OPERATING HIGHLIGHTS
* Solid operating free cash flow generation of $21.1 million in the
quarter and $52.5 million for the 2007 calendar year, 34% growth
over prior calendar year
* Backlog rose $39 million on a sequential basis to $1.380 billion;
grew $138 million for calendar 2007
* Revenue of $101.3 million; 9% growth over prior year; deferred
revenue rose $15.5 million on a sequential quarterly basis to
$142.8 million
---------------------------------------------------------------------
Quarter Ended
-------------------------------------------
Better / Better /
(Worse) (Worse)
December 31, December 31, December 31,
2007 2006 2006
---------------------------------------------------------------------
Operating Free Cash
Flow $ 21.1 $ 14.4 215%
($ Mil)
60 month
Backlog $1.380 $0.138 11%
($Bil)
Revenues
($ Mil) $101.3 $ 8.0 9%
---------------------------------------------------------------------
NEW YORK, Feb. 19, 2008 (PRIME NEWSWIRE) -- ACI Worldwide, Inc. (Nasdaq:ACIW), a leading international provider of software for electronic payment systems, today announced preliminary financial results for the period ending December 31, 2007. We will hold a conference call on February 19, 2008, at 8.30 a.m. EST to discuss this information. Interested persons may also access a real-time audio broadcast of the teleconference at www.aciworldwide.com/investors.
"We are pleased with our December quarterly performance. All of our operating metrics -- sales, operating free cash flow, backlog, revenue and deferred revenue -- demonstrated the type of performance we expect from our products and also validated our strategic shift away from selling shorter tenured product and into selling comprehensive multi-product solutions." Heasley stated, "2007 was a challenging transitional year with legacy issues and, yet, it was extremely gratifying to see the business perform so well in the fourth quarter of the calendar year. I believe that our organic performance and the new IBM alliance will both position ACI to grow strongly in 2008 and beyond."
Notable new business during the quarter included:
* Saudi Arabia: a significant Saudi bank subscribed to Base24-eps/pos, AKDS, ACI Commerce Gateway, Smart Chip Manager, Payments Manager Transaction Warehouse, ACI Web Access services, Simulation Services for Enterprise Testing, Monitoring/Management system. * Thailand: a major Thai bank subscribed to Base 24-atm and card, PRM risk manager, ACI Communication Services, Golden Gate and Vision Plus AO. * EMEA processor: Base 24-atm/pos, Smart Chip Manager, Card Management System, PRM Merchant, Debit, ACI Web Access services. * United Kingdom: ACI Datawise sold to a governmental police authority. * United States: ACI Enterprise Security, Web Access, Retail Commerce Server and ACI Enterprise Banker on Demand were sold to multiple U.S. clients in the quarter ranging from credit unions to commercial banks, and retailers. * 17 new customers signed up for 37 products, including new users of Base 24-eps, ACI Enterprise Banker, ACI Retail Commerce Server, Smart Chip Manager and Payments Manager Transaction Warehouse. * 19 new applications added to 16 existing customer relationships ranging from ACI Retail Commerce Server to Proactive Risk Manager for Enterprise Services, and Simulation Services for Enterprise Testing.
FINANCIAL SUMMARY
Operating Free Cash Flow
Operating free cash flow for the quarter was $21.1 million compared to $6.7 million for the December 2006 quarter. On an annual basis, operating free cash flow grew 33% to end the year at $52.5 million versus $39.3 million in calendar 2006. Operating free cash flow for both the quarter and year ended December 2007 includes a net figure of approximately $9.3 million related to the receipt of cash from IBM Corporation exclusive of the amount paid for warrants in ACI shares.
Backlog
As of December 31, 2007, our estimated 60-month backlog was $1.380 billion compared to backlog of $1.341 billion, and $1.242 billion as of September 30, 2007 and December 30, 2006, respectively. The 2007 year-end figure represented a rise of $39 million on a sequential basis and $138 million on a year over year basis.
As of December 31, 2007, our 12-month backlog was $336 million, as compared to $329 million as of September 30, 2007, and $292 million as of December 31, 2006.
As previously disclosed in our Form 10-K for the fiscal year ended September 30, 2007, we have recently completed a comprehensive review of the assumptions used and data required in computing our backlog estimates. The results above reflect the impact of this review on all periods.
