2 0 1 4 A N N U A L R E P O R T
Dedication to Excellence Award Winners
Dedication to Excellence Chairman Award Winners
{01} Lynn Hoff, Kentucky
Technical Business Analyst, Advisory
Associate since 2012
{02} Kim Vandine, Texas
Administrative Sales Support Representative II
Associate since 2007
{03} Shelly Helmuth, Indiana
Administrative Assistant II
Associate since 2000
{04} Roger Wolf, Missouri
Project Management, Senior Manager
Associate since 2006
{05} Levi Price, Missouri
Programmer Analyst
Associate since 2013
{06} Kelli Houser, Missouri
QA Analyst, Advanced
Associate since 2000
{07} Beth Carter, Alabama
Customer Relationship Manager, Advisory
Associate since 1996
{08} Sam Turk, South Carolina
Programmer Analyst, Senior
Associate since 1993
{09} Monica Clark, Kentucky
Installation Manager, Senior
Associate since 2007
{10} Margie Fenske, Missouri
Instructional Design Specialist, Advanced
Associate since 2001
{11} Ty Knotts, Missouri
Technical Support Coordinator
Associate since 2010
{12} Krishna Ghamandi, Florida
Technical Support Representative, Advanced
Associate since 2007
{13} Tina Rioux
{14} Debbie McGilvry
{15} Kara Church
{16} Robert Avie
01
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07
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WE ARE JACK HENRY &
ASSOCIATES, INC.®
For 38 years, we at Jack Henry & Associates (JHA) have built our business on the belief that the people
who contribute day-in and day-out to our success are the true foundation of our company. JHA is
not a logo, a website, or a slogan. We are the voices on the other end of the line in a customer’s
moment of need. We are the installers who work long hours to ensure the job is done right. We are the
programmers who develop the perfect code for a new enhancement.
We are a time-tested, unified group of approximately 5,600 innovative
minds working toward one common goal – excellence in financial
services technology.
In 2013 we created our Dedication to Excellence Awards, a program in which our employees can
nominate peers who they believe continually demonstrate, through word and deed, a commitment to
our company’s fundamental values. We are pleased to introduce to you, our shareholders, some of the
associates who were recognized with this award during fiscal year 2014. Read more about these awards
on page 19.
1
www.jackhenry.com about jack henry
Jack Henry & Associates (JHA) was founded in 1976 to support community
banks with in-house data processing systems. Today, we sell and support more than
300 products and services that enable financial institutions to process financial
transactions, automate their businesses, and succeed in the competitive financial
services industry.
We serve approximately 11,300 customers with products and services delivered through three primary
brands – Jack Henry Banking®, Symitar®, and ProfitStars®. Our customers are financial institutions of all
sizes, diverse businesses outside the financial industry, and other technology providers. Each of
our distinct brands is committed to providing high quality, easily integrated solutions that are
backed by integrity-based business relationships and exceptional service.
In an industry that is constantly transforming, we continue to deliver trusted technology that:
Enables efficiency and compliance.
Integrates with other systems and data.
Supports unique customer needs through customization.
Provides flexible delivery options including in-house or outsourced/cloud technology.
Positions our customers for the future.
By focusing on internal product development, disciplined acquisitions, and alliances with proven
companies that complement our proprietary solutions, we are able to expand our offerings and
regularly introduce new products and services that generate extensive cross-sale opportunities
spanning our three brands. Our commitment to quality and our high service standards foster
customer relationships that stand the test of time – and have enabled us to capture substantial
market share. Learn more at www.jackhenry.com.
2
2014 annual report three successful brands
www.jackhenrybanking.com/about
» U.S. Community and
Mid-Tier Banks
» Core Processing Systems
» Integrated
Complementary Products
» In-House or Outsourced
Services
» U.S. Credit Unions of
All Sizes
» Core Processing Systems
» Integrated
Complementary Products
» In-House or Outsourced
Services
» U.S. and International
Financial Institutions
» Core Processor Agnostic
» Corporate Entities
» Best-of-Breed
Niche Solutions
www.symitar.com/about
www.profitstars.com/about
3
www.jackhenry.com MISSION
statement
To protect and increase the value of our stockholders' investment
by providing quality products and services to our customers. In
accomplishing this we feel it is important to:
Concentrate our activities on what we know best – information systems
and services for financial institutions.
Provide outstanding commitment and service to our customers so that
the perceived value of our products and services is consistent with the
real value.
Maintain a work environment that is personally, professionally, and
financially rewarding for our employees.
GUIDING
principles
We have maintained the focused work ethic and ideals established
by our co-founders – Jack Henry and Jerry Hall – 38 years ago.
Do the right thing.
Do whatever it takes.
Have fun.
4
2014 annual report TABLE OF CONTENTS
6
7
10
14
17
23
25
27
28
29
29
41
42
64
66
{ Financial Highlights }
{ Shareholders’ Letter }
{ We are Growing, Adapting, and Innovating }
{ We Remain Committed to Monitoring and Mitigating Risk }
{ We are One Company }
{ We Have Built a Legacy of Exceptional Leadership }
{ We Look Toward the Future, Confident and Optimistic }
{ Market for Registrant’s Common Equity }
{ Performance Graph }
{ Selected Financial Data }
{ Management’s Discussion and Analysis }
{ Quantitative and Qualitative Disclosures about Market Risk }
{ Financial Statements and Supplementary Data }
{ Quarterly Financial Information }
{ Board of Directors and Executive Officers }
5
www.jackhenry.com 2014 FINANCIALS
(In millions except per share data)
REVENUE
$1,129
$1,210
$1,027
NET INCOME
DILUTED EARNINGS
PER SHARE
$155
$177
$201
$1.78
$2.04
$2.36
2012
2013
2014
2012
2013
2014
2012
2013
2014
TOTAL ASSETS
$1,619
$1,629
$1,624
STOCKHOLDERS’ EQUITY
$983
$1,072
$1,038
DIVIDENDS DECLARED
PER SHARE
$0.56
$0.84
$0.44
2012
2013
2014
2012
2013
2014
2012
2013
2014
6
2014 annual report fellOW sharehOlders,
Fiscal year 2014 (ended June 30) marked our 38th year in business, 28th year
as a public company, and another year of record financial performance and
profitable organic revenue growth across all three of our brands. The economy
continued its recovery and financial institutions continued investing in their
technology infrastructures.
During fiscal year 2014, we acquired Banno, a company providing more than 375 financial institution
customers with data-enriched Web and transaction marketing services with a focus on the mobile
medium. Banno added three primary services to our product line: Banno Mobile™ a financial aggregation
application that combines mobile banking, mobile personal financial management (PFM), and mobile
bill pay in one native app; a web solution that offers the design and development of responsive
websites; and Kernel™, a targeted online advertising platform. This acquisition expanded our online
and mobile suite, increased cross-sale opportunities among our respective customer bases, and added
loyal customers to our client roster.
This year we also welcomed new members of our executive management team. We announced that
David Foss would transition from his role as President of our ProfitStars division to President of JHA,
replacing Tony Wormington who retired June 30, 2014. In response to our continued focus on payments
and risk management, we also announced two new, consolidated groups within our organizational
structure – Payment Solutions and Enterprise Risk Management – and appointed General Managers in
both of these areas.
We continued our commitment to mitigating our company’s and our customers’ exposure to risk,
refining our enterprise-wide approach in response to internal process analyses and regulatory updates.
Policy and procedure revisions, staff realignments, and technology advancements better positioned us
to proactively protect customer information and respond effectively to unexpected events and evolving
compliance directives.
7
www.jackhenry.com During fiscal year 2014, we continued to see a growing preference for software delivered in a hosted
environment which is also referred to as outsourcing, in-the-cloud, or Software-as-a Service (SaaS).
Today, 44% of our core clients use the hosted model. This shift has been a significant contributor to our
recurring revenue composition which now approaches 80%.
We are excited about the opportunities ahead, and
we’re confident that with the support of our exceptional
employees and our loyal customers we will continue
to see a strong financial performance and superior
shareholder returns.
We’ve also experienced growth in our electronic payments businesses, which currently generate more
than $443 million in annual revenue, or 37% of our total revenue. This revenue is generated primarily
by fees for each transaction processed, and with the increasing trend toward electronic payment
alternatives, including online and mobile, this is growing at a significantly higher rate than our traditional
business. We generated 7% revenue growth during the year, with nearly 100% being organic and a
slight contribution from Banno. During the year we increased our dividend substantially by 50%,
reflecting our confidence in our ability to use our cash flow and balance sheet to fund significant
acquisitions and continue to return more money to shareholders.
During fiscal year 2014, revenue, earnings, and operating cash flow all reached record highs. Total
revenue increased to a record $1,210 million. Net income was $201 million or $2.36 per diluted share,
as compared to net income of $177 million or $2.04 per diluted share reported for fiscal year 2013. We
generated strong cash flow from operating activities of $342 million, as compared to $309 million in
fiscal year 2013. Our return on assets was 12.4%, and return on equity was 19.1%. We generated strong
profitability with a 26% operating margin.
Our revenue mix for the year consisted of $53 million in software license fees or 4% of total revenue,
$1,098 million in support and services or 91% of total revenue, and $59 million in hardware sales or 5%
of total revenue.
Recurring revenue, which consists of software maintenance fees, outsourcing services, and electronic
payment processing, approached 80% of total revenue in fiscal year 2014.
Backlog, which consists of contracted sales of products and services that were not delivered by fiscal
year-end, reached $513 million, a 3% increase over the $499 million reported last year.
8
2014 annual report We expect to find comparable growth opportunities to generate solid financial performance again in
2015 based on our focused business strategy and our ability to control and reduce near- and long-term
operating expenses.
We are excited about the opportunities ahead, and we’re confident that with the support of our
exceptional employees and our loyal customers we will continue to see a strong financial performance
and superior shareholder returns.
Jack Prim { Chairman of the Board & Chief Executive Officer }
DaviD Foss { President }
kevin Williams { Chief Financial Officer & Treasurer }
9
www.jackhenry.com a strategic fOcus On payments
Payment processing services is JHA’s fastest growing business line, providing a dynamic suite of
solutions that quickly, accurately, and securely move money through virtually all payment channels
and support all remittance types.
From traditional payments like debit card and online bill payments to emerging payment channels
like person-to-person (P2P) and mobile remote deposit capture, we offer customizable platforms
that allow our customers to quickly respond to market demands. We competitively differentiate our
payments solutions with value-added services including sophisticated reporting and analytics tools
and proven programs for increasing consumer adoption and organic growth. In addition to our direct
sales efforts, we enhance our presence in the payments industry by establishing reseller agreements
with other technology providers and partnering with proven value added resellers (VARs) and
independent sales organizations (ISOs).
In fiscal 2014, we consolidated our payment offerings under one umbrella, Payment Solutions, and
appointed a new general manager of that group. We believe our payments business will continue
to generate significant growth for our company and garner new opportunities for innovation.
OutsOurcing OppOrtunity
Today, the forces driving financial institutions to consider outsourcing – and the benefits they can
gain from a successful provider partnership – are greater than ever. With outsourcing, financial
institutions can eliminate both the capital expenditures required for in-house system installations
and the need for resident resources to operate and manage in-house hardware and software. Since
JHA is able to leverage economies of scale, institutions not only benefit from more predictable costs,
but also gain access to the latest technology and a more sophisticated infrastructure and processing
Continued on page 13.
10
WEARE GROWING, ADAPTING, AND INNOVATING2014 annual report Dedication to Excellence Chairman Award Winner
Tina Rioux
Livermore, Maine
Customer Relationship Manager, Senior
Associate since 2003
11
www.jackhenry.com OUTLINK DATA CENTERS
CHARLOTTE,
NC
We operate three data
centers to meet the
needs of all sizes of
financial institutions.
ALLEN, TX
LENEXA, KS
Turnkey outsourcing solutions to approximately
759 financial institutions.
OutLink currently processes approximately
18 million deposit/loan accounts each day.
Financial institutions range from de novo to
multi-billion dollar mid-tier institutions.
Average assets = $320.5 million.
OutLink processes more than 29 million
checks/electronic equivalent transactions
each month.
12
2014 annual report environment. Additionally, in today’s compliance-focused environment, outsourcing shifts much of
our customers’ compliance burden to us, while providing them – and their customers – with powerful
security, disaster recovery, and business continuity resources. Perhaps most importantly, outsourcing
lets financial institutions focus on serving their customers, without worrying about the dynamic
technology required to do so. Our OutLink Data Centers continue to grow year-over-year in number
of institutions served and transactions processed, and 2014 was no exception.
Our OutLink Data Centers continue to grow year-
over-year in number of institutions served and
transactions processed, and 2014 was no exception.
pOsitiOning Our custOmers fOr the future
Midway through 2014, we launched the Innovation Center, a strategic team that identifies opportunities
to enhance our products with innovative solutions that proactively address changing customer and market
needs. Responsible for bringing concepts from inception to development in less than six months, the
Innovation Center is built for speed and efficiency rather than relying on a time intensive, analysis-laden
process. The goal is to get potential products in front of a customer committee, solicit feedback, and assess
the products’ value as quickly as possible. If products are validated, they are sent to our operational units to
develop documentation, refine processes, establish support, and eventually move into general availability.
The Innovation Center provides a continuous flow of ideas, so if a product offers limited opportunity to
meet a customer need, it drops out of consideration and another product takes its place.
13
www.jackhenry.com WE
REMAIN COMMITTED TO MONITORING
AND MITIGATING RISK
We continued to focus on risk management this fiscal year, redefining our
processes to ensure that risks are identified and managed appropriately. By
realigning personnel, establishing new reporting relationships, and consolidating
risk related functions under one new department – Enterprise Risk Management
– we improved the flow of information to executive management and the Board
of Directors.
Monthly meetings with the Board’s Risk & Compliance Committee ensure that process improvement
commitments are being met and that corporate risks are being managed and mitigated enterprise-
wide. Additionally, the Enterprise Risk Management group offers clear and definitive governance
that helps ensure that all areas of the company are adhering to established corporate policies and
addressing changes to these policies when appropriate. This more focused approach offers a new
structure to our organizational risk management while positioning us to readily adapt as necessary
to the ever-changing financial services environment.
