Securities registered pursuant to Section 12(g) of the Act:   None

Large Accelerated Filer [ X ]

Accelerated Filer [   ]

Large Accelerated Filer [ X ]                       Accelerated Filer [  ]                        Non-Accelerated Filer [  ]

DOCUMENTS INCORPORATED BY REFERENCE

PART I

Item 1. Business

Jack Henry & Associates, Inc. ("JHA"(“JHA” or the "Company"“Company”) was founded in 1976 as a provider of core information processing solutions for community banks. Today, the Company'sCompany’s extensive array of products and services includes processing transactions, automating business processes, and managing information for more than 8,70011,200 financial institutions and diverse corporate entities.

JHA provides its products and services through threefour marketed brands.brands:

• §

  Jack Henry Banking is a leading provider of integrated data processing systems to approximately 1,700nearly 1,500 banks ranging from de novo or start-up institutions to mid-tier banks with assets in excess of $1up to $15 billion. Our banking solutions support both in-house and outsourced operating environments with three functionally distinct core processing platforms and more than 100 integrated complementary solutions.

• §

  Symitaris a leading provider of core data processing solutions for credit unions of all sizes, with more than 650700 credit union customers. Symitar markets two functionally distinct core processing platforms and more than 50 integrated complementary solutions that support both in-house and outsourced operating environments. According to Callahan and Associates'2007 Credit Union Technology Survey, a respected source of published data related to the credit union industry, for eight consecutive years Symitar's core processing platforms have been implemented by more credit unions with assets exceeding $25 million than any competitive system.

• ProfitStarsis§

  ProfitStarsis a leading provider of highly specialized products and services to financial institutions that are primarily not core customers of the Company. These specialized solutions can be used with a wide variety of information technology platforms and operating environments. ProfitStars'ProfitStars’ offers proven solutions for generating revenue and growth opportunities, increasing security and mitigating operational risks, and controlling operating costs. ProfitStars'ProfitStars’ products and services enhance the performance of financial services organizations of all asset sizes and charters, and diverse corporate entities with more than 6,4008,800 domestic and international customers.

§

iPay Technologiesis a leading provider of electronic bill pay services. iPay Technologies’ bill pay engine integrates with online banking platforms and provides individuals and small businesses with bill payment solutions. Through strategic partnerships with more than 50 providers of information processing and online banking solutions, iPay’s electronic payments platform is supporting more than 1,700 financial institutions.

Our products and services enable our customers to implement proven technology solutions that can be tailored to support their unique growth, service, operational, and performance goals. Our solutions also enable financial institutions to offer the high-demand products and services required to compete more successfully, and to capitalize on evolving trends shaping the financial services industry.

Our sustainable competitive advantage is a company-wide commitmentWe are committed to meet and exceed our customers'customers’ service-related expectations. We measure and monitor customer satisfaction using formal annual surveys and more than 50,000 online surveys initiated each yearday by routine support requests. The results of this extensive survey process confirm that our service consistently exceeds our customers'customers’ expectations and ultimately generategenerates excellent customer retention rates.

We also focus on establishing long-term customer relationships, continually expanding and strengthening those relationships with cross sales of additional products and services, earning new traditional and nontraditional clients, and ensuring each product offering is highly competitive.     Based on these strategic initiatives, targeted marketing and sales initiatives, and disciplined acquisition activities, our customer base has increased 190 percent during the four-year period ranging from June 30, 2003 to June 30, 2007, growing from approximately 3,000 customers to more than 8,700 customers.

We have three primary revenue sources:

• ·

  Software license fees paid by customers installingimplementing our software solutions in-house;

• ·

  Ongoing outsourcing fees paid by customers that outsource their information processing to us, recurring transaction processing fees, annual maintenance and support fees, and service fees that includeincluding software implementation; and

• ·

  Hardware sales that include all non-software products that we re-market in order to support our software systems.

JHA's

JHA’s gross revenue has grown from $404.6$590.9 million in fiscal 20032006 to $668.1$836.6 million in fiscal 2007,2010, representing a compound annual growth rate during this five-year period of 11percent7percent.Net income from continuing operations has grown from $49.4$90.9 million to $104.7$117.9 million during this same five-year period, representing a compound annual growth rate of 135 percent.Information regarding the classification of our business into separate segments serving the banking and credit union industries is set forth in Note 1314 to the Consolidated Financial Statements (see Item 8).

JHA'sJHA’s progress and performance have been guided by the focused work ethic and fundamental ideals fostered by the company'sCompany’s founders three decades ago:

• §

  Do the right thing,

• §

  Do whatever it takes, and

• §

  Have fun.

We recognize that our associates and their collective contribution are ultimately responsible for JHA'sJHA’s past, present, and future success. Recruiting and retaining high-quality employees is essential to our ongoing growth and financial performance, and we have established a corporate culture that sustains rewardinghigh levels of employee satisfaction.

Industry Background

Jack Henry Banking primarily serves commercial banks and savings institutions with less than $20.0$30.0 billion in assets, and generated approximately 83 percent of the Company's total revenue in fiscal 2007.assets. According to the Federal Deposit Insurance Corporation ("FDIC"(“FDIC”), there were approximately 8,600more than 7,900 commercial banks and savings institutions in this asset range as of December 31, 2006.2009. Jack Henry Banking currently supports more than 1,600nearly 1,500 of these banks with its core information processing platforms and complementary products and services.

Symitar serves credit unions of all asset sizes, and generated approximately 17 percent of the Company's total revenue in fiscal 2007.sizes. According to the Credit Union National Association ("CUNA"(“CUNA”), there were approximately 8,600more than 7,800 domestic credit unions as of December 31, 2006.2009. Symitar currently supports more than 650700 of these credit unions with core information processing platforms and complementary products and services.

