FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURI-
TIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 of incorporation) (I.R.S. Employer
Identification No.)
663 Highway 60, P. O. Box 807, Monett, MO 65708
(Address of principal 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
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.
Class Outstanding at April 30, 1995
Common Stock, $.01 par value 11,720,028
JACK HENRY & ASSOCIATES, INC.
CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item I - Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1995, (Unaudited) and June
30, 1994 3-4
Condensed Consolidated Statements of
Operations for the Nine Months and
Three Months Ended March 31, 1995
and 1994 (Unaudited) 5
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended March 31,
1995 and 1994 (Unaudited) 6
Notes to the Condensed Consolidated Financial
Statements 7
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial
Condition 8-10
Part II. OTHER INFORMATION
Item 5 - Other Information 10
Part I. Financial Information
Item 1. Financial Statements
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Share Data)
March 31,
1995 June 30,
(Unaudited) 1994
ASSETS
Current assets:
Cash $ 3,151 $ 1,942
Short-term investments 11,174 9,729
Receivables 5,682 11,384
Prepaid expenses and other 2,302 2,126
Total current assets $22,309 $25,181
Property and equipment, net 8,275 7,022
Other assets:
Intangible assets, net of amortization $ 4,581 $ 3,238
Computer software 1,110 1,196
Investments and other 410 677
Marketable equity securities 1,062 1,033
Total other assets $ 7,163 $ 6,144
Total assets
$37,747 $38,347
March 31,
1995 June 30,
(Unaudited) 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,041 $ 2,086
Accrued expenses 1,220 1,541
Income taxes 430 -
Deferred revenue 5,776 10,373
Total current liabilities $ 9,467 $14,000
Deferred income taxes 717 697
Total liabilities $10,184 $14,697
Stockholders' equity:
Preferred stock - $1.00 par value;
500,000 shares authorized;
none issued - -
Common stock - $0.01 par value;
30,000,000 shares authorized;
11,704,528 issued @ 3/31/95
11,674,403 issued @ 6/30/94 $ 117 $ 117
Additional paid-in capital 9,199 9,099
Net unrealized loss on noncurrent
equity securities - (44)
Retained earnings 18,247 14,478
Total stockholders' equity $27,563 $23,650
Total liabilities and
stockholders' equity $37,747 $38,347
The accompanying notes are an integral part of these consolidated financial
statements.
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JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands of Dollars, Except Per Share Data)
Quarter Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
Revenues:
Software licensing & installation $ 3,685 $ 3,056 $11,310 $ 9,079
Maintenance/support & service 2,645 1,763 7,689 5,039
Hardware sales & commissions 4,075 4,032 12,460 14,092
Total revenues $10,405 $ 8,851 $31,459 $28,210
Cost of sales:
Cost of hardware $ 2,950 $ 3,102 $ 9,025 $10,615
Cost of services * 1,983 1,670 5,850 5,120
Total cost of sales $ 4,933 $ 4,772 $14,875 $15,735
Gross profit $ 5,472 $ 4,079 $16,584 $12,475
Operating expenses:
Selling and marketing $ 1,347 $ 1,132 $ 3,956 $ 3,428
Research and development 280 231 826 715
General and administrative * 1,208 832 3,457 2,628
Total operating expenses $ 2,835 $ 2,195 $ 8,239 $ 6,771
Operating income $ 2,637 $ 1,884 $ 8,345 $ 5,704
Other income (expense):
Interest and dividend income, net $ 191 $ 137 $ 547 $ 472
Other, net 22 31 7 553
Total other income $ 213 $ 168 $ 554 $ 1,025
Income before income taxes $ 2,850 $ 2,052 $ 8,899 $ 6,729
Provision for income taxes 1,076 761 3,288 2,328
Net income $ 1,774 $ 1,291 $ 5,611 $ 4,401
Per share information (Note 4):
Net income ** $ .15 $ .11 $ .47 $ .37
Weighted avg. shares outstanding ** 12,054 12,057 12,007 12,011
The accompanying notes are an integral part of these consolidated financial
statements.
