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
Date of Report (Date of earliest event reported): February 28, 2013 (February 28, 2013)
ACI WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-25346 | 47-0772104 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
3520 Kraft Rd, Suite 300
Naples, FL 34105
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (239) 403-4600
(Former Name or Former Address, if Changed Since Last Report)
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 February 28, 2013, ACI Worldwide, Inc. (“the Company”) issued a press release announcing its financial results for the three months and full year ended December 31, 2012. 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 Operation and Financial Condition” above.
| Item 9.01. | Financial Statements and Exhibits. |
| 99.1 | Press Release dated February 28, 2013 | |
| 99.2 | Investor presentation materials dated February 28, 2013 | |
2
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, Executive Vice President, Chief Financial Officer, and Chief Accounting Officer |
Date: February 28, 2013
3
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release dated February 28, 2013 | |
| 99.2 | Investor presentation materials dated February, 28 2013 | |
4
Exhibit 99.1
|
News Release |
ACI Worldwide, Inc. Reports Financial
Results for the Quarter and Year Ended December 31, 2012
OPERATING HIGHLIGHTS
| • | Strong revenue, up 66% over prior year quarter and 45% sequentially over Q3 |
| • | Strong sales bookings across all geographies, up 81% over prior year quarter and 61% sequentially over Q3 |
| • | Non-GAAP Operating Income and Adjusted EBITDA growth rate of 108% and 95%, respectively, over prior year quarter |
| • | Full year non-GAAP diluted EPS of $2.10, an increase of 43% over prior year |
(NAPLES, FL — February 28, 2013) — ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of payment systems, today announced financial results for the period ended December 31, 2012. Management will host a conference call at 8:30 am EST to discuss these results as well as 2013 guidance. Interested persons may access a real-time audio broadcast of the teleconference at www.aciworldwide.com/investors or use the following numbers for dial in participation: US/Canada: (866) 914-7436, International/Local: +1 (817) 385-9117. Please provide your name, the conference name ACI Worldwide, Inc. and conference code 98146721. There will be a replay available for two weeks on (855) 859-2056 for US/Canada Dial-In and +1 (404) 537- 3406 for International/Local Dial-In participants.
“We closed out a transitional 2012 with record revenues, sales bookings and earnings,” said Chief Executive Officer Philip Heasley. “With the S1 integration substantially complete, we are excited to enter 2013 well positioned to accelerate our growth objectives. Further, the proposed acquisition of Online Resources will add a highly strategic electronic bill payment platform to the ACI suite of products, enabling us to be the Universal Payments Platform company”, continued Mr. Heasley.
FINANCIAL SUMMARY
Sales
Sales bookings in the quarter totaled $309 million, an increase of $138 million, or 81%, over prior year quarter. Sales net of term extensions in the quarter totaled $198 million, an increase of $81 million, or 69%, over the prior-year quarter. S1 contributed $81 million to sales in the quarter. Historical ACI sales increased $57 million, or 33%, over prior year quarter sales bookings of $171 million.
For the year 2012, sales totaled $766 million, an increase of $210 million, or 38%, as compared with $556 million last year. S1 contributed $189 million to sales for the year.
Backlog
60-month backlog increased $49 million in the quarter to $2.416 billion as compared to $2.367 billion as of September 30, 2012. 12-month backlog increased $12 million to $596 million as compared to $584 million at September 30, 2012.
Revenue
GAAP revenue increased to $224.1 million, an increase of $89.1 million, or 66%, over prior-year quarter. Historical ACI revenue increased $40.7 million, or 30%, and S1 contributed $48.4 million of revenue in the fourth quarter. Non-GAAP revenue was $227.7 million, an increase of $92.7 million, or 69%, over prior year quarter. Non-GAAP revenue excludes the impact of $3.6 million of deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements.
Revenue for the full year 2012 was $666.6 million, an increase of $201.5 million, or 43%. Historical ACI revenue increased $39.6 million, or 8.5%, and S1 contributed $161.9 million of revenue to the full year. Non-GAAP revenue was $689.0 million, an increase of $223.9 million, or 48%, over prior year.
Operating Expenses
Excluding $4.4 million and $3.2 million of S1 acquisition related one-time expenses incurred in the quarters ended December 31, 2012 and 2011, respectively, operating expenses increased $49.3 million compared to the prior year quarter primarily due to the addition of $42.7 million of S1 operating expenses, inclusive of $4.0 million of intangibles amortization. Total GAAP operating expenses for the quarter were $148.6 million.
