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Form 8-K HENRY JACK & ASSOCIATES For: May 03

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May 3, 2016 5:28 PM EDT


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): May 3, 2016
JACK HENRY & ASSOCIATES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
0-14112
43-1128385
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer 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)

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 May 3, 2016, Jack Henry & Associates, Inc. issued a press release announcing fiscal 2016 third quarter results, the text of which is attached hereto as Exhibit 99.1.

Item 9.01
Financial Statements and Exhibits.
(d)    Exhibits    
99.1 Press release dated May 3, 2016.





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:
May 3, 2016
 
/s/ Kevin D. Williams
 
 
 
Kevin D. Williams
 
 
 
Chief Financial Officer and Treasurer



JKHY Third Quarter Fiscal 2016 Revenue Increases 8%
May 3, 2016

Jack Henry & Associates, Inc.
Analyst & IR Contact:
Kevin D. Williams
 663 Highway 60, P.O. Box 807
 
Chief Financial Officer
 Monett, MO 65708
 
(417) 235-6652

FOR IMMEDIATE RELEASE

JACK HENRY & ASSOCIATES ENDS THIRD QUARTER FISCAL 2016 WITH
8% INCREASE IN REVENUE

Monett, MO, May 3, 2016 - Jack Henry & Associates, Inc. (NASDAQ: JKHY), a leading provider of technology solutions and payment processing services primarily for the financial services industry, today announced third quarter fiscal 2016 results.
Revenue for the quarter increased 8% compared to the third quarter of fiscal 2015 to $333.2 million, gross profit increased 5% to $138.9 million, and net income increased 6% to $53.9 million, or $0.68 per diluted share.
The nine months ended March 31, 2016 also contained increases in each of these categories. Fiscal year-to-date revenue increased 7% to $987.7 million, gross profit increased 8% to $419.3 million, and net income increased 9% to $164.6 million, or $2.06 per diluted share, over the first nine months of fiscal 2015.
According to Jack Prim, CEO, “We are pleased to deliver another quarter with record revenue and earnings. Sales performances across our brands remained strong in the quarter as we begin to book next year's business."
Operating Results
Revenue, cost of sales, and gross profit results for the quarter and fiscal year-to-date periods were as follows:
Revenue, Cost of Sales, and Gross Profit
 
 
 
 
 
 
 
 
 
(In Thousands)
Three Months Ended
March 31,
% Change
 
Nine Months Ended
March 31,
% Change
 
2016

 
2015

 
 
2016

 
2015

 
Revenue
 
 
 
 
 
 
 
 
 
License
$
292

 
$
569

(49
)%
 
$
2,530

 
$
1,563

62
 %
Percentage of Total Revenue
<1%

 
<1%

 
 
<1%

 
<1%

 
Support and Service
319,649

 
296,896

8
 %
 
947,615

 
882,017

7
 %
Percentage of Total Revenue
96
%
 
96
%
 
 
96
%
 
96
%
 
Hardware
13,245

 
12,244

8
 %
 
37,532

 
38,897

(4
)%
Percentage of Total Revenue
4
%
 
4
%
 
 
4
%
 
4
%
 
Total Revenue
333,186

 
309,709

8
 %
 
987,677

 
922,477

7
 %
 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
 
 
 
 
 
 
 
 
Cost of License
193

 
285

(32
)%
 
873

 
1,002

(13
)%
Cost of Support and Service
184,527

 
168,457

10
 %
 
541,230

 
503,925

7
 %
Cost of Hardware
9,553

 
9,152

4
 %
 
26,279

 
28,111

(7
)%
Total Cost of Sales
194,273

 
177,894

9
 %
 
568,382

 
533,038

7
 %
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
 
 
 
 
 
 
 
