Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

	Report of Independent Registered Public Accounting Firm	35
	Management's Annual Report on Internal Control over Financial Reporting	36
	Report of Independent Registered Public Accounting Firm	37
	Financial Statements
	Consolidated Statements of Income,
	Years Ended June 30, 2015, 2014, and 2013	39
	Consolidated Balance Sheets,
	June 30, 2015 and 2014	40
	Consolidated Statements of Changes in Stockholders' Equity,
	Years Ended June 30, 2015, 2014, and 2013	41
	Consolidated Statements of Cash Flows,
	Years Ended June 30, 2015, 2014, and 2013	42
	Notes to Consolidated Financial Statements	43

Financial Statement Schedules

There are no schedules included because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Jack Henry & Associates, Inc.

Monett, Missouri

We have audited the accompanying consolidated balance sheets of Jack Henry & Associates, Inc. and subsidiaries (the “Company”) as of June 30, 2015 and 2014, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jack Henry & Associates, Inc. and subsidiaries as of June 30, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2015, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of June 30, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 11, 2015 expressed an adverse opinion on the Company’s internal control over financial reporting because of a material weakness.

/s/ DELOITTE & TOUCHE LLP

Kansas City, Missouri

September 11, 2015

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING (Revised)

The management of Jack Henry & Associates, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes policies and procedures pertaining to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. All internal controls, no matter how well designed, have inherent limitations. Therefore, even where internal control over financial reporting is determined to be effective, it can provide only reasonable assurance. Projections of any evaluation of effectiveness to future periods are subject to the risk controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

As of the end of the Company's 2015 fiscal year, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, and the previous identification of a material weakness (the description of which is set forth below), management has determined the Company's internal control over financial reporting as of June 30, 2015 was not effective.

There are a number of deficiencies in the design and operating effectiveness of internal control over financial reporting that, in the aggregate, constitute a material weakness. The identified deficiencies noted below stem from a failure in the Company’s risk assessment process wherein the risk assessment process did not identify or evaluate the inherent risks and complexities associated with accounting for revenue arrangements with software elements.

•	The lack of training and continuing education related to multiple element software arrangements led to a lack of knowledge of the individuals tasked with understanding various technical accounting matters associated with the Company's multiple element arrangement revenue recognition policies.

•	Appropriate accounting and reporting policies and procedures related to bundled multiple element arrangements were not designed and implemented.

•	Appropriate internal controls over financial reporting for bundled multiple element arrangements were not designed and implemented.

•	Monitoring, including use of internal audit, was not appropriately designed to identify errors in accounting for revenue recognition for multiple element software arrangements.

The Company’s internal control over financial reporting as of June 30, 2015 has been audited by the Company’s independent registered public accounting firm, as stated in their report appearing on the next page.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Jack Henry & Associates, Inc.

Monett, Missouri

We have audited Jack Henry & Associates, Inc. and subsidiaries' (the “Company's”) internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment:

There are a number of deficiencies in the design and operating effectiveness of internal control over financial reporting that, in aggregate, constitute a material weakness. The identified deficiencies noted below stem from a failure in the Company’s risk assessment process wherein the risk assessment process did not identify or evaluate the inherent risks and complexities associated with accounting for revenue arrangements with software elements.

•	The lack of training and continuing education related to multiple element software arrangements led to a lack of competence with individuals tasked with understanding various technical accounting matters associated with the Company's multiple element arrangement revenue recognition policies.

•	Appropriate accounting and reporting policies and procedures related to bundled multiple element arrangements were not designed and implemented.

•	Appropriate internal controls over financial reporting for bundled multiple element arrangements were not designed and implemented.

•	Monitoring, including use of internal audit, was not appropriately designed to identify errors in accounting for revenue recognition for multiple element software arrangements.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended June 30, 2015, of the Company and this report does not affect our report on such financial statements.

In our opinion, because of the effect of the material weakness identified above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of June 30, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended June 30, 2015, of the Company and our report dated September 11, 2015 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Kansas City, Missouri

September 11, 2015

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
	Year Ended
	June 30,
	2015				2014				2013
REVENUE
License	$	2,635			$	2,184			$	5,366
Support and service	1,200,652				1,112,331				1,042,801
Hardware	52,903				58,658				59,357
Total revenue	1,256,190				1,173,173				1,107,524
COST OF SALES
Cost of license	1,187				908				860
Cost of support and service	680,750				634,756				601,620
Cost of hardware	38,399				43,708				43,650
Total cost of sales	720,336				679,372				646,130
GROSS PROFIT	535,854				493,801				461,394
OPERATING EXPENSES
Selling and marketing	89,004				85,443				80,811
Research and development	71,495				66,748				63,202
General and administrative	57,490				53,312				66,624
Total operating expenses	217,989				205,503				210,637
OPERATING INCOME	317,865				288,298				250,757
INTEREST INCOME (EXPENSE)
Interest income	169				377				640
Interest expense	(1,594		)		(1,105		)		(6,337		)
Total interest income (expense)	(1,425		)		(728		)		(5,697		)
INCOME BEFORE INCOME TAXES	316,440				287,570				245,060
PROVISION FOR INCOME TAXES	105,219				100,855				77,450
NET INCOME	$	211,221			$	186,715			$	167,610
Diluted earnings per share	$	2.59			$	2.19			$	1.94
Diluted weighted average shares outstanding	81,601				85,396				86,619
Basic earnings per share	$	2.60			$	2.20			$	1.95
Basic weighted average shares outstanding	81,353				84,866				86,040

See notes to consolidated financial statements

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
	June 30, 2015				June 30, 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	148,313			$	70,377
Receivables, net	245,387				224,041
Income tax receivable	2,753				7,937
Prepaid expenses and other	69,096				61,074
Deferred costs	27,950				27,077
Total current assets	493,499				390,506
PROPERTY AND EQUIPMENT, net	296,332				291,675
OTHER ASSETS:
Non-current deferred costs	96,423				78,458
Computer software, net of amortization	191,541				160,391
Other non-current assets	52,432				44,657
Customer relationships, net of amortization	122,204				136,602
Other intangible assets, net of amortization	34,038				25,653
Goodwill	550,366				552,761
Total other assets	1,047,004				998,522
Total assets	$	1,836,835			$	1,680,703
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	9,933			$	10,516
Accrued expenses	78,962				63,299
Accrued income taxes	5,543				—
Deferred income tax liability	7,034				30,094
Notes payable and current maturities of long term debt	2,595				5,407
Deferred revenues	339,544				337,493
Total current liabilities	443,611				446,809
LONG TERM LIABILITIES:
Non-current deferred revenues	192,443				155,375
Non-current deferred income tax liability	150,223				97,720
Debt, net of current maturities	50,102				3,729
Other long-term liabilities	8,922				9,683
Total long term liabilities	401,690				266,507
Total liabilities	845,301				713,316
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value; 500,000 shares authorized, none issued	—				—
Common stock - $0.01 par value; 250,000,000 shares authorized; 102,695,214 shares issued at June 30, 2015; 102,429,926 shares issued at June 30, 2014	1,027				1,024
Additional paid-in capital	424,536				412,512
Retained earnings	1,266,443				1,131,632
Less treasury stock at cost 21,842,632 shares at June 30, 2015; 19,794,559 shares at June 30, 2014	(700,472		)		(577,781		)
Total stockholders' equity	991,534				967,387
Total liabilities and equity	$	1,836,835			$	1,680,703