Excluding $31.5 million and $6.7 million of S1 acquisition related one-time expenses incurred in the years ended December 31, 2012 and 2011, respectively, operating expenses increased of $168.6 million, or 43%, primarily from the addition of $159 million of S1 operating expenses, inclusive of $13.9 million of intangible amortization. Total GAAP operating expenses were $592.2 for the full year 2012. Historical ACI operating expense growth was led primarily by higher deferred cost recognition upon project go-lives.
Operating Income
Consolidated GAAP operating income was $75.5 million for the quarter. Non-GAAP operating income totaled $83.6 million, an increase of $43.4 million, or 108%, above the prior-year quarter. Non-GAAP operating income excludes the $3.6 million deferred revenue adjustment due to purchase accounting as well as the impact of $4.4 million of acquisition-related one-time expenses.
Operating income for the full year 2012 was $74.4 million, versus $66.2 million for the full year 2011. Excluding the $22.5 million deferred revenue adjustment due to purchase accounting as well as the impact of $31.5 million of acquisition-related one-time expenses, operating income increased $55.4 million, or 76%, to $128.3 million.
Adjusted EBITDA
Adjusted EBITDA increased to $101.1 million, an improvement of $49.2 million, or 95%, compared to the prior year quarter. Adjusted EBITDA excludes the impact of $3.6 million of deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements and $4.4 million of acquisition related one-time expenses.
Full year 2012 Adjusted EBITDA was $191.4 million, an increase of $78.9 million, or 70%, as compared to $112.6 million for full year 2011.
Liquidity
We ended the year with $76.3 million in cash on hand as of December 31, 2012. During the quarter, we repaid $20.7 million in refundable liability to IBM upon termination of our Alliance and $10.4 million in debt. We ended the quarter with a debt balance of $374.3 million. As of December 31, 2012, we had up to $62 million of unused borrowings under our Revolving Credit Facility.
Operating Free Cash Flow
Operating free cash flow (“OFCF”) for the quarter and full year 2012 was $23.6 million, and $23.5 million, respectively, both impacted by back-end timing of sales bookings and revenue during the year. OFCF for the quarter and full year 2011 was $30.0 million, and $67.2 million, respectively
Other Expense
Other expense for the quarter was $1.5 million, an increase of $0.5 million as compared to other expense of $1.0 million in the prior-year quarter.
Other expense for the full year 2012 was $9.1 million as compared to other expense of $1.9 million for the full year 2011. The increase was primarily the result of $8.0 million of increased interest expense due to increased borrowings partially offset by a gain of $1.6 million on the shares of S1 stock previously held as available-for-sale.
Taxes
Income tax expense in the quarter was $24.3 million, or a 33% effective tax rate, compared to income tax expense of $12.1 million, or a 34% effective tax rate in the prior year quarter. Income tax expense for the year ended December 2012 was $16.4 million, or a 25% effective tax rate, as compared to $18.5 million, or a 29% effective tax rate, for the prior year ended December 2011. The year-over-year decrease in the effective tax rate was largely due to the mix of lower domestic earnings at the U.S. tax rate offset by higher foreign income at lower tax rates.
Net Income and Diluted Earnings Per Share
Net income for the quarter ended December 31, 2012 was $49.7 million, compared to net income of $23.9 million during the same period last year.
GAAP earnings per share for the quarter was $1.24 per diluted share compared to $0.70 per diluted share during the same period last year. Excluding the tax-adjusted impact of $4.4 million of S1 acquisition related one-time expenses and the impact of $3.6 of million deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements, earnings per share was $1.37 per diluted share, versus $0.76 per share last year, up 81%.
GAAP earnings per share for the year ended December 2012 was $1.22 compared to $1.34 per diluted share for the year ended December 2011. Excluding the tax-adjusted impact of $31.5 million of S1 acquisition related one-time expenses and the impact of $22.5 of million deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements, earnings per share was $2.10 per diluted share, versus $1.47 per share last year, up 43%.
Weighted Average Shares Outstanding
Total diluted weighted average shares outstanding were 39.9 million for the year ended December 31, 2012 as compared to 34.2 million shares outstanding for the year ended December 31, 2011. The number of weighted average shares outstanding was increased by 5.9 million due to the issuance of shares related to the acquisition of S1 Corporation.
2013 Guidance
ACI is guiding on three metrics for calendar year 2013. On an organic basis, we currently expect to achieve revenue in a range of $765-$785 million, operating income of $150-$160 million and Adjusted EBITDA of $230-$240 million.
