UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ACI WORLDWIDE, INC.

Delaware (State or other jurisdiction of incorporation)		0-25346 (Commission File Number)		47-0772104 (IRS Employer Identification No.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.		Results of Operation and Financial Condition.

     On August 6, 2009, ACI Worldwide, Inc. (“the Company”) issued a press release announcing its financial results for the three months ended June 30, 2009. A copy of this press release is attached hereto as Exhibit 99.1.

     The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02- Results of Operations and Financial Condition” and Item 7.01- Regulation FD Disclosure.” Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

     The filing of this report and the furnishing of this information pursuant to Items 2.02 and 7.01 do not mean that such information is material or that disclosure of such information is required.

Item 7.01.		Regulation FD Disclosure.

     See “Item 2.02- Results of Operations and Financial Condition” above.

     Item 9.01. Financial Statements and Exhibits.

	99.1		Press Release dated August 6, 2009
	99.2		Investor presentation materials dated August 6, 2009

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ACI WORLDWIDE, INC.
		/s/ Scott W. Behrens
		Scott W. Behrens, Senior Vice President, Chief Financial Officer, Controller and Chief Accounting Officer

Date: August 6, 2009

Exhibit No.				Description
	99.1			Press Release dated August 6, 2009
	99.2			Investor presentation materials dated August 6, 2009

Exhibit 99.1

		News Release

Investors contact:
Tamar Gerber
Vice President, Investor Relations
646.348.6706

ACI Worldwide, Inc. Reports Financial
Results for the Quarter Ended June 30, 2009
ACI Reaffirms its Annual Guidance on Sales, Revenue and Operating Income

OPERATING HIGHLIGHTS

	•		Achieved Operating Free Cash Flow (“OFCF”) of $13.6 million, a rise of $24.5 million over prior year
	•		Achieved operating expense improvement of $17.6 million or 16%
	•		Achieved recurring revenue growth of $1.5 million
	•		Repurchased 1 million shares in the quarter for approximately $15 million
	•		Since quarter end, renewed former large US bank PUF as standard ILF/annuity contract; in July we have achieved “go live” with two large BASE24-eps™ and three large ACI Money Transfer System™ deals in Western Europe and the US

		Quarter Ended
							Better / (Worse)					Better / (Worse)
		June 30, 2009					June 30, 2008					June 30, 2008
Sales		$	97.3				$	(2.6	)				(3	)%
Revenue		$	87.2				$	(22.0	)				(20	)%
GAAP Operating Loss		$	(3.2	)			$	(4.5	)				(357	)%

(NEW YORK — August 6, 2009) — ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of electronic payments software and solutions, today announced financial results for the period ended June 30, 2009. We will hold a conference call on August 6, 2009, at

8.30 a.m. EDT to discuss this information. Interested persons may also access a real-time audio broadcast of the teleconference at www.aciworldwide.com/investors.

“The business is where we expected it to be at this point in 2009 and we are quite excited with the payments opportunities ahead of us, particularly in EMEA. Our second quarter revenues, on a constant FX-basis and without the distortion of non-recurring government mandate deals, are in line with the prior-year quarter. Moreover, our cash generation in the first half of the year was where I expected it to be and I’m pleased with how well we are tracking to our full year guidance,” said Chief Executive Officer Philip Heasley.

Notable sales business during the quarter included:

	•		Americas: Strong Money Transfer System bookings seen in the US augmented by applications sales to Canadian and US processors. Americas also booked four key Latin American multi-product bank transactions.
	•		EMEA: Sales bookings included a large term renewal and add-on for a Dutch bank and an IBM System p BASE24-eps, ACI Proactive Risk Manager™ and ACI Payments Manager™ deal signed in France.
	•		Asia: Achieved a new customer in Vietnam for BASE24-eps as well as a risk management system sale in New Zealand.

Sales bookings in the quarter totaled $97.3 million which was a reduction of 3%, or $2.6 million, as compared to the June 2008 quarter. Notable changes in the mix of sales included a rise of approximately $20 million in add-ons and term extensions which was largely offset by a reduction of approximately $22 million in new sales/new applications activity.