14
2014 annual report Dedication to Excellence Chairman Award Winner
Robert Avie
Troy, Michigan
Applications Analyst, Senior
Associate since 2008
15
www.jackhenry.com Dedication to Excellence Chairman Award Winner
Kara Church
San Diego, California
Technical Editor, Advisory
Associate since 1998
16
2014 annual report WE ARE ONE COMPANY
One cOnsistent custOmer experience
Our “One Company” initiative was born out of one simple idea: that we must
serve our customers better than the competition. To provide the best in service, we
believe that all customers should receive a consistent, seamless service experience
across all JHA departments, regardless of which division serves them. This idea
has become a living, breathing part of our business, and has been the catalyst for
operational improvements company-wide in fiscal 2014.
We’ve made great strides during the past year to market our products and services with a multi-product
“solution view” rather than a single “product view.” By organizing our product suites in an intuitive
way across all brands, customers are now able to better understand our solutions, relate them to their
business, and implement them where it makes the most sense for their operations. The clarity this
“solution view” offers fosters improved customer satisfaction, stronger partnerships, and cross-sale
opportunities that add value to the banks and credit unions we serve.
Additionally, to support company-wide knowledge about our rapidly growing product and service
catalog, we implemented all-employee product training. The goal of the training was to ensure that
every associate across all of our divisions and departments was familiar with all JHA products and
services – not just the ones they work with daily. The training was followed by an online test that
assessed their knowledge and proficiency, the belief being that an employee base with broader
product knowledge will undoubtedly lead to better customer service.
Our For Clients portal remains an important channel of communication with our customers. Accessible
via our website, this convenient online hub allows customers to initiate and manage support requests,
view announcements and alerts, visit discussion boards, search product information, and more. We
continue to update our For Clients site to ensure it offers relevant and timely information and an
intuitive user experience designed with our customers in mind.
Continued on page 19.
17
www.jackhenry.com DAILY CUSTOMER SATISFACTION SURVEYS
QUESTIONS ASKED OF OUR CUSTOMERS:
Q7
What is your overall rating of the Customer
Service Representative?
Q10 What is your rating for this customer service
experience overall?
4.68
4.58
rating scale:
5) Far exceeded expectations
4) Exceeded expectations
3) Met expectations
2) Needs improvement
1) Unacceptable
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
18
Q7
Q10
2014 annual report Once again, our annual customer satisfaction surveys proved that we’re doing things right. The results
of the more than 80,000 online surveys we distribute after routine support requests confirm that our
investment in and commitment to providing exceptional service generates customer satisfaction levels
that are among the highest – if not the highest – in the markets we serve.
One dedicated and satisfied WOrkfOrce
Consistent with previous years, our employee satisfaction survey yielded satisfaction levels that
exceeded the benchmarks in key areas, proving that our employees remain devoted to JHA and
optimistic about their future success with our organization. Our associates are confident about JHA’s
future performance, they trust in our values, and believe they will have successful careers.
Career growth was a primary focus at JHA in fiscal 2014, as demonstrated with our development of
the PRIDE Academy, an educational opportunity spearheaded by JHA’s executive team and general
managers. The PRIDE acronym is derived from JHA’s Core Values: Passion for Customer Service,
Relationships, Integrity, Drive for Results, and Excellence. PRIDE Academy is a series of courses that
empower our employees with the tools and resources they need to achieve personal and professional
excellence. From the newest hire to the seasoned employee, the program provides a path to
personal and professional growth through educational courses in four primary areas: PRIDE in People,
PRIDE in Management, PRIDE in Leadership, and PRIDE in Excellence. Each course combines live and
virtual classroom experiences, interactive facilitation and coaching, practical application of skills with
assessments, and feedback opportunities. PRIDE Academy is a worthwhile commitment for a fulfilling,
meaningful, and fun experience as associates develop their careers at JHA.
Our Dedication to Excellence Awards and Chairman Awards continue to recognize associates who
consistently go above and beyond in their work and embody JHA’s Core Values. The Dedication
to Excellence Award is a peer-nominated award that is presented to four associates each quarter;
16 associates each year. The winners of the Dedication to Excellence Awards are eligible for the
Chairman Award, a prestigious award hand-selected by our executives and presented to four
associates at the end of each fiscal year.
19
www.jackhenry.com
EMPLOYEE ENGAGEMENT SURVEY
2014 SURVEY AVERAGE SCORES
Bottom 2 score
Middle 3 score
Top 2 score
My organization has consistently treated me well.
2%
14%
JHA
84%
5%
26%
69%
Benchmark
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
I trust my organization.
2%
20%
JHA
77%
7%
36%
57%
Benchmark
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
2014 annual report Bottom 2 score
Middle 3 score
Top 2 score
I am confident about the future performance of my organization.
2%
18%
JHA
80%
7%
37%
56%
Benchmark
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
I believe in my organization's values.
1% 11%
JHA
88%
4%
27%
69%
Benchmark
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
21
www.jackhenry.com Dedication to Excellence Chairman Award Winner
Debbie McGilvry
Springfield, Missouri
Technical Support Supervisor
Associate since 2000
22
2014 annual report WE HAVE BUILT A LEGACY OF
EXCEPTIONAL LEADERSHIP
Since Jack Henry and Jerry Hall founded JHA in 1976, the company has
benefited from the best and brightest leadership in the business. This year
we announced changes to our executive management team, introduced a new
board member, added new general managers, and continued to provide ongoing
advancement opportunities and professional training to promote managers at
every level and position them for success.
In February of 2014, long-standing JHA President Tony Wormington informed the Board of Directors
that he would retire as President of the company effective June 30, 2014, and David Foss, President of
Jack Henry's ProfitStars division, was announced as his successor.
Tony began his career with JHA in 1980 and was an integral part of our growth and evolution into a
premier financial services provider. A Monett, Missouri, native who was initially hired as an installer,
Tony went on to hold positions as Research and Development Manager, Vice President and General
Manager of Technology Solutions, Chief Operating Officer, and in 2004 was promoted to President.
New JHA President David Foss joined JHA in 1999 when he arranged the sale of BancTec’s financial
solutions division to Jack Henry and Associates. From 1999 to the inception of ProfitStars in
2003, he served a dual role as President of the Open Systems group and General Manager of the
Complementary Solutions group. He was President of ProfitStars from 2004 until 2014 when he was
named President of JHA.
23
www.jackhenry.com Russ Bernthal was named the new President of ProfitStars. Russ joined JHA in 2005 through the
acquisition of Tangent Analytics, Inc. where he served as President and CEO. He has served in
progressively responsible roles, most recently as Group President of ProfitStars’ Software Solutions,
and in his new role he has assumed operational and development responsibilities for the ProfitStars
branded products including Imaging Solutions, Lending Solutions, Gladiator®, Performance Suite,
Web Solutions, Banno Mobile™/Kernel™ and the remittance product line.
JHA also added a new Board member. On September 10, 2013, we announced that Laura Kelly
was appointed to the Board of Directors as an independent director. Our Board consists of seven
members, including six independent outside directors and one non-independent director. Laura has
spent more than 20 years in senior leadership roles in financial services technology and payments,
focusing on strategy, innovation, risk/compliance, and marketing. Laura was recognized by the
industry for her contributions by being named one of the most influential women in payments
in 2013.
“The company, our shareholders, the Jack Henry &
Associates employees, and our clients that Tony has
cared so much about owe a great debt of gratitude
to him for his many years of service and contribution
to JHA’s success.”
Jack Prim, CEO and Chairman of the Board
24
2014 annual report WE LOOK TOWARD THE
FUTURE, CONFIDENT
AND OPTIMISTIC
During fiscal year 2015 we will continue to focus on our primary growth drivers:
Maintain our high levels of customer satisfaction and retention by delivering high-quality business solutions
and exceptional service.
Increase market share with targeted sales efforts.
Expand our existing customer relationships by cross selling additional products and services.
Introduce new products and services that capitalize on advancing technologies and enhance our customers’
existing technology platforms.
Increase recurring revenue by optimizing outsourcing opportunities, transaction-based processing fees, and
ongoing software maintenance and support fees.
Pursue disciplined acquisitions that complement our internal growth, continue our focused diversification,
and expand our product offerings with proven solutions.
Continue our strict focus on cost control.
We are optimistic that our strategic financial position and the support
of our experienced management team and exceptional workforce will
enable us to generate company-wide progress and a strong financial
performance again in fiscal year 2015.
25
www.jackhenry.com 2014 FINANCIAL REVIEW
26
2014 annual report MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company's common stock is quoted on the NASDAQ Global Select Market (“NASDAQ”), formerly known as the
NASDAQ National Market, under the symbol “JKHY”. The following table sets forth, for the periods indicated, the high and
low sales price per share of the common stock as reported by NASDAQ.
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Fiscal 2014
Fiscal 2013
High
Low
High
Low
$
60.02 $
60.34
59.37
52.42
52.87 $
53.55
49.08
47.14
48.24 $
46.31
40.71
38.22
37.90
39.60
37.12
33.92
The Company established a practice of paying quarterly dividends at the end of fiscal 1990 and has paid dividends with
respect to every quarter since that time. Quarterly dividends per share paid on the common stock for the two most recent
fiscal years ended June 30, 2014 and 2013 are as follows:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Fiscal 2014
Fiscal 2013
$
0.220 $
0.220
0.200
0.200
0.200
0.130
0.115
0.115
The declaration and payment of any future dividends will continue to be at the discretion of our Board of Directors and will
depend upon, among other factors, our earnings, capital requirements, contractual restrictions, and operating and financial
condition. The Company does not currently foresee any changes in its dividend practices.
Information regarding the Company's equity compensation plans is set forth under the caption "Equity Compensation Plan
Information" in the Company's definitive Proxy Statement and is incorporated herein by reference.
On August 15, 2014, there were approximately 55,000 holders of the Company’s common stock. On that same date the last
sale price of the common shares as reported on NASDAQ was $56.44 per share.
Issuer Purchases of Equity Securities
The following shares of the Company were repurchased during the quarter ended June 30, 2014:
April 1 - April 30, 2014
May 1 - May 31, 2014
June 1 - June 30, 2014
Total
Total Number
of Shares
Purchased (1)
Average
Price of
Share
Total Number of Shares
Purchased as Part of
Publicly Announced Plans
(1)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans (2)
— $
1,073,046
867,960
1,941,006
—
57.39
58.90
58.06
—
1,073,046
867,960
1,941,006
7,137,063
6,064,017
5,196,057
5,196,057
(1) 1,941,006 shares were purchased through a publicly announced repurchase plan. There were no shares surrendered to
the Company to satisfy tax withholding obligations in connection with employee restricted stock awards.
(2) Stock repurchase authorizations approved by the Company's Board of Directors as of May 3, 2013 was 25.0 million
shares. These authorizations have no specific dollar or share price targets and no expiration dates.
27
www.jackhenry.com PERFORMANCE GRAPH
The following chart presents a comparison for the five-year period ended June 30, 2014, of the market performance of
the Company’s common stock with the S & P 500 Index and an index of peer companies selected by the Company:
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Jack Henry & Associates, Inc., the S&P 500 Index, and a Peer Group
The following information depicts a line graph with the following values:
JKHY
Old Peer Group
New Peer Group
S & P 500
2009
100.00
100.00
100.00
100.00
2010
116.85
112.45
115.50
114.43
2011
148.92
150.77
159.31
149.55
2012
173.67
176.12
171.86
157.70
2013
240.25
220.42
198.72
190.18
2014
307.57
275.73
273.95
236.98
This comparison assumes $100 was invested on June 30, 2009, and assumes reinvestments of dividends. Total returns are
calculated according to market capitalization of peer group members at the beginning of each period. Peer companies selected
are in the business of providing specialized computer software, hardware and related services to financial institutions and
other businesses. In fiscal 2014, we changed our peer group of companies used for this analysis to maintain alignment with
peer companies selected by our Compensation Committee for use in determining compensation for executive management.
Companies in the New Peer Group are ACI Worldwide, Inc., Bottomline Technology, Inc., Broadridge Financial Solutions,
Cardtronics, Inc., Convergys Corp., Corelogic, Inc., DST Systems, Inc., Euronet Worldwide, Inc., Fair Isaac Corp., Fidelity
National Information Services, Inc., Fiserv, Inc., Global Payments, Inc., Heartland Payment Systems, Inc., Micros Systems,
Inc., Moneygram International, Inc., SS&C Technologies Holdings, Inc., Total Systems Services, Inc., Tyler Technologies,
Inc., Verifone Systems, Inc., and WEX, Inc..
Companies in the Old Peer Group are ACI Worldwide, Inc., Bottomline Technology, Inc., Cerner Corp., DST Systems,
Inc., Euronet Worldwide, Inc., Fair Isaac Corp., Fidelity National Information Services, Inc., Fiserv, Inc., SEI Investments
Company, Telecommunications Systems, Inc., and Tyler Technologies Corp.
28
2014 annual report SELECTED FINANCIAL DATA
Selected Financial Data
(In Thousands, Except Per Share Data)
Income Statement Data
Revenue (1)
Income from continuing operations
Basic net income per share,
continuing operations
Diluted net income per share,
continuing operations
Dividends declared per share
Balance Sheet Data
Working capital
Total assets
Long-term debt
Stockholders’ equity
YEAR ENDED JUNE 30,
2014
1,210,053 $
201,136 $
2013
2012
1,129,386 $
176,645 $
1,027,109 $
154,984 $
2011
966,897
137,471
2.37 $
2.05 $
1.79 $
2.36 $
0.84 $
2.04 $
0.56 $
1.78 $
0.44 $
1.60
1.59
0.40
2010
836,586
117,870
1.39
1.38
0.36
$
$
$
$
$
(44,435) $
1,624,292 $
3,729 $
1,038,161 $
35,627 $
1,629,155 $
7,366 $
1,072,169 $
66,406 $
1,619,492 $
106,166 $
983,056 $
(26,561 ) $
$
$
$
1,505,797
127,939
879,776
(51,283)
1,560,560
272,732
750,372
$
$
$
$
$
$
$
$
$
(1) Revenue includes license sales, support and service revenues, and hardware sales, less returns and allowances.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following section provides management's view of the financial condition and results of operations and should be
read in conjunction with the Selected Financial Data, the audited Consolidated Financial Statements, and related notes
included elsewhere in this report.
