ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended June 30, 2013

  ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended June 30,


  *Non-GAAP revenue of $208 million, up 30% over last year and up 5%
    excluding ORCC
  *Q2 operating free cash flow of $22 million, up from a negative $4 million
    last year
  *Achieved major milestone with the launch of Universal Payments Platform
    (UPP) 3.0
  *Increasing share repurchase authorization by $100 million
  *Planning for potential long-term debt issuance to provide financial
  *Updating full year 2013 guidance

Business Wire

NAPLES, Fla. -- August 7, 2013

ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of payment
systems, today announced financial results for the period ended June 30, 2013.
Management will host a conference call at 8:30 am EDT to discuss these results
as well as 2013 guidance. Interested persons may access a real-time audio
broadcast of the teleconference at 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 20058556. 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’s Q2 results were within our guidance range,” commented Phil Heasley, ACI
President and CEO. “Regarding Online Resources, the acquisition is performing
as, or better than, expected and we are well into our second phase of
integration. Most importantly, our organic sales bookings pipeline (excluding
ORCC) is looking stronger than originally anticipated and we now expect total
net new bookings growth for the full year 2013 to be in the mid-teens
percentage range. This is due in part to the prospects from our recently
delivered Universal Payments Platform (UPP) version 3.0 that delivers the
industry’s only complete end-to-end, highly differentiated payments solution.
Lastly, we are contemplating the issuance of long-term debt to improve our
financial flexibility and capital structure. In anticipation of that, we are
announcing a $100 million increase to our stock repurchase authorization. 2013
remains a watershed year, from which we will emerge more profitable, faster
growing and stronger in our competitive position.”


Financial Results for Q2

Q2 non-GAAP revenue of $208 million grew 30%, or $48 million, from last year’s
quarter. After adjusting for Online Resources’ $38 million contribution,
organic revenue grew 5% in the quarter. Monthly recurring revenue grew to $148
million, up $43 million, and represented 72% of total revenue in the quarter.
Excluding Online Resources, recurring revenue grew 5% from Q2 2012.

New sales bookings, net of term extensions (SNET), excluding the contribution
from Online Resources, were flat compared to last year’s Q2. Online Resources’
SNET grew $6 million, or 55% in the second quarter from Q2 2012. Our 12 month
backlog increased to $746 million, up $6 million, while our 60 month backlog
increased to $3.08 billion, up $37 million, during the quarter (both adjusted
for foreign currency fluctuations).

Q2 non-GAAP operating income was $17 million versus $9 million last year.
Consolidated GAAP operating income was $12 million for the quarter, versus a
loss of $8 million last year. Adjusted EBITDA of $38 million was $12 million
above last year’s $26 million. Non-GAAP net income was $6 million, or $0.14
per diluted share, in Q2 2013, versus non-GAAP net income of $7 million, or
$0.16 per diluted share last year. GAAP net income was $2 million, or $0.05
per diluted share, versus a GAAP net loss of $5 million, or $(0.12) per
diluted share in Q2 2012.

We ended the second quarter with $108 million in cash on hand. Operating free
cash flow (“OFCF”) for the quarter was $22 million, up from a negative $4
million in Q2 of last year. The quarter finished with a debt balance of $661
million, down $9 million from last quarter. Furthermore, as of August 7^th, we
have repurchased approximately $18 million of our stock.

ORCC Acquisition Update

With regards to the Online Resources transaction, the newly acquired company
is growing as planned and our integration is now into Phase 2. As part of that
plan, we are consolidating facilities and datacenters, as well as
rationalizing certain low margin community financial online banking contracts.
While Phase 2 will not be complete until early 2015, we expect to achieve an
incremental $7 million in cost savings, representing total acquisition cost
synergies of $27 million.

Long-term Financing and Increasing Share Repurchase Authorization

In an effort to improve our long-term financial flexibility and capital
structure in a historically low interest rate environment, ACI is planning a
potential issuance of long-term debt. The terms, timing, and ability to
complete such an offering depend on many factors, including market conditions.
If pursued, proceeds from this offering could be used to pay outstanding
amounts under our existing credit facility and to strengthen our balance

In addition, ACI’s Board of Directors has authorized an increase to its Share
Repurchase Program of $100 million. Including this increase, ACI has
approximately $165 million of remaining share repurchase authority.
Year-to-date as of August 7, 2013, ACI has repurchased 394,000 shares, for a
total of $18 million.