Revenues

Revenue was $87.2 million in the quarter ended June 30, 2009, a reduction of $22.0 million or 20% over the prior-year quarter revenue of $109.2 million. The decrease in revenue was largely attributable to initial license fee and service fee contributions of approximately $15.0 million due

to the impact of Faster Payments and the Middle East switch “go live” in the prior-year quarter. Negative foreign currency exchange impact of approximately $4 million also diminished second quarter 2009 results as compared to prior year. However, notwithstanding the absolute reduction in revenue, we achieved recurring revenue growth of $1.5 million compared to the prior-year quarter.

Backlog

As of June 30, 2009, our estimated 60-month backlog was $1.476 billion as compared to $1.410 billion at March 31, 2009, and $1.437 billion as of June 30, 2008. As of June 30, 2009, our 12-month backlog was $349 million, as compared to $335 million for the quarter ended March 31, 2009, and $341 million for the quarter ended June 30, 2008. The 12-month backlog increase of $14 million as compared to the quarter ended March 31, 2009 is due to significant projects moving into the 12-month backlog period as well as the expected timing of revenue recognition for certain sales made in the quarter ended June 30, 2009. Both 12-month and 60-month backlog were positively impacted by foreign currency exchange rate movement since March 31, 2009.

Liquidity

We had $114.4 million in cash on hand at June 30, 2009, an increase of $4.9 million as compared to the March 31, 2009 quarter. As of June 30, 2009, we also had approximately $70.0 million in unused borrowings under our credit facility.

Operating Free Cash Flow

Operating free cash flow (“OFCF”) for the quarter was $13.6 million compared to $(10.9) million for the June 2008 quarter. The year-over-year positive variance in operating free cash flow of $24.5 million was largely due to timing of $5.6 million in trade cash receipts, reduced payroll expenditure of approximately $5.4 million and $7.0 million in lower capital expenditures and facilities payments.

Operating Income/Loss

Operating loss was $3.2 million in the June 2009 quarter, a reduction of $4.5 million as compared to operating income of $1.3 million in the June 2008 quarter.

Operating Expenses

Operating expenses were $90.4 million in the June 2009 quarter compared to $108.0 million in the June 2008 quarter, an improvement of $17.6 million or 16%. Operating expense variances over prior-year quarter were as follows: a reduction of $3.5 million as a result of beneficial foreign exchange translation effect, a reduction of $4.6 million due to restructuring savings, a decrease of $3.8 million in release of deferred software and services expense, a reduction of $3.1 million in IBM IT Outsourcing transition costs, and lastly, a decrease of $2.6 million in bad debt expense and other costs.

Other Income and Expense

Other expense for the quarter was $3.7 million, compared to other income of $2.0 million in the June 2008 quarter. The increase in other expense versus the prior-year quarter resulted primarily from a negative variance of $3.6 million related to foreign currency exposure as well as $3.3 million increase in non-cash loss on the fair value interest rate swap. The losses were partially mitigated by a $1 million gain on the final cash settlement related to a 2006 sale of intellectual property.

Taxes

Income tax benefit in the quarter was $3.4 million as a result of the pre-tax loss of $6.9 million.

Net Loss and Diluted Earnings Per Share

Net loss for the quarter was $3.6 million, compared to net income of $0.8 million during the same period last year.

Loss per share for the quarter ended June 2009 was $(0.10) per diluted share compared to earnings of $0.02 per diluted share during the same period last year.

Weighted Average Shares Outstanding

Total diluted weighted average shares outstanding were 34.1 million for the quarter ended June 30, 2009 as compared to 34.9 million shares outstanding for the quarter ended June 30, 2008.

Re-affirmation of Guidance

We do not anticipate any changes to our annual guidance based upon what we are seeing in our business markets to date. We now anticipate that our business will achieve the lower end of the guidance range. Hence, guidance remains as indicated on February 26, 2009 with the calendar year guidance as follows: Sales of $450-460 million, GAAP revenue of $415-425 million and GAAP Operating Income of $35-40 million.

-End-

About ACI Worldwide, Inc.