ProfitStars serves financial services organizations of all asset sizes and charters. The related revenue and gross profit are included and reported in our banking and credit union segments. ProfitStars currently supports approximately 6,4009,600 institutions with specialized solutions for generating additional revenue and growth, increasing security, and mitigating operational risks, and controlling operating costs.

iPay Technologies serves financial institutions of all sizes. iPay currently supports more than 3,600 institutions with their electronic payment platform and online bill payment solutions.

The FDIC reports the number of commercial banks and savings institutions declined 1011 percent from the beginning of calendar year 20022005 to the end of calendar year 2006.2009. Although the number of banks declined at a 2 percent compound annual rate during this period, aggregate assets increased at acompoundacompound annual rate of 97 percent and totaled $10$11.8 trillion as of December 31, 2006.2009. Comparing calendar years 20062009 to 2005,2008, new bank charters increased 7decreased 68 percent and mergers increased 9decreased 39 percent.

CUNA reports the number of credit unions declined 16 percent from the beginning of calendar year 20022005 to the end of calendar year 2006.2009. Although the number of credit unions declined at a 43 percent compound annual rate during this period, aggregate assets increased at acompoundacompound annual rate of 76 percent and totaled $732.5$904.0 billion as of December 31, 2006.2009.

According toAutomation in Banking 2007,2010,approximately 5551 percent of all commercial banksfinancial institutions currently utilize in-house core information processing solutions and approximately 4549 percent outsource information processing to third-party providers. According to the20072010 Credit Union Technology Surveypublished by Callahan & Associates,approximately 7567 percent of all credit unions with assets exceeding $25 million utilize in-house core information processing solutions and approximately 2529 percent outsource information processing to third-party providers.

Community and mid-tier banks and credit unions are important in the communities and to the consumers they serve. Bank customers and credit union members rely on these institutions to provide personalized, relationship-based service and competitive financial products and services available through the customer'scustomer’s delivery channel of choice. Institutions are realizingrecognizing that attracting and retaining customers/members in today'stoday’s highly competitive financial industry and realizing near and long term performance goals are often technology-dependent. Financial institutions must implement technological solutions that enable them to:

• 
  

  ·

  Maximize performance with accessible, accurate, and timely decision support and business intelligence information;

• ·

  Offer the high-demand products and services needed to aggressively and successfully compete with traditional competitors and the non-traditional competitors created by convergence within the financial services industry;

• ·

  Enhance the customer/member experience at varied points of contact;

• ·

  Expand existing customer/member relationships and strengthen exit barriers by cross selling additional products and services;

• ·

  Capitalize on new revenue and deposit growth opportunities;

• ·

  Increase operating efficiencies and reduce operating costs;

• ·

  Implement an e-commerce strategystrategies that providesprovide the convenience-driven services required in today'stoday’s financial services industry;

• ·

  Protect mission-critical information assets and operational infrastructures;

infrastructure;
• ·

  Protect customers/members from fraud and the related financial losses;

• ·

  Maximize the day-to-day use of technology and the return on technology investments; and

• ·

  Ensure full regulatory compliance.

JHA's

JHA’s extensive product and service offering enables diverse financial institutions to effectively capitalize on these business opportunities and respond to these business challenges. We strive to establish a long-term, value-added technology partnership with each customer, and to continually expand our offering with the specific solutions our customers need to prosper in the evolving financial services industry.

Mission Statement

JHA'sJHA’s mission is to protect and increase the value of its stockholders' investment by providing quality products and services to our customers by:

• ·

  Concentrating our activities on what we know best - information systems and services for financial institutions;

• ·

  Providing outstanding commitment and service to our customers so that the perceived value of our products and services is consistent with the real value; and

• ·

  Maintaining a work environment that is personally, professionally, and financially rewarding to our employees.

Business Strategy

Our fundamental business strategy is to generate organic revenue and earnings growth supplemented by strategic acquisitions. We execute this strategy by:

• §

  Providing commercial banks and credit unions with core software systems that provide excellent functionality, and support in-house and outsourced operating environments with identical functionality.

• §

  Expanding each core customer relationship by cross-selling complementary products and services that enhance the functionality provided by our core information processing systems.

• §

  Maintaining a company-wide commitment to customer service that consistently exceeds our customers'customers’ expectations and generates rewardinghigh levels of customer retention.

• §

  Capitalizing on our focused diversification acquisition strategy.

Focused Diversification Acquisition Strategy

JHA'sJHA’s acquisition strategy, which complements and accelerates our organic growth, focuses on successful companies that provide in-demand products and services, excellent customer relationships, and strong management teams and employee bases.

Historically, our acquisition strategy focused on companies that:

• 
  

  §

  Expanded our base of core financial institution customers,

• 
  

  §

  Expanded our suite of complementary products and services that were cross sold almost exclusively to existing customers,

• 
  

  §

  Enabled our entry into adjacent markets within financial services industry; and/or

• 
  

  §

  Provided additional outsourcing capabilities/opportunities.

In 2004, we adopted our focused diversification acquisition strategy and began acquiring companies and highly specialized products that are:

• Cross sold§

  Sold to existing core customers;

• §

  Sold outside JHA'sJHA’s base of core bank and credit union customers to financial services organizations of all charters and asset sizes;

• §

  Selectively sold outside the financial services industry to diverse corporate entities; and

• §

  Selectively sold internationally.

Since our focused diversification strategy was adopted, JHA has completed 1519 acquisitions that support it and assembled three distinct product suites that enable users to:

• §

  Generate additional revenue and growth opportunities,

• §

  Increase security and mitigate operational risks, and /or

• §

  Control operating costs.

These products and services enable us to expand our reach well beyond our traditional markets with solutions that are appropriate for virtually any financial services organization, including thousands of institutions that we previously did not sell to.

