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ACI Worldwide, Inc. Reports Financial Results for the Quarter and Year Ended December 31, 2013

ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of electronic payment and banking systems, today announced financial results for the period ended December 31, 2013. Management will host a conference call at 8:30 am EST 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 76644361. 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 has finished an important transitional year,” commented Phil Heasley, ACI President and CEO. “The integration of Online Resources is substantially complete, Official Payments is on schedule and our EBPP business is performing better than expected. Our Universal Payments strategy came to fruition in 2013 and we have seen encouraging interest in the marketplace. Our overall pipeline is at record levels and we have enhanced our financial guidance. We are very confident our efforts have positioned us to successfully take advantage of significant opportunity in 2014 and beyond.”

Q4 FINANCIAL SUMMARY

Revenue in Q4 was $283 million, an increase of $59 million, or 26%, above the prior-year quarter.

New sales bookings, net of term extensions (SNET), increased 25% compared to the prior-year quarter. Excluding the contribution from Online Resources and Official Payments, SNET increased 13% in Q4, compared to last year’s quarter.

Operating income was $86 million for the quarter, an increase of $10 million, or 14%, above the prior-year quarter. Q4 adjusted EBITDA of $117 million was 15% above the prior year’s $101 million.

Net income for the quarter was $50 million, or $1.28 per diluted share, compared to net income of $50 million, or $1.24 per diluted share, during the same period the prior year. Operating free cash flow in Q4 was $62 million, up from $24 million in the prior-year quarter.

FULL YEAR 2013 FINANCIAL SUMMARY

Revenue for the full year 2013 was $865 million, an increase of $198 million, or 30%. The acquisitions of Online Resources and Official Payments contributed $144 million of GAAP revenue to the full year. Non-GAAP revenue for the full year 2013 was $871 million, up 26% from the prior year’s $689 million. These figures include $6 million and $22 million, respectively, in deferred revenue not reportable under GAAP purchase accounting requirements.

New sales bookings, net of term extensions (SNET) for the year was $600 million, up 20% from $501 million in 2012. Excluding the contribution from Online Resources and Official Payments, SNET grew 7% compared to the prior year.

Operating income for the full year 2013 was $123 million, versus $74 million for the full year 2012. Non-GAAP operating income for the year was $155 million, up 21% from the prior year’s $128 million. Adjusted EBITDA of $239 million for the year grew 25% from the prior year’s $191 million. Non-GAAP figures include $6 million and $22 million of deferred revenue adjustments due to purchase accounting and exclude one-time acquisition-related expenses of $26 million and $31 million in 2013 and 2012, respectively. Excluding pass through interchange revenues of $38 million in 2013, net adjusted EBITDA margin represented 29% of revenue in the 2013, versus 28% in 2012.

Net income for the year ended December 31, 2013 was $64 million, or $1.60 per diluted share, compared to net income of $49 million, or $1.22 per diluted share, in the prior year. Non-GAAP net income for the year was $85 million, or $2.11 per diluted share, versus $84 million, or $2.10 per diluted share for 2012. Operating free cash flow for the year was $151 million, up from $24 million the prior year.

We ended the year with a 60-month backlog of $3.9 billion, adjusted for foreign currency fluctuations, up 24% from last quarter. Similarly, our 12-month backlog increased to $870 million. Official Payments contributed $696 million and $142 million to 60- and 12-month backlog, respectively.

As of December 31, 2013, we had $95 million in cash on hand, a debt balance of $755 million, down slightly from last quarter’s $764 million. We repurchased $81 million of our stock during 2013.

INCREASING SHARE REPURCHASE AUTHORIZATION

Year to date in 2014, we have repurchased 930,000 shares for $54 million. In addition, ACI’s Board of Directors has authorized an increase to its Share Repurchase Program of $100 million. Including this increase, we now have $156 million remaining on our share buyback authorization.

2014 GUIDANCE

We expect to generate non-GAAP revenue in a range of $1.06 to $1.08 billion for the full year and $220 to $230 million in the first quarter. Adjusted EBITDA is expected to be in a range of $290 to $300 million. This guidance excludes $13 to $15 million of one-time integration-related expenses and $2 million of deferred revenue haircut. Lastly, we expect full year 2014 net new sales bookings to increase in the upper single digit range.

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 payments 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.