 
License Gross Profit
99

 
284

(65
)%
 
1,657

 
561

195
 %
License Gross Profit Margin
34
%
 
50
%
 
 
65
%
 
36
%
 
Support and Service Gross Profit
135,122

 
128,439

5
 %
 
406,385

 
378,092

7
 %
Support and Service Gross Profit Margin
42
%
 
43
%
 
 
43
%
 
43
%
 
Hardware Gross Profit
3,692

 
3,092

19
 %
 
11,253

 
10,786

4
 %
Hardware Gross Profit Margin
28
%
 
25
%
 
 
30
%
 
28
%
 
Total Gross Profit
$
138,913

 
$
131,815

5
 %
 
$
419,295

 
$
389,439

8
 %
Gross Profit Margin
42
%
 
43
%
 
 
42
%
 
42
%
 
•
For the third quarter of fiscal 2016, the bank systems and services segment revenue increased 3% to $246.2 million with a gross margin of 39% from $238.1 million with a gross margin of 41% in the same quarter last year.  The decrease in gross margin is primarily due to the decrease in deconversion fees in the current quarter compared to the prior year. The credit union systems and services segment revenue increased 21% to $87.0 million with a gross margin of 48% for the third quarter of fiscal 2016 from $71.6 million and a gross margin of 46% in the same period a year ago.

Page 1
JKHY Third Quarter Fiscal 2016 Revenue Increases 8%
May 3, 2016

•
Bank systems and services segment revenue for the nine month period increased 2% to $723.9 million from $709.0 million. Gross margins in each period were 40% and 41%, respectively. Credit union systems and services segment revenue increased 24% to $263.7 million with a gross margin of 49% from $213.4 million with a gross margin of 46% for the same nine months last year.
Operating Expenses and Operating Income
Operating income increased 3% to $79.8 million, or 24% of third quarter fiscal 2016 revenue, compared to $77.2 million, or 25% of revenue in the third quarter of fiscal 2015.
For the nine month period ending March 31, 2016, operating income increased 7% to $245.2 million, a 25% operating margin on total revenue, from $228.5 million, also 25% of revenue, in the same period of fiscal 2015.
(In Thousands)
Three Months Ended
March 31,
% Change
 
Nine Months Ended
March 31,
% Change
 
2016

 
2015

 
 
2016

 
2015

 
Selling and Marketing
$
22,732

 
$
21,674

5
%
 
$
66,714

 
$
65,512

2
%
Percentage of Total Revenue
7
%
 
7
%
 
 
7
%
 
7
%
 
 
 
 
 
 
 
 
 
 
 
Research and Development
19,854

 
17,522

13
%
 
57,269

 
51,995

10
%
Percentage of Total Revenue
6
%
 
6
%
 
 
6
%
 
6
%
 
 
 
 
 
 
 
 
 
 
 
General and Administrative
16,497

 
15,417

7
%
 
50,157

 
43,442

15
%
Percentage of Total Revenue
5
%
 
5
%
 
 
5
%
 
5
%
 
Total Operating Expenses
59,083

 
54,613

8
%
 
174,140

 
160,949

8
%
Operating Income
$
79,830

 
$
77,202

3
%
 
$
245,155

 
$
228,490

7
%
Operating Margin
24
%
 
25
%
 
 
25
%
 
25
%
 
•
The general and administrative costs increase of 15% in the year-to-date period is partially due to the gain on the sale of assets for TeleWeb products reported in the prior year. Increased headcount and related personnel costs also contributed to the increase in general and administrative and research and development costs.
Net Income
Third quarter net income totaled $53.9 million, or $0.68 per diluted share, compared to $50.7 million, or $0.63 per diluted share in the third quarter of fiscal 2015, for an increase in net income of 6% and an increase in diluted earnings per share of 9%.
Net income for the nine months ending March 31, 2016 totaled $164.6 million, compared to $150.7 million for the same time frame last year, for an increase of 9%, and diluted earnings per share increased 12% to $2.06 from $1.84 for the prior year period.
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
% Change
 
Nine Months Ended
March 31,
% Change
 
2016

 
2015

 
 
