M O M E N T U M > >
2 0 1 5 A n n u a l R e p o r t
M O M E N T U M > > 2 0 1 5
M O M E N T U M > > 2 0 1 5
Since 1976, Jack Henry & Associates, Inc.® (JHA) has remained committed to offering
industry-leading technology backed by unmatched service. Today, our approximately 5,900
associates develop and support solutions that empower nearly 10,900 financial institutions to
process financial transactions, automate their businesses, and succeed in the competitive
financial services marketplace.
> >
As we approach our 40th year
in business, we’re energized by
the momentum in our industry.
Our core platforms, complementary products, and exceptional associates continue to propel
our company, our clients, and our shareholders, forward.
1
www.jackhenry.com O U R M A R K E T S
Our clients 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 service that is
unmatched by our competitors.
www.jackhenry.com
O U R
G U I D I N G
P R I N C I P L E S
Our founders – Jack Henry and Jerry Hall –
established our company’s foundational
principles 39 years ago. These important
tenets still guide our business today.
Do the right thing,
do whatever it takes,
and have fun.
2
2015 annual report TA BLE O F CO NT ENTS
4 >> Financial Highlights
5 >> Shareholders’ Letter
8 >> Our Platforms Never Sit Still
10 >> Service Excellence in Action
12 >> Life Moves Fast, So Should Money
13 >> The Outsourcing Movement
14 >> Our Momentum is Strong, and Growing Stronger
17 >> Market for Registrant’s Common Equity
18 >> Performance Graph
19 >> Selected Financial Data
19 >> Management’s Discussion and Analysis
34 >> Quantitative and Qualitative Disclosures about Market Risk
35 >> Financial Statements and Supplementary Data
60 >> Quarterly Financial Information
64 >> Board of Directors and Executive Officers
3
www.jackhenry.com >> 2015 FIN ANC IALS
(In millions except per share data)
REVENUE
NET INCOME
DILUTED EARNINGS
per share
$1,108
$1,173
$1,256
$168
$187
$211
$1.94
$2.19
$2.59
2013
2014
2015
2013
2014
2015
2013
2014
2015
TOTAL ASSETS
STOCKHOLDERS’ EQUITY
DIVIDENDS DECLARED
per share
$1,672
$1,681
$1,837
$1,016
$967
$992
$0.56
$0.84
$0.94
2013
2014
2015
2013
2014
2015
2013
2014
2015
M O M E N T U M > >
4
2015 annual report FELLOW SH AREHOLDERS,
Fiscal year 2015 (ended June 30) marked our 39th year in business, 29th year as
a public company, and another year of progress and solid financial results. As
the economy continues to gain strength and financial institution balance sheets
have reached their strongest position in decades, we have seen new evidence of
industry health with five banks applying for new banking charters since the start
of the financial crisis. Four have opened their doors and the fifth is planning a late
2015 opening.
In fiscal year 2015, we experienced a seamless
established in 2004 as a third brand to support
management transition as David Foss assumed
our focused diversification strategy, we have
the role of President of JHA. We further
successfully broadened our market reach with
strengthened our management team with the
specialized solutions for virtually every financial
newly created position of Jack Henry Banking
services organization, regardless of asset size or
President. With this addition, each of our three
core processing platform. ProfitStars’ revenue
brands is now led by a brand president who is
contribution has increased significantly each
ultimately responsible for customer satisfaction
year since the division’s inception.
in the markets served by each brand.
We also strengthened our Board of Directors
this year when Shruti Miyashiro joined the
Board in March 2015 as an independent
director. Shruti has served as the President
and Chief Executive Officer of Orange
County’s Credit Union in Santa Ana, California
since 2007. Her appointment expands the
Board to eight members, including seven
independent outside directors and one non-
independent director.
Fiscal year 2015 was a milestone year for
ProfitStars in that we celebrated the division’s
10-year anniversary. Since ProfitStars was
>>
TEN
Years Since We
Established Our
ProfitStars® Division
During fiscal year 2015, 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, 46% of our core
5
www.jackhenry.com >>
39YEARS IN
BUSINESS
clients use the hosted model. This shift has
been a significant contributor to our recurring
revenue composition which reached 80% in
fiscal year 2015.
We continue to experience strong growth in
our electronic payments businesses, which
currently generate more than $482 million in
annual revenue, or 38% 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
component is growing at a significantly higher
rate than our traditional business.
Our teams continued to execute on our key
product and growth strategies. In fiscal year
2015, we delivered a number of exciting new
solutions to our clients including a new network
hosting service, an enhanced mobile banking
experience for our mobile banking clients, and a
workflow solution to help our clients significantly
improve operational efficiencies. Additionally,
on July 1, 2015, we announced the acquisition of
Bayside Business Solutions, a small company that
will provide industry-leading commercial lending
technology for our clients.
We generated 7% revenue growth during the
year, with nearly 100% being organic. We returned
$199 million to our shareholders as we increased
our annual dividend by 12% and repurchased
2 million shares of JHA stock in the market. We
will continue to use our strong balance sheet and
cash flow to generate value for our shareholders
through these and other methods.
During fiscal year 2015, revenue, earnings, and
operating cash flow all reached record highs.
Total revenue increased to a record $1,256 million.
Net income was $211 million or $2.59 per diluted
share, as compared to net income of $187 million
or $2.19 per diluted share reported for fiscal
year 2014. We generated strong cash flow from
>>
29YEARS AS
A PUBLIC
COMPANY
~10,900
CLIENTS SERVED
6
2015 annual report operating activities of $374 million, as compared to $342 million in fiscal year 2014. Our return on assets
was 12%, and return on equity was 21.6%. We generated strong profitability with a 25% operating margin.
We’re excited about our momentum as we move into fiscal year 2016, and will continue to adhere to our
focused business strategy to generate strong financial performance and superior shareholder returns.
We thank our shareholders for their confidence in JHA, our customers for their
loyalty and continued business, and our approximately 5,900 associates for their
daily efforts on behalf of our customers and shareholders.
>>
JAC K PRI M
Chairman and Chief Executive Officer
>>
DAVI D F OS S
President
>>
K EVI N WILLI AMS
Chief Financial Officer and Treasurer
7
www.jackhenry.com OUR PLATF ORMS N EVER SI T ST I L L > >
“ For more than 30 years, The Bank of Southside Virginia has been
a Jack Henry customer. As expectations for banking technology
continue to evolve at an unprecedented pace, JHA has not only met
those needs but in many cases exceeded them. We are extremely proud
to be associated with this outstanding company of forward thinkers,
dedicated to continual technological advancement of the
CIF 20/20® software while never losing sight of its goal for total
customer satisfaction. ”
Carol Chappell
First Vice President – Cashier
The Bank of Southside Virginia
Carson, Virginia
JHA’s core platforms empower our clients to
Through internal product development, disciplined
custom-fit their technology to their unique
acquisitions, and alliances with companies offering
business demands. We’re committed to
niche solutions that complement our proprietary
a core strategy that focuses on ongoing
solutions, we regularly introduce new products
development and
integration of new
and services that expand our core platforms and
technologies for our five competitive core
generate cross-sales opportunities within and
platforms, giving our clients the flexibility
among our brands.
they need and the technology they can trust
to drive their ongoing success.
Our core platforms are integrated with more
than 300 complementary products and services
supporting the areas of Retail Delivery, Online
& Mobile, Imaging, JHA Payment Solutions,
Information Security & Risk Management,
Business Intelligence & Financial Performance,
and Training & Consulting.
>>
300+
COMPLEMENTARY
PRODUCTS &
SERVICES SOLD
8
2015 annual report
CORE PLATFORMS SERVING BANKS
www.jackhenrybanking.com
CORE PLATFORMS SERVING CREDIT UNIONS
www.symitar.com
“ Episys has allowed us to do everything from the member’s perspective.
We are now able to pave the way to excellence, push through
boundaries, and develop areas that haven’t been explored. ”
Christina Welch
Applications and Software Analyst
Orange County’s Credit Union
Santa Ana, California
9
www.jackhenry.com SERV IC E E XCE LL EN CE I N ACTI O N > >
“ We can honestly say that the support we’ve received from Jack
Henry Banking is second to none. Throughout the entire conversion
experience, the executive team was available to us. Having someone
to reach out to, knowing that someone was there to answer questions –
that was very comforting. It’s obvious that Jack Henry’s support team
and executives truly care about their clients. That speaks volumes. ”
Norman Montgomery
Executive Vice President
First Commonwealth Bank
Indiana, Pennsylvania
The foundation of our company is its people,
and our service culture sets us apart from our
competition. We believe that by providing
exceptional service to our clients, we
strengthen not only our business relationships,
but also our value to shareholders.
Each year, we ask our associates to provide
feedback about their job satisfaction using
anonymous surveys. These surveys yield
employee satisfaction levels year-over-year
that exceed the benchmarks in key areas,
demonstrating that our employees remain
committed to JHA and optimistic about their
futures with our organization.
Career growth remains a primary focus at
JHA, and we continue to foster employee
development through our PRIDE Academy, a
multi-tiered management training program;
our Dedication to Excellence Awards, a peer-
nominated recognition initiative; and other
programs that encourage our Core Values and
recognize associates who consistently go above
and beyond to attain excellence in our industry.