OVERVIEW
Jack Henry & Associates, Inc. (JHA) is headquartered in Monett, Missouri, employs approximately 5,600 associates
nationwide, and is a leading provider of technology solutions and payment processing services primarily for financial
services organizations. Its solutions serve nearly 11,300 customers and are marketed and supported through three
primary brands. Jack Henry Banking® supports banks ranging from community to mid-tier, multi-billion dollar institutions
with information and transaction processing solutions. Symitar® is a leading provider of information and transaction
processing solutions for credit unions of all sizes. ProfitStars® provides specialized products and services that enable
financial institutions of every asset size and charter, and diverse corporate entities outside the financial services industry,
to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. JHA's integrated solutions
are available for in-house installation and outsourced and hosted delivery.
Each of our brands share the fundamental commitment to provide high quality business solutions, service levels that
consistently exceed customer expectations, integration of solutions and practical new technologies. The quality of our
solutions, our high service standards, and the fundamental way we do business typically foster long-term customer
relationships, attract prospective customers, and have enabled us to capture substantial market share.
Through internal product development, disciplined acquisitions, and alliances with companies offering niche solutions
that complement our proprietary solutions, we regularly introduce new products and services and generate new cross-
sales opportunities across our three business brands. We provide compatible computer hardware for our in-house
installations and secure processing environments for our outsourced and hosted solutions. We perform data conversions,
software implementations, initial and ongoing customer training, and ongoing customer support services.
Our primary competitive advantage is customer service. Our support infrastructure and strict standards provide service
levels we believe to be the highest in the markets we serve and generate high levels of customer satisfaction and
retention. We consistently measure customer satisfaction using comprehensive annual surveys and random surveys we
29
www.jackhenry.com receive in our everyday business. Dedicated surveys are also used to grade specific aspects of our customer experience,
including product implementation, education, and consulting services.
The majority of our revenue is derived from recurring outsourcing fees and transaction processing fees that predominantly
have contract terms of five years or greater at inception. Support and service fees also include in-house maintenance fees on
primarily annual contract terms. Less predictable software license fees and hardware sales complement our primary revenue
sources. We continually seek opportunities to increase revenue while at the same time containing costs to expand margins.
During the last five fiscal years, our revenues have grown from $836,586 in fiscal 2010 to $1,210,053 in fiscal 2014. Income
from continuing operations has grown from $117,870 in fiscal 2010 to $201,136 in fiscal 2014. This growth has resulted
primarily from internal expansion.
We have two reportable segments: bank systems and services and credit union systems and services. The respective
segments include all related license, support and service, and hardware sales along with the related cost of sales.
We continue to focus on our objective of providing the best integrated solutions, products and customer service to our
clients. We are cautiously optimistic regarding ongoing economic improvement and expect our clients to continue investing
in our products and services to improve their operating efficiencies and performance. We anticipate that consolidation
within the financial services industry will continue. Regulatory conditions and legislation such as the Dodd-Frank Wall
Street Reform and Consumer Protection Act will continue to impact the financial services industry and could motivate some
financial institutions to postpone discretionary spending.
A detailed discussion of the major components of the results of operations follows. All dollar amounts are in thousands and
discussions compare fiscal 2014 to fiscal 2013 and compare fiscal 2013 to fiscal 2012.
RESULTS OF OPERATIONS
FISCAL 2014 COMPARED TO FISCAL 2013
In fiscal 2014, revenues increased 7% or $80,667 compared to the prior year due primarily to strong growth in all components
of support and service revenues, particularly our electronic payment services and our outsourcing services. The growth in
revenue and the Company's continued focus on cost management continued to drive up gross margins, which has resulted
in a 9% increase in gross profit.
Operating expenses decreased 2% for the year mainly due to $12,436 of expenses in the prior year related to the impact of
Hurricane Sandy flooding on our Lyndhurst, New Jersey item processing center. Provision for income taxes increased over
the prior year. The prior year provision for income tax was low due to the tax impact of the Lyndhurst, New Jersey expenses
and the release of previously unrecognized tax benefits. Increased revenue and gross margin, coupled with the above
changes, resulted in a combined 14% increase in net income for fiscal 2014.
We move into fiscal 2015 following record revenue achieved in fiscal 2014. Significant portions of our business continue to
come from recurring revenue and our healthy sales pipeline is also encouraging. Our customers continue to face regulatory
and operational challenges which our products and services address, and in these times they have an even greater need
for our solutions that directly address institutional profitability and efficiency. Our strong balance sheet, access to extensive
lines of credit, the strength of our existing product line and an unwavering commitment to superior customer service position
us well to address current and future opportunities.
REVENUE
License Revenue
License
Percentage of total revenue
Year Ended
June 30,
2014
2013
% Change
$
53,009
$
54,818
(3)%
4 %
5 %
License revenue represents the sale and delivery 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.
30
2014 annual report
License revenue decreased slightly due mainly to a decrease in license revenue from complementary products, particularly
our remote deposit capture suite of products.
While license fees will fluctuate, recent trends indicate that our customers are increasingly electing to contract for our
products via outsourced delivery rather than a traditional license as our outsourced delivery does not require an up-front
capital investment in license fees. We expect this trend to continue in the long term.
Support and Service Revenue
Support and service
Percentage of total revenue
In-House Support & Other Services
Electronic Payment Services
Outsourcing Services
Implementation Services
Total Increase
Year Ended
June 30,
2014
$
1,098,386
$
2013
1,015,211
91 %
90 %
%
Change
8 %
Year over Year
$ Change
% Change
$
$
14,851
37,158
21,408
9,758
83,175
5 %
9 %
10 %
11 %
Support and service revenues are generated from annual support to assist the customer in operating their systems and to
enhance and update the software, electronic payment services, outsourced data processing services and implementation
services (including conversion, installation, configuration and training). There was growth in all support and service revenue
components in fiscal 2014.
In-house support and other services revenue increased due to annual maintenance fee increases for both core and
complementary products as our customers’ assets grow and due to maintenance fees associated with new software implemented.
Electronic payment services continue to experience the largest dollar growth. The revenue increases are attributable to strong
performance across debit/credit card transaction processing services, online bill payment services and ACH processing.
Outsourcing services for banks and credit unions continue to drive revenue growth as customers continue to show a
preference for outsourced delivery of our solutions. We expect the trend towards outsourced product delivery to benefit
outsourcing services revenue for the foreseeable future. Revenues from outsourcing services are typically earned under
multi-year service contracts and therefore provide a long-term stream of recurring revenues.
Implementation services revenue increased due mainly to increased implementations of our credit union core products.
Hardware Revenue
Hardware
Percentage of total revenue
Year Ended
June 30,
%
Change
2014
2013
$
58,658
$
59,357
(1) %
5 %
5 %
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 slightly. Although there will be continuing quarterly fluctuations, we expect there to be an
overall decreasing trend in hardware sales due to the change in sales mix towards outsourcing contracts, which typically do
not include hardware, and the general deflationary trend of computer prices.
COST OF SALES AND GROSS PROFIT
Cost of license represented the cost of software from third party vendors through remarketing agreements associated with
license fee revenue. These costs were recognized when license revenue was recognized. Cost of support and service
represented 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, electronic payment services
and direct operating costs. These costs were recognized as they were incurred. Cost of hardware consisted of the direct
and indirect costs of purchasing the equipment from the manufacturers and delivery to our customers. These costs were
recognized at the same time as the related hardware revenue was recognized. Ongoing operating costs to provide support
to our customers were recognized as they were incurred.
31
www.jackhenry.com Cost of License
Percentage of total revenue
License Gross Profit
Gross Profit Margin
Cost of support and service
Percentage of total revenue
Support and Service Gross Profit
Gross Profit Margin
Cost of hardware
Percentage of total revenue
Hardware Gross Profit
Gross Profit Margin
TOTAL COST OF SALES
Percentage of total revenue
TOTAL GROSS PROFIT
Gross Profit Margin
Year Ended
June 30,
%
Change
2014
2013
4,273
<1%
48,736
92 %
643,443
53 %
454,943
41 %
43,708
4 %
14,950
25 %
691,424
57 %
518,629
43 %
$
$
$
$
$
$
$
$
4,824
(11) %
<1%
49,994
91 %
603,920
53 %
411,291
41 %
43,650
4 %
15,707
26 %
652,394
58 %
476,992
42 %
(3) %
7 %
11 %
— %
(5) %
6 %
9 %
$
$
$
$
$
$
$
$
Cost of license consists of the direct costs of third party software. Sales of third party software products decreased slightly
compared to last year, causing a slight increase in gross profit margins.
Gross profit margins in support and service remained consistent with the prior year.
In general, changes in cost of hardware trend consistently with hardware revenue. For the fiscal year, margins are slightly
lower due to decreased sales of higher margin hardware upgrade products.
OPERATING EXPENSES
Selling and Marketing
Selling and marketing
Percentage of total revenue
Year Ended
June 30,
%
Change
2014
2013
$
86,570
$
81,619
6 %
7 %
7 %
Dedicated sales forces, inside sales teams, technical sales support teams and channel partners conduct our sales efforts
for our two reportable 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.
Selling and marketing expenses for the year increased mainly due to higher commission expenses and a general increase
in sales headcount and related salaries. This is in line with increased sales volume of long term service contracts on which
commissions are paid as a percentage of total revenue.
Research and Development
Research and development
Percentage of total revenue
Year Ended
June 30,
%
Change
2014
2013
$
66,748
$
63,202
6 %
6 %
6 %
We devote significant effort and expense to develop new software, service products and continually upgrade and enhance
our existing offerings. Typically, we upgrade our various core and complementary software applications once per year. 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 increased headcount and related salaries.
32
2014 annual report General and Administrative
General and administrative
Percentage of total revenue
Year Ended
June 30,
%
Change
2014
2013
$
53,312
$
66,624
(20) %
4 %
6 %
General and administrative costs include all expenses related to finance, legal, human resources, plus all administrative costs.
General and administrative expenses in the current year includes $2,900 of insurance recoveries of costs related to the
impact of Hurricane Sandy flooding on our Lyndhurst, New Jersey item processing center, whereas the prior year includes
$12,436 of expenses related to the same event. General and administrative expenses, excluding the Lyndhurst expenses
and subsequent insurance recoveries, increased slightly year-over-year due to additional headcount and related salaries.
INTEREST INCOME AND EXPENSE
Interest Income
Interest Expense
Year Ended
June 30,
%
Change
2014
2013
$
$
377
(1,105)
$
$
640
(6,337 )
(41) %
(83) %
Interest income fluctuated due to changes in invested balances and yields on invested balances. Interest expense decreased
due to full repayment of our term loan in the fourth quarter of fiscal 2013.
PROVISION FOR INCOME TAXES
The provision for income taxes was $110,135 or 35.4% of income before income taxes in fiscal 2014 compared with $83,205
or 32.0% of income before income taxes in fiscal 2013. The increase in the effective tax rate was primarily due to the
recognition of previously unrecognized tax benefits during the prior year quarter following the close of an Internal Revenue
Service audit of fiscal years 2010 and 2011, as well as the retroactive extension of the research and experimentation credit
during the prior year quarter.
NET INCOME
Net income increased from $176,645, or $2.04 per diluted share, in fiscal 2013 to $201,136, or $2.36 per diluted share, in
fiscal 2014.
FISCAL 2013 COMPARED TO FISCAL 2012
In fiscal 2013, revenues increased 10% or $102,277 compared to the prior year due primarily to strong growth in all
components of support and service revenues, particularly our electronic payment services and our outsourcing services.
The growth in revenue and the Company's continued focus on cost management continued to drive up gross margins, which
resulted in a 13% increase in gross profit.
Operating expenses increased 13% for the year mainly due to expenses related to the impact of widespread flooding caused
by Hurricane Sandy on our Lyndhurst, New Jersey item processing center. Expenses related to this event totaled $12,475
for fiscal 2013, net of $2,390 insurance recoveries received in the year.
Increased revenue and gross margins, partially offset by increased operating expenses, resulted in a combined 14% increase
in net income for fiscal 2013.
REVENUE
License Revenue
License
Percentage of total revenue
Year Ended
June 30,
2013
54,818
$
2012
54,811
$
5 %
5 %
%
Change
<1%
License revenue represents the sale and delivery 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.
33
www.jackhenry.com
License revenue remained consistent with the prior year due to strong results from our core and complementary Credit
Union products being offset by reduced revenue from our Alogent® products (our suite of deposit and image capture products
targeted at large financial institutions) which reduced from a particularly strong prior year.
While license fees will fluctuate, recent trends indicate that our customers are increasingly electing to contract for our
products via outsourced delivery rather than a traditional license as our outsourced delivery does not require an up-front
capital investment in license fees. We expect this trend to continue in the long term.
Support and Service Revenue
Support and Service
Percentage of total revenue
In-House Support & Other Services
Electronic Payment Services
Outsourcing Services
Implementation Services
Total Increase
Year Ended
June 30,
2013
$ 1,015,211
$
2012
909,176
90 %
89 %
%
Change
12 %
Year over Year Change
$ Change
% Change
$
12,677
58,052
23,017
12,289
$
106,035
4 %
17 %
12 %
17 %
Support and service revenues are generated from annual support to assist the customer in operating their systems and to
enhance and update the software, electronic payment services, outsourced data processing services and implementation
services (including conversion, installation, configuration and training). There was growth in all components of support and
service revenue in fiscal 2013.
In-house support and other services revenue increased due to annual maintenance fee increases as our customers’ assets
grew. Revenue from our complementary products also grew as the total number of supported in-house products grew.
Electronic payment services continued to experience the largest growth. The revenue increases were attributable to strong
performance across debit/credit card processing services, online bill payment services and ACH processing.
Outsourcing services for banks and credit unions continued to drive revenue growth as customers continue to show a
preference for outsourced delivery of our solutions. Revenues from outsourcing services are typically earned under multi-
year service contracts and therefore provide a long-term stream of recurring revenues.
Implementation services revenue increased due mainly to increased implementations of our core Banking and Credit Union
platform products and related complementary products, coupled with higher merger conversion revenues from our core
banking platform and outsourcing products.