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, Online Resources and Official Payments 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.
  • 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 significant transaction 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 payments associated with the cash settlement of acquisition related options and significant acquired opening balance sheet liabilities, plus net after-tax payments associated with employee-related actions and facility closures, net after-tax payments associated with significant transaction related expenses, 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.
  • 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) marketplace interest in our Universal Payments strategy; (ii) our overall pipeline; (iii) our ability to successfully take advantage of significant opportunities in 2014 and beyond; (iv) expectations regarding 2014 financial guidance, including non-GAAP revenue, adjusted EBITDA, and net new sales bookings; and (v) expectations regarding non-GAAP revenue in the first quarter.

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 transactions 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 applicable legislation, governmental regulations and industry standards, our compliance with privacy regulations, the protection of our intellectual property in intellectual property litigation, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue generating activity during the final weeks of each quarter, business interruptions or failure of our information technology and communication systems, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, exposure to unknown tax liabilities, and volatility in our stock price. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, Registration Statement on Form S-4, and subsequent reports on Forms 10-Q and 8-K.

 
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except share and per share amounts)
         
December 31, December 31,
2013 2012
ASSETS
Current assets
Cash and cash equivalents $ 95,059 $ 76,329
Receivables, net of allowances of $4,459 and $8,117, respectively 203,575 217,321
Deferred income taxes, net 47,593 34,342
Recoverable income taxes 2,258 5,572
Prepaid expenses 22,549 16,746
Other current assets   65,328     5,816  
Total current assets   436,362     356,126  
 
Property and equipment, net 57,347 41,286
Software, net 191,468 129,314
Goodwill 669,217 501,141
Intangible assets, net 237,693 127,900
Deferred income taxes, net 48,852 63,370
Other noncurrent assets   40,912     31,749  
TOTAL ASSETS $ 1,681,851   $ 1,250,886  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 43,658 $ 33,926
Employee compensation 35,623 35,194
Current portion of long-term debt 47,313 17,500
Deferred revenue 122,045 139,863
Income taxes payable 1,192 3,542
Deferred income taxes, net 753 174
Other current liabilities   95,016     36,400  
Total current liabilities   345,600     266,599  
 
Noncurrent liabilities
Deferred revenue 45,656 51,519
Long-term debt 708,070 356,750
Deferred income taxes, net 11,000 14,940
Other noncurrent liabilities   27,831     26,721  
Total liabilities   1,138,157     716,529  
 
Commitments and contingencies
 
Stockholders' equity

Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding at December 31, 2013 and 2012

- -

Common stock; $0.005 par value; 70,000,000 shares authorized; 46,606,796 shares issued at December 31, 2013 and 2012

232 232
Additional paid-in capital 543,163 534,953
Retained earnings 263,855 199,987
Treasury stock, at cost, 7,751,807 and 7,159,023 shares at December 31, 2013 and 2012, respectively (240,241 ) (186,784 )
Accumulated other comprehensive loss   (23,315 )   (14,031 )
Total stockholders' equity   543,694     534,357  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,681,851   $ 1,250,886  
 
 
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited and in thousands, except per share amounts)
     

For the Three Months Ended
December 31,

2013     2012
 
Revenues
License $ 82,625 $ 94,731
Maintenance 69,033 58,862
Services 40,952 38,985
Hosting   90,552     31,517  
Total revenues   283,162     224,095  
 
Operating expenses
Cost of license (1) 7,349 6,968
Cost of maintenance, services and hosting (1) 93,123 53,502
Research and development 33,375 33,586
Selling and marketing 23,118 22,730
General and administrative 23,557 21,616
Depreciation and amortization   16,660     10,158  
Total operating expenses   197,182     148,560  
 
Operating income   85,980     75,535  
 
Other income (expense)
Interest expense (9,818 ) (3,031 )
Interest income 158 209
Other, net   (1,821 )   1,298  
Total other income (expense)   (11,481 )   (1,524 )
 
Income before income taxes 74,499 74,011
Income tax expense   24,108     24,347  
Net income $ 50,391   $ 49,664  
 
Earnings per common share
Basic $ 1.30 $ 1.26
Diluted $ 1.28 $ 1.24
 
Weighted average common shares outstanding
Basic 38,650 39,393
Diluted 39,479 40,055
 

(1) The cost of software license fees excludes charges for depreciation but includes amortization of purchased and developed software for resale. The cost of maintenance, services and hosting fees excludes charges for depreciation.