Revenues
Revenue was $101.3 million in the quarter ended December 31, 2007, an increase of $8.0 million or 9% over the prior-year period revenue of $93.3 million. The year over year quarterly increase was largely attributable to an increase of $5.1 million in license fees received; of which 80% originated in the United Kingdom and Scandinavia with the remainder in the United States. The remaining $2.9 million in revenue increase on a year-over-year quarterly basis was derived primarily from maintenance revenue growth. Sequentially, our deferred revenue increased by $15.5 million to $142.8 million compared to a sequential increase of $1.5 million to $100.9 million in the December 2006 quarter. The increase reflects the business' emphasis on selling longer term products and services to both new and existing customers, thereby resulting in lengthier revenue recognition cycles.
Revenue for calendar year 2007 was $374.2 million, an increase of $18.1 million or 5% compared to revenue of $356.1 million in calendar 2006. The growth in revenue is attributed to $48.0 million in acquisition-related revenue, primarily due to a $38.8 million contribution by P&H Solutions in the Americas in calendar 2007 compared to a P&H Solutions contribution of $7.4 million in calendar 2006. Organic revenue decreased by $17.8 million due to a reduction in non-recurring fees. Deferred revenue grew 41% or $41.9 million on a year over year basis as compared to a 2006 deferred revenue increase of 1% or $0.7 million. The growth in deferred revenue, much like the quarterly performance of deferred revenue, is a reflection of the fact that we now sell longer term products and services to both new and existing customers which has the effect of prolonging the revenue recognition timeframe.
Operating Expenses
Operating expenses were $98.4 million in the December 2007 quarter compared to $88.3 million in the December 2006 quarter. Organic expenses rose $10.0 million year over year excluding the impact of acquisitions and other non-recurring items. This is primarily due to increased research and development costs incurred in the Base 24-eps(tm) and ACI On Demand product lines ($3 million), higher commissions paid as a result of higher sales ($2 million), and timing associated with professional fees ($3 million). Deferred expenses increased $2.9 million from the previous sequential quarter compared to a rise of $2.0 million in the prior year sequential quarter.
Operating expenses for calendar year 2007 were $373.9 million, an increase of $62.0 million, or 20%, compared to expense of $311.9 million in calendar year 2006. The increase in operating expense year over year resulted primarily from $45.2 million of expense related to acquisitions, $5.4 million related to non-recurring employee costs, and $9.2 million related to the historical stock options review and settlement of vested options. Deferred expense during calendar 2007 increased $5.5 million as compared to deferred expense growth of $0.7 million during calendar 2006.
Other Income and Expense
Other expense in the December 2007 quarter was $1.0 million as compared to $0.9 million in the quarter year over year as a result of a $2.5 million favorable swing in currency translation offset by a $2.5 million FAS 133 non-cash loss on derivative instruments which did not occur in the prior year.
On an annual basis, other expense in calendar year 2007 was $6.4 million as compared to other income of $3.7 million in the calendar year 2006. The $10.1 million change in other income/expense on a year over year basis was due to the following factors: an expense of $4.6 million on a FAS 133 non-cash loss on derivative instruments incurred in 2007 versus none in 2006, a $1.4 million change in the impact of currency translation as compared to in the prior year, and an increase of $4.5 million in interest expense on a credit facility as compared to prior year.
Taxes
The tax rate for the quarter was 207% due to losses in tax jurisdictions for which we received no tax benefit. Furthermore, as mentioned in previous quarters, the company continues to incur a fixed amortization charge of $0.5 million per quarter related to the transfer of intellectual property outside the United States.
Net Income (Loss) and Diluted Earnings Per Share
The Company reported a net loss of $2.0 million for the quarter compared to net income of $2.6 million during the same period last year. Calendar year 2007 net loss was $13.8 million compared to net income of $42.8 million in calendar 2006.
Earnings per share for the quarter ended December 2007 was ($0.06) per diluted share compared to $0.07 per diluted share during the same period last year. Earnings per share for the year ended December 31, 2007 was ($0.38) as compared to $1.13 in the prior year period ended December 31, 2006.
2008 Guidance
ACI anticipates operating free cash flow ("OFCF") of approximately $65 million in calendar 2008 versus $52.5 million OFCF achieved in calendar 2007. This number includes approximately $24 million of capital spending and financing anticipated in 2008 versus $9.8 million of capital spending and financing in calendar year 2007. The higher rate of capital spending is influenced by several factors, including investments in facilities, retail and wholesale software optimization as well as the IBM relationship.
