What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 134 added, 126 removed, 681 unchanged (28% of the section changed)

4 unchanged sentences

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

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Current assets

53 unchanged sentences

5,000,000 shares authorized;

no shares issued at June 30, 2020, and December 31, 2019

no shares issued at September 30, 2020, and December 31, 2019

Common stock;

1 unchanged sentence

280,000,000 shares authorized;

140,525,055 shares issued at June 30, 2020, and December 31, 2019

140,525,055 shares issued at September 30, 2020, and December 31, 2019

Additional paid-in capital 675,941 667,658

Retained earnings 936,344 930,830

Treasury stock, at cost, 24,158,059 and 24,538,703 shares at June 30, 2020, and December 31, 2019, respectively

Treasury stock, at cost, 23,794,109 and 24,538,703 shares at September 30, 2020, and December 31, 2019, respectively

( 393,651 ) ( 377,639 )

7 unchanged sentences

(unaudited and in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

19 unchanged sentences

284,701 299,583 858,241 837,031

Operating income (loss) 29,138 ( 5,882 ) 17,855 ( 33,975 )

Operating income 31,182 55,318 49,037 21,343

Other income (expense)

7 unchanged sentences

Income tax expense (benefit) 6,674 5,136 1,705 ( 30,018 )

Net income (loss) $ 14,075 $ 5,725 $ ( 10,352 ) $ ( 20,238 )

Income (loss) per common share

Net income $ 15,866 $ 31,814 $ 5,514 $ 11,576

Income per common share

$ 0.14 $ 0.27 $ 0.05 $ 0.10

9 unchanged sentences

(unaudited and in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net income (loss) $ 14,075 $ 5,725 $ ( 10,352 ) $ ( 20,238 )

Other comprehensive loss:

Net income $ 15,866 $ 31,814 $ 5,514 $ 11,576

Other comprehensive income (loss):

Foreign currency translation adjustments

1,842 ( 1,610 ) ( 4,909 ) ( 2,019 )

Total other comprehensive loss ( 582 ) ( 1,730 ) ( 6,751 ) ( 409 )

Comprehensive income (loss)

Total other comprehensive income (loss) 1,842 ( 1,610 ) ( 4,909 ) ( 2,019 )

Comprehensive income

$ 17,708 $ 30,204 $ 605 $ 9,557

4 unchanged sentences

(unaudited and in thousands, except share amounts)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Common Stock Additional

1 unchanged sentence

Comprehensive Loss Total

Balance as of March 31, 2020 $ 702 $ 656,723 $ 906,403 $ ( 398,278 ) $ ( 97,752 ) $ 1,067,798

Balance as of June 30, 2020 $ 702 $ 667,554 $ 920,478 $ ( 399,663 ) $ ( 98,334 ) $ 1,090,737

Net income — — 15,866 — — 15,866

Other comprehensive loss — — — — ( 582 ) ( 582 )

Other comprehensive income — — — — 1,842 1,842

Stock-based compensation

4 unchanged sentences

— — — ( 26 ) — ( 26 )

Balance as of June 30, 2020 $ 702 $ 667,554 $ 920,478 $ ( 399,663 ) $ ( 98,334 ) $ 1,090,737

Three Months Ended June 30, 2019

Balance as of September 30, 2020 $ 702 $ 675,941 $ 936,344 $ ( 393,651 ) $ ( 96,492 ) $ 1,122,844

Three Months Ended September 30, 2019

Common Stock Additional

1 unchanged sentence

Comprehensive Loss Total

Balance as of March 31, 2019 $ 702 $ 636,960 $ 837,805 $ ( 351,587 ) $ ( 91,296 ) $ 1,032,584

Balance as of June 30, 2019 $ 702 $ 650,797 $ 843,530 $ ( 349,426 ) $ ( 93,026 ) $ 1,052,577

Net income — — 31,814 — — 31,814

5 unchanged sentences

— 485 — 1,299 — 1,784

Repurchase of 1,204,300 shares of common stock

— — — ( 34,986 ) — ( 34,986 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 13 ) — ( 13 )

Balance as of June 30, 2019 $ 702 $ 650,797 $ 843,530 $ ( 349,426 ) $ ( 93,026 ) $ 1,052,577

Balance as of September 30, 2019 $ 702 $ 660,653 $ 875,344 $ ( 383,126 ) $ ( 94,636 ) $ 1,058,937

The accompanying notes are an integral part of the condensed consolidated financial statements.