MostFollowing are some of the acquired companies and their respective products and services have been consolidated into our ProfitStars brand. Today, ProfitStars' products and services collectively represent more than 6,400 domestic and international implementations.

Since the beginning of fiscal year 2004, the following acquisitions that have been made in the last five fiscal years to support JHA'sJHA’s focused diversification:

Solutions

JHA was founded in 1976 as a provider of core information processing solutions for community banks. Today, we provide an extensive array of products and services that enable more than 8,700 financial institutions and corporate entities to capitalize on business opportunities and respond to inherent business challenges with proven solutions. Our proprietary solutions are marketed through threefour business brands:

• §

  Jack Henry Banking supports commercial banks with information and transaction processing platforms that provide enterprise-wide automation. Its solutions encompass three functionally distinct core processing systems and more than 100 complementary solutions, including business intelligence and bank management, retail and business banking, Internet banking and electronic funds transfer ("EFT"(“EFT”), risk management and protection, and item and document imaging solutions. Our banking solutions have state-of-the-art functional capabilities, and we can provide the hardware required by each software system. Our banking solutions can be delivered in-house or through outsourced implementation, and are backed by a company-wide commitment to provide exceptional personal service. Jack Henry Banking is a recognized market leader, currently supporting more than 1,600nearly 1,500 banks with its technology platforms.

• Symitarsupports§

  Symitarsupports credit unions of all sizes with information and transaction processing platforms that provide enterprise-wide automation. Its solutions include two functionally distinct core processing systems and more than 50 complementary solutions, including business intelligence and credit union management, member and member business services, Internet banking and EFT, risk management and protection, and item and document imaging solutions. Our credit union solutions also have state-of-the-art functional capabilities, and we can provide the hardware required by each software system. Our credit union solutions can be delivered in-house or through outsourced implementation, and are also backed by our company-wide commitment to provide exceptional personal service.  According to Callahan and Associates, a respected source of published data related to the credit union industry, for eight consecutive years Symitar's core processing platforms have been implemented by more cred it unions with assets exceeding $25 million than any competitive alternative, positioning Symitar as the recognized market leader.

• ProfitStarsis§

  ProfitStarsis a leading provider of specialized products and services assembled through our focused diversification acquisition strategy. These solutions are compatible with a wide variety of information technology platforms and operating environments, and include proven solutions for generating additional revenue and growth, increasing security and mitigating operational risks, and/or controlling operating costs. ProfitStars'ProfitStars’ products and services are enhancing the performance of financial services organizations of all asset sizes and charters, and diverse corporate entities with approximately 6,400more than 8,800 domestic and international implementations. These distinct products and services can be implemented individually or as solution suites to address specific business problems and enable effective responses to dynamic industry trends.

Products§

iPay Technologies is a leading provider of a configurable electronic payments platform and services that meet users' functional requirements are expected inturnkey online bill payment solutions. These solutions integrate with any online banking platform, aiding financial institutions with the competitive markets that we serve. attraction and retention of customers. Through strategic partnerships with more than 50 providers of information processing and online banking solutions, iPay is supporting more than 1,700 financial institutions.

We will continue to develop and maintain functionally robust, integrated solutions that are supported with high service levels; regularly enhanced using an interactive customer enhancement process; compliant with relevant regulations; updated with proven advances in technology; and consistent with JHA'sJHA’s reputation as a premium product and service provider.

Core Software Systems

Core software systems primarily consist of the integrated applications required to process deposit, loan, and general ledger transactions, and to maintain centralized customer/member information.

Jack Henry Banking markets three core software systems to banks and Symitar markets two core software systems to credit unions. These core systems are available for in-house installation at customer sites or financial institutions can outsource ongoing information processing to JHA based on the core processing solution most compatible with their specific operational requirements.

Jack Henry Banking'sBanking’s three core banking platforms are:

§

• SilverLake^®is a robust IBM^® System i™i™-based system primarily designed for commercial-focused banks with assets ranging from $500 million to $20$30 billion. However, an increasing number of progressive smaller banks, including de novo, or recently chartered start-up banks, are now selecting SilverLake. This system has been implemented by more thannearly 450 banks, and now automates approximately 156 percent of the domestic banks with assets ranging from $1 billion toless than $30 billion.
• §

  CIF 20/20^®is a parameter-driven, easy-to-use system that now supports approximately 900780 banks ranging from de novo institutions to those with assets exceeding $2 billion. CIF 20/20is the most widely used IBM System i-based core processing system in the community bank market.

• §

  Core Director^®is a Windows^®-based, client/server system that now supports more than 200almost 250 banks ranging from de novo institutions to those with assets exceeding $1 billion. Core Director is a cost-efficient operating platform and provides intuitive point-and-click operation.

Symitar's

Symitar’s two functionally distinct core credit union platforms are:

• §

  Episys^®is a robust IBM System p™p™-based system primarily designed for credit unions with more than $50 million in assets. It has been implemented by more than 500almost 550 credit unions and is ranked as the system implemented by more credit unions with assets exceeding $25 million than any other alternative.

• §

  Cruise^®is a Windows-based, client/server system designed primarily for credit unions with less than $50 million in assets. It has been implemented by more than 190170 credit unions, is cost-efficient, and provides intuitive point-and-click, drag-and-drop operation.

Customers electing to install our solutions in-house license the proprietary software systems based on initial license fees. The large majority of these customers pay ongoing annual software maintenance fees. We also re-market the hardware and peripheral equipment that is required by our software solutions; and we contract to perform software implementation, data conversion, training, ongoing support, and other related services. In-house customers generally license our core software systems under a standard license agreement that provides a fully paid, nonexclusive, nontransferable right to use the software on a single computer at a single location.