End-
About ACI Worldwide
ACI Worldwide powers electronic payments and banking for more than 1,750 financial institutions, retailers and processors around the world. ACI software enables $13 trillion in payments each day, processing transactions for more than 250 of the leading global retailers, and 18 of the world’s 20 largest banks. Through our integrated suite of software products and hosted services, we deliver a broad range of solutions for payments processing, card and merchant management, online banking, mobile, branch and voice banking, fraud detection, and trade finance. To learn more about ACI and the reasons why our solutions are trusted globally, please visit www.aciworldwide.com. You can also find us on www.paymentsinsights.com or on Twitter @ACI_Worldwide.
For more information contact:
John Kraft, Vice President, Investor Relations & Strategic Analysis
ACI Worldwide
239-403-4627
john.kraft@aciworldwide.com
Non-GAAP Financial Measures
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 DECEMBER 31, | ||||||||||||||||||||||||||||||||
| 2012 | 2012 | 2011 | 2011 | |||||||||||||||||||||||||||||
| GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | $ Diff | % Diff | |||||||||||||||||||||||||
| Revenues: (2) |
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| Total revenues |
$ | 224,095 | $ | 3,635 | $ | 227,730 | $ | 135,037 | $ | — | $ | 135,037 | $ | 92,693 | 69 | % | ||||||||||||||||
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| Expenses: |
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| Cost of software license fees |
6,968 | — | 6,968 | 4,077 | — | 4,077 | 2,891 | 71 | % | |||||||||||||||||||||||
| Cost of maintenance, services and hosting fees |
53,502 | — | 53,502 | 27,445 | — | 27,445 | 26,057 | 95 | % | |||||||||||||||||||||||
| Research and development |
33,586 | — | 33,586 | 20,781 | — | 20,781 | 12,805 | 62 | % | |||||||||||||||||||||||
| Selling and marketing |
22,730 | — | 22,730 | 20,023 | — | 20,023 | 2,707 | 14 | % | |||||||||||||||||||||||
| General and administrative (3) |
21,616 | (4,430 | ) | 17,186 | 20,191 | (3,200 | ) | 16,991 | 195 | 1 | % | |||||||||||||||||||||
| Depreciation and amortization |
10,158 | — | 10,158 | 5,477 | — | 5,477 | 4,681 | 85 | % | |||||||||||||||||||||||
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| Total expenses |
148,560 | (4,430 | ) | 144,130 | 97,994 | (3,200 | ) | 94,794 | 49,336 | 52 | % | |||||||||||||||||||||
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| Operating income |
75,535 | 8,065 | 83,600 | 37,043 | 3,200 | 40,243 | 43,357 | 108 | % | |||||||||||||||||||||||
| Other income (expense): |
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| Interest income |
209 | — | 209 | 676 | — | 676 | (467 | ) | -69 | % | ||||||||||||||||||||||
| Interest expense |
(3,031 | ) | — | (3,031 | ) | (1,008 | ) | — | (1,008 | ) | (2,023 | ) | 201 | % | ||||||||||||||||||
| Other, net |
1,298 | — | 1,298 | (714 | ) | — | (714 | ) | 2,012 | -282 | % | |||||||||||||||||||||
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| Total other income (expense) |
(1,524 | ) | — | (1,524 | ) | (1,046 | ) | — | (1,046 | ) | (478 | ) | 46 | % | ||||||||||||||||||
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| Income before income taxes |
74,011 | 8,065 | 82,076 | 35,997 | 3,200 | 39,197 | 42,879 | 109 | % | |||||||||||||||||||||||
| Income tax expense (4) |
24,347 | 2,823 | 27,170 | 12,106 | 1,120 | 13,226 | 13,944 | 105 | % | |||||||||||||||||||||||
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| Net income |
$ | 49,664 | $ | 5,242 | $ | 54,906 | $ | 23,891 | $ | 2,080 | $ | 25,971 | $ | 28,935 | 111 | % | ||||||||||||||||
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| Depreciation and amortization |
13,948 | — | 13,948 | 7,035 | — | 7,035 | 6,913 | 98 | % | |||||||||||||||||||||||
| Stock-based compensation |
3,525 | — | 3,525 | 4,563 | — | 4,563 | (1,038 | ) | -23 | % | ||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 93,008 | $ | 8,065 | $ | 101,073 | $ | 48,641 | $ | 3,200 | $ | 51,841 | $ | 49,232 | 95 | % | ||||||||||||||||
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| Earnings per share information |
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| Weighted average shares outstanding |