3 unchanged sentences

(unaudited and in thousands, except share amounts)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Paid-in Capital

4 unchanged sentences

Balance as of December 31, 2019 $ 702 $ 667,658 $ 930,830 $ ( 377,639 ) $ ( 91,583 ) $ 1,129,968

Net loss — — ( 10,352 ) — — ( 10,352 )

Net income — — 5,514 — — 5,514

Other comprehensive loss — — — — ( 4,909 ) ( 4,909 )

7 unchanged sentences

— — — ( 11,150 ) — ( 11,150 )

Balance as of June 30, 2020 $ 702 $ 667,554 $ 920,478 $ ( 399,663 ) $ ( 98,334 ) $ 1,090,737

Six Months Ended June 30, 2019

Balance as of September 30, 2020 $ 702 $ 675,941 $ 936,344 $ ( 393,651 ) $ ( 96,492 ) $ 1,122,844

Nine Months Ended September 30, 2019

Paid-in Capital

4 unchanged sentences

Balance as of December 31, 2018 $ 702 $ 632,235 $ 863,768 $ ( 355,857 ) $ ( 92,617 ) $ 1,048,231

— — ( 20,238 ) — — ( 20,238 )

Net income — — 11,576 — — 11,576

Other comprehensive loss

8 unchanged sentences

— — — ( 2,822 ) — ( 2,822 )

Balance as of June 30, 2019 $ 702 $ 650,797 $ 843,530 $ ( 349,426 ) $ ( 93,026 ) $ 1,052,577

Balance as of September 30, 2019 $ 702 $ 660,653 $ 875,344 $ ( 383,126 ) $ ( 94,636 ) $ 1,058,937

The accompanying notes are an integral part of the condensed consolidated financial statements.

3 unchanged sentences

(unaudited and in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net loss $ ( 10,352 ) $ ( 20,238 )

Adjustments to reconcile net loss to net cash flows from operating activities:

Net income $ 5,514 $ 11,576

Adjustments to reconcile net income to net cash flows from operating activities:

18,012 17,916

1 unchanged sentence

Amortization of operating lease right-of-use assets

14,145 10,877

Amortization of deferred debt issuance costs

6 unchanged sentences

Accounts payable

Accrued employee compensation

1,680 ( 8,414 )

Accrued employee compensation

Current income taxes

33 unchanged sentences

Effect of exchange rate fluctuations on cash

8,118 ( 865 )

Net increase (decrease) in cash and cash equivalents 12,447 ( 26,921 )

16 unchanged sentences

All intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements as of June 30, 2020, and for the three and six months ended June 30, 2020 and 2019, are unaudited and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods.

The condensed consolidated financial statements as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019, are unaudited and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods.

The condensed consolidated balance sheet as of December 31, 2019, is derived from the audited financial statements.

The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 27, 2020.

Results for the three and six months ended June 30, 2020, are not necessarily indicative of results that may be attained in the future.

Results for the three and nine months ended September 30, 2020, are not necessarily indicative of results that may be attained in the future.

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S.

14 unchanged sentences

The components of other current liabilities are included in the following table (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Operating lease liabilities $ 13,569 $ 15,049

19 unchanged sentences

The collection of interest on these settlement accounts is considered in the Company’s determination of its fee structure for clients and represents a portion of the payment for services performed by the Company.

The amount of settlement funds as of June 30, 2020, and December 31, 2019, was $ 165.9 million and $ 274.0 million, respectively.

The amount of settlement funds as of September 30, 2020, and December 31, 2019, was $ 164.5 million and $ 274.0 million, respectively.

The fair value of the Company’s Credit Agreement approximates the carrying value due to the floating interest rate (Level 2 of the fair value hierarchy).

The Company measures the fair value of its Senior Notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 416.7 million and $ 432.0 million as of June 30, 2020, and December 31, 2019, respectively.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 423.0 million and $ 432.0 million as of September 30, 2020, and December 31, 2019, respectively.

The fair values of cash and cash equivalents approximate the carrying values due to the short period of time to maturity (Level 2 of the fair value hierarchy).

