ACI
Worldwide (NASDAQ: ACIW), a leading global provider of electronic
payment and banking solutions, today announced financial
results for the period ended September 30, 2014. Management will host a
conference call at 8:30 am ET to discuss these results as well as 2014
financial guidance. Interested persons may access a real-time audio
broadcast of the teleconference at http://investor.aciworldwide.com/
or use the following numbers for dial-in participation: US/Canada: (866)
914-7436, international: +1 (817) 385-9117. Please provide your name,
the conference name ACI Worldwide, Inc. and conference code 21274653.
There will be a replay available for two weeks on (855) 859-2056 for
US/Canada callers and +1 (404) 537- 3406 for international participants.
“Our new sales bookings growth rate is tracking to be double our
guidance for the year and our continued cost discipline helped
ACI generate EBITDA growth over last year,” commented Phil Heasley,
President and CEO, ACI Worldwide. “Aside from foreign currency movements
that are reducing our revenue forecast by $10 million, our anticipated
model change is moving more quickly than expected with significant
growth in our hosted business and UP-enabled solutions adding much more
complexity to the renewal opportunities with our largest customers. Our
strong sales bookings this year set us up for an improved 2015 and,
overall, we remain optimistic regarding our long-term strategy, product
suite and position in the rapidly changing payments space.”
FINANCIAL SUMMARY
Financial Results for Q3
New sales bookings, net of term extensions (SNET), increased 6% compared
to the prior year quarter. Overall sales bookings including term
extensions increased 18% compared to the prior year. Year-to-date, SNET
and total sales bookings are up 22% and 30%, respectively.
We ended Q3 with a 12-month backlog of $898 million and a 60-month
backlog of $4.1 billion, both new records. The acquisition of ReD
contributed $42 and $205 million, respectively. Excluding this addition
and adjusting for foreign currency fluctuation, our 12 month backlog
decreased $22 million from last quarter and our 60 month backlog
increased $25 million from Q2.
Non-GAAP revenue in Q3 was $250 million, an increase of $34 million, or
16%, above the prior year quarter. Excluding the $35 million
contribution from Official Payments and ReD, organic revenue was flat
compared to last year.
Non-GAAP operating income was $40 million for the quarter, flat from the
prior year quarter. Adjusted EBITDA of $66 million was up 7% from last
year’s $62 million. Net EBITDA margin in Q3 2014 was 29% versus 30%
margin last year, after adjusting for $25 million and $7 million of pass
through interchange fees in Q3 2014 and Q3 2013, respectively.
Q3 non-GAAP net income was $21 million, or $0.18 per diluted share,
versus non-GAAP net income of $21 million, or $0.17 per diluted share,
in Q3 2013.
ACI ended the third quarter with $60 million in cash on hand. Operating
free cash flow (OFCF) for the quarter was $18 million, down from $27
million in Q3 of last year. The third quarter ended with a debt balance
of $946 million, up from $753 million in Q2.
Updating Guidance
Foreign currency movements during the quarter have reduced our outlook
for full year revenue by $10 million, but will have no impact on our
margins as our foreign expenses are a natural hedge. We are focused on
optimizing our sales for the long-term economic value of the business.
Our new forecast assumes a higher contribution from hosted contracts and
that several large strategic sales will now sign in 2015. The timing,
structure and complexity of these deals will result in lower sales to
revenue conversion in the current year. We now expect non-GAAP revenue
for the full year 2014 to be in a range of $1.025 to $1.045 billion,
down from a range of $1.078 to $1.098 billion. Adjusted EBITDA
expectations are now in a range of $265 to $275 million, down from a
range of $294 to $304 million. This guidance excludes approximately $18
to $20 million of significant integration-related expenses and includes
$2 million for the deferred revenue adjustments. Lastly, our new sales
bookings growth rate for the year is expected to be in the double digits.
About ACI Worldwide
ACI Worldwide, the Universal
Payments company, powers electronic payments and banking for more
than 5,000 financial institutions, retailers, billers and processors
around the world. ACI software processes $13 trillion in payments and
securities transactions for more than 250 of the leading global
retailers, and 21 of the world’s 25 largest banks. Through our
comprehensive suite of software products and hosted services, we deliver
a broad range of solutions for payment processing; card and merchant
management; online
banking; mobile, branch and voice banking; fraud
detection; trade finance; and electronic
bill presentment and payment. To learn more about ACI, please visit www.aciworldwide.com.