Customers can eliminate the significant up-front capital expenditures required by in-house installations and the responsibility for operating information and transaction processing infrastructures by outsourcing these functions to JHA. Our outsourcing services are provided through a national network of eight data centers in six data centerphysical locations and 2310 image-enabled item processing centers. Customers electing to outsource their core processing typically sign five-year contracts that include transaction-based processing fees and minimum guaranteed payments during the contract period.

We support the dynamic business requirements of our core bank and credit union clients with ongoing enhancements to each core system, the regular introduction of new integrated complementary products, the ongoing integration of practical new technologies, and regulatory compliance initiatives. JHA also serves each core customer as a single point of contact, support, and accountability.

Complementary Products and Services

We provide more than 100 complementary products and services that are sold to our core bank and credit union customers, and selectively sold by our ProfitStars division to financial services organizations that use other core processing systems.

These complementary solutions enable core bank and credit union clients to respond to evolving customer/member demands, expedite speed-to-market with competitive offerings, increase operating efficiency, address specific operational issues, with proven solutions, and generate new revenue streams. The highly specialized solutions sold by ProfitStars enable diverse financial services organizations and corporate entities to generate additional revenue and growth opportunities, increase security and mitigate operational risks, and control operating costs.

Following are brief overviews of our key complementary products and services, which are categorized into functional product families.

Business Intelligence and Management Solutions

JHA's business intelligence and management solutions enable financial institutions to maximize performance and profits with accessible, accurate, and timely decision-support information. These products and services leverage the processes, technology, and expertise required to compile, report, and analyze customer, product, market, and business information.

Retail Delivery Solutions

JHA's retail delivery solutions enable financial institutions to enhance their customer/member experience, capitalize on the opportunities to expand customer/member relationships at all points of contact, and successfully compete by offering high-demand products and services.

Business Banking Solutions

JHA's business banking solutions enable banks to enhance their commercial customers' experience, capitalized on the opportunities to expand commercial relationships at all points of contact, and successfully compete by offering high-demand commercial products and services.

Electronic Funds Transfer (EFT) Solutions

JHA's EFT solutions provide a secure, reliable, end-to-end transaction processing platform for the high-demand EFT services required to compete in today's financial services industry.

Internet Banking Solutions

JHA's Internet banking solutions support convenience-driven consumers with account access and the ability to initiate transactions and conduct self-directed research 24x7x365.

Risk Management and Protection Solutions

JHA's risk management and protection solutions enable financial institutions to manage their assets, protect their customers/members from fraud and the related financial losses, prepare to conduct business in the event of a disaster, and fully comply with the related regulatory requirements.

Item and Document Imaging Solutions

JHA's imaging solutions revolutionize item processing by converting paper-based checks into digital checks and processing them electronically. Its document imaging and management solutions convert virtually any paper-based document into a digital document that can be electronically stored, immediately retrieved, and efficiently delivered.

Professional Services and Education

JHA's professional services and education enable financial institutions to proactively protect their mission-critical information assets and operational infrastructures, further streamline operations, maximize the day-to-day use of technology-based solutions, maximize their return on technology investments, and ensure related regulatory compliance.

JHA regularly introduces new products and services based on demand for integrated complementary solutions from our existing core clients;clients, and based on the growing demand among financial services organizations and corporate entities for specialized solutions capable of increasing revenue and growth opportunities, mitigating and controlling operational risks, and containing costs. The Company'sCompany’s Industry Research department solicits customer guidance on the business solutions they need, formally evaluates available solutions and competitive offerings, and manages the introduction of new product offerings. JHA'sJHA’s new complementary products and services are developed internally, acquired, or provided through strategic alliances.

jXchange

Although JHA provides one of the most extensive product offerings available today, our experience supporting core bank and credit union clients has demonstrated that diverse financial services organizations have niche product requirements outside the Company's offering. In response, we developed jXchange, a services-oriented architecture on a .NET platform that provides open connectivity between our core and complementary solutions and third-party products. This contemporary integration methodology increases financial institutions' operating flexibility, and enables them to leverage existing and future technology investments.

Hardware Systems

Hardware sales, which include all non-software products that we re-market in order to support our software systems, represent one of our primary revenue sources.

Our software systems operate on a variety of hardware platforms. We have established remarketing agreements with IBM Corporation, Avnet, Inc., and other hardware providers that allow JHA to purchase hardware at a discount and resell it directly to our customers. We currently sell the IBM System i, System p,Power Systems and System x servers; IBMLenovo workstations; Dell servers and workstations; NCR, BancTec, and Unisys, RDM, Panini, Digital Check, Canon check transports;scanners; and other devices that complement our software solutions.

JHA has maintained a long-term strategic relationship with IBM, dating back to the development of our first core software applications over 30 years ago. This relationship has resulted in IBM naming JHA as a "Premier“Premier Business Partner'' every year since 1993.

Implementation and Training

While it is not essential, the majority of our core bank and credit union customers contract separately with us for implementation and training services in connection with their in-house systems.

A complete core system implementation typically includes detailed planning, project management, data conversion, and testing. Our experienced implementation teams travel to customer facilities to help manage the process and ensure that all data is transferred from the legacy system to the JHA system being implemented. Our implementation fees are fixed or hourly based on the core system being installed.

Implementation and training services also are provided in connection with new customers outsourcing their information processing to JHA.

We also provide extensive initial and ongoing education to our customers. Know-It-All Education is a comprehensive training program that supports new customers with basic training and longtime customers with continuing education. The curricula provide the ongoing training financial institutions need to maximize the use of JHA'sJHA’s core and complementary products, to optimize ongoing system enhancements, and to fully understand dynamic year-end legislative and regulatory requirements. Each basic, intermediate, and advanced course is delivered by system experts, supported by professional materials and training tools, and incorporates different educational media in a blended learning approach. Know-It-All Education supports distinct learning preferences with a variety of delivery channels, including classroom-based courses offered in JHA'sJHA’s regional training centers, Internet-based live instruction, eLearning courses, on-site training, and train-the-trainertrain-the-t rainer programs.