Hardware Revenue
Hardware
Percentage of total revenue
Year Ended
June 30,
2013
59,357
$
2012
63,122
$
5 %
6 %
%
Change
(6) %
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 due to a decrease in the number of third party hardware systems and components delivered.
COST OF SALES AND GROSS PROFIT
Cost of license represented the cost of software from third party vendors through remarketing agreements associated with
license fee revenue. These costs were recognized when license revenue was recognized. Cost of support and service
represented 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, electronic payment services
and direct operating costs. These costs were recognized as they were incurred. Cost of hardware consisted of the direct
and indirect costs of purchasing the equipment from the manufacturers and delivery to our customers. These costs were
recognized at the same time as the related hardware revenue was recognized. Ongoing operating costs to provide support
to our customers were recognized as they were incurred.
34
2014 annual report Cost of License
Percentage of total revenue
License Gross Profit
Gross Profit Margin
Cost of Support and Service
Percentage of total revenue
Support and Service Gross Profit
Gross Profit Margin
Cost of Hardware
Percentage of total revenue
Hardware Gross Profit
Gross Profit Margin
TOTAL COST OF SALES
Percentage of total revenue
TOTAL GROSS PROFIT
Gross Profit Margin
Year Ended
June 30,
%
Change
$
$
$
$
$
$
$
$
2013
4,824
<1%
49,994
91 %
603,920
53 %
411,291
41 %
43,650
4 %
15,707
26 %
652,394
58 %
476,992
42 %
$
$
$
$
$
$
$
$
2012
6,111
1 %
48,700
89 %
551,285
54 %
357,891
39 %
45,983
4 %
17,139
27 %
603,379
59 %
423,730
41 %
(21) %
3 %
10 %
15 %
(5) %
(8) %
8 %
13 %
Cost of license consisted of the direct costs of third party software. Sales of third party software products decreased compared
to the prior year, leading to lower related costs and slightly increased gross profit margins.
Gross profit margins in support and service increased due to economies of scale realized from increased revenues,
particularly in electronic payment services.
In general, changes in cost of hardware trended consistently with hardware revenue. For the fiscal year, margins decreased
slightly, impacted by reduced sales of higher margin products related to hardware upgrades.
OPERATING EXPENSES
Selling and Marketing
Selling and marketing
Percentage of total revenue
Year Ended
June 30,
2013
81,619
$
2012
76,500
$
7 %
7 %
%
Change
7 %
Dedicated sales forces, inside sales teams, technical sales support teams and channel partners conducted our sales efforts
for our two reportable segments, and were overseen by regional sales managers. Our sales executives were responsible
for pursuing lead generation activities for new core customers. Our account executives nurtured long-term relationships with
our client base and cross sold our many complementary products and services.
Selling and marketing expenses for the year increased mainly due to higher commission expenses. This is in line with
increased sales volume of long term service contracts on which commissions were paid as a percentage of total revenue.
Research and Development
Research and development
Percentage of total revenue
Year Ended
June 30,
%
Change
2013
63,202
$
2012
60,876
$
6 %
6 %
4 %
We devote significant effort and expense to develop new software, service products and continually upgrade and enhance
our existing offerings. Typically, we upgrade our various core and complementary software applications once per year. 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 increased salary costs.
35
www.jackhenry.com General and Administrative
General and administrative
Percentage of total revenue
Year Ended
June 30,
2013
66,624
$
2012
50,119
$
6 %
5 %
%
Change
33 %
General and administrative costs included all expenses related to finance, legal, human resources, plus all administrative
costs. General and administrative expenses increased compared to the prior year due mainly to $12,475 of expenses, net
of $2,390 insurance recoveries received, related to the impact of widespread flooding caused by Hurricane Sandy on our
Lyndhurst, New Jersey item processing center.
INTEREST INCOME AND EXPENSE
Interest Income
Interest Expense
Year Ended
June 30,
2013
2012
$
$
640 $
(6,337) $
1,176
(5,743)
%
Change
(46) %
10 %
Interest income was unusually high in the prior year, mainly from contractual interest income on previously uncollected
deconversion revenues. Interest expense increased from the prior year due to costs related to the early payment of the term
loan during fiscal 2013.
PROVISION FOR INCOME TAXES
The provision for income taxes was $83,205 or 32.0% of income before income taxes in fiscal 2013 compared with $76,684
or 33.1% of income before income taxes in fiscal 2012. The decrease in the effective tax rate was primarily due to the
completion of the Internal Revenue Service audit of the tax returns for the fiscal years June 30, 2010 and 2011 which
resulted in the recognition of previously-unrecognized tax benefits, and the retroactive extension of the Research and
Experimentation Tax Credit through December 31, 2013.
NET INCOME
Net income increased from $154,984, or $1.78 per diluted share in fiscal 2012 to $176,645, or $2.04 per diluted share in
fiscal 2013.
REPORTABLE SEGMENT DISCUSSION
The Company is a provider of integrated computer systems that perform data processing (available for in-house installations
or outsourced services) for banks and credit unions. The Company’s operations are classified into two reportable 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 Systems and Services
Revenue
Gross profit
Gross profit margin
2014
% Change
2013
% Change
2012
$
$
912,976
384,070
42 %
8 %
8 %
$
$
848,058
354,373
9 %
10 %
$
$
778,455
321,515
42 %
41 %
In fiscal 2014, revenue increased 8% overall in the Bank systems and services reportable segment compared to the prior
year. The increase was due mainly to increased support and service revenue. Within support and service revenue, the
increase was driven by 12% year-over-year growth in electronic payment services revenues from transaction processing
and a 10% increase in outsourcing services revenue. Gross profit margins remain consistent year-over-year.
In fiscal 2013, revenue increased 9% overall in the Bank systems and services reportable segment compared to the prior
year. The increase was due mainly to 17% growth in electronic transaction processing services and an 11% increase in
outsourcing services. The slight increase in margin was driven mainly by increased support and service margins due to
economies of scale realized from increased revenues, particularly in electronic payment services.
36
2014 annual report Credit Union Systems and Services
Revenue
Gross profit
Gross profit margin
2014
% Change
2013
% Change
2012
$
$
297,077
134,559
45 %
6 % $
10 % $
281,328
122,619
13 % $
20 % $
248,654
102,215
44 %
41 %
In fiscal 2014, revenue in the Credit Union segment increased 6% over the prior year, driven by all components of support
& service revenue. In particular, electronic payment services increased due to the continuing growth of our transaction
processing and debit/credit card processing services and in-house maintenance revenues also increased. Gross profit
margins for the Credit Union segment increased mainly due to economies of scale realized from growing transaction volume
in our payment processing services.
In fiscal 2013, revenue in the Credit Union systems and services reportable segment increased in all three of our revenue
areas (license, support & service and hardware). Support & service revenues grew 13% through increases in all components,
particularly electronic payment services due to the continuing growth of our transaction processing and debit/credit card
processing services and outsourcing services. Gross profit margins for the Credit Union segment increased mainly due to
increased license revenue from licenses with no related costs and increased support and service margins due to economies
of scale realized.
LIQUIDITY AND CAPITAL RESOURCES
We have historically generated positive cash flow from operations and have generally used funds generated from operations
and short-term borrowings on our revolving credit facility to meet capital requirements. We expect this trend to continue in
the future.
The Company's cash and cash equivalents decreased to $70,377 at June 30, 2014 from $127,905 at June 30, 2013. The
decrease from June 30, 2013 is primarily due to the Banno acquisition and ongoing purchases of treasury stock.
The following table summarizes net cash from operating activities in the statement of cash flows:
Net income
Non-cash expenses
Change in receivables
Change in deferred revenue
Change in other assets and liabilities
Net cash provided by operating activities
Year Ended
June 30,
2014
2013
201,136
135,704
7,498
15,072
(17,751)
341,659
$
$
176,645
133,334
(12,739)
8,597
3,337
309,174
$
$
Cash provided by operating activities increased 11% compared to last year. Cash from operations is primarily used to repay
debt, pay dividends, repurchase stock and other capital expenditures.
Cash used in investing activities for the fiscal year ended June 30, 2014 totaled $131,780 and included capital expenditures
on facilities and equipment of $33,185, which mainly included the purchase of aircraft and computer equipment. Other uses
of cash included $27,894 of payments for the acquisition of Banno, $62,194 for the development of software and $16,288 for
the purchase and development of internal use software. These expenditures have been partially offset by $7,781 proceeds
received primarily from sale of aircraft. Cash used in investing activities for the fiscal year ended June 30, 2013 totaled
$97,244 and included capital expenditures on facilities and equipment totaled $46,256, which included spending on our
online bill payment data center migration and an aircraft purchase. Other uses of cash included $51,332 for the development
of software and $186 for the acquisition of customer contracts. These expenditures were partially offset by $530 proceeds
from sale of assets.
Financing activities used cash of $267,407 during the fiscal year ended June 30, 2014. Cash used was mainly dividends paid
to stockholders of $71,251, $175,699 for the purchase of treasury shares, and repayments of capital leases of $22,158. Cash
used was partially offset by $1,701 net proceeds from the issuance of stock and tax related to stock-based compensation.
During the fourth quarter, the Company also borrowed $25,000 against its revolving line of credit and the full amount of
the borrowing was repaid in the same period. Financing activities used cash of $241,338 during fiscal 2013. There were
cash outflows to repay long and short term borrowings on our credit facilities of $145,180, dividends paid to stockholders of
$48,202 and repurchases of treasury shares of $58,126. Cash used was partially offset by $10,170 net proceeds from the
issuance of stock and tax related to stock-based compensation.
37
www.jackhenry.com
At June 30, 2014, the Company had negative working capital of $44,435; however, the largest component of current
liabilities was deferred revenue of $312,002, which primarily relates to our annual in-house maintenance agreements. The
cash outlay necessary to provide the services related to these deferred revenues is significantly less than this recorded
balance. In addition, we continue to have access to unused lines of credit in excess of $150,000 and continue to generate
substantial cash inflows from operations. Therefore, we do not anticipate any liquidity problems arising from this condition.
The Company generally uses existing resources and funds generated from operations to meet its capital requirements.
Capital expenditures in the fiscal year were made primarily for additional equipment and the improvement of existing
facilities. These additions were funded from cash generated by operations. At June 30, 2014, the Company had $24,223 of
purchase commitments related to property and equipment. We anticipate that these commitments will be funded by cash
generated by operations.
The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization,
the Company may finance its share repurchases with available cash reserves or short-term borrowings on its existing credit
facilities. The share repurchase program does not include specific price targets or timetables and may be suspended at
any time. At June 30, 2014, there were 19,795 shares in treasury stock and the Company had the remaining authority to
repurchase up to 5,196 additional shares. The total cost of treasury shares at June 30, 2014 is $577,781. During fiscal 2014,
the Company repurchased 3,041 treasury shares for $175,699. At June 30, 2013, there were 16,754 shares in treasury
stock and the Company had authority to repurchase up to 8,237 additional shares.
On August 22, 2014, the Company's Board of Directors declared a cash dividend of $0.22 per share on its common stock,
payable on September 26, 2014 to shareholders of record on September 5, 2014. 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 picture continues to be favorable.
Capital leases
The Company has entered into various capital lease obligations for the use of certain computer equipment. Long term capital
lease obligations were entered into of which $7,757 remains outstanding at June 30, 2014 of which $4,028 will be maturing
within the next twelve months. The Company also has short term capital lease obligations totaling $1,379 at June 30, 2014.
Other lines of credit
The long term revolving credit facility allows for borrowings of up to $150,000, which may be increased by the Company at
any time until maturity to $250,000. The credit facility bears interest at a variable rate equal to (a) a rate based on LIBOR or
(b) an alternate base rate (the greater of (a) the Federal Funds Rate plus 0.5%, (b) the Prime Rate or (c) LIBOR plus 1.0%),
plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is secured by
pledges of capital stock of certain subsidiaries of the Company and also guaranteed by certain subsidiaries of the Company.
The credit facility is subject to various financial covenants that require the Company to maintain certain financial ratios as
defined in the agreement. As of June 30, 2014, the Company was in compliance with all such covenants. The revolving loan
terminates June 4, 2015 and at June 30, 2014, there was no outstanding revolving loan balance.
The Company renewed an unsecured bank credit line on March 3, 2014 which provides for funding of up to $5,000 and
bears interest at the prime rate less 1%. The credit line was renewed through April 30, 2017. At June 30, 2014, no amount
was outstanding.
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
At June 30, 2014, the Company’s total off balance sheet contractual obligations were $55,370. This balance consists of
$31,147 of long-term operating leases for various facilities and equipment which expire from 2015 to 2021 and $24,223
of purchase commitments related to property and equipment. The contractual obligations table below excludes $8,620 of
liabilities for uncertain tax positions as we are unable to reasonably estimate the ultimate amount or timing of settlement.
Contractual obligations by period
as of June 30, 2014
Less than
1 year
1-3 years
3-5 years
More than
5 years
Operating lease obligations
Capital lease obligations
Purchase obligations
Total
38
$
$
7,851 $
14,024 $
7,469 $
1,803 $
5,407
24,223
3,729
—
—
—
—
—
37,481 $
17,753 $
7,469 $
1,803 $
TOTAL
31,147
9,136
24,223
64,506
2014 annual report RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue
from Contracts with Customers in May 2014. The new standard will supersede much of the existing authoritative literature for
revenue recognition. The standard and related amendments will be effective for the Company for its annual reporting period
beginning July 1, 2017, including interim periods within that reporting period. Early application is not permitted. Entities are
allowed to transition to the new standard by either recasting prior periods or recognizing the cumulative effect. The Company
is currently evaluating the newly issued guidance, including which transition approach will be applied and the estimated
impact it will have on our consolidated financial statements.
CRITICAL ACCOUNTING POLICIES
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United
States (“U.S. GAAP”). The significant accounting policies are discussed in Note 1 to the consolidated financial statements.
The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and expenses, as well as disclosure of contingent
assets and liabilities. We base our estimates and judgments upon historical experience and other factors believed to be
reasonable under the circumstances. Changes in estimates or assumptions could result in a material adjustment to the
consolidated financial statements.
We have identified several critical accounting estimates. An accounting estimate is considered critical if both: (a) the nature
of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (b) the impact of
changes in the estimates and assumptions would have a material effect on the consolidated financial statements.