2016

 
2015

 
Income Before Income Taxes
$
79,398

 
$
76,566

4
 %
 
$
244,430

 
$
227,335

8
%
Provision for Income Taxes
25,515

 
25,854

(1
)%
 
79,833

 
76,656

4
%
Net Income
$
53,883

 
$
50,712

6
 %
 
$
164,597

 
$
150,679

9
%
Diluted net income per share
$
0.68

 
$
0.63

9
 %
 
$
2.06

 
$
1.84

12
%
•
Provision for income taxes decreased 1% in the current third quarter compared to the same quarter in fiscal 2015 and is 32.1% of income before income taxes this quarter compared to 33.8% of income before income taxes for the same period in fiscal 2015.
•
Provision for income taxes increased 4% for the year-to-date period, although the effective rate decreased to 32.7% of income before income taxes from 33.7% for the nine months ending March 31, 2015.
Balance Sheet and Cash Flow Review
•
At March 31, 2016, cash and cash equivalents increased to $54.0 million from $52.8 million at March 31, 2015.
•
Trade receivables totaled $137.4 million at March 31, 2016, which was the same at March 31, 2015.
•
Current and long term debt increased from $77.4 million a year ago to $100.2 million at March 31, 2016.
•
Deferred revenue increased to $383.2 million at March 31, 2016, compared to $370.5 million a year ago.

Page 2
JKHY Third Quarter Fiscal 2016 Revenue Increases 8%
May 3, 2016

•
Stockholders' equity decreased 1% to $948.9 million at March 31, 2016, compared to $956.6 million a year ago.
Cash provided by operations totaled $207.0 million in the current year-to-date period compared to $182.5 million for the same period last year. The following table summarizes net cash (in thousands) from operating activities:
(In Thousands)
Nine Months Ended March 31,
 
2016
 
2015
Net income
$
164,597

 
$
150,679

Depreciation
38,106

 
41,023

Amortization
57,013

 
48,063

Other non-cash expenses
32,522

 
(2,241
)
Change in receivables
108,172

 
86,626

Change in deferred revenue
(149,885
)
 
(120,941
)
Change in other assets and liabilities
(43,492
)
 
(20,722
)
Net cash provided by operating activities
$
207,033

 
$
182,487

Cash used in investing activities for the first nine months of fiscal 2016 totaled $133.6 million, compared to $94.3 million for the first nine months of fiscal 2015 and included the following:
(In Thousands)
Nine Months Ended March 31,
 
2016
 
2015
Payment for acquisitions, net of cash acquired
$
(8,275
)
 
$
—

Capital expenditures
(43,300
)
 
(35,867
)
Proceeds from sale of assets
2,797

 
8,266

Internal use software
(10,157
)
 
(10,266
)
Computer software developed
(74,662
)
 
(56,465
)
Net cash from investing activities
$
(133,597
)
 
$
(94,332
)
•
The $43.3 million in capital expenditures was mainly for the purchase of computer equipment and aircraft.
•
$8.3 million, net of cash acquired, was used for the acquisition of Bayside Business Solutions.
•
The prior year's $8.3 million in proceeds from the sale of assets mainly related to the TeleWeb suite of Internet and mobile banking software products.
Financing activities used cash of $167.7 million for the first nine months of fiscal 2016 and $105.7 million in the first nine months of fiscal 2015.
(In Thousands)
Nine Months Ended March 31,
 
2016
 
2015
Borrowings on credit facilities
$
100,000

 
$
70,000

Repayments on credit facilities
(52,484
)
 
(6,033
)
Debt acquisition costs
—

 
(901
)
Purchase of treasury stock
(155,122
)
 
(112,803
)
Dividends paid
(62,037
)
 
(56,183
)
Net cash from issuance of stock and tax related to stock-based compensation
1,895

 
188

Net cash from financing activities
$
(167,748
)
 
$
(105,732
)
According to Kevin Williams, CFO, “We continue to invest pretty heavily in capitalized software, which is primarily in the areas of electronic payments, mobile offerings and other new products; along with other offerings that will drive additional future revenue. Dividends increased for the first nine months reflecting the twelve percent increase announced in the third quarter. We continue to have a strong cash balance with liquidity for potential acquisitions, stock buy-backs, dividends, and continued investment in the company.”
Quarterly Conference Call
The company will hold a conference call on May 4, 2016; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com.

Page 3
JKHY Third Quarter Fiscal 2016 Revenue Increases 8%
May 3, 2016

About Jack Henry & Associates
Jack Henry & Associates, Inc. (NASDAQ: JKHY) is a leading provider of computer systems and electronic payment solutions primarily for financial services organizations. Its technology solutions serve more than 10,600 customers nationwide, and are marketed and supported through three primary brands. Jack Henry Banking™ supports banks ranging from community to mid-tier institutions with information processing solutions. Symitar™ is the leading provider of information processing solutions for credit unions of all sizes. ProfitStars provides highly specialized products and services that enable financial institutions of every asset size and charter, and diverse corporate entities to mitigate and control risks, optimize revenue and growth opportunities, and contain costs.  Additional information is available 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.


