JACK HENRY AND ASSOCIATES

Piyapong Pantipjatuporn, Meiling Liu,

Emma Zhang, Yuwei Hong

October 25, 20111

EXECUTIVE SUMMARY

Introduction

Review of company  and its business

Macroeconomic Review

Industry Analysis

Financial analysis

Financial projections

Applications of valuation tools

Recommendation 2

SUMMARY OF HOLDINGS 11/11/1999: Purchased 200 shares at $36 per share 3/2/2000: 2:1 split which took the holding to 400

shares at $18 per share 3/4/2001: 2:1 split which took the holding to 800

shares at $9 per share 1/15/2007: Sold 400 shares at $22.53 for a realized

gain of $5,412 3/9/2011: Hold 400 shares at $32.47 Current share price = $32.47 Current holding value = $12,988 Constitutes 12.43% of invested holdings(without cash) Constitutes 3.93% of invested holdings(with cash) Unrealized gain: $9,388

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COMPANY OVERVIEW

JHA provides integrated computer systems for in-house and outsourced data processing to commercial banks, credit unions and other financial institutions. JHA also performs data conversion and software implementation services for its systems and provide customer support services after the systems are implemented.Jack Henry Banking is the primary technology provider for more than 18% of U.S. banks.Symitar is the primary technology provider for 10% of credit unions.ProfitStars has client relationships with 56 of the largest 100 banks and 60 of the largest 100 credit unions.iPay Technologies has client relationships with more than 25% of U.S. banks and 23% of credit unions. 4

Jack Henry Banking - provides community and mid-tier banks with core and

complementary solutions that process financial transactions and automate

information management and business processes.

Symitar – Acquired by Jack Henry & Associates in 2000, Symitar provides

credit unions of all sizes with core and complementary solutions that process

financial transactions and automate information management and business

processes.5

COMPANY OVERVIEW4 MAJOR BUSINESS UNITS

ProfitStars - provides financial services organizations and diverse businesses

outside the financial industry with specialized financial performance, imaging

and payments processing, information security and risk management, and

retail delivery solutions.

iPay Technologies- Acquired by Jack Henry & Associates in 2010, provides

consumer and small business electronic bill payment solutions and person-to-

person electronic payment services to community and mid-tier banks, credit

unions of all sizes, and other companies that provide information processing

and online banking solutions.

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COMPANY OVERVIEW4 MAJOR BUSINESS UNITS

COMPANY OVERVIEWREVENUE STREAMS

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MACROECONOMIC OVERVIEW

During the economic crisis many banks and financial institutions have failed 30% of their customers were affected by the

downturn The industry has been undergone consolidation,

which reduces their number of potential clients Clients are more hesitant to invest in and

purchase technology in this uncertain economic environment

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U.S. GDP FORECAST

Source: Department of Commerce and Federal ReserveEffect of American Recovery and Reinvestment Act of 2009

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COMPANY OVERVIEWBUSINESS STRATEGY

Acquisition Strategy Started acquisitions in 1992 Adopted focused diversification acquisition

strategy in 2004 Acquiring of companies and products that can

be sold outside of JKHY’s core client base to all financial services companies

Most recent acquisitions took place in 2010 PEMCO Technology iPay Technologies Goldleaf Financial Services

Broad trend in industry

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COMPANY OVERVIEWSWOT ANALYSIS

Strengths Low operating leverage Consistent and growing dividend Diversified revenue streams

Weaknesses Some of their technologies not patented Size relative to competitors Switching costs for clients work against them

Opportunities Many financial services are outsourcing their data and

they provide the expertise Cross-selling of products Future acquisitions to increase market share and range

of products Threats

Trend of banks and credit unions Economic downturn strongly tied to client’s demand for

products and services Competitive industry 11

Annual revenue growth during 2006-2011 is – 2.3% Banks experienced huge losses as a result of the

credit crisis, causing revenue reduction by 25.0% in 2007- 2009

Revenue will be less volatile through 2016 as commercial banks benefit from TARP aid

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CUSTOMERSCOMMERCIAL BANKS

CUSTOMERSCREDIT UNIONS

Annual revenue growth during 2006-2011 is – 3.4% Profitability is expected to improve through 2016 as

revenue and membership continue to grow, with demand returning and credit unions servicing a larger portion of the US population across more regions

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COMPETITORS OVERVIEWFIDELITY NATIONAL INFORMATION

FISERV

Offers financial institution core processing, card issuer, and transaction processing services,

including the NYCE Network

Financial Solutions : core processing software applications to run critical banking processes;

retail delivery applications for integrating customer-facing operations and back-office processes

Payment Solutions : electronic funds transfer services comprising settlement and card

management solutions; item processing and output services; credit card solutions;

Provide various financial services technology solutions : Payments and Industry Products,

and Financial Institution Services. Payments and Industry Products : electronic bill payment and presentment services, and

services to meet the electronic transaction processing needs of the financial services industry.