10
>>
PRIDE
JHA PRIDE is based
on our company’s
Core Values:
> Passion for
Customer Service
> Relationships
> Integrity
> Drive for Results
> Excellence
2015 annual report ~5,900
Loyal and Experienced Employees
EM P LOYEE SP OTLIGHT
The Dedication to Excellence Award program gives our employees the opportunity to
nominate peers who they believe continually demonstrate, through word and deed, a
commitment to our company’s Core Values. This award 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. Meet this
year’s Chairman Award winners:
>>
JAMES BERGGREN
Software Engineer, Advanced
>>
KIM CROSS
Technical Business Analyst, Senior
>>
PATRICK DONNELL
Technical Business Analyst, Senior
>>
GRANT PRIEWE
Applications Engineer, Advanced
11
www.jackhenry.com LIFE MOVES FAST, SO SHOULD MONEY >>
“ When Bank Independent made the decision to explore new partnerships
for our payments needs, we based our search on our philosophy of
being rooted in tradition, but focused on the future. We knew that if
our payments partner didn’t meet our expectations, we couldn’t exceed
those of our customers. That’s why we selected JHA Payment Solutions.
In JHA, we have a partner upon which we can rely to offer forward-
thinking solutions but also remain open to the input of our team
members. They have provided consistent day-to-day processing for
our cardholders. Our experience with JHA has been similar to that
which we provide to our customers – high tech, but high touch. ”
Penny Camp
Senior Vice President of Customer Experience
Bank Independent
Sheffield, Alabama
Our payments business is among the fastest-
We process more than 360 million monthly
growing in the industry, and we continue
transactions – representing over $85 billion
to expand this segment of our operations
– on behalf of approximately 7,600 financial
so it evolves with financial institution and
institutions ranging from small community banks
consumer demand.
and credit unions to the largest domestic and
international institutions.
JHA Payment Solutions provides the most
trusted and recognized solutions on the
A continued focus on research and development
market today. From traditional payments
and new innovations will help ensure that
like checks and online bill pay, to emerging
our payments business continues to generate
channels like mobile remote deposit capture,
significant growth and opportunity.
mobile bill pay, and image-enabled ATMs,
we simplify the complexity of payments so
our clients remain competitive.
12
2015 annual report THE OUTSOURC IN G MOVE ME N T > >
For many years, outsourcing has played a
valuable role in the IT strategies of many financial
institutions. Today, nearly half of JHA’s total core
clients outsource their operations with JHA
OutLink Processing Services™ (JHA OPS).
JHA OPS continues to grow year-over-year in
number of institutions served and transactions
processed, and 2015 was no exception. In fact,
every new bank core client that contracted with
us during the past fiscal year elected to perform
their core processing through our outsourced
delivery model.
Lower operating costs, better customer service,
seamless access to new technologies, and
regulatory compliance are just a few of the
reasons
financial
institutions are making
the switch from in-house processing to an
outsourced environment.
46%>>
CLIENTS USING
OUR OUTSOURCED
DELIVERY MODEL
Our consistently high system availability provides
our clients peace of mind in knowing that their
mission-critical information – and that of their
customers – is protected by JHA’s security,
disaster
recovery, and business continuity
resources and experts.
“ For us, the decision to convert
to an outsourced environment
has everything to do with
simplifying. We’re a bank that
wants to focus on customer
service – instead of being
chained to a desk for hours
on end, filling out compliance
paperwork that feels like a
losing battle. Since converting
to JHA OutLink Processing
Services, we’ve been able to
bring the focus back to the
customer who’s standing in
front of us. ”
Marla Hanes
Vice President
Citizens Exchange Bank
Fairmount, Indiana
13
www.jackhenry.com OUR M OMENTUM IS STRON G,
AND GROWING STRONG ER
During fiscal year 2016 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.
We believe that our proven business strategy, loyal customers,
dedicated associates, and confident shareholders will enable us to
achieve company-wide progress and a record financial performance
as our momentum continues into fiscal year 2016.
14
2015 annual report
2015 >> FIN ANCIALS
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 2015
Fiscal 2014
$
High
70.25
70.18
63.85
60.84
$
Low
60.10
60.60
51.86
54.78
$
High
60.02
60.34
59.37
52.42
$
Low
52.87
53.55
49.08
47.14
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, 2015 and 2014 are as follows:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
$
Fiscal 2015
0.250
0.250
0.220
0.220
$
Fiscal 2014
0.220
0.220
0.200
0.200
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 18, 2015, there were approximately 70,300 holders of the Company’s common stock. On that same date the last
sale price of the common shares as reported on NASDAQ was $71.59 per share.
Issuer Purchases of Equity Securities
The following shares of the Company were repurchased during the quarter ended June 30, 2015:
April 1 - April 30, 2015
May 1 - May 31, 2015
June 1 - June 30, 2015
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)
— $
—
150,146
150,146
—
—
65.87
65.87
—
—
150,100
150,100
8,298,084
8,298,084
8,147,984
8,147,984
(1) 150,100 shares were purchased through a publicly announced repurchase plan. There were 46 shares surrendered to the Company to satisfy tax
withholding obligations in connection with employee restricted stock awards.
(2) Total stock repurchase authorizations approved by the Company's Board of Directors as of February 17, 2015 were for 30.0 million shares, an increase
of 5.0 million shares. These authorizations have no specific dollar or share price targets and no expiration dates.
17
www.jackhenry.com
PERFORMANCE GRAPH
The following chart presents a comparison for the five-year period ended June 30, 2015, 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
Peer Group
S&P 500
2010
100.00
100.00
100.00
2011
127.44
136.78
130.69
2012
148.62
148.10
137.81
2013
205.60
174.79
166.20
2014
263.21
239.10
207.10
2015
290.88
301.34
222.47
This comparison assumes $100 was invested on June 30, 2010, 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.
Companies in the 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., Moneygram
International, Inc., SS&C Technologies Holdings, Inc., Total Systems Services, Inc., Tyler Technologies, Inc., Verifone
Systems, Inc., and WEX, Inc..
Micros Systems, Inc. was removed from the peer group as it was acquired in September 2014.
18
2015 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
$
$
$
$
$
YEAR ENDED JUNE 30,
2015
2014
2013
2012
2011
1,256,190 $ 1,173,173 $ 1,107,524 $ 1,017,667 $
152,040 $
167,610 $
186,715 $
211,221 $
2.60 $
2.20 $
1.95 $
1.76 $
2.59 $
2.19 $
1.94 $
1.74 $
946,394
128,394
1.49
1.48
0.940 $
0.840 $
0.560 $
0.440 $
0.400
Balance Sheet Data
Total deferred revenue
Total assets
Long-term debt
Stockholders’ equity
(1) Revenue includes license sales, support and service revenues, and hardware sales, less returns and allowances.
398,800
1,836,835 $ 1,680,703 $ 1,672,386 $ 1,655,652 $ 1,537,158
127,939
835,403
7,366 $
967,387 $ 1,015,816 $
50,102 $
991,534 $
106,166 $
935,738 $
531,987 $
492,868 $
439,596 $
409,139 $
3,729 $
$
$
$
$
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 5,900 associates
nationwide, and is a leading provider of technology solutions and payment processing services primarily for financial
services organizations. Its solutions serve nearly 10,900 customers and are marketed and supported through three primary
brands. Jack Henry Banking® supports banks ranging from community to 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 highly 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 randomly generated daily surveys
19
www.jackhenry.com we 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.
A significant proportion 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 $946,394 in fiscal 2011 to $1,256,190 in fiscal 2015. Income
from continuing operations has grown from $128,394 in fiscal 2011 to $211,221 in fiscal 2015. 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 2015 to fiscal 2014 and compare fiscal 2014 to fiscal 2013.
RESULTS OF OPERATIONS
FISCAL 2015 COMPARED TO FISCAL 2014
In fiscal 2015, revenues increased 7% or $83,017 compared to the prior year due primarily to growth in all components
of support and service revenues, particularly our electronic payment services and our outsourcing services. Cost of sales
increased 6%, in line with revenue. 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 increased 6% and the provision for income taxes increased 4% compared to the prior year-to-date
period. The increased revenue and above changes resulted in a combined 13% increase in net income for fiscal 2015.
We move into fiscal 2016 following strong performance in fiscal 2015. 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,
2015
2014
%
Change
$ 2,635
$ 2,184
21%
<1%
<1%
License revenue represents the sale and delivery of application software systems contracted with us by the customer, which
are not part of a bundled arrangement. 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.
20
2015 annual report
Non-bundled license revenue increased due mainly to an increase in standalone license sales in our Credit Union segment.
Such license fees will fluctuate as non-bundled license sales are sporadic in nature.
Support and Service Revenue
Support and service
Percentage of total revenue
In-House Support & Other Services
Electronic Payment Services
Outsourcing Services
Implementation Services
Bundled Products & Services
Total Increase
Year Ended June 30,
2015
$ 1,200,652
96%
2014
$ 1,112,331
95%
%
Change
8%
Year over Year
$ Change
3,603
38,321
35,490
8,704
2,203
88,321
$
$
% Change
1%
9%
15%
13%
4%
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, implementation
services (including conversion, installation, configuration and training) and revenue from our bundled software multi-element
agreements. There was growth in all components of support and service revenue in fiscal 2015.