See notes to consolidated financial statements

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Share and Per Share Data)
	Year Ended June 30,
	2015				2014				2013
PREFERRED SHARES:	—				—				—
COMMON SHARES:
Shares, beginning of year	102,429,926				101,993,808				101,482,461
Shares issued for equity-based payment arrangements	172,661				344,372				405,270
Shares issued for Employee Stock Purchase Plan	92,627				91,746				106,077
Shares, end of year	102,695,214				102,429,926				101,993,808
COMMON STOCK - PAR VALUE $0.01 PER SHARE:
Balance, beginning of year	$	1,024			$	1,020			$	1,015
Shares issued for equity-based payment arrangements	2				3				4
Shares issued for Employee Stock Purchase Plan	1				1				1
Balance, end of year	$	1,027			$	1,024			$	1,020
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of year	$	412,512			$	400,710			$	381,919
Shares issued upon exercise of stock options	640				606				6,771
Tax withholding related to share based compensation	(7,951		)		(6,598		)		(3,926		)
Shares issued for Employee Stock Purchase Plan	4,880				4,283				3,699
Tax benefits from share-based compensation	4,343				3,420				3,632
Stock-based compensation expense	10,112				10,091				8,615
Balance, end of year	$	424,536			$	412,512			$	400,710
RETAINED EARNINGS:
Balance, beginning of year	$	1,131,632			$	1,016,168			$	896,760
Net income	211,221				186,715				167,610
Dividends	(76,410		)		(71,251		)		(48,202		)
Balance, end of year	$	1,266,443			$	1,131,632			$	1,016,168
TREASURY STOCK:
Balance, beginning of year	$	(577,781	)		$	(402,082	)		$	(343,956	)
Purchase of treasury shares	(122,691		)		(175,699		)		(58,126		)
Balance, end of year	$	(700,472	)		$	(577,781	)		$	(402,082	)
TOTAL STOCKHOLDERS' EQUITY	$	991,534			$	967,387			$	1,015,816
Dividends declared per share	$	0.94			$	0.84			$	0.56

See notes to consolidated financial statements.

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
	Year Ended
	June 30,
	2015				2014				2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	211,221			$	186,715			$	167,610
Adjustments to reconcile net income from operations to net cash from operating activities:
Depreciation	54,155				52,935				51,967
Amortization	64,841				54,836				48,374
Change in deferred income taxes	29,443				12,752				18,336
Excess tax benefits from stock-based compensation	(4,343		)		(3,406		)		(3,621		)
Expense for stock-based compensation	10,112				10,091				8,615
(Gain)/loss on disposal of assets	(5,046		)		(784		)		3,908
Changes in operating assets and liabilities:
Change in receivables	(21,346		)		7,498				(12,739		)
Change in prepaid expenses, deferred costs and other	(33,858		)		(28,565		)		(11,502		)
Change in accounts payable	(583		)		(1,252		)		(4,582		)
Change in accrued expenses	14,483				(6,364		)		7,774
Change in income taxes	14,146				5,251				4,575
Change in deferred revenues	40,565				51,952				30,459
Net cash from operating activities	373,790				341,659				309,174
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisitions, net of cash acquired	—				(27,894		)		—
Capital expenditures	(54,409		)		(33,185		)		(46,256		)
Proceeds from sale of assets	8,317				7,781				530
Customer contracts acquired	—				—				(186		)
Internal use software	(14,020		)		(16,288		)		—
Computer software developed	(76,872		)		(62,194		)		(51,332		)
Net cash from investing activities	(136,984		)		(131,780		)		(97,244		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facilities	90,000				25,000				—
Repayments on credit facilities	(50,783		)		(47,158		)		(145,180		)
Debt acquisition costs	(901		)		—				—
Purchase of treasury stock	(122,691		)		(175,699		)		(58,126		)
Dividends paid	(76,410		)		(71,251		)		(48,202		)
Excess tax benefits from stock-based compensation	4,343				3,406				3,621
Proceeds from issuance of common stock upon exercise of stock options	642				609				6,775
Minimum tax withholding payments related to share based compensation	(7,951		)		(6,598		)		(3,926		)
Proceeds from sale of common stock, net	4,881				4,284				3,700
Net cash from financing activities	(158,870		)		(267,407		)		(241,338		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	77,936			$	(57,528	)		$	(29,408	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	70,377			$	127,905			$	157,313
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	148,313			$	70,377			$	127,905

See notes to consolidated financial statements

JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Amounts)

NOTE 1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

Jack Henry & Associates, Inc. and subsidiaries (“JHA” or the “Company”) is a provider of integrated computer systems and services that has developed and acquired a number of banking and credit union software systems. The Company's revenues are predominately earned by marketing those systems to financial institutions nationwide together with computer equipment (hardware), by providing the conversion and software implementation services for financial institutions to utilize JHA software systems, and by providing other related services. JHA also provides continuing support and services to customers using in-house or outsourced systems.

CONSOLIDATION

The consolidated financial statements include the accounts of JHA and all of its subsidiaries, which are wholly-owned, and all intercompany accounts and transactions have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company derives revenue from the following sources: license arrangements, support and service fees (non-software) and hardware sales. There are no rights of return, condition of acceptance or price protection in the Company’s sales contracts.

License Arrangements: For software license agreements, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed and determinable and collection is probable. For arrangements where the fee is not fixed or determinable, revenue is deferred until payments become due. The Company’s software license agreements generally include multiple products and services or “elements.” Generally, none of these elements are deemed to be essential to the functionality of the other elements.

For multiple element arrangements, which contain software elements and non-software elements, we allocate revenue to the software deliverables and the non-software deliverables as a group based on the relative selling prices of all of the deliverables in the arrangement. For our non-software deliverables, we allocate the arrangement consideration based on the relative selling price of the deliverables using estimated selling price ("ESP"). For our software elements, we use VSOE for this allocation when it can be established and ESP when VSOE cannot be established.

The selling price for each element is based upon the following selling price hierarchy: VSOE if available, third party evidence ("TPE") if VSOE is not available, or ESP if neither VSOE or TPE are available. Generally, we are not able to determine TPE because our go-to-market strategy differs from that of our peers and our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality cannot be obtained. ESP is determined after considering both market conditions (such as the sale of similar products in the market place) and entity-specific factors (such as pricing practices and the specifics of each transaction).

