JACK HENRYGagan Bhatia, Olamide Esan, Alex Florea, Somil Kadakia, Victor Murthi, Yanyan Xu

Presented on 11/10/2009

DeliveDeliverable Outlinerable

I. Company OverviewII. Company StrategyIII. Macro-economic OutlookIV. Industry AnalysisV. CompetitorsVI. ValuationVII. Client PortfolioVIII. Recommendation

2

Company Overview

• Founded in 1976 by Jack Henry as a provider of core information processing solutions for community banks, IPO in 1985

• Trades on the NASDAQ as JKHY

• Headquartered in Monett, Missouri with over 3,800 employees

• Array of products and services includes processing transactions, automating business processes, and managing information for more than 9,800 financial institutions and diverse corporate entities

• FY 2009 Annual sales of $745.6 mm, Net Income of $103.1

3

Source: Jack Henry, Data Monitor, Accessed 11/01/09

Business Description

• Two main business segments: 1) Bank Systems and Services and 2) Credit union Systems and Services

• Three marketed brands: Jack Henry Banking, Symitar, and ProfitStars• Three primary revenue sources: Software License Fees, Outsourcing

Fees, Transaction/Maintenance/Support Fees

4

Source: Jack Henry, Annual Report 2008 Accessed 11/01/09

3 Marketed Brands

• Provides integrated data processing to more than 1,500 banks ranging from start-ups to midsize banks. Services include business intelligence/bank management, retail and business banking, Internet banking, electronic funds transfer, risk management and protection.

• Provides core data processing to over 700 credit unions. Services include business intelligence and credit union management, member and member business services, Internet banking and EFT, risk management and protection

•Provides solutions for generating revenue and growth opportunities, security and mitigating operational risks, and controlling operating costs to financial institutions that are primarily not core customers. Diverse and flexible with more than 7,500 domestic and international customers.

Source: Jack Henry, Annual Report 2008 Accessed 11/01/09

Recent Performance6

Key Ratios (As of June 30th, 2009) Company

IndustryCurrent Ratio (MRQ) 1.04

1.63Quick Ratio (MRQ) 1.04

1.38Debt to Equity (MRQ) 0.10

0.28Sales 5 Year Growth 9.79

22.34Net Profit Margin (TTM) % 13.83 -2.80Return on Assets (TTM) % 9.95 -4.86Return on Equity (TTM) % 16.79 2.83

2 Year Weekly End Price & Volume

•Acquired major competitor in Goldleaf Financial Solutions•Recurring revenue increased to 70% from 66%•Backlog increased by 8%

Notes

Company Strategy

• Increase market share by aggressively earning new traditional and nontraditional clients and cross selling additional products and services to our existing clients.

• Add new products and services that enable financial institutions to capitalize on business opportunities and resolve specific operational issues.

• Increase recurring revenue by optimizing outsourcing opportunities, transaction-based processing fees, and ongoing software maintenance and support fees.

• Pursue disciplined acquisitions that complement our internal growth and continue our focused diversification.

7

Source: Jack Henry, Data Monitor, Accessed 11/01/09

Recent Acquisition

• Pemco: ATM debit transaction processing, which currently represents 70% of the revenue of the payments business, while also inducing new capabilities in the area of credit card transaction routing.

• Goldleaf: Remote deposit capture presence which is the fastest growing component of payment solutions with 54% year-over-year growth in the last fiscal year.

8

Recent Acquisition

• Recently addition of 2800 new customers and increase the number of core and non-core processing customers using one or more of our products to over 11,000

• Employees Addition: 540• By 2005 they made 16 acquisition to add

up total customers of 2300Opportunities for cost reduction in addition to the increased revenue contribution

9

Risk Factors10

• Changes in the banking and credit union industry could reduce demand for our products

• Consolidation of financial institutions will continue to reduce the number of our customers and potential customers.

The number of commercial banks and credit unions has decreased because of mergers and acquisitions over the last several decades and is expected to continue to decrease as more consolidation occurs

• Our growth may be affected if we are unable to find or complete suitable acquisitions

Risks focused on banking industry and successful acquisitions

Source: Jack Henry, Annual Report 2008 Accessed 11/01/09

Banking Industry11

• Hit hardest by collapse of sub-prime mortgage market and financial crisis• Profit after tax decline by 80.5% over course of 2008• Increasing loan loss provisions and rising cost of funds contributed to profitability decline• Loan loss provisions and net charge-offs expected to continue into 2010

Banking industry continue to be stressed

Source: Banking Industry, IBIS World, Accessed 11/01/09

Credit Unions12

• Delinquencies will continue to increase in 2009 meaning lower operating profit margins• Credit Union membership expected to grow due to member satisfaction• The DJIA, existing home sales, and total motor vehicle registrations are expected to experience strong growth from 2010 onwards• Credit Unions are somewhat linked to the above variables and industry growth is expected to be strongest between 2011 and 2013

