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. Beginning in the first quarter of fiscal 2018, JHA changed its reportable segment structure from two customer-centric segments, Bank and Credit Union, to four product-centric segments. The change was made based on the view of our Chief Executive Officer, who is also our Chief Operating Decision Maker, that the Company could be more effectively managed using a product-centric approach and was driven by the first budgetary process under his administration. He requested changes in reports he regularly reviews for the purposes of allocating resources and assessing performance.

The Company’s operations are classified into four reportable segments: Core, Payments, Complementary, and Corporate & Other. The Core segment provides core information processing platforms to banks and credit unions, which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer/member information. The Payments segment provides secure payment processing tools and services, including: ATM, debit, and credit card transaction processing services; online and mobile bill pay solutions; and risk management products and services. The Complementary segment provides additional software and services that can be integrated with our Core solutions or used independently. The Corporate & Other segment includes hardware revenue and costs, as well as operating costs not directly attributable to the other three segments.

The Company evaluates the performance of its segments and allocates resources to them based on various factors, including performance against trend, budget, and forecast. Only revenue and costs of revenue are considered in the evaluation for each segment.

The prior period presented has been retroactively restated to conform to the new segment structure adopted July 1, 2017.



	Three Months Ended
	March 31, 2018
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	129,787	$	14,950	$	89,151	$	10,942		$	244,830
Processing	6,824		117,624		15,355		51			139,854
Total Revenue	136,611		132,574		104,506		10,993			384,684

Cost of Revenue	63,157		62,783		42,837		52,815			221,592
Research and Development										22,591
Selling, General, and Administrative										44,185
Gain on Disposal of Businesses										—
Total Expenses										288,368

SEGMENT INCOME	$	73,454	$	69,791	$	61,669	$	(41,822	)

OPERATING INCOME										96,316

INTEREST INCOME (EXPENSE)										(604		)

INCOME BEFORE INCOME TAXES										$	95,712



	Three Months Ended
	March 31, 2017
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	120,978	$	10,805	$	81,076	$	13,997		$	226,856
Processing	6,192		107,588		13,122		9			126,911
Total Revenue	127,170		118,393		94,198		14,006			353,767

Cost of Revenue	58,983		55,802		39,488		52,454			206,727
Research and Development										20,801
Selling, General, and Administrative										39,794
Gain on Disposal of Businesses										(2,286		)
Total Expenses										265,036

SEGMENT INCOME	$	68,187	$	62,591	$	54,710	$	(38,448	)

OPERATING INCOME										88,731

INTEREST INCOME (EXPENSE)										(236		)

INCOME BEFORE INCOME TAXES										$	88,495



	Nine Months Ended
	March 31, 2018
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	379,643	$	34,950	$	252,746	$	39,540		$	706,879
Processing	20,300		346,787		45,338		70			412,495
Total Revenue	399,943		381,737		298,084		39,610			1,119,374

Cost of Revenue	178,619		179,100		124,693		155,548			637,960
Research and Development										65,934
Selling, General, and Administrative										133,532
Gain on Disposal of Businesses										(1,894		)
Total Expenses										835,532

SEGMENT INCOME	$	221,324	$	202,637	$	173,391	$	(115,938	)

OPERATING INCOME										283,842

INTEREST INCOME (EXPENSE)										(749		)

INCOME BEFORE INCOME TAXES										$	283,093



	Nine Months Ended
	March 31, 2017
	Core		Payments		Complementary		Corporate & Other			Total
REVENUE
Services and Support	$	345,660	$	35,688	$	240,487	$	44,227		$	666,062
Processing	18,304		324,179		38,720		84			381,287
Total Revenue	363,964		359,867		279,207		44,311			1,047,349

Cost of Revenue	164,820		166,615		117,290		150,911			599,636
Research and Development										61,413
Selling, General, and Administrative										119,795
Gain on Disposal of Businesses										(2,250		)
Total Expenses										778,594

SEGMENT INCOME	$	199,144	$	193,252	$	161,917	$	(106,600	)

OPERATING INCOME										268,755

INTEREST INCOME (EXPENSE)										(395		)

INCOME BEFORE INCOME TAXES										$	268,360

The Company has not disclosed any additional asset information by segment, as the information is not generated for internal management reporting to the Chief Operating Decision Maker.