For our non-software deliverables, a delivered item is accounted for as a separate unit of accounting if the delivered item has standalone value and if the customer has a general right of return relative to the delivered item, delivery or performance of the undelivered item is probable and substantially within our control.

For our software licenses and related services, including the software elements of multiple-element software and non-software arrangements, U.S. GAAP generally require revenue earned on software arrangements involving multiple elements to be allocated to each element based on vendor-specific objective evidence (“VSOE”) of fair value. VSOE of fair value is determined for implementation services based on a rate per hour for stand-alone professional services and the estimated hours for the bundled implementation, if the hours can be reasonably estimated. VSOE of fair value is determined for post-contract support ("PCS") based upon the price charged when sold separately. For a majority of the elements within our software arrangements, we have determined that VSOE cannot be established; therefore, revenue on our software arrangements is generally deferred until the only remaining element is post-contract support ("PCS"). At that point, the entire arrangement fee is recognized ratably over the remaining PCS period, assuming that all other criteria for revenue recognition have been met. The amounts deferred are included in the balance sheet as

deferred revenue and recognized as Bundled Products & Services revenue within Support & Service revenue in the income statement.

For arrangements that include specified upgrades, such upgrades are accounted for as a separate element of the arrangement. For those specified upgrades for which VSOE of fair value cannot be determined, revenue related to the software elements within the arrangement is deferred until such specified upgrades have been delivered.

Total revenue recognized ratably related to our Bundled Products & Services was $62,888, $60,685 and $64,275 for the years ended June 30, 2015, 2014, and 2013, respectively.

Support and Service Fee Revenue (Non-software): Maintenance support revenue contracted for outside of a license arrangement is recognized pro-rata over the contract period, typically one year.

Outsourced data processing and ATM, debit card, and other transaction processing services revenue is recognized in the month the transactions are processed or the services are rendered.

Hardware Revenue: Hardware revenue is recognized upon delivery to the customer, when title and risk of loss are transferred. In most cases, we do not stock in inventory the hardware products we sell, but arrange for third-party suppliers to drop-ship the products to our customers on our behalf. The revenue related to these hardware sales is recorded gross. The Company also remarkets maintenance contracts on hardware to our customers. Hardware maintenance revenue is recognized ratably over the agreement period.

Revenue-based taxes collected from customers and remitted to governmental authorities are presented on a net basis (i.e. excluded from revenues).

DEFERRED COSTS

Costs for certain software and hardware maintenance contracts with third parties, which are prepaid, are recognized ratably over the life of the maintenance contract, generally one to five years, with the related revenue amortized from deferred revenues.

Direct and incremental costs associated with arrangements subject to Accounting Standards Codification ("ASC") 985-605 (for which VSOE of fair value cannot be established) are deferred until the only remaining element in the revenue arrangement is PCS at which point the costs are recognized ratably over the remaining PCS period with the related revenue. Deferred direct and incremental costs associated with arrangements not subject to ASC 985-605 consist primarily of certain up-front costs incurred in connection with our software hosting arrangements and are recognized ratably over the contract period which typically ranges from 5-7 years. These costs include commissions, costs of third-party licenses and the direct costs of our implementation services, consisting of payroll and other fringe benefits.

DEFERRED REVENUES

Deferred revenues consist primarily of prepaid annual software support fees, deferred bundled software arrangements revenue, and prepaid hardware maintenance fees. Deferred bundled software arrangements revenue and hardware maintenance contracts may be recognized over multiple years; therefore, the related deferred revenue and maintenance are classified as current or non-current in accordance with the terms of the contract. Software and hardware deposits received are also reflected as deferred revenues.

The vast majority of our maintenance (PCS) renews annually and runs from July 1 to June 30. Renewal billings are submitted to customers each June and the Company has the right to bill at that date; therefore we include those billings as gross in deferred revenue and as a receivable on our balance sheet at the end of each fiscal year.

COMPUTER SOFTWARE DEVELOPMENT

The Company capitalizes new product development costs incurred from the point at which technological feasibility has been established through the point at which the product is ready for general availability. Software development costs that are capitalized are evaluated on a product-by-product basis annually and are assigned an estimated economic life based on the type of product, market characteristics, and maturity of the market for that particular product. These costs are amortized based on current and estimated future revenue from the product or on a straight-line basis, whichever yields greater amortization expense. All of this amortization expense is included within Cost of support and service.

CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of three months or less at the time of acquisition to be cash equivalents.

PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets.

Intangible assets consist of goodwill, customer relationships, computer software, and trade names acquired in business acquisitions in addition to internally developed computer software. The amounts are amortized, with the exception of those with an indefinite life (such as goodwill), over an estimated economic benefit period, generally five to twenty years.

The Company reviews its long-lived assets and identifiable intangible assets with finite lives for impairment whenever events or changes in circumstances have indicated that the carrying amount of its assets might not be recoverable. The Company evaluates goodwill and other indefinite-lived intangible assets for impairment of value on an annual basis as of January 1 and between annual tests if events or changes in circumstances indicate that the asset might be impaired.

COMPREHENSIVE INCOME

Comprehensive income for each of the years ended June 30, 2015, 2014, and 2013 equals the Company’s net income.

REPORTABLE SEGMENT INFORMATION

In accordance with U.S. GAAP, the Company's operations are classified as two reportable segments: bank systems and services and credit union systems and services (see Note 13). Revenue by type of product and service is presented on the face of the consolidated statements of income. Substantially all the Company’s revenues are derived from operations and assets located within the United States of America.

COMMON STOCK

The Board of Directors has authorized the Company to repurchase shares of its common stock. Under this authorization, the Company may finance its share repurchases with available cash reserves or short-term borrowings on its existing credit facilities. The share repurchase program does not include specific price targets or timetables and may be suspended at any time. At June 30, 2015, there were 21,843 shares in treasury stock and the Company had the remaining authority to repurchase up to 8,148 additional shares. The total cost of treasury shares at June 30, 2015 is $700,472. During fiscal 2015, the Company repurchased 2,048 treasury shares for $122,691. At June 30, 2014, there were 19,795 shares in treasury stock and the Company had authority to repurchase up to 5,196 additional shares.

Dividends declared per share were $0.94, $0.84, and $0.56 for the years ended June 30, 2015, 2014, and 2013, respectively.

EARNINGS PER SHARE

Per share information is based on the weighted average number of common shares outstanding during the year. Stock options have been included in the calculation of income per diluted share to the extent they are dilutive. The difference between basic and diluted weighted average shares outstanding is the dilutive effect of outstanding stock options (see Note 10).