 
 

ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited and in thousands, except per share amounts)

     

For the Years Ended December 31,

2013     2012
 
Revenues
License $ 233,931 $ 221,846
Maintenance 245,954 199,876
Services 122,085 131,536
Hosting   262,958     113,321  
Total revenues   864,928     666,579  
 
Operating expenses
Cost of license (1) 25,324 23,592
Cost of maintenance, services and hosting (1) 318,515 202,052
Research and development 142,557 133,759
Selling and marketing 99,828 87,054
General and administrative 99,300 108,747
Depreciation and amortization   56,356     37,003  
Total operating expenses   741,880     592,207  
 
Operating income   123,048     74,372  
 
Other income (expense)
Interest expense (27,221 ) (10,417 )
Interest income 659 914
Other, net   (3,327 )   399  
Total other income (expense)   (29,889 )   (9,104 )
 
Income before income taxes 93,159 65,268
Income tax expense   29,291     16,422  
Net income $ 63,868   $ 48,846  
 
Earnings per common share
Basic $ 1.63 $ 1.26
Diluted $ 1.60 $ 1.22
 
Weighted average common shares outstanding
Basic 39,295 38,696
Diluted 40,018 39,905
 

(1) The cost of software license fees excludes charges for depreciation but includes amortization of purchased and developed software for resale. The cost of maintenance, services and hosting fees excludes charges for depreciation.

 
 

ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

     

For the Three Months Ended
December 31,

2013     2012
Cash flows from operating activities:
Net income $ 50,391 $ 49,664
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation 5,218 3,596
Amortization 14,966 10,352
Amortization of deferred debt issuance costs 1,367 762
Deferred income taxes 14,913 12,542
Stock-based compensation expense 2,462 3,525
Excess tax benefit of stock options exercised (4,396 ) (165 )
Other (1,246 ) 852
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables (3,286 ) (48,003 )
Accounts payable 1,481 5,965
Accrued employee compensation (19,494 ) (2,737 )
Repayment of IBM Alliance agreement liability - (20,667 )
Current income taxes 3,165 5,886
Deferred revenue (29,494 ) (21,470 )
Other current and noncurrent assets and liabilities   15,811     3,375  
Net cash flows from operating activities   51,858     3,477  
 
Cash flows from investing activities:
Purchases of property and equipment (9,622 ) (3,018 )
Purchases of software and distribution rights (4,619 ) (54 )
Acquisition of businesses, net of cash acquired   (113,911 )   -  
Net cash flows from investing activities   (128,152 )   (3,072 )
 
Cash flows from financing activities:
Proceeds from issuance of common stock 654 398
Proceeds from exercises of stock options 9,669 1,671
Excess tax benefit of stock options exercised 4,396 165
Repurchases of common stock (264 ) -
Repurchase of restricted stock and performance shares for tax withholdings (328 ) (331 )
Repayments of revolving credit facility (40,000 ) (6,000 )
Proceeds from revolving credit facility 40,000 -
Repayment of term portion of credit agreement (8,871 ) (4,375 )
Payments on other debt and capital leases (702 ) (1,332 )
Payment for debt issuance costs   (645 )   -  
Net cash flows from financing activities   3,909     (9,804 )
 
Effect of exchange rate fluctuations on cash   933     (1,954 )
Net decrease in cash and cash equivalents (71,452 ) (11,353 )
Cash and cash equivalents, beginning of period   166,511     87,682  
Cash and cash equivalents, end of period $ 95,059   $ 76,329  
 
 
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
     

For the Years Ended
December 31,

2013     2012
Cash flows from operating activities:
Net income $ 63,868 $ 48,846
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation 18,751 13,284
Amortization 51,216 37,497
Amortization of deferred debt issuance costs 5,388 2,450
Deferred income taxes 9,573 4,775
Stock-based compensation expense 13,572 15,186
Excess tax benefit of stock options exercised (6,960 ) (3,543 )
Other (593 ) 150
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables 22,496 (61,965 )
Accounts payable (13,548 ) 5,981
Accrued employee compensation (24,501 ) (29,026 )
Repayment of IBM Alliance agreement liability - (20,667 )
Current income taxes 9,360 (5,660 )
Deferred revenue (23,613 ) (11,816 )
Other current and noncurrent assets and liabilities   13,409     (4,757 )
Net cash flows from operating activities   138,418     (9,265 )
 
