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): July 31, 2014 (July 31, 2014)

 

 

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))

 

 

 

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Item 2.02.

Results of Operation and Financial Condition.

On July 31, 2014, ACI Worldwide, Inc. (“the Company”) issued a press release announcing its financial results for the period ended June 30, 2014. 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 July 31, 2014
99.2		Investor presentation materials dated July 31, 2014

 

2

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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.

 

Date: July 31, 2014

 

3

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release dated July 31, 2014
99.2		Investor presentation materials dated July 31, 2014

 

4

Exhibit 99.1

 

News Release

ACI Worldwide, Inc. Reports Financial

Results for the Quarter Ended June 30, 2014

HIGHLIGHTS

 

•

SNET bookings of $150 million, up 16% from Q2 last year

 

•

Non-GAAP revenue of $255 million, up 23% from Q2 last year

 

•

Operating free cash flow of $28 million, up 29% from Q2 last year

 

•

Non-GAAP operating income of $31 million, up 76% from Q2 last year

 

•

Adjusted EBITDA of $56 million, up 46% from Q2 last year

 

•

Reiterating organic 2014 financial guidance

NAPLES, FLA — July 31, 2014 — ACI Worldwide (NASDAQ: ACIW), a leading international provider of electronic payment and banking systems, today announced financial results for the period ended June 30, 2014. Management will host a conference call at 8:30 am ET to discuss these results as well as 2014 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 72317567. 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.

“ACI had a strong second quarter, driven by continued market interest in our Universal Payments solutions and solid execution company wide,” commented Phil Heasley, President and CEO, ACI Worldwide. “We expect the addition of Retail Decisions to continue this momentum and we remain optimistic regarding the remainder of 2014 and beyond.”

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FINANCIAL SUMMARY

Financial Results for Q2

Non-GAAP revenue in Q2 was $255 million, an increase of $47 million, or 23%, above the prior year quarter. Excluding the Official Payments contribution of $39 million, organic revenue grew 4%.

New sales bookings, net of term extensions (SNET) increased 16% compared to the prior year quarter, or 14% excluding the contribution from Official Payments. Our 12-month backlog increased by $2 million from last quarter to $885 million, while our 60-month backlog increased by $14 million from last quarter to $3.92 billion.

Non-GAAP operating income was $31 million for the quarter, versus $17 million in the prior year quarter. Adjusted EBITDA of $56 million grew 46%, or $18 million above last year’s $38 million. Net EBITDA margin in Q2 2014 was 25% versus 19% margin last year, after adjusting for $34 million and $7 million of pass through interchange fees in Q2 2014 and Q2 2013, respectively.

Q2 GAAP net income was $11 million, or $0.10 per diluted share, versus net income of $2 million, or $0.02 per diluted share in Q2 2013. The variance was primarily driven by higher revenues and cost containment.

We ended the second quarter with $55 million in cash on hand. Operating free cash flow (OFCF) for the quarter was $28 million, up from $22 million in Q2 of last year. The quarter ended with a debt balance of $753 million, down from $779 million in Q1.

Reiterating Guidance

Excluding contribution from the pending acquisition of Retail Decisions (ReD), we continue to expect to generate non-GAAP revenue in a range of $1.06 to $1.08 billion for the full year. We expect non-GAAP revenue of $250 to $260 million in the third quarter. Adjusted EBITDA expectations remain in a range of $290 to $300 million. This guidance excludes approximately $15 million of significant integration-related expenses and includes $2 million for the deferred revenue adjustments. If closed in the middle of the third quarter, we expect the acquisition of ReD will generate approximately $18 million in revenue and $4 million in adjusted EBITDA for the remainder of 2014 and we will update our financial guidance upon closing. Lastly, our full year 2014 net new sales bookings growth is expected to be in the upper single digit range.

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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.

For more information contact:

John Kraft, Vice President, Investor Relations & Strategic Analysis

ACI Worldwide

239-403-4627

john.kraft@aciworldwide.com

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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 (loss) 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 (loss).