INCOME TAXES

Deferred tax liabilities and assets are recognized for the tax effects of differences between the financial statement and tax bases of assets and liabilities. A valuation allowance would be established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefits recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers in May 2014. The new standard will supersede much of the existing authoritative literature for revenue recognition. In August 2015, the FASB also issued ASU No. 2015-14 which deferred the effective date of the new standard by one year. The standard and related amendments will be effective for the Company for its annual reporting period beginning July 1, 2018, including interim periods within that reporting period. Along with the deferral of the effective date, ASU No. 2015-14 allows early application as of the original effective date.

Entities are allowed to transition to the new standard by either recasting prior periods or recognizing the cumulative effect as of the beginning of the period of adoption. The Company is currently evaluating the newly issued guidance, including which transition approach will be applied and the estimated impact it will have on our consolidated financial statements.

In April 2015, the FASB also issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability (same treatment as debt discounts). ASU 2015-3 is effective for the company in fiscal year ended June 30, 2017. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will adopt these changes for the fiscal year ended June 30, 2017.

NOTE 2. FAIR VALUE OF FINANCIAL INSTRUMENTS

For cash equivalents, amounts receivable or payable and short-term borrowings, fair values approximate carrying value, based on the short-term nature of the assets and liabilities. The fair value of long term debt also approximates carrying value as estimated using discounted cash flows based on the Company’s current incremental borrowing rates.

The Company's estimates of the fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows:

Level 1: inputs to the valuation are quoted prices in an active market for identical assets

Level 2: inputs to the valuation include quoted prices for similar assets in active markets that are observable either directly or indirectly

Level 3: valuation is based on significant inputs that are unobservable in the market and the Company's own estimates of assumptions that we believe market participants would use in pricing the asset

Fair value of financial assets, included in cash and cash equivalents, and financial liabilities is as follows:

		Estimated Fair Value Measurements												Total Fair
		Level 1				Level 2				Level 3				Value
June 30, 2015
Financial Assets:
Money market funds		$	98,888			$	—			$	—			$	98,888
Financial Liabilities:
Revolving credit facility		$	—			$	50,000			$	—			$	50,000
June 30, 2014
Financial Assets:
Money market funds		$	28,877			$	—			$	—			$	28,877

NOTE 3. PROPERTY AND EQUIPMENT

The classification of property and equipment, together with their estimated useful lives is as follows:

	June 30,
	2015				2014				Estimated Useful Life
Land	$	24,987			$	24,987
Land improvements	25,428				25,411				5 - 20 years
Buildings	144,414				143,733				20 - 30 years
Leasehold improvements	32,169				28,962				5 - 30 years	(1)
Equipment and furniture	327,949				316,064				3 - 10 years
Aircraft and equipment	37,695				27,246				5 - 15 years
Construction in progress	23,563				12,199
	616,205				578,602
Less accumulated depreciation	319,873				286,927
Property and equipment, net	$	296,332			$	291,675

(1) Lesser of lease term or estimated useful life

Property and equipment included $1,343 and $523 that was in accrued liabilities at June 30, 2015 and 2014, respectively. Also, the Company acquired $4,344 and $16,119 of computer equipment through capital leases for the years ended June 30, 2015 and 2014, respectively. These amounts were excluded from capital expenditures on the statement of cash flows.

NOTE 4. OTHER ASSETS

Goodwill

The carrying amount of goodwill for the years ended June 30, 2015 and 2014, by reportable segments, is as follows:

	June 30,
Banking	2015				2014
Beginning balance	$	423,190			$	403,720
Goodwill, acquired during the year	—				19,470
Goodwill, written off related to sale	(2,395		)		—
Ending balance	$	420,795			$	423,190
Credit Union
Beginning balance	$	129,571			$	129,571
Goodwill, acquired during the year	—				—
Ending balance	$	129,571			$	129,571

During the year the Profitstars® division of the Company sold its TeleWeb suite of Internet and mobile banking software products to Data Center Inc. (DCI). Goodwill allocated to the carrying amount of the net assets sold was calculated based on the relative fair values of the business disposed of and the portion of the reporting unit (in which the business resided) that was retained, multiplied by the reporting unit's carrying value of goodwill.

Other Intangible Assets

Information regarding other identifiable intangible assets is as follows:

	June 30, 2015
	Gross Carrying Amount				Accumulated Amortization			Net
Customer relationships	$	276,337			(154,133	)		$	122,204
Computer software	$	416,674			(225,133	)		$	191,541
Other intangible assets:
Purchased software	32,192				(7,818	)		24,374
Trade names	12,498				(2,834	)		9,664
Other intangible assets, total	$	44,690			(10,652	)		$	34,038
	June 30, 2014
	Gross Carrying Amount				Accumulated Amortization			Net
Customer relationships	$	276,337			(139,735	)		$	136,602
Computer software	$	345,248			(184,857	)		$	160,391
Other intangible assets:
Purchased software	17,162				(1,933	)		15,229
Trade names	12,498				(2,074	)		10,424
Total	$	29,660			(4,007	)		$	25,653

Customer relationships have lives ranging from 5 to 20 years. Our other intangible assets have useful lives ranging from 3 to 20 years.

Computer software includes the unamortized cost of commercial software products developed or acquired by the Company, which are capitalized and amortized over useful lives ranging from 5 to 10 years. Amortization expense for computer software totaled $43,798, $37,720, and $33,145 for the fiscal years ended June 30, 2015, 2014, and 2013, respectively. There were no material impairments in any of the fiscal years presented.

Amortization expense for all intangible assets was $64,841, $54,836, and $48,374 for the fiscal years ended June 30, 2015, 2014, and 2013, respectively. The estimated aggregate future amortization expense for each of the next five years for all intangible assets remaining as of June 30, 2015, is as follows:

Years Ending June 30,	Computer Software				Customer Relationships				Other Intangible Assets				Total
2016	$	44,416			$	13,814			$	7,756			$	65,986
2017	35,602				13,585				6,249				55,436
2018	28,080				13,050				2,686				43,816
2019	19,701				12,829				955				33,485
2020	8,224				10,699				560				19,483

NOTE 5. DEBT

The Company’s outstanding long and short term debt is as follows:

	June 30,				June 30,
	2015				2014
LONG TERM DEBT
Revolving credit facility	$	50,000			$	—
Capital leases	816				7,757
	50,816				7,757
Less current maturities	714				4,028
Debt, net of current maturities	$	50,102			$	3,729

SHORT TERM DEBT
Capital leases	$	1,881			$	1,379
Current maturities of long-term debt	714				4,028
Notes payable and current maturities of long term debt	$	2,595			$	5,407

The following table summarizes the annual principal payments required as of June 30, 2015:

Years ended June 30,
2016	$	2,595
2017	102
2018	—
2019	—
2020	50,000
Thereafter	—
	$	52,697

Capital leases

The Company has entered into various capital lease obligations for the use of certain computer equipment. Long term capital lease obligations were entered into of which $816 remains outstanding at June 30, 2015 and $714 will be maturing within the next twelve months. The Company also has short term capital lease obligations totaling $1,881 at June 30, 2015. Included in property and equipment are assets under capital leases totaling $16,833, which have accumulated depreciation totaling $4,563.