In-house support and other services revenue increased due to annual maintenance renewal fee increases for both core and
complementary products as our customers’ assets grow.
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 include implementation services for our outsourcing and electronic payment services customers as
well as standalone customization services, merger conversion services, image conversion services and network monitoring
services. Implementation services revenue increased due mainly to increased implementations across our core, online
banking, imaging solutions and payments products.
Bundled products and services revenue is combined revenue from the multiple elements in our bundled arrangements,
including license, implementation services and maintenance, which cannot be recognized separately due to a lack of vendor-
specific objective evidence of fair value. Bundled products and services revenue increased slightly from last year mainly due
to increased revenues from our core and complementary banking products, furthered by an increase in core credit union
products. The increase was partially offset by reduced revenues from our Alogent® suite of remote deposit capture products.
Hardware Revenue
Hardware
Percentage of total revenue
Year Ended June 30,
2015
$ 52,903
4%
2014
$ 58,658
5%
%
Change
(10)%
The Company has entered into remarketing agreements with several hardware manufacturers and suppliers 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 complementary hardware products delivered. Although there will be
quarterly fluctuations, we expect an overall decreasing trend in hardware sales to continue due to the change in sales mix
towards outsourcing contracts, which typically do not include hardware, and the general deflationary trend of computer prices.
21
www.jackhenry.com COST OF SALES AND GROSS PROFIT
Cost of license represented the cost of software from third party vendors through remarketing agreements associated with
non-bundled application software licenses. 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 or, for direct costs
associated with obtaining and implementing our bundled arrangements, they are deferred and recognized ratably as the
related revenues for these arrangements are recognized, typically beginning when PCS is the only remaining undelivered
element, and ending at the end of the initial bundled PCS term. 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.
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
$
$
2015
1,187
<1%
1,448
55%
$ 680,750
54%
$ 519,902
$
$
43%
38,399
3%
14,504
27%
$ 720,336
57%
$ 535,854
43%
$
$
2014
908
<1%
1,276
58%
$ 634,756
54%
$ 477,575
43%
$ 43,708
4%
$ 14,950
25%
$ 679,372
58%
$ 493,801
42%
31 %
13 %
7 %
9 %
(12 )%
(3 )%
6 %
9 %
Cost of license consists of the direct costs of third party software that are a part of a non-bundled arrangement. Sales of these
third party software products increased compared to last year, causing a decrease in gross profit margins. Shifts in sales mix
between the products that make up these costs cause fluctuations in the margins from period to period.
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 were slightly
higher due to increased sales of higher margin hardware upgrade products.
OPERATING EXPENSES
Selling and Marketing
Selling and marketing
Percentage of total revenue
22
Year Ended June 30,
2015
$ 89,004
7%
2014
$ 85,443
7%
%
Change
4 %
2015 annual report 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 personnel costs. This was 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,
2015
$ 71,495
6%
$
2014
66,748
6%
%
Change
7 %
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 personnel costs, but
were consistent with the prior year as a percentage of total revenue.
General and Administrative
General and administrative
Percentage of total revenue
Year Ended June 30,
2015
$ 57,490
5%
2014
$ 53,312
5%
%
Change
8 %
General and administrative costs included all expenses related to finance, legal, human resources, plus all administrative costs.
General and administrative expenses in the current year were higher due to the impact of a Lyndhurst related insurance
recovery in the prior year coupled with increased headcount and related personnel costs, partially offset by a gain on the
disposal of our Teleweb suite of Internet and mobile banking software products. Overall these costs were consistent with the
prior year as a percentage of total revenue.
INTEREST INCOME AND EXPENSE
Interest Income
Interest Expense
Year Ended June 30,
2015
169
$
2014
377
$
$ (1,594)
$ (1,105)
%
Change
(55 )%
44 %
Interest income fluctuated due to changes in invested balances and yields on invested balances. Interest expense increased
due to interest on the borrowing from our revolving credit facility in the second quarter.
PROVISION FOR INCOME TAXES
Provision For Income Taxes
Effective Rate
Year Ended June 30,
2015
2014
%
Change
$ 105,219
$ 100,855
4 %
33.3%
35.1%
The decrease in the effective tax rate was primarily due to favorable state tax law changes, as well as the retroactive extension
of the Research & Experimentation Credit for the period January 1, 2014 to December 31, 2014 during fiscal 2015.
23
www.jackhenry.com
NET INCOME
Net income increased from $186,715, or $2.19 per diluted share, in fiscal 2014 to $211,221, or $2.59 per diluted share, in
fiscal 2015.
FISCAL 2014 COMPARED TO FISCAL 2013
In fiscal 2014, revenues increased 6% or $65,649 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
7% 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 11% increase in net income for fiscal 2014.
REVENUE
License Revenue
License
Percentage of total revenue
Year Ended
June 30,
2014
$ 2,184
<1%
2013
$ 5,366
<1%
%
Change
(59)%
License revenue represents the sale and delivery of application software systems contracted with us by the customer,
which are not part of a bundled arrangement. 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.
Non-bundled license revenue decreased due mainly to a decrease in standalone license sales in our banking segment.
Such license fees will fluctuate as non-bundled license sales are sporadic in nature.
Support and Service Revenue
Support and service
Percentage of total revenue
In-House Support & Other Services
Electronic Payment Services
Outsourcing Services
Implementation Services
Bundled Products & Services
Total Increase
Year Ended
June 30,
2014
$ 1,112,331
95%
2013
$ 1,042,801
94%
Year over Year Change
%
Change
7%
$ Change
$
11,762
37,158
21,408
2,792
(3,590)
$ 69,530
% Change
4%
9%
10%
4%
(6)%
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, implementation
services (including conversion, installation, configuration and training) and revenue from our bundled software multi-
element agreements.
24
2015 annual report
In-house support and other services revenue increased due to annual maintenance renewal fee increases for both core and
complementary products as our customers’ assets grew. The increase compared to the prior year was consistent across all
four fiscal quarters.
Electronic payment services continued to experience the largest dollar growth. The revenue increases were attributable
to strong performance across debit/credit card transaction processing services, online bill payment services and ACH
processing. The increase compared to the prior year was consistent across all four fiscal quarters.
Outsourcing services for banks and credit unions continued to drive revenue growth as customers continued 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 include implementation services for our outsourcing and electronic payment services customers as
well as standalone customization services, merger conversion services, image conversion services and network monitoring
services. Implementation services revenue increased due mainly to increased implementations of our Credit Union core
products, particularly in the second and third quarters of the fiscal year.
Bundled products and services revenue is combined revenue from the multiple elements in our bundled arrangements,
including license, implementation services and maintenance, which cannot be recognized separately due to a lack of vendor-
specific objective evidence of fair value. Bundled products and services revenue decreased from last year mainly due to
decreased revenues from our core and complementary banking products, particularly image solutions, throughout the fiscal
year. Additionally, the decrease was furthered due to a decrease in core Credit Union products in the fourth quarter compared
to the same quarter in the prior year.
Hardware Revenue
Hardware
Percentage of total revenue
Year Ended
June 30,
2014
$ 58,658
5%
2013
$ 59,357
5%
%
Change
(1)%
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
non-bundled application software licenses. 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 or, for direct costs associated
with obtaining and implementing our bundled arrangements, deferred and recognized ratably as the related revenues for
these arrangements are recognized, which typically begins when PCS is the only remaining undelivered element, and ends
at the end of the initial bundled PCS term. 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.
25
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,
$
$
2014
908
<1%
1,276
58%
$
$
2013
860
<1%
4,506
84%
$ 634,756
54%
$ 477,575
$ 601,620
54%
$ 441,181
$
$
43%
43,708
4%
14,950
25%
$ 679,372
58%
$ 493,801
42%
$
$
42%
43,650
4%
15,707
26%
$ 646,130
58%
$ 461,394
42%
%
Change
6%
(72)%
6%
8%
—%
(5)%
5%
7%
Cost of license consisted of the direct costs of third party software. Sales of third party software products increased compared
to last year, causing a decrease in 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. Although margins fluctuated slightly throughout the quarters of the current
fiscal year due to sales mix, the trend in electronic payment services was consistent through all four quarters.
In general, changes in cost of hardware trended 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,
2014
$ 85,443
7%
2013
$ 80,811
7%
%
Change
6%
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 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 were paid as a percentage of total revenue, and was consistent across all quarters of the fiscal year.
26
2015 annual report
Research and Development
Research and development
Percentage of total revenue
Year Ended
June 30,
2014
$ 66,748
6%
2013
$ 63,202
6%
%
Change
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, with all quarters
in the fiscal year being driven by a 6% increase in headcount in the first quarter.
General and Administrative
General and administrative
Percentage of total revenue
Year Ended
June 30,
2014
$ 53,312
5%
2013
$ 66,624
6%
%
Change
(20)%
General and administrative costs included all expenses related to finance, legal, human resources, plus all administrative costs.
