UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 19, 2005
JACK HENRY & ASSOCIATES, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 0-14112 43-1128385
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
663 Highway 60, P.O. Box 807, Monett, MO 65708
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (417) 235-6652
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a.-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On January 19, 2005, Jack Henry & Associates, Inc. issued a press
release announcing 2005 second quarter results, the text of which is
attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated January 19, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JACK HENRY & ASSOCIATES, INC.
(Registrant)
Date: January 19, 2005 By: /s/ Kevin D. Williams
Kevin D. Williams
Chief Financial Officer
Exhibit 99.1
Company: Jack Henry & Associates, Inc. Analyst Contact: Kevin D. Williams
663 Highway 60, P.O. Box 807 Chief Financial Officer
Monett, MO 65708 (417) 235-6652
IR Contact: Jon Seegert
Director Investor Relations
(417) 235-6652
FOR IMMEDIATE RELEASE
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JACK HENRY & ASSOCIATES FISCAL 2005 SECOND QUARTER NET INCOME INCREASES 22%
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Monett, MO. January 19, 2005 - Jack Henry & Associates, Inc. (Nasdaq: JKHY),
a leading provider of integrated technology solutions that perform data
processing for financial institutions, today reported fiscal 2005 second
quarter results reflecting a 21% increase in revenue, resulting in a 22%
increase in gross profit and net income over the same quarter of the prior
year. For the first six months of fiscal 2005 revenue increased 17%, with
an increase of 21% in gross profit and net income over the same six months
in fiscal 2004.
For the quarter ended December 31, 2004, the company generated total revenue
of $136.0 million compared to $112.7 million in the same quarter a year ago.
Gross profit increased to $54.7 million compared to $44.7 million in the
second quarter of last fiscal year. Net income totaled $17.7 million, or
$0.19 per diluted share, compared to $14.5 million, or $0.16 per diluted
share in the same quarter a year ago.
For the first half of fiscal 2005, total revenue of $260.1 million was
generated compared to $221.7 million for the first half of fiscal 2004.
Gross profit increased to $105.3 million compared to $87.4 million during
the same period last fiscal year. Net income for the first half of fiscal
2005 was $34.4 million, or $0.37 per diluted share, compared to $28.4
million, or $0.31 per diluted share for the same six months in fiscal 2004.
"We are very encouraged with the progress we have made during the quarter
and first six months of our fiscal year reflected by both increased revenue
and backlog. We believe that the changes made to our sales force over the
last couple of years continue to show positive results. This was the
strongest quarter in the history of the company from the perspective of both
new contracts and revenue recognized," said Jack F. Prim, CEO. "Since our
last earnings call we have announced four additional acquisitions, which
not only add to our suite of products and services being offered to our
existing customers but they also expand our potential addressable market
base and new markets. Year to date we have made six acquisitions, which we
anticipate to be slightly accretive for the remainder of the fiscal year,
and we expect to see significant growth for these products and services in
the future."
Operating Results
"We continued to have strong license revenue in the second fiscal quarter
with a 79% increase for the quarter and a 64% increase in license revenue
for the six months ended December 31, 2004, compared to the prior year
periods. However, due to a significant increase in re-sale of third party
software to our core customers our gross profit margin on license revenue
decreased from 98% to 92% for the quarter and from 95% to 92% year-to-date,"
said Tony L. Wormington, President. "The most significant impact of the
decrease in license margins is attributable to the third party re-sale
agreements in the credit union segment."
License revenue increased to $22.1 million, or 16% of second quarter total
revenue, compared to $12.4 million, or 11% of the second quarter total
revenue a year ago. Support and services revenue increased to $87.7
million, or 65% of total revenue in second quarter of fiscal 2005 from $76.7
million, or 68% of total revenue for the same period a year ago. Hardware
sales in the second quarter of fiscal 2005 increased to $26.1 million, or
19% of total revenue, from $23.6 million, or 21% of total revenue in the
second quarter of last fiscal year.
For the first half of fiscal 2005, license revenue increased 64% to $41.7
million, or 16% of total revenue, compared to $25.4 million, or 11% of the
total revenue a year ago. Support and services revenue contributed 66% to
total revenue, or $171.4 million of the total revenue for the first six
months of fiscal 2005 compared to $149.2 million, or 67% of total revenue
for the first six months of fiscal 2004. Hardware sales for the six months
of fiscal 2005 remained nearly even at $47.0 million compared to $47.1
million for the same period last year. Hardware revenue was 18% of total
revenue year to date in fiscal 2005 and 21% of revenue year to date in
fiscal 2004.