Revolving credit facility

The revolving credit facility allows for borrowings of up to $300,000, which may be increased by the Company at any time until maturity to $600,000. The credit facility bears interest at a variable rate equal to (a) a rate based on LIBOR or (b) an alternate base rate (the highest of (i) the Prime Rate for such day, (ii) the sum of the Federal Funds Effective Rate for such day plus 0.50% and (iii) the Eurocurrency Rate for a one month Interest Period on such day for dollars plus 1.0%), plus an applicable percentage in each case determined by the Company's leverage ratio. The credit facility is secured by pledges of capital stock of certain subsidiaries of the Company and also guaranteed by certain subsidiaries of the Company. The credit facility is subject to various financial covenants that require the Company to maintain certain financial ratios as defined in the agreement. As of June 30, 2015, the Company was in compliance with all such covenants. The revolving loan terminates February 20, 2020 and at June 30, 2015, the outstanding revolving loan balance was $50,000.

Other lines of credit

The Company renewed an unsecured bank credit line on March 3, 2014 which provides for funding of up to $5,000 and bears interest at the prime rate less 1%. The credit line was renewed through April 30, 2017. At June 30, 2015, no amount was outstanding.

Interest

The Company paid interest of $1,111, $620, and $3,549 in 2015, 2014, and 2013 respectively.

NOTE 6. COMMITMENTS AND CONTINGENCIES

Litigation

We are subject to various routine legal proceedings and claims, including the following:

In 2013 a patent infringement lawsuit entitled DataTreasury Corporation v. Jack Henry & Associates, Inc. et. al. was filed against the Company, several subsidiaries and a number of customer financial institutions in the US District Court for the Eastern District of Texas. The complaint seeks damages, interest, injunctive relief, and attorneys' fees for the alleged infringement of two patents, as well as trebling of damage awards for alleged willful infringement. We believe we have strong defenses and have defended the lawsuit vigorously. A part of that defense has been the filing of challenges to the validity of plaintiff's patents in post-grant proceedings at the Patent Trial and Appeal Board ("PTAB") of the U.S. Patent and Trademark Office. On April 29 and July 8, 2015, the PTAB issued decisions holding that all relevant claims of the plaintiff's patents are unpatentable and invalid. DataTreasury has moved for rehearing of the PTAB decisions. At this stage, we cannot make a reasonable estimate of possible loss or range of loss, if any, arising from this lawsuit.

Property and Equipment

The Company had $13,089 of material commitments at June 30, 2015 to purchase property and equipment related mainly to the purchase of aircraft. There were $14,293 material commitments at June 30, 2014.

Leases

The Company leases certain property under operating leases which expire over the next 6 years, but certain of the leases contain options to extend the lease term. All lease payments are based on the lapse of time but include, in some cases, payments for operating expenses and property taxes. There are no purchase options on real estate leases at this time. Certain leases on real estate are subject to annual escalations for increases in operating expenses and property taxes.

As of June 30, 2015, net future minimum lease payments are as follows:

Years Ending June 30,	Lease Payments
2016	$	8,554
2017	7,163
2018	5,725
2019	2,845
2020	1,673
Thereafter	607
Total	$	26,567

Rent expense was $9,547, $8,609, and $8,124 in 2015, 2014, and 2013 respectively.

NOTE 7. INCOME TAXES

The provision for income taxes from continuing operations consists of the following:

	Year Ended June 30,
	2015				2014				2013
Current:
Federal	$	70,555			$	77,937			$	54,574
State	5,221				10,166				4,540
Deferred:
Federal	28,018				10,636				14,689
State	1,425				2,116				3,647
	$	105,219			$	100,855			$	77,450

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	June 30,
	2015				2014
Deferred tax assets:
Contract and service revenues and costs	$	68,503			$	71,383
Expense reserves (bad debts, insurance, franchise tax and vacation)	14,612				14,776
Net operating loss carryforwards	3,682				4,218
Other, net	1,493				1,148
	88,290				91,525
Deferred tax liabilities:
Accelerated tax depreciation	(32,331		)		(29,247		)
Accelerated tax amortization	(142,776		)		(125,054		)
Contract and service revenues and costs	(69,790		)		(64,338		)
	(244,897		)		(218,639		)
Net deferred tax liability before valuation allowance	(156,607		)		(127,114		)
Valuation allowance	(650		)		(700		)
Net deferred tax liability	$	(157,257	)		$	(127,814	)

The deferred taxes are classified on the balance sheets as follows:

	2015				2014
Deferred income taxes (current)	$	(7,034	)		$	(30,094	)
Deferred income taxes (long-term)	(150,223		)		(97,720		)
	$	(157,257	)		$	(127,814	)

The following analysis reconciles the statutory federal income tax rate to the effective income tax rates reflected above:

	Year Ended June 30,
	2015			2014			2013
Computed "expected" tax expense	35.0	%		35.0	%		35.0	%
Increase (reduction) in taxes resulting from:
State income taxes, net of federal income tax benefits	1.4	%		2.8	%		2.2	%
Research and development credit	(1.5	)%		(0.8	)%		(3.5	)%
Domestic production activities deduction	(2.0	)%		(2.2	)%		(2.3	)%
Other (net)	0.4	%		0.3	%		0.2	%
	33.3	%		35.1	%		31.6	%

As of June 30, 2015, we have $6,903 of net operating loss (“NOL”) carryforwards pertaining to the acquisition of Goldleaf Financial Solutions, Inc., which are expected to be utilized after the application of IRC Section 382. Separately, as of June 30, 2015, we had state NOL carryforwards of $1,643. The federal and state losses have varying expiration dates, ranging from 2015 to 2034. Based on state tax rules which restrict our utilization of these losses, we believe it is more likely than not that $650 of these losses will expire unutilized. Accordingly, a valuation allowance of $650 and $700 has been recorded against these assets as of June 30, 2015 and 2014, respectively.

The Company paid income taxes of $61,885, $83,014, and $54,815 in 2015, 2014, and 2013 respectively.

At June 30, 2014, the Company had $7,834 of unrecognized tax benefits, $5,366 of which, if recognized, would affect our effective tax rate. At June 30, 2015, the Company had $7,104 of gross unrecognized tax benefits, $5,193 of which, if recognized, would affect our effective tax rate. We had accrued interest and penalties of $1,120 and $1,315 related to uncertain tax positions at June 30, 2015 and 2014, respectively. The income tax provision included interest expense and penalties (or benefits) on unrecognized tax benefits of $(155), $582, and $(60) in the years ending June 30, 2015, 2014, and 2013, respectively.