General and administrative expenses in the current year includes $2,900 in the second quarter for insurance recoveries of
costs related to the impact of Hurricane Sandy flooding on our Lyndhurst, New Jersey item processing center, whereas the
prior year (mostly the second quarter) 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
$
377
$ (1,105)
2013
$
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 $100,855 or 35.1% of income before income taxes in fiscal 2014 compared with
$77,450 or 31.6% 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 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.
NET INCOME
Net income increased from $167,610, or $1.94 per diluted share in fiscal 2013 to $186,715 or $2.19 per diluted share in
fiscal 2014.
27
www.jackhenry.com
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
2015
962,729
400,659
$
$
42 %
% Change
2014
% Change
2013
7 % $ 897,671
8 % $ 372,473
7 % $ 840,380
7 % $ 348,309
41 %
41 %
In fiscal 2015, revenue increased 7% overall in the Bank systems and services reportable segment compared to the prior
year. The increase was due mainly to 9% growth in electronic transaction processing services and a 14% increase in
outsourcing services. Gross profit margins remained consistent year-over-year.
In fiscal 2014, revenue increased 7% 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.
Credit Union Systems and Services
Revenue
Gross profit
Gross profit margin
2015
% Change
2014
% Change
2013
$ 293,461
$ 135,195
46 %
7 % $ 275,502
11 % $ 121,328
3 % $ 267,144
7 % $ 113,085
44 %
42 %
In fiscal 2015, revenue in the Credit Union systems and services reportable segment increased 7% due to increases in
support & service revenue. Support & service revenues grew 7% through increases in electronic payment services, in-house
maintenance renewals, and outsourcing services. Gross profit margins for the Credit Union segment increased mainly due
economies of scale realized from growing transaction volume in our payment processing services.
In fiscal 2014, revenue in the Credit Union segment increased 3% over the prior year, driven by 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 renewal 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.
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 increased to $148,313 at June 30, 2015 from $70,377 at June 30, 2014. The
increase from June 30, 2014 is primarily due to borrowings made on our revolving credit facility during the year and fewer
repurchases of treasury stock in fiscal 2015 compared to the prior year.
28
2015 annual report 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,
2015
2014
$
$
211,221
149,162
(21,346 )
40,565
(5,812 )
373,790
$
$
186,715
126,424
7,498
51,952
(30,930 )
341,659
Cash provided by operating activities increased 9% compared to last year. Cash from operations is primarily used to repay
debt, pay dividends, repurchase stock and for capital expenditures.
Cash used in investing activities for the fiscal year ended June 30, 2015 totaled $136,984 and included capital expenditures
on facilities and equipment of $54,409, which mainly included the purchase of aircraft and computer equipment, $76,872 for
the development of software and $14,020 for the purchase and development of internal use software. These expenditures
were partially offset by $8,317 proceeds received primarily from sale of aircraft. 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 were partially offset by $7,781 proceeds received primarily from sale of aircraft.
Financing activities used cash of $158,870 during the fiscal year ended June 30, 2015. Cash used was mainly dividends paid
to stockholders of $76,410, $122,691 for the purchase of treasury shares, repayment of the revolving credit facility of $20,000,
and repayment of capital leases of $10,783. Cash used was partially offset by borrowings against the revolving credit facility
of $90,000, and $1,915 net proceeds from the issuance of stock and taxes related to stock-based compensation. Financing
activities used cash of $267,407 during fiscal 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 taxes 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.
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, 2015, the Company had $19,790 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, 2015, there were 21,843 shares in treasury stock and the Company had the remaining authority to
repurchase up to 8,148 additional shares. The total cost of treasury shares at June 30, 2015 is $700,472. During fiscal 2015,
the Company repurchased 2,048 treasury shares for $122,691. At June 30, 2014, there were 19,795 shares in treasury
stock and the Company had authority to repurchase up to 5,196 additional shares.
On August 21, 2015, the Company's Board of Directors declared a cash dividend of $0.25 per share on its common stock,
payable on September 25, 2015 to shareholders of record on September 4, 2015. 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 $816 remains outstanding at June 30, 2015 and $714 will be maturing
within the next twelve months. The Company also has short term capital lease obligations totaling $1,881 at June 30, 2015.
Included in property and equipment are assets under capital leases totaling $16,833, which have accumulated depreciation
totaling $4,563.
29
www.jackhenry.com Revolving credit facility
The revolving credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time
until maturity to $600,000. The credit facility bears interest at a variable rate equal to (a) a rate based on LIBOR or (b) an
alternate base rate (the highest of (i) the Prime Rate for such day, (ii) the sum of the Federal Funds Effective Rate for such
day plus 0.50% and (iii) the Eurocurrency Rate for a one month Interest Period on such day for dollars 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, 2015, the Company was in compliance with all such covenants. The revolving loan terminates
February 20, 2020 and at June 30, 2015, the outstanding revolving loan balance was $50,000.
Other lines of credit
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, 2015, no amount
was outstanding.
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
At June 30, 2015, the Company’s total off balance sheet contractual obligations were $46,357. This balance consists of
$26,567 of long-term operating leases for various facilities and equipment which expire from 2016 to 2021 and $19,790
of purchase commitments related to property and equipment. The contractual obligations table below excludes $7,696 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, 2015
Less than
1 year
1-3 years
3-5 years
More than
5 years
Operating lease obligations
Capital lease obligations
Revolving credit facility, including
accrued interest
Purchase obligations
Total
$
$
8,554 $
5,407
—
19,790
33,751 $
12,889 $
3,729
4,518 $
—
—
50,000
—
16,618 $
—
54,518 $
606 $
—
—
—
606 $
TOTAL
26,567
9,136
50,000
19,790
105,493
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. In August 2015, the FASB also issued ASU No. 2015-14 which deferred the effective date of the
new standard by one year. The standard and related amendments will be effective for the Company for its annual reporting
period beginning July 1, 2018, including interim periods within that reporting period. Along with the deferral of the effective
date, ASU No. 2015-14 allows early application as of the original effective date. Entities are allowed to transition to the new
standard by either recasting prior periods or recognizing the cumulative effect as of the beginning of the period of adoption.
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.
In April 2015, the FASB also issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs. This ASU requires that debt issuance costs be presented in the balance sheet as
a direct deduction from the carrying amount of the related debt liability (same treatment as debt discounts). ASU 2015-3
is effective for the company in fiscal year ended June 30, 2017. Early adoption is permitted provided that the guidance is
applied from the beginning of the fiscal year of adoption. The Company will adopt these changes for the fiscal year ended
June 30, 2017.
30
2015 annual report 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 and services 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
deferred revenue reflected in the financial statements.
License Arrangements: For software license agreements, the Company recognizes revenue when persuasive evidence of
an arrangement exists, delivery of the product or service has occurred, the fee is fixed and determinable and collection is
probable. For arrangements where the fee is not fixed or determinable, revenue is deferred until payments become due. The
Company’s software license agreements generally include multiple products and services or “elements.” Generally, none of
these elements are deemed to be essential to the functionality of the other elements.
For multiple element arrangements, which contain software elements and non-software elements, we allocate revenue
to the software deliverables and the non-software deliverables as a group based on the relative selling prices of all of the
deliverables in the arrangement. For our non-software deliverables, we allocate the arrangement consideration based on
the relative selling price of the deliverables using estimated selling price ("ESP"). For our software elements, we use VSOE
for this allocation when it can be established and ESP when VSOE cannot be established.
The selling price for each element is based upon the following selling price hierarchy: VSOE if available, third party evidence
("TPE") if VSOE is not available, or ESP if neither VSOE or TPE are available. Generally, we are not able to determine TPE
because our go-to-market strategy differs from that of our peers and our offerings contain a significant level of differentiation
such that the comparable pricing of products with similar functionality cannot be obtained. ESP is determined after considering
both market conditions (such as the sale of similar products in the market place) and entity-specific factors (such as pricing
practices and the specifics of each transaction).
For our non-software deliverables, a delivered item is accounted for as a separate unit of accounting if the delivered item
has standalone value and if the customer has a general right of return relative to the delivered item, delivery or performance
of the undelivered item is probable and substantially within our control.
For our software licenses and related services, including the software elements of multiple-element software and
non-software arrangements, U.S. GAAP generally require revenue earned on software arrangements involving multiple
elements to be allocated to each element based on VSOE of fair value. VSOE of fair value is determined for implementation
services based on a rate per hour for stand-alone professional services and the estimated hours for the bundled
implementation, if the hours can be reasonably estimated. VSOE of fair value is determined for post-contract support ("PCS")
based upon the price charged when sold separately. For a majority of the elements within our software arrangements, we
have determined that VSOE cannot be established; therefore, revenue on our software arrangements is generally deferred
until the only remaining element is PCS. At that point, the entire arrangement fee is recognized ratably over the remaining
PCS period, assuming that all other criteria for revenue recognition have been met. The amounts deferred are included in
the balance sheet as deferred revenue and recognized as Bundled Products & Services revenue within Support & Service
revenue in the income statement.
31
www.jackhenry.com For arrangements that include specified upgrades, such upgrades are accounted for as a separate element of the
arrangement. For those specified upgrades for which VSOE of fair value cannot be determined, revenue related to the
software elements within the arrangement is deferred until such specified upgrades have been delivered.