1 unchanged sentence

The Company evaluates goodwill at the reporting unit level and has identified its reportable segments, ACI On Demand and ACI On Premise, as the reporting units.

Changes in the carrying amount of goodwill attributable to each reporting unit during the six months ended June 30, 2020, were as follows (in thousands):

Changes in the carrying amount of goodwill attributable to each reporting unit during the nine months ended September 30, 2020, were as follows (in thousands):

ACI On Demand ACI On Premise Total

6 unchanged sentences

Goodwill from acquisitions (1) ( 299 ) — ( 299 )

Balance, June 30, 2020

Balance, September 30, 2020

$ 554,318 $ 725,908 $ 1,280,226

12 unchanged sentences

The Company records its share of earnings and losses in the investment on a one-quarter lag basis.

Accordingly, the Company recorded an investment of $ 18.1 million and $ 18.5 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of June 30, 2020 and December 31, 2019, respectively.

Accordingly, the Company recorded an investment of $ 18.8 million and $ 18.5 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of September 30, 2020, and December 31, 2019, respectively.

Effective January 1, 2020, Official Payments Corporation, a wholly owned subsidiary, changed its name to ACI Payments, Inc.

37 unchanged sentences

Total receivables, net is comprised of the following (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Billed receivables $ 168,973 $ 213,654

8 unchanged sentences

Total receivables, net $ 515,381 $ 572,238

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of June 30, 2020, or December 31, 2019.

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of September 30, 2020, or December 31, 2019.

Deferred revenue includes amounts due or received from customers for software licenses, maintenance, services, and/or SaaS and PaaS services in advance of recording the related revenue.

4 unchanged sentences

Foreign currency translation ( 252 )

Balance, June 30, 2020

Balance, September 30, 2020

Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

3 unchanged sentences

• SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the direct allocation method.

Revenue allocated to remaining performance obligations was $ 672.2 million as of June 30, 2020, of which the Company expects to recognize approximately 44 % over the next 12 months and the remainder thereafter.

During the three and six months ended June 30, 2020 and 2019, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

Revenue allocated to remaining performance obligations was $ 731.7 million as of September 30, 2020, of which the Company expects to recognize approximately 39 % over the next 12 months and the remainder thereafter.

During the three and nine months ended September 30, 2020 and 2019, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

On May 9, 2019, the Company acquired Speedpay, a subsidiary of The Western Union Company (“Western Union”), for $ 754.1 million in cash, including working capital adjustments, pursuant to a Stock Purchase Agreement, among the Company, Western Union, and ACI Worldwide Corp., a wholly owned subsidiary of the Company.

5 unchanged sentences

The remaining acquisition consideration was funded with cash on hand.

The Company expensed approximately $ 16.6 million and $ 21.3 million of costs related to the acquisition of Speedpay for the three and six months ended June 30, 2019, respectively.

The Company expensed approximately $ 0.9 million and $ 22.2 million of costs related to the acquisition of Speedpay for the three and nine months ended September 30, 2019, respectively.

These costs, which consist primarily of investment bank, consulting, and legal fees, are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Speedpay contributed approximately $ 80.2 million in total revenue and $ 15.0 million in total operating income for the three months ended June 30, 2020.

Speedpay contributed approximately $ 168.9 million in total revenue and $ 27.3 million in total operating income for the six months ended June 30, 2020.

Speedpay contributed approximately $ 49.3 million in total revenue and $ 7.6 million in total operating income for the three and six months ended June 30, 2019.

In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of June 30, 2020 (in thousands, except weighted average useful lives):

Speedpay contributed approximately $ 80.3 million and $ 249.2 million in total revenue for the three and nine months ended September 30, 2020, respectively.

Due to integration activities, the Company is no longer able to separately identify the contribution to operating income generated from the acquisition of Speedpay for the three and nine months ended September 30, 2020.

Speedpay contributed approximately $ 87.7 million and $ 137.1 million in total revenue for the three and nine months ended September 30, 2019, respectively.

Speedpay contributed approximately $ 7.5 million and $ 15.2 million in total operating income for the three and nine months ended September 30, 2019, respectively.