A reconciliation of the unrecognized tax benefits for the years ended June 30, 2015 and 2014 follows:

	Unrecognized Tax Benefits
Balance at July 1, 2013	$	4,890
Additions for current year tax positions	1,380
Reductions for current year tax positions	—
Additions for prior year tax positions	1,662
Reductions for prior year tax positions	(1		)
Settlements	—
Reductions related to expirations of statute of limitations	(97		)
Balance at June 30, 2014	7,834
Additions for current year tax positions	1,351
Reductions for current year tax positions	(56		)
Additions for prior year tax positions	483
Reductions for prior year tax positions	(998		)
Settlements	—
Reductions related to expirations of statute of limitations	(1,510		)
Balance at June 30, 2015	$	7,104

The U.S. federal and state income tax returns for June 30, 2012 and all subsequent years remain subject to examination as of June 30, 2015 under statute of limitations rules. We anticipate potential changes could reduce the unrecognized tax benefits balance by $1,500 - $2,500 within twelve months of June 30, 2015.

NOTE 8. INDUSTRY AND SUPPLIER CONCENTRATIONS

The Company sells its products to banks, credit unions, and financial institutions throughout the United States and generally does not require collateral. All billings to customers are due 30 days from date of billing. Reserves (which are insignificant at June 30, 2015, 2014, and 2013) are maintained for potential credit losses.

In addition, the Company purchases most of its computer hardware and related maintenance for resale in relation to installation of JHA software systems from two suppliers. There are a limited number of hardware suppliers for these required items. If these relationships were terminated, it could have a negative impact on the operations of the Company.

NOTE 9. STOCK-BASED COMPENSATION

Our pre-tax operating income for the years ended June 30, 2015, 2014 and 2013 includes $10,112, $10,091 and $8,615 of equity-based compensation costs, respectively, of which $9,251, $9,335 and $7,962 relates to the restricted stock plan, respectively.

2005 NSOP and 1996 SOP

The Company previously issued options to employees under the 1996 Stock Option Plan (“1996 SOP”) and to outside directors under the 2005 Non-Qualified Stock Option Plan (“2005 NSOP”).

The 1996 SOP was adopted by the Company on October 29, 1996, for its employees. Terms and vesting periods of the options were determined by the Compensation Committee of the Board of Directors when granted and for options outstanding include vesting periods up to four years. Shares of common stock were reserved for issuance under this plan at the time of each grant, which must be at or above fair market value of the stock at the grant date. The options terminate 30 days after termination of employment, 3 months after retirement, one year after death or 10 years after the date of grant. The plan terminated by its terms on October 29, 2006, although options previously granted under the 1996 SOP are still outstanding and vested.

The 2005 NSOP was adopted by the Company on September 23, 2005, for its outside directors. Generally, options are exercisable beginning 6 months after grant at an exercise price equal to the fair market value of the stock at the grant date. For individuals who have served less than 4 continuous years, 25% of all options will vest after one year of service, 50% shall vest after two years, and 75% shall vest after three years of service on the Board. The options terminate upon surrender of the option, upon the expiration of 1 year following notification of a deceased optionee, or 10 years after grant. 700 shares of common stock have been reserved for issuance under this plan with a maximum of 100 for each director.

A summary of option plan activity under the plan is as follows:

	Number of Shares			Weighted Average Exercise Price				Aggregate Intrinsic Value
Outstanding July 1, 2012	464			$	16.19
Granted	—			—
Forfeited	—			—
Exercised	(320	)		13.68
Outstanding July 1, 2013	144			21.79
Granted	—			—
Forfeited	—			—
Exercised	(19	)		18.42
Outstanding July 1, 2014	125			22.29
Granted	—			—
Forfeited	—			—
Exercised	(25	)		19.17
Outstanding June 30, 2015	100			$	23.07			$	4,164
Vested June 30, 2015	100			$	23.07			$	4,164
Exercisable June 30, 2015	100			$	23.07			$	4,164

There were no options granted during any period presented. As of June 30, 2015, there were no unrecognized compensation costs related to stock options since all options have now vested. The weighted average remaining contractual term on options currently exercisable as of June 30, 2015 was 3.17 years.

The income tax benefits from stock option exercises totaled $4,343, $3,420 and $3,632 for the years ended June 30, 2015, 2014, and 2013, respectively.

The total intrinsic value of options exercised was $1,044, $704 and $8,254 for the fiscal years ended June 30, 2015, 2014, and 2013, respectively.

Restricted Stock Plan

The Restricted Stock Plan was adopted by the Company on November 1, 2005, for its employees. Up to 3,000 shares of common stock are available for issuance under the plan. Upon issuance, shares of restricted stock are subject to forfeiture and to restrictions which limit the sale or transfer of the shares during the restriction period. The restrictions will be lifted over periods ranging from 3 years to 7 years from grant date. On certain awards, the restrictions may be lifted sooner if certain targets for shareholder return are met.

The following table summarizes non-vested share awards activity:

Share awards	Shares			Weighted Average Grant Date Fair Value
Outstanding July 1, 2012	332			$	23.13
Granted	53			36.78
Vested	(125	)		23.17
Forfeited	(8	)		23.11
Outstanding July 1, 2013	252			25.92
Granted	30			54.13
Vested	(143	)		24.41
Forfeited	(1	)		22.17
Outstanding July 1, 2014	138			33.56
Granted	12			57.77
Vested	(71	)		35.69
Forfeited	(7	)		46.39
Outstanding June 30, 2015	72			$	34.28

The non-vested share awards will not participate in dividends during the restriction period. As a result, the weighted-average fair value of the non-vested share awards is based on the fair market value of the Company’s equity shares on the grant date, less the present value of the expected future dividends to be declared during the restriction period.

At June 30, 2015, there was $808 of compensation expense that has yet to be recognized related to non-vested restricted stock share awards, which will be recognized over a weighted-average period of 1.02 years.

An amendment to the Restricted Stock Plan was adopted by the Company on August 20, 2010. Unit awards will be made to employees remaining in continuous employment throughout the performance period and vary based on the Company’s percentile ranking in Total Shareholder Return (“TSR”) over the performance period compared to a peer group of companies. TSR is defined as the change in the stock price through the performance period plus dividends per share paid during the performance period, all divided by the stock price at the beginning of the performance period. It is the intention of the Company to settle the unit awards in shares of the Company’s stock.