Support and Service Fee Revenue (Non-software): Maintenance support revenue contracted for outside of a license
arrangement is recognized pro-rata over the contract period, typically one year.
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. The revenue related to these hardware sales is recorded gross. 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).
Deferred Costs
Costs for certain software and hardware maintenance contracts with third parties, which are prepaid, are recognized
ratably over the life of the maintenance contract, generally one to five years, with the related revenue amortized from
deferred revenues.
Direct and incremental costs associated with arrangements subject to Accounting Standards Codification ("ASC") 985-
605 (for which VSOE of fair value cannot be established) are deferred until the only remaining element in the revenue
arrangement is PCS at which point the costs are recognized ratably over the remaining PCS period with the related revenue.
Deferred direct and incremental costs associated with arrangements not subject to ASC 985-605 consist primarily of certain
up-front costs incurred in connection with our software hosting arrangements and are recognized ratably over the contract
period which typically ranges from 5-7 years. These costs include commissions, costs of third-party licenses and the direct
costs of our implementation services, consisting of payroll and other fringe benefits.
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:
establishing when technological feasibility has been met and costs should be capitalized, 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
32
2015 annual report 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 as the fair value of each reporting unit is significantly in excess of the
carrying value. 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.
33
www.jackhenry.com 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.
Based on our outstanding debt with variable interest rates as of June 30, 2015 a 1% increase in our borrowing rate would
increase annual interest expense in fiscal 2015 by less than $500.
34
2015 annual report 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, 2015, 2014, and 2013
Consolidated Balance Sheets,
June 30, 2015 and 2014
Consolidated Statements of Changes in Stockholders' Equity,
Years Ended June 30, 2015, 2014, and 2013
Consolidated Statements of Cash Flows,
Years Ended June 30, 2015, 2014, and 2013
Notes to Consolidated Financial Statements
Financial Statement Schedules
36
37
38
40
41
42
43
44
There are no schedules included because they are not applicable or the required information is shown in the consolidated
financial statements or notes thereto.
35
www.jackhenry.com 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, 2015 and 2014, 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, 2015. 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, 2015 and 2014, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 2015, 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, 2015, based on the criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated September 11, 2015 expressed an adverse opinion on the Company’s internal control over financial
reporting because of a material weakness.
/s/ DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 11, 2015
36
2015 annual report MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING (Revised)
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 2015 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 (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based
on this assessment, and the previous identification of a material weakness (the description of which is set forth below),
management has determined the Company's internal control over financial reporting as of June 30, 2015 was not effective.
There are a number of deficiencies in the design and operating effectiveness of internal control over financial reporting
that, in the aggregate, constitute a material weakness. The identified deficiencies noted below stem from a failure in the
Company’s risk assessment process wherein the risk assessment process did not identify or evaluate the inherent risks and
complexities associated with accounting for revenue arrangements with software elements.
• The lack of training and continuing education related to multiple element software arrangements led to a lack of
knowledge of the individuals tasked with understanding various technical accounting matters associated with the
Company's multiple element arrangement revenue recognition policies.
• Appropriate accounting and reporting policies and procedures related to bundled multiple element arrangements
were not designed and implemented.
• Appropriate internal controls over financial reporting for bundled multiple element arrangements were not designed
and implemented.
• Monitoring, including use of internal audit, was not appropriately designed to identify errors in accounting for revenue
recognition for multiple element software arrangements.
The Company’s internal control over financial reporting as of June 30, 2015 has been audited by the Company’s independent
registered public accounting firm, as stated in their report appearing on the next page.
37
www.jackhenry.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Jack Henry & Associates, Inc.
Monett, Missouri
We have audited Jack Henry & Associates, Inc. and subsidiaries’ (the “Company’s”) internal control over financial reporting
as of June 30, 2015, based on criteria established in Internal Control - Integrated Framework (2013) 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.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will
not be prevented or detected on a timely basis. The following material weakness has been identified and included in
management's assessment:
There are a number of deficiencies in the design and operating effectiveness of internal control over financial reporting
that, in aggregate, constitute a material weakness. The identified deficiencies noted below stem from a failure in the
Company’s risk assessment process wherein the risk assessment process did not identify or evaluate the inherent
risks and complexities associated with accounting for revenue arrangements with software elements.
• The lack of training and continuing education related to multiple element software arrangements led to a lack of competence
with individuals tasked with understanding various technical accounting matters associated with the Company's multiple
element arrangement revenue recognition policies.
• Appropriate accounting and reporting policies and procedures related to bundled multiple element arrangements were
not designed and implemented.
• Appropriate internal controls over financial reporting for bundled multiple element arrangements were not designed
and implemented.
• Monitoring, including use of internal audit, was not appropriately designed to identify errors in accounting for revenue
recognition for multiple element software arrangements.
38
2015 annual report This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of
the consolidated financial statements as of and for the year ended June 30, 2015, of the Company and this report does not
affect our report on such financial statements.
In our opinion, because of the effect of the material weakness identified above on the achievement of the objectives of
the control criteria, the Company has not maintained effective internal control over financial reporting as of June 30, 2015,
based on the criteria established in Internal Control - Integrated Framework (2013) 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, 2015, of the Company and our report dated
September 11, 2015 expressed an unqualified opinion on those financial statements.
/s/ DELOITTE & TOUCHE LLP
Kansas City, Missouri
September 11, 2015
39
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
Year Ended
June 30,
2014
2015
$
2,635 $
2,184 $
1,200,652
52,903
1,256,190
1,112,331
58,658
1,173,173
1,187
680,750
38,399
720,336
908
634,756
43,708
679,372
2013
5,366
1,042,801
59,357
1,107,524
860
601,620
43,650
646,130
GROSS PROFIT
535,854
493,801
461,394
OPERATING EXPENSES
Selling and marketing
Research and development
General and administrative
Total operating expenses
89,004
71,495
57,490
217,989
85,443
66,748
53,312
205,503
80,811
63,202
66,624
210,637
OPERATING INCOME
317,865
288,298
250,757
INTEREST INCOME (EXPENSE)
Interest income
Interest expense
Total interest income (expense)
169
(1,594 )
(1,425 )
377
(1,105 )
(728 )
640
(6,337 )
(5,697 )
INCOME BEFORE INCOME TAXES
316,440
287,570
245,060
PROVISION FOR INCOME TAXES
105,219
100,855
77,450
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
40
$
$
$
211,221 $
186,715 $
167,610
2.59 $
81,601
2.60 $
81,353
2.19 $
85,396
2.20 $
84,866
1.94
86,619
1.95
86,040
2015 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
Deferred costs
Total current assets
PROPERTY AND EQUIPMENT, net
OTHER ASSETS:
Non-current deferred costs
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
Accrued income taxes
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;
102,695,214 shares issued at June 30, 2015;
102,429,926 shares issued at June 30, 2014
Additional paid-in capital
Retained earnings
Less treasury stock at cost
21,842,632 shares at June 30, 2015;
19,794,559 shares at June 30, 2014
Total stockholders' equity
Total liabilities and equity
See notes to consolidated financial statements
June 30,
2015
June 30,
2014
$
$
$
148,313 $
245,387
2,753
69,096
27,950
493,499
296,332
96,423
191,541
52,432
122,204
34,038
550,366
1,047,004
1,836,835 $
9,933 $
78,962
5,543
7,034
2,595
339,544
443,611
192,443
150,223
50,102
8,922
401,690
845,301
—
1,027
70,377
224,041
7,937
61,074
27,077
390,506
291,675
78,458
160,391
44,657
136,602
25,653
552,761
998,522
1,680,703
10,516
63,299
—
30,094
5,407
337,493
446,809
155,375
97,720
3,729
9,683
266,507
713,316
—
1,024
424,536
1,266,443
412,512
1,131,632
(700,472 )
(577,781 )
991,534
1,836,835 $
$
967,387
1,680,703
41
www.jackhenry.com JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)
PREFERRED SHARES:
COMMON SHARES:
2015
Year Ended June 30,
2014
2013
—
—
—
Shares, beginning of year
Shares issued for equity-based payment arrangements
Shares issued for Employee Stock Purchase Plan
Shares, end of year
102,429,926
172,661
92,627
102,695,214
101,993,808
344,372
91,746
102,429,926
101,482,461
405,270
106,077
101,993,808
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
Dividends declared per share
See notes to consolidated financial statements.
