-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CVYbZzDZMhTrqsnxGQTjOlgMCXytStpCnUnBl9a8LfeKdzdBpQTR86J8KMh8ES4v hszPijDAc5c7emZp6nBtMA== 0000926236-05-000054.txt : 20050506 0000926236-05-000054.hdr.sgml : 20050506 20050506093430 ACCESSION NUMBER: 0000926236-05-000054 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050506 DATE AS OF CHANGE: 20050506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HENRY JACK & ASSOCIATES INC CENTRAL INDEX KEY: 0000779152 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 431128385 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14112 FILM NUMBER: 05805607 BUSINESS ADDRESS: STREET 1: PO BOX 807 STREET 2: 663 HWY 60 CITY: MONETT STATE: MO ZIP: 65708-0807 BUSINESS PHONE: 4172356652 MAIL ADDRESS: STREET 1: PO BOX 807 STREET 2: 663 HWY 60 CITY: MONETT STATE: MO ZIP: 65708-0807 10-Q 1 jha05q3.txt FORM 10Q FOR QUARTERLY PERIOD ENDED MARCH 31, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number 0-14112 JACK HENRY & ASSOCIATES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 43-1128385 ---------------------------- --------------- (State or Other Jurisdiction I.R.S. Employer of Incorporation) Identification No.) 663 Highway 60, P.O. Box 807, Monett, MO 65708 ---------------------------------------------- Address of Principle Executive Offices (Zip Code) 417-235-6652 ---------------------------------------------------- (Registrant's Telephone number, including area code) N/A ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2 of the Exchange Act.) Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of April 27, 2005, Registrant has 91,377,152 shares of common stock outstanding ($.01 par value) JACK HENRY & ASSOCIATES, INC. CONTENTS Page PART I FINANCIAL INFORMATION Reference ITEM 1 Financial Statements Condensed Consolidated Balance Sheets March 31, 2005 and June 30, 2004 (Unaudited) 3 Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2005 and 2004 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2005 and 2004 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudite 6 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 ITEM 3 Quantitative and Qualitative Disclosures about Market Risk 18 ITEM 4 Controls and Procedures 18 PART II OTHER INFORMATION ITEM 6 Exhibits 19 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Data) (Unaudited) March 31, June 30, 2005 2004 ----------- ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 15,952 $ 53,758 Investments, at amortized cost 993 998 Trade receivables 80,026 169,873 Prepaid expenses and other 14,322 14,023 Prepaid cost of product 16,002 19,086 Deferred income taxes 2,375 1,320 ----------- ----------- Total 129,670 259,058 PROPERTY AND EQUIPMENT, net 226,537 215,100 OTHER ASSETS: Prepaid cost of product 8,771 6,758 Computer software, net of amortization 27,148 18,382 Other non-current assets 6,597 5,791 Customer relationships, net of amortization 70,144 61,368 Trade names 4,011 4,029 Goodwill 187,222 83,128 ----------- ----------- Total 303,893 179,456 ----------- ----------- Total assets $ 660,100 $ 653,614 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 7,919 $ 9,171 Accrued expenses 16,187 21,509 Accrued income taxes 4,174 6,258 Note payable 14,000 - Deferred revenues 71,191 136,302 ----------- ----------- Total 113,471 173,240 DEFERRED REVENUES 11,180 8,694 DEFERRED INCOME TAXES 32,575 28,762 ----------- ----------- Total liabilities 157,226 210,696 STOCKHOLDERS' EQUITY: Preferred stock - $1 par value; 500,000 shares authorized, none issued - - Common stock - $0.01 par value: 250,000,000 shares authorized; Shares issued at 03/31/05 were 91,374,902 Shares issued at 06/30/04 were 90,519,856 914 905 Additional paid-in capital 189,248 175,706 Retained earnings 312,712 271,433 Less treasury stock at cost - 315,651 shares at 06/30/04 - (5,126) ----------- ----------- Total stockholders' equity 502,874 442,918 ----------- ----------- Total liabilities and stockholders' equity $ 660,100 $ 653,614 =========== =========== See notes to condensed consolidated financial statement JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Data) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, -------------------- -------------------- 2005 2004 2005 2004 ------- ------- ------- ------- REVENUE: License $ 20,943 $ 15,343 $ 62,642 $ 40,703 Support and service 92,509 78,353 263,883 227,594 Hardware 20,930 26,012 67,913 73,081 ------- ------- ------- ------- Total 134,382 119,708 394,438 341,378 COST OF SALES: Cost of license 1,085 1,131 4,428 2,296 Cost of support and service 61,436 52,073 178,412 152,818 Cost of hardware 14,584 19,185 49,010 51,579 ------- ------- ------- ------- Total 77,105 72,389 231,850 206,693 ------- ------- ------- ------- GROSS PROFIT 57,277 47,319 162,588 134,685 OPERATING EXPENSES: Selling and marketing 11,598 8,634 34,250 25,937 Research and development 7,738 6,344 20,621 17,575 General and administrative 6,915 6,842 22,507 21,520 ------- ------- ------- ------- Total 26,251 21,820 77,378 65,032 ------- ------- ------- ------- OPERATING INCOME 31,026 25,499 85,210 69,653 INTEREST INCOME (EXPENSE): Interest income 171 248 989 816 Interest expense (110) (52) (127) (81) ------- ------- ------- ------- Total 61 196 862 735 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES 31,087 25,695 86,072 70,388 PROVISION FOR INCOME TAXES 11,658 9,379 32,277 25,692 ------- ------- ------- ------- NET INCOME $ 19,429 $ 16,316 $ 53,795 $ 44,696 ======= ======= ======= ======= Diluted net income per share $ 0.21 $ 0.18 $ 0.58 $ 0.49 ======= ======= ======= ======= Diluted weighted average shares outstanding 93,421 92,077 92,954 91,715 ======= ======= ======= ======= Basic net income per share $ 0.21 $ 0.18 $ 0.59 $ 0.50 ======= ======= ======= ======= Basic weighted average shares outstanding 91,212 89,654 90,716 89,133 ======= ======= ======= ======= See notes to condensed consolidated financial statements JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Nine Months Ended March 31, ----------------------- 2005 2004 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 53,795 $ 44,696 Adjustments to reconcile net income from operations to cash from operating activities: Depreciation 21,900 19,908 Amortization 6,548 4,904 Deferred income taxes 5,045 5,850 Loss on disposal of property and equipment 1,016 258 Other, net - (68) Changes in operating assets and liabilities, net of acquisitions: Trade receivables 94,879 84,473 Prepaid expenses, prepaid cost of product, and other 382 4,089 Accounts payable (2,819) (3,308) Accrued expenses (5,354) (5,975) Income taxes (including tax benefit of $3,463 and $4,917 from exercise of stock options, respectively) 1,380 7,051 Deferred revenues (71,656) (58,209) -------- -------- Net cash from operating activities 105,116 103,669 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (33,428) (33,069) Purchase of investments (3,983) (2,994) Proceeds from sale of property and equipment 150 971 Proceeds from investments 4,000 3,633 Computer software developed (4,607) (2,734) Payment for acquisitions, net of cash acquired (119,616) (20,583) Other, net 105 143 -------- -------- Net cash from investing activities (157,379) (54,633) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock upon exercise of stock options 11,238 17,130 Proceeds from sale of common stock, net 565 540 Note payable 14,000 - Dividends paid (11,346) (9,815) -------- -------- Net cash from financing activities 14,457 7,855 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (37,806) $ 56,891 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 53,758 $ 32,014 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,952 $ 88,905 ======== ======== Net cash paid for income taxes was $25,865 and $11,970 for the nine months ended March 31, 2005 and 2004, respectively. The Company paid interest of $127 and $81 for the nine months ended March 31, 2005 and 2004, respectively. See notes to condensed consolidated financial statements JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts in Thousands, Except Per Share Amounts) (Unaudited) 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 leading provider of integrated computer systems 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) and by providing the conversion and software implementation services for a financial institution to utilize a JHA software system. 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 significant intercompany accounts and transactions have been eliminated. STOCK OPTIONS As permitted under Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, the Company has elected to follow Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based awards to employees. Under APB No. 25, the Company generally recognizes no compensation expense with respect to such awards, since the exercise price of the stock options awarded is equal to the fair market value of the underlying security on the grant date. The following table illustrates the effect on net income and net income per share as if the Company had accounted for its stock-based awards to employees under the fair value method of SFAS No. 123. The fair value of the Company's stock-based awards to employees was estimated as of the date of the grant using a Black-Scholes option pricing model. The Company's pro forma information is as follows: Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Net income, as reported $ 19,429 $ 16,316 $ 53,795 $ 44,696 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects 295 249 900 7,058 ------- ------- ------- ------- Pro forma net income $ 19,134 $ 16,067 $ 52,895 $ 37,638 ======= ======= ======= ======= Diluted net income per share As reported $ 0.21 $ 0.18 $ 0.58 $ 0.49 Pro forma $ 0.20 $ 0.17 $ 0.57 $ 0.41 Basic net income per share As reported $ 0.21 $ 0.18 $ 0.59 $ 0.50 Pro forma $ 0.21 $ 0.18 $ 0.58 $ 0.42 COMPREHENSIVE INCOME Comprehensive income for the three and nine-month periods ended March 31, 2005 and 2004 equals the Company's net income. INTERIM FINANCIAL STATEMENTS The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America applicable to interim condensed consolidated financial statements, and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and accompanying notes, which are included in its Annual Report on Form 10-K ("Form 10-K") for the year ended June 30, 2004. The accounting policies followed by the Company are set forth in Note 1 to the Company's consolidated financial statements included in its Form 10-K for the fiscal year ended June 30, 2004. In the opinion of management of the Company, the accompanying condensed consolidated financial statements reflect all adjustments necessary (consisting solely of normal recurring adjustments) to present fairly the financial position of the Company as of March 31, 2005, and the results of its operations and its cash flows for the three and nine-month periods ended March 31, 2005 and 2004. The results of operations for the three and nine-month periods ended March 31, 2005 are not necessarily indicative of the results to be expected for the entire year. ADDITIONAL INTERIM FOOTNOTE INFORMATION The following additional information is provided to update the notes to the Company's annual consolidated financial statements for the developments during the three and nine months ended March 31, 2005. Acquisitions: On March 2, 2005, the Company acquired all of the membership interests in Tangent Analytics, LLC, ("Tangent"), a developer of business intelligence software systems. The purchase price for Tangent, $4,000 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $241 to capitalized software and $4,045 to goodwill. Contingent purchase consideration of up to $5,000 may be paid over the next three years based upon Tangent's earnings before interest, depreciation, taxes and amortization. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax purposes. Effective January 1, 2005, the Company acquired all of the membership interests in RPM Intelligence, LLC, doing business as Stratika ("Stratika"). Stratika provides customer and product profitability solutions for financial institutions. The purchase price for Stratika, $6,241 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $422 to capitalized software and $5,807 to goodwill. Contingent purchase consideration of up to $10,000 may be paid over the next three years based upon the net operating income of Stratika. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax. On December 17, 2004, the Company acquired certain assets of SERSynergy[TM] ("Synergy"), a division of SER Solutions, Inc. Synergy is a market leader for intelligent document management for financial institutions. The purchase price for Synergy, $34,466 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $2,541 to capitalized software, $6,145 to customer relationships, and $28,996 to goodwill. The acquired goodwill has been allocated to the bank segment and is deductible for federal income tax. Effective December 1, 2004, the Company acquired the capital stock of TWS Systems, Inc. and three affiliated corporations (collectively "TWS"). TWS is a leading provider of image-based item processing solutions for credit unions. The purchase price for TWS, $10,885 paid in cash, was allocated to the assets and liabilities acquired, based on then estimated fair values at the acquisition date, resulting in an allocation of $2,110 to capitalized software, $2,645 to customer relationships, and $5,920 to goodwill. The acquired goodwill has been allocated to the credit union segment and is non- deductible for federal income tax. On November 23, 2004, the Company acquired the capital stock of Optinfo, Inc. ("Optinfo"). Optinfo is a leading provider of enterprise exception management software and services. The purchase price for Optinfo, $12,927 paid in cash and $2,240 of vested options to acquire common stock, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $421 to capitalized software, and $12,650 to goodwill. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax. Effective October 1, 2004, the Company acquired the capital stock of Verinex Technologies, Inc. ("Verinex"). Verinex is a leading developer and integrator of biometric security solutions. The purchase price for Verinex, $35,000 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $464 to capitalized software, $4,208 to customer relationships, and $29,729 to goodwill. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax. On October 5, 2004, the Company announced it had completed the acquisition by merger of Select Payment Processing, Inc. ("SPP") effective October 1, 2004. SPP is a provider of an innovative electronic payment processing solution for financial institutions. The purchase price for SPP, $12,000 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, resulting in an allocation of $467 to capitalized software and $10,397 to goodwill. The acquired goodwill has been allocated to the bank segment and is non- deductible for federal income tax. On September 1, 2004, the Company acquired Banc Insurance Services, Inc. ("BIS") in Massachusetts. BIS is a leading provider of turnkey outsourced insurance agency solutions for financial institutions. The purchase price for BIS, $6,700 paid in cash, was allocated to the assets and liabilities acquired based on then estimated fair values at the acquisition date, with the remainder resulting in a net allocation of $6,549 to goodwill. Contingent purchase consideration may be paid over the next five years based upon BIS gross revenues which could result in additional allocations to goodwill of up to $13,400. The acquired goodwill has been allocated to the bank segment and is non-deductible for federal income tax. The accompanying condensed statements of income for the three and nine-month periods ended March 31, 2005 and 2004 do not include any revenues and expenses related to these acquisitions prior to the respective closing dates of each acquisition. The following unaudited pro forma consolidated financial information is presented as if these acquisitions had occurred at the beginning of the periods presented. In addition, this unaudited pro forma financial information is provided for illustrative purposes only and should not be relied upon as necessarily being indicative of the historical results that would have been obtained if these acquisitions had actually occurred during those periods, or the results that may be obtained in the future as a result of these acquisitions. Pro Forma Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Revenue $134,573 $127,556 $411,964 $368,412 Gross profit 57,301 50,193 169,963 144,340 ------- ------- ------- ------- Net Income $ 19,464 $ 16,937 $ 56,386 $ 47,612 ======= ======= ======= ======= Earnings per share - diluted $ 0.21 $ 0.18 $ 0.61 $ 0.52 ======= ======= ======= ======= Diluted Shares 93,421 92,077 92,954 91,715 ======= ======= ======= ======= Earnings per share - basic $ 0.21 $ 0.19 $ 0.62 $ 0.53 ======= ======= ======= ======= Basic Shares 91,212 89,654 90,716 89,133 ======= ======= ======= ======= RECLASSIFICATION Where appropriate, prior period financial information has been reclassified to conform to the current period's presentation. NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS In December 2004, the Financial Accounting Standard Board ("FASB") issued Statement No. 123 ("FAS 123R"), Share-Based Payment and on March 29, 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 107 ("SAB 107"), Share-Based Payment. FAS 123R requires all entities to recognize compensation expense in an amount equal to the fair value of stock options and restricted stock granted to employees, while SAB No. 107 addresses issues regarding valuation methods and selection of assumptions. The Company will apply these standards beginning July 1, 2005; however the Company has not completed the process of evaluating the methodology to be used to implement the requirements of these standards. In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29, effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005, and therefore effective for the Company on July 1, 2005. SFAS No. 153 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is not expected to have a material effect on the Company's consolidated financial statements. NOTE 3. SHARES USED IN COMPUTING NET INCOME PER SHARE Three Months Ended Nine Months Ended March 31, March 31, --------------- --------------- 2005 2004 2005 2004 ------ ------ ------ ------ Weighted average number of common shares outstanding - basic 91,212 89,654 90,716 89,133 Common stock equivalents 2,209 2,423 2,238 2,582 ------ ------ ------ ------ Weighted average number of common and common equivalent shares outstanding - diluted 93,421 92,077 92,954 91,715 ====== ====== ====== ====== Per share information is based on the weighted average number of common shares outstanding for the periods ended March 31, 2005 and 2004. Stock options have been included in the calculation of income per share to the extent they are dilutive. Non-dilutive stock options to purchase approximately 1,667 and 1,751 shares and 1,746 and 1,758 shares for the three and nine-month periods ended March 31, 2005 and 2004, respectively, were not included in the computation of diluted income per common share. NOTE 4. BUSINESS SEGMENT INFORMATION The Company is a leading provider of integrated computer systems that perform data processing (both in-house and outsourced) for banks and credit unions. The Company's operations are classified into two business segments: bank systems and services and credit union systems and services. 