* 1994 figures restated to current year presentation
** 1994 figures reflects the 33.33% stock dividend paid March 10, 1994
</TABLE>
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Nine Months Ended
March 31,
1995 1994
Cash flows - operating activities:
Cash received from customers $32,570 $29,029
Cash paid to suppliers and employees (22,079) (22,573)
Interest and dividends received 585 416
Income taxes paid (3,174) (1,743)
Other, net 19 455
Net cash provided by operating
activities $ 7,921 $ 5,584
Cash flows from investing activities:
Proceeds on sale of property & equipment $ 1 $ 24
Capital expenditures (1,893) (685)
Short-term investment activity, net (1,504) (5,208)
Long-term investment activity, net (40) (46)
Capitalized software development (165) (47)
Payment of long-term debt 0 (800)
Acquisition costs, net (1,370) 32
Net cash used in investing activities $(4,971) $(6,730)
Cash flows from financing activities:
Proceeds from issuance of common stock
upon exercise of stock options $ 100 $ 503
Dividends paid (1,841) (1,565)
Net cash used in financing activities $(1,741) $(1,062)
Net increase (decrease) in cash $ 1,209 $(2,208)
Cash at beginning of period 1,942 4,843
Cash at end of period $ 3,151 $ 2,635
The accompanying notes are an integral part of these consolidated financial
statements.
JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
Description of the Company - Jack Henry & Associates, Inc. ("JHA" or the
"Company") is a computer software company which has developed several banking
software systems. It markets those systems to financial institutions worldwide
along with the computer equipment (hardware) and provides the conversion and
software customization services necessary for a financial institution to install
a JHA software system. It also provides continuing support and maintenance
services to customers using the system. All of these related activities are
currently considered a single business segment.
Consolidation - The consolidated financial statements include the accounts of
JHA and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in the consolidation.
Other Significant Accounting Policies - The accounting policies followed by
the Company are set forth in Note 1 to the Company's consolidated financial
statements included in its Annual Report on Form 10-K ("Form 10-K") for the
fiscal year ended June 30, 1994.
2. Interim Financial Statements
The accompanying condensed financial statements have been prepared in accor-
dance with the instructions to Form 10-Q of the Securities and Exchange Commis-
sion and in accordance with generally accepted accounting principles applicable
to interim financial statements, and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The financial statements should be read in conjunction
with the audited consolidated financial statements and accompanying notes of the
Company for the year ended June 30, 1994, which are included in its Form 10-K.
In the opinion of management of the Company, the accompanying condensed
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, 1995, and the results of its operations and its cash
flows for the three-month and nine-month periods then ended.
The results of operations for the periods ended March 31, 1995, are not
necessarily indicative of the results to be expected for the entire year.
3. Additional Interim Footnote Information
None.
4. Income Per Share Information
Earnings per common share are computed by dividing income by the weighted
average number of shares of common stock and dilutive common stock equivalents
outstanding for the quarters and nine month periods ended March 31, 1995 and
1994.
Item 2. - Management's Discussion and Analysis of Results of
Operations and Financial Condition
RESULTS OF OPERATIONS
Background and Overview
Jack Henry & Associates, Inc. ("JHA" or the "Company") is a leading provider
of in-house integrated computer systems that perform data processing for banks
and related financial institutions. The Company was founded in 1976. Its
proprietary applications software, which operates on IBM computers, is offered
under two systems: CIF 20/20 1, typically for banks with less than $200
million in assets, and the Silverlake System 2, for banks with assets of $100
million to $3 billion. Domestically, JHA frequently sells hardware with its
software products. It also provides customer support and related services. The
Company's software systems have been installed at over 955 banks and financial
institutions worldwide.
A detailed discussion of the major components of the results of operations for
the quarter and the nine months ended March 31, 1995, as compared to the same
periods in the previous year follows.
Revenues
Revenues increased 18% to $10,405,000, in the third quarter ended March 31,
1995. Software licensing and installation increased 21%, which renders the
highest profit margin of the three revenue groups. Maintenance, support and
service revenues increased 50% to $2,645,000, growing with new customer addi-
tions and the addition of CommLink. Hardware sales were $4,075,000, up slightly
from last year's quarter due to the timing and mix of orders received. Overall,
revenues continue to be strong because demand for the Company's products and
services remains high.
The nine months ended March 31, 1995, had a 12% increase in revenues over the
same period a year earlier. Software licensing and installation revenues are up
25% over FY '94's third quarter. This increase is complimented by the 53%
growth in maintenance/support and service revenue (which increased for similar
reasons to the quarter above), but slightly offset by the 12% decrease in
hardware sales over the same period last year.
The $7,734,049, backlog of sales at March 31, 1995, reflects an increase of
18% above last year's level.
Cost of Sales
There was an overall increase in total cost of sales of 5% for the quarter and
a decrease of 4% for the nine months compared to the same periods last year.
The quarter had cost of hardware decreasing 5%, reflecting a small improvement
in margin, and cost of services increased 25%, which reflects a slight improve-
ment since non-hardware revenues increased 31%.