$
$
$
$
$
$
$
$
$
$
1,024 $
2
1
1,027 $
412,512 $
640
(7,951 )
4,880
4,343
10,112
424,536 $
1,020
3
1
1,024
400,710
606
(6,598 )
4,283
3,420
10,091
412,512
1,131,632 $
211,221
(76,410 )
1,266,443 $
1,016,168
186,715
(71,251 )
1,131,632
$
$
$
$
$
$
1,015
4
1
1,020
381,919
6,771
(3,926 )
3,699
3,632
8,615
400,710
896,760
167,610
(48,202 )
1,016,168
(577,781 ) $
(122,691 )
(700,472 ) $
(402,082 ) $
(175,699 )
(577,781 ) $
(343,956 )
(58,126 )
(402,082 )
991,534 $
967,387
0.94 $
0.84
$
$
1,015,816
0.56
42
2015 annual report JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended
June 30,
2014
2013
2015
$
211,221 $
186,715 $
167,610
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, deferred costs 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
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities
Repayments on credit facilities
Debt acquisition costs
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
54,155
64,841
29,443
(4,343 )
10,112
(5,046 )
(21,346 )
(33,858 )
(583 )
14,483
14,146
40,565
373,790
—
(54,409 )
8,317
—
(14,020 )
(76,872 )
(136,984 )
90,000
(50,783 )
(901 )
(122,691 )
(76,410 )
4,343
642
(7,951 )
4,881
(158,870 )
77,936 $
70,377 $
52,935
54,836
12,752
(3,406 )
10,091
(784 )
7,498
(28,565 )
(1,252 )
(6,364 )
5,251
51,952
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 )
(57,528 ) $
51,967
48,374
18,336
(3,621 )
8,615
3,908
(12,739 )
(11,502 )
(4,582 )
7,774
4,575
30,459
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 )
(29,408 )
127,905 $
157,313
148,313 $
70,377 $
127,905
43
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.
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 arrangements, support and service fees (non-software) and
hardware sales. There are no rights of return, condition of acceptance or price protection in the Company’s sales contracts.
License Arrangements: For software license agreements, the Company recognizes revenue when persuasive evidence of
an arrangement exists, delivery of the product or service has occurred, the fee is fixed and determinable and collection is
probable. For arrangements where the fee is not fixed or determinable, revenue is deferred until payments become due. The
Company’s software license agreements generally include multiple products and services or “elements.” Generally, none of
these elements are deemed to be essential to the functionality of the other elements.
For multiple element arrangements, which contain software elements and non-software elements, we allocate revenue
to the software deliverables and the non-software deliverables as a group based on the relative selling prices of all of the
deliverables in the arrangement. For our non-software deliverables, we allocate the arrangement consideration based on the
relative selling price of the deliverables using estimated selling price ("ESP"). For our software elements, we use VSOE for
this allocation when it can be established and ESP when VSOE cannot be established.
The selling price for each element is based upon the following selling price hierarchy: VSOE if available, third party evidence
("TPE") if VSOE is not available, or ESP if neither VSOE or TPE are available. Generally, we are not able to determine TPE
because our go-to-market strategy differs from that of our peers and our offerings contain a significant level of differentiation
such that the comparable pricing of products with similar functionality cannot be obtained. ESP is determined after considering
both market conditions (such as the sale of similar products in the market place) and entity-specific factors (such as pricing
practices and the specifics of each transaction).
For our non-software deliverables, a delivered item is accounted for as a separate unit of accounting if the delivered item has
standalone value and if the customer has a general right of return relative to the delivered item, delivery or performance of
the undelivered item is probable and substantially within our control.
For our software licenses and related services, including the software elements of multiple-element software and non-
software arrangements, 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. VSOE of fair value is
determined for implementation services based on a rate per hour for stand-alone professional services and the estimated
hours for the bundled implementation, if the hours can be reasonably estimated. VSOE of fair value is determined for
post-contract support ("PCS") based upon the price charged when sold separately. For a majority of the elements within
our software arrangements, we have determined that VSOE cannot be established; therefore, revenue on our software
arrangements is generally deferred until the only remaining element is post-contract support ("PCS"). At that point, the
44
2015 annual report entire arrangement fee is recognized ratably over the remaining PCS period, assuming that all other criteria for revenue
recognition have been met. The amounts deferred are included in the balance sheet as deferred revenue and recognized
as Bundled Products & Services revenue within Support & Service revenue in the income statement.
For arrangements that include specified upgrades, such upgrades are accounted for as a separate element of the
arrangement. For those specified upgrades for which VSOE of fair value cannot be determined, revenue related to the
software elements within the arrangement is deferred until such specified upgrades have been delivered.
Total revenue recognized ratably related to our Bundled Products & Services was $62,888, $60,685 and $64,275 for the
years ended June 30, 2015, 2014, and 2013, respectively.
Support and Service Fee Revenue (Non-software): Maintenance support revenue contracted for outside of a license
arrangement is recognized pro-rata over the contract period, typically one year.
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. The revenue related to these hardware sales is recorded gross. 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).
DEFERRED COSTS
Costs for certain software and hardware maintenance contracts with third parties, which are prepaid, are recognized
ratably over the life of the maintenance contract, generally one to five years, with the related revenue amortized from
deferred revenues.
Direct and incremental costs associated with arrangements subject to Accounting Standards Codification ("ASC")
985-605 (for which VSOE of fair value cannot be established) are deferred until the only remaining element in the revenue
arrangement is PCS at which point the costs are recognized ratably over the remaining PCS period with the related revenue.
Deferred direct and incremental costs associated with arrangements not subject to ASC 985-605 consist primarily of certain
up-front costs incurred in connection with our software hosting arrangements and are recognized ratably over the contract
period which typically ranges from 5-7 years. These costs include commissions, costs of third-party licenses and the direct
costs of our implementation services, consisting of payroll and other fringe benefits.
DEFERRED REVENUES
Deferred revenues consist primarily of prepaid annual software support fees, deferred bundled software arrangements
revenue, and prepaid hardware maintenance fees. Deferred bundled software arrangements revenue and hardware
maintenance contracts may be recognized over multiple years; therefore, the related deferred revenue and maintenance are
classified as current or non-current in accordance with the terms of the contract. Software and hardware deposits received
are also reflected as deferred revenues.
The vast majority of our maintenance (PCS) renews annually and runs from July 1 to June 30. Renewal billings are submitted
to customers each June and the Company has the right to bill at that date; therefore we include those billings as gross in
deferred revenue and as a receivable on our balance sheet at the end of each fiscal year.
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.
45
www.jackhenry.com 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, 2015, 2014, and 2013 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.
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, 2015, there were 21,843 shares in treasury stock and the Company had the remaining authority to
repurchase up to 8,148 additional shares. The total cost of treasury shares at June 30, 2015 is $700,472. During fiscal 2015,
the Company repurchased 2,048 treasury shares for $122,691. At June 30, 2014, there were 19,795 shares in treasury stock
and the Company had authority to repurchase up to 5,196 additional shares.
Dividends declared per share were $0.94, $0.84, and $0.56 for the years ended June 30, 2015, 2014, and 2013, 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. In August 2015, the FASB also issued ASU No. 2015-14 which deferred the effective date of the
new standard by one year. The standard and related amendments will be effective for the Company for its annual reporting
period beginning July 1, 2018, including interim periods within that reporting period. Along with the deferral of the effective
date, ASU No. 2015-14 allows early application as of the original effective date. Entities are allowed to transition to the new
standard by either recasting prior periods or recognizing the cumulative effect as of the beginning of the period of adoption.
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.
46
2015 annual report In April 2015, the FASB also issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs. This ASU requires that debt issuance costs be presented in the balance sheet as
a direct deduction from the carrying amount of the related debt liability (same treatment as debt discounts). ASU 2015-3
is effective for the company in fiscal year ended June 30, 2017. Early adoption is permitted provided that the guidance is
applied from the beginning of the fiscal year of adoption. The Company will adopt these changes for the fiscal year ended
June 30, 2017.
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.
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
Fair value of financial assets, included in cash and cash equivalents, and financial liabilities is as follows:
Estimated Fair Value Measurements
Level 2
Level 3
Level 1
Total Fair
Value
June 30, 2015
Financial Assets:
Money market funds
Financial Liabilities:
Revolving credit facility
June 30, 2014
Financial Assets:
Money market funds
$
$
$
98,888 $
— $
— $
98,888
— $
50,000 $
— $
50,000
28,877 $
— $
— $
28,877
47
www.jackhenry.com 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
(1) Lesser of lease term or estimated useful life
June 30,
2015
2014
Estimated Useful Life
$
$
24,987 $
25,428
144,414
32,169
327,949
37,695
23,563
616,205
319,873
296,332 $
24,987
25,411
143,733
28,962
316,064
27,246
12,199
578,602
286,927
291,675
5 - 20 years
20 - 30 years
5 - 30 years (1)
3 - 10 years
5 - 15 years
Property and equipment included $1,343 and $523 that was in accrued liabilities at June 30, 2015 and 2014, respectively.
Also, the Company acquired $4,344 and $16,119 of computer equipment through capital leases for the years ended June 30,
2015 and 2014, 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, 2015 and 2014, 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,
2015
423,190
—
(2,395 )
420,795
129,571
—
129,571
$
$
$
$
2014
403,720
19,470
—
423,190
129,571
—
129,571
$
$
$
$
During the year the Profitstars® division of the Company sold its TeleWeb suite of Internet and mobile banking
software products to Data Center Inc. (DCI). Goodwill allocated to the carrying amount of the net assets sold was calculated
based on the relative fair values of the business disposed of and the portion of the reporting unit (in which the business
resided) that was retained, multiplied by the reporting unit’s carrying value of goodwill.