Credit Unions will experience early hiccup with recovery starting in 2010

Source: Credit Unions, IBIS World, Accessed 11/01/09

SWOT Analysis (Strengths)13

Strengths from diversification and industry

• Comprehensive portfolio of offerings Provides integrated computer systems and services for financial

institutions. Offers solutions through three core business areas: Jack Henry Banking, ProfitStars, and Symitar

• Switching costs fairly high

• High barriers to entry, regulations are high

Source: Jack Henry, Data Monitor, Accessed 11/01/09

SWOT Analysis (Weaknesses)

14

Weaknesses from size and dependence on banking industry

• Lack of scale

Large competitors generated 5-6 times more revenue in 2008. (Fidelity/Fiserv) Lack of scale could affect its ability to bag large contracts and makes it a target for acquisition

• Dependence on the financial services

The company derives its revenues from the financial services market. The current crisis and significant consolidation in the financial services industry could result in few large customers, there by increasing their bargaining power. It also enables large organizations to develop IT in-house

Source: Jack Henry, Data Monitor, Accessed 11/01/09

SWOT Analysis (Opportunities)

15

Opportunities from acquisitions and virtualization

• Entry into virtualization market

The market for server and desktop virtualization software technologies is forecasted to grow at a compound annual rate of over 30% through 2013. Virtualization generates significant cost and time saving benefits. JHA formally announced its support for virtualization in March 2009

• Strategic acquisitions

Acquisitions provide cross sell opportunities for the company’s core bank and credit union customers. On Oct 01, 2009, JHA announced

acquisition of Goldleaf Financial Solutions, Inc and Pemco Technologies.

Source: Jack Henry, Data Monitor, Accessed 11/01/09

SWOT Analysis (Threats)16

Threats from spending habits of customers

• Challenging business environment

Economic downturn means customers postponed their large capital investments. Customers elect outsourced delivery rather than a traditional license arrangement. The outsourced delivery does not require customers to make a large, up-front capital investment in license fees or in hardware. As a result, the company has been experiencing a decrease in license revenue in recent times.

Source: Jack Henry, Data Monitor, Accessed 11/01/09

Technology Threat

• All of JKHY’s products are based on legacy systems• The Core banking products are based on either the IBM or Windows

systems• Symitar's two functionally distinct core credit union platforms are based on

IBM and Windows• So JKHY faces a threat from companies that provide solutions on “open

systems” and not on legacy systems like IBM and Windows in the “long term”

“Finacle” a solution provided by Infosys Technologies Ltd is based on Open system

17

Source: Jack Henry, Data Monitor, Accessed 11/01/09

Competitors

I. Comparative Descriptions

II. Comparative Ratios

III. Comparative Analysis

18

Recent Developments

• Previously Metavante competed with JKHY’s Jack Henry banking and Symitar brand .

• FIS competed with JKHY’s Symitar and Profitstars brand• Recently FIS acquired Metavante, so now FIS competes with JKHY across

all brands.

With the recent acquisition FIS gains an entry into mid-tier banks, a hitherto stronghold of JKHY

19

Competitors

Jack Henry Banking Symitar Profitstars

1.Fidelity National Information services (FIS)

1. Fidelity National Information services(FIS)

Array of disparate vendors that provide niche solutions to financial services organizations and corporate entities.

2. Fiserv 2.Fiserv

3. Open Solutions, Inc.

(*FIS recently acquired Metavante)

4. Harland Financial Solutions – Ultradata

JKHY’s competes with FIS and Fiserv broadly across segments.

20

Source: Jack Henry, Annual Report 2008, Accessed 11/01/09

Publicly traded competitors

Company Market Cap ($mm) P/E P/S EPS ($/Share)

JKHY

1,960 20.0 2.6 1.16

FIS

8,207 17.6 3.1 1.26

FISV 7,118 15.8 2.5 2.94

This table just gives a reference for performance but JKHY’s real competitors are private companies

21

Its Important to note that the FIS and FISV are two of the largest players in the industry where as JKHY is just around the median mark. Also FISV and FIS ‘s primary clients are large institutions, where as JKHY targets mid-tier banks and credit unions.