Combined revenue and 60-month backlog growth is expected to reach approximately $200 million in 2008 as compared to calendar year 2007 growth of $157 million.
A key factor driving the growth of both of these metrics is an increase in new product and new client sales anticipated for 2008.
-----------------------------------------------------------
Table 1: Reconciliation of Operating Free Cash Flow
Quarter Ended
December 31,
----------------
(millions) 2007 2006
----------------
Net cash provided by operating
activities $ 12.1 ($0.6)
One-time items:
Net after-tax cash payments associated
with P&H 0.0 5.9
Net after-tax cash payments associated
with class action settlement 0.0 5.3
Net after-tax cash payments associated
with stock option 0.0 1.2
Net after-tax cash payments associated
with Restructuring and Other Emp.
Related Actions 2.7 0.0
Net after-tax cash payments associated
with cancellation of corp. jet lease 0.8 0.0
Less capital expenditures (3.9) (5.1)
Net Proceeds from IBM Alliance 9.3 0.0
----------------
Operating Free Cash Flow $ 21.1 $ 6.7
-----------------------------------------------------------
---------------------------------------------------------------------
Quarter Ended
------------------------------
Dec. 31, Sept. 30, Dec. 31,
Table 2: Backlog 60- Month (millions) 2007 2007 2006
------------------------------
Americas $ 733 $ 717 $ 686
EMEA 504 489 431
Asia/Pacific 143 135 125
------------------------------
Backlog 60-Month $1,380 $1,341 $1,242
Backlog breakout
ACI Organic $1,367 $1,331 $1,242
Acquisitions 13 10 0
------------------------------
Backlog 60-Month $1,380 $1,341 $1,242
ACI Organic Deferred Revenue 141 126 101
ACI Organic Other 1,227 1,205 1,141
Acquisition Deferred Revenue 2 1 0
Acquisition Other 11 9 0
------------------------------
Backlog 60-Month $1,380 $1,341 $1,242
---------------------------------------------------------------------
-----------------------------------------------------------
Quarter Ended
Table 3: Revenues by Channel December 31,
----------------
2007 2006
----------------
Revenues:
United States $ 36.0 $ 34.0
Americas International 13.6 13.2
----------------
Americas $ 49.6 $ 47.2
EMEA 43.1 37.5
Asia/Pacific 8.6 8.6
----------------
Revenues $101.3 $ 93.3
-----------------------------------------------------------
-----------------------------------------------------------
Quarter Ended
Table 4: Monthly Recurring Revenue December 31,
(millions) ----------------
2007 2006
----------------
Monthly license fees $ 16.0 $ 15.2
Maintenance fees 32.2 28.7
Processing Services 8.4 7.6
----------------
Monthly Recurring Revenue $ 56.6 $ 51.5
-----------------------------------------------------------
---------------------------------------------------------------------
Quarter Ended
Table 5: Deferred Revenue Dec. 31, Sept. 30, Dec. 31, Sept. 30,
(millions) 2007 2007 2006 2006
------------------------------------
Acquisitions $ 2.0 $ 1.1 $ 0.0 $ 0.0
ACI Organic 113.5 96.0 78.5 79.0
------------------------------------
Short Term Deferred Revenue $115.5 $ 97.0 $ 78.5 $ 79.0
Acquisitions $ 0.0 $ 0.0 $ 0.0 $ 0.0
ACI Organic 27.3 30.3 22.4 20.4
------------------------------------
Long Term Deferred Revenue $ 27.3 $ 30.3 $ 22.4 $ 20.4
Total Deferred Revenue $142.8 $127.3 $100.9 $ 99.4
---------------------------------------------------------------------
---------------------------------------------------------------------
Quarter Ended
Table 6: Deferred Expenses Dec. 31, Sept. 30, Dec. 31, Sept. 30,
(millions) 2007 2007 2006 2006
------------------------------------
Acquisitions $ 0.1 $ 0.1 $ 0.0 $ 0.0
ACI Organic 11.3 8.4 5.9 3.9
------------------------------------
Total Deferred Expenses $ 11.4 $ 8.5 $ 5.9 $ 3.9
---------------------------------------------------------------------
---------------------------------------------------------------------
Year Year Sep-Dec Sep-Dec
over over y-o-y y-o-y
Table 7: Organic versus Year Year Quarterly Quarterly
Acquisition Comparisons Increase/ Increase/ Movement Movement
(millions) Decrease Decrease in in
in Revenue in Op. Deferred Deferred
Expenses Revenue Expense
2006 Quarter $ 93.3 $ 88.3 $ 1.5 $ 2.0
Organic $ 7.2 $ 10.0 $ 13.0 0.9
Acquisitions 0.8 2.5 1.0 --
Stock Options Prof. Fees -- (2.6) -- --
Intangible Amortization -- (0.2) -- --
2006 LTIP Reversal -- (2.1) -- --
Corporate Jet -- 1.3 -- --
Transaction Pro Fees -- 0.5 -- --