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| Basic |
39,393 | 39,393 | 39,393 | 33,564 | 33,564 | 33,564 | ||||||||||||||||||||||||||
| Diluted |
40,055 | 40,055 | 40,055 | 34,232 | 34,232 | 34,232 | ||||||||||||||||||||||||||
| Earnings per share |
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| Basic |
$ | 1.26 | $ | 0.13 | $ | 1.39 | $ | 0.71 | $ | 0.06 | $ | 0.77 | $ | 0.62 | 80 | % | ||||||||||||||||
| Diluted |
$ | 1.24 | $ | 0.13 | $ | 1.37 | $ | 0.70 | $ | 0.06 | $ | 0.76 | $ | 0.61 | 81 | % | ||||||||||||||||
| (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 $3.6 million of deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements. |
| (3) | One-time expense related to the acquisition of S1, including, $1.3 million for facility closures, $0.2 million for employee related actions, and $3.0 million for other professional fees in 2012 and $3.2 million of professional fees in 2011. |
| (4) | Adjustments tax effected at 35%. |
ACI Worldwide, Inc.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(unaudited and in thousands, except per share data)
| FOR THE YEARS ENDED DECEMBER 31, | ||||||||||||||||||||||||||||||||
| 2012 | 2012 | 2011 | 2011 | |||||||||||||||||||||||||||||
| GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | $ Diff | % Diff | |||||||||||||||||||||||||
| Revenues: (2) |
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| Total revenues |
$ | 666,579 | $ | 22,461 | $ | 689,040 | $ | 465,095 | $ | — | $ | 465,095 | $ | 223,945 | 48 | % | ||||||||||||||||
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| Expenses: |
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| Cost of software license fees |
23,592 | — | 23,592 | 15,418 | — | 15,418 | 8,174 | 53 | % | |||||||||||||||||||||||
| Cost of maintenance, services and hosting fees |
202,052 | — | 202,052 | 118,866 | — | 118,866 | 83,186 | 70 | % | |||||||||||||||||||||||
| Research and development |
133,759 | — | 133,759 | 90,176 | — | 90,176 | 43,583 | 48 | % | |||||||||||||||||||||||
| Selling and marketing |
87,054 | — | 87,054 | 80,922 | — | 80,922 | 6,132 | 8 | % | |||||||||||||||||||||||
| General and administrative (3) |
108,747 | (31,464 | ) | 77,283 | 71,425 | (6,700 | ) | 64,725 | 12,558 | 19 | % | |||||||||||||||||||||
| Depreciation and amortization |
37,003 | — | 37,003 | 22,057 | — | 22,057 | 14,946 | 68 | % | |||||||||||||||||||||||
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| Total expenses |
592,207 | (31,464 | ) | 560,743 | 398,864 | (6,700 | ) | 392,164 | 168,579 | 43 | % | |||||||||||||||||||||
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| Operating income |
74,372 | 53,925 | 128,297 | 66,231 | 6,700 | 72,931 | 55,366 | 76 | % | |||||||||||||||||||||||
| Other income (expense): |
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| Interest income |
914 | — | 914 | 1,315 | — | 1,315 | (401 | ) | -30 | % | ||||||||||||||||||||||
| Interest expense |
(10,417 | ) | — | (10,417 | ) | (2,431 | ) | — | (2,431 | ) | (7,986 | ) | 329 | % | ||||||||||||||||||
| Other, net |
399 | — | 399 | (802 | ) | — | (802 | ) | 1,201 | -150 | % | |||||||||||||||||||||
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| Total other income (expense) |
(9,104 | ) | — | (9,104 | ) | (1,918 | ) | — | (1,918 | ) | (7,186 | ) | 375 | % | ||||||||||||||||||
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| Income before income taxes |
65,268 | 53,925 | 119,193 | 64,313 | 6,700 | 71,013 | 48,180 | 68 | % | |||||||||||||||||||||||
| Income tax expense (4) |
16,422 | 18,874 | 35,296 | 18,461 | 2,310 | 20,771 | 14,525 | 70 | % | |||||||||||||||||||||||
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| Net income |
$ | 48,846 | $ | 35,051 | $ | 83,897 | $ | 45,852 | $ | 4,390 | $ | 50,242 | $ | 33,655 | 67 | % | ||||||||||||||||
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| Depreciation and amortization |
50,781 | — | 50,781 | 28,378 | — | 28,378 | 22,403 | 79 | % | |||||||||||||||||||||||
| Stock-based compensation (5) |
15,186 | (2,822 | ) | 12,364 | 11,255 | — | 11,255 | 1,109 | 10 | % | ||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 140,339 | $ | 51,103 | $ | 191,442 | $ | 105,864 | $ | 6,700 | $ | 112,564 | $ | 78,878 | 70 | % | ||||||||||||||||