Support and Services

We serve our customers as a single point of contact and support for the complex solutions we provide. The Company'sCompany’s comprehensive support infrastructure incorporates:

• ·

  Exacting service standards;

• Superior·

  Trained support staffs available 24 hours-a-day, 365 days-a-year;

• ·

  Assigned account managers;

• ·

  Sophisticated support tools, resources, and technology; and

• ·

  A best practices methodology developed and refined through the company-wide, day-to-day experience supporting more than 8,70011,200 diverse clients.

JHA's

JHA’s experience converting diverse banks and credit unions to our core platforms from every competitive platform also provides highly effective change management and control processes.

Most in-house customers contract for annual software support services, and this represents a significant source of recurring revenue for JHA. These support services are typically priced at approximately 18 percent to 20 percent of the respective product'sproduct’s software license fee. These fees generally increase as customer assets increase and as additional complementary products are purchased. Annual software support fees are typically billed during June and are paid in advance for the entire fiscal year, with pro-ration for new product implementations that occur during the year. Hardware support fees also are usually paid in advance for entire contract periods which typically range from one to five years. Most support contracts automatically renew unless the customer or JHA gives notice of termination at least 60 days prior to contract expiration.

High levels of support are provided to our outsourced customers by the same support infrastructure utilized for in-house customers. However, these support fees are included as part of monthly outsourcing fees.

JHA regularly measures customer satisfaction using formal annual surveys and more than 50,000 online surveys initiated each year by routine support requests. This process shows that we consistently exceed our customers'customers’ service-related expectations.

Regulatory Compliance

JHA maintains a strict corporate commitment to address compliance issues and implement requirements imposed by the federal regulators prior to the effective date of such requirements.  JHA'srequirements when adequate prior notice is given. JHA’s comprehensive compliance program is provided by a team of compliance analysts and auditors that possess extensive regulatory agency and financial institution experience, and a thorough working knowledge of JHA and our solutions. These compliance professionals leverage multiple channels to remain informed about potential and recently enacted regulatory requirements, including regular discussions on emerging topics with the Federal Financial Institutions Examination Council ("FFIEC"(“FFIEC”) examination team and training sessions sponsored by various professional associations.

JHA has a proven process to inform internal contacts of new and revised regulatory requirements. Upcoming regulatory changes also are presented to the Company'sCompany’s product-specific change control boards and the necessary product changes are included in the ongoing product development cycle. A representative of JHA'sJHA’s compliance organization serves on every change control board to ensure that the regulatory perspective is addressed in proposed product/service changes. We publish newsletters to keep our customers informed of regulatory changes that could impact their operations. Periodically, customer advisory groups are assembled to discuss significant regulatory changes, such as the USA Patriot Act.recent changes to Regulation E relating to overdraft fees.

Internal audits of our systems, networks, operations, and applications are conducted and specialized outside firms are periodically engaged to perform testing and validation of our systems, processes, and security. Ensuring that confidential information remains private is a high priority, and JHA'sJHA’s initiatives to protect confidential information include regular third-party application reviews intended to better secure information access. Additional third-party reviews are performed throughout the organization, such as vulnerability tests, intrusion tests, and SAS 70 reviews. The FFIEC conducts annual reviews throughout the Company and issues reports that are reviewed by the JHA Audit Committee of the Board of Directors.

Research and Development

We invest significant resources in ongoing research and development to develop new software solutions and services, and enhance existing solutions with additional functionality and features required to ensure regulatory compliance. Our core and complementary systems are typically enhanced once each year.   Product-specific enhancements are largely customer-driven with recommended enhancements formally gathered through focus groups, change control boards, strategic initiatives meetings, annual user group meetings, and ongoing customer contact. We also continually evaluate and implement process improvements that expedite the delivery of new products and enhancements to our customers, and reduce related costs.

Research and development expenses for fiscal years 2007, 2006,2010, 2009, and 20052008 were $36.0$50.8 million, $31.9$42.9 million, and $27.7$43.3 million, respectively. Capitalized software for fiscal years 2007, 20062010, 2009 and 20052008 was $20.7$25.6 million, $16.1$24.7 million, and $7.8$23.7 million, respectively.

Sales and Marketing

JHA serves established, well defined markets that inherently provide ongoing sales and cross-sales opportunities.

Jack Henry Banking sells core processing systems and integrated complementary solutions to domestic commercial banks with assets up to $20.0$30.0 billion. Symitar sells core processing systems and integrated complementary solutions to domestic credit unions of all asset sizes. The marketing and sales initiatives within these business lines are primarily focused on identifying banks and credit unions evaluating alternative core information and transaction processing solutions. Jack Henry Banking also has been extremely successfully selling its core and complementary solutions to a significant number of the de novo banks chartered during the past twoin recent years. ProfitStars sells specialized niche solutions that complement existing technology platforms to domestic financial services organizations of all asset sizes and charters.

Dedicated sales forces support each of JHA'sJHA’s three business brands. Sales executives are responsible for the activities required to earn new customers in assigned territories, and regional account executives are responsible for nurturing customer relationships and cross selling additional products and services. Our sales professionals receive base salaries and performance-based commission compensation. Brand-specific sales support staff provide a variety of services, including product and service demonstrations, responses to prospect-issued requests-for-proposals, and proposal and contract generation. A centralized marketing department supports all threefour business lines with lead generation and brand-building activities, including participation in state-specific, regional, and national trade shows; print and online advertising; telemarketing; customer newsletters; ongoing promotional campaigns; and media relations. Each of JHA's business brandsJHA also hosts an annual national user group meetingmeetings which providesprovide opportunities to network with existing clients and demonstrate new products and services.

jhaDirect sells specific complementary solutions, and business forms and supplies that are compatible with JHA'sJHA’s software solutions. jhaDirect'sjhaDirect’s offering consists of more than 4,000 items, including tax and custom forms, ATM and teller supplies, check imaging and reader/sorter supplies, magnetic media, laser printers and supplies, loan coupon books, and much more. New items are regularly added in response to dynamic regulatory requirements and to support JHA'sJHA’s ever-expanding product and service suite.