Restructuring -- 0.5 -- --
Other Employee -- 0.2 -- --
------------------------------------
Net Change $ 8.0 $ 10.1 $ 14.0 $ 0.9
2007 Quarter $101.3 $ 98.4 $ 15.5 $ 2.9
---------------------------------------------------------------------
---------------------------------------------------------------------
Table 8: Acquisition-related
Intangibles and software,
Non-cash equity based
compensation and non-recurring Quarter Ended
items (millions) December 31,
2007 2006
------------------------------------
EPS $ in EPS $ in
Non-recurring items Impact Millions Impact Millions
Stock options review $ 0.00 $ 0.0 $ 0.04 $ 1.7
Restructuring 0.01 0.4 0.00 0.0
Other employee expense 0.00 0.1 0.00 0.0
2006 LTIP Reversal (0.04) (1.4) 0.00 0.0
Corporate Jet Lease Termination 0.02 0.8 0.00 0.0
IBM Related Fees 0.01 0.3 0.00 0.0
Non-recurring items $ 0.01 $ 0.2 $ 0.04 $ 1.7
Amortization of acquisition-
related intangibles and software 0.05 1.9 0.05 2.1
Non-cash equity-based
compensation (0.00) (0.0) 0.03 1.1
------------------------------------
Total: $ 0.06 $ 2.1 $ 0.13 $ 4.9
* Tax Effected at 35%
---------------------------------------------------------------------
---------------------------------------------------------------------
Quarter Ended
Table 9: Other Income (Expense) Dec. 31, Sept. 30, Dec. 31, Sept. 30,
(millions) 2007 2007 2006 2006
------------------------------------
Interest Income $ 0.8 $ 1.2 $ 0.9 $ 1.7
Interest Expense (1.3) (2.2) (1.4) (0.1)
FX Gain / Loss 1.9 0.5 (0.6) (0.2)
Derivative Loss (2.5) (2.1) 0.0 0.0
Other 0.2 0.1 0.3 (0.1)
------------------------------------
Total Other Income (Expense) ($1.0) ($2.5) ($0.9) $ 1.3
---------------------------------------------------------------------
About ACI Worldwide, Inc.
Every second of every day, ACI Worldwide solutions are at work processing electronic payments, managing risk, automating back office systems and providing application infrastructure services. ACI is a leading international provider of solutions for banking, retail and cross-industry systems. ACI serves more than 800 customers in 84 countries including many of the world's largest financial institutions, retailers and payment processors. Visit ACI Worldwide at www.aciworldwide.com.
Non-GAAP Financial Measures
This press release includes operating free cash flow and backlog estimates. ACI is presenting these non-GAAP guidance measures to provide more transparency to its earnings, focusing on operations before selected non-cash items, operating free cash flow and backlog.
ACI is presenting operating free cash flow, which is defined by our net cash provided by operating activities, adjusted for one-time items, minus capital expenditures. 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 is considered a non-GAAP financial measure as defined by SEC Regulation G. We define operating free cash flow as net cash provided (used) by operating activities, excluding cash payments associated with the cash settlement of stock options, cash payments associated with one-time employee related actions, less capital expenditures and plus or minus net proceeds from IBM. We utilize this non-GAAP financial measure, and believe it is useful to investors, as an indicator of cash flow available for debt repayment and other investing activities, such as capital investments and acquisitions. We utilize operating free cash flow as a further indicator of operating performance and for planning investing activities. Operating free cash flow should be considered in addition to, rather than as a substitute for, net cash provided (used) by operating activities. A limitation of operating free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. This measure also does not exclude mandatory debt service obligations and, therefore, does not represent the residual cash flow available for discretionary expenditures. 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. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, loss from operations and net loss per share calculated in accordance with GAAP. We believe that operating free cash flow is useful to investors to provide disclosures of our operating results on the same basis as that used by our management. We also believe that this measure can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items, which do not directly affect our ongoing cash flow.