Updated Outlook

We are lowering our full year FY 2013 non-GAAP revenue guidance by 3% to a new
range of $865 to $885 million due in part to certain online banking
implementations that are requiring more resources and time than initially
planned. We have completed a thorough review of these projects and expect the
impact to be largely confined to 2013, with no significant impact in 2014 and
beyond. Additionally, while we expect full year 2013 new sales bookings to
increase organically (excluding ORCC) in the mid teens from last year’s
results, an increase from our prior expectations, the timing of these bookings
is expected to occur later in the year, which will impact sales-to-revenue
conversion, also negatively impacting 2013 revenues. Given the reduction in
revenue, offset by expense management, we are revising our non-GAAP operating
income and adjusted EBITDA ranges downward by $5 million and $10 million,
respectively. Our updated non-GAAP operating income range is $165 to $175
million compared to prior guidance of $170 to $180 million and our adjusted
EBITDA range is $256 to $266 million compared with $266 to $276 million

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 or
on Twitter @ACI_Worldwide.

To supplement our financial results presented on a GAAP basis, we use the
non-GAAP measures indicated in the tables, which exclude certain business
combination accounting entries and expenses related to the acquisition of S1
and Online Resources, 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
    acquisition related expenses. Non-GAAP operating income should be
    considered in addition to, rather than as a substitute for, operating
  *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 and Online
    Resources if not for GAAP purchase accounting requirements and acquisition
    related expenses. Adjusted EBITDA should be considered in addition to,
    rather than as a substitute for, operating income.

ACI is also presenting operating free cash flow, which is defined as net cash
provided by operating activities, plus net after-tax payments associated with
employee-related actions and facility disclosures, net after-tax payments
associated with acquisition related transaction 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

ACI also includes backlog estimates, which include all software license fees,
maintenance fees and services specified in executed contracts, as well as
revenues from assumed contract renewals to the extent that we believe
recognition of the related revenue will occur within the corresponding backlog
period. We have historically included assumed renewals in backlog estimates
based upon automatic renewal provisions in the executed contract and our
historic experience with customer renewal rates.

Backlog is considered a non-GAAP financial measure as defined by SEC
Regulation G. Our 60-month backlog estimate represents expected revenues from
existing customers using the following key assumptions:

  *Maintenance fees are assumed to exist for the duration of the license term
    for those contracts in which the committed maintenance term is less than
    the committed license term.
  *License, facilities management, and software hosting arrangements are
    assumed to renew at the end of their committed term at a rate consistent
    with our historical experiences.
  *Non-recurring license arrangements are assumed to renew as recurring
    revenue streams.
  *Foreign currency exchange rates are assumed to remain constant over the
    60-month backlog period for those contracts stated in currencies other
    than the U.S. dollar.
  *Our pricing policies and practices are assumed to remain constant over the
    60-month backlog period.

Estimates of future financial results are inherently unreliable. Our backlog
estimates require substantial judgment and are based on a number of
assumptions as described above. These assumptions may turn out to be
inaccurate or wrong, including for reasons outside of management’s control.
For example, our customers may attempt to renegotiate or terminate their
contracts for a number of reasons, including mergers, changes in their
financial condition, or general changes in economic conditions in the
customer’s industry or geographic location, or we may experience delays in the
development or delivery of products or services specified in customer
contracts which may cause the actual renewal rates and amounts to differ from
historical experiences. Changes in foreign currency exchange rates may also
impact the amount of revenue actually recognized in future periods.
Accordingly, there can be no assurance that contracts included in backlog
estimates will actually generate the specified revenues or that the actual
revenues will be generated within the corresponding 60-month period.

Backlog should be considered in addition to, rather than as a substitute for,
reported revenue and deferred revenue.

Forward-Looking Statements

This press release contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. Generally,
forward-looking statements do not relate strictly to historical or current
facts and may include words or phrases such as “believes,” “will,” “expects,”
“anticipates,” “intends,” and words and phrases of similar impact. The
forward-looking statements are made pursuant to safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.

Forward-looking statements in this press release include, but are not limited
to, statements regarding: (i) expectations with respect to the Online
Resources acquisition and the performance of that business; (ii) our organic
sales bookings pipeline; (iii) prospects from UPP; (iv) expectations regarding
a potential issuance of long-term debt; (v) expectations regarding 2013
financial guidance related to revenue, operating income and adjusted EBITDA;
(vi) expectations that we will emerge from 2013 more profitable, faster
growing and stronger; (vii) the impact of online banking implementations and
their resource requirements; and (viii) expectations regarding 2013 new sales

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 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.