Financial Institution Services : account processing services, item processing services,

loan origination and servicing products, cash management and consulting services, and

other products and services that support various types of financial transactions

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COMPETITORS OVERVIEWNCR CORPORATION

TOTAL SYSTEM SERVICES

Offers financial-oriented self service technologies, such as ATMs; cash dispensers; software

solutions; and consulting services for financial institutions and retailers

Provides check and document imaging solutions consisting of hardware, software, and

consulting, and support services that enable capture, processing, and retaining of check and

item-based transactions

Offers various maintenance and support services, as well as site assessment and preparation,

staging, installation and implementation, systems management, and managed services

Provides electronic payment processing and other services to card-issuing and merchant

acquiring institutions

Offers issuer account solutions, including processing the card application, initiating service for

the cardholder, processing each card transaction for the issuing retailer or financial institution,

and accumulating the account's transactions.

Provides merchant processing and related services that comprise processing various payment

forms, such as credit, debit, prepaid, electronic benefit transfer, and electronic check;

authorization and capture of transactions; clearing and settlement of transactions.

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COMPETITORS OVERVIEWValue Measure

Value Measure JKHY FIS FISV NCR TSS

Trailing P/E 20.01 18.57 19.18 17.7 18.96

Price/Sales 2.78 1.39 1.94 0.57 2.04

Price/Book 3.06 1.16 2.65 2.97 2.72

Enterprise Value/Revenue 2.94 2.2 2.66 0.48 2.04

Enterprise Value/EBITDA 9.25 7.71 8.65 9.6 8.37

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COMPETITORS OVERVIEWProfitability and Management effectiveness

  JKHY FIS FISV NCR TSS

Profit Margin 14.22% 7.83% 10.67% 3.35% 11.17%

Operating Margin 22.37% 18.85% 23.91% 3.07% 17.11%

Return on Assets 8.82% 4.71% 7.60% 2.23% 10.04%

Return on Equity 16.87% 5.60% 14.95% 18.65% 15.43%

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STOCK PRICES 2006-2011

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INDUSTRY ANALYSIS

Low Threat of Substitutes High costs to learn new system, renewal of

contracts High Barriers to Entry

Compliance with regulations, high switching costs for clients

High Industry Rivalry Highly competitive industry, larger competitors

with more resources Low Medium Power of Buyers

Clients are resistant to change due to switching costs

Low Power of Suppliers Hardware of suppliers constitute a low portion

of their revenue19

ASSUMPTIONS

Revenue Assumption: We remain cautiously optimistic, however, with

increasing portions of our business coming from recurring revenue, increases in backlog and an encouraging sales pipeline in specific areas. Our customers will continue to face regulatory and operational challenges which our products and services address, and in these times they have an even greater need for some of our solutions that directly address institutional profitability and efficiency. We face these times with a strong balance sheet and an unwavering commitment to superior customer service, and we believe that we are well positioned to address current opportunities as well as those which will arise when the economic rebound strengthens.

Capital Structure

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DISCOUNT RATE

Market Price 32.6Shares Outstanding 85,978Market Capitalization 2,802,866.50

Total Debt 154,031Total Common Equity 2,802,866.50Total Capital 2,956,897.50

Weight of Debt 5.21%Weight of Equity 94.79%

Capital StructureBeta (Google) 0.73Beta (Yahoo) 0.68Beta(Reuters) 0.73Beta Average 0.71

Market Return 10.00%Risk-Free Rate 3.50%Market Risk Premium 6.50%

Cost of Equity (ROE) 11.54%Cost of Equity (CAPM) 8.14%

Cost of Debt 3.00%Tax Rate 35.00%

WACC (ROE) 11.04%WACC (CAPM) 7.81%

WACC

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DCF AND VALUE2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E

Net Income 104,681 104,222 103,102 117,870 137,471 139,504 148,755 158,742 170,354 181,640 196,365 212,415 232,034 253,472 277,733

Depreciation & Amortization50,954 62,006 64,147 71,508 90,514 91,664 87,049 86,232 83,384 79,847 107,544 111,612 118,982 128,266 141,042

