2009 Economic Impact Awards, Manufacturing Finalist: Jack Henry & Associates Inc.

Taking a long-term approach amid flat revenue and a 5 percent decline in net income for the fiscal year is helping Monett-based banking software supplier Jack Henry & Associates Inc. stand out among its peers, according to CEO Jack Prim.

While other companies have instituted layoffs, Jack Henry found ways to keep its employees on board.

"We chose to take a different path with across-the-board salary reductions," he says.

At the low end, that meant a 1.5 percent reduction with an average of 3.5 percent, but as the company waits for an economic turnaround, Prim knows customers still expect - and deserve - the same level of service. If employees are laid off, when business picks up and hires are required, he says it takes time to bring new people up to speed, which also can affect customer service.

"Our view is we have temporary head winds, but we'll need these people in the future," Prim adds.

Employee reaction was overwhelmingly positive. Within 48 hours of the announcement that staff would be retained, Prim received upwards of 50 e-mails - mostly from rank-and-file employees - thanking him.

"It was pretty humbling to get that kind of response from employees that we're all in this together," he says.

Jack Henry (Nasdaq: JKHY) also cut its travel and marketing spending, and offered employees the opportunity to take unpaid time off, says President Tony Wormington. When that measure was originally discontinued in March, Wormington says there were employees who wanted to continue, so the company has reinstituted the option for an undetermined length of time.

"If there is anything good that comes out of an economic downturn, (it) is the rally of loyal employees," Wormington says. "You seem to get a morale boost, because everyone seems to be pulling harder."

Jack Henry's business is divided among three segments: Jack Henry Banking serves banks; Symitar serves credit unions; and ProfitStars provides products and services - brought together by the company's diversification acquisition strategy - that are compatible with information technology platforms of nearly all financial services entities.

According to the company's Web site, its products and services are helping more than 8,700 financial institutions and corporate entities with tasks such as transaction processing and business process automation.

And while discretionary spending continues to be down among Jack Henry customers in general, there are bright spots, Prim says. Credit unions are upgrading their systems, and Jack Henry announced in May that Louisiana-based Whitney National Bank chose the company as its partner to convert to a new technology platform. Whitney is the biggest bank in terms of current assets that Jack Henry has partnered with, Prim says.

Although Jack Henry's appetite for acquisitions hasn't slowed, viable candidates at a reasonable price aren't abundant, Prim notes. The company's last acquisition was in November 2007, when it bought US Banking Alliance.

Debt markets have dried up, so there isn't as much competition from private equity firms as there once was, but prices across the board are down, Prim says. Companies are either not willing to accept a lower valuation implied in the market, or, if they are, due diligence must be extensive to make sure there aren't major issues.

Meanwhile, the company is growing its physical footprint with a new Springfield campus under construction on East Battlefield Road, just east of U.S. Highway 65, slated to open in mid-2010.

Between the 200 Springfield-based employees who commute to Monett every day and 200 more who are scattered among four locations in Springfield, the two new buildings totaling 163,000 square feet will house about 400 people, Prim says.[[In-content Ad]]