(unaudited and in thousands, except share and per share amounts)
                                                 June 30,        December 31,
                                                 2013            2012
Current assets
Cash and cash equivalents                        $ 107,741       $ 76,329
Billed receivables, net of allowances of           165,450         176,313
$10,035 and $8,117, respectively
Accrued receivables                                37,038          41,008
Deferred income taxes, net                         69,974          34,342
Recoverable income taxes                           3,974           5,572
Prepaid expenses                                   19,305          16,746
Other current assets                              14,433        5,816     
Total current assets                              417,915       356,126   
Property and equipment, net                        47,862          41,286
Software, net                                      177,836         129,314
Goodwill                                           625,990         501,141
Other intangible assets, net                       193,814         127,900
Deferred income taxes, net                         31,029          63,370
Other noncurrent assets                           39,278        31,749    
TOTAL ASSETS                                     $ 1,533,724    $ 1,250,886 
Current liabilities
Accounts payable                                 $ 43,691        $ 33,926
Accrued employee compensation                      37,047          35,194
Current portion of term credit facility            56,250          17,500
Deferred revenue                                   149,319         139,863
Income taxes payable                               3,590           3,542
Deferred income taxes, net                         214             174
Accrued and other current liabilities             31,398        36,400    
Total current liabilities                         321,509       266,599   
Noncurrent liabilities
Deferred revenue                                   59,799          51,519
Note payable under term credit facility            416,875         168,750
Note payable under revolving credit facility       188,000         188,000
Deferred income taxes, net                         12,952          14,940
Other noncurrent liabilities                      26,170        26,721    
Total liabilities                                 1,025,305     716,529   
Commitments and contingencies
Stockholders' equity
Preferred stock; $0.01 par value; 5,000,000
shares authorized; no shares issued                -               -
and outstanding at June 30, 2013 and December
31, 2012
Common stock; $0.005 par value; 70,000,000
shares authorized; 46,606,796                      232             232
shares issued at June 30, 2013 and December
31, 2012
Treasury stock, at cost, 7,038,613 and
7,159,023 shares at June 30, 2013                  (192,778  )     (186,784  )
and December 31, 2012, respectively
Additional paid-in capital                         535,167         534,953
Retained earnings                                  199,702         199,987
Accumulated other comprehensive loss              (33,904   )    (14,031   )
Total stockholders' equity                        508,419       534,357   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 1,533,724    $ 1,250,886 



(unaudited and in thousands, except per share amounts)
                                                   Three Months Ended June 30,
                                                   2013           2012
Software license fees                              $  53,714       $ 36,645
Maintenance fees                                      57,830         49,359
Services                                              26,964         33,888
Software hosting fees                                67,322       29,905  
Total revenues                                       205,830      149,797 
Cost of software license fees (1)                     6,169          5,818
Cost of maintenance, services, and hosting fees       82,573         55,715
Research and development                              38,391         35,027
Selling and marketing                                 27,538         23,178
General and administrative                            26,147         28,236
Depreciation and amortization                        13,490       9,681   
Total expenses                                       194,308      157,655 
Operating income (loss)                               11,522         (7,858  )
Other income (expense):
Interest income                                       211            234
Interest expense                                      (6,053   )     (2,875  )
Other, net                                           (1,519   )    (347    )
Total other expense                                  (7,361   )    (2,988  )
Income (loss) before income taxes                     4,161          (10,846 )
Income tax expense (benefit)                         2,280        (6,195  )
Net income (loss)                                  $  1,881       $ (4,651  )
Income (loss) per share information
Weighted average shares outstanding
Basic                                                 39,835         39,263
Diluted                                               40,501         39,263
Income (loss) per share
Basic                                              $  0.05         $ (0.12   )
Diluted                                            $  0.05         $ (0.12   )

(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.