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| Earnings per share information |
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| Weighted average shares outstanding |
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| Basic |
38,696 | 38,696 | 38,696 | 33,457 | 33,457 | 33,457 | ||||||||||||||||||||||||||
| Diluted |
39,905 | 39,905 | 39,905 | 34,195 | 34,195 | 34,195 | ||||||||||||||||||||||||||
| Earnings per share |
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| Basic |
$ | 1.26 | $ | 0.91 | $ | 2.17 | $ | 1.37 | $ | 0.13 | $ | 1.50 | $ | 0.67 | 44 | % | ||||||||||||||||
| Diluted |
$ | 1.22 | $ | 0.88 | $ | 2.10 | $ | 1.34 | $ | 0.13 | $ | 1.47 | $ | 0.63 | 43 | % | ||||||||||||||||
| (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 $22.5 million of deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements. |
| (3) | One-time expense related to the acquisition of S1, including, $14 million for employee related actions, $4.9 million for facility closures, $3.2 million for IT exit costs and $9.3 million for other professional fees. |
| (4) | Adjustments tax effected at 35%. |
| (5) | Accelerated stock compensation expense for terminated employees related to the S1 acquisition. |
To supplement our financial results presented on a GAAP basis, we use the non-GAAP measure indicated in the tables, which exclude certain business combination accounting entries and expenses related to the acquisition of S1, 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 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 (loss) plus deferred revenue that would have been recognized in the normal course of business by S1 if not for GAAP purchase accounting requirements and one-time expense related to the acquisition of S1. Non-GAAP operating income should be considered in addition to, rather than as a substitute for, operating income. |
| • | Adjusted EBITDA: net income (loss) 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 if not for GAAP purchase accounting requirements and one-time expense related to the acquisition of S1. 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 net after-tax payments associated with employee-related actions and facility disclosures, net after-tax payments associated with IBM IT outsourcing transition, 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.
| Table 1: Reconciliation of Operating Free Cash Flow | Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
| (millions) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Net cash provided by operating activities |
$ | 3.5 | $ | 31.2 | ($ | 9.3 | ) | $ | 83.5 | |||||||
| Net after-tax payments associated with employee-related actions |
0.4 | — | 6.2 | — | ||||||||||||
| Net after-tax payments associated with lease terminations |
1.9 | — | 2.7 | — | ||||||||||||
| Net after-tax payments associated with S1 related transaction costs |
— | 3.3 | 8.8 | 3.7 | ||||||||||||
| Net after-tax payments associated with cash settlement of S1 options |
— | — | 10.2 | |||||||||||||
| Net after-tax payments associated with IBM IT Outsourcing Transition |
0.2 | 0.2 | 0.9 | 0.9 | ||||||||||||
| Refund of IBM Alliance Liability |
20.7 | — | 20.7 | — | ||||||||||||
| Less capital expenditures |
(3.1 | ) | (3.1 | ) | (16.7 | ) | (19.0 | ) | ||||||||
| Less Alliance technical enablement expenditures |
— | (1.6 | ) | — | (1.9 | ) | ||||||||||
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| Operating Free Cash Flow |
$ | 23.6 | $ | 30.0 | $ | 23.5 | $ | 67.2 | ||||||||
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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 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.
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) expectations that our growth objectives will accelerate in 2013 partly as a result of the substantial completion of the S1 integration; (ii) expectations that the addition of Online Resources’ electronic bill payment platform (through our pending acquisition of Online Resources Corporation) will enable us to be recognized as the “universal payments platform company”; and (iii) expectations regarding 2013 financial guidance related to revenue, operating income and adjusted EBITDA.