JHA sells select products and services in the Caribbean, and now has approximately 41 installations in Europe and South America as a result of recent acquisitions. International sales account for less than one percent of JHA'sJHA’s total revenue in each of the three years ended June 30, 2007, 2006,2010, 2009, and 2005.2008.

Backlog

Backlog consists of contracted in-house products and services that have not been delivered. Backlog also includes the minimum monthly payments for the remaining portion of multi-year outsourcing contracts, and typically includes the minimum payments guaranteed for the remainder of the contract period.

Backlog as of June 30, 20072010 totaled $239.3$328.8 million, consisting of $68.1$78.2 million for in-house products and services, and $171.2$250.6 million for outsourcing services.Approximately $126.0$189.2 million of the outsourcing services backlog as of June 30, 20072010 is not expected to be realized during fiscal year 20082011 due to the long-term nature of many outsourcing contracts.Backlog as of June 30, 20062009 totaled $222.0$289.4 million, and consisted of $66.4$66.8 million for in-house products and services, and $155.6$222.5 million for outsourcing services.

Our in-house backlog is subject to seasonal variations and can fluctuate quarterly. Our outsourcing backlog continues to experience growth based on new contracting activities and renewals of multi-year contracts, and although the appropriate portion of this revenue will be recognized during fiscal year 20082011, the backlog is expected to remain constanttrend up gradually for the foreseeable future due to renewals of existing relationships and new contracting activities expected to surpass the revenue recognized.activities.

Competition

The market for companies providing technology solutions to financial services organizations is competitive, and we expect that competition from both existing competitors and companies entering our existing or future markets will remain strong. Some of JHA'sJHA’s current competitors have longer operating histories, larger customer bases, and greater financial resources. The principal competitive factors affecting the market for technology solutions include product/service functionality, price, operating flexibility and ease-of-use, customer support, and existing customer references. During the lastFor more than a decade there has been significant consolidation among providers of products and services designed for financial institutions, and this consolidation is expected to continue in the future.

Jack Henry Banking, competesSymitar and iPay Technologies compete with large vendors that provide information and transaction processing solutions to banks including Fidelity Information Services, Inc.; Fiserv, Inc.; and Metavante. Symitar competes with large vendors that provide information and transaction processing solutions to credit unions, including Fidelity National Information Services, Inc.; Fiserv, Inc.; Open Solutions, Inc.; and Harland Financial Solutions -– Ultradata.   ProfitStars competes with an array of disparate vendors that provide niche solutions to financial services organizations and corporate entities.

Intellectual Property, Patents, and Trademarks

Although we believe our success depends upon our technical expertise more than our proprietary rights, our future success and ability to compete depend in part upon our proprietary technology. We have registered or filed applicationsforapplicationsfor our primary trademarks. Most of our technology is not patented.  Instead, we rely on a combination of contractual rights, copyrights, trademarks, and trade secrets to establish and protect our proprietary technology. We generally enter into confidentiality agreements with our employees, consultants, resellers, customers, and potential customers. Access to and distribution of our Company'sCompany’s source code is restricted, and the disclosure and use of other proprietary information is further limited. Despite our efforts to protect our proprietary rights, unauthorized parties can attempt to copy or otherwise obtain, or use our products or technology. We cannotcann ot be ce rtaincertain that the steps taken in this regard will be adequate to prevent misappropriation of our technology or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology.

Government Regulation

The financial services industry is subject to extensive and complex federal and state regulation. All financial institutions are subject to substantial regulatory oversight and supervision. We must ensure that ourOur products and services must comply with the extensive and evolving regulatory requirements applicable to our customers, includingbutincludingbut not limited tothosetothose mandated by federal truth-in-lending and truth-in-savings rules, the Privacy of Consumer Financial Information regulations,usury laws, the Equal Credit Opportunity Act, the Fair Housing Act, the Electronic Funds Transfer Act, the Fair Credit Reporting Act, the Bank Secrecy Act, the USA Patriot Act, the Gramm-Leach-Bliley Act, and the Community Reinvestment Act. The compliance of JHA'sJHA’s products and services with these requirements depends on a variety of factors, including the particular functionality, the interactive design, the classification of customers, and the manner in which the customer utilizes the products and services. Our customers are contractually responsible for assessing and determining what is required of them under these regulations and then we assist them in meeting their regulatory needs through our products and services. The impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act will be evaluated as regulations are written to implement the various provisions of the law. It is not possible to predict the impact these regulations, any future amendments to these regulations or any newly implemented regulations could have on our business in the future.

JHA is not chartered by the Office of the Comptroller of Currency, the Board of Governors of the Federal Reserve System, the National Credit Union Administration or other federal or state agencies that regulate or supervise depository institutions.

Operating as a service provider to financial institutions, JHA'sJHA’s operations are governed by the same regulatory requirements as those imposed on financial institutions, and subject to periodic reviews by FFIEC regulators who have broad supervisory authority to remedy any shortcomings identified in such reviews.

JHA provides outsourced data and item processing through geographically dispersed OutLink™OutLink™ Data Centers, electronic transaction processing through our PassPort and Enterprise Payments Solutions™Solutions™, Internet banking through NetTeller and MemberConnect™MemberConnect™ online solutions, and business recovery services through Centurion Disaster Recovery.