 

•

Adjusted EBITDA: net income (loss) plus income tax expense (benefit), 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 (loss).

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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 closures, net after-tax payments associated with significant transaction-related costs, net after-tax payments associated with IBM IT outsourcing transition and termination, 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.

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•

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.

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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) interest in our Universal Payments solutions; (ii) expectations regarding the acquisition of Retail Decisions; (iii) optimism regarding the remainder of 2014 and beyond; (iv) expectations regarding revenue, adjusted EBITDA, and sales, net of term guidance in 2014; (v) expectations regarding Q3 2014 revenue; and (vi) expectations relating to the timing of the close of Retail Decisions and the revenue and EBITDA contributions during the remainder of 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 and Official Payments, 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

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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

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands, except share and per share amounts)

 

		June 30,				December 31,
		2014				2013
ASSETS
Current assets
Cash and cash equivalents		$	54,982			$	95,059
Receivables, net of allowances of $4,722 and $4,459, respectively			206,901				203,575
Deferred income taxes, net			74,247				47,593
Recoverable income taxes			3,009				2,258
Prepaid expenses			21,580				22,549
Other current assets			29,884				65,328
Total current assets			390,603				436,362
Property and equipment, net			54,731				57,347
Software, net			191,465				191,468
Goodwill			668,566				669,217
Intangible assets, net			224,505				237,693
Deferred income taxes, net			41,740				48,852
Other noncurrent assets			42,594				40,912
TOTAL ASSETS		$	1,614,204			$	1,681,851
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	41,235			$	43,658
Employee compensation			36,665				35,623
Current portion of long-term debt			59,141				47,313
Deferred revenue			141,388				122,045
Income taxes payable			2,625				1,192
Deferred income taxes, net			691				753
Other current liabilities			55,639				95,016
Total current liabilities			337,384				345,600
Noncurrent liabilities
Deferred revenue			48,229				45,656
Long-term debt			693,500				708,070
Deferred income taxes, net			10,078				11,000
Other noncurrent liabilities			22,347				27,831
Total liabilities			1,111,538				1,138,157
Commitments and contingencies
Stockholders’ equity
Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding at June 30, 2014 and December 31, 2013			—				—
Common stock; $0.005 par value; 280,000,000 shares authorized; 139,820,388 shares issued at June 30, 2014 and December 31, 2013			698				698
Additional paid-in capital			547,201				542,697
Retained earnings			269,317				263,855
Treasury stock, at cost, 25,736,694 and 23,255,421 shares at June 30, 2014 and December 31, 2013, respectively			(300,454	)			(240,241	)
Accumulated other comprehensive loss			(14,096	)			(23,315	)
Total stockholders’ equity			502,666				543,694
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	1,614,204			$	1,681,851

Note: All references to share amounts have been retroactively adjusted to reflect the July 10, 2014 three-for-one stock split for all periods presented.

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ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)

 

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2014				2013				2014				2013
Revenues
License		$	61,377			$	53,714			$	97,079			$	95,070
Maintenance			62,309				57,830				124,808				116,464
Services			24,991				26,964				47,579				50,893
Hosting			106,131				67,322				206,815				105,400
Total revenues			254,808				205,830				476,281				367,827
Operating expenses
Cost of license (1)			6,897				6,169				12,633				12,087
Cost of maintenance, services and hosting (1)			112,595				82,573				220,482				144,444
Research and development			38,876				38,391				76,332				75,540
Selling and marketing			28,007				27,538				55,916				52,612
General and administrative			24,682				26,147				49,798				51,184
Depreciation and amortization			17,010				13,490				34,088				24,447
Total operating expenses			228,067				194,308				449,249				360,314
Operating income			26,741				11,522				27,032				7,513
Other income (expense)
Interest expense			(9,329	)			(6,053	)			(18,504	)			(9,950	)
Interest income			135				211				334				342
Other, net			(3,901	)			(1,519	)			(4,958	)			1,646
Total other income (expense)			(13,095	)			(7,361	)			(23,128	)			(7,962	)
Income (loss) before income taxes			13,646				4,161				3,904				(449	)
Income tax expense (benefit)			2,409				2,280				(1,558	)			(164	)
Net income (loss)		$	11,237			$	1,881			$	5,462			$	(285	)
Income (loss) per common share
Basic		$	0.10			$	0.02			$	0.05			$	(0.00	)
Diluted		$	0.10			$	0.02			$	0.05			$	(0.00	)
Weighted average common shares outstanding
Basic			113,907				119,505				114,663				118,781
Diluted			115,977				121,502				116,812				118,781