The following table summarizes non-vested unit awards as of June 30, 2015, as well as activity for the year then ended:

Unit awards	Shares			Weighted Average Grant Date Fair Value
Outstanding July 1, 2012	672			$	18.05
Granted	174			42.39
Vested	—			—
Forfeited	(32	)		22.45
Outstanding July 1, 2013	814			23.08
Granted	164			48.21
Vested	(168	)		15.77
Forfeited	(101	)		15.77
Outstanding July 1, 2014	709			31.66
Granted	178			53.62
Vested	(277	)		19.69
Forfeited	(111	)		22.74
Outstanding June 30, 2015	499			$	48.13

The Company utilized a Monte Carlo pricing model customized to the specific provisions of the Company’s plan design to value unit awards subject to performance targets on the grant dates. The weighted average assumptions used in the model to measure fair value at the grant dates are as follows:

	Year Ended June 30,
	2015			2014			2013
Volatility	17.8	%		21.6	%		23.3	%
Risk free interest rate	1.06	%		0.91	%		0.33	%
Dividend yield	1.5	%		1.6	%		1.2	%
Stock Beta	0.765			0.837			0.864

For the year ended June 30, 2015, 164 unit awards were granted and measured using the above assumptions. The remaining 14 unit awards granted are not subject to performance targets, and therefore the estimated fair value at measurement date is valued in the same manner as restricted stock award grants.

At June 30, 2015, there was $9,442 of compensation expense that has yet to be recognized related to non-vested restricted stock unit awards, which will be recognized over a weighted-average period of 1.16 years.

NOTE 10. EARNINGS PER SHARE

The following table reflects the reconciliation between basic and diluted earnings per share, as well as cash dividends paid per share:

	Year Ended June 30,
	2015				2014				2013
Net Income	$	211,221			$	186,715			$	167,610
Common share information:
Weighted average shares outstanding for basic earnings per share	81,353				84,866				86,040
Dilutive effect of stock options and restricted stock	248				530				579
Weighted average shares outstanding for diluted earnings per share	81,601				85,396				86,619
Basic earnings per share	$	2.60			$	2.20			$	1.95
Diluted earnings per share	$	2.59			$	2.19			$	1.94

Per share information is based on the weighted average number of common shares outstanding for each of the fiscal years. Stock options and restricted stock have been included in the calculation of earnings per share to the extent they are dilutive. There were no anti-dilutive stock options and restricted stock excluded from the computation of diluted earnings per share for fiscal 2015, with 24 shares excluded for fiscal 2014 and no shares excluded for fiscal 2013.

NOTE 11. EMPLOYEE BENEFIT PLANS

The Company established an employee stock purchase plan in 2006. The plan allows the majority of employees the opportunity to directly purchase shares of the Company at a 15% discount. The plan does not meet the criteria as a non-compensatory plan. As a result, the Company records the total dollar value of the stock discount given to employees under the plan as expense. Total expense recorded by the Company under the plan for the year ended June 30, 2015, 2014 and 2013 was $861, $756 and $653, respectively.

The Company has a defined contribution plan for its employees: the 401(k) Retirement Savings Plan (the “Plan”). The Plan is subject to the Employee Retirement Income Security Act of 1975 (“ERISA”) as amended. Under the Plan, the Company matches 100% of full time employee contributions up to 5% of compensation subject to a maximum of $5 per year. In order to receive matching contributions, employees must be 18 years of age and be employed for at least six months. The Company has the option of making a discretionary contribution; however, none has been made for any of the three most recent fiscal years. The total matching contributions for the Plan were $15,378, $13,617, and $12,426 for fiscal 2015, 2014 and 2013, respectively.

NOTE 12. BUSINESS ACQUISITION

Banno, LLC

Effective March 1, 2014, the Company acquired all of the equity interests of Banno, an Iowa-based company that provides Web and transaction marketing services with a focus on the mobile medium, for $27,910 paid in cash. This acquisition was funded using existing operating cash. The acquisition of Banno expanded the Company’s presence in online and mobile technologies within the industry.

Management has completed a purchase price allocation of Banno and its assessment of the fair value of acquired assets and liabilities assumed. The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of March 1, 2014 are set forth below:

Current assets	$	610
Long-term assets	87
Identifiable intangible assets	9,255
Total liabilities assumed	(1,512		)
Total identifiable net assets	8,440
Goodwill	19,470
Net assets acquired	27,910

The goodwill of $19,470 arising from this acquisition consists largely of the growth potential, synergies and economies of scale expected from combining the operations of the Company with those of Banno, together with the value of Banno’s assembled workforce. Goodwill from this acquisition has been allocated to our Banking Systems and Services segment. Approximately 95% of the goodwill is expected to be deductible for income tax purposes.

Identifiable intangible assets from this acquisition consist of customer relationships of $3,946, $3,546 of computer software and other intangible assets of $1,763. The weighted average amortization period for acquired customer relationships, acquired computer software, and other intangible assets is 15 years, 8 years, and 20 years, respectively.

Current assets were inclusive of cash acquired of $16. The fair value of current assets acquired included accounts receivable of $476. The gross amount of receivables was $501, of which $25 was expected to be uncollectible.

During fiscal year 2014, the Company incurred $30 in costs related to the acquisition of Banno. These costs included fees for legal, valuation and other fees. These costs were included within general and administrative expenses.

The results of Banno’s operations included in the Company’s consolidated statement of operations for the year ended June 30, 2015 included revenue of $4,175 and after-tax net loss of $1,784. The results of Banno’s operations included in the Company’s consolidated statement of operations from the acquisition date to June 30, 2014 included revenue of $848 and after-tax net loss of $1,121.

The accompanying consolidated statements of income for the three and twelve month periods ended June 30, 2014 do not include any revenues and expenses related to this acquisition prior to the acquisition date. The impact of this acquisition was considered immaterial to both the current and prior periods of our consolidated financial statements and pro forma financial information has not been provided.

NOTE 13. REPORTABLE SEGMENT INFORMATION

The Company is a provider of integrated computer systems that perform data processing (available for in-house installations or outsourced services) for banks and credit unions. The Company’s operations are classified into two reportable segments: bank systems and services (“Bank”) and credit union systems and services (“Credit Union”). The Company evaluates the performance of its segments and allocates resources to them based on various factors, including prospects for growth, return on investment, and return on revenue.

	Year Ended
	June 30, 2015
	Bank				Credit Union				Total
REVENUE
License	$	1,727			$	908			$	2,635
Support and service	922,545				278,107				1,200,652
Hardware	38,457				14,446				52,903
Total revenue	962,729				293,461				1,256,190
COST OF SALES
Cost of license	832				355				1,187
Cost of support and service	533,407				147,343				680,750
Cost of hardware	27,831				10,568				38,399
Total cost of sales	562,070				158,266				720,336
GROSS PROFIT	$	400,659			$	135,195			535,854
OPERATING EXPENSES									217,989
INTEREST INCOME (EXPENSE)									(1,425		)
INCOME BEFORE INCOME TAXES									$	316,440

	Year Ended
	June 30, 2014
	Bank				Credit Union				Total
REVENUE
License	$	1,514			$	670			$	2,184
Support and service	853,500				258,831				1,112,331
Hardware	42,657				16,001				58,658
Total revenue	897,671				275,502				1,173,173
COST OF SALES
Cost of license	555				353				908
Cost of support and service	492,777				141,979				634,756
Cost of hardware	31,866				11,842				43,708
Total cost of sales	525,198				154,174				679,372
GROSS PROFIT	$	372,473			$	121,328			493,801
OPERATING EXPENSES									205,503
INTEREST INCOME (EXPENSE)									(728		)
INCOME BEFORE INCOME TAXES									$	287,570