The services provided by our OutLink Data Centers are subject to examination by the Federal Financial Institution Examination Council regulators under the Bank Service Company Act. These outsourcing services also are subject to examination by state banking authorities on occasion.

Employees

As of June 30, 20072010 and 2006,2009, JHA had 3,5834,528 and 3,3103,808 full-time employees, respectively. Of our full-time employees, approximately 640760 are employed in the credit union segment of our business, with the remainder employed in the bank business segment or in general and administrative functions that serve both segments. Our employees are not covered by a collective bargaining agreement and there have been no labor-related work stoppages.

Available Information

JHA'sJHA’s Website is easily accessible to the public atwww.jackhenry.com. The "For“For Investors" portion of the Website provides key corporate governance documents, the code of conduct, an archive of press releases, and other relevant companyCompany information. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other filings and amendments thereto that are made with the U.S. Securities and Exchange Commission (SEC) also are available free of charge on theour Website and as soon as reasonably practical after these reports have been filed with or furnished to the SEC.

Item 1A. Risk Factors

The Company'sCompany’s business and the results of its operations are affected by numerous factors and uncertainties, some of which are beyond our control. The following is a description of some of the important risks and uncertainties that may cause the actual results of the Company'sCompany’s operations in future periods to differ from those expected or desired.

Our business may be adversely impacted by U.S. and global market and economic conditions.We derive most of our revenue from products and services we provide to the financial services industry. Given this concentration, we may be particularly exposed to the current global economic recession. If the economic environment remains poor, it may result in significant decreases in demand by current and potential clients for our products and services, which could have a material adverse effect on our business, results of operations and financial condition.

Changes in the banking and credit union industry could reduce demand for our products.products. Cyclical fluctuations in economic conditions affect profitability and revenue growth at commercial banks and credit unions. Unfavorable economic conditions negatively affect the spending of banks and credit unions, including spending on computer software and hardware. Such conditions could reduce both our sales to new customers and upgrade/complementary product sales to existing customers. The Company could also experience the loss of customers due to their financial failure.

Competition or general economic conditions may result in decreased demand or require price reductions or other concessions to customers which could result in lower margins and reduce income.We vigorously compete with a variety of software vendors in all of our major product lines. We compete on the basis of product quality, reliability, performance, ease of use, quality of support and services, integration with other products and pricing. Some of our competitors may not behave advantages over us due to their size, product lines, greater marketing resources, or exclusive intellectual property rights. If competitors offer more favorable pricing, payment or other contractual terms, warranties, or functionality, or if general economic conditions decline such that customers are less willing or able to manage growth.We have grown both internallypay the cost of our products and through acquisitions. Our expansion has and will continueservices, we may need to place significant demands on our administrative, operational, financial and management personnel and systems. We may not be ablelower prices or offer favorable terms in order to enhance and expand our product lines, manage costs, adapt our infrastructure and modify our systems to accommodate future growth.successfully compete.

If we fail to adapt our products and services to changes in technology, we could lose existing customers and be unable to attract new business.Thebusiness.The markets for our software and hardware products and services are characterized by changing customer requirements and rapid technological changes. These factors and new product introductions by our existing competitors or by new market entrants could reduce the demand for our existing products and services and we may be required to develop or acquire new products and services. Our future success is dependent on our ability to enhance our existing products and services in a timely manner and to develop or acquire new products and services. If we are unable to develop or acquire new products and services as planned, or if we fail to sell our new or enhanced products and services, we may incur unanticipated expenses or fail to achieve anticipated revenues.

Security problems could damage our reputation and business.We rely on standardindustry-standard encryption, network and Internet security systems, most of which we license from third parties, to provide the security and authentication necessary to effect secure transmission of data. Computer networks and the Internet are vulnerable to unauthorized access, computer viruses and other disruptive problems. Individual personal computers can be stolen, and customer data tapes can be lost in shipment. Under state and proposed federal laws requiring consumer notification of security breaches, the costs to remediate security breaches can be substantial. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may render our security measures inadequate. Security risks may result in liability to us and also may deter financial institutions from purchasing our products. We will continuecontin ue to expend significant capital and other resources protecting a gainstagainst the threat of security breaches, and we may need to expend resources alleviating problems caused by breaches. Eliminating computer viruses and addressing other security problems may result in interruptions, delays or cessation of service to users, any of which could harm our business.

We may not be able to manage growth.We have grown both internally and through acquisitions. Our expansion has and will continue to place significant demands on our administrative, operational, financial and management personnel and systems. We may not be able to enhance and expand our product lines, manage costs, adapt our infrastructure and modify our systems to accommodate future growth.

Our growth may be affected if we are unable to find or complete suitable acquisitions.Weacquisitions.We have augmented the growth of our business with a number of acquisitions and we plan to continue to acquire appropriate businesses, products and services. This strategy depends on our ability to identify, negotiate and finance suitable acquisitions. Substantial recent merger and acquisition activity in our industry has affected the availability and pricing of such acquisitions. If we are unable to acquire suitable acquisition candidates, we may experience slower growth.

Acquisitions may be costly and difficult to integrate.We have acquired a number of businesses in the last fewseveral years and will continue to explore acquisitions in the future. We may not be able to successfully integrate acquired companies. We may encounter problems with the integration of new businesses including: financial control and computer system compatibility; unanticipated costs; unanticipated quality or customer problems with acquired products or services; differing regulatory  and industry standards; diversion of management's attention; adverse effects on existing business relationships with suppliers and customers; loss of key employees; and significant amortization expenses related to acquired assets. To finance future acquisitions, we may have to increase our borrowing or sell equity or debt securities to the public. Without additional acquisitions, we may not be able to grow and to develop new productsproduc ts and services as quickly as we have in the past to meet the compe tition.competition. If we fail to integrate our acquisitions, our business, financial condition and results of operations could be materially and adversely affected. Failed acquisitions could also produce material and unpredictable impairment charges as we periodically review our acquired assets.