Cost of sales for the second quarter increased 19% from $68.0 million for
the three months ended December 31, 2003 to $81.2 million for the three
months ended December 31, 2004. Second quarter gross profit increased 22%
to $54.7 million with a 40% gross margin, compared to $44.7 million and a
40% gross margin for the same period a year ago.
Cost of sales for the six months ended December 31, 2004 increased 15%, to
$154.7 million from $134.3 million for the same period ended December 31,
2003. Gross profit for the first half of fiscal 2005 increased 21% to
$105.3 million with a 40% gross margin, compared to $87.4 million or a 39%
gross margin for the first half of fiscal 2004.
Gross margin on license revenue for the second quarter of fiscal 2005 was
92% compared to 98% a year ago for the same period due to increased license
revenue through reseller agreements. Support and service gross margin
decreased to 31% in the second quarter of fiscal 2005 from 33% a year ago
mainly due to increased headcount relating to the support and service
revenue, travel expenses and depreciation. Hardware gross margins were
lower for the second quarter at 29% compared to 32% for the same quarter
last year primarily due to volume and sales mix of hardware and reduced
rebates received on hardware sold in the current year.
Gross margin on license revenue for the first half of fiscal 2005 was 92%
compared to 95% a year ago for the same period due to increased license
revenue through reseller agreements. Support and service gross margin
remained even at 32% for the first six months in both fiscal years.
Hardware gross margins were lower this year to date at 27% compared to 31%
for the same period last year, primarily due to the volume and sales mix of
hardware and a decrease in rebates received on hardware sold.
For the second quarter of 2005, the bank systems and services segment
revenue increased 18% to $111.3 million, with a gross margin of 43% from
$94.2 million and a gross margin of 40% in the same quarter a year ago. The
credit union systems and services segment revenue increased 33% to $24.7
million with a gross margin of 29% for the second quarter of 2005 from $18.5
million and a gross margin of 36% in the same period a year ago. "The
credit union segment gross margin decreased primarily due to the significant
amount of third party software delivered during the quarter causing a
decrease in gross margin on license revenue. This combined with a decrease
in support and service margin primarily due to increased headcount this
quarter compared to the prior year, increased depreciation related to the
new facility in San Diego, and the decrease in the hardware margin due to
sales mix and reduced rebates caused the decrease in Credit Union segment
gross margin for the quarter," said Kevin D. Williams, CFO.
For the six months ended December 31, 2004, the bank systems and services
segment revenue increased 14% to $211.1 million, with a gross margin of 42%
from $185.8 million and a gross margin of 40% a year ago. The credit union
systems and services segment revenue increased 36% to $49.0 million for the
first half of 2005, with a gross margin of 33% from $35.9 million and gross
margin of 36% in the same period a year ago.
Operating expenses increased 21% for the second quarter of fiscal 2005
compared to the same quarter a year ago primarily due to employee related
expenses. Selling and marketing expenses rose 40% in the second quarter to
$11.9 million, or 9% of total revenue, from $8.5 million or 8% of total
revenue. Research and development expenses increased 14% to $6.7 million
from $5.9 million, while remaining at 5% of total revenue for the
second quarters in fiscal 2005 and 2004. General and administrative costs
increased 6% to $8.1 million or 6% of revenue, in the second quarter of
fiscal year 2005, from $7.7 million, or 7% of revenue for the same quarter a
year ago.
Operating expenses increased 18% for fiscal 2005 year to date compared to
the same period a year ago primarily due to employee related expenses.
Selling and marketing expenses rose 31% in the same period to $22.7 million,
or 9% of total revenue from $17.3 million or 8% of total revenue. Research
and development expenses increased 15% to $12.9 million from $11.2 million,
while remaining at 5% of total revenue for the first six months in fiscal
2005 and 2004. General and administrative costs increased 6% to $15.6
million or 6% of revenue for the first half of fiscal 2005 from $14.7
million, or 7% of revenue for the same period a year ago.
Operating income increased 24% to $28.0 million, or 21% of second quarter
revenue, compared to $22.6 million, or 20% of revenue in the second quarter
of fiscal 2004. Provision for income taxes is 37.5% for the second quarter
in fiscal 2005 compared to 36.5% last year due to changes in the effective
state tax rates. Second quarter net income totaled $17.7 million, or $0.19
per diluted share, compared to $14.5 million, or $0.16 per diluted share in
the second quarter of fiscal 2004.
Operating income increased 23% to $54.2 million, or 21% of year to date
revenue, compared to $44.2 million, or 20% of revenue year to date in fiscal
2004. Provision for income taxes is 37.5% year to date fiscal 2005 compared
to 36.5% year to date in fiscal 2004 due to changes in the effective state
tax rates. Year to date net income totaled $34.4 million, or $0.37 per
diluted share, compared to $28.4 million, or $0.31 per diluted share in the
prior year.