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. Three Months Ended Three Months Ended March 31, 2005 March 31, 2004 ---------------------------- ---------------------------- Bank Credit Union Total Bank Credit Union Total ------- ------------ ------- ------- ------------ ------- REVENUE: License $ 11,614 $ 9,329 $ 20,943 $ 10,620 $ 4,723 $ 15,343 Support and service 77,076 15,433 92,509 66,848 11,505 78,353 Hardware 15,551 5,379 20,930 19,203 6,809 26,012 ------- ------- ------- ------- ------- ------- Total 104,241 30,141 134,382 96,671 23,037 119,708 ------- ------- ------- ------- ------- ------- COST OF SALES: Cost of license 285 800 1,085 831 300 1,131 Cost of support and service 49,148 12,288 61,436 42,855 9,218 52,073 Cost of hardware 10,647 3,937 14,584 13,800 5,385 19,185 ------- ------- ------- ------- ------- ------- Total 60,080 17,025 77,105 57,486 14,903 72,389 ------- ------- ------- ------- ------- ------- GROSS PROFIT $ 44,161 $ 13,116 $ 57,277 $ 39,185 $ 8,134 $ 47,319 ======= ======= ======= ======= ======= ======= Nine Months Ended Nine Months Ended March 31, 2005 March 31, 2004 ---------------------------- ---------------------------- Bank Credit Union Total Bank Credit Union Total ------- ------------ ------- ------- ------------ ------- REVENUE: License $ 40,997 $ 21,645 $ 62,642 $ 28,108 $ 12,595 $ 40,703 Support and service 222,242 41,641 263,883 195,896 31,698 227,594 Hardware 52,123 15,790 67,913 58,457 14,624 73,081 ------- ------- ------- ------- ------- ------- Total 315,362 79,076 394,438 282,461 58,917 341,378 ------- ------- ------- ------- ------- ------- COST OF SALES: Cost of license 1,820 2,608 4,428 1,471 825 2,296 Cost of support and service 143,300 35,112 178,412 126,332 26,486 152,818 Cost of hardware 36,928 12,082 49,010 40,884 10,695 51,579 ------- ------- ------- ------- ------- ------- Total 182,048 49,802 231,850 168,687 38,006 206,693 ------- ------- ------- ------- ------- ------- GROSS PROFIT $133,314 $ 29,274 $162,588 $113,774 $ 20,911 $134,685 ======= ======= ======= ======= ======= =======

March 31, June 30, ----------- ----------- 2005 2004 ----------- ----------- Property and equipment, net: Bank systems and services $ 192,382 $ 187,242 Credit Union systems and services 34,155 27,858 ----------- ----------- Total $ 226,537 $ 215,100 =========== =========== Identified intangible assets, net: Bank systems and services $ 248,363 $ 125,650 Credit Union systems and services 40,162 41,257 ----------- ----------- Total $ 288,525 $ 166,907 =========== =========== NOTE 5. SUBSEQUENT EVENTS Subsequent to March 31, 2005, the Company terminated its bank credit line that it renewed in October 2004, which provided for funding up to $25,000 and bore interest at a variable LIBOR-based rate. At March 31, 2005, there was a 30-day note outstanding for $14,000 under such credit line. The credit line was terminated and the outstanding note of $14,000 was paid in full on April 19, 2005, using the proceeds of a loan under a new unsecured revolving bank credit agreement, entered into on the same date. The new unsecured revolving bank credit facility allows borrowing of up to $150,000, which may be increased by the Company at any time in the next three years to $225,000. The unsecured revolving bank credit facility bears interest at a rate equal to (a) LIBOR or (b) an alternate base rate (the greater of (a) the Federal Funds Rate plus 1/2% or (b) the Prime Rate), plus an applicable percentage in each case determined by the Company's leverage ratio. The new unsecured revolving credit line terminates April 19, 2010. Also subsequent to March 31, 2005, on April 29, 2005, the Board of Directors increased its existing 3.0 million share stock repurchase authorization by 2.0 million, bringing the total authorization to 5.0 million shares. The Company will finance its share repurchase with available cash reserves or short-term borrowings on its existing credit facility. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Background and Overview We provide integrated computer systems for in-house and outsourced data processing to commercial banks, credit unions and other financial institutions. We have developed and acquired banking and credit union application software systems that we market, together with compatible computer hardware, to these financial institutions. We also perform data conversion and software installation for the implementation of our systems and provide continuing customer support services after the systems are installed. For our customers who prefer not to make an up-front capital investment in software and hardware, we provide our full range of products and services on an outsourced basis through our six data centers and 22 item-processing centers located throughout the United States. Fiscal year 2005 third quarter results reflect a 12% increase in revenue, resulting in a 21% increase in gross profit and an increase of 19% in net income over the third quarter of fiscal year 2004. For the nine months of fiscal 2005, revenue increased 16%, with an increase of 21% in gross profit and an increase of 20% in net income over the same nine months in fiscal 2004. A detailed discussion of the major components of the results of operations for the three and nine-month periods ended March 31, 2005 follows. All amounts are in thousands and discussions compare the current three and nine- month periods ended March 31 2005, to the prior three and nine-month periods ended March 31, 2004. REVENUE License Revenue Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- License $ 20,943 $ 15,343 $ 62,642 $ 40,703 Percentage of total revenue 16% 13% 16% 12% Change from prior year +36% +54% License revenue represents the delivery and