Jack Henry and Associates

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

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

3. COMPANY OVERVIEW

4. Jack Henry Business Jack Henry (2007). Annual Report 2007. Retrieved November 24, 2007, from SEC EDGAR database http://sec.gov/edgar • 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

5. Revenue Streams Jack Henry (2007). Annual Report 2007. Retrieved November 24, 2007, from SEC EDGAR database http://sec.gov/edgar

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

7. 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 2007. Retrieved November 24, 2007, from SEC EDGAR database http://sec.gov/edgar

8. Jack Henry Brands Jack Henry (2007). Annual Report 2007. Retrieved November 24, 2007, from SEC EDGAR database http://sec.gov/edgar 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

9. Jack Henry Brands Jack Henry (2007). Annual Report 2007. Retrieved November 24, 2007, from SEC EDGAR database http://sec.gov/edgar 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

10. INDUSTRY OVERVIEW

11. 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 2007. Retrieved November 24, 2007, from SEC EDGAR database http://sec.gov/edgar

12. Acquisition History

13. RCMP POSITION AND STOCK PERFORMANCE

14. 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 Current Position

15. Stock Performance

16. Stock Performance

17. Portfolio Correlation

18. Portfolio Pie Chart

19. Ratio Comparison Source: One Source

20. Ratio Comparison Cont. Source: One Source

21. FINANCIAL HEALTH

22. Financial Health

23. VALUATION • DCF VALUATION • Assumptions • WACC • Share Price Range

24. 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. • Imaging and exchanging of checks, IBM System upgrades

25. 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%

26. WACC • CAPM • Risk Free Rate – 4.26% • Market Premium – 5.75% • Beta – 1.28 • Cost of Equity -11.61% E/V – 96.99% • Cost of Debt – 8.5% D/V – 3.01% • Tax Rate 37% • WACC – 11.42%

27. Sensitivity Analysis

28. Conclusion • DCF – $28.91 • Market Price - $ 25.40 • Recommendation – HOLD All 400 Shares • Undervalued • Excellent Diversifier with the current portfolio mix. • On a downside the Credit Crunch may hit their revenue.

29. Questions ???