ACI also includes backlog estimates which are all software license fees, maintenance fees and services specified in executed contracts, as well as revenues from assumed contract renewals to the extent that we believe recognition of the related revenue will occur within the corresponding backlog period. We have historically included assumed renewals in backlog estimates based upon automatic renewal provisions in the executed contract and our historic experience with customer renewal rates.
Backlog is considered a non-GAAP financial measure as defined by SEC Regulation G. Our 60-month backlog estimate represents expected revenues from existing customers using the following key assumptions:
* Maintenance fees are assumed to exist for the duration of the license term for those contracts in which the committed maintenance term is less than the committed license term. * License and facilities management arrangements are assumed to renew at the end of their committed term at a rate consistent with our historical experiences. * Non-recurring license arrangements are assumed to renew as recurring revenue streams. * Foreign currency exchange rates are assumed to remain constant over the 60-month backlog period for those contracts stated in currencies other than the U.S. dollar. * Our pricing policies and practices are assumed to remain constant over the 60-month backlog period.
Estimates of future financial results are inherently unreliable. Our backlog estimates require substantial judgment and are based on a number of assumptions as described above. These assumptions may turn out to be inaccurate or wrong, including for reasons outside of management's control. For example, our customers may attempt to renegotiate or terminate their contracts for a number of reasons, including mergers, changes in their financial condition, or general changes in economic conditions in the customer's industry or geographic location, or we may experience delays in the development or delivery of products or services specified in customer contracts which may cause the actual renewal rates and amounts to differ from historical experiences. Changes in foreign currency exchange rates may also impact the amount of revenue actually recognized in future periods. Accordingly, there can be no assurance that contracts included in backlog estimates will actually generate the specified revenues or that the actual revenues will be generated within the corresponding 60-month period.
Backlog should be considered in addition to, rather than as a substitute for, reported revenue and deferred revenue.
The presentation of these non-GAAP financial measures should be considered in addition to our GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
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", "looks forward to," and words and phrases of similar impact.
The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this presentation include, but are not limited to, statements regarding the:
* The strength of, or improvement in, future sales results; * Retention of customers; * Sales and financial expectations in various geographies, including expectations that we are gaining traction in Latin America, have momentum in France, Spain and Italy, and will win new customers in Asia; * 2008 sales outlook, including expansion in various countries, sales into new accounts and sales of new applications, and leveraging of wholesale payments products; * Expected impacts and benefits of the IBM alliance; * 2008 outlook relating to technical headcount investment, aggression in product life cycle management, wholesale payment hub opportunity, solutions and integration focus, implementation and services margin improvement, and harvesting backlog; * Expectations that transactions that were expected to close in the second half of 2007 will close in the first half of 2008; * Expectations for 2008 operating free cash flow and combined revenue and backlog growth; * Expectations regarding sales growth, sales mix, revenues, backlog, operating free cash flow, expenses, effective tax rate and number of shares outstanding; and * 2009 - 2011 outlook, including revenue and backlog growth, operating free cash flow growth and operating margins.
Any or all of the forward-looking statements may turn out to be wrong. They can be affected by the judgments and estimates underlying such assumptions or by known or unknown risks and uncertainties. Many of these factors will be important in determining the Company's actual future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those expressed or implied in any forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements after the date of this presentation.
All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in the Company's filings with the Securities and Exchange Commission. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K filed on May 11, 2007, the Company's Form 10-Q filed on June 29, 2007, the Company's Form 10-Q filed on August 10, 2007, the Company's Form 10-Q filed on September 25, 2007 and the Company's Form 10-K filed on January 30, 2008, specifically the section entitled "Factors That May Affect the Company's Future Results or the Market Price of the Company's Common Stock."