Cash flows from investing activities:
Purchases of property and equipment (21,104 ) (13,050 )
Purchases of software and distribution rights (11,497 ) (3,612 )
Acquisition of businesses, net of cash acquired (378,113 ) (325,232 )
Other   -     (1,046 )
Net cash flows from investing activities   (410,714 )   (342,940 )
 
Cash flows from financing activities:
Proceeds from issuance of common stock 2,186 1,426
Proceeds from exercises of stock options 19,561 16,730
Excess tax benefit of stock options exercised 6,960 3,543
Repurchases of common stock (80,912 ) (57,836 )
Repurchase of restricted stock and performance shares for tax withholdings (6,222 ) (3,273 )
Proceeds from exercises of common stock warrants - 11,866
Cash settlement of common stock warrants - (29,596 )
Repayments of revolving credit facility (228,000 ) (6,000 )
Proceeds from revolving credit facility 40,000 119,000
Proceeds from term portion of credit agreement 300,000 200,000
Proceeds from issuance of senior notes 300,000 -
Repayment of term portion of credit agreement (30,867 ) (13,750 )
Payments on other debt and capital leases (14,024 ) (7,115 )
Payment for debt issuance costs   (17,042 )   (1,094 )
Net cash flows from financing activities   291,640     233,901  
 
Effect of exchange rate fluctuations on cash   (614 )   (2,465 )
Net increase (decrease) in cash and cash equivalents 18,730 (120,769 )
Cash and cash equivalents, beginning of period   76,329     197,098  
Cash and cash equivalents, end of period $ 95,059   $ 76,329  
 
 
ACI Worldwide, Inc.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(unaudited and in thousands, except per share data)
                                 
FOR THE THREE MONTHS ENDED December 31,

2013

2013 2012 2012
Selected Non-GAAP Financial Data GAAP     Adj     Non-GAAP     GAAP     Adj     Non-GAAP     $ Diff     % Diff
 
Total revenues (2) $ 283,162 $ 940 $ 284,102 $ 224,095 $ 3,635 $ 227,730 $ 56,372 25 %
Total expenses (3) 197,182 (6,975 ) 190,207 148,560 (4,430 ) 144,130 46,077 32 %
Operating income 85,980 7,915 93,895 75,535 8,065 83,600 10,295 12 %
Income before income taxes 74,499 7,915 82,414 74,011 8,065 82,076 338 0 %
Income tax expense (benefit) (4)   24,108       2,770         26,878       24,347       2,823         27,170       (292 )     -1 %
Net income $ 50,391     $ 5,145       $ 55,536     $ 49,664     $ 5,242       $ 54,906     $ 629       1 %
 
Depreciation 5,218 - 5,218 3,596 - 3,596 1,622 45 %
Amortization - acquisition related intangibles 5,180 - 5,180 3,414 - 3,414 1,766 52 %
Amortization - acquisition related software 4,607 - 4,607 3,555 - 3,555 1,052 30 %
Amortization - other 5,179 - 5,179 3,383 - 3,383 1,796 53 %
Stock-based compensation (5) 2,462 - 2,462 3,525 - 3,525 (1,063 ) -30 %
                                           
Adjusted EBITDA $ 108,626     $ 7,915       $ 116,541     $ 93,008     $ 8,065       $ 101,073     $ 15,468       15 %
 
Earnings per share information
Weighted average shares outstanding
Basic 38,650 38,650 38,650 39,393 39,393 39,393
Diluted 39,479 39,479 39,479 40,055 40,055 40,055
 
Earnings per share
Basic $ 1.30 $ 0.13 $ 1.44 $ 1.26 $ 0.13 $ 1.39 $ 0.04 3 %
Diluted $ 1.28 $ 0.13 $ 1.41 $ 1.24 $ 0.13 $ 1.37 $ 0.04 3 %
 

(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 ORCC and S1 but was not recognized due to GAAP purchase accounting requirements.

(3) Expense for significant transaction related transactions, including, $1.2 million for employee related actions, $1.2 million for facility closures, $1.4 million for data center moves and $3.1 million for professional and other fees in 2013 and $0.2 million for employee related actions, $1.3 million for facility closures, and $3.0 million for other professional fees in 2012.

(4) Adjustments tax effected at 35%.