1CIF 20/20 is a trademark of Jack Henry & Associ-
ates, Inc.
2Silverlake System is a registered trademark of
Jack Henry & Associates, Inc.
Cost of hardware decreased 15% for the nine months ended March 31, 1995. This
is on a 12% decrease in hardware revenue, thus a small margin improvement. The
nine month period reflects only a 19% increase in cost of services on a 35%
increase in non-hardware revenues. This resulted from the addition of CommLink
(which has a higher margin) and improved operational efficiencies.
Gross Profit
Gross profit increased to $5,472,000 and $16,584,000, respectively, in the
third quarter and the nine months ended March 31, 1995, compared to $4,168,000
and $12,672,000, for the same periods last year. Total gross profit has
increased 31% and 31%, which is relatively consistent with the revenue percent-
age increases. The previously discussed 21% and the 25% increase in software
revenues along with maintenance/services and support increasing due to new
customer additions, price increases and CommLink contributions are the primary
reasons for the consistent growth in the gross profit margins. The gross margin
percentage was 53% of sales for the quarter and nine month periods, up nicely
from the previous year periods of 47% and 45%, respectively. Generally, this
percentage will fluctuate with hardware sales - as they go down it will trend
upward and vice versa.
Operating Expenses
Total operating expenses increased 24%. This is a favorable picture, since
gross profit increased 31%, thus the Company continues to gain efficiencies
through growth. Selling expenses increased 19% and general and administrative
expenses increased 31%, research and development increased 21%. These increases
are primarily attributable to the addition of CommLink.
Operating expenses for the nine months ended March 31, 1995, also experienced
increases in all areas when compared to the same period a year ago. Again these
increases are primarily related to CommLink.
Other Income and Expense
Other income for the quarter ended March 31, 1995, reflects a net 27% increase
when compared to the same period last year.
The nine months ended March 31, 1995, experienced a net decrease, when
compared to the same period a year ago. The largest factor is due to the one-
time collection of $394,000 in Fiscal Year 1994's second quarter of amounts
previously deemed uncollectible.
Net Income
Net income for the third quarter was $1,774,000, or $.15 per share, compared
to $1,291,000, or $.11 per share, in the same quarter last year.
Net income for the nine months ended March 31, 1995, was $5,611,000, or $.47
per share compared to $4,401,000, or $.37 per share, in the same period last
year.
FINANCIAL CONDITION
Liquidity
The Company's cash and short-term investments increased to $14,325,000, at
March 31, 1995, from $11,671,000, at June 30, 1994. The increase is primarily
attributable to two factors, the first being customer payments made in response
to the annual billing of support fees received in the first quarter. (This also
caused the decrease in accounts receivable reflected on JHA's balance sheet at
March 31, 1995.) The second is the Company's continued profitability.
JHA has available credit lines totaling $2,215,000, although the Company
expects their use to be minimal during FY '95. The Company currently has no
short-term or long-term debt obligations.
Capital Requirements and Resources
JHA generally uses existing resources and funds generated from operations to
meet its capital requirements. Capital expenditures totalling $323,000 for the
third quarter ended March 31, 1995, were made for additional equipment and a new
building for CommLink. These were funded from cash generated by operations.
The consolidated capital expenditures of JHA total $1,893,000 for the nine month
period, ending March 31, 1995.
The Company paid a $.0575 per share cash dividend on March 15, 1995 to
stockholders of record on February 23, 1995 which was funded from working
capital. In addition, the Company's Board of Directors, subsequent to March 31,
1995, declared a quarterly cash dividend of $.0575 per share on its common stock
payable on May 26, 1995, to stockholders of record on May 12, 1995. This will
be funded out of working capital.
CONCLUSION
JHA's results of operations and its financial position continued to be quite
favorable during the quarter and nine months ended March 31, 1995. This
reflects the continuing attitude of cooperation and commitment by each employee,
management's ongoing cost control efforts and commitment to deliver top quality
products and services to the markets served.
PART II. OTHER INFORMATION
None.
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
behalf by the undersigned thereunto duly authorized.
JACK HENRY & ASSOCIATES, INC.
Date: May 12, 1995 /s/ Michael E. Henry
Michael E. Henry
Chairman of the Board
Chief Executive Officer
Date: May 12, 1995 /s/ Terry W. Thompson
Terry W. Thompson
Vice President and
Chief Financial Officer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMAY FINANCIAL INFORMATION EXTRACTED FROM JACK HENRY &
ASSOCIATES, INC. 3RD QUARTER 10-Q FOR 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH 10-Q.
</LEGEND>
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<PERIOD-END> MAR-31-1995
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