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JHA reports income increase

Wednesday, August 17, 2011

Jack Henry and Associates, Inc., based in Monett, has completd its fiscal year with a 16 percent increase in total revenue.

JHA, a leading provider of technology solutions and payment processing services primarily for the financial services industry, had gross profit for the year of $399.3 million. Net income rose 17 percent to $137.5 million compared to the prior fiscal year.

For the quarter ended June 30, the company generated total revenue of $249.3 million compared to $227.8 million in the same quarter a year ago. Gross profit increased to $104.2 million compared to $95.1 million in the fourth quarter of last fiscal year.

In fiscal 2011, total revenue was $966.9 million, compared to $836.6 million in fiscal 2010. Gross profit increased to $399.3 million compared to $345.1 million during last fiscal year.

Net income for the current year was $137.5 million, or $1.59 per diluted share, compared to $117.9 million, or $1.38 per diluted share for the prior year.

"Solid organic revenue growth and strong performances from our recent acquisitions allowed us to deliver revenue and operating income that exceeded the guidance we provided a year ago," said Jack Prim, chief executive officer. "In spite of recent economic news, we believe the spending environment for our customers is continuing to improve. We ended the fiscal year with strong sales performances as all four brands were over 100 percent of their assigned quotas for the year.

"We are cautiously optimistic that we will continue to see an improved economic environment over the next 12 months," Prim added.

"We ended fiscal 2011 with record levels of revenue, gross profit and net income," said Tony Wormington, JHA president. "Our company continues to prosper in a very competitive market and a consolidating industry through our constant focus on providing high quality products and services supported by superior levels of customer support.

"We are entering our fiscal

2012 with a strong balance sheet with low levels of debt, recurring revenue that continues to grow, an extremely focused strategy on servicing financial institutions, and a cautiously optimistic outlook for the new fiscal year," Wormington said. "We continue our laser-like focus on all of our growth oriented business opportunities and at the same time continue to maintain cost control initiatives."

License revenue for the fourth quarter increased to $15.1 million, or 6 percent of fourth quarter total revenue. Support and service revenue increased 11 percent to $219.2 million.

Within support and service revenue, electronic payment services, which includes ATM/debit/credit card transaction processing, bill payment, remote deposit capture and ACH transaction processing services, had the largest percentage growth of 26 percent or $16.9 million in the fourth quarter compared to the same quarter a year ago. Hardware sales in the fourth quarter of fiscal 2011 decreased 13 percent.

For the fiscal year 2011, license revenue increased to $53.1 million, or 6 percent of total revenue. There was growth in all the support and service revenue components for the fiscal year. The increase is due to continued strong organic growth and the additional revenues from companies acquired during the prior fiscal year.

Cost of sales increased 9 percent for the fourth quarter and 15 percent for the fiscal year. Gross margins on license revenue for fiscal 2011 were 88 percent, compared to 89 percent in 2010. The change in license gross margin is a result of fluctuations in the sales mix of third party products delivered. The gross margin for both hardware sales and support and service held steady for both fiscal years.

Research and development expenses increased 15 percent for the quarter, while general and administrative costs decreased 17 percent. Operating expenses increased 12 percent for the 2011 fiscal year, primarily due to additional operating expenses of the companies acquired during the previous fiscal year. Selling and marketing expenses rose 12 percent for the year.

According to Kevin Williams, chief financial officer, expenses and revenues were in line with company projections, including the three company acquisitions made in the previous year.

"Revenue and gross profit for the year were within 2 percent of our projections," Williams said. "We were able to get slightly more leverage to the operating income line that originally projected. Our interest expense went up significantly this year due to the credit facilities put in place in June of last year.

"However, we were able to repay approximately $230 million on these facilities during the year," Williams said. "We currently have a healthy cash balance."

Jack Henry and Associates, Inc., is a leading provider of technology solutions and payment processing

services primarily for financial services organizations. Its solutions serve more than 11,300 customers nationwide. For more information, viist www.jackhenry.com.



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