Revenue Recognition
We recognize revenue in accordance with generally accepted accounting principles and with guidance provided within
Staff Accounting Bulletins issued by the Securities and Exchange Commission. The application of these pronouncements
requires judgment, including whether a software arrangement includes multiple elements, whether any elements are
essential to the functionality of any other elements, and whether vendor-specific objective evidence (“VSOE”) of fair value
exists for those elements. Customers receive certain elements of our products over time. Changes to the elements in a
software arrangement or in our ability to identify VSOE for those elements could materially impact the amount of earned and
unearned revenue reflected in the financial statements.
License Fee Revenue. For software license agreements that do not require significant modification or customization of the
software, the Company recognizes software license revenue when persuasive evidence of an arrangement exists, delivery
of the product has occurred, the license fee is fixed and determinable and collection is probable. The Company’s software
license agreements generally include multiple products and services or “elements.” None of these elements alone are
deemed to be essential to the functionality of the other elements. Generally accepted accounting principles require revenue
earned on software arrangements involving multiple elements to be allocated to each element based on VSOE of fair value.
Fair value is determined for license fees based upon the price charged when sold separately. When we determine that VSOE
does not exist for one or more of the delivered elements of a software arrangement, but does exist for all of the undelivered
elements, revenue is recognized following the residual method allowed by current accounting pronouncements. Under the
residual method, a residual amount of the total arrangement fee is recognized as revenue for the delivered elements after
the established fair value of all undelivered elements has been deducted.
Support and Service Fee Revenue. Implementation services are generally for installation, implementation, and configuration
of our systems and for training of our customer’s employees. These services are not considered essential to the functionality
of the related software. VSOE of fair value is established by pricing used when these services are sold separately. Generally,
revenue is recognized when services are completed. On certain larger implementations, revenue is recognized based on
milestones during the implementation. Milestones are triggered by tasks completed or based on direct labor hours.
Maintenance support revenue is recognized pro-rata over the contract period, typically one year. VSOE of fair value is
determined based on contract renewal rates.
Outsourced data processing services and electronic payment services revenues are recognized based on the fair value of
individual elements in the month the transactions were processed or the services were rendered.
Hardware Revenue: Hardware revenue is recognized upon delivery to the customer, when title and risk of loss are transferred.
In most cases, we do not stock in inventory the hardware products we sell, but arrange for third-party suppliers to drop-
ship the products to our customers on our behalf. Some of our hardware revenues are derived under “arrangements” as
defined within U.S. GAAP. To the extent hardware revenue is part of such an arrangement and is not deemed essential to
39
www.jackhenry.com
the functionality of any of the other elements to the arrangement, it is recognized based on VSOE of fair value at the time
of delivery. The Company also remarkets maintenance contracts on hardware to our customers. Hardware maintenance
revenue is recognized ratably over the agreement period.
Depreciation and Amortization Expense
The calculation of depreciation and amortization expense is based on the estimated economic lives of the underlying
property, plant and equipment and intangible assets, which have been examined for their useful life and determined that
no impairment exists. We believe it is unlikely that any significant changes to the useful lives of our tangible and intangible
assets will occur in the near term, but rapid changes in technology or changes in market conditions could result in revisions
to such estimates that could materially affect the carrying value of these assets and the Company’s future consolidated
operating results. All long lived assets are tested for valuation and potential impairment on a scheduled annual basis.
Capitalization of software development costs
We capitalize certain costs incurred to develop commercial software products. Significant estimates and assumptions
include: determining the appropriate period over which to amortize the capitalized costs based on the estimated useful
lives, estimating the marketability of the commercial software products and related future revenues, and assessing the
unamortized cost balances for impairment. The appropriate amortization period is based on estimates of future revenues
from sales of the products. We consider various factors to project marketability and future revenues, including an assessment
of alternative solutions or products, current and historical demand for the product, and anticipated changes in technology
that may make the product obsolete. A significant change in an estimate related to one or more software products could
result in a material change to our results of operations.
Estimates used to determine current and deferred income taxes
We make certain estimates and judgments in determining income tax expense for financial statement purposes. These
estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing
of recognition of revenue and expense for tax and financial statement purposes. We also must determine the likelihood of
recoverability of deferred tax assets, and adjust any valuation allowances accordingly. Considerations include the period of
expiration of the tax asset, planned use of the tax asset, and historical and projected taxable income as well as tax liabilities
for the tax jurisdiction to which the tax asset relates. Valuation allowances are evaluated periodically and will be subject to
change in each future reporting period as a result of changes in one or more of these factors. Also, liabilities for uncertain
tax positions require significant judgment in determining what constitutes an individual tax position as well as assessing the
outcome of each tax position. Changes in judgment as to recognition or measurement of tax positions can materially affect
the estimate of the effective tax rate and consequently, affect our financial results.
Assumptions related to purchase accounting and goodwill
We account for our acquisitions using the purchase method of accounting. This method requires estimates to determine
the fair values of assets and liabilities acquired, including judgments to determine any acquired intangible assets such as
customer-related intangibles, as well as assessments of the fair value of existing assets such as property and equipment.
Liabilities acquired can include balances for litigation and other contingency reserves established prior to or at the time of
acquisition, and require judgment in ascertaining a reasonable value. Third party valuation firms may be used to assist in the
appraisal of certain assets and liabilities, but even those determinations would be based on significant estimates provided
by us, such as forecast revenues or profits on contract-related intangibles. Numerous factors are typically considered in the
purchase accounting assessments, which are conducted by Company professionals from legal, finance, human resources,
information systems, program management and other disciplines. Changes in assumptions and estimates of the acquired
assets and liabilities would result in changes to the fair values, resulting in an offsetting change to the goodwill balance
associated with the business acquired.
As goodwill is not amortized, goodwill balances are regularly assessed for potential impairment. Such assessments require
an analysis of future cash flow projections as well as a determination of an appropriate discount rate to calculate present
values. Cash flow projections are based on management-approved estimates, which involve the input of numerous Company
professionals from finance, operations and program management. Key factors used in estimating future cash flows include
assessments of labor and other direct costs on existing contracts, estimates of overhead costs and other indirect costs, and
assessments of new business prospects and projected win rates. The Company's most recent assessment indicates that no
reporting units are currently at risk of impairment; however, significant changes in the estimates and assumptions used in
purchase accounting and goodwill impairment testing could have a material effect on the consolidated financial statements.
40
2014 annual report 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 outstanding debt.
We do not currently use any derivative financial instruments. We actively monitor these risks through a variety of controlled
procedures involving senior management.
Based on the controls in place and the credit worthiness of the customer base, we believe the credit risk associated with the
extension of credit to our customers will not have a material adverse effect on our consolidated financial position, results of
operations or cash flows.
We have no outstanding debt with variable interest rates as of June 30, 2014 and are therefore not currently exposed to interest risk.
41
www.jackhenry.com FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Report of Independent Registered Public Accounting Firm
Management's Annual Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Financial Statements
Consolidated Statements of Income,
Years Ended June 30, 2014, 2013, and 2012
Consolidated Balance Sheets,
June 30, 2014 and 2013
Consolidated Statements of Changes in Stockholders' Equity,
Years Ended June 30, 2014, 2013, and 2012
Consolidated Statements of Cash Flows,
Years Ended June 30, 2014, 2013, and 2012
Notes to Consolidated Financial Statements
43
44
45
46
47
48
49
50
Financial Statement Schedules
There are no schedules included because they are not applicable or the required information is shown in the consolidated
financial statements or notes thereto.
42
2014 annual report REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Jack Henry & Associates, Inc.
Monett, Missouri
We have audited the accompanying consolidated balance sheets of Jack Henry & Associates, Inc. and subsidiaries (the
“Company”) as of June 30, 2014 and 2013, and the related consolidated statements of income, changes in stockholders’
equity, and cash flows for each of the three years in the period ended June 30, 2014. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jack
Henry & Associates, Inc. and subsidiaries as of June 30, 2014 and 2013, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 2014, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the Company’s internal control over financial reporting as of June 30, 2014, based on the criteria established in Internal Control
- Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated August 26, 2014 expressed an unqualified opinion on the Company’s internal control over financial reporting.
/s/ DELOITTE & TOUCHE LLP
Kansas City, Missouri
August 26, 2014
43
www.jackhenry.com MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Jack Henry & Associates, Inc. is responsible for establishing and maintaining adequate internal control
over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial
statements for external reporting purposes in accordance with accounting principles generally accepted in the United States
of America.
The Company’s internal control over financial reporting includes policies and procedures pertaining to the maintenance of
records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable
assurance transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America, and receipts and expenditures are being
made only in accordance with authorizations of management and the directors of the Company; and provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets
that could have a material effect on the Company’s consolidated financial statements. All internal controls, no matter how
well designed, have inherent limitations. Therefore, even where internal control over financial reporting is determined to
be effective, it can provide only reasonable assurance. Projections of any evaluation of effectiveness to future periods are
subject to the risk controls may become inadequate because of changes in conditions, or the degree of compliance with the
policies or procedures may deteriorate.
As of the end of the Company’s 2014 fiscal year, management conducted an assessment of the effectiveness of the
Company’s internal control over financial reporting based on the framework established in Internal Control—Integrated
Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on
this assessment, management has determined the Company’s internal control over financial reporting as of June 30, 2014
was effective.
The Company’s internal control over financial reporting as of June 30, 2014 has been audited by the Company’s independent
registered public accounting firm, as stated in their report appearing on the next page.
44
2014 annual report REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Jack Henry & Associates, Inc.
Monett, Missouri
We have audited the internal control over financial reporting of Jack Henry & Associates Inc. and subsidiaries (the “Company”)
as of June 30, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures
as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's
principal executive and principal financial officers, or persons performing similar functions, and effected by the company's
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely
basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June
30, 2014, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated financial statements as of and for the year ended June 30, 2014 of the Company, and our report dated
August 26, 2014 expressed an unqualified opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
Kansas City, Missouri
August 26, 2014
45
www.jackhenry.com JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
REVENUE
License
Support and service
Hardware
Total revenue
COST OF SALES
Cost of license
Cost of support and service
Cost of hardware
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES
Selling and marketing
Research and development
General and administrative
Total operating expenses
Year Ended
June 30,
2013
2014
$
53,009 $
54,818 $
1,098,386
58,658
1,210,053
1,015,211
59,357
1,129,386
4,273
643,443
43,708
691,424
4,824
603,920
43,650
652,394
2012
54,811
909,176
63,122
1,027,109
6,111
551,285
45,983
603,379
518,629
476,992
423,730
86,570
66,748
53,312
206,630
81,619
63,202
66,624
211,445
76,500
60,876
50,119
187,495
OPERATING INCOME
311,999
265,547
236,235
INTEREST INCOME (EXPENSE)
Interest income
Interest expense
Total interest income (expense)
377
(1,105)
(728)
640
(6,337)
(5,697)
1,176
(5,743)
(4,567)
INCOME BEFORE INCOME TAXES
311,271
259,850
231,668
PROVISION FOR INCOME TAXES
110,135
83,205
76,684
NET INCOME
Diluted earnings per share
Diluted weighted average shares outstanding
Basic earnings per share
Basic weighted average shares outstanding
See notes to consolidated financial statements
$
$
$
201,136 $
176,645 $
154,984
2.36 $
85,396
2.37 $
84,866
2.04 $
86,619
2.05 $
86,040
1.78
87,287
1.79
86,599
46
2014 annual report JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Receivables, net
Income tax receivable
Prepaid expenses and other
Prepaid cost of product
Total current assets
PROPERTY AND EQUIPMENT, net
OTHER ASSETS:
Non-current prepaid cost of product
Computer software, net of amortization
Other non-current assets
Customer relationships, net of amortization
Other intangible assets, net of amortization
Goodwill
Total other assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued expenses
Deferred income tax liability
Notes payable and current maturities of long term debt
Deferred revenues
Total current liabilities
LONG TERM LIABILITIES:
Non-current deferred revenues
Non-current deferred income tax liability
Debt, net of current maturities
Other long-term liabilities
Total long term liabilities
Total liabilities
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued
Common stock - $0.01 par value; 250,000,000 shares authorized;
102,429,926 shares issued at June 30, 2014;
101,993,808 shares issued at June 30, 2013
Additional paid-in capital
Retained earnings
Less treasury stock at cost
19,794,559 shares at June 30, 2014;
16,753,889 shares at June 30, 2013
Total stockholders' equity
Total liabilities and equity
See notes to consolidated financial statements
June 30,
2014
June 30,
2013
$
70,377 $
$
$
224,041
7,937
59,824
22,202
384,381
291,675
34,708
160,391
38,121
136,602
25,653
552,761
948,236
1,624,292 $
10,516 $
63,299
37,592
5,407
312,002
428,816
8,985
134,918
3,729
9,683
157,315
586,131
—
1,024
127,905
231,263
6,107
59,244
23,366
447,885
300,511
27,898
132,612
30,411
147,167
9,380
533,291
880,759
1,629,155
11,701
68,528
30,845
7,929
293,255
412,258
11,342
120,434
7,366
5,586
144,728
556,986
—
1,020
412,512
1,202,406
400,710
1,072,521
(577,781)
1,038,161
1,624,292 $
(402,082)
1,072,169
1,629,155
$
47
www.jackhenry.com JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)
2014
Year Ended June 30,
2013
2012
—
—
—
101,993,808
344,372
91,746
102,429,926
101,482,461
405,270
106,077
101,993,808
100,766,173
594,428
121,860
101,482,461
$
$
$
$
$
$
$
$
$
1,020 $
3
1
1,024 $
400,710 $
606
(6,598)
4,283
3,420
10,091
412,512 $
1,015 $
4
1
1,020 $
381,919 $
6,771
(3,926)
3,699
3,632
8,615
400,710 $
1,072,521 $
201,136
(71,251)
1,202,406 $
944,078 $
176,645
(48,202)
1,072,521 $
1,008
6
1
1,015
361,131
10,998
(4,112)
3,321
3,631
6,950
381,919
827,222
154,984
(38,128)
944,078
(402,082) $
(175,699)
(577,781) $
(343,956) $
(58,126)
(402,082) $
(309,585)
(34,371)
(343,956)
1,038,161 $
1,072,169 $
983,056
PREFERRED SHARES:
COMMON SHARES:
Shares, beginning of year
Shares issued for equity-based payment arrangements
Shares issued for Employee Stock Purchase Plan
Shares, end of year
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of year
Shares issued for equity-based payment arrangements
Shares issued for Employee Stock Purchase Plan
Balance, end of year
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year
Shares issued upon exercise of stock options
Tax withholding related to share based compensation
Shares issued for Employee Stock Purchase Plan
Tax benefits from share-based compensation
Stock-based compensation expense
Balance, end of year
RETAINED EARNINGS:
Balance, beginning of year
Net income
Dividends
Balance, end of year
TREASURY STOCK:
Balance, beginning of year
Purchase of treasury shares
Balance, end of year
TOTAL STOCKHOLDERS' EQUITY
See notes to consolidated financial statements.