 

(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.

Note: 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.

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ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

		For the Three Months Ended June 30,
		2014				2013
Cash flows from operating activities:
Net income		$	11,237			$	1,881
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation			5,234				4,200
Amortization			15,309				12,720
Amortization of deferred debt issuance costs			1,332				1,556
Deferred income taxes			(857	)			(680	)
Stock-based compensation expense			4,416				3,774
Excess tax benefit of stock options exercised			(312	)			(373	)
Other			734				3,992
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables			(6,156	)			(8,643	)
Accounts payable			(1,723	)			(1,516	)
Accrued employee compensation			4,239				4,269
Current income taxes			(1,438	)			(498	)
Deferred revenue			(6,559	)			5,799
Other current and noncurrent assets and liabilities			7,610				(3,777	)
Net cash flows from operating activities			33,066				22,704
Cash flows from investing activities:
Purchases of property and equipment			(4,091	)			(2,809	)
Purchases of software and distribution rights			(3,411	)			(1,814	)
Other			(1,500	)			—
Net cash flows from investing activities			(9,002	)			(4,623	)
Cash flows from financing activities:
Proceeds from issuance of common stock			686				463
Proceeds from exercises of stock options			1,230				1,719
Excess tax benefit of stock options exercised			312				373
Repurchases of common stock			—				(12,068	)
Repurchase of restricted stock and performance shares for tax withholdings			(30	)			(54	)
Proceeds from revolving credit facility			10,000				—
Repayment of revolving credit facility			(27,000	)			—
Repayment of term portion of credit agreement			(8,871	)			(9,375	)
Payments on other debt and capital leases			(6,305	)			(3,379	)
Payment for debt issuance costs			—				(264	)
Distribution to noncontrolling interest			(1,391	)			—
Net cash flows from financing activities			(31,369	)			(22,585	)
Effect of exchange rate fluctuations on cash			3,351				(239	)
Net decrease in cash and cash equivalents			(3,954	)			(4,743	)
Cash and cash equivalents, beginning of period			58,936				112,484
Cash and cash equivalents, end of period		$	54,982			$	107,741

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ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