In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of September 30, 2020 (in thousands, except weighted average useful lives):

Amount Weighted Average Useful Lives

23 unchanged sentences

Net assets acquired $ 754,057

During the six months ended June 30, 2020, the Company made adjustments to the preliminary purchase price allocation as additional information became available for accounts payable.

During the nine months ended September 30, 2020, the Company made adjustments to the preliminary purchase price allocation as additional information became available for accounts payable.

These adjustments and any resulting adjustments to the statements of operations were not material to the Company’s previously reported operating results or financial position.

5 unchanged sentences

This pro forma information is not intended to represent or be indicative of actual results had the acquisition occurred as of the beginning of each period, and does not reflect potential synergies, integration costs, or other such costs or savings.

Certain pro forma adjustments have been made to net income (loss) for the three and six months ended June 30, 2019, to give effect to estimated adjustments that remove the amortization expense on eliminated Speedpay historical identifiable intangible assets, add amortization expense for the value of acquired identified intangible assets (primarily acquired software, customer relationships, and trademarks), and add estimated interest expense on the Company’s additional Delayed Draw Term Loan and Revolving Credit Facility borrowings.

Additionally, certain transaction expenses that are a direct result of the acquisition have

been excluded.

The three and six months ended June 30, 2020, are not presented as Speedpay is included in the Company's consolidated results for the entire periods.

Certain pro forma adjustments have been made to net income for the three and nine months ended September 30, 2019, to give effect to estimated adjustments that remove the amortization expense on eliminated Speedpay historical identifiable intangible assets, add amortization expense for the value of acquired identified intangible assets (primarily acquired software, customer relationships, and trademarks), and add estimated interest expense on the Company’s additional Delayed Draw Term Loan and Revolving Credit Facility borrowings.

Additionally, certain transaction expenses that are a direct result of the acquisition have been excluded.

The three and nine months ended September 30, 2020, are not presented, as Speedpay is included in the Company's consolidated results for the entire periods.

The following is the unaudited summarized pro forma financial information (in thousands, except per share data):

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Pro forma revenue $ 354,901 $ 983,037

Pro forma net income (loss) $ 15,249 $ ( 5,996 )

Pro forma income (loss) per share:

Pro forma net income $ 32,513 $ 26,517

Pro forma income per share:

Basic $ 0.28 $ 0.23

2 unchanged sentences

The Company has included the financial results of Walletron in the condensed consolidated financial statements from the date of acquisition, which were not material.

As of June 30, 2020, the Company had $ 200.0 million, $ 736.6 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $ 300.0 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended.

As of September 30, 2020, the Company had $ 160.0 million, $ 726.8 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $ 338.5 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended, and up to $ 1.5 million of unused borrowings under the Letter of Credit agreement.

The amount of unused borrowings actually available varies in accordance with the terms of the agreement.

Credit Agreement

10 unchanged sentences

Interest is due and payable monthly.

The interest rate in effect for the Credit Facility as of June 30, 2020, was 2.43 %.

The interest rate in effect for the Credit Facility as of September 30, 2020, was 2.40 %.

The Company is also required to pay (a) a commitment fee related to the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears, (b) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on LIBOR rate borrowings under the Revolving Credit Facility on an annual basis, payable quarterly in arrears, and (c) customary fronting fees for the issuance of letters of credit fees and agency fees.

The Company’s obligations under the Credit Facility and cash management arrangements entered into with lenders under the Credit Facility (or affiliates thereof) and the obligations of the subsidiary guarantors are secured by first-priority security interests in substantially all assets of the Company and any guarantor, including 100 % of the capital stock of ACI Worldwide Corp.

and each domestic subsidiary of the Company, each domestic subsidiary of any guarantor, and 65 % of the voting capital stock of each foreign subsidiary of the Company that is directly owned by the Company or a guarantor, in each case subject to

certain exclusions set forth in the credit documentation governing the Credit Facility.

The collateral agreement of the Credit Agreement, as amended, released the lien on certain assets of ACI Payments, Inc., our electronic bill presentment and payment affiliate, to allow ACI Payments, Inc.

13 unchanged sentences

and hold certain assets and incur certain liabilities.

Letter of Credit

On August 12, 2020, the Company entered into a standby letter of credit (the “Letter of Credit”), under the terms of the Credit Agreement, for $ 1.5 million.