48
2015 annual report
Other Intangible Assets
Information regarding other identifiable intangible assets is as follows:
Customer relationships
Computer software
Other intangible assets:
Purchased software
Trade names
Other intangible assets, total
Customer relationships
Computer software
Other intangible assets:
Purchased software
Trade names
Total
Gross Carrying
Amount
June 30, 2015
Accumulated
Amortization
Net
$
$
$
$
$
$
276,337
416,674
32,192
12,498
44,690
(154,133 ) $
(225,133 ) $
122,204
191,541
(7,818 )
(2,834 )
(10,652 ) $
24,374
9,664
34,038
Gross Carrying
Amount
June 30, 2014
Accumulated
Amortization
Net
276,337
345,248
17,162
12,498
29,660
(139,735 ) $
(184,857 ) $
136,602
160,391
(1,933 )
(2,074 )
(4,007 ) $
15,229
10,424
25,653
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 $43,798, $37,720, and $33,145 for the fiscal years ended June 30, 2015, 2014, and 2013, respectively.
There were no material impairments in any of the fiscal years presented.
Amortization expense for all intangible assets was $64,841, $54,836, and $48,374 for the fiscal years ended June 30, 2015,
2014, and 2013, respectively. The estimated aggregate future amortization expense for each of the next five years for all
intangible assets remaining as of June 30, 2015, is as follows:
Years Ending June 30,
2016
2017
2018
2019
2020
Computer
Software
Customer
Relationships
Other Intangible
Assets
Total
$
44,416 $
35,602
28,080
19,701
8,224
13,814 $
13,585
13,050
12,829
10,699
7,756 $
6,249
2,686
955
560
65,986
55,436
43,816
33,485
19,483
49
www.jackhenry.com NOTE 5. DEBT
The Company’s outstanding long and short term debt is as follows:
LONG TERM DEBT
Revolving credit facility
Capital leases
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
June 30,
2015
June 30,
2014
$
$
$
$
50,000 $
816
50,816
714
50,102 $
1,881 $
714
2,595 $
—
7,757
7,757
4,028
3,729
1,379
4,028
5,407
2,595
102
—
—
50,000
—
52,697
The following table summarizes the annual principal payments required as of June 30, 2015:
Years ended June 30,
2016
2017
2018
2019
2020
Thereafter
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 $816 remains outstanding at June 30, 2015 and $714 will be maturing
within the next twelve months. The Company also has short term capital lease obligations totaling $1,881 at June 30, 2015.
Included in property and equipment are assets under capital leases totaling $16,833, which have accumulated depreciation
totaling $4,563.
Revolving credit facility
The revolving credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time
until maturity to $600,000. The credit facility bears interest at a variable rate equal to (a) a rate based on LIBOR or (b) an
alternate base rate (the highest of (i) the Prime Rate for such day, (ii) the sum of the Federal Funds Effective Rate for such
day plus 0.50% and (iii) the Eurocurrency Rate for a one month Interest Period on such day for dollars 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, 2015, the Company was in compliance with all such covenants. The revolving loan terminates
February 20, 2020 and at June 30, 2015, the outstanding revolving loan balance was $50,000.
Other lines of credit
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, 2015, no amount
was outstanding.
Interest
The Company paid interest of $1,111, $620, and $3,549 in 2015, 2014, and 2013 respectively.
50
2015 annual report NOTE 6. COMMITMENTS AND CONTINGENCIES
Litigation
We are subject to various routine legal proceedings and claims, including the following:
In 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 have defended the lawsuit vigorously. A part of that defense has been the filing of challenges to the validity of
plaintiff's patents in post-grant proceedings at the Patent Trial and Appeal Board ("PTAB") of the U.S. Patent and Trademark
Office. On April 29 and July 8, 2015, the PTAB issued decisions holding that all relevant claims of the plaintiff's patents are
unpatentable and invalid. DataTreasury has moved for rehearing of the PTAB decisions. 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 $13,089 of material commitments at June 30, 2015 to purchase property and equipment related mainly
to the purchase of aircraft. There were $14,293 material commitments at June 30, 2014.
Leases
The Company leases certain property under operating leases which expire over the next 6 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.
As of June 30, 2015, net future minimum lease payments are as follows:
Years Ending June 30,
Lease Payments
2016
2017
2018
2019
2020
Thereafter
Total
Rent expense was $9,547, $8,609, and $8,124 in 2015, 2014, and 2013 respectively.
NOTE 7. INCOME TAXES
The provision for income taxes from continuing operations consists of the following:
$
$
8,554
7,163
5,725
2,845
1,673
607
26,567
Current:
Federal
State
Deferred:
Federal
State
Year Ended June 30,
2014
2013
2015
$
$
70,555 $
5,221
77,937 $
10,166
28,018
1,425
105,219 $
10,636
2,116
100,855 $
54,574
4,540
14,689
3,647
77,450
51
www.jackhenry.com The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:
Deferred tax assets:
Contract and service revenues and costs
Expense reserves (bad debts, insurance, franchise tax and vacation)
Net operating loss carryforwards
Other, net
Deferred tax liabilities:
Accelerated tax depreciation
Accelerated tax amortization
Contract and service revenues and costs
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)
June 30,
2015
2014
68,503 $
14,612
3,682
1,493
88,290
(32,331 )
(142,776 )
(69,790 )
(244,897 )
(156,607 )
(650 )
(157,257 ) $
71,383
14,776
4,218
1,148
91,525
(29,247 )
(125,054 )
(64,338 )
(218,639 )
(127,114 )
(700 )
(127,814 )
2015
(7,034 ) $
(150,223 )
(157,257 ) $
2014
(30,094 )
(97,720 )
(127,814 )
$
$
$
$
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)
Year Ended June 30,
2014
2013
35.0 %
35.0 %
2015
35.0 %
1.4 %
(1.5)%
(2.0)%
0.4 %
33.3 %
2.8 %
(0.8)%
(2.2)%
0.3 %
35.1 %
2.2 %
(3.5)%
(2.3)%
0.2 %
31.6 %
As of June 30, 2015, we have $6,903 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,
2015, we had state NOL carryforwards of $1,643. The federal and state losses have varying expiration dates, ranging from
2015 to 2034. Based on state tax rules which restrict our utilization of these losses, we believe it is more likely than not that
$650 of these losses will expire unutilized. Accordingly, a valuation allowance of $650 and $700 has been recorded against
these assets as of June 30, 2015 and 2014, respectively.
The Company paid income taxes of $61,885, $83,014, and $54,815 in 2015, 2014, and 2013 respectively.
At June 30, 2014, the Company had $7,834 of unrecognized tax benefits, $5,366 of which, if recognized, would affect
our effective tax rate. At June 30, 2015, the Company had $7,104 of gross unrecognized tax benefits, $5,193 of which,
if recognized, would affect our effective tax rate. We had accrued interest and penalties of $1,120 and $1,315 related to
uncertain tax positions at June 30, 2015 and 2014, respectively. The income tax provision included interest expense and
penalties (or benefits) on unrecognized tax benefits of $(155), $582, and $(60) in the years ending June 30, 2015, 2014,
and 2013, respectively.
52
2015 annual report A reconciliation of the unrecognized tax benefits for the years ended June 30, 2015 and 2014 follows:
Balance at July 1, 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
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, 2015
Unrecognized Tax
Benefits
$
$
4,890
1,380
—
1,662
(1 )
—
(97 )
7,834
1,351
(56 )
483
(998 )
—
(1,510 )
7,104
The U.S. federal and state income tax returns for June 30, 2012 and all subsequent years remain subject to examination
as of June 30, 2015 under statute of limitations rules. We anticipate potential changes could reduce the unrecognized tax
benefits balance by $1,500 - $2,500 within twelve months of June 30, 2015.
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, 2015, 2014, and 2013) 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.
NOTE 9. STOCK-BASED COMPENSATION
Our pre-tax operating income for the years ended June 30, 2015, 2014 and 2013 includes $10,112, $10,091 and $8,615 of equity-
based compensation costs, respectively, of which $9,251, $9,335 and $7,962 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.
53
www.jackhenry.com
A summary of option plan activity under the plan is as follows:
Outstanding July 1, 2012
Granted
Forfeited
Exercised
Outstanding July 1, 2013
Granted
Forfeited
Exercised
Outstanding July 1, 2014
Granted
Forfeited
Exercised
Outstanding June 30, 2015
Vested June 30, 2015
Exercisable June 30, 2015
Number of
Shares
464
—
—
(320 )
144
—
—
(19 )
125
—
—
(25 )
100
100
100
Weighted
Average
Exercise Price
16.19
—
—
13.68
21.79
—
—
18.42
22.29
—
—
19.17
23.07 $
23.07 $
23.07 $
$
$
$
$
Aggregate
Intrinsic
Value
4,164
4,164
4,164
There were no options granted during any period presented. As of June 30, 2015, there were 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, 2015 was 3.17 years.
The income tax benefits from stock option exercises totaled $4,343, $3,420 and $3,632 for the years ended June 30, 2015,
2014, and 2013, respectively.
The total intrinsic value of options exercised was $1,044, $704 and $8,254 for the fiscal years ended June 30, 2015, 2014,
and 2013, 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 from grant date. On certain awards, the restrictions may be lifted sooner if certain
targets for shareholder return are met.