Source: Jack Henry, CapitalIQ, Accessed 11/01/09

Valuation

I. Financial Highlights

II. Assumptions

III. WACC

IV. DCF Analysis

V. Multiples

22

Financial Highlights – Income Statement

23

STATEMENT OF INCOME YEAR ENDED JUNE 30, 2005 2006 2007 2008 2009

REVENUE          License        82,374         84,014         76,403         73,553         58,434 % of Total Revenue 15.37% 14.22% 11.46% 9.90% 7.84%Support & Service      364,076       424,333       501,722       580,334       614,242 % of Total Revenue 67.94% 71.81% 75.28% 78.11% 82.38%Hardware Sales        89,413         82,530         88,342         89,039         72,917 % of Total Revenue 16.69% 13.97% 13.26% 11.98% 9.78%Total Revenue 535,863 590,877 666,467 742,926 745,593 YOY % Change 14.6% 10.27% 12.79% 11.47% 0.36%

COST OF SALES          Cost of License          5,547           2,717           4,277           6,698           6,885 Cost of Services      244,097       270,485       309,919       364,140       385,837 % of Support & Service Revenue 67.05% 63.74% 61.77% 62.75% 62.82%Cost of Hardware        63,769         60,658         65,469         64,862         53,472 % of Hardware Sales 71.32% 73.50% 74.11% 72.85% 73.33%Total Cost of Sales 313,413 333,860 379,665 435,700 446,194 Total COGS as % of Revenue 58.49% 56.50% 56.97% 58.65% 59.84%Gross Profit 222,450 257,017 286,802 307,226 299,399

Net Income 75,501 89,923 104,681 104,222 103,102

Financial Highlights - Balance Sheet

24

BALANCE SHEETS YEAR ENDED JUNE 30,    2005 2006 2007 2008 2009             

Cash and Cash Equivalents         11,608          74,139          88,617            65,565          118,251  Investments             993            2,181               989                 997              1,000  Trade Receivable       209,922        180,295         209,242          213,947          192,733  Total Current Assets 260,293 306,410 350,385 329,757 359,646  

                 Property, Plant & Equipment       334,536        351,039         366,894          387,308          416,505  Depreciation        (91,345)        (99,407)       (117,012)        (148,303)        (178,727) Property, Plant & Equipment, Net 243,191 251,632 249,882 239,005 237,778  Goodwill       191,415        212,538         248,863          289,373          292,400  Tradenames           4,010            4,009            4,009              3,999              3,999  Customer Relationship, net of amortization         68,475          63,162          61,248            63,819            55,450  Computer Software, net of amortization         29,488          43,840          59,190            74,943            82,679  Total Assets 814,153 906,067 999,340 1,021,044 1,050,700  

   Accounts Payable         15,895          14,525          11,481              6,946              8,206  Accrued Expenses         24,844          29,012          34,920            35,996            34,018  Note Payable and Current Maturities         45,000          50,241          70,503            70,177            63,461  Total Current Liabilities 246,583 263,492 330,477 341,175 344,407  Off Balance Sheet Debt 50,820  Total Liabilities 296,999 330,855 400,975 419,593 424,194  Total Equity 517,154 575,212 598,365 601,451 626,506  Total Liabilities & Shareholders' Equity 814,153 906,067 999,340 1,021,044 1,050,700  

DCF - Assumptions

 

25

DCF ASSUMPTIONS HISTORICAL FORECAST

2005 2006 2007 2008 2009 2010E 2011E 2012E 2013E 2014E

1. Revenue Growth:                     

Total Growth - YOY 14.64% 10.27% 12.79% 11.47% 0.36% 8.04% 12.31% 18.29% 17.01% 15.99%

License/Revenue 15.37% 14.22% 11.46% 9.90% 7.84% 7.34% 6.34% 5.34% 4.34% 4.00%

Support & Service/ Revenue 67.94% 71.81% 75.28% 78.11% 82.38% 83.88% 85.88% 87.88% 89.88% 91.22%

Hardware Sales/Revenue 16.69% 13.97% 13.26% 11.98% 9.78% 8.78% 7.78% 6.78% 5.78% 4.78%

Long Term                     -              -              -              -    3.00%

2. WACC           11.00% 11.00% 11.00% 11.00% 11.00%

3. Tax rate 37.00% 35.80% 34.66% 35.97% 34.46% 37.00% 37.00% 37.00% 37.00% 37.00%

4. COGS/Revenue 58.49% 56.50% 56.97% 58.65% 59.84% 60.00% 59.80% 59.80% 59.80% 59.80%

License / COGS 1.77% 0.81% 1.13% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54%

Support & Service / COGS 77.88% 81.02% 81.63% 83.58% 86.47% 87.97% 89.47% 90.97% 92.47% 93.97%

Hardware Sales / COGS 20.35% 18.17% 17.24% 14.89% 11.98% 10.48% 8.98% 7.48% 5.98% 4.48%

5. SG&A/Total Revenue 19.29% 19.67% 19.02% 19.25% 18.98% 18.78% 19.25% 19.25% 19.25% 19.25%

6. NWC/Total Revenue 36.39% 28.42% 29.82% 28.00% 24.88% 24.02% 25.01% 25.39% 25.88% 26.37%

7. PPE/Total Revenue 62.43% 59.41% 55.05% 52.13% 55.86% 55.52% 52.11% 46.53% 42.10% 38.51%

8. Capex/Total PPE & Goodwill 11.04% 8.05% 5.55% 4.60% 4.45% 6.45% 4.55% 4.45% 4.35% 4.25%

DCF Analysis26

NPV of FCF 1,957,511

Less Debt (2,916)