acceptance of application software systems contracted with us by the customer. We license our proprietary software products under standard license agreements that typically provide the customer with a non-exclusive, non-transferable right to use the software on a single computer and for a single financial institution location. License revenue increased mainly due to growth in delivery and acceptance within both the bank and credit union segments. Year-to-date license revenue in fiscal 2005 experienced growth in many software solutions. The leading elements were Episys[R] (our flagship software solution for larger credit unions), third party credit union ancillary software solutions, Silverlake System[R] (our flagship software solution for larger banks), 4|sight[TM] (our complementary image solution), and Fraud Detective[TM] (our anti-fraud and anti-money laundering software solution). Support and Service Revenue Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Support and service $ 92,509 $ 78,353 $263,883 $227,594 Percentage of total revenue 69% 65% 67% 67% Change from prior year +18% +16% Support and service revenues are generated from implementation services (including conversion, installation, configuration and training), annual support to assist the customer in operating their systems and to enhance and update the software, outsourced data processing services and ATM and debit card processing services. Q3 Fiscal 2005 Compared YTD Fiscal 2005 Compared to Q3 Fiscal 2004 to YTD Fiscal 2004 ------------------- ------------------- Support and Service Revenue $ Change % Change $ Change % Change -------- -------- -------- -------- In-House Support & Other Services $ 5,924 15% $ 15,350 14% EFT Support 3,634 39% 11,544 44% Outsourcing Services 3,247 16% 8,311 14% Implementation Services 1,351 14% 1,084 4% -------- -------- Total Increase $ 14,156 18% $ 36,289 16% ======== ======== There was strong growth in all of the support and service revenue components for the third quarter and nine months of fiscal 2005. EFT support, including ATM and debit card transaction processing services, experienced the largest percentage of growth for the third quarter and the nine months of fiscal 2005. Our daily transaction counts are rapidly growing as our customers continue to experience consistent organic growth in ATM and debit card transactions. In-house support increased primarily from software implementations performed during the previous twelve months. Outsourcing services for banks and credit unions also continue to drive revenue growth at a strong pace as we add new bank and credit union customers and open new data processing sites. We expect growth in outsourcing to continue as we add services from recent acquisitions to our existing and new customers. Hardware Revenue Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Hardware $ 20,930 $ 26,012 $ 67,913 $ 73,081 Percentage of total revenue 15% 22% 17% 21% Change from prior year -20% -7% 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 for the third quarter and year-to-date due to the types of equipment sold and a decrease in the number of hardware systems sold. Hardware revenue was 22% of total revenue in the third quarter and 21% for the nine months of fiscal 2004, while in the current third quarter it is 15% of total revenue and 17% of total revenue for the nine months of fiscal 2005. We expect this decrease as a percentage of total revenue to continue as the entire industry is experiencing the impact of rising equipment processing power and decreasing equipment prices. BACKLOG Backlog increased 5% from year-ago levels and increased 2% from December 31, 2004 quarter to $198,000 ($67,000 in-house and $131,000 outsourcing) at March 31, 2005. Backlog at December 31, 2004, was $194,500 ($68,500 in- house and $126,000 outsourcing). At March 31, 2004, backlog was $188,000 ($66,500 in-house and $121,500 outsourcing). COST OF SALES AND GROSS PROFIT Cost of license represents the cost of software from third party vendors through remarketing agreements. These costs are recognized when license revenue is recognized. Cost of support and service represents 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, ATM and debit card processing services and direct operation costs. These costs are recognized as they are incurred. Cost of hardware consists of the direct and related costs of purchasing the equipment from the manufacturers and delivery to our customers, plus the ongoing operation costs to provide support to our customers. These costs are recognized at the same time as the related hardware revenue is recognized. Cost of Sales and Gross Profit Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Cost of License $ 1,085 $ 1,131 $ 4,428 $ 2,296 Percentage of total revenue <1% <1% 1% 1% Change from prior year -4% +93% License Gross Profit $ 19,858 $ 14,212 $ 58,214 $ 38,407 Gross Profit Margin 95% 93% 93% 94% Change from prior year +40% +52% ------------------ ------------------ Cost of support and service $ 61,436 $ 52,073 $178,412 $152,818 Percentage of total revenue 46% 44% 45% 45% Change from prior year +18% +17% Support and Service Gross $ 31,073 $ 26,280 $ 85,471 $ 74,776 Gross Profit Margin 34% 34% 32% 33% Change from prior year +18% +14% ------------------ ------------------ Cost of hardware $ 14,584 $ 19,185 $ 49,010 $ 51,579 Percentage of total revenue 11% 16% 12% 15% Change from prior year -24% -5% Hardware Gross Profit $ 6,346 $ 6,827 $ 18,903 $ 21,502 Gross Profit Margin 30% 26% 28% 29% Change from prior year -7% -12% ------------------ ------------------ TOTAL COST OF SALES $ 77,105 $ 72,389 $231,850 $206,693 Percentage of total revenue 57% 60% 59% 61% Change from prior year +7% +12% TOTAL GROSS PROFIT $ 57,277 $ 47,319 $162,588 $134,685 Gross Profit Margin 43% 40% 41% 39% Change from prior year +21% +21% Cost of license decreased slightly for the third quarter due to less third party reseller agreement software vendor costs. These costs increased for the nine months of fiscal 2005 due to increased third party reseller agreement software vendor costs in prior quarters of the current fiscal year. Cost of support and service increased for the third quarter and the nine months, in line with the support and service revenue increase, primarily due to increased headcount and depreciation expense as