Jack Henry reports lower profits, higher revenue

Jack Henry & Associates Inc. Jan. 19 announced a decline in profits for its second quarter.

Net income for the second quarter that ended Dec. 31 was $4 million, or 19 cents per diluted share. In the second quarter a year ago net income was $6.9 million, or 33 cents per diluted share. In the first six months of the company's fiscal 2000, net income was $12.5 million, compared to $15.7 million for the same period a year earlier.

The Monett company said the decline in profits was experienced throughout its industry and met management's December announcement that spending moratoriums in preparation for Y2K would reduce profits.

Total second quarter revenues increased 8 percent to $51.5 million, attributed by the company to a 37 percent growth in maintenance, support and services. That growth offset a 23 percent decline in software licensing and installation, and flat hardware sales, according to the company. Hardware sales of $18.7 million for the second quarter were up 1 percent from the previous year and up 76 percent from the company's first quarter.

"The rebound in our hardware sales, coupled with growing backlog, are clear signals that the fundamentals in the bank technology business are moving beyond Y2K and are exceptionally strong," said Michael E. Henry, chairman and chief executive officer. "Accelerating popularity of the Internet, especially for financial services, continues to fuel demand for technology solutions and bodes well for our future."

For the first six months of Jack Henry's fiscal 2000, total revenues declined to $93.8 million, compared to $96.7 million for the same six-month period a year earlier.

"Backlog was $90.2 million, reflecting strong growth in our in-house component, at Dec. 31, 1999, compared to $80.2 million a year ago," said Terry Thompson, chief financial officer. "The backlog also grew from September, up 9 percent, in line with our expectations that demand would come back and continue to grow."

The company acquired the Open Systems Group in September 1999, and it contributed $6.9 million to second-quarter revenues. Operating expenses for the quarter increased to $11.4 million, compared to $10.7 million in the same quarter a year ago, reflecting costs associated with the first full quarter after the Open Systems Group acquisition.