54
2015 annual report The following table summarizes non-vested share awards activity:
Share awards
Outstanding July 1, 2012
Granted
Vested
Forfeited
Outstanding July 1, 2013
Granted
Vested
Forfeited
Outstanding July 1, 2014
Granted
Vested
Forfeited
Outstanding June 30, 2015
Weighted
Average
Grant Date
Fair Value
Shares
332 $
53
(125 )
(8 )
252
30
(143 )
(1 )
138
12
(71 )
(7 )
72 $
23.13
36.78
23.17
23.11
25.92
54.13
24.41
22.17
33.56
57.77
35.69
46.39
34.28
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, 2015, there was $808 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 1.02 years.
An amendment to the Restricted Stock Plan was adopted by the Company on August 20, 2010. 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, 2015, as well as activity for the year then ended:
Unit awards
Outstanding July 1, 2012
Granted
Vested
Forfeited
Outstanding July 1, 2013
Granted
Vested
Forfeited
Outstanding July 1, 2014
Granted
Vested
Forfeited
Outstanding June 30, 2015
Weighted
Average
Grant Date
Fair Value
Shares
672 $
174
—
(32 )
814
164
(168 )
(101 )
709
178
(277 )
(111 )
499 $
18.05
42.39
—
22.45
23.08
48.21
15.77
15.77
31.66
53.62
19.69
22.74
48.13
55
www.jackhenry.com
The Company utilized a Monte Carlo pricing model customized to the specific provisions of the Company’s plan design to
value unit awards subject to performance targets on the grant dates. The weighted average assumptions used in the model
to measure fair value at the grant dates are as follows:
Volatility
Risk free interest rate
Dividend yield
Stock Beta
Year Ended June 30,
2015
17.8 %
1.06 %
1.5 %
0.765
2014
21.6 %
0.91 %
1.6 %
0.837
2013
23.3 %
0.33 %
1.2 %
0.864
For the year ended June 30, 2015, 164 unit awards were granted and measured using the above assumptions. The remaining
14 unit awards granted are not subject to performance targets, and therefore the estimated fair value at measurement date is
valued in the same manner as restricted stock award grants.
At June 30, 2015, there was $9,442 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 1.16 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,
2015
2014
2013
$ 211,221
$ 186,715
$ 167,610
81,353
248
81,601
84,866
86,040
530
579
85,396
86,619
$
$
2.60
2.59
$
$
2.20
2.19
$
$
1.95
1.94
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 no anti-dilutive stock options and restricted stock excluded from the computation of diluted earnings per share
for fiscal 2015, with 24 shares excluded for fiscal 2014 and no shares excluded for fiscal 2013.
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, 2015, 2014 and
2013 was $861, $756 and $653, 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 $15,378, $13,617, and $12,426 for fiscal 2015, 2014 and
2013, respectively.
56
2015 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 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
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 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 consist 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 were inclusive of cash acquired of $16. The fair value of current assets acquired included accounts receivable
of $476. The gross amount of receivables was $501, of which $25 was 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 for the year ended June
30, 2015 included revenue of $4,175 and after-tax net loss of $1,784. 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 both the current and prior periods of our consolidated financial statements and pro forma financial
information has not been provided.
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.
57
www.jackhenry.com 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)
June 30, 2015
Bank
Credit Union
Total
$
1,727 $
908 $
2,635
922,545
38,457
962,729
832
533,407
27,831
562,070
400,659 $
$
278,107
14,446
293,461
355
147,343
10,568
158,266
135,195
1,200,652
52,903
1,256,190
1,187
680,750
38,399
720,336
535,854
217,989
(1,425 )
INCOME BEFORE INCOME TAXES
$
316,440
Year Ended
June 30, 2014
Bank
Credit Union
Total
$
1,514 $
670 $
2,184
853,500
42,657
897,671
555
492,777
31,866
525,198
372,473 $
$
258,831
16,001
275,502
353
141,979
11,842
154,174
121,328
1,112,331
58,658
1,173,173
908
634,756
43,708
679,372
493,801
205,503
(728 )
$
287,570
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
58
2015 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, 2013
Bank
Credit Union
Total
$
4,895 $
471 $
5,366
794,433
41,052
840,380
765
461,370
29,936
492,071
348,309 $
$
248,368
18,305
267,144
95
140,250
13,714
154,059
113,085
1,042,801
59,357
1,107,524
860
601,620
43,650
646,130
461,394
210,637
(5,697 )
$
245,060
Year Ended June 30,
2014
2013
2015
$
$
$
$
$
$
50,154 $
4,001
54,155 $
47,502 $
17,339
64,841 $
53,730 $
679
54,409 $
48,382 $
4,553
52,935 $
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
June 30,
2015
June 30,
2014
$
$
$
$
263,231 $
33,101
296,332 $
664,231 $
233,918
898,149 $
258,437
33,238
291,675
643,972
231,435
875,407
59
www.jackhenry.com 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
Dividends
On August 21, 2015, the Company's Board of Directors declared a cash dividend of $0.25 per share on its common stock,
payable on September 25, 2015 to shareholders of record on September 4, 2015.
Acquisition of Bayside
On July 1, 2015, the Company announced the acquisition of all the stock of Bayside Business Solutions, a provider of
complete portfolio management systems for commercial lenders and industry leader in providing factoring software, for a net
cash outlay of $10,000. This acquisition was funded with operating cash. We have not yet completed our purchase accounting
procedures with respect to this acquisition. The impact of this acquisition is considered immaterial to our consolidated
financial statements and pro forma financial information has not been provided.
QUARTERLY FINANCIAL INFORMATION
(unaudited)
Quarter 1
For the Year Ended June 30, 2015
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
Basic weighted average shares
outstanding
60
$
$
$
$
503 $
491 $
569 $
1,072 $
288,216
12,755
301,474
409
165,090
9,385
174,884
126,590
21,663
16,791
16,510
54,964
71,626
296,905
13,898
311,294
308
170,377
9,574
180,259
131,035
22,175
17,681
11,514
51,370
79,665
296,896
12,244
309,709
285
168,457
9,152
177,894
131,815
21,674
17,522
15,417
54,613
77,202
318,635
14,006
333,713
185
176,826
10,288
187,299
146,414
23,492
19,501
14,049
57,042
89,372
57
(266 )
(209 )
28
(337 )
(309 )
33
(669 )
(636 )
51
(322 )
(271 )
71,417
25,329
46,088 $
79,356
25,474
53,882 $
76,566
25,854
50,712 $
89,101
28,562
60,539 $
Total
2,635
1,200,652
52,903
1,256,190
1,187
680,750
38,399
720,336
535,854
89,004
71,495
57,490
217,989
317,865
169
(1,594 )
(1,425 )
316,440
105,219
211,221
0.56 $
0.66 $
0.63 $
0.75 $
2.59
82,589
81,634
81,094
81,086
81,601
0.56 $
0.66 $
0.63 $
0.75 $
2.60
82,195
81,432
80,880
80,904
81,353
2015 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
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
Basic weighted average
shares outstanding
$
$
$
$
Quarter 1
762
262,630
14,338
277,730
345
149,156
10,941
160,442
117,288
20,738
15,673
14,250
50,661
66,627
131
(280 )
(149 )
66,478
23,258
43,220
0.50
85,854
$
$
For the Year Ended June 30, 2014
Quarter 3
Quarter 4
Quarter 2
$
245 $
603 $
574 $
273,242
15,356
288,843
188
154,769
10,867
165,824
123,019
20,503
16,142
12,132
48,777
74,242
276,100
14,731
291,434
227
162,824
11,008
174,059
117,375
21,719
17,486
13,629
52,834
64,541
300,359
14,233
315,166
148
168,007
10,892
179,047
136,119
22,483
17,447
13,301
53,231
82,888
129
(267 )
(138 )
84
(262 )
(178 )
33
(296 )
(263 )
74,104
25,744
48,360 $
64,363
21,757
42,606 $
82,625
30,096
52,529 $
Total
2,184
1,112,331
58,658
1,173,173
908
634,756
43,708
679,372
493,801
85,443
66,748
53,312
205,503
288,298
377
(1,105 )
(728 )
287,570
100,855
186,715
0.56 $
0.50 $
0.62 $
2.19
85,986
85,467
84,276
85,396
0.51
$
0.57 $
0.50 $
0.63 $
2.20
85,294
85,450
84,981
83,740
84,866
61
www.jackhenry.com T H I S P A G E I N T E N T I O N A L LY L E F T B L A N K
62
2015 annual report T H I S P A G E I N T E N T I O N A L LY L E F T B L A N K
T H I S P A G E I N T E N T I O N A L LY L E F T B L A N K
63
www.jackhenry.com BOARD OF DIRECTORS
>> John F. “Jack” Prim
Chairman of the Board and Chief Executive Officer
Jack Henry & Associates, Inc.®
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
Retired as 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, LLC
Louisville, Kentucky
>> Laura G. Kelly
Chief Product and Data Solutions Officer
The Dun & Bradstreet Corporation
Austin, Texas
>> Shruti S. Miyashiro
President and Chief Executive Officer
Orange County’s Credit Union
Santa Ana, California
64
2015 annual report
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
ANNUAL MEETING
The annual meeting of shareholders will be held on Tuesday,
November 10, 2015 at 11 a.m. CT at Jack Henry & Associates’
Corporate Headquarters, Monett, Missouri.
FORM 10-K
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.
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