compared to the same periods last year. Cost of hardware decreased for the third quarter and the nine months of fiscal 2005, in line with the decrease in hardware sales, primarily due to the types of equipment delivered, with varying vendor incentives in the current year. Incentives and rebates received from vendors fluctuate quarterly and annually due to changing thresholds established by the vendors. GROSS PROFIT Gross profit margin on license revenue increased in the third quarter and decreased slightly for the nine months of fiscal 2005 due to the timing of license revenue and the associated costs through reseller agreements. The gross profit margin remained at 34% in support and service for the third quarter in both fiscal years, but decreased slightly for the nine months of fiscal 2005, primarily due to increased headcount relating to support and service, facility costs related to new acquisitions, and depreciation expense of new equipment. Hardware gross margin increased in the third quarter of fiscal 2005 due to vendor rebates received. For the nine months of fiscal 2005, hardware margins decreased minimally due to the number of hardware shipments and sales mix. OPERATING EXPENSES Selling and Marketing Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Selling and marketing $ 11,598 $ 8,634 $ 34,250 $ 25,937 Percentage of total revenue 9% 7% 9% 8% Change from prior year +34% +32% Dedicated sales forces, inside sales teams, and technical sales support teams conduct our sales efforts for our two market 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. Our inside sales force markets specific complementary products and services to our existing customers. For the three months and nine months ended March 31, 2005, selling and marketing expenses increased due to higher commission and related expenses due to increased revenue and to additional expenses incurred by entities acquired during each period. Research and Development Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Research and development $ 7,738 $ 6,344 $ 20,621 $ 17,575 Percentage of total revenue 6% 5% 5% 5% Change from prior year +22% +17% We devote significant effort and expense to develop new software, service products and continually upgrade and enhance our existing offerings. Typically, we upgrade all of our core and complementary software applications annually. 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 employee costs in relation to increased headcount for ongoing development of new products and enhancements to existing products, plus depreciation and equipment maintenance expense. Research and development expenses increased to 6% of total revenue for the third quarter ended March 31, 2005, but remained at 5% of total revenue for the nine months ended March 31, 2005. General and Administrative Three Months Ended Nine Months Ended March 31, March 31, ------------------ ------------------ 2005 2004 2005 2004 ------- ------- ------- ------- General and administrative $ 6,915 $ 6,842 $ 22,507 $ 21,520 Percentage of total revenue 5% 6% 6% 6% Change from prior year +1% +5% General and administrative expense increased for the third quarter and year- to-date in fiscal 2005, primarily due to increased expenses related to customer user group meetings, and insurance expense related to the additional sites and increased coverage as compared to the same period last year. Although general and administrative expenses increased in both the third quarter and year-to-date, expenses remained at 5% of total revenue in the current quarter and 6% of total revenue in the third quarter of last fiscal year. For the nine months, expenses were 6% of total revenue for both fiscal years. INTEREST INCOME (EXPENSE) Net interest income for the three and nine-months ended March 31, 2005 reflects a $135 decrease and a $127 increase, respectively. The decrease in interest income of $77 for the third quarter is due to lower cash balances as compared to the nine month increase of $173, which is due to higher cash balances in prior quarters of fiscal 2005. The increase of interest expense of $58 for the third quarter and $46 for the nine months is due to interest expense on the bank credit line that was renewed in October 2004. PROVISION FOR INCOME TAXES The provision for income taxes was $11,658 and $32,277 for the three and nine months ended March 31, 2005, compared with $9,379 and $25,692 for the same three and nine-month periods in fiscal 2004. For the current fiscal year, the rate of income taxes is estimated at 37.5% of income before income taxes compared to 36.5% for the same periods in fiscal 2004. The change reflects an overall increase in the effective state income tax rate. NET INCOME Net income increased 19% to $19,429, or $0.21 per diluted share, for the three months ended March 31, 2005 compared to $16,316, or $0.18 per diluted share, for the three months ended March 31, 2004. Net income increased 20% to $53,795, or $0.58 per diluted share, for the nine months of fiscal 2005 compared to $44,696, or $0.49 per diluted share, for the nine-month period ended March 31, 2004. BUSINESS SEGMENT DISCUSSION The Company is a leading provider of integrated computer systems that perform data processing (available for in-house or outsourced installations) for banks and credit unions. The Company's operations are classified into two business 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 Three Months Ended % Nine Months Ended % March 31, Change March 31, Change ------------------------- ------------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Revenue $104,241 $ 96,671 8% $315,362 $282,461 12% Gross Profit $ 44,161 $ 39,185 13% $133,314 $113,774 17% Gross Profit Margin 42% 41% 42% 40% Revenue growth in the bank segment for the third quarter and nine months of fiscal 2005 is attributable to the significant increase in license revenue related to new core customers, migrations from legacy systems, and sales of complementary products, together with the steady increase in support and services relating to maintenance for in-house and outsourced customers. ATM and debit card processing continue to experience strong organic growth, along with expanding customer bases. The bank segment increased gross profit for the third quarter and year-to- date in fiscal 2005 due to revenue growth from