48
2014 annual report JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended
June 30,
2013
2012
2014
$
201,136 $
176,645 $
154,984
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income
Adjustments to reconcile net income from operations
to net cash from operating activities:
Depreciation
Amortization
Change in deferred income taxes
Excess tax benefits from stock-based compensation
Expense for stock-based compensation
(Gain)/loss on disposal of assets
Changes in operating assets and liabilities:
Change in receivables
Change in prepaid expenses, prepaid cost of product and other
Change in accounts payable
Change in accrued expenses
Change in income taxes
Change in deferred revenues
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired
Capital expenditures
Proceeds from sale of assets
Customer contracts acquired
Internal use software
Computer software developed
Proceeds from investments
Purchase of investments
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities
Repayments on credit facilities
Purchase of treasury stock
Dividends paid
Excess tax benefits from stock-based compensation
Proceeds from issuance of common stock upon exercise of stock options
Minimum tax withholding payments related to share based compensation
Proceeds from sale of common stock, net
Net cash from financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD
See notes to consolidated financial statements
$
$
$
52,935
54,836
22,032
(3,406)
10,091
(784)
7,498
(15,386)
(1,252)
(6,364)
5,251
15,072
341,659
(27,894)
(33,185)
7,781
—
(16,288)
(62,194)
—
—
(131,780)
25,000
(47,158)
(175,699)
(71,251)
3,406
609
(6,598)
4,284
(267,407)
51,967
48,374
24,091
(3,621)
8,615
3,908
(12,739)
(4,430)
(4,582)
7,774
4,575
8,597
309,174
—
(46,256)
530
(186)
—
(51,332)
—
—
(97,244)
—
(145,180)
(58,126)
(48,202)
3,621
6,775
(3,926)
3,700
(241,338)
(57,528) $
(29,408) $
127,905 $
157,313 $
45,322
49,297
22,610
(3,465)
6,950
1,198
(10,795)
(22,962)
3,488
7,770
9,257
896
264,550
—
(41,441)
2,772
(720)
—
(37,873)
3,000
(2,000)
(76,262)
—
(35,280)
(34,371)
(38,128)
3,465
11,004
(4,112)
3,322
(94,100)
94,188
63,125
70,377 $
127,905 $
157,313
49
www.jackhenry.com JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Per Share Amounts)
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 provider of integrated computer systems
and services 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), by providing the conversion and software implementation services for financial institutions to utilize
JHA software systems, and by providing other related services. 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 intercompany accounts and transactions have been eliminated.
PRIOR PERIOD RECLASSIFICATION
Certain amounts included within the consolidated statements of cash flows for the years ended June 30, 2013 and 2012 have
been restated to correct an error related to the presentation of excess tax benefits from stock based compensation within cash
flows from operating activities. Such correction adjusted the cash flow statement for 2013 and 2012 by presenting excess tax
benefits from stock based compensation as a separate line item and increasing the change in income taxes by $3,621 and
$3,465 for the respective periods. There was no change in total cash flows from operating, investing or financing activities.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company derives revenue from the following sources: license fees, support and service fees and hardware sales.
There are no rights of return, condition of acceptance or price protection in the Company’s sales contracts.
License Fee Revenue: For software license agreements that do not require significant modification or customization of the
software, the Company recognizes software license revenue when persuasive evidence of an arrangement exists, delivery
of the product has occurred, the license fee is fixed and determinable and collection is probable. The Company’s software
license agreements generally include multiple products and services or “elements.” None of these elements are deemed
to be essential to the functionality of the other elements. Accounting principles generally accepted in the Unites States of
America (“U.S. GAAP”) generally require revenue earned on software arrangements involving multiple elements to be
allocated to each element based on vendor-specific objective evidence (“VSOE”) of fair value. Fair value is determined
for license fees based upon the price charged when sold separately or, if the product is not yet sold separately, the price
determined by management with relevant authority. In the event that we determine that VSOE does not exist for one or
more of the delivered elements of a software arrangement, but does exist for all of the undelivered elements, revenue
is recognized using the residual method. Under the residual method, a residual amount of the total arrangement fee is
recognized as revenue for the delivered elements after the established fair value of all undelivered elements has been
deducted.
Arrangements with customers that include significant customization, modification, or production of software are accounted
for under contract accounting, with the revenue being recognized using the percentage-of-completion method.
Support and Service Fee Revenue: Implementation services are generally for installation, training, implementation, and
configuration. These services are not considered essential to the functionality of the related software. VSOE of fair value
is established by pricing used when these services are sold separately or, if the services are not yet sold separately, the
price determined by management with relevant authority. Generally revenue is recognized when services are completed.
On certain larger implementations, revenue is recognized based on milestones during the implementation. Milestones are
triggered by tasks completed or based on direct labor hours.
50
2014 annual report Maintenance support revenue is recognized pro-rata over the contract period, typically one year. VSOE of fair value is
determined based on contract renewal rates.
Outsourced data processing and ATM, debit card, and other transaction processing services revenue is recognized in the
month the transactions are processed or the services are rendered.
Hardware Revenue: Hardware revenue is recognized upon delivery to the customer, when title and risk of loss are transferred.
In most cases, we do not stock in inventory the hardware products we sell, but arrange for third-party suppliers to drop-
ship the products to our customers on our behalf. To the extent hardware revenue is part of such an arrangement and is
not deemed essential to the functionality of any of the other elements to the arrangement, it is recognized based on fair
value at the time of delivery. The Company also remarkets maintenance contracts on hardware to our customers. Hardware
maintenance revenue is recognized ratably over the agreement period.
Revenue-based taxes collected from customers and remitted to governmental authorities are presented on a net basis (i.e.
excluded from revenues).
PREPAID COST OF PRODUCT
Costs for remarketed hardware and software maintenance contracts, which are prepaid, are recognized ratably over the life
of the contract, generally one to five years, with the related revenue amortized from deferred revenues.
DEFERRED REVENUES
Deferred revenues consist primarily of prepaid annual software support fees and prepaid hardware maintenance fees.
Hardware maintenance contracts are multi-year; therefore, the deferred revenue and maintenance are classified in
accordance with the terms of the contract. Software and hardware deposits received are also reflected as deferred revenues.
COMPUTER SOFTWARE DEVELOPMENT
The Company capitalizes new product development costs incurred from the point at which technological feasibility has
been established through the point at which the product is ready for general availability. Software development costs that
are capitalized are evaluated on a product-by-product basis annually and are assigned an estimated economic life based
on the type of product, market characteristics, and maturity of the market for that particular product. These costs are
amortized based on current and estimated future revenue from the product or on a straight-line basis, whichever yields
greater amortization expense. All of this amortization expense is included within Cost of support and service.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three months or less at the time of acquisition to be
cash equivalents.
PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of
the assets.
Intangible assets consist of goodwill, customer relationships, computer software, and trade names acquired in business
acquisitions in addition to internally developed computer software. The amounts are amortized, with the exception of those
with an indefinite life (such as goodwill), over an estimated economic benefit period, generally five to twenty years.
The Company reviews its long-lived assets and identifiable intangible assets with finite lives for impairment whenever events
or changes in circumstances have indicated that the carrying amount of its assets might not be recoverable. The Company
evaluates goodwill and other indefinite-lived intangible assets for impairment of value on an annual basis as of January 1
and between annual tests if events or changes in circumstances indicate that the asset might be impaired.
COMPREHENSIVE INCOME
Comprehensive income for each of the years ended June 30, 2014, 2013, and 2012 equals the Company’s net income.
REPORTABLE SEGMENT INFORMATION
In accordance with U.S. GAAP, the Company's operations are classified as two reportable segments: bank systems and
services and credit union systems and services (see Note 13). Revenue by type of product and service is presented on the
face of the consolidated statements of income. Substantially all the Company’s revenues are derived from operations and
assets located within the United States of America.
51
www.jackhenry.com COMMON STOCK
The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization,
the Company may finance its share repurchases with available cash reserves or short-term borrowings on its existing credit
facilities. The share repurchase program does not include specific price targets or timetables and may be suspended at
any time. At June 30, 2014, there were 19,795 shares in treasury stock and the Company had the remaining authority to
repurchase up to 5,196 additional shares. The total cost of treasury shares at June 30, 2014 is $577,781. During fiscal 2014,
the Company repurchased 3,041 treasury shares for $175,699. At June 30, 2013, there were 16,754 shares in treasury
stock and the Company had authority to repurchase up to 8,237 additional shares.
Dividends declared per share were $0.84, $0.56, and $0.44 for the years ended June 30, 2014, 2013, and 2012, respectively.
EARNINGS PER SHARE
Per share information is based on the weighted average number of common shares outstanding during the year. Stock options
have been included in the calculation of income per diluted share to the extent they are dilutive. The difference between basic
and diluted weighted average shares outstanding is the dilutive effect of outstanding stock options (see Note 10).
INCOME TAXES
Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement and tax
bases of assets and liabilities. A valuation allowance would be established to reduce deferred tax assets if it is more likely
than not that a deferred tax asset will not be realized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefits
recognized in the financial statements from such a position is measured based on the largest benefit that has a greater
than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on
the full amount of deferred benefits for uncertain tax positions. Our policy is to include interest and penalties related to
unrecognized tax benefits in income tax expense.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue
from Contracts with Customers in May 2014. The new standard will supersede much of the existing authoritative literature
for revenue recognition. The standard and related amendments will be effective for the Company for its annual reporting
period beginning July 1, 2017, including interim periods within that reporting period. Early application is not permitted.
Entities are allowed to transition to the new standard by either recasting prior periods or recognizing the cumulative effect.
The Company is currently evaluating the newly issued guidance, including which transition approach will be applied and the
estimated impact it will have on our consolidated financial statements.
NOTE 2. FAIR VALUE OF FINANCIAL INSTRUMENTS
For cash equivalents, amounts receivable or payable and short-term borrowings, fair values approximate carrying value,
based on the short-term nature of the assets and liabilities. The fair value of long term debt also approximates carrying value
as estimated using discounted cash flows based on the Company’s current incremental borrowing rates or quoted prices in
active markets.
The Company's estimates of the fair value for financial assets and financial liabilities are based on the framework established
in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to
quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three
levels of the hierarchy are as follows:
Level 1: inputs to the valuation are quoted prices in an active market for identical assets
Level 2: inputs to the valuation include quoted prices for similar assets in active markets that are observable either
directly or indirectly
Level 3: valuation is based on significant inputs that are unobservable in the market and the Company's own estimates
of assumptions that we believe market participants would use in pricing the asset
52
2014 annual report Fair value of financial assets, included in cash and cash equivalents, is as follows:
Estimated Fair Value Measurements
Level 2
Level 3
Level 1
Total Fair
Value
June 30, 2014
Financial Assets:
Money market funds
June 30, 2013
Financial Assets:
Money market funds
$
$
28,877 $
— $
— $
28,877
101,576 $
— $
— $
101,576
NOTE 3. PROPERTY AND EQUIPMENT
The classification of property and equipment, together with their estimated useful lives is as follows:
Land
Land improvements
Buildings
Leasehold improvements
Equipment and furniture
Aircraft and equipment
Construction in progress
Less accumulated depreciation
Property and equipment, net
June 30,
2014
2013
Estimated Useful Life
$
$
24,987 $
25,411
143,733
28,962
316,064
27,246
12,199
578,602
286,927
291,675 $
25,003
25,385
142,350
24,037
293,044
45,179
18,099
573,097
272,586
300,511
5 - 20 years
20 - 30 years
5 - 20 years (1)
3 - 10 years
5 - 15 years
(1) Lesser of lease term or estimated useful life
Property and equipment included $523 and $2,179 that was in accrued liabilities at June 30, 2014 and 2013, respectively. Also,
the Company acquired $16,119 and $29,131 of computer equipment through capital leases for the years ended June 30, 2014
and 2013, respectively. These amounts were excluded from capital expenditures on the statement of cash flows.
NOTE 4. OTHER ASSETS
Goodwill
The carrying amount of goodwill for the years ended June 30, 2014 and 2013, by reportable segments, is as follows:
Banking
Beginning balance
Goodwill, acquired during the year
Goodwill, written off related to sale
Ending balance
Credit Union
Beginning balance
Goodwill, acquired during the year
Ending balance
June 30,
2014
2013
403,720 $
19,470
—
423,190 $
403,949
—
(229)
403,720
129,571 $
—
129,571 $
129,571
—
129,571
$
$
$
$
53
www.jackhenry.com Other Intangible Assets
Information regarding other identifiable intangible assets is as follows:
Customer relationships
Less accumulated amortization
Customer relationships, net
Other intangible assets
Less accumulated amortization
Other intangible assets, net
Computer software
Less accumulated amortization
Computer software, net
June 30,
2014
276,337 $
(139,735)
136,602 $
2013
272,391
(125,224)
147,167
29,660 $
(4,007)
25,653 $
10,735
(1,355)
9,380
345,248 $
(184,857)
160,391 $
288,095
(155,483)
132,612
$
$
$
$
$
$
Customer relationships have lives ranging from 5 to 20 years. Our other intangible assets have useful lives ranging from 3
to 20 years.
Computer software includes the unamortized cost of commercial software products developed or acquired by the Company,
which are capitalized and amortized over useful lives ranging from 5 to 10 years. Amortization expense for computer
software totaled $37,720, $33,145, and $32,807 for the fiscal years ended June 30, 2014, 2013, and 2012, respectively.
There were no material impairments in any of the fiscal years presented.
