Jack Henry and Associates Presented By: Jeremy Smith Sajal Rohatgi Yanlei Xu November 27, 2007

Table of Contents  Company Overview  Industry Overview  Acquisition History  RCMP Position and Portfolio Analysis  Stock Performance  Ratio Comparison  Financial Health  DCF Valuation  Recommendation

COMPANY OVERVIEW

Jack Henry Business  Provide integrated computer systems for in-house and outsourced data processing to commercial banks, credit unions and other financial institutions  Process transactions, automate business processes, and managing information  “Fundamental business strategy is to generate organic revenue and earnings growth supplemented by strategic acquisitions”  Publicly traded on NASDAQ under JKHY Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

Revenue Streams Sources of Revenue License Fees (11%) Sale and delivery of application software systems Non-exclusive, non- transferable rights to use at specified location Support and Service Fees (76%) In-House Implementation services, support for operating systems, enhance and update software Outsourced Data processing services, and EFT support services Hardware Sales (13%) Re-marketing agreements Computer hardware, hardware maintenance and services Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

Jack Henry Brands 1. Jack Henry Banking: Start-up to mid-tier banks with assets excess of $1bn 2. Symitar: Credit unions of all sizes 3. ProfitStars: Financial institutions Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

Jack Henry Brands Jack Henry Banking :  Supports commercial banks with information and transaction processing platforms  Provides three core software systems to process deposit, loan, and general ledger transactions, and to maintain centralized customer/member information  SilverLake, CIF 20/20, Core Director  Complementary systems  Business intelligence and bank management, retail and business banking, Internet banking and electronic funds transfer ("EFT”) Access timely info to report and analyze business info, help customer commercial relations at all points of contact, account access and initiate transactions, secure and reliable end to end transfer Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

Jack Henry Brands Symitar :  Supports Credit Unions with information and transaction processing platforms  Two core credit union processing platforms  Elipsys (IMB System p -based) and Cruise (Windows)  Complementary systems  Business intelligence and credit union management, member and member business services, Internet banking and EFT Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

Jack Henry Brands ProfitStars:  Provide specialized niche products and services  complement existing technology platforms to domestic financial services organizations  In-organic in nature as most of the acquired companies and their respective products and services have been consolidated into ProfitStars Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

INDUSTRY OVERVIEW

Industry Overview  Banks  10% Decline in number of banks since 02’ Assets have increased at 9% annual rate 55% use in-house info processing, 45% outsource  Credit Unions  16% Decrease in number of credit unions since 02’ Assets have increased at 7% annual rate 75% use in-house info processing, 25% outsource For credit unions with over $25 million in assets Jack Henry (2007). Annual Report Retrieved November 24, 2007, from SEC EDGAR database

Acquisition History Fiscal YearCompany or Product Name Products and Services 2008Gladiator Technology Information Technology Security Services 2007Margin Maximizer Loan and Deposit Pricing Solutions 2006ProfitStar Asset/Liability Management, Budgeting and Profitability 2005Tangent Analytics Business Intelligence Solutions 2005Stratika Profitability Solutions 2005Synergy Document Imaging 2005TWS Item Processing/ATM Deposit Processing 2005Optinfo Enterprise Exception Management Solution 2005Verinex Technologies Biometric Security Solutions 2005Select Payment Processing Payment Processing Solutions 2005Banc Insurance Services Insurance Agency Outsourcing 2004Regulatory Reporting Group Electronic Regulatory Reporting Solutions 2004e-ClassicSystems ATM Channel Management System 2004PowerPay.ach,.rck and.arc Automated Clearing House Product Suite 2004Yellow Hammer Software Fraud Detection and Prevention Solution

RCMP POSITION AND STOCK PERFORMANCE

Current Position  November 11, 1999 entered position  BOT 200 shares at $36 per share  March 3, 2000  Stock split 2:1  March 5, 2001  Stock split 2:1  January 15, 2007  Sold 400 shares at $22.53  Current position  Own 400 shares  Stock price $25.40 as of November 26, 2007

Stock Performance

Portfolio Correlation AEEAEOCPRTDFSFRJKHYKMBMVSNSRCLSRZWAG AEE1.00 AEO CPRT DFS FR JKHY KMB MVSN SRCL SRZ WAG

Portfolio Pie Chart

Ratio Comparison JKHYComputer Networks Industry Technology Sector S&P 500 Valuation Ratios P/E Ratio (TTM) Beta Price to Sales (TTM) Price to Book (MRQ) Price to Free Cash Flow (TTM) Dividends Dividend Yield - 5 Year Avg Payout Ratio (TTM) Source: One Source

Ratio Comparison Cont. JKHY Computer Network Industry Technology Sector S&P 500 Financial Strength Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt to Equity (MRQ) Profitability Ratios (%) Gross Margin - 5 Yr. Avg Net Profit Margin - 5 Yr. Avg Management Effectiveness (%) Return On Assets (TTM) Return On Equity (TTM) Efficiency Receivable Turnover (TTM) Inventory Turnover (TTM)#N/A Asset Turnover (TTM) Source: One Source

FINANCIAL HEALTH

Financial Health Profitability Ratios Return on Equity (%) Return on Assets (%) Return on Investment Gross Margin Operating Margin (%) Pre-Tax Margin Net Profit Margin (%) Effective Tax Rate (%) Liquidity Indicators Quick Ratio Current Ratio Debt Management Current Liabilities/Equity

VALUATION  DCF VALUATION  Assumptions  WACC  Share Price Range

ASSUMPTIONS  Revenue – 3 Streams  License Revenue – Decreasing YOY Already Strong Penetration in the market Shift of Customers towards Outsourcing  Support and Services – Increasing YOY Outsourcing from Customer Increase in the Asset under Management of Existing Customer  Hardware Revenue – High for 2008, constant for rest of the years. I maging and exchanging of checks, IBM System upgrades

Assumptions  Cost of Sales – Increase with increase in revenue   Operating Expenses  SG&A to grow at a constant 5 year average  R&D to increase to boost the license revenue  G&A Expenses to remain constant on 5 year average  Tax Rate – Marginal Tax Rate of 37%  Capex – Assumed to follow the same pattern as last 5 years. In nominal terms management expects it to be below $50 million.  Dividend Payout of 22%  Sustainable Growth Rate of 4%

WACC  CAPM  Risk Free Rate – 4.26%  Market Premium – 5.75%  Beta – 1.28  Cost of Equity %E/V – 96.99%  Cost of Debt – 8.5%D/V – 3.01%  Tax Rate 37%  WACC – 11.42%

Sensitivity Analysis Growth Rate WACC -3%3.25%3.50%3.75%4.00%4.25%4.50%4.75%5.00% 10% % % % % % % % % % % % % %

Conclusion  DCF – $28.91  Market Price - $  Recommendation – HOLD All 400 Shares  Undervalued  Excellent Diversifier with the current portfolio mix.  On a downside the Credit Crunch may hit their revenue.

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