Competition or general economic conditions may result in decreased demand or require price reductions or other concessions to customers which could result in lower margins and reduce income. We vigorously compete with a variety of software vendors in all of our major product lines. We compete on the basis of product quality, reliability, performance, ease of use, quality of support, integration with other products and pricing. Some of our competitors may have advantages over us due to their size, product lines, greater marketing resources, or exclusive intellectual property rights. If competitors offer more favorable pricing, payment or other contractual terms, warranties, or functionality, or if general economic conditions decline such that customers are less willing or able to pay the cost of our products, we may need to lower prices or offer favorable terms in order to successfully compete.

The loss of key employees could adversely affect our business.We depend on the contributions and abilities of our senior management. Our Company has grown significantly in recent years and our management remains concentrated in a small number of key employees. If we lose one or more of our key employees, we could suffer a loss of sales and delays in new product development, and management resources would have to be diverted from other activities to compensate for this loss. We do not have employment agreements with any of our executive officers.

Consolidation of financial institutions will continue to reduce the number of our customers and potential customers.Our primary market consists of approximately 9,0007,900 commercial and savings banks and 9,0007,800 credit unions. The number of commercial banks and credit unions has decreased because of mergers and acquisitions over the last several decades and is expected to continue to decrease as more consolidation occurs.

The services we provide to our customers are subject to government regulation that could hinder the development of portions of our business or impose constraints on the way we conduct our operations.The financial services industry is subject to extensive and complex federal and state regulation. As a supplier of services to financial institutions, portions of our operations are examined by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation, the National Credit Union Association and the Office of Thrift Supervision, among other regulatory agencies. These agencies regulate services we provide and the manner in which we operate, and we are required to comply with a broad range of applicable laws and regulations. In addition, existing laws, regulations, and policies could be amended or interpreted differently by regulators in a manner that has a negative impactimpac t on our existing operations or that limits our future growth or expansion. Our customers are also regulated entities, and actions by regulatory authorities could determine both the decisions they make concerning the purchase of data processing and other services and the timing and implementation of these decisions. Concerns are growing with respect to the use, confidentiality, and security of private customer information. Regulatory agencies, Congress and state legislatures are considering numerous regulatory and statutory proposals to protect the interests of consumers and to require compliance with standards and policies that have not been defined.

The software we provide to our customers is also affected by government regulation.We are generally obligated to our customers to provide software solutions that comply with applicable federal and state regulations. Substantial software research and development and other corporate resources have been and will continue to be applied to adapt our software products to this evolving, complex and often unpredictable regulatory environment. Our failure to provide compliant solutions could result in significant fines or consumer liability on our customers, for which we may bear ultimate liability.

As technology becomes less expensive and more advanced, purchase prices of hardware are declining and our revenues and profits from remarketing arrangements may decrease.Computer hardware technology is rapidly developing. Hardware manufacturers are producing less expensive and more powerful equipment each year, and we expect this trend to continue into the future. As computer hardware becomes less expensive, revenues and profits derived from our hardware remarketing may decrease and become a smaller portion of our revenues and profits.

An operational failure in our outsourcing facilities could cause us to lose customers.Damagecustomers.Damage or destruction that interrupts our outsourcing operations could damage our relationship with customers and may cause us to incur substantial additional expense to repair or replace damaged equipment. Our back-up systems and procedures may not prevent disruption, such as a prolonged interruption of our transaction processing services. In the event that an interruption of our network extends for more than several hours, we may experience data loss or a reduction in revenues by reason of such interruption. In addition, a significant interruption of service could have a negative impact on our reputation and could lead our present and potential customers to choose other service providers.

If our strategic relationship with IBM were terminated, it could have a negative impact on the continuing success of our business.We market and sell IBM hardware and equipment to our customers under an IBM Business Partner Agreement and resell maintenance on IBM hardware products to our customers. Much of our software is designed to be compatible with the IBM hardware that is run by a majority of our customers. If IBM were to terminate or fundamentally modify our strategic relationship, our relationship with our customers and our revenues and earnings could suffer. We could also lose software market share or be required to redesign existing products or develop new products for new hardware platforms.

If others claim that we have infringed their intellectual property rights, we could be liable for significant damages.Wedamages.We have agreed to indemnify many of our customers against claims that our products and services infringe on the proprietary rights of others. We anticipate that the number of infringement claims will increase as the number of our software solutions and services increases and the functionality of our products and services expands. Any such claims, whether with or without merit, could be time-consuming, result in costly litigation and may not be resolved on terms favorable to us.

Expansion of services to non-traditional customers could expose us to new risks.Somerisks.Some of our recent acquisitions include business lines that are marketed outside our traditional, regulated, and litigation-averse base of financial institution customers. These non-regulated customers may entail greater operational, credit and litigation risks than we have faced before and could result in increases in bad debts and litigation costs.

Increases in service revenue as a percentage of total revenues may decrease overall margins.We continue to experience a trend of a greater proportion of our products being sold as outsourcing services rather than in-house licenses. We realize lower margins on service revenues than on license revenues. Thus, if service revenue increases as a percentage of total revenue, our gross margins will be lower and our operating results may be impacted.

Failure to achieve favorable renewals of service contracts could negatively affect our outsourcing business.Our contracts with our customers for outsourced data processing services generally run for a period of 3-5 years. Because of the rapid growth of our outsourcing business over the last five years, we will experience greater numbers of these contracts coming up for renewal over the next few years. Renewal time presents our customers with the opportunity to consider other providers or to renegotiate their contracts with us. If we are not successful in achieving high renewal rates upon favorable terms, our outsourcing revenues and profit margins will suffer.

Item 1B. Unresolved Staff Comments

None.