Amortization expense for all intangible assets was $54,836, $48,374, and $49,297 for the fiscal years ended June 30, 2014,
2013, and 2012, respectively. The estimated aggregate future amortization expense for each of the next five years for all
intangible assets remaining as of June 30, 2014, is as follows:
Years Ending
June 30,
2015
2016
2017
2018
2019
NOTE 5. DEBT
Computer Software
Customer
Relationships
Other Intangible
Assets
Total
$
39,051 $
31,820
23,006
15,496
7,151
14,398 $
13,814
13,585
13,050
12,829
4,493 $
4,267
2,761
894
697
57,942
49,901
39,352
29,440
20,677
The Company’s outstanding long and short term debt is as follows:
LONG TERM DEBT
Capital leases
Other borrowings
Less current maturities
Debt, net of current maturities
SHORT TERM DEBT
Capital leases
Current maturities of long-term debt
Notes payable and current maturities of long term debt
54
June 30,
2014
June 30,
2013
$
$
$
$
7,757 $
—
7,757
4,028
3,729 $
1,379 $
4,028
5,407 $
14,161
120
14,281
6,915
7,366
1,014
6,915
7,929
2014 annual report The following table summarizes the annual principal payments required as of June 30, 2014:
Years ended June 30,
2015
2016
2017
2018
2019
Thereafter
Capital leases
$
$
5,407
3,729
—
—
—
—
9,136
The Company has entered into various capital lease obligations for the use of certain computer equipment. Long term capital
lease obligations were entered into of which $7,757 remains outstanding at June 30, 2014 and $4,028 will be maturing
within the next twelve months. The Company also has short term capital lease obligations totaling $1,379 at June 30, 2014.
Included in property and equipment are assets under capital leases totaling $37,316, which have accumulated depreciation
totaling $7,994.
Other lines of credit
The long term revolving credit facility allows for borrowings of up to $150,000, which may be increased by the Company at
any time until maturity to $250,000. The credit facility bears interest at a variable rate equal to (a) a rate based on LIBOR or
(b) an alternate base rate (the greater of (a) the Federal Funds Rate plus 0.5%, (b) the Prime Rate or (c) LIBOR plus 1.0%),
plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is secured by
pledges of capital stock of certain subsidiaries of the Company and also guaranteed by certain subsidiaries of the Company.
The credit facility is subject to various financial covenants that require the Company to maintain certain financial ratios as
defined in the agreement. As of June 30, 2014, the Company was in compliance with all such covenants. The revolving loan
terminates June 4, 2015 and at June 30, 2014, there was no outstanding revolving loan balance.
The Company renewed an unsecured bank credit line on March 3, 2014 which provides for funding of up to $5,000 and
bears interest at the prime rate less 1%. The credit line was renewed through April 30, 2017. At June 30, 2014, no amount
was outstanding.
Interest
The Company paid interest of $620, $3,549, and $3,899 in 2014, 2013, and 2012 respectively.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Litigation
We are subject to various routine legal proceedings and claims, including the following:
In May 2013 a patent infringement lawsuit entitled DataTreasury Corporation v. Jack Henry & Associates, Inc. et. al. was
filed against the Company, several subsidiaries and a number of customer financial institutions in the US District Court for
the Eastern District of Texas. The complaint seeks damages, interest, injunctive relief, and attorneys' fees for the alleged
infringement of two patents, as well as trebling of damage awards for alleged willful infringement. We believe we have strong
defenses and intend to defend the lawsuit vigorously. At this stage, we cannot make a reasonable estimate of possible loss
or range of loss, if any, arising from this lawsuit.
Property and Equipment
The Company had $14,293 of material commitments at June 30, 2014 to purchase property and equipment related mainly
to the purchase of aircraft. There were $18,779 material commitments at June 30, 2013.
Leases
The Company leases certain property under operating leases which expire over the next 7 years, but certain of the leases
contain options to extend the lease term. All lease payments are based on the lapse of time but include, in some cases,
payments for operating expenses and property taxes. There are no purchase options on real estate leases at this time.
Certain leases on real estate are subject to annual escalations for increases in operating expenses and property taxes.
55
www.jackhenry.com As of June 30, 2014, net future minimum lease payments are as follows:
Years Ending June 30,
Lease Payments
2015
2016
2017
2018
2019
Thereafter
Total
$
$
7,851
7,587
6,437
5,016
2,453
1,803
31,147
Rent expense was $8,609, $8,124, and $8,410 in 2014, 2013, and 2012 respectively.
NOTE 7. INCOME TAXES
The provision for income taxes from continuing operations consists of the following:
Current:
Federal
State
Deferred:
Federal
State
2014
Year Ended June 30,
2013
2012
$
$
77,938 $
10,166
18,400
3,631
110,135 $
54,574 $
4,540
19,553
4,538
83,205 $
48,053
6,022
20,649
1,960
76,684
The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:
June 30,
2014
2013
Deferred tax assets:
Deferred revenue
Expense reserves (bad debts, insurance, franchise tax and vacation)
Net operating loss carryforwards
Other, net
Deferred tax liabilities:
Accelerated tax depreciation
Accelerated tax amortization
Prepaid expenses
Other, net
Net deferred tax liability before valuation allowance
Valuation allowance
Net deferred tax liability
The deferred taxes are classified on the balance sheets as follows:
Deferred income taxes (current)
Deferred income taxes (long-term)
56
$
4,996 $
14,776
4,218
1,122
25,112
(29,247)
(125,054)
(29,264)
(13,357)
(196,922)
(171,810)
(700)
(172,510) $
5,846
12,515
6,363
1,383
26,107
(35,046)
(106,147)
(25,779)
(9,714)
(176,686)
(150,579)
(700)
(151,279)
2014
2013
(37,592) $
(134,918)
(172,510) $
(30,845)
(120,434)
(151,279)
$
$
$
2014 annual report The following analysis reconciles the statutory federal income tax rate to the effective income tax rates reflected above:
Computed "expected" tax expense
Increase (reduction) in taxes resulting from:
State income taxes, net of federal income tax benefits
Research and development credit
Domestic production activities deduction
Other (net)
2014
Year Ended June 30,
2013
2012
35.0 %
2.9 %
(0.7 )%
(2.1 )%
0.3 %
35.4 %
35.0 %
35.0 %
2.3 %
(3.3 )%
(2.2 )%
0.2 %
32.0 %
2.2 %
(1.8 )%
(2.1 )%
(0.2 )%
33.1 %
As of June 30, 2014, we have $8,761 of net operating loss (“NOL”) carryforwards pertaining to the acquisition of Goldleaf
Financial Solutions, Inc., which are expected to be utilized after the application of IRC Section 382. Separately, as of June 30,
2014, we had state NOL carryforwards of $1,705. The federal and state losses have varying expiration dates, ranging from
2014 to 2034. Based on state tax rules which restrict our utilization of these losses, we believe it is more likely than not that
$700 of these losses will expire unutilized. Accordingly, a valuation allowance of $700 and $700 has been recorded against
these assets as of June 30, 2014 and 2013, respectively.
The Company paid income taxes of $83,014, $54,815, and $44,962 in 2014, 2013, and 2012 respectively.
At June 30, 2013, the Company had $4,890 of unrecognized tax benefits. At June 30, 2014, the Company had $7,834 of
gross unrecognized tax benefits, $5,366 of which, if recognized, would affect our effective tax rate. We had accrued interest
and penalties of $1,315 and $597 related to uncertain tax positions at June 30, 2014 and 2013, respectively.
A reconciliation of the unrecognized tax benefits for the years ended June 30, 2014 and 2013 follows:
Balance at July 1, 2012
Additions for current year tax positions
Reductions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Settlements
Reductions related to expirations of statute of limitations
Balance at June 30, 2013
Additions for current year tax positions
Reductions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Settlements
Reductions related to expirations of statute of limitations
Balance at June 30, 2014
Unrecognized Tax
Benefits
$
$
6,202
1,087
—
510
(2,720)
—
(189)
4,890
1,380
—
1,662
(1)
—
(97)
7,834
The U.S. federal and state income tax returns for June 30, 2011 and all subsequent years remain subject to examination
as of June 30, 2014 under statute of limitations rules. We anticipate potential changes could reduce the unrecognized tax
benefits balance by $1,700 - $2,300 within twelve months of June 30, 2014.
NOTE 8. INDUSTRY AND SUPPLIER CONCENTRATIONS
The Company sells its products to banks, credit unions, and financial institutions throughout the United States and generally
does not require collateral. All billings to customers are due 30 days from date of billing. Reserves (which are insignificant at
June 30, 2014, 2013, and 2012) are maintained for potential credit losses.
In addition, the Company purchases most of its computer hardware and related maintenance for resale in relation to
installation of JHA software systems from two suppliers. There are a limited number of hardware suppliers for these required
items. If these relationships were terminated, it could have a negative impact on the operations of the Company.
57
www.jackhenry.com
NOTE 9. STOCK-BASED COMPENSATION
Our pre-tax operating income for the years ended June 30, 2014, 2013 and 2012 includes $10,091, $8,615 and $6,950 of equity-
based compensation costs, respectively, of which $9,335, $7,962 and $6,364 relates to the restricted stock plan, respectively.
2005 NSOP and 1996 SOP
The Company previously issued options to employees under the 1996 Stock Option Plan (“1996 SOP”) and to outside
directors under the 2005 Non-Qualified Stock Option Plan (“2005 NSOP”).
The 1996 SOP was adopted by the Company on October 29, 1996, for its employees. Terms and vesting periods of
the options were determined by the Compensation Committee of the Board of Directors when granted and for options
outstanding include vesting periods up to four years. Shares of common stock were reserved for issuance under this plan
at the time of each grant, which must be at or above fair market value of the stock at the grant date. The options terminate
30 days after termination of employment, 3 months after retirement, one year after death or 10 years after the date of grant.
The plan terminated by its terms on October 29, 2006, although options previously granted under the 1996 SOP are still
outstanding and vested.
The 2005 NSOP was adopted by the Company on September 23, 2005, for its outside directors. Generally, options are
exercisable beginning 6 months after grant at an exercise price equal to the fair market value of the stock at the grant
date. For individuals who have served less than 4 continuous years, 25% of all options will vest after one year of service,
50% shall vest after two years, and 75% shall vest after three years of service on the Board. The options terminate upon
surrender of the option, upon the expiration of 1 year following notification of a deceased optionee, or 10 years after grant.
700 shares of common stock have been reserved for issuance under this plan with a maximum of 100 for each director.
A summary of option plan activity under the plan is as follows:
Outstanding July 1, 2011
Granted
Forfeited
Exercised
Outstanding July 1, 2012
Granted
Forfeited
Exercised
Outstanding July 1, 2013
Granted
Forfeited
Exercised
Outstanding June 30, 2014
Vested June 30, 2014
Exercisable June 30, 2014
Number of
Shares
Weighted
Average
Exercise Price
Aggregate
Intrinsic
Value
990 $
—
—
(526)
464
—
—
(320)
144
—
—
(19)
125 $
125 $
125 $
15.65
—
—
15.17
16.19
—
—
13.68
21.79
—
—
18.42
22.29 $
22.29 $
22.29 $
4,633
4,633
4,633
There were no options granted during any period presented. As of June 30, 2014, there was no unrecognized compensation
costs related to stock options since all options have now vested. The weighted average remaining contractual term on
options currently exercisable as of June 30, 2014 was 3.49 years.
The income tax benefits from stock option exercises totaled $3,420, $3,632 and $3,631 for the years ended June 30, 2014,
2013, and 2012, respectively.
The total intrinsic value of options exercised was $704, $8,254 and $9,654 for the fiscal years ended June 30, 2014, 2013,
and 2012, respectively.
Restricted Stock Plan
The Restricted Stock Plan was adopted by the Company on November 1, 2005, for its employees. Up to 3,000 shares of
common stock are available for issuance under the plan. Upon issuance, shares of restricted stock are subject to forfeiture
and to restrictions which limit the sale or transfer of the shares during the restriction period. The restrictions will be lifted over
periods ranging from 3 years to 7 years years from grant date. On certain awards, the restrictions may be lifted sooner if
certain targets for shareholder return are met.
58
2014 annual report The following table summarizes non-vested share awards activity:
Share awards
Outstanding July 1, 2011
Granted
Vested
Forfeited
Outstanding July 1, 2012
Granted
Vested
Forfeited
Outstanding July 1, 2013
Granted
Vested
Forfeited
Outstanding June 30, 2014
Weighted
Average
Grant Date
Fair Value
Shares
416 $
42
(106)
(20)
332
53
(125)
(8)
252
30
(143)
(1)
138 $
22.34
31.50
22.92
25.49
23.13
36.78
23.17
23.11
25.92
54.13
24.41
22.17
33.56
The non-vested share awards will not participate in dividends during the restriction period. As a result, the weighted-average
fair value of the non-vested share awards is based on the fair market value of the Company’s equity shares on the grant
date, less the present value of the expected future dividends to be declared during the restriction period.
At June 30, 2014, there was $1,492 of compensation expense that has yet to be recognized related to non-vested restricted
stock share awards, which will be recognized over a weighted-average period of 0.92 years.
An amendment to the Restricted Stock Plan was adopted by the Company on August 20, 2010, for its executive officers.
Unit awards will be made to employees remaining in continuous employment throughout the performance period and vary
based on the Company’s percentile ranking in Total Shareholder Return (“TSR”) over the performance period compared to
a peer group of companies. TSR is defined as the change in the stock price through the performance period plus dividends
per share paid during the performance period, all divided by the stock price at the beginning of the performance period. It is
the intention of the Company to settle the unit awards in shares of the Company’s stock.
The following table summarizes non-vested unit awards as of June 30, 2014, as well as activity for the year then ended:
Unit awards
Outstanding July 1, 2011
Granted
Vested
Forfeited
Outstanding July 1, 2012
Granted
Vested
Forfeited
Outstanding July 1, 2013
Granted
Vested
Forfeited
Outstanding June 30, 2014
Weighted
Average
Grant Date
Fair Value
Shares
293 $
391
—
(12)
672
174
—
(32)
814
164
(168)
(101)
709 $
15.77
19.69
—
15.77
18.05
42.39
—
22.45
23.08
48.21
15.77
15.77
31.66
59
www.jackhenry.com The weighted average assumptions used in this model to estimate fair value at the measurement date and resulting values
are as follows:
Volatility
Risk free interest rate
Dividend yield
Stock Beta
Year Ended June 30,
2014
2013
2012
21.6 %
0.91 %
1.6 %
0.837
23.3 %
0.33 %
1.2 %
0.864
34.2 %
0.31 %
1.5 %
0.903
At June 30, 2014, there was $8,193 of compensation expense that has yet to be recognized related to non-vested restricted
stock unit awards, which will be recognized over a weighted-average period of 0.91 years.