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, 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 proposed transaction with Online Resources, 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.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except share and per share amounts)
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 76,329 | $ | 197,098 | ||||
| Billed receivables, net of allowances of $8,117 and $4,843, respectively |
176,313 | 93,355 | ||||||
| Accrued receivables |
41,008 | 6,693 | ||||||
| Deferred income taxes, net |
34,342 | 25,944 | ||||||
| Recoverable income taxes |
5,572 | — | ||||||
| Prepaid expenses |
16,746 | 9,454 | ||||||
| Other current assets |
5,816 | 9,320 | ||||||
|
|
|
|
|
|||||
| Total current assets |
356,126 | 341,864 | ||||||
|
|
|
|
|
|||||
| Property and equipment, net |
41,286 | 20,479 | ||||||
| Software, net |
129,314 | 22,598 | ||||||
| Goodwill |
501,141 | 214,144 | ||||||
| Other intangible assets, net |
127,900 | 18,343 | ||||||
| Deferred income taxes, net |
63,370 | 13,466 | ||||||
| Other noncurrent assets |
31,749 | 33,748 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 1,250,886 | $ | 664,642 | ||||
|
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|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 33,926 | $ | 11,532 | ||||
| Accrued employee compensation |
35,194 | 27,955 | ||||||
| Current portion of Term Credit Facility |
17,500 | — | ||||||
| Deferred revenue |
139,863 | 132,995 | ||||||
| Income taxes payable |
3,542 | 10,427 | ||||||
| Deferred income taxes |
174 | — | ||||||
| Alliance agreement liability |
— | 20,667 | ||||||
| Accrued and other current liabilities |
36,400 | 23,481 | ||||||
|
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|
|
|
|||||
| Total current liabilities |
266,599 | 227,057 | ||||||
|
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|
|
|
|||||
| Noncurrent liabilities |
||||||||
| Deferred revenue |
51,519 | 32,721 | ||||||
| Note payable under Term Credit Facility |
168,750 | — | ||||||
| Note payable under Revolving Credit Facility |
188,000 | 75,000 | ||||||
| Deferred income taxes |
14,940 | — | ||||||
| Other noncurrent liabilities |
26,721 | 12,534 | ||||||
|
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|
|
|
|||||
| Total liabilities |
716,529 | 347,312 | ||||||
|
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|
|
|
|||||
| Stockholders’ equity |
||||||||
| Preferred stock |
— | — | ||||||
| Common stock |
232 | 204 | ||||||
| Common stock warrants |
— | 24,003 | ||||||
| Treasury stock |
(186,784 | ) | (163,411 | ) | ||||
| Additional paid-in capital |
534,953 | 322,654 | ||||||
| Retained earnings |
199,987 | 151,141 | ||||||
| Accumulated other comprehensive loss |
(14,031 | ) | (17,261 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
534,357 | 317,330 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 1,250,886 | $ | 664,642 | ||||
|
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|
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ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
| For the Three Months Ended December 31, | ||||||||
| 2012 | 2011 | |||||||
| Revenues: |
||||||||
| Software license fees |
$ | 94,731 | $ | 60,762 | ||||
| Maintenance fees |
58,862 | 39,164 | ||||||
| Services |
38,985 | 21,956 | ||||||
| Software hosting fees |
31,517 | 13,155 | ||||||
|
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|
|
|||||
| Total revenues |
224,095 | 135,037 | ||||||
|
|
|
|
|
|||||
| Expenses: |
||||||||
| Cost of software license fees (1) |
6,968 | 4,077 | ||||||
| Cost of maintenance, services and hosting fees (1) |
53,502 | 27,445 | ||||||
| Research and development |
33,586 | 20,781 | ||||||
| Selling and marketing |
22,730 | 20,023 | ||||||
| General and administrative |
21,616 | 20,191 | ||||||
| Depreciation and amortization |
10,158 | 5,477 | ||||||
|
|
|
|
|
|||||
| Total expenses |
148,560 | 97,994 | ||||||
|
|
|
|
|
|||||
| Operating income |
75,535 | 37,043 | ||||||
| Other income (expense): |
||||||||
| Interest income |
209 | 676 | ||||||
| Interest expense |
(3,031 | ) | (1,008 | ) | ||||
| Other, net |
1,298 | (714 | ) | |||||
|
|
|
|
|
|||||
| Total other income (expense) |
(1,524 | ) | (1,046 | ) | ||||
|
|
|
|
|
|||||
| Income before income taxes |
74,011 | 35,997 | ||||||
| Income tax expense |
24,347 | 12,106 | ||||||
|
|
|
|
|
|||||
| Net income |
$ | 49,664 | $ | 23,891 | ||||
|
|
|
|
|
|||||
| Earnings per share information |
||||||||
| Weighted average shares outstanding |
||||||||
| Basic |
39,393 | 33,564 | ||||||
| Diluted |
40,055 | 34,232 | ||||||
| Earnings per share |
||||||||
| Basic |
$ | 1.26 | $ | 0.71 | ||||
| Diluted |
$ | 1.24 | $ | 0.70 | ||||
| (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
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
| For the Three Months Ended December 31, | ||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 49,664 | $ | 23,891 | ||||
| Adjustments to reconcile net income to net cash flows from operating activities |
||||||||
| Depreciation |
3,596 | 2,012 | ||||||
| Amortization |
10,352 | 5,023 | ||||||
| Deferred income taxes |
12,542 | 415 | ||||||
| Stock-based compensation expense |
3,525 | 4,563 | ||||||
| Excess tax benefit of stock options exercised |
(165 | ) | (553 | ) | ||||
| Other |
852 | 419 | ||||||