The risks identified in the Company's filings with the Securities and Exchange Commission include:
* Risks associated with the restatement of the Company's financial
statements;
* Risks associated with the Company's performance which could be
materially adversely affected by a general economic downturn or
lessening demand in the software sector;
* Risks associated with the complexity of the Company's software
products;
* Risks inherent in making an estimate of the Company's backlogs
which may not be accurate and may not generate the predicted
revenue;
* Risks associated with tax positions taken by the Company which
require substantial judgment and with which taxing authorities
may not agree;
* Risks associated with consolidation in the financial services
industry which may adversely impact the number of customers and
the Company's revenues in the future;
* Risks associated with the Company's stock price which may be
volatile;
* Risks associated with conducting international operations;
* Risks regarding the Company's newly introduced BASE24-eps product
which may prove to be unsuccessful in the marketplace;
* Risks associated with the Company's future profitability which
depends on demand for its products; lower demand in the future
could adversely affect the Company's business;
* Risks associated with the Company's software products which may
contain undetected errors or other defects, which could damage its
reputation with customers, decrease profitability, and expose the
Company to liability;
* Risks associated with the IBM alliance, our or IBM's ability to
perform under the terms of that alliance and customer receptiveness
to the alliance;
* Risks associated with future acquisitions and investments which
could materially adversely affect the Company;
* Risks associated with the Company's ability to protect its
intellectual property and technology and that the Company may be
subject to increasing litigation over its intellectual property
rights;
* Risks associated with litigation that could materially adversely
affect the Company's business financial condition and/or results
of operations;
* Risks associated with new accounting standards or revised
interpretations or guidance regarding existing standards;
* Risks associated with the Company's offshore software development
activities, which may put its intellectual property at risk;
* Risks associated with security breaches or computer viruses, which
could disrupt delivery of services and damage the Company's
reputation;
* Risks associated with the Company's customers who are subject to a
regulatory environment and industry standards that may change and
reduce the number of transactions in which the customers engage;
* Risks associated with the Company's ability to comply with privacy
regulations imposed on providers of services to financial
institutions;
* Risks associated with system failures, which could delay the
provision of products and services and damage the Company's
reputation with its customers;
* Risks associated with the Company's restructuring plan, which may
not achieve expected efficiencies; and
* Risks associated with material weaknesses in the Company's internal
control over financial reporting.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
Dec. 31, Sept. 30, Dec. 31, Sept. 30,
2007 2007 2006 2006
-------- -------- -------- --------
ASSETS
Current assets
Cash and cash
equivalents $ 97,011 $ 60,794 $ 89,900 $110,148
Billed receivables,
net of allowances
of $1,723 and
$2,041 87,932 70,384 65,402 72,439
Accrued receivables 11,132 11,955 13,593 14,443
Deferred income
taxes, net 5,374 7,088 2,441 9,410
Recoverable income
taxes 6,033 3,852 -- 3,791
Prepaid expenses 9,803 10,572 8,010 8,389
Other current assets 8,399 7,233 12,353 10,690
-------- -------- -------- --------
Total current
assets 225,684 171,878 191,699 229,310
-------- -------- -------- --------
Property, plant and
equipment, net 19,503 19,356 18,899 14,306
Software, net 31,430 31,764 32,990 34,294
Goodwill 206,770 205,715 193,927 191,518
Other intangible
assets, net 38,088 39,685 41,338 42,435
Deferred income taxes,
net 31,283 24,315 17,517 13,721
Other assets 17,700 14,028 13,106 13,781
-------- -------- -------- --------
TOTAL ASSETS $570,458 $506,741 $509,476 $539,365
======== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 16,351 $ 14,677 $ 12,465 $ 15,090
Accrued employee
compensation 22,659 22,625 17,242 30,089
Deferred revenue 115,519 97,042 78,497 78,996
Income taxes
payable -- 2,251 -- 5,579
Accrued settlement
for class action
litigation -- -- -- 8,450
Accrued and other
current liabilities 32,323 17,925 16,737 23,174
-------- -------- -------- --------
Total current
liabilities 186,852 154,520 124,941 161,378