Equity value 1,954,595

Number of shares (M) 84,195

Value per share 23.22

Share Price 11/9/09 24.19

(In Millions)

Multiples27

Client Portfolio

I. Stock Performance Graph

II. Stock Ownership Profile

III. Transaction History

IV. RCMP Portfolio Correlation

V. RCMP Portfolio Weights

28

Stock Performance Graph29

JKHY – Jack Henry & Associate FISV – Fiserv

FIS – Fidelity National GSPC – S&P 500.

Stock Ownership Profile30

AEE AEO DO FR JKHY KMB MCD SRCL WAG WFRAnnual Return

2000 56.22% 16.28% 45.31% 36.73% 118.45% 16.66% -8.45% 135.31% 50.25% -38.24%2001 10.20% -32.20% -24.07% 3.13% -3.79% -5.98% -9.02% 87.67% -17.49% -69.26%2002 2.99% -45.87% -22.86% -0.46% -44.26% -19.64% -40.01% 13.54% -19.20% 104.59%2003 24.15% 0.00% -2.16% 35.62% 68.27% 31.03% 77.12% 37.84% 26.07% 18.91%2004 9.66% 153.44% 77.66% 19.53% 9.95% 16.14% 26.85% 3.98% 11.66% 25.95%2005 7.21% -8.52% 59.86% 5.64% -7.34% -6.32% 6.23% 14.46% 4.42% 80.24%2006 11.15% 75.32% -5.22% 28.24% 5.64% 22.77% 29.68% 26.30% 6.71% 36.95%2007 7.18% -34.87% 79.41% -21.32% 15.24% 3.02% 36.34% 54.29% -15.25% 68.87%2008 -20.69% -58.02% -44.50% -75.92% -19.95% -16.56% 19.39% -12.12% -28.66% -79.99%

YTD 2009 -21.07% 99.32% 73.77% -18.57% 32.40% 22.75% 3.75% 8.67% 37.02% -7.65%Mean 8.70% 16.49% 23.72% 1.26% 17.46% 6.39% 14.19% 36.99% 5.55% 14.04%

120 Months HPR 34.94% 89.64% 350.85% -62.46% 158.62% 29.16% 54.60% 1119.27% 36.31% 4.67%Risk Measure

Monthly σ 5.76% 17.88% 10.36% 11.97% 9.94% 5.16% 7.00% 8.46% 7.13% 24.00%Sharpe 0.79 0.69 1.89 -0.24 1.34 0.43 1.43 3.88 0.20 0.41

Monthly VaR (95%) 9.50% 29.50% 17.09% 19.75% 16.39% 8.51% 11.55% 13.96% 11.76% 39.60%

Transaction History31

AEE AEO DO FR JKHY KMB MCD SRCL WAG WFRPortfolio Return

YTD -50.50% 179.40% 37.92% -82.05% 158.33% -1.24% 11.82% 446.10% 48.36% -36.62%Annualized -17.96% 51.21% 40.80% -15.95% 9.99% 1.52% 19.13% 21.79% 4.00% -32.01%

Market Value 5,066.00$ 45,550.00$ 4,938.50$ 4,850.00$ 9,344.00$ 24,692.00$ 11,828.00$ 5,296.00$ 19,200.00$ 7,632.00$

11/11/1999 Bought 200 shares at $36 per share3/2/2000 2 on 1 split increase the holding to 400 shares at $18 per share3/4/2001 2 on 1 split increase the holding to 800 shares at $9 per share

12/7/2004 Presentation to hold 800 shares12/6/2005 Presentation to hold 800 shares

Nov-06 Presentation to sell 400 shares4/17/2007 Presentation to hold 400 shares

11/27/2007 Presentation to hold 400 shares4/10/2008 Presentation to hold 400 shares

11/11/2008 Presentation to hold 400 shares and limit sell of 400 shares at $20.404/14/2009 Presentation to hold 400 shares

Portfolio Correlation32

CORRELATION TABLE120 Months Stress

AEE 0.1536 0.4727AEO 0.1055 0.2731DO 0.1386 0.0733FR 0.2710 0.6731JKHY 1.0000 1.0000KMB 0.1579 0.3984MCD 0.2830 0.3571SRCL 0.2564 0.0987WAG 0.0859 0.2965WFR 0.1320 -0.0744

Portfolio Holdings33

Recommendation

DCF Range (+/- 10%) : $20.89 - $25.54

Current Price: $ 24.19 as of 11/09/09

Recommendation: HOLD 400 Shares

Strong management On top of changes in business and revenue streams. Strategic acquisitions to improve business model.

34