NOTE 10. EARNINGS PER SHARE
The following table reflects the reconciliation between basic and diluted earnings per share, as well as cash dividends paid
per share:
Net Income
Common share information:
Weighted average shares outstanding for basic earnings per share
Dilutive effect of stock options and restricted stock
Weighted average shares outstanding for diluted earnings per share
Basic earnings per share
Diluted earnings per share
Year Ended June 30,
2014
2013
2012
$
201,136 $
176,645 $
154,984
84,866
530
85,396
2.37 $
2.36 $
86,040
579
86,619
2.05 $
2.04 $
86,599
688
87,287
1.79
1.78
$
$
Per share information is based on the weighted average number of common shares outstanding for each of the fiscal years.
Stock options and restricted stock have been included in the calculation of earnings per share to the extent they are dilutive.
There were 24 anti-dilutive stock options and restricted stock excluded from the computation of diluted earnings per share
for fiscal 2014, with no shares excluded for fiscal 2013 and no shares excluded for fiscal 2012.
NOTE 11. EMPLOYEE BENEFIT PLANS
The Company established an employee stock purchase plan in 2006. The plan allows the majority of employees the
opportunity to directly purchase shares of the Company at a 15% discount. The plan does not meet the criteria as a non-
compensatory plan. As a result, the Company records the total dollar value of the stock discount given to employees under
the plan as expense. Total expense recorded by the Company under the plan for the year ended June 30, 2014, 2013 and
2012 was $756, $653 and $586, respectively.
The Company has a defined contribution plan for its employees: the 401(k) Retirement Savings Plan (the “Plan”). The Plan is
subject to the Employee Retirement Income Security Act of 1975 (“ERISA”) as amended. Under the Plan, the Company matches
100% of full time employee contributions up to 5% of compensation subject to a maximum of $5 per year. In order to receive
matching contributions, employees must be 18 years of age and be employed for at least six months. The Company has the
option of making a discretionary contribution; however, none has been made for any of the three most recent fiscal years. The total
matching contributions for the Plan were $13,617, $12,426, and $11,376 for fiscal 2014, 2013 and 2012, respectively.
60
2014 annual report NOTE 12. BUSINESS ACQUISITION
Banno, LLC
Effective March 1, 2014, the Company acquired all of the equity interests of Banno, an Iowa-based company that provides
Web and transaction marketing services with a focus on the mobile medium, for $27,910 paid in cash. This acquisition was
funded using existing operating cash. The acquisition of Banno expanded the Company’s presence in online and mobile
technologies within the industry.
Management has completed a preliminary purchase price allocation of Banno and its assessment of the fair value of acquired
assets and liabilities assumed. The recognized amounts of identifiable assets acquired and liabilities assumed, based upon
their preliminary fair values as of March 1, 2014 are set forth below:
Current assets
Long-term assets
Identifiable intangible assets
Total liabilities assumed
Total identifiable net assets
Goodwill
Net assets acquired
$
610
87
9,255
(1,512)
8,440
19,470
27,910
The amounts shown above may change in the near term as management continues to assess the fair value of acquired
assets and liabilities and evaluate the income tax implications of this business combination.
The goodwill of $19,470 arising from this acquisition consists largely of the growth potential, synergies and economies of
scale expected from combining the operations of the Company with those of Banno, together with the value of Banno’s
assembled workforce. Goodwill from this acquisition has been allocated to our Banking Systems and Services segment.
Approximately 95% of the goodwill is expected to be deductible for income tax purposes.
Identifiable intangible assets from this acquisition consists of customer relationships of $3,946, $3,546 of computer software
and other intangible assets of $1,763. The weighted average amortization period for acquired customer relationships,
acquired computer software, and other intangible assets is 15 years, 8 years, and 20 years, respectively.
Current assets is inclusive of cash acquired of $16. The fair value of current assets acquired included accounts receivable
of $476. The gross amount receivable is $501, of which $25 is expected to be uncollectible.
During fiscal year 2014, the Company incurred $30 in costs related to the acquisition of Banno. These costs included fees
for legal, valuation and other fees. These costs were included within general and administrative expenses.
The results of Banno’s operations included in the Company’s consolidated statement of operations from the acquisition date
to June 30, 2014 included revenue of $848 and after-tax net loss of $1,121.
The accompanying consolidated statements of income for the three and twelve month periods ended June 30, 2014 do not
include any revenues and expenses related to this acquisition prior to the acquisition date. The impact of this acquisition
was considered immaterial to our both the current and prior periods of our consolidated financial statements and pro forma
financial information has not been provided.
61
www.jackhenry.com NOTE 13. REPORTABLE SEGMENT INFORMATION
The Company is a provider of integrated computer systems that perform data processing (available for in-house installations
or outsourced services) for banks and credit unions. The Company’s operations are classified into two reportable 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.
REVENUE
License
Support and service
Hardware
Total revenue
COST OF SALES
Cost of license
Cost of support and service
Cost of hardware
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES
INTEREST INCOME (EXPENSE)
Year Ended
June 30, 2014
Bank
Credit Union
Total
$
30,253 $
22,756 $
840,066
42,657
912,976
3,316
493,724
31,866
528,906
$
384,070 $
258,320
16,001
297,077
957
149,719
11,842
162,518
134,559
53,009
1,098,386
58,658
1,210,053
4,273
643,443
43,708
691,424
518,629
206,630
(728)
INCOME BEFORE INCOME TAXES
$
311,271
Year Ended
June 30, 2013
Credit Union
Bank
$
32,933 $
21,885 $
774,073
41,052
848,058
3,699
460,050
29,936
493,685
354,373 $
241,138
18,305
281,328
1,125
143,870
13,714
158,709
122,619
$
Total
54,818
1,015,211
59,357
1,129,386
4,824
603,920
43,650
652,394
476,992
211,445
(5,697)
$
259,850
REVENUE
License
Support and service
Hardware
Total revenue
COST OF SALES
Cost of license
Cost of support and service
Cost of hardware
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES
INTEREST INCOME (EXPENSE)
INCOME BEFORE INCOME TAXES
62
2014 annual report REVENUE
License
Support and service
Hardware
Total revenue
COST OF SALES
Cost of license
Cost of support and service
Cost of hardware
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES
INTEREST INCOME (EXPENSE)
INCOME BEFORE INCOME TAXES
Depreciation expense, net
Bank systems and services
Credit Unions systems and services
Total
Amortization expense, net
Bank systems and services
Credit Unions systems and services
Total
Capital expenditures
Bank systems and services
Credit Unions systems and services
Total
Property and equipment, net
Bank systems and services
Credit Union systems and services
Total
Intangible assets, net
Bank systems and services
Credit Union systems and services
Total
Year Ended
June 30, 2012
Bank
Credit Union
Total
$
37,200 $
17,611 $
696,204
45,051
778,455
4,863
419,954
32,123
456,940
321,515 $
212,972
18,071
248,654
1,248
131,331
13,860
146,439
102,215
54,811
909,176
63,122
1,027,109
6,111
551,285
45,983
603,379
423,730
187,495
(4,567)
$
231,668
Year Ended June 30,
2014
2013
2012
48,382 $
4,553
52,935 $
w
39,152 $
15,684
54,836 $
32,736 $
449
33,185 $
47,789 $
4,178
51,967 $
32,959 $
15,415
48,374 $
44,976 $
1,280
46,256 $
41,053
4,269
45,322
35,492
13,805
49,297
34,963
6,478
41,441
June 30,
2014
June 30,
2013
$
$
$
$
258,437 $
33,238
291,675 $
643,972 $
231,435
875,407 $
265,595
34,916
300,511
589,891
232,559
822,450
$
$
$
$
$
$
$
The Company has not disclosed any additional asset information by segment, as the information is not produced internally
and its preparation is impracticable.
NOTE 14. SUBSEQUENT EVENTS
On August 22, 2014, the Company's Board of Directors declared a cash dividend of $0.22 per share on its common stock,
payable on September 26, 2014 to shareholders of record on September 5, 2014.
63
www.jackhenry.com QUARTERLY FINANCIAL INFORMATION
(unaudited)
Quarter 1
For the Year Ended June 30, 2014
Quarter 3
Quarter 2
Quarter 4
REVENUE
License
Support and service
Hardware
Total revenue
COST OF SALES
Cost of license
Cost of support and service
Cost of hardware
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES
Selling and marketing
Research and development
General and administrative
Total operating expenses
OPERATING INCOME
INTEREST INCOME (EXPENSE)
Interest income
Interest expense
Total interest income (expense)
INCOME BEFORE INCOME TAXES
PROVISION FOR INCOME TAXES
NET INCOME
Diluted earnings per share
Diluted weighted average shares outstanding
Basic earnings per share
$
$
$
$
11,779 $
12,893 $
15,267 $
13,070 $
269,544
14,338
295,661
1,412
154,583
10,941
166,936
128,725
21,458
15,673
14,250
51,381
77,344
131
(280)
(149)
274,276
15,356
302,525
947
157,893
10,867
169,707
132,818
21,071
16,142
12,132
49,345
83,473
129
(267)
(138)
270,931
14,731
300,929
1,167
164,223
11,008
176,398
124,531
22,034
17,486
13,629
53,149
71,382
84
(262)
(178)
283,635
14,233
310,938
747
166,744
10,892
178,383
132,555
22,007
17,447
13,301
52,755
79,800
33
(296)
(263)
77,195
27,407
49,788 $
83,335
29,353
53,982 $
71,204
24,447
46,757 $
79,537
28,928
50,609 $
0.58 $
0.63 $
0.55 $
0.60 $
85,854
85,986
85,467
84,276
0.58 $
0.63 $
0.55 $
0.60 $
Total
53,009
1,098,386
58,658
1,210,053
4,273
643,443
43,708
691,424
518,629
86,570
66,748
53,312
206,630
311,999
377
(1,105)
(728)
311,271
110,135
201,136
2.36
85,396
2.37
84,866
Basic weighted average shares outstanding
85,294
85,450
84,981
83,740
64
2014 annual report Quarter 1
For the Year Ended June 30, 2013
Quarter 3
Quarter 2
Quarter 4
REVENUE
License
Support and service
Hardware
Total revenue
COST OF SALES
Cost of license
Cost of support and service
Cost of hardware
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES
Selling and marketing
Research and development
General and administrative
Total operating expenses
OPERATING INCOME
INTEREST INCOME (EXPENSE)
Interest income
Interest expense
Total interest income (expense)
INCOME BEFORE INCOME TAXES
PROVISION FOR INCOME TAXES
NET INCOME
Diluted net income per share
Diluted weighted average shares outstanding
Basic net income per share
$
12,864 $
13,210 $
16,681 $
12,063 $
244,585
13,552
271,001
1,077
143,418
10,578
155,073
115,928
20,189
14,645
13,578
48,412
67,516
187
(1,341)
(1,154)
250,310
15,174
278,694
1,251
144,683
10,523
156,457
122,237
19,937
15,691
27,181
62,809
59,428
190
(1,261)
(1,071)
250,415
14,447
281,543
1,360
155,012
10,581
166,953
114,590
20,935
15,996
11,950
48,881
65,709
133
(1,034)
(901)
269,901
16,184
298,148
1,136
160,807
11,968
173,911
124,237
20,558
16,870
13,915
51,343
72,894
130
(2,701)
(2,571)
66,362
23,887
42,475 $
58,357
17,852
40,505 $
64,808
18,812
45,996 $
70,323
22,654
47,669 $
0.49 $
0.47 $
0.53 $
0.55 $
86,605
86,639
86,705
86,525
0.49 $
0.47 $
0.53 $
0.56 $
$
$
$
Basic weighted average shares outstanding
86,109
86,084
86,120
85,845
Total
54,818
1,015,211
59,357
1,129,386
4,824
603,920
43,650
652,394
476,992
81,619
63,202
66,624
211,445
265,547
640
(6,337)
(5,697)
259,850
83,205
176,645
2.04
86,619
2.05
86,040
65
www.jackhenry.com board of directors
John F. “Jack” Prim
Chairman of the Board and Chief Executive Officer
Jack Henry & Associates
Monett, Missouri
Matthew C. Flanigan
Vice Chairman and Lead Director, Jack Henry & Associates
Executive Vice President and Chief Financial Officer, Leggett & Platt, Incorporated
Carthage, Missouri
Marla K. Shepard
Chief Executive Officer
California Coast Credit Union
San Diego, California
Tom H. Wilson, Jr.
Managing Partner
DecisionPoint Advisors, LLC
Charlotte, North Carolina
Jacqueline R. Fiegel
Chairman/Central Oklahoma Area
Prosperity Bank
Oklahoma City, Oklahoma
Thomas A. Wimsett
Chairman and Managing Partner
Wimsett & Company
Louisville, Kentucky
Laura G. Kelly
Senior Vice President and Chief Product Officer
The Dun & Bradstreet Corporation
Austin, Texas
executive officers
John F. “Jack” Prim – Chairman of the Board and Chief Executive Officer
David B. Foss – President
Kevin D. Williams – Chief Financial Officer and Treasurer
Mark S. Forbis – Vice President and Chief Technology Officer
66
2014 annual report
annual meeting
The annual meeting of shareholders will be held on Thursday, November 13, 2014 at
11 a.m. Central at Jack Henry & Associates’ Corporate Headquarters, Monett, Missouri.
A copy of the company’s Form 10-K is available upon request to the Chief Financial Officer
at the corporate headquarters address or from our website at www.jackhenry.com.
form 10-k
transfer agent and registrar
Computershare Trust Company, N.A.
P.O. Box 30170
College Station, TX 77842-3170
663 Highway 60
P.O. Box 807
Monett, MO 65708
417-235-6652
417-235-4281 fax
www.jackhenry.com