		For the Six Months Ended June 30,
		2014				2013
Cash flows from operating activities:
Net income (loss)		$	5,462			$	(285	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation			10,558				7,964
Amortization			30,591				23,142
Amortization of deferred debt issuance costs			2,680				2,516
Deferred income taxes			(12,134	)			(6,776	)
Stock-based compensation expense			9,188				7,724
Excess tax benefit of stock options exercised			(4,382	)			(1,681	)
Other			671				2,035
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables			(9,279	)			22,028
Accounts payable			(3,203	)			(10,731	)
Accrued employee compensation			659				(8,012	)
Current income taxes			4,728				3,780
Deferred revenue			20,337				21,737
Other current and noncurrent assets and liabilities			(7,553	)			(5,810	)
Net cash flows from operating activities			48,323				57,631
Cash flows from investing activities:
Purchases of property and equipment			(8,319	)			(9,050	)
Purchases of software and distribution rights			(6,991	)			(4,578	)
Acquisition of businesses, net of cash acquired			—				(264,202	)
Other			(1,500	)			—
Net cash flows from investing activities			(16,810	)			(277,830	)
Cash flows from financing activities:
Proceeds from issuance of common stock			1,338				938
Proceeds from exercises of stock options			4,117				5,583
Excess tax benefit of stock options exercised			4,382				1,681
Repurchases of common stock			(70,000	)			(12,068	)
Repurchase of restricted stock and performance shares for tax withholdings			(4,533	)			(5,574	)
Proceeds from term portion of credit agreement			—				300,000
Proceeds from revolving credit facility			50,000				—
Repayment of revolving credit facility			(35,000	)			—
Repayment of term portion of credit agreement			(17,742	)			(13,125	)
Payments on other debt and capital leases			(6,687	)			(11,717	)
Payment for debt issuance costs			(163	)			(9,536	)
Distribution to noncontrolling interest			(1,391	)			—
Net cash flows from financing activities			(75,679	)			256,182
Effect of exchange rate fluctuations on cash			4,089				(4,571	)
Net increase (decrease) in cash and cash equivalents			(40,077	)			31,412
Cash and cash equivalents, beginning of period			95,059				76,329
Cash and cash equivalents, end of period		$	54,982			$	107,741

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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 June 30,
Selected Non-GAAP Financial Data		2014 GAAP				Adj				2014 Non-GAAP				2013 GAAP				Adj				2013 Non-GAAP				$ Diff				% Diff
Total revenues (2)		$	254,808			$	459			$	255,267			$	205,830			$	2,001			$	207,831			$	47,436				23	%
Total expenses (3)			228,067				(3,502	)			224,565				194,308				(3,922	)			190,386				34,179				18	%
Operating income (loss)			26,741				3,961				30,702				11,522				5,923				17,445				13,257				76	%
Income (Loss) before income taxes			13,646				3,961				17,607				4,161				5,923				10,084				7,523				75	%
Income tax expense (benefit) (4)			2,409				1,386				3,795				2,280				2,073				4,353				(558	)			-13	%
Net income (loss)		$	11,237			$	2,575			$	13,812			$	1,881			$	3,850			$	5,731			$	8,081				141	%
Depreciation			5,234				—				5,234				4,200				—				4,200				1,034				25	%
Amortization—acquisition related intangibles			5,803				—				5,803				4,803				—				4,803				1,000				21	%
Amortization—acquisition related software			5,125				—				5,125				4,507				—				4,507				618				14	%
Amortization—other			4,381				—				4,381				3,410				—				3,410				971				29	%
Stock-based compensation (5)			4,416				—				4,416				3,774				—				3,774				642				17	%
Adjusted EBITDA		$	51,700			$	3,961			$	55,661			$	32,216			$	5,923			$	38,139			$	17,522				46	%
Earnings per share information
Weighted average shares outstanding
Basic (5)			113,907				113,907				113,907				119,505				119,505				119,505
Diluted (5)			115,977				115,977				115,977				121,502				121,502				121,502
Earnings per share
Basic (5)		$	0.10			$	0.02			$	0.12			$	0.02			$	0.03			$	0.05			$	0.07				153	%
Diluted (5)		$	0.10			$	0.02			$	0.12			$	0.02			$	0.03			$	0.05			$	0.07				152	%

 

(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, $1.4 million for employee related actions, $0.6 million for data center moves and $1.5 million for professional and other fees in 2014 and $2.4 million for employee related actions and $1.5 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 June 30,
Reconciliation of Operating Free Cash Flow (millions)		2014				2013
Net cash provided (used) by operating activities		$	33.1			$	22.7
Payments associated with acquired opening balance sheet liabilities			0.3				—
Net after-tax payments associated with employee-related actions (4)			0.9				2.1
Net after-tax payments associated with lease terminations (4)			0.2				0.2
Net after-tax payments associated with significant transaction related expenses (4)			1.2				1.4
Less capital expenditures			(7.5	)			(4.6	)
Operating Free Cash Flow		$	28.2			$	21.8

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