| Changes in operating assets and liabilities, net of impact of acquisitions: |
||||||||
| Billed and accrued receivables, net |
(48,003 | ) | (29,977 | ) | ||||
| Other current and noncurrent assets |
2,092 | (1,269 | ) | |||||
| Accounts payable |
5,965 | (305 | ) | |||||
| Accrued employee compensation |
(2,737 | ) | 1,600 | |||||
| Accrued liabilities |
2,311 | 2,327 | ||||||
| Alliance liability |
(20,667 | ) | — | |||||
| Current income taxes |
5,886 | 12,725 | ||||||
| Deferred revenue |
(21,470 | ) | 10,625 | |||||
| Other current and noncurrent liabilities |
(266 | ) | (269 | ) | ||||
|
|
|
|
|
|||||
| Net cash flows from operating activities |
3,477 | 31,227 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(3,018 | ) | (1,358 | ) | ||||
| Purchases of software and distribution rights |
(54 | ) | (1,719 | ) | ||||
| Alliance technical enablement expenditures |
— | (1,600 | ) | |||||
|
|
|
|
|
|||||
| Net cash flows from investing activities |
(3,072 | ) | (4,677 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
398 | 305 | ||||||
| Proceeds from exercises of stock options |
1,671 | 1,698 | ||||||
| Excess tax benefit of stock options exercised |
165 | 553 | ||||||
| Repurchase of restricted stock for tax withholdings |
(331 | ) | (64 | ) | ||||
| Proceeds from revolving portion of credit agreement |
— | 75,000 | ||||||
| Repayment of interim revolving credit facility |
— | (75,000 | ) | |||||
| Repayment of revolver portion of credit agreement |
(6,000 | ) | ||||||
| Repayment of term portion of credit agreement |
(4,375 | ) | — | |||||
| Payments for debt issuance costs |
— | (11,789 | ) | |||||
| Payments on debt and capital leases |
(1,332 | ) | (550 | ) | ||||
|
|
|
|
|
|||||
| Net cash flows from financing activities |
(9,804 | ) | (9,847 | ) | ||||
|
|
|
|
|
|||||
| Effect of exchange rate fluctuations on cash |
(1,954 | ) | 695 | |||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
(11,353 | ) | 17,398 | |||||
| Cash and cash equivalents, beginning of period |
87,682 | 179,700 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 76,329 | $ | 197,098 | ||||
|
|
|
|
|
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| December 31, 2012 Quarterly and Year End Results Presentation February 28, 2013 ACI's software underpins electronic payments throughout retail and wholesale banking, and commerce all the time. Exhibit 99.2 |
| 2 Private Securities Litigation Reform Act of 1995 Safe Harbor For Forward-Looking Statements This presentation contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. A discussion of these forward-looking statements and risk factors that may affect them is set forth at the end of this presentation. The Company assumes no obligation to update any forward-looking statement in this presentation, except as required by law. |
| Annual Overview Phil Heasley Chief Executive Officer |
| 2012 Year in Review 4 Closed S1 acquisition in Q1 and removed $48 million of cost from combined business Integration substantially complete Acquired Distra Provides key IP that drives the innovative Universal Payments Platform strategy that transforms how payment services are taken to market and how customers will use them to their competitive advantage Repurchased 1.4 million shares for approximately $58 million Finished year with strong Q4 Strong revenue growth driven by project completions converting revenue from backlog Strong growth in operating income and adjusted EBITDA Sales bookings up 81% over prior year quarter, up 61% sequentially over Q3 Sales bookings and strong pipeline providing forward momentum into 2013 Resolved potential dilution from IBM warrants through settlement Repurchased warrants exercisable for 2.5 million shares Announced the acquisition of Online Resources Corporation Expect to close in Q1 2013 |
| Financial Review Scott Behrens Chief Financial Officer |
| 6 Key Takeaways from the Quarter Strong Q4 Sales Bookings Strong sales growth, up $138 million or 81% over prior year quarter, up 61% sequentially Historical ACI sales and sales net of term extensions up 33% and 9%, respectively over prior year quarter S1 Acquisition contributed approximately $80.8 million of sales to the quarter Sales, net of term extensions, increased $81 million or 69% over prior year quarter Solid Backlog Growth led by Strong Sales 60-month backlog growth of $49 million 12-month backlog growth of $12 million Strong Revenue Quarter Strong growth in Historical ACI revenue, up $40.7 million or 30% S1 contributed $48.4 million in revenue for the quarter Q4 GAAP revenue impacted by $3.6 million of deferred revenue haircut Operating Expense S1 contributed $42.7 million in expenses for the period Historical ACI expenses higher compared to prior year quarter primarily from higher deferred cost recognition from project go-lives $4.4 million of one-time S1 related integration expenses Non-GAAP Operating Income & Adjusted EBITDA Non-GAAP Operating Income increased $43.4 million or 108% over prior year quarter Non-GAAP Adjusted EBITDA increased $49.2 million or 95% over prior year quarter |
