ACI Worldwide, Inc. Reports Financial Results for Quarter Ended June 30, 2007 and Updates Guidance.KEY QUARTERLY HIGHLIGHTS * Generated strong operating free cash flow of $11.7 million versus $2.3 million in June 2006 quarter. * Continued sequential growth of $26 million in 60-month backlog to $1.270 billion versus $1.244 billion in the March quarter of 2007. * Signed a multi product contract with a large European bank to install BASE24-eps[TM], ACI ACI American Concrete Institute ACI Arch Coal Inc ACI Airports Council International (formerly Airport Associations Coordinating Council) ACI Automobile Club d'Italia ACI American Competitiveness Initiative Proactive Risk Manager debit A monetary amount that is subtracted from an account balance. A debit from one account is a credit to another. See credit. and credit on the IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) Z-Series platform and also expanded our direct distribution network in Asia with the acquisition of Stratasoft Sdn Bhd SDN BHD Sendirian Berhad (Malay equivalent to incorporated) . NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- ACI Worldwide, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ACIW): [TABLE OMITTED] ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of software for electronic payment systems, today announced financial results for the period ending June 30, 2007. We will hold a conference call on September 20,2007 at 8:30 am EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss this information. Interested persons may also access a real-time audio broadcast of the teleconference at www.aciworldwide.com/investors. "We believe that the continued growth in operating free cash flow underscores our effort to build and deliver long-term economic value in our business," stated Chief Executive Officer Philip G. Heasley. "Our results in the June quarter demonstrated the progress of our strategic emphasis upon cross-selling products to our existing accounts and we were encouraged by the growth of multi-product users within the quarter. In the March and June quarterly results, we demonstrated growth in both our backlog and in our deferred revenue compared to last year. In pursuit of the growth and expansion of our Asian direct distribution network we purchased Stratasoft in Malaysia, a long time ACI partner." Notable new business during the quarter included: * A multi-product contract signed with a bank in Brazil for ACI Proactive Risk Manager, and ACI Automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. Case Management systems. * A BASE24-eps[TM] capacity contract signed with a top 40 global bank. * Seven new customers signed; including new users of ACI Enterprise Banker On Demand and of Proactive Risk Manager. * Thirty one new applications added to existing customer relationships ranging from ACI Retail Commerce Server to PRM PRM Partner Relationship Management PRM Parameter PRM Bureau of Population, Refugees and Migration (US State Department) PRM Partidul Romania Mare (Romania Mare Party) PRM Professional Risk Manager Enterprise Risk and Simulation Services for Enterprise Testing. FINANCIAL SUMMARY Operating Free Cash Flow Operating free cash flow was $11.7 million compared to $2.3 million for the June 2006 quarter. The drivers of our operating free cash flow were solid contracting, billings and collections. Backlog As of June 30, 2007, our estimated 60-month backlog was $1.270 billion, compared to $1.244 billion as of March 31, 2007 and compared to $1.078 billion as of June 30, 2006. As of June 30, 2007, our 12-month backlog was $317 million, as compared to $307 million for the quarter ended March 31, 2007 and $257 million for the quarter ended June 30, 2006. The sequential growth of $26 million in our 60-month backlog was comprised of ACI organic growth of $23 million and $3 million from our acquired companies. Revenues Revenue was $98.1 million in the quarter ended June 2007, an increase of $13.3 million or 16 percent over the prior year period revenue of $84.8 million. $13.0 million of the increase was due to acquired companies' revenue while $0.3 million was attributable to ACI's organic business. Sequentially, our deferred revenue increased slightly at $1.1 million compared to a sequential decrease of $5.2 million in the June 2006 quarter, reflecting the business' emphasis on selling longer term products and services to both new and existing customers, thus resulting in lengthier revenue recognition cycles. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Excluding expenses of $15.5 million related to acquisitions, $4.7 million related to the review of historical stock option practices and vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) share option settlement, and $1.3 million related to non-recurring employee costs, organic operating expenses for the quarter rose $2.5 million on a year over year basis. The rise in operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. was primarily driven by a $1.4 million swing in deferred expenses and $0.7 million related to investments in Ireland and in Romania. Including the impact of these items, operating expenses were $93.2 million in the June 2007 quarter compared to $69.2 million in the June 2006 quarter. Other Income and Expense Other expense for the quarter was $2.0 million, compared to other income of $1.4 million in the June 2006 quarter. The decrease in other income resulted from the following factors: a loss on foreign exchange, a reduction of cash and cash equivalents due to the funding of the share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program which also impacted interest income received, and interest expense paid on the outstanding credit facility. Taxes The elongation elongation, in astronomy, the angular distance between two points in the sky as measured from a third point. The elongation of a planet is usually measured as the angular distance from the sun to the planet as measured from the earth. of our revenue recognition cycle, combined with several non-recurring charges, has resulted in lower pre-tax earnings. The impact of the $0.5 million fixed charge related to the transfer of intellectual property rights to Ireland and our geographic profit mix combined with the lower pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings led to an effective tax rate of 195 percent for the period ending June 30, 2007. The equivalent period ending June 30, 2006 had a rate of (33.1) percent due to a $12.6 million tax benefit related to the release of valuation allowances during the quarter. Net Income (Loss) and Diluted Earnings Per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of Net loss for the quarter was $2.7 million, compared to net income of $22.5 million during the same period last year. Earnings per share for the quarter ended June 2007 was $(0.07) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $0.59 per diluted share during the same period last year. The year-over-year quarterly variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality is primarily due to the following factors: change in tax rate $(0.48), dilutive impact of acquisitions $(0.04), expense related to the review of historical stock options and expense related to the settlement of vested options $(0.08), employee related costs $(0.02), investment in global offices and change in deferred costs $(0.03). Shares Outstanding Total weighted average diluted shares outstanding were 37.1 million as of June 30, 2007 as compared to 38.5 million shares outstanding as of June 30, 2006. Shares repurchased in the quarter totaled 463,100 shares at an average price of $33.90 or $15.7 million. Year to date we have repurchased 1,373,720 shares at an average price of $30.41. Adjusted Non-GAAP Earnings Per Share Adjusted Non-GAAP earnings for the quarter were $0.10 per diluted share, compared to $0.31 per diluted share during the same period last year. The variance is due primarily to the following factors: variance in taxes paid $(0.16), investment in Ireland and in Romania and change in deferred costs $(0.03). Calendar Year Guidance Update We have modified our assumptions on calendar year guidance predicated on the performance of the operating business as well as the impact of all expenses related to the options review charge of $4.7 million and non-recurring employee exit costs of approximately $6.5 to $7.5 million. Operating free cash flow is expected to be in the range of $50 million to $55 million with 60-month backlog of $1.290 billion to $1.310 billion. Revenue for calendar year 2007 is expected to be in the range of $390 million to $400 million. Currently we anticipate GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share for calendar year 2007 to be $0.20 to $0.40 per fully diluted share. Non-GAAP earnings per share, adjusted by adding expenses associated with amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. from acquisitions and non-cash, stock-based compensation (see Adjusted Non-GAAP Financial Measure below), is expected to be $0.82 to $1.02. In estimating earnings per share guidance for calendar 2007, we assume an average effective tax rate of 37 percent and 37.4 million shares outstanding. 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 earnings per share on an adjusted, non-GAAP basis. ACI is presenting these non-GAAP guidance measures to provide more transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. to its earnings, focusing on operations before selected non-cash items, operating free cash flow. We believe that providing earnings per share on an adjusted, non-GAAP basis is useful to our investors as an operating measure because it allows investors to more accurately compare our ongoing performance from period to period. However, earnings per share on an adjusted non-GAAP basis, is limited because it excludes expenses associated with amortization of intangible assets from acquisitions and non-cash stock based compensation. ACI is also 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. 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 the non-GAAP financial measures only in addition to and in conjunction with results presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. 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 a substitute for, or superior to, loss from operations and net loss per share calculated in accordance with GAAP. Due to the forward-looking nature of free operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and earnings per share on an adjusted, non-GAAP basis for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measure is not available at this time as the Company is unable to forecast any special items for future periods. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 the Company "believes," "will," "expects," "looks forward to" and words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. of similar impact. The forward-looking statements are made pursuant to safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements in this press release include, but are not limited to, statements regarding the: * Company's belief that the continued growth in operating free cash flow underscores our effort to build and deliver long-term economic value in our business; * Company's pursuit of the growth and expansion of its Asian direct distribution network; * Company's assumptions underlying our calendar year guidance; * Company's revenues, earnings per share, adjusted earnings per share, operating free cash flow, and 60-month backlog estimates for calendar year 2007; * Company's 12-month and 60-month backlog estimates; and * Company's calculation of recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. and non-recurring backlog. 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. Consequently, no forward-looking statement can be guaranteed. In addition, the Company disclaims any obligation to update any forward-looking statement after the date of this release. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on May 11, 2007, the Company's Form 10-Q Form 10-Q See 10-Q. filed on June 29, 2007 and the Company's Form 10-Q filed on August 10, 2007 and, specifically, the sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "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 Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the Company's financial statements; * Risks associated with not having current financial information available, one result of which is that the Company will be limited in its ability to register its securities for offer and sale until the Company is deemed a current filer with the SEC; * Risks associated with the delays in filing its periodic reports, including the need to obtain additional extensions from lenders in the future in order to comply with the financial reporting requirements of the Company's bank debt, which failure to do so could have a material adverse effect on the Company's business, liquidity and financial conditions; * Risks associated with the Company's noncompliance noncompliance failure of the owner to follow instructions, particularly in administering medication as prescribed; a cause of a less than expected response to treatment. noncompliance with NASDAQ marketplace rules, including the risk of being delisted; * 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 the Company's performance which could be materially adversely affected by a general economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. or lessening demand in the software sector; * Risks associated with the complexity of the Company's software products; * Risks associated with consolidation in the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. 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 Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; * 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 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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; and * Risks associated with the material weaknesses in the Company's internal controls over financial reporting. Backlog Estimates of future financial results are inherently unreliable. The Company's backlog estimates require substantial judgment and are based upon a number of assumptions as described in the Company's Form 10-Q filed on August 10, 2007 in the section entitled "Backlog" under Item 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. These assumptions may turn out to be inaccurate or wrong, including for reasons outside of management's control. For example, customers may attempt to renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. 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 the Company 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 12-month or 60-month period. Additionally, because backlog estimates are operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. , the estimates are not subject to the same level of internal review or controls as a GAAP financial measure. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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