The Letter of Credit expires on July 31, 2021, with automatic renewals for twelve month periods thereafter.

The Letter of Credit reduces the maximum available borrowings under the Revolving Credit Facility to $ 498.5 million.

Upon expiration of the Letter of Credit, maximum borrowings will return to $ 500.0 million.

Expected Discontinuation of LIBOR

8 unchanged sentences

The 2026 Notes will mature on August 15, 2026.

Maturities on debt outstanding as of June 30, 2020, are as follows (in thousands):

Maturities on debt outstanding as of September 30, 2020, are as follows (in thousands):

Fiscal Year Ending December 31,

6 unchanged sentences

As specified in the Credit Agreement and 2026 Notes agreement, if certain events occur and continue, the Company may be required to repay all amounts outstanding under the Credit Facility and 2026 Notes.

As of June 30, 2020, and at all times during the period, the Company was in compliance with its financial debt covenants.

As of September 30, 2020, and at all times during the period, the Company was in compliance with its financial debt covenants.

Total debt is comprised of the following (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Term loans $ 726,848 $ 756,060

13 unchanged sentences

Amounts outstanding on the overdraft facility are included in other current liabilities in the condensed consolidated balance sheet.

As of June 30, 2020, there was no amount outstanding on the overdraft facility.

As of September 30, 2020, there was no amount outstanding on the overdraft facility.

As of December 31, 2019, there was $ 1.5 million outstanding on the overdraft facility.

1 unchanged sentence

Upon execution, these arrangements have been treated as a non-cash investing and financing activity for purposes of the condensed consolidated statements of cash flows.

As of June 30, 2020, $ 13.8 million was outstanding, of which $ 9.4 million and $ 4.4 million is included in other current liabilities and other noncurrent liabilities, respectively, in the consolidated balance sheet.

As of December 31, 2019, $ 13.8 million was outstanding, of which $ 6.0 million and $ 7.8 million was included in other current liabilities and other noncurrent liabilities, respectively, in the consolidated balance sheet.

As of September 30, 2020, $ 10.0 million was outstanding, of which $ 7.8 million and $ 2.2 million is included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

Stock-Based Compensation Plans

Employee Stock Purchase Plan

Shares issued under the 2017 Employee Stock Purchase Plan during the six months ended June 30, 2020 and 2019, totaled 72,228 and 60,362 , respectively.

Shares issued under the 2017 Employee Stock Purchase Plan during the nine months ended September 30, 2020 and 2019, totaled 114,709 and 92,765 , respectively.

2020 Equity and Incentive Compensation Plan

19 unchanged sentences

Expired ( 6,090 ) 18.44

Outstanding as of June 30, 2020 2,832,399 $ 17.61 3.98 $ 26,562,039

Exercisable as of June 30, 2020 2,685,163 $ 17.48 4.11 $ 25,532,991

The total intrinsic value of stock options exercised during the six months ended June 30, 2020 and 2019, was $ 10.5 million and $ 6.0 million, respectively.

There were no stock options granted during the six months ended June 30, 2020 or 2019.

Outstanding as of September 30, 2020 2,514,153 $ 17.70 4.17 $ 21,206,451

Exercisable as of September 30, 2020 2,366,917 $ 17.55 4.34 $ 20,304,026

The total intrinsic value of stock options exercised during the nine months ended September 30, 2020 and 2019, was $ 14.3 million and $ 6.9 million, respectively.

There were no stock options granted during the nine months ended September 30, 2020 or 2019.

Long-term Incentive Program Performance Share Awards

7 unchanged sentences

Change in attainment 4,139 20.12

Nonvested as of June 30, 2020 — $ —

During the six months ended June 30, 2020, a total of 668,240 LTIPs vested.

Nonvested as of September 30, 2020 — $ —

During the nine months ended September 30, 2020, a total of 668,240 LTIPs vested.

The Company withheld 165,237 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

6 unchanged sentences

Forfeited ( 3,929 ) 20.35

Nonvested as of June 30, 2020 — $ —

During the six months ended June 30, 2020, a total of 88,913 RSAs vested.

Nonvested as of September 30, 2020 — $ —

During the nine months ended September 30, 2020, a total of 88,913 RSAs vested.