Page 4
JKHY Third Quarter Fiscal 2016 Revenue Increases 8%
May 3, 2016

Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
(In Thousands, Except Per Share Data)
Three Months Ended March 31,
 
% Change
 
Nine Months Ended March 31,
 
% Change
 
2016
 
2015
 
 
 
2016
 
2015
 
 
REVENUE
 
 
 
 
 
 
 
 
 
 
 
License
$
292

 
$
569

 
(49
)%
 
$
2,530

 
$
1,563

 
62
 %
Support and service
319,649

 
296,896

 
8
 %
 
947,615

 
882,017

 
7
 %
Hardware
13,245

 
12,244

 
8
 %
 
37,532

 
38,897

 
(4
)%
Total
333,186

 
309,709

 
8
 %
 
987,677

 
922,477

 
7
 %
COST OF SALES
 
 
 
 
 
 
 
 
 
 
 
Cost of license
193

 
285

 
(32
)%
 
873

 
1,002

 
(13
)%
Cost of support and service
184,527

 
168,457

 
10
 %
 
541,230

 
503,925

 
7
 %
Cost of hardware
9,553

 
9,152

 
4
 %
 
26,279

 
28,111

 
(7
)%
Total
194,273

 
177,894

 
9
 %
 
568,382

 
533,038

 
7
 %
GROSS PROFIT
138,913

 
131,815

 
5
 %
 
419,295

 
389,439

 
8
 %
Gross Profit Margin
42
%
 
43
%
 
 
 
42
%
 
42
%
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Selling and marketing
22,732

 
21,674

 
5
 %
 
66,714

 
65,512

 
2
 %
Research and development
19,854

 
17,522

 
13
 %
 
57,269

 
51,995

 
10
 %
General and administrative
16,497

 
15,417

 
7
 %
 
50,157

 
43,442

 
15
 %
Total
59,083

 
54,613

 
8
 %
 
174,140

 
160,949

 
8
 %
OPERATING INCOME
79,830

 
77,202

 
3
 %
 
245,155

 
228,490

 
7
 %
INTEREST INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
54

 
33

 
64
 %
 
258

 
118

 
119
 %
Interest expense
(486
)
 
(669
)
 
(27
)%
 
(983
)
 
(1,273
)
 
(23
)%
Total
(432
)
 
(636
)
 
(32
)%
 
(725
)
 
(1,155
)
 
(37
)%
INCOME BEFORE INCOME TAXES
79,398

 
76,566

 
4
 %
 
244,430

 
227,335

 
8
 %
PROVISION FOR INCOME TAXES
25,515

 
25,854

 
(1
)%
 
79,833

 
76,656

 
4
 %
NET INCOME
$
53,883

 
$
50,712

 
6
 %
 
$
164,597

 
$
150,679

 
9
 %
Diluted net income per share
$
0.68

 
$
0.63

 
 
 
$
2.06

 
$
1.84

 
 
Diluted weighted average shares outstanding
79,167

 
81,094

 
 
 
79,891

 
81,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheet Highlights (Unaudited)
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
 
 
 
 
 
March 31,
 
% Change
 
 
 
 
 
 
 
2016
 
2015
 
 
Cash and cash equivalents
 
 
 
 
 
 
$
54,001

 
$
52,800

 
2
 %
Receivables
 
 
 
 
 
 
137,406

 
137,415

 
—
 %
Total assets
 
 
 
 
 
 
1,702,622

 
1,618,139

 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
 
 
$
76,781

 
$
71,502

 
7
 %
Current and long term debt
 
 
 
 
 
 
100,213

 
77,447

 
29
 %
Deferred revenue
 
 
 
 
 
 
383,171

 
370,470

 
3
 %
Stockholders' Equity
 
 
 
 
 
 
948,867

 
956,610

 
(1
)%


Page 5

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