You can also find us on Twitter @ACI_Worldwide.
To supplement our financial results presented on a GAAP basis, we use
the non-GAAP measures indicated in the tables, which exclude certain
business combination accounting entries related to the acquisitions of
S1 Corporation and Online Resources Corporation and significant
transaction-related expenses, as well as other significant non-cash
expenses such as depreciation, amortization and share-based
compensation, that we believe are helpful in understanding our past
financial performance and our future results. The presentation of these
non-GAAP financial measures should be considered in addition to our GAAP
results and are not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP. Management generally compensates for limitations
in the use of non-GAAP financial measures by relying on comparable GAAP
financial measures and providing investors with a reconciliation of
non-GAAP financial measures only in addition to and in conjunction with
results presented in accordance with GAAP. We believe that these
non-GAAP financial measures reflect an additional way of viewing aspects
of our operations that, when viewed with our GAAP results, provide a
more complete understanding of factors and trends affecting our
business. Certain non-GAAP measures include:
-
Non-GAAP revenue: revenue plus deferred revenue that would have been
recognized in the normal course of business by S1 and Online Resources
if not for GAAP purchase accounting requirements. Non-GAAP revenue
should be considered in addition to, rather than as a substitute for,
revenue.
-
Non-GAAP operating income: operating income plus deferred revenue that
would have been recognized in the normal course of business by S1 and
Online Resources if not for GAAP purchase accounting requirements and
significant transaction-related expenses. Non-GAAP operating income
should be considered in addition to, rather than as a substitute for,
operating income.
-
Adjusted EBITDA: net income plus income tax expense, net interest
income (expense), net other income (expense), depreciation,
amortization and non-cash compensation, as well as deferred revenue
that would have been recognized in the normal course of business by S1
and Online Resources if not for GAAP purchase accounting requirements
and significant transaction related expenses. Adjusted EBITDA should
be considered in addition to, rather than as a substitute for,
operating income.
ACI is also presenting operating free cash flow, which is defined as net
cash provided by operating activities, plus payments associated with
acquired opening balance sheet liabilities, net after-tax payments
associated with employee-related actions and facility closures, net
after-tax payments associated with significant transaction-related
costs, and less capital expenditures. Operating free cash flow is
considered a non-GAAP financial measure as defined by SEC Regulation G.
We utilize this non-GAAP financial measure, and believe it is useful to
investors, as an indicator of cash flow available for debt repayment and
other investing activities, such as capital investments and
acquisitions. We utilize operating free cash flow as a further indicator
of operating performance and for planning investing activities.
Operating free cash flow should be considered in addition to, rather
than as a substitute for, net cash provided by operating activities. A
limitation of operating free cash flow is that it does not represent the
total increase or decrease in the cash balance for the period. This
measure also does not exclude mandatory debt service obligations and,
therefore, does not represent the residual cash flow available for
discretionary expenditures. We believe that operating free cash flow is
useful to investors to provide disclosures of our operating results on
the same basis as that used by our management.
ACI also includes backlog estimates, which include all software license
fees, maintenance fees and services specified in executed contracts, as
well as revenues from assumed contract renewals to the extent that we
believe recognition of the related revenue will occur within the
corresponding backlog period. We have historically included assumed
renewals in backlog estimates based upon automatic renewal provisions in
the executed contract and our historic experience with customer renewal
rates.
Backlog is considered a non-GAAP financial measure as defined by SEC
Regulation G. Our 60-month backlog estimate represents expected revenues
from existing customers using the following key assumptions:
-
Maintenance fees are assumed to exist for the duration of the license
term for those contracts in which the committed maintenance term is
less than the committed license term.
-
License, facilities management, and software hosting arrangements are
assumed to renew at the end of their committed term at a rate
consistent with our historical experiences.
-
Non-recurring license arrangements are assumed to renew as recurring
revenue streams.
-
Foreign currency exchange rates are assumed to remain constant over
the 60-month backlog period for those contracts stated in currencies
other than the U.S. dollar.
-
Our pricing policies and practices are assumed to remain constant over
the 60-month backlog period.