bank customers and continued leveraging of resources and infrastructure combined with company-wide cost controls. Credit Union Three Months Ended % Nine Months Ended % March 31, Change March 31, Change ------------------------- ------------------------ 2005 2004 2005 2004 ------- ------- ------- ------- Revenue $ 30,141 $ 23,037 31% $ 79,076 $ 58,917 34% Gross Profit $ 13,116 $ 8,134 61% $ 29,274 $ 20,911 40% Gross Profit Margin 44% 35% 37% 35% Revenue growth in the credit union segment for the third quarter and year to date of fiscal 2005 is attributable to the rise in license revenue from our credit union products together with a strong increase in support and service revenue from maintenance for in-house customers, with the largest growth being in credit union outsourcing. ATM and debit card processing activity is also growing rapidly in our credit union segment from both organic growth and expansion of our customer base. The credit union gross profit increased for the third quarter and the nine months of 2005 primarily due to revenue from delivery and acceptance of new core systems. There was an increase in the hardware margin for the third quarter, mainly due to vendor rebates compared to the same period in the prior year. However, the increase in the third quarter did not raise the year-to-date hardware margins, which had a small decrease for the nine months of fiscal year 2005 due to the mix of products sold. FINANCIAL CONDITION Liquidity The Company's cash and cash equivalents decreased to $15,952 at March 31, 2005, from $53,758 million at June 30, 2004 and $88,905 at March 31, 2004. The decrease is primarily due to payment for acquisitions of $119,616. Cash provided by operations increased $1,447 to $105,116 for the nine months ended March 31, 2005 as compared to $103,669 for the same period last year. The increase in net cash from operating activities consists of an increase in net income of $9,099, and an increase in depreciation and amortization of $3,636, plus changes in trade receivables of $10,406, prepaid expenses of ($3,707), accounts payable and accrued expenses of $1,110, offset by decreasing income taxes of ($5,671) and deferred revenues of ($13,447). Cash used in investing activities for the current period totaled $157,379. The largest use of cash was for payment of acquisitions in the amount of $119,616. Capital expenditures totaled $33,428, and internal computer software developed used $4,607. Financing activities netted cash of $14,457 during the nine months ended March 31, 2005 and included proceeds from the issuance of stock for stock options exercised and the sale of treasury and common stock to the employee stock purchase plan of $11,238 and $565, respectively. Borrowing under a line of credit note payable amounted to $14,000 and dividends were paid to the stockholders of $11,346 during the nine-month period ended March 31, 2005. The Company renewed a credit line on March 22, 2005 which provides for funding of up to $8,000 and bears interest at the prime rate (5.75% at March 31, 2005). The credit line expires March 22, 2006 and is secured by $1,000 of investments. At March 31, 2005, no amount was outstanding. In October 2004, the Company renewed a bank credit line that provided for funding up to $25,000 and bore interest at a variable LIBOR-based rate. At March 31, 2005, there was a 30-day note outstanding for $14,000 under such credit line. The credit line was terminated and the outstanding note of $14,000 was paid in full on April 19, 2005, using the proceeds of a loan under a new unsecured revolving bank credit facility, entered into on the same date. The new unsecured revolving bank credit facility allows borrowing of up to $150,000, which may be increased by the Company at any time in the next three years to $225,000. The unsecured revolving bank credit facility bears interest at a rate equal to (a) LIBOR or (b) an alternate base rate (the greater of (a) the Federal Funds Rate plus 1/2% or (b) the Prime Rate), plus an applicable percentage in each case determined by the Company's leverage ratio. The new unsecured revolving credit line terminates April 19, 2010. Also subsequent to March 31, 2005, on April 29, 2005, the Board of Directors increased its existing 3.0 million share stock repurchase authorization by 2.0 million, bringing the total authorization to 5.0 million shares. The Company will finance its share repurchase with available cash reserves or short-term borrowings on its existing credit facility. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. Capital Requirements and Resources The Company generally uses existing resources and funds generated from operations to meet its capital requirements. Capital expenditures totaling $33,428 and $33,069 for the nine-month periods ended March 31, 2005 and 2004, respectively, were made for expansion of facilities and additional equipment. These additions were funded from cash generated by operations. Total consolidated capital expenditures for the Company are not expected to exceed $45,000 for fiscal year 2005. On September 21, 2001, the Company's Board of Directors approved a stock buyback of the Company's common stock of up to 3.0 million shares, and approved an increase to 6.0 million shares on October 4, 2002. The buyback was funded with cash from operations. At June 30, 2004, there were 315,651 shares remaining in treasury stock. During the nine months ended March 31, 2005, treasury shares of 306,027 were reissued for the shares exercised in the employee stock option plan and 9,624 were reissued for the shares exercised in the employee stock purchase plan. At March 31, 2005, there were no shares remaining in treasury stock. Subsequent to March 31, 2005, the Company's Board of Directors declared a cash dividend of $.045 per share on its common stock payable on May 24, 2005, to stockholders of record on May 9, 2005. 