	Year Ended
	June 30, 2013
	Bank				Credit Union				Total
REVENUE
License	$	4,895			$	471			$	5,366
Support and service	794,433				248,368				1,042,801
Hardware	41,052				18,305				59,357
Total revenue	840,380				267,144				1,107,524
COST OF SALES
Cost of license	765				95				860
Cost of support and service	461,370				140,250				601,620
Cost of hardware	29,936				13,714				43,650
Total cost of sales	492,071				154,059				646,130
GROSS PROFIT	$	348,309			$	113,085			461,394
OPERATING EXPENSES									210,637
INTEREST INCOME (EXPENSE)									(5,697		)
INCOME BEFORE INCOME TAXES									$	245,060

	Year Ended June 30,
	2015				2014				2013
Depreciation expense, net
Bank systems and services	$	50,154			$	48,382			$	47,789
Credit Unions systems and services	4,001				4,553				4,178
Total	$	54,155			$	52,935			$	51,967
Amortization expense, net
Bank systems and services	$	47,502			$	39,152			$	32,959
Credit Unions systems and services	17,339				15,684				15,415
Total	$	64,841			$	54,836			$	48,374
Capital expenditures
Bank systems and services	$	53,730			$	32,736			$	44,976
Credit Unions systems and services	679				449				1,280
Total	$	54,409			$	33,185			$	46,256

	June 30,				June 30,
	2015				2014
Property and equipment, net
Bank systems and services	$	263,231			$	258,437
Credit Union systems and services	33,101				33,238
Total	$	296,332			$	291,675
Intangible assets, net
Bank systems and services	$	664,231			$	643,972
Credit Union systems and services	233,918				231,435
Total	$	898,149			$	875,407

The Company has not disclosed any additional asset information by segment, as the information is not produced internally and its preparation is impracticable.

NOTE 14. SUBSEQUENT EVENTS

Dividends

On August 21, 2015, the Company's Board of Directors declared a cash dividend of $0.25 per share on its common stock, payable on September 25, 2015 to shareholders of record on September 4, 2015.

Acquisition of Bayside

On July 1, 2015, the Company announced the acquisition of all the stock of Bayside Business Solutions, a provider of complete portfolio management systems for commercial lenders and industry leader in providing factoring software, for a net cash outlay of $10,000. This acquisition was funded with operating cash. We have not yet completed our purchase accounting procedures with respect to this acquisition. The impact of this acquisition is considered immaterial to our consolidated financial statements and pro forma financial information has not been provided.

QUARTERLY FINANCIAL INFORMATION

(unaudited)

	For the Year Ended June 30, 2015
	Quarter 1				Quarter 2				Quarter 3				Quarter 4				Total
REVENUE
License	$	503			$	491			$	569			$	1,072			$	2,635
Support and service	288,216				296,905				296,896				318,635				1,200,652
Hardware	12,755				13,898				12,244				14,006				52,903
Total revenue	301,474				311,294				309,709				333,713				1,256,190
COST OF SALES
Cost of license	409				308				285				185				1,187
Cost of support and service	165,090				170,377				168,457				176,826				680,750
Cost of hardware	9,385				9,574				9,152				10,288				38,399
Total cost of sales	174,884				180,259				177,894				187,299				720,336
GROSS PROFIT	126,590				131,035				131,815				146,414				535,854
OPERATING EXPENSES
Selling and marketing	21,663				22,175				21,674				23,492				89,004
Research and development	16,791				17,681				17,522				19,501				71,495
General and administrative	16,510				11,514				15,417				14,049				57,490
Total operating expenses	54,964				51,370				54,613				57,042				217,989
OPERATING INCOME	71,626				79,665				77,202				89,372				317,865
INTEREST INCOME (EXPENSE)
Interest income	57				28				33				51				169
Interest expense	(266		)		(337		)		(669		)		(322		)		(1,594		)
Total interest income (expense)	(209		)		(309		)		(636		)		(271		)		(1,425		)
INCOME BEFORE INCOME TAXES	71,417				79,356				76,566				89,101				316,440
PROVISION FOR INCOME TAXES	25,329				25,474				25,854				28,562				105,219
NET INCOME	$	46,088			$	53,882			$	50,712			$	60,539			$	211,221
Diluted earnings per share	$	0.56			$	0.66			$	0.63			$	0.75			$	2.59
Diluted weighted average shares outstanding	82,589				81,634				81,094				81,086				81,601
Basic earnings per share	$	0.56			$	0.66			$	0.63			$	0.75			$	2.60
Basic weighted average shares outstanding	82,195				81,432				80,880				80,904				81,353

	For the Year Ended June 30, 2014
	Quarter 1				Quarter 2				Quarter 3				Quarter 4				Total
REVENUE
License	$	762			$	245			$	603			$	574			$	2,184
Support and service	262,630				273,242				276,100				300,359				1,112,331
Hardware	14,338				15,356				14,731				14,233				58,658
Total revenue	277,730				288,843				291,434				315,166				1,173,173
COST OF SALES
Cost of license	345				188				227				148				908
Cost of support and service	149,156				154,769				162,824				168,007				634,756
Cost of hardware	10,941				10,867				11,008				10,892				43,708
Total cost of sales	160,442				165,824				174,059				179,047				679,372
GROSS PROFIT	117,288				123,019				117,375				136,119				493,801
OPERATING EXPENSES
Selling and marketing	20,738				20,503				21,719				22,483				85,443
Research and development	15,673				16,142				17,486				17,447				66,748
General and administrative	14,250				12,132				13,629				13,301				53,312
Total operating expenses	50,661				48,777				52,834				53,231				205,503
OPERATING INCOME	66,627				74,242				64,541				82,888				288,298
INTEREST INCOME (EXPENSE)
Interest income	131				129				84				33				377
Interest expense	(280		)		(267		)		(262		)		(296		)		(1,105		)
Total interest income (expense)	(149		)		(138		)		(178		)		(263		)		(728		)
INCOME BEFORE INCOME TAXES	66,478				74,104				64,363				82,625				287,570
PROVISION FOR INCOME TAXES	23,258				25,744				21,757				30,096				100,855
NET INCOME	$	43,220			$	48,360			$	42,606			$	52,529			$	186,715
Diluted net income per share	$	0.50			$	0.56			$	0.50			$	0.62			$	2.19
Diluted weighted average shares outstanding	85,854				85,986				85,467				84,276				85,396
Basic net income per share	$	0.51			$	0.57			$	0.50			$	0.63			$	2.20
Basic weighted average shares outstanding	85,294				85,450				84,981				83,740				84,866