Balance Sheet and Backlog Review
Cash, cash equivalents, and investments decreased to $23.5 million from
$109.5 million compared to December 31, 2003 primarily due to amounts paid
for acquisitions. Trade receivables increased $20.1 million to $87.9 million
compared to a year ago. Deferred revenue increased $11.8 million or 12% to
$109.7 million at December 31, 2004 compared to a year ago. Stockholders'
equity grew 19% to $482.4 million at December 31, 2004, from $406.8 million
a year ago.
Backlog, which is a measure of future business and revenue, increased 7%
from year-ago levels and increased 5% from the prior quarter to $194.5
million ($68.4 million in-house and $126.1 million outsourcing). Backlog at
September 30, 2004, was $185.1 million ($63.0 million in-house and $122.1
million outsourcing) and at December 31, 2003, was $182.5 million ($60.0
million in-house and $122.5 million outsourcing).
About Jack Henry & Associates
Jack Henry & Associates, Inc. provides integrated computer systems and
processes ATM and debit card transactions for banks and credit unions. Jack
Henry markets and supports its systems throughout the United States and has
over 7,700 customers nationwide. For additional information on Jack Henry,
visit the company's web site at www.jackhenry.com. The company will hold a
conference call on January 20th at 7:45 a.m. Central Time and investors are
invited to listen at www.jackhenry.com.
Statements made in this news release that are not historical facts are
forward-looking information. Actual results may differ materially from
those projected in any forward-looking information. Specifically, there are
a number of important factors that could cause actual results to differ
materially from those anticipated by any forward-looking information.
Additional information on these and other factors, which could affect the
Company's financial results, are included in its Securities and Exchange
Commission (SEC) filings on Form 10-K, and potential investors should review
these statements. Finally, there may be other factors not mentioned above
or included in the Company's SEC filings that may cause actual results to
differ materially from any forward-looking information.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Data - unaudited)
Three Months Ended % Change Six Months Ended % Change
------------------ -------- ---------------- --------
December 31, December 31,
2004 2003 2004 2003
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REVENUE
License $ 22,148 $ 12,400 79% $ 41,699 $ 25,360 64%
Support and service 87,726 76,717 14% 171,374 149,241 15%
Hardware 26,086 23,613 10% 46,983 47,069 0%
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Total 135,960 112,730 21% 260,056 221,670 17%
COST OF SALES
Cost of license 1,734 252 >100% 3,343 1,165 >100%
Cost of support and service 60,946 51,696 18% 116,976 100,745 16%
Cost of hardware 18,531 16,073 15% 34,426 32,394 6%
-------- -------- -------- --------
Total 81,211 68,021 19% 154,745 134,304 15%
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GROSS PROFIT 54,749 44,709 22% 105,311 87,366 21%
Gross Profit Margin 40% 40% 40% 39%
OPERATING EXPENSES
Selling and marketing 11,920 8,531 40% 22,652 17,303 31%
Research and development 6,741 5,912 14% 12,883 11,231 15%
General and administrative 8,127 7,673 6% 15,592 14,678 6%
-------- -------- -------- --------
Total 26,788 22,116 21% 51,127 43,212 18%
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OPERATING INCOME 27,961 22,593 24% 54,184 44,154 23%
INTEREST INCOME (EXPENSE)
Interest income 359 281 28% 818 568 44%
Interest expense (14) (3) >100% (17) (29) -41%
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Total 345 278 24% 801 539 49%
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INCOME BEFORE INCOME TAXES 28,306 22,871 24% 54,985 44,693 23%
PROVISION FOR INCOME TAXES 10,614 8,348 27% 20,619 16,313 26%
-------- -------- -------- --------
NET INCOME $ 17,692 $ 14,523 22% $ 34,366 $ 28,380 21%
======== ======== ======== ========
Diluted net income per shar $ 0.19 $ 0.16 $ 0.37 $ 0.31
======== ======== ======== ========
Diluted weighted avg shares
outstanding 92,957 92,000 92,721 91,534
======== ======== ======== ========
Consolidated Balance Sheet Highlights
(In Thousands-unaudited) December 31, % Change
---------------------- --------
2004 2003
-------- --------
Cash, cash equivalents and investments $ 23,512 $ 109,535 -79%
Trade receivables $ 87,921 $ 67,832 30%
TOTAL ASSETS $ 661,588 $ 548,375 21%
Accounts payable and accrued expenses $ 29,529 $ 16,081 84%
Deferred revenue $ 109,742 $ 97,882 12%
STOCKHOLDERS' EQUITY $ 482,362 $ 406,802 19%
(THIRTY)