| Key Takeaways from the Year Strong Revenue Growth Strong growth in Historical ACI revenue, up $39.6 million or 8.5% S1 contributed $161.9 million in revenue for the year Full year GAAP revenue impacted by $22.5 million of deferred revenue haircut Operating Expense S1 contributed $159.0 million in expenses for the period Historical ACI expenses higher primarily from higher deferred cost recognition from project go-lives $31.5 million of one-time S1 related acquisition and integration expenses Non-GAAP Operating Income & Adjusted EBITDA Non-GAAP Operating Income increased $55.4 million or 76% over prior year Non-GAAP Adjusted EBITDA increased $78.9 million or 70% over prior year Debt & Liquidity Ended the year with $76.3 million in cash Repaid $20.7 million refundable liability to IBM upon termination of Alliance in December 2012 Full year operating free cash flow impacted primarily by back-end timing of sales bookings and revenue during the year and corresponding increase in receivables Ended year with $176.3 million of accounts receivable representing 75 days revenue outstanding (vs. 62 days revenue outstanding at the end of the prior year) As of December 31, 2012, debt outstanding of $374.3 million Remaining repurchase authorization now 1.8 million shares 7 |
| 8 2013 Outlook Sales, net of term extension, growth in the high single digits to low double digits Revenue growth in mid to high single digits Revenue and margin phasing by quarter consistent with 2012 Operating Income margin of 20% Adjusted EBITDA margin of 30% Depreciation and amortization expected to approximate $64 million Non-cash compensation expense expected to approximate $15 million Diluted Share Count to approximate 40 million (excluding future share buy-back activity) ($ in Millions) |
| 9 ACI / ORCC - Transaction Update Tender offer initiated on Friday, February 8th Tender offer remains open for 20 business days ORCC's Board of Directors unanimously approved the transaction and recommend shareholders to tender their shares ORCC's largest shareholder and its CEO (combined ~22% ownership) have entered into support agreements to tender shares Received regulatory HSR approval ahead of schedule Anticipated closing the transaction in mid-March 2013 Integration planning in process Annual cost synergies of $19.5 million to be actioned within 60 days of close Additional cost synergies, including data center and facilities consolidation, to be provided at a later date Status and progress of the ORCC integration will be updated quarterly |
| Appendix |
| 11 Historic Sales By Quarter 2010-2012 |
| Sales By Region by Geography and Type 12 |
| Backlog as a Contributor of Quarterly Revenue Backlog from monthly recurring revenues and project go-lives continues to drive current quarter GAAP revenue Revenue from current quarter sales consistent with prior quarters 13 |
| Operating Free Cash Flow ($ millions) 14 * Tax effected at 35% |
| 60-Month Backlog ($ millions) 15 |
| Revenues by Channel ($ millions) 16 |
| Monthly Recurring Revenue ($ millions) 17 |
| Deferred Revenue and Expense ($ millions) 18 |
| Non-Cash Compensation, Acquisition Intangibles and Software, and Acquisition-Related Expenses 19 |
| Other Income / Expense ($ millions) 20 |
| Adjusted EBITDA 21 |
| Non-GAAP Operating Income 22 |
| Non-GAAP Financial Measures To supplement our financial results presented on a GAAP basis, we use the non-GAAP measure indicated in the tables, which exclude certain business combination accounting entries and expenses related to the acquisition of S1, 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 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 (loss) plus deferred revenue that would have been recognized in the normal course of business by S1 if not for GAAP purchase accounting requirements and one-time expense related to the acquisition of S1. Non-GAAP operating income should be considered in addition to, rather than as a substitute for, operating income. Adjusted EBITDA: net income (loss) 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 if not for GAAP purchase accounting requirements and one-time expense related to the acquisition of S1. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, operating income. 23 |
| Non-GAAP Financial Measures ACI is also presenting operating free cash flow, which is defined as net cash provided by operating activities, plus net after-tax payments associated with employee-related actions and facility disclosures, net after-tax payments associated with IBM IT outsourcing transition, 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. 24 |
| Non-GAAP Financial Measures 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. 25 |
| Forward-Looking Statements This presentation 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: • expectations that our growth objectives will accelerate in 2013 partly as a result of the substantial completion of the S1 integration; expectations that the addition of Online Resources' electronic bill payment platform (through our pending acquisition of Online Resources Corporation) will enable us to be recognized as the "universal payments platform company"; and expectations regarding 2013 financial guidance related to revenue, operating income and adjusted EBITDA. 26 |
| Forward-Looking Statements 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, 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 proposed transaction with Online Resources, 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. 27 |
| ACI's software underpins electronic payments throughout retail and wholesale banking, and commerce all the time, without fail. www.aciworldwide.com |