(unaudited and in thousands)
                                                     For the Three Months
                                                     Ended June 30,
                                                     2013         2012
Cash flows from operating activities:
Net income (loss)                                    $ 1,881       $ (4,651  )
Adjustments to reconcile net loss to net cash
flows from operating activities
Depreciation                                           4,200         3,456
Amortization                                           12,720        9,682
Provision for doubtful accounts receivable             1,399         346
Deferred income taxes                                  (680    )     (6,242  )
Stock-based compensation expense                       3,774         3,468
Excess tax benefit of stock options exercised          (373    )     (892    )
Other                                                  1,633         784
Changes in operating assets and liabilities, net
of impact of acquisitions:
Billed and accrued receivables, net                    (8,643  )     (15,630 )
Other current and noncurrent assets                    2,486         4,753
Accounts payable                                       (1,516  )     3,715
Accrued employee compensation                          4,269         556
Accrued liabilities                                    (3,650  )     (3,097  )
Current income taxes                                   (498    )     (1,222  )
Deferred revenue                                       5,799         (57     )
Other current and noncurrent liabilities              (97     )    (422    )
Net cash flows from operating activities              22,704      (5,453  )
Cash flows from investing activities:
Purchases of property and equipment                    (2,809  )     (2,076  )
Purchases of software and distribution rights          (1,814  )     (1,396  )
Acquisition of businesses, net of cash acquired        -             (4,432  )
Other                                                 -           (1,046  )
Net cash flows from investing activities              (4,623  )    (8,950  )
Cash flows from financing activities:
Proceeds from issuance of common stock                 463           352
Proceeds from exercises of stock options               1,719         9,407
Excess tax benefit of stock options exercised          373           892
Repurchases of common stock                            (12,068 )     (37,823 )
Repurchase of restricted stock and performance         (54     )     (127    )
shares for tax withholdings
Repayment of term portion of credit agreement          (9,375  )     (3,125  )
Payments for debt issuance costs                       (264    )     -
Payments on debt and capital leases                   (3,379  )    (3,782  )
Net cash flows from financing activities              (22,585 )    (34,206 )
Effect of exchange rate fluctuations on cash          (239    )    (2,855  )
Net increase in cash and cash equivalents              (4,743  )     (51,464 )
Cash and cash equivalents, beginning of period        112,484     201,080 
Cash and cash equivalents, end of period             $ 107,741    $ 149,616 

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,
               2013                     2013        2012                       2012
Non-GAAP       GAAP       Adj         Non-GAAP   GAAP         Adj         Non-GAAP     $ Diff      % Diff
Total          $ 205,830   $ 2,001      $ 207,831   $ 149,797     $ 9,644      $ 159,441     $ 48,390     30    %
revenues (2)
Total            194,308     (3,922 )     190,386     157,655       (7,588 )     150,067       40,319     27    %
expenses (3)
income           11,522      5,923        17,445      (7,858  )     17,232       9,374         8,071      86    %
(loss)           4,161       5,923        10,084      (10,846 )     17,232       6,386         3,698      58    %
income taxes
Income tax      2,280     2,073     4,353     (6,195  )   6,031     (164    )   4,517    -2758 %
expense (4)
Net income     $ 1,881    $ 3,850    $ 5,731    $ (4,651  )  $ 11,201   $ 6,550     $ (819   )  -13   %
Depreciation     4,200       -            4,200       3,456         -            3,456         744        22    %
acquisition      4,803       -            4,803       3,215         -            3,215         1,588      49    %
acquisition      4,507       -            4,507       3,228         -            3,228         1,279      40    %
Amortization     3,410       -            3,410       3,238         -            3,238         172        5     %
- other
Stock-based      3,774       -            3,774       3,468         (276   )     3,192         582        18    %
Adjusted       $ 32,216   $ 5,923    $ 38,139   $ 8,747     $ 16,956   $ 25,703    $ 12,436   48    %
(loss) per
Basic            39,835      39,835       39,835      39,263        39,263       39,263
Diluted          40,501      40,501       40,501      39,263        40,839       40,839
(loss) per
Basic          $ 0.05      $ 0.10       $ 0.14      $ (0.12   )   $ 0.29       $ 0.17        $ (0.02  )   -14   %
Diluted        $ 0.05      $ 0.10       $ 0.14      $ (0.12   )   $ 0.27       $ 0.16        $ (0.02  )   -12   %

(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 deferred revenue that would have been recognized in the
normal course of business by S1 and ORCC but was not recognized due to GAAP
purchase accounting requirements.

(3) Expense for acquisition related transactions, including, $2.4 million for
employee related actions and $1.5 million for professional and other fees in
2013 and $3.6 million for employee related actions, $3.1 million for
termination of the IBM IT outsourcing agreement and $0.9 million for other
professional fees in 2012.

(4) Adjustments tax effected at 35%.

                                                     Quarter Ended June 30,
Reconciliation of Operating Free Cash Flow              2013        2012
Net cash provided (used) by operating activities        $  22.7       $ (5.5 )
Net after-tax payments associated with                     2.1          3.9
employee-related actions (5)
Net after-tax payments associated with lease               0.2          -
terminations (5)
Net after-tax payments associated with one-time            1.4          1.1
transaction related expenses (5)
Net after-tax payments associated with IBM IT              -            0.2
Outsourcing Transition (5)
Less capital expenditures                                 (4.6 )    (3.5 )
Operating Free Cash Flow                                $  21.8    $ (3.8 )

(5) Amounts are tax effected at 35%.


ACI Worldwide
John Kraft, 239-403-4627
Vice President, Investor Relations & Strategic Analysis
Press spacebar to pause and continue. Press esc to stop.