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 outlook continues to be favorable. Critical Accounting Policies The Company regularly reviews its selection and application of significant accounting policies and related financial disclosures. The application of these accounting policies requires that management make estimates and judgments. The estimates that affect the application of our most critical accounting policies and require our most significant judgments are outlined in Management's Discussion and Analysis of Financial Condition and Results of Operations - "Critical Accounting Policies" - contained in our annual report on Form 10-K for the year ended June 30, 2004. Accounting Pronouncements In December 2004, the Financial Accounting Standard Board ("FASB") issued Statement No. 123 ("FAS 123R"), Share-Based Payment and on March 29, 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 107 ("SAB 107"), Share-Based Payment. FAS 123R requires all entities to recognize compensation expense in an amount equal to the fair value of stock options and restricted stock granted to employees, while SAB No. 107 addresses issues regarding valuation methods and selection of assumptions. The Company will apply these standards beginning July 1, 2005; however the Company has not completed the process of evaluating the methodology to be used to implement the requirements of these standards. In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29, effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005, and therefore effective for the Company on July 1, 2005. SFAS No. 153 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is not expected to have a material effect on the Company's consolidated financial statements. Forward Looking Statements The Management's Discussion and Analysis of Results of Operations and Financial Condition and other portions of this report contain forward- looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to the Company and those specific to the industry, which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, the matters detailed at Risk Factors in its Annual Report on Form 10-K for the fiscal year ended June 30, 2004. Undue reliance should not be placed on the forward-looking statements. The Company does not undertake any obligation to publicly update any forward-looking statements. CONCLUSION The Company's results of operations and its financial position continue to be strong with increased earnings, and continued gross margin growth for the three and nine months ended March 31, 2005, and sustained growth in cash flow from operations for the nine months ended March 31, 2005. This reflects the continuing attitude of cooperation and commitment by each employee, management's ongoing cost control efforts and our commitment to deliver top quality products and services to the markets we serve. ITEM 3. 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 investments in U.S. government securities. We actively monitor these risks through a variety of controlled procedures involving senior management. We do not currently use any derivative financial instruments. Based on the controls in place, credit worthiness of the customer base and the relative size of these financial instruments, we believe the risk associated with these exposures will not have a material adverse effect on our consolidated financial position or results of operations. ITEM 4. CONTROLS AND PROCEDURES An evaluation was carried out under the supervision and with the participation of our management, including our Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operations of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation as of the end of the period covered by this report, the CEO and CFO concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings. There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of evaluation. PART II. OTHER INFORMATION ITEM 6. EXHIBITS 31.1 Certification of the Chief Executive Officer dated May 6, 2005. 31.2 Certification of the Chief Financial Officer dated May 6, 2005. 32.1 Written Statement of the Chief Executive Officer dated May 6, 2005. 32.2 Written Statement of the Chief Financial Officer dated May 6, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. JACK HENRY & ASSOCIATES, INC. Date: May 6, 2005 /s/ John F. Prim --------------------- John F. Prim Chief Executive Officer Date: May 6, 2005 /s/ Kevin D. Williams --------------------- Kevin D. Williams Chief Financial Officer and Treasurer EX-31.1 2 exh31-1.txt CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 CERTIFICATION ------------- I, John F. Prim, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Jack Henry & Associates, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information ; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 6, 2005 /s/ John F. Prim ------------------------------ John F. Prim Chief Executive Officer EX-31.2 3 exh31-2.txt CERTIFICATION OF THE CHIEF FINANCIAL OFFICER EXHIBIT 31.2 CERTIFICATION ------------- I, Kevin D. Williams, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Jack Henry & Associates, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information ; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 6, 2005 /s/ Kevin D. Williams ------------------------------- Kevin D. Williams Chief Financial Officer EX-32.1 4 exh32-1.txt WRITTEN STATEMENT OF THE CHIEF EXECUTIVE OFFICER EXHIBIT 32.1 Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Executive Officer of Jack Henry & Associates, Inc. (the "Company"), hereby certify that the Quarterly Report on Form 10-Q of the Company for the three and nine-months ended March 31, 2005 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 6, 2005 */s/ John F. Prim ------------------------------------ John F. Prim Chief Executive Officer * A signed original of this written statement required by Section 906 has been provided to Jack Henry & Associates, Inc. and will be retained by Jack Henry & Associates, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 5 exh32-2.txt WRITTEN STATEMENT OF THE CHIEF FINANCIAL OFFICER EXHIBIT 32.2 Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Financial Officer of Jack Henry & Associates, Inc. (the "Company"), hereby certify that the Quarterly Report on Form 10-Q of the Company for the three and nine-months ended March 31, 2005 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 6, 2005 */s/ Kevin D. Williams ------------------------------------ Kevin D. Williams Chief Financial Officer * A signed original of this written statement required by Section 906 has been provided to Jack Henry & Associates, Inc. and will be retained by Jack Henry & Associates, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. ~~-----END PRIVACY-ENHANCED MESSAGE-----~~