-------- -------- -------- --------
Deferred revenue 27,253 30,280 22,414 20,380
Note payable under
credit facility 75,000 75,000 75,000 75,000
Deferred income taxes,
net 3,245 3,265 -- 1,427
Other noncurrent
liabilities 37,069 18,664 16,755 13,968
-------- -------- -------- --------
Total liabilities 329,419 281,729 239,110 272,153
-------- -------- -------- --------
Commitments and
contingencies
Stockholders' equity
Preferred Stock -- -- -- --
Common Stock 204 204 204 204
Common stock warrants 24,003 -- -- --
Treasury Stock (140,320) (140,340) (97,768) (94,313)
Additional paid-in
capital 311,108 312,642 309,086 307,553
Retained earnings 47,886 53,226 64,978 62,357
Accumulated other
comprehensive loss (1,842) (720) (6,134) (8,589)
-------- -------- -------- --------
Total
stockholders'
equity 241,039 225,012 270,366 267,212
-------- -------- -------- --------
TOTAL
LIABILITIES AND
STOCKHOLDERS'
EQUITY $570,458 $506,741 $509,476 $539,365
======== ======== ======== ========
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
Three Months Ended
December 31,
-------- --------
2007 2006
-------- --------
Revenues:
Software license fees $ 46,266 $ 41,185
Maintenance fees 32,167 28,729
Services 22,849 23,375
-------- --------
Total revenues 101,282 93,289
-------- --------
Expenses:
Cost of software license fees 10,214 10,211
Cost of maintenance and services 24,689 24,147
Research and development 16,411 11,985
Selling and marketing 20,673 18,150
General and administrative 26,443 23,831
-------- --------
Total expenses 98,430 88,324
-------- --------
Operating income 2,852 4,965
Other income (expense):
Interest income 763 885
Interest expense (1,389) (1,460)
Other, net (334) (293)
-------- --------
Total other income (expense) (960) (868)
-------- --------
Income before income taxes 1,892 4,097
Income tax expense (benefit) 3,908 1,476
-------- --------
Net income (loss) $ (2,016) $ 2,621
======== ========
Earnings per share information
Weighted average shares outstanding
Basic 35,700 37,182
Diluted 35,700 38,035
Earnings per share
Basic $ (0.06) $ 0.07
Diluted $ (0.06) $ 0.07
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Three Months Ended
December 31,
--------------------
2007 2006
-------- --------
Cash flows from operating activities:
Net income (loss) $ (2,016) $ 2,621
Adjustments to reconcile net income (loss)
to net cash flows from operating activities
Depreciation 1,496 1,379
Amortization 3,724 3,499
Tax expense of intellectual property shift 591 478
Amortization of debt financing costs 84 84
Gain on transfer of assets under contractual
obligations (386) (404)
Loss on disposal of assets 17 54
Change in fair value of interest rate swaps 2,475 --
Deferred income taxes (741) 1,658
Stock-based compensation expense (recovery) (5) 1,748
Tax benefit of stock options exercised and
cash settled 97 121
Changes in operating assets and liabilities,
net of impact of acquisitions:
Billed and accrued receivables, net (17,552) 9,564
Other current assets (384) (247)
Other assets (702) 121
Accounts payable 2,799 (2,733)
Accrued employee compensation (73) (13,145)
Accrued liabilities 3,982 2,574
Payment of class action litigation
settlement -- (8,450)
Current income taxes 2,443 (1,788)
Deferred revenue 16,171 (54)
Other current and noncurrent liabilities 103 2,309
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Net cash flows from operating activities 12,123 (611)
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Cash flows from investing activities:
Purchases of property and equipment (2,227) (4,648)
Purchases of software and distribution
rights (1,658) (431)
Purchases of marketable securities -- (2,500)
Proceeds from transfer of assets under
contractual arrangement 500 500
Acquisition of businesses, net of cash
acquired (47) (6,757)
Proceeds from alliance agreement, net of
common stock warrants 9,330 --
-------- --------
Net cash flows from investing activities 5,898 (13,836)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 279 --
Proceeds from issuance of common stock
warrants 24,003
Payments for cash settlement of stock
options -- (285)
Proceeds from exercises of stock options 610 25
Excess tax benefit of stock options
exercised 109 17
Purchases of common stock (3,994) (4,353)
Payments on debt and capital leases (625) (1,489)
-------- --------
Net cash flows from financing activities 20,382 (6,085)
-------- --------
Effect of exchange rate fluctuations on cash (2,186) 284
-------- --------
Net increase (decrease) in cash and cash
equivalents 36,217 (20,248)
Cash and cash equivalents, beginning of period 60,794 110,148
-------- --------
Cash and cash equivalents, end of period $ 97,011 $ 89,900
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