Estimates of future financial results are inherently unreliable. Our
backlog estimates require substantial judgment and are based on a number
of assumptions as described above. These assumptions may turn out to be
inaccurate or wrong, including for reasons outside of management’s
control. For example, our customers may attempt to renegotiate or
terminate their contracts for a number of reasons, including mergers,
changes in their financial condition, or general changes in economic
conditions in the customer’s industry or geographic location, or we may
experience delays in the development or delivery of products or services
specified in customer contracts which may cause the actual renewal rates
and amounts to differ from historical experiences. Changes in foreign
currency exchange rates may also impact the amount of revenue actually
recognized in future periods. Accordingly, there can be no assurance
that contracts included in backlog estimates will actually generate the
specified revenues or that the actual revenues will be generated within
the corresponding 60-month period.
Backlog should be considered in addition to, rather than as a substitute
for, reported revenue and deferred revenue.
Forward-Looking Statements
This press release contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties.
Generally, forward-looking statements do not relate strictly to
historical or current facts and may include words or phrases such as
“believes,” “will,” “expects,” “anticipates,” “intends,” and words and
phrases of similar impact. The forward-looking statements are made
pursuant to safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.
Forward-looking statements in this press release include, but are not
limited to, statements regarding: (i) the acquisition of ReD bolstering
offerings; (ii) new sales bookings growth expectations; (iii) impact of
foreign currency movements; (iv) expectations regarding our business
model change; (v) strong sales bookings setting us up for an improved
2015; (vi) lower sales to revenue conversions in 2014; and (vii)
expectations regarding revenue, adjusted EBITDA, and sales, net of term
extension, guidance in 2014.
All of the foregoing forward-looking statements are expressly qualified
by the risk factors discussed in our filings with the Securities and
Exchange Commission. Such factors include, but are not limited to,
increased competition, the performance of our strategic product, UP
BASE24-eps, demand for our products, restrictions and other financial
covenants in our credit facility, consolidations and failures in the
financial services industry, customer reluctance to switch to a new
vendor, the accuracy of management’s backlog estimates, the maturity of
certain products, our strategy to migrate customers to our next
generation products, ratable or deferred recognition of certain revenue
associated with customer migrations and the maturity of certain of our
products, failure to obtain renewals of customer contracts or to obtain
such renewals on favorable terms, delay or cancellation of customer
projects or inaccurate project completion estimates, volatility and
disruption of the capital and credit markets and adverse changes in the
global economy, our existing levels of debt, impairment of our goodwill
or intangible assets, litigation, future acquisitions, strategic
partnerships and investments, risks related to the expected benefits to
be achieved in the transaction with Online Resources, Official Payments
and ReD, the complexity of our products and services and the risk that
they may contain hidden defects or be subjected to security breaches or
viruses, compliance of our products with applicable legislation,
governmental regulations and industry standards, our compliance with
privacy regulations, the protection of our intellectual property in
intellectual property litigation, the cyclical nature of our revenue and
earnings and the accuracy of forecasts due to the concentration of
revenue-generating activity during the final weeks of each quarter,
business interruptions or failure of our information technology and
communication systems, our offshore software development activities,
risks from operating internationally, including fluctuations in currency
exchange rates, exposure to unknown tax liabilities, and volatility in
our stock price. For a detailed discussion of these risk factors,
parties that are relying on the forward-looking statements should review
our filings with the Securities and Exchange Commission, including our
most recently filed Annual Report on Form 10-K, Registration Statement
on Form S-4, and subsequent reports on Forms 10-Q and 8-K.