Changes In NWC 0 (8,274) (26,029) (73,789) 87,115 35,255 7,574 13,809 19,900 30,718 26,357 31,305 39,619 43,850 48,147

Capital Expenditures 54,945 54,841 56,246 80,095 59,039 20,419 21,646 23,021 24,782 26,736 28,898 31,281 34,217 37,465 41,056

Free Cash Flow 100,690 119,661 137,032 183,072 81,831 175,493 206,584 208,145 209,056 204,032 248,654 261,440 277,180 300,422 329,572

Terminal Value 4,223,331

Time 1 2 3 4 5 6 7 8 9 10

PV of Free Cash Flow 162,774 177,723 166,087 154,723 140,060 158,319 154,396 151,827 152,630 155,304PV of Terminal Value 1,482,349

Year Ended June 30 Year Ended June 30

Growth Rate 3%10 Year Discount Rate 7.81%

Terminal Discount Rate 11.04%

Firm Value

Total PV of FCF 3,056,192Less: Debt 154,031Equity Value 2,902,161# of Shares 85,978Intrinsic Value 33.75

+10% 37.13-10% 30.38 22

SENSITIVITY ANALYSIS

37.13 8.04% 9.04% 10.04% 11.04% 12.04% 13.04% 14.04%1.50% 44.11 35.04 28.98 24.67 21.46 18.98 17.012.00% 49.81 38.52 31.30 26.31 22.67 19.90 17.732.50% 57.33 42.84 34.07 28.22 24.05 20.94 18.543.00% 67.71 48.36 37.45 30.46 25.64 22.11 19.433.50% 82.96 55.64 41.63 33.15 27.48 23.45 20.444.00% 107.57 65.68 46.97 36.41 29.66 24.99 21.574.50% 153.95 80.45 54.02 40.47 32.26 26.78 22.87

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MULTIPLE ANALYSIS

Price

Trailing P/E 30.03 40.00%Price/Sales 21.64 30.00%Price/Book 43.64 30.00%Enterprise Value/Revenue 1995.68Enterprise Value/EBITDA 2674.33

Final Price $31.59

Value Measure JKHY FIS FISV NCR TSS Mean Median

Trailing P/E 20.01 18.57 19.18 17.7 18.96 18.88 18.96

Price/Sales 2.78 1.39 1.94 0.57 2.04 1.74 1.94

Price/Book 3.06 1.16 2.65 2.97 2.72 2.51 2.72

Enterprise Value/Revenue 2.94 2.2 2.66 0.48 2.04 2.06 2.2

Enterprise Value/EBITDA 9.25 7.71 8.65 9.6 8.37 8.72 8.65

JKHY FIS FISV NCR TSS

Profit Margin (ttm): 14.22% 7.83% 10.67% 3.35% 11.17%Operating Margin (ttm): 22.37% 18.85% 23.91% 3.07% 17.11%Return on Assets (ttm): 8.82% 4.71% 7.60% 2.23% 10.04%Return on Equity (ttm): 16.87% 5.60% 14.95% 18.65% 15.43%

JKHY FIS FISV NCR TSS

Revenue 966.90M 5.59B 4.22B 5.02B 1.75BRevenue Per Share 11.25 18.09 28.78 31.58 9.05

EBITDA 306.83M 1.59B 1.30B 250.00M 426.13MRecurring revenue 80% 83% 85% 42.50% N/A

Profitability and Management effectiveness

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RECOMMENDATION

Multiple Analysis: $31.59 DCF Value 31.27 +10% 37.13 -10% 28.15 Sensitivity Analysis Price Range $24.05- $41.63 Price as of Close 10/24/2011 $32.47 Recommendation: Hold

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QUESTIONS? Thank You

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APPENDIX27

COMPETITORS OVERVIEWXXX

  JKHY FIS FISV NCR TSS

Revenue 966.90M 5.59B 4.22B 5.02B 1.75B

Revenue Per Share 11.25 18.09 28.78 31.58 9.05

EBITDA 306.83M 1.59B 1.30B 250.00M 426.13M

Recurring revenue 80% 83% 85% 42.50% N/A

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COMPETITORS OVERVIEWXXX

  JKHY FIS FISV NCR TSS

Total Cash 64.12M 427.30M 675.00M 457.00M 263.33M

Total Debt 154.03M 4.94B 3.72B 11.00M 266.12M

Total Debt/Equity 17.51 71.64 120.38 1.1 20.03

Book Value Per Share 10.19 22.02 21.81 6.1 6.79

Operating Cash Flow 240.13M 1.15B 972.00M 254.00M 392.75M

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