The Company withheld 28,233 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

Total Shareholder Return Awards

During the six months ended June 30, 2020 and 2019, pursuant to the 2016 Incentive Plan, the Company granted total shareholder return awards (“TSRs”).

During the nine months ended September 30, 2020 and 2019, pursuant to the 2016 Incentive Plan, the Company granted total shareholder return awards (“TSRs”).

TSRs are performance shares that are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period.

10 unchanged sentences

Change in payout rate ( 14,259 ) 24.37

Nonvested as of June 30, 2020 1,446,568 $ 34.56

During the six months ended June 30, 2020, a total of 199,413 TSRs awards granted in fiscal 2017 vested and achieved a payout rate of 93 % based on the Company's total shareholder return as compared to a group of peer companies over a three -year performance period.

Nonvested as of September 30, 2020 1,441,802 $ 34.56

During the nine months ended September 30, 2020, a total of 199,413 TSRs awards granted in fiscal 2017 vested and achieved a payout rate of 93 % based on the Company's total shareholder return as compared to a group of peer companies over a three-year performance period.

The Company withheld 53,033 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

The fair value of TSRs granted during the six months ended June 30, 2020 and 2019, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted average assumptions:

Six Months Ended June 30,

The fair value of TSRs granted during the nine months ended September 30, 2020 and 2019, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted average assumptions:

Nine Months Ended September 30,

Expected life (years) 2.8 2.8

3 unchanged sentences

Restricted Share Units

During the six months ended June 30, 2020 and 2019, pursuant to the 2020 Plan and the 2016 Incentive Plan, respectively, the Company granted restricted share unit awards (“RSUs”).

During the nine months ended September 30, 2020 and 2019, pursuant to the 2020 Plan and the 2016 Incentive Plan, respectively, the Company granted restricted share unit awards (“RSUs”).

RSUs generally have requisite service periods of three years and vest in increments of 33 % on the anniversary of the grant dates.

10 unchanged sentences

Forfeited ( 121,284 ) 29.50

Nonvested as of June 30, 2020 1,283,367 $ 27.59

During the six months ended June 30, 2020, a total of 399,605 RSUs vested.

Nonvested as of September 30, 2020 1,292,062 $ 27.55

During the nine months ended September 30, 2020, a total of 403,865 RSUs vested.

The Company withheld 110,689 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of June 30, 2020, there were unrecognized compensation costs of $ 30.1 million related to nonvested RSUs, $ 27.1 million related to nonvested TSRs, and less than $ 0.1 million related to nonvested stock options, which the Company expects to recognize over weighted average periods of 2.1 years, 1.9 years, and 0.7 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended June 30, 2020 and 2019, of $ 7.9 million and $ 14.4 million, respectively, with corresponding tax benefits of $ 1.4 million and $ 2.8 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the six months ended June 30, 2020 and 2019, of $ 14.9 million and $ 21.0 million, respectively, with the corresponding tax benefits of $ 2.8 million and $ 4.0 million, respectively.

As of September 30, 2020, there were unrecognized compensation costs of $ 26.1 million related to nonvested RSUs, $ 23.5 million related to nonvested TSRs, and less than $ 0.1 million related to nonvested stock options, which the Company expects to recognize over weighted average periods of 1.9 years, 1.7 years, and 0.4 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended September 30, 2020 and 2019, of $ 8.1 million and $ 9.3 million, respectively, with corresponding tax benefits of $ 1.4 million and $ 1.5 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the nine months ended September 30, 2020 and 2019, of $ 22.9 million and $ 30.3 million, respectively, with the corresponding tax benefits of $ 4.2 million and $ 5.5 million, respectively.

Software and Other Intangible Assets

The carrying amount and accumulated amortization of the Company's software assets subject to amortization at each balance sheet date are as follows (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Gross Carrying Amount Accumulated Amortization Net Balance Gross Carrying Amount Accumulated Amortization Net Balance

3 unchanged sentences

Amortization of software for resale is computed using the greater of (a) the ratio of current gross revenues to the total of current and future gross revenues expected to be derived from the software or (b) the straight-line method over the remaining estimated useful life of generally five to ten years .

Software for resale amortization expense recorded during the three months ended June 30, 2020 and 2019, totaled $ 2.1 million and $ 3.0 million, respectively.