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ACI WORLDWIDE, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(unaudited and in thousands, except share and per share amounts)
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September 30,
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December 31,
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2014
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2013
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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60,071
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$
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95,059
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Receivables, net of allowances of $5,682 and $4,459, respectively
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217,450
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203,575
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Deferred income taxes, net
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81,767
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47,593
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Recoverable income taxes
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3,233
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2,258
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Prepaid expenses
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21,141
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|
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22,549
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Other current assets
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26,787
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|
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65,328
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Total current assets
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410,449
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436,362
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Property and equipment, net
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56,275
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57,347
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Software, net
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207,683
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191,468
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Goodwill
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816,931
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669,217
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Intangible assets, net
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255,803
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237,693
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Deferred income taxes, net
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|
|
|
|
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|
28,564
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|
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48,852
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Other noncurrent assets
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|
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46,316
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|
|
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40,912
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TOTAL ASSETS
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$
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1,822,021
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$
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1,681,851
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Accounts payable
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$
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43,718
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$
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43,658
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Employee compensation
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39,980
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35,623
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Current portion of long-term debt
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83,381
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|
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47,313
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Deferred revenue
|
|
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|
141,323
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|
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|
|
|
|
122,045
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Income taxes payable
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|
|
|
|
|
|
3,752
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|
|
|
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|
|
1,192
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Deferred income taxes, net
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|
|
|
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201
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|
|
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|
753
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Other current liabilities
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44,181
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|
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|
95,016
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Total current liabilities
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|
356,536
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345,600
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Noncurrent liabilities
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Deferred revenue
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42,143
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45,656
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Long-term debt
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|
862,906
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|
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|
708,070
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Deferred income taxes, net
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|
|
|
|
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|
15,385
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|
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|
11,000
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Other noncurrent liabilities
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|
|
24,223
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|
|
|
|
|
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27,831
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Total liabilities
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1,301,193
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1,138,157
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Commitments and contingencies
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Stockholders' equity
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Preferred stock; $0.01 par value; 5,000,000 shares authorized; no
shares issued
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and outstanding at September 30, 2014 and December 31, 2013
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-
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-
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Common stock; $0.005 par value; 280,000,000 shares authorized;
139,820,388
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shares issued at September 30, 2014 and December 31, 2013
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698
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698
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Additional paid-in capital
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555,202
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542,697
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Retained earnings
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285,049
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263,855
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Treasury stock, at cost, 24,882,072 and 23,255,421 shares at
September 30, 2014 and December 31, 2013, respectively
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(290,655
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)
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(240,241
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)
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Accumulated other comprehensive loss
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(29,466
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)
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(23,315
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)
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Total stockholders' equity
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520,828
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543,694
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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|
$
|
1,822,021
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$
|
1,681,851
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|
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|
|
ACI WORLDWIDE, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited and in thousands, except per share amounts)
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For the Three Months Ended September 30,
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For the Nine Months Ended September 30,
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2014
|
|
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|
2013
|
|
|
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|
|
2014
|
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|
|
|
2013
|
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Revenues
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License
|
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$
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57,653
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$
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56,236
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$
|
154,732
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$
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151,306
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Maintenance
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63,764
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|
|
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60,457
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188,572
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|
|
|
|
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176,921
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Services
|
|
|
|
|
|
28,194
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|
|
|
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|
30,240
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|
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|
|
|
75,773
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|
|
|
|
|
81,133
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Hosting
|
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|
100,033
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|
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|
67,006
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|
|
|
|
|
306,848
|
|
|
|
|
|
172,406
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Total revenues
|
|
|
|
|
|
249,644
|
|
|
|
|
|
213,939
|
|
|
|
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|
725,925
|
|
|
|
|
|
581,766
|
|
|
|
|
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Operating expenses
|
|
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|
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|
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Cost of license (1)
|
|
|
|
|
|
5,433
|
|
|
|
|
|
5,888
|
|
|
|
|
|
18,066
|
|
|
|
|
|
17,975
|
|
Cost of maintenance, services and hosting (1)
|
|
|
|
|
|
105,319
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|
|
|
|
|
80,948
|
|
|
|
|
|
325,801
|
|
|
|
|
|
225,392
|
|
Research and development
|
|
|
|
|
|
36,321
|
|
|
|
|
|
33,642
|
|
|
|
|
|
112,653
|
|
|
|
|
|
109,182
|
|
Selling and marketing
|
|
|
|
|
|
27,078
|
|
|
|
|
|
24,098
|
|
|
|
|
|
82,994
|
|
|
|
|
|
76,710
|
|
General and administrative
|
|
|
|
|
|
25,329
|
|
|
|
|
|
24,559
|
|
|
|
|
|
75,127
|
|
|
|
|
|
75,743
|
|
Depreciation and amortization
|
|
|
|
|
|
18,295
|
|
|
|
|
|
15,249
|
|
|
|
|
|
52,383
|
|
|
|
|
|
39,696
|
|
Total operating expenses
|
|
|
|
|
|
217,775
|
|
|
|
|
|
184,384
|
|
|
|
|
|
667,024
|
|
|
|
|
|
544,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
31,869
|
|
|
|
|
|
29,555
|
|
|
|
|
|
58,901
|
|
|
|
|
|
37,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
(10,416
|
)
|
|
|
|
|
(7,453
|
)
|
|
|
|
|
(28,920
|
)
|
|
|
|
|
(17,403
|
)
|
Interest income
|
|
|
|
|
|
98
|
|
|
|
|
|
159
|
|
|
|
|
|
432
|
|
|
|
|
|
501
|
|
Other, net
|
|
|
|
|
|
3,614
|
|
|
|
|
|
(3,152
|
)
|
|
|
|
|
(1,344
|
)
|
|
|
|
|
(1,506
|
)
|
Total other income (expense)
|
|
|
|
|
|
(6,704
|
)
|
|
|
|
|
(10,446
|
)
|
|
|
|
|
(29,832
|
)
|
|
|
|
|
(18,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
|
25,165
|
|
|
|
|
|
19,109
|
|
|
|
|
|
29,069
|
|
|
|
|
|
18,660
|
|
Income tax expense
|
|
|
|
|
|
9,433
|
|
|
|
|
|
5,347
|
|
|
|
|
|
7,875
|
|
|
|
|
|
5,183
|
|
Net income
|
|
|
|
|
$
|
15,732
|
|
|
|
|
$
|
13,762
|
|
|
|
|
$
|
21,194
|
|
|
|
|
$
|
13,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
$
|
0.14
|
|
|
|
|
$
|
0.12
|
|
|
|
|
$
|
0.18
|
|
|
|
|
$
|
0.11
|
|
Diluted
|
|
|
|
|
$
|
0.14
|
|
|
|
|
$
|
0.12
|
|
|
|
|
$
|
0.18
|
|
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
114,484
|
|
|
|
|
|
117,376
|
|
|
|
|
|
114,603
|
|
|
|
|
|
118,537
|
|
Diluted
|
|
|
|
|
|
116,428
|
|
|
|
|
|
119,422
|
|
|
|
|
|
116,682
|
|
|
|
|
|
120,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The cost of software license fees excludes charges for depreciation
but includes amortization of purchased and developed software for
resale. The cost of maintenance, services and hosting fees excludes
charges for depreciation.
|
|
|
|
|
|
|
|
|
|
|
|
ACI WORLDWIDE, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30,
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
$
|
15,732
|
|
|
|
|
|
$
|
13,762
|
|
Adjustments to reconcile net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
4,542
|
|
|
|
|
|
|
5,569
|
|
Amortization
|
|
|
|
|
|
|
17,583
|
|
|
|
|
|
|
13,108
|
|
Amortization of deferred debt issuance costs
|
|
|
|
|
|
|
1,527
|
|
|
|
|
|
|
1,505
|
|
Deferred income taxes
|
|
|
|
|
|
|
2,497
|
|
|
|
|
|
|
1,436
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
4,554
|
|
|
|
|
|
|
3,386
|
|
Excess tax benefit of stock options exercised and vesting of
restricted stock and performance shares
|
|
|
|
|
|
|
(6,034
|
)
|
|
|
|
|
|
(883
|
)
|
Other
|
|
|
|
|
|
|
1,335
|
|
|
|
|
|
|
(1,382
|
)
|
Changes in operating assets and liabilities, net of impact of
acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
(7,731
|
)
|
|
|
|
|
|
3,754
|
|
Accounts payable
|
|
|
|
|
|
|
(3,298
|
)
|
|
|
|
|
|
(4,298
|
)
|
Accrued employee compensation
|
|
|
|
|
|
|
(3,341
|
)
|
|
|
|
|
|
3,005
|
|
Current income taxes
|
|
|
|
|
|
|
4,617
|
|
|
|
|
|
|
2,415
|
|
Deferred revenue
|
|
|
|
|
|
|
(4,405
|
)
|
|
|
|
|
|
(15,856
|
)
|
Other current and noncurrent assets and liabilities
|
|
|
|
|
|
|
(3,918
|
)
|
|
|
|
|
|
3,408
|
|
Net cash flows from operating activities
|
|
|
|
|
|
|
23,660
|
|
|
|
|
|
|
28,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
|
|
|
(3,436
|
)
|
|
|
|
|
|
(2,432
|
)
|
Purchases of software and distribution rights
|
|
|
|
|
|
|
(7,236
|
)
|
|
|
|
|
|
(2,300
|
)
|
Acquisition of businesses, net of cash acquired
|
|
|
|
|
|
|
(204,290
|
)
|
|
|
|
|
|
-
|
|
Net cash flows from investing activities
|
|
|
|
|
|
|
(214,962
|
)
|
|
|
|
|
|
(4,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|
704
|
|
|
|
|
|
|
594
|
|
Proceeds from exercises of stock options
|
|
|
|
|
|
|
6,989
|
|
|
|
|
|
|
4,309
|
|
Excess tax benefit of stock options exercised and vesting of
restricted stock and performance shares
|
|
|
|
|
|
|
6,034
|
|
|
|
|
|
|
883
|
|
Repurchases of common stock
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(68,580
|
)
|
Repurchase of restricted stock and performance shares for tax
withholdings
|
|
|
|
|
|
|
(442
|
)
|
|
|
|
|
|
(320
|
)
|
Proceeds from term portion of credit agreement
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
-
|
|
Proceeds from issuance of senior notes
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
300,000
|
|
Proceeds from revolving credit facility
|
|
|
|
|
|
|
99,500
|
|
|
|
|
|
|
-
|
|
Repayment of revolving credit facility
|
|
|
|
|
|
|
(36,000
|
)
|
|
|
|
|
|
(188,000
|
)
|
Repayment of term portion of credit agreement
|
|
|
|
|
|
|
(19,854
|
)
|
|
|
|
|
|
(8,871
|
)
|
Payments on other debt and capital leases
|
|
|
|
|
|
|
(1,225
|
)
|
|
|
|
|
|
(1,605
|
)
|
Payment for debt issuance costs
|
|
|
|
|
|
|
(4,381
|
)
|
|
|
|
|
|
(6,861
|
)
|
Net cash flows from financing activities
|
|
|
|
|
|
|
201,325
|
|
|
|
|
|
|
31,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash
|
|
|
|
|
|
|
(4,934
|
)
|
|
|
|
|
|
3,024
|
|
Net increase in cash and cash equivalents
|
|
|
|
|
|
|
5,089
|
|
|
|
|
|
|
58,770
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
|
|
54,982
|
|
|
|
|
|
|
107,741
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
|
$
|
60,071
|
|
|
|
|
|
$
|
166,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACI WORLDWIDE, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited and in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
$
|
21,194
|
|
|
|
|
|
$
|
13,477
|
|
Adjustments to reconcile net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
15,100
|
|
|
|
|
|
|
13,533
|
|
Amortization
|
|
|
|
|
|
|
48,174
|
|
|
|
|
|
|
36,250
|
|
Amortization of deferred debt issuance costs
|
|
|
|
|
|
|
4,207
|
|
|
|
|
|
|
4,021
|
|
Deferred income taxes
|
|
|
|
|
|
|
(9,637
|
)
|
|
|
|
|
|
(5,340
|
)
|
Stock-based compensation expense
|
|
|
|
|
|
|
13,742
|
|
|
|
|
|
|
11,110
|
|
Excess tax benefit of stock options exercised and vesting of
restricted stock and performance shares
|
|
|
|
|
|
|
(10,416
|
)
|
|
|
|
|
|
(2,564
|
)
|
Other
|
|
|
|
|
|
|
2,006
|
|
|
|
|
|
|
653
|
|
Changes in operating assets and liabilities, net of impact of
acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
(17,010
|
)
|
|
|
|
|
|
25,782
|
|
Accounts payable
|
|
|
|
|
|
|
(6,501
|
)
|
|
|
|
|
|
(15,029
|
)
|
Accrued employee compensation
|
|
|
|
|
|
|
(2,682
|
)
|
|
|
|
|
|
(5,007
|
)
|
Current income taxes
|
|
|
|
|
|
|
9,345
|
|
|
|
|
|
|
6,195
|
|
Deferred revenue
|
|
|
|
|
|
|
15,932
|
|
|
|
|
|
|
5,881
|
|
Other current and noncurrent assets and liabilities
|
|
|
|
|
|
|
(11,471
|
)
|
|
|
|
|
|
(2,402
|
)
|
Net cash flows from operating activities
|
|
|
|
|
|
|
71,983
|
|
|
|
|
|
|
86,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
|
|
|
(11,755
|
)
|
|
|
|
|
|
(11,482
|
)
|
Purchases of software and distribution rights
|
|
|
|
|
|
|
(14,227
|
)
|
|
|
|
|
|
(6,878
|
)
|
Acquisition of businesses, net of cash acquired
|
|
|
|
|
|
|
(204,290
|
)
|
|
|
|
|
|
(264,202
|
)
|
Other
|
|
|
|
|
|
|
(1,500
|
)
|
|
|
|
|
|
-
|
|
Net cash flows from investing activities
|
|
|
|
|
|
|
(231,772
|
)
|
|
|
|
|
|
(282,562
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|
2,042
|
|
|
|
|
|
|
1,532
|
|
Proceeds from exercises of stock options
|
|
|
|
|
|
|
11,106
|
|
|
|
|
|
|
9,892
|
|
Excess tax benefit of stock options exercised and vesting of
restricted stock and performance shares
|
|
|
|
|
|
|
10,416
|
|
|
|
|
|
|
2,564
|
|
Repurchases of common stock
|
|
|
|
|
|
|
(70,000
|
)
|
|
|
|
|
|
(80,648
|
)
|
Repurchase of restricted stock and performance shares for tax
withholdings
|
|
|
|
|
|
|
(4,975
|
)
|
|
|
|
|
|
(5,894
|
)
|
Proceeds from term portion of credit agreement
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
300,000
|
|
Proceeds from issuance of senior notes
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
300,000
|
|
Proceeds from revolving credit facility
|
|
|
|
|
|
|
149,500
|
|
|
|
|
|
|
-
|
|
Repayment of revolving credit facility
|
|
|
|
|
|
|
(71,000
|
)
|
|
|
|
|
|
(188,000
|
)
|
Repayment of term portion of credit agreement
|
|
|
|
|
|
|
(37,596
|
)
|
|
|
|
|
|
(21,996
|
)
|
Payments on other debt and capital leases
|
|
|
|
|
|
|
(7,912
|
)
|
|
|
|
|
|
(13,322
|
)
|
Payment for debt issuance costs
|
|
|
|
|
|
|
(4,544
|
)
|
|
|
|
|
|
(16,397
|
)
|
Distribution to noncontrolling interest
|
|
|
|
|
|
|
(1,391
|
)
|
|
|
|
|
|
-
|
|
Net cash flows from financing activities
|
|
|
|
|
|
|
125,646
|
|
|
|
|
|
|
287,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash
|
|
|
|
|
|
|
(845
|
)
|
|
|
|
|
|
(1,547
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
|
(34,988
|
)
|
|
|
|
|
|
90,182
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
|
|
95,059
|
|
|
|
|
|
|
76,329
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
|
$
|
60,071
|
|
|
|
|
|
$
|
166,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACI Worldwide, Inc.
|
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
|
(unaudited and in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE THREE MONTHS ENDED September 30,
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
Selected Non-GAAP Financial Data
|
|
|
|
|
GAAP
|
|
|
Adj
|
|
|
Non-GAAP
|
|
|
GAAP
|
|
|
Adj
|
|
|
Non-GAAP
|
|
|
$ Diff
|
|
|
% Diff
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues (2)
|
|
|
|
|
$
|
249,644
|
|
|
$
|
407
|
|
|
|
$
|
250,051
|
|
|
$
|
213,939
|
|
|
$
|
1,696
|
|
|
|
$
|
215,635
|
|
|
$
|
34,416
|
|
|
|
16
|
%
|
Total expenses (3)
|
|
|
|
|
|
217,775
|
|
|
|
(7,332
|
)
|
|
|
|
210,443
|
|
|
|
184,384
|
|
|
|
(8,676
|
)
|
|
|
|
175,708
|
|
|
|
34,735
|
|
|
|
20
|
%
|
Operating income (loss)
|
|
|
|
|
|
31,869
|
|
|
|
7,739
|
|
|
|
|
39,608
|
|
|
|
29,555
|
|
|
|
10,372
|
|
|
|
|
39,927
|
|
|
|
(319
|
)
|
|
|
-1
|
%
|
Income (Loss) before income taxes
|
|
|
|
|
|
25,165
|
|
|
|
7,739
|
|
|
|
|
32,904
|
|
|
|
19,109
|
|
|
|
10,372
|
|
|
|
|
29,481
|
|
|
|
3,423
|
|
|
|
12
|
%
|
Income tax expense (benefit) (4)
|
|
|
|
|
|
9,433
|
|
|
|
2,709
|
|
|
|
|
12,142
|
|
|
|
5,347
|
|
|
|
3,630
|
|
|
|
|
8,977
|
|
|
|
3,165
|
|
|
|
35
|
%
|
Net income (loss)
|
|
|
|
|
|
15,732
|
|
|
|
5,030
|
|
|
|
|
20,762
|
|
|
|
13,762
|
|
|
|
6,742
|
|
|
|
|
20,504
|
|
|
|
259
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
$
|
4,542
|
|
|
$
|
-
|
|
|
|
$
|
4,542
|
|
|
$
|
5,569
|
|
|
$
|
-
|
|
|
|
$
|
5,569
|
|
|
$
|
(1,027
|
)
|
|
|
-18
|
%
|
Amortization - acquisition related intangibles
|
|
|
|
|
|
6,090
|
|
|
|
-
|
|
|
|
|
6,090
|
|
|
|
4,701
|
|
|
|
-
|
|
|
|
|
4,701
|
|
|
|
1,389
|
|
|
|
30
|
%
|
Amortization - acquisition related software
|
|
|
|
|
|
5,757
|
|
|
|
-
|
|
|
|
|
5,757
|
|
|
|
4,513
|
|
|
|
-
|
|
|
|
|
4,513
|
|
|
|
1,244
|
|
|
|
28
|
%
|
Amortization - other
|
|
|
|
|
|
5,736
|
|
|
|
-
|
|
|
|
|
5,736
|
|
|
|
3,894
|
|
|
|
-
|
|
|
|
|
3,894
|
|
|
|
1,842
|
|
|
|
47
|
%
|
Stock-based compensation (5)
|
|
|
|
|
|
4,554
|
|
|
|
-
|
|
|
|
|
4,554
|
|
|
|
3,386
|
|
|
|
-
|
|
|
|
|
3,386
|
|
|
|
1,168
|
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
$
|
58,548
|
|
|
$
|
7,739
|
|
|
|
$
|
66,287
|
|
|
$
|
51,618
|
|
|
$
|
10,372
|
|
|
|
$
|
61,990
|
|
|
$
|
4,297
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (5)
|
|
|
|
|
|
114,484
|
|
|
|
114,484
|
|
|
|
|
114,484
|
|
|
|
117,376
|
|
|
|
117,376
|
|
|
|
|
117,376
|
|
|
|
|
|
|
Diluted (5)
|
|
|
|
|
|
116,428
|
|
|
|
116,428
|
|
|
|
|
116,428
|
|
|
|
119,422
|
|
|
|
119,422
|
|
|
|
|
119,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (5)
|
|
|
|
|
$
|
0.14
|
|
|
$
|
0.04
|
|
|
|
$
|
0.18
|
|
|
$
|
0.12
|
|
|
$
|
0.06
|
|
|
|
$
|
0.17
|
|
|
$
|
0.01
|
|
|
|
4
|
%
|
Diluted (5)
|
|
|
|
|
$
|
0.14
|
|
|
$
|
0.04
|
|
|
|
$
|
0.18
|
|
|
$
|
0.12
|
|
|
$
|
0.06
|
|
|
|
$
|
0.17
|
|
|
$
|
0.01
|
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This presentation includes non-GAAP measures. Our non-GAAP measures
are not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction with
our consolidated financial statements prepared in accordance with GAAP.
(2) Adjustment for ORCC deferred revenue that would have been recognized
in the normal course of business but was not recognized due to GAAP
purchase accounting requirements.
(3) Expense for significant transaction related transactions, including,
$3.3 million for employee related actions, $1.3 million for data center
moves and $2.7 million for professional and other fees in 2014 and $5.2
million for employee related actions, $1.0 million for facility closures
and $2.5 million for other professional fees in 2013.
(4) Adjustments tax effected at 35%.
(5) All references to share and per share amounts have been
retroactively adjusted to reflect the July 10, 2014 three-for-one stock
split for all periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30,
|
Reconciliation of Operating Free Cash Flow (millions)
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
|
$
|
23.7
|
|
|
|
|
$
|
28.9
|
|
Payments associated with acquired opening balance sheet liabilities
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
-
|
|
Net after-tax payments associated with employee-related actions (4)
|
|
|
|
|
|
|
|
|
2.1
|
|
|
|
|
|
1.5
|
|
Net after-tax payments associated with lease terminations (4)
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
0.5
|
|
Net after-tax payments associated with significant transaction
related expenses (4)
|
|
|
|
|
|
|
|
|
2.6
|
|
|
|
|
|
0.9
|
|
Less capital expenditures
|
|
|
|
|
|
|
|
|
(10.7
|
)
|
|
|
|
|
(4.7
|
)
|
Operating Free Cash Flow
|
|
|
|
|
|
|
|
$
|
18.2
|
|
|
|
|
$
|
27.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copyright Business Wire 2014