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. Beginning in the first quarter of fiscal 2018, JHA changed its reportable segment structure from two customer-centric segments, Bank and Credit Union, to four product-centric segments. The change was made based on the view of our Chief Executive Officer, who is also our Chief Operating Decision Maker, that the Company could be more effectively managed using a product-centric approach and was driven by the first budgetary process under his administration. He requested changes in reports he regularly reviews for the purposes of allocating resources and assessing performance.

The Company’s operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate & Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/ member information. The Payments segment provides secure payment processing tools and services, including: ATM, debit, and credit card transaction processing services; online and mobile bill pay solutions; and risk management products and services. The Complementary segment provides additional software and services that can be integrated with our Core solutions or used independently. The Corporate & Other segment includes hardware revenue and costs, as well as operating costs not directly attributable to the other three segments.

The Company evaluates the performance of its segments and allocates resources to them based on various factors, including performance against trend, budget, and forecast. Only revenue and costs of revenue are considered in the evaluation for each segment.

The prior period presented has been retroactively restated to conform to the new segment structure adopted July 1, 2017.



	Three Months Ended
	December 31, 2017
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	127,787	$	10,913	$	84,528	$	14,526		$	237,754
Processing	6,611		115,096		15,279		16			137,002
Total Revenue	134,398		126,009		99,807		14,542			374,756

Cost of Revenue	59,199		59,052		41,379		52,023			211,653
Research and Development										22,414
Selling, General, and Administrative										45,613
Gain on Disposal of Businesses										(189		)
Total Expenses										279,491

SEGMENT INCOME	$	75,199	$	66,957	$	58,428	$	(37,481	)

OPERATING INCOME										95,265

INTEREST INCOME (EXPENSE)										(104		)

INCOME BEFORE INCOME TAXES										$	95,161



	Three Months Ended
	December 31, 2016
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	113,887	$	11,290	$	81,134	$	15,404		$	221,715
Processing	6,000		107,854		12,946		38			126,838
Total Revenue	119,887		119,144		94,080		15,442			348,553

Cost of Revenue	53,087		54,792		38,976		51,291			198,146
Research and Development										20,873
Selling, General, and Administrative										40,928
Gain on Disposal of Businesses										—
Total Expenses										259,947

SEGMENT INCOME	$	66,800	$	64,352	$	55,104	$	(35,849	)

OPERATING INCOME										88,606

INTEREST INCOME (EXPENSE)										(124		)

INCOME BEFORE INCOME TAXES										$	88,482



	Six Months Ended
	December 31, 2017
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	249,856	$	20,000	$	163,596	$	28,598		$	462,050
Processing	13,475		229,163		29,983		19			272,640
Total Revenue	263,331		249,163		193,579		28,617			734,690

Cost of Revenue	115,461		116,318		81,856		102,733			416,368
Research and Development										43,343
Selling, General, and Administrative										89,346
Gain on Disposal of Businesses										(1,894		)
Total Expenses										547,163

SEGMENT INCOME	$	147,870	$	132,845	$	111,723	$	(74,116	)

OPERATING INCOME										187,527

INTEREST INCOME (EXPENSE)										(146		)

INCOME BEFORE INCOME TAXES										$	187,381



	Six Months Ended
	December 31, 2016
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	224,682	$	24,883	$	159,411	$	30,229		$	439,205
Processing	12,112		216,591		25,598		75			254,376
Total Revenue	236,794		241,474		185,009		30,304			693,581

Cost of Revenue	105,837		110,812		77,802		98,457			392,908
Research and Development										40,611
Selling, General, and Administrative										80,038
Gain on Disposal of Businesses										—
Total Expenses										513,557

SEGMENT INCOME	$	130,957	$	130,662	$	107,207	$	(68,153	)

OPERATING INCOME										180,024

INTEREST INCOME (EXPENSE)										(159		)

INCOME BEFORE INCOME TAXES										$	179,865

The Company has not disclosed any additional asset information by segment, as the information is not generated for internal management reporting to the Chief Operating Decision Maker.