Software for resale amortization expense recorded during the six months ended June 30, 2020 and 2019, totaled $ 4.0 million and $ 6.0 million, respectively.

Software for resale amortization expense recorded during the three months ended September 30, 2020 and 2019, totaled $ 2.1 million and $ 2.8 million, respectively.

Software for resale amortization expense recorded during the nine months ended September 30, 2020 and 2019, totaled $ 6.1 million and $ 8.8 million, respectively.

These software amortization expense amounts are reflected in cost of revenue in the condensed consolidated statements of operations.

Amortization of software for internal use is computed using the straight-line method over an estimated useful life of generally one to ten years .

Software for internal use amortization expense recorded during the three months ended June 30, 2020 and 2019, totaled $ 18.5 million and $ 13.3 million, respectively.

Software for internal use amortization expense recorded during the six months ended June 30, 2020 and 2019, totaled $ 35.2 million and $ 23.7 million, respectively.

Software for internal use amortization expense recorded during the three months ended September 30, 2020 and 2019, totaled $ 17.9 million and $ 15.7 million, respectively.

Software for internal use amortization expense recorded during the nine months ended September 30, 2020 and 2019, totaled $ 53.1 million and $ 39.4 million, respectively.

These software amortization expense amounts are reflected in depreciation and amortization in the condensed consolidated statements of operations.

The carrying amount and accumulated amortization of the Company’s other intangible assets subject to amortization at each balance sheet date are as follows (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Gross Carrying Amount Accumulated Amortization Net Balance Gross Carrying Amount Accumulated Amortization Net Balance

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Total other intangible assets $ 533,655 $ ( 205,398 ) $ 328,257 $ 535,097 $ ( 178,128 ) $ 356,969

Other intangible assets amortization expense recorded during the three months ended June 30, 2020 and 2019, totaled $ 9.2 million and $ 7.6 million, respectively.

Other intangible assets amortization expense recorded during the six months ended June 30, 2020 and 2019, totaled $ 18.5 million and $ 13.1 million, respectively.

Based on capitalized intangible assets as of June 30, 2020, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Other intangible assets amortization expense recorded during the three months ended September 30, 2020 and 2019, totaled $ 9.3 million and $ 9.4 million, respectively.

Other intangible assets amortization expense recorded during the nine months ended September 30, 2020 and 2019, totaled $ 27.8 million and $ 22.5 million, respectively.

Based on capitalized intangible assets as of September 30, 2020, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Fiscal Year Ending December 31, Software Amortization Other Intangible Assets Amortization

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In February 2018, the board approved the repurchase of the Company's common stock of up to $ 200.0 million, in place of the remaining purchase amounts previously authorized.

The Company repurchased 1,000,000 shares for $ 28.9 million under the program during the six months ended June 30, 2020.

The Company repurchased 1,000,000 shares for $ 28.9 million under the program during the nine months ended September 30, 2020.

Under the program to date, the Company has repurchased 46,357,495 shares for approximately $ 612.3 million.

As of June 30, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 112.1 million.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed in accordance with ASC 260, Earnings Per Share , based on weighted average outstanding common shares.

Diluted earnings (loss) per share is computed based on basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs, and certain contingently issuable shares for which performance targets have been achieved.

The following table reconciles the weighted average share amounts used to compute both basic and diluted earnings (loss) per share (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

As of September 30, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 112.1 million.

Earnings Per Share

Basic earnings per share is computed in accordance with ASC 260, Earnings Per Share , based on weighted average outstanding common shares.

Diluted earnings per share is computed based on basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs, and certain contingently issuable shares for which performance targets have been achieved.

The following table reconciles the weighted average share amounts used to compute both basic and diluted earnings per share (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Diluted weighted average shares outstanding 117,804 118,307 117,644 118,460

The diluted earnings (loss) per share computation excludes 1.8 million and 2.1 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended June 30, 2020 and 2019, respectively, as their effect would be anti-dilutive.

The diluted loss per share computation excludes 6.1 million and 7.5 million options to purchase shares, RSUs, and contingently issuable shares during the six months ended June 30, 2020 and 2019, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of June 30, 2020, and December 31, 2019, was 116,366,996 and 115,986,352 , respectively.