ACI Worldwide is a leading provider of software and services solutions to initiate, manage, secure and operate electronic payments for major banks, retailers and processors around the world. The company enables payment processing, online banking, fraud prevention and detection, and back-office services. ACI solutions provide agility, reliability, manageability and scale, to approximately 750 customers in 90 countries. Visit ACI Worldwide at www.aciworldwide.com.

Non GAAP Financial Measures

ACI is presenting operating free cash flow, which is defined as net cash provided (used) by operating activities less capital expenditures and plus or minus net proceeds from IBM. 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 (used) 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. We also believe that this measure can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items, which do not directly affect our ongoing cash flow.

Reconciliation of Operating Free Cash Flow		Quarter Ended June 30,
(millions)		2009					2008
Net cash provided by operating activities		$	16.6			$	(3.4	)
Less capital expenditures			(1.1	)			(6.0	)
Less alliance technical enablement expenditures			(1.9	)			(1.5	)
Operating Free Cash Flow		$	13.6			$	(10.9	)

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.

ACI also includes backlog estimates which are 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 and facilities management 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.

The presentation of these non-GAAP financial measures should be considered in addition to our GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Reclassification

The Company redefined its cost of software license fees in order to better conform to industry practice. The definition has been revised to be third-party software royalties as well as the amortization of purchased and developed software for resale. Previously, cost of software license fees also included certain costs associated with maintaining software products that have already been developed and directing future product development efforts. These costs included human resource costs and other incidental costs related to product management, documentation, publications and education. These costs have now been reclassified to research and development and cost of maintenance and services.

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 presentation include, but are not limited to, statements regarding the: (a) expectations regarding the payments opportunities ahead of the Company; (b) the Company tracking to its full year guidance; (c) expectations and assumptions regarding 2009 sales, GAAP revenues, and GAAP operating income; (d) the Company not anticipating changes to its annual guidance; and (e) the Company anticipating that the business will achieve the lower end of the guidance range.

Forward-looking statements can be affected by the judgments and estimates underlying such assumptions or by known or unknown risks and uncertainties. Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those expressed or implied in any forward-looking statements, and our business, financial condition and results of operations could be materially and adversely affected. In addition, we disclaim any obligation to update any forward-looking statements after the date of this press release, except as required by law. 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, risks related to the global financial crisis, restrictions and other financial covenants in our credit facility, volatility and disruption of the capital and credit markets, our restructuring efforts, the restatement of our financial statements, consolidation in the financial services

industry, changes in the financial services industry, the accuracy of backlog estimates, material weaknesses in our internal control over financial reporting, our tax positions, volatility in our stock price, risks from operating internationally, increased competition, our offshore software development activities, the performance of our strategic product, BASE24-eps, the maturity of certain legacy retail payment 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 legacy retail payment products, demand for our products, our alliance with IBM, our outsourcing agreement with IBM, the complexity of our products and the risk that they may contain hidden defects, governmental regulations and industry standards, our compliance with privacy regulations, system failures, the protection of our intellectual property, future acquisitions and investments and litigation. 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 and subsequent reports on Forms 10-Q and 8-K.

ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)

		June 30,				December 31,
		2009				2008
ASSETS
Current assets
Cash and cash equivalents		$	114,403			$	112,966
Billed receivables, net of allowances of $2,490 and $1,920, respectively			70,464				77,738
Accrued receivables			11,138				17,412
Deferred income taxes			14,005				17,005
Recoverable income taxes			3,869				3,140
Prepaid expenses			11,010				9,483
Other current assets			12,672				8,800
Total current assets			237,561				246,544
Property, plant and equipment, net			17,702				19,421
Software, net			27,531				29,438
Goodwill			202,086				199,986
Other intangible assets, net			27,704				30,347
Deferred income taxes			22,685				12,899
Other assets			11,357				14,207
TOTAL ASSETS		$	546,626			$	552,842
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	17,861			$	16,047
Accrued employee compensation			19,575				19,955
Deferred revenue			107,720				99,921
Income taxes payable			820				78
Alliance agreement liability			6,784				6,195
Accrued and other current liabilities			20,524				24,068
Total current liabilities			173,284				166,264
Deferred revenue			32,383				24,296
Note payable under credit facility			75,000				75,000
Deferred income taxes			1,603				2,091
Alliance agreement noncurrent liability			30,991				37,327
Other noncurrent liabilities			29,566				34,023
Total liabilities			342,827				339,001
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding at June 30, 2009 and December 31, 2008			—				—
Common stock; $0.005 par value; 70,000,000 shares authorized; 40,821,516 shares issued at June 30, 2009 and December 31, 2008			204				204
Common stock warrants			24,003				24,003
Treasury stock, at cost, 6,828,493 and 5,909,000 shares outstanding at June 30, 2009 and December 31, 2008, respectively			(159,812	)			(147,808	)
Additional paid-in capital			304,911				302,237
Retained earnings			50,774				58,468
Accumulated other comprehensive loss			(16,281	)			(23,263	)
Total stockholders’ equity			203,799				213,841
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	546,626			$	552,842

ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)

		Three Months Ended June 30,
		2009				2008
Revenues:
Software license fees		$	27,116			$	38,214
Maintenance fees			33,346				32,867
Services			26,708				38,138
Total revenues			87,170				109,219
Expenses:
Cost of software license fees (1)			3,833				3,248
Cost of maintenance and services (1)			27,955				33,698
Research and development			19,932				21,106
Selling and marketing			15,511				22,215
General and administrative			18,865				23,481
Depreciation and amortization			4,310				4,212
Total expenses			90,406				107,960
Operating income (loss)			(3,236	)			1,259
Other income (expense):
Interest income			446				703
Interest expense			(526	)			(1,038	)
Other, net			(3,615	)			2,333
Total other income (expense)			(3,695	)			1,998
Income (loss) before income taxes			(6,931	)			3,257
Income tax expense (benefit)			(3,369	)			2,429
Net income (loss)		$	(3,562	)		$	828
Earnings (loss) per share information
Weighted average shares outstanding
Basic			34,129				34,371
Diluted			34,129				34,903
Earnings (loss) per share
Basic		$	(0.10	)		$	0.02
Diluted		$	(0.10	)		$	0.02

ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

		For the Three Months Ended June 30,
		2009				2008
Cash flows from operating activities:
Net income (loss)		$	(3,561	)		$	828
Adjustments to reconcile net income (loss) to net cash flows from operating activities
Depreciation			1,579				1,598
Amortization			4,150				3,932
Tax expense on intellectual property shift			550				590
Amortization of debt financing cost			84				84
Gain on transfer of assets under contractual obligations			(993	)			—
Gain/Loss on disposals of assets			(3	)			18
Change in fair value of interest rate swaps			328				(2,935	)
Deferred income taxes			(4,210	)			1,538
Share-based compensation expense			2,026				2,613
Tax benefit of stock options exercised			626				69
Changes in operating assets and liabilities			—				—
Billed and accrued receivables, net			20,097				(4,426	)
Other current assets			(2,172	)			1,564
Other assets			2,373				(2,002	)
Accounts payable			2,336				(286	)
Accrued employee compensation			3,531				3,586
Proceeds from alliance agreement			—				1,400
Accrued liabilities			1,966				2,891
Current income taxes			(491	)			(2,899	)
Deferred revenue			(2,716	)			(11,669	)
Other current and noncurrent liabilities			(8,899	)			87
Net cash flows from operating activities			16,601				(3,419	)
Cash flows from investing activities:
Purchases of property and equipment			(575	)			(3,154	)
Purchases of software and distribution rights			(494	)			(2,857	)
Alliance technical enablement expenditures			(1,887	)			(1,502	)
Proceeds from assets transferred under contractual obligations			1,050				—
Other			(50	)			(7	)
Net cash flows from investing activities			(1,956	)			(7,520	)
Cash flows from financing activities:
Proceeds from issuance of Common Stock			314				403
Proceeds from exercise of stock options			35				405
Excess tax benefit of stock options exercised			7				34
Purchase of Common Stock			(15,000	)			—
Payments on debt and capital leases			(358	)			(1,113	)
Net cash flows from financing activities			(15,002	)			(271	)
Effect of exchange rate fluctuations on cash			5,260				736
Net increase (decrease) in cash and cash equivalents			4,903				(10,474	)
Cash and cash equivalents, beginning of period			109,500				108,667
Cash and cash equivalents, end of period			114,403				98,193