               

Quarter Ended

December 31,

Reconciliation of Operating Free Cash Flow (millions) 2013 2012
 
Net cash provided (used) by operating activities $ 51.9 $ 3.5
Payments associated with cash settlement of acquisition related options (4) 10.2 -
Payments associated with acquired opening balance sheet liabilities 4.5 -
Net after-tax payments associated with employee-related actions (4) 1.8 0.4
Net after-tax payments associated with lease terminations (4) 0.4 1.9
Net after-tax payments associated with significant transaction related expenses (4) 6.9 -
Net after-tax payments associated with IBM IT Outsourcing Termination (4) - 0.2
Plus IBM Alliance liability payment - 20.7
Less capital expenditures   (14.2 )   (3.1 )
Operating Free Cash Flow $ 61.5   $ 23.6  
 
 
      ACI Worldwide, Inc.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(unaudited and in thousands, except per share data)
                           
FOR THE TWELVE MONTHS ENDED December 31,
2013 2013 2012 2012
Selected Non-GAAP Financial Data GAAP     Adj     Non-GAAP    

GAAP

    Adj     Non-GAAP     $ Diff     % Diff
 
Total revenues (2) $ 864,928 $ 5,771 $ 870,699 $ 666,579 $ 22,461 $ 689,040 $ 181,659 26 %
Total expenses (3) 741,880 (26,169 ) 715,711 592,207 (31,464 ) 560,743 154,968 28 %
Operating income 123,048 31,940 154,988 74,372 53,925 128,297 26,691 21 %
Income before income taxes 93,159 31,940 125,099 65,268 53,925 119,193 5,906 5 %
Income tax expense (benefit) (4)   29,291       11,179         40,470       16,422       18,874         35,296       5,174       15 %
Net income $ 63,868     $ 20,761       $ 84,629     $ 48,846     $ 35,051       $ 83,897     $ 732       1 %
 
Depreciation 18,751 - 18,751 13,284 - 13,284 5,467 41 %
Amortization - acquisition related intangibles 51 - 51 12,102 - 12,102 (12,051 ) -100 %
Amortization - acquisition related software 16,911 - 16,911 12,837 - 12,837 4,074 32 %
Amortization - other 15,779 - 15,779 12,558 - 12,558 3,221 26 %
Stock-based compensation (5) 13,572 - 13,572 15,186 (2,822 ) 12,364 1,208 10 %
                                           
Adjusted EBITDA $ 188,112     $ 31,940       $ 220,052     $ 140,339     $ 51,103       $ 191,442     $ 28,610       15 %
 
Earnings per share information
Weighted average shares outstanding
Basic 39,295 39,295 39,295 38,696 38,696 38,696
Diluted 40,018 40,018 40,018 39,905 39,905 39,905
 
Earnings per share
Basic $ 1.63 $ 0.53 $ 2.15 $ 1.26 $ 0.91 $ 2.17 $ (0.01 ) -1 %
Diluted $ 1.60 $ 0.52 $ 2.11 $ 1.22 $ 0.88 $ 2.10 $ 0.01 1 %
 

 

(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 ORCC and S1 but was not recognized due to GAAP purchase accounting requirements.

(3) Expense for significant transaction related transactions, including, $10.6 million for employee related actions, $2.2 million for facility closures, $2.4 million for data center moves and $10.9 million for professional and other fees in 2013 and $14.0 million for employee related actions, $4.9 million for facility closures, $3.2 million for IT exit costs and $9.3 million for other professional fees in 2012.

(4) Adjustments tax effected at 35%.

(5) Accelerated stock compensation expense for terminated employees related to the S1 acquisition.

     
Year Ended December 31,
Reconciliation of Operating Free Cash Flow (millions) 2013     2012
 
Net cash provided (used) by operating activities $ 138.4 $ (9.3 )
Payments associated with cash settlement of acquisition related options (4) 10.2 10.2
Payments associated with acquired opening balance sheet liabilities 4.5 -
Net after-tax payments associated with employee-related actions (4) 9.7 6.2
Net after-tax payments associated with lease terminations (4) 1.0 2.7
Net after-tax payments associated with significant transaction related expenses (4) 18.1 8.8
Net after-tax payments associated with IBM IT Outsourcing Termination (4) 1.9 0.9
Plus IBM Alliance liability payment - 20.7
Less capital expenditures   (32.5 )   (16.7 )
Operating Free Cash Flow $ 151.3   $ 23.5  

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