Other, net is primarily comprised of foreign currency transaction gains of $ 1.9 million and $ 1.4 million for the three months ended June 30, 2020 and 2019, respectively.

Other, net is primarily comprised of foreign currency transaction losses of $ 7.9 million and $ 0.5 million for the six months ended June 30, 2020 and 2019, respectively.

The diluted earnings per share computation excludes 1.5 million and 2.1 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended September 30, 2020 and 2019, respectively, as their effect would be anti-dilutive.

The diluted earnings per share computation excludes 1.7 million and 2.1 million options to purchase shares, RSUs, and contingently issuable shares during the nine months ended September 30, 2020 and 2019, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of September 30, 2020, and December 31, 2019, was 116,730,946 and 115,986,352 , respectively.

Other, net is primarily comprised of foreign currency transaction gains and losses.

Other, net was $ 1.4 million of income and $ 2.4 million of expense for the three months ended September 30, 2020 and 2019, respectively.

Other, net was $ 6.4 million and $ 2.9 million of expense for the nine months ended September 30, 2020 and 2019, respectively.

Segment Information

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Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments, and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting.

Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).

Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest,

income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).

Corporate and unallocated expenses consist of the corporate overhead costs that are not allocated to reportable segments.

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The following is selected financial data for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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The following is revenue by primary geographic market and primary solution category for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended June 30, 2020 Three Months Ended June 30, 2019

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

ACI On Demand ACI On Premise Total ACI On Demand ACI On Premise Total

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Total $ 190,369 $ 125,514 $ 315,883 $ 192,952 $ 161,949 $ 354,901

Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

ACI On Demand ACI On Premise Total ACI On Demand ACI On Premise Total

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The following is the Company’s long-lived assets by geographic location for the periods indicated (in thousands):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Long-lived Assets

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Total $ 2,201,706 $ 2,285,547

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2020 and 2019.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three and six months ended June 30, 2020 and 2019.

The effective tax rate for the three and six months ended June 30, 2020, was 30 % and 32 %, respectively.

The Company reported tax expense on pretax income for the three months ended June 30, 2020 and a tax benefit on a pretax loss for the six months ended June 30, 2020.

The Company’s foreign entities recognized earnings of $ 10.7 million and a loss of $ 3.7 million for the three and six months ended June 30, 2020, respectively.

The effective tax rate for the three months ended June 30, 2020, was negatively impacted by state income tax charges on a domestic profit.

The effective tax rate for the six months ended June 30, 2020, was positively impacted by equity compensation excess tax benefits and state income tax benefits on a domestic loss.

The effective tax rate for the three and six months ended June 30, 2019, was 134 % and 63 %, respectively.

The Company reported an overall tax benefit on a pretax loss for the three and six months ended June 30, 2019.

The earnings of the Company’s foreign entities for the three and six months ended June 30, 2019, were $ 11.0 million and $ 4.8 million, respectively.

The effective tax rates for the three and six months ended June 30, 2019, was positively impacted by state income tax benefits on a domestic loss.

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and nine months ended September 30, 2020 and 2019.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three and nine months ended September 30, 2020 and 2019.

For the three and nine months ended September 30, 2020, the Company's effective tax rate was 30 % and 24 %, respectively, with the Company reporting tax expense on pretax income.

The Company’s foreign entities recognized earnings of $ 23.4 million and $ 19.7 million for the three and nine months ended September 30, 2020, respectively.

The effective tax rate for the three and nine months ended September 30, 2020, was negatively impacted by a change in tax rates in certain countries.

For the three and nine months ended September 30, 2019, the Company's effective tax rate was 14 % and 163 %, respectively.

The Company reported a tax charge on pretax income for the three months ended September 30, 2019, and a tax benefit on pretax loss for the nine months ended September 30, 2019.

The Company’s foreign entities recognized earnings of $ 16.6 million and $ 21.5 million for the three and nine months ended September 30, 2019, respectively.

The effective tax rate for the three months ended September 30, 2019, was positively impacted by the release of an uncertain tax position due to the statute of limitations expiration.

The effective tax rate for the nine months ended September 30, 2019, was positively impacted by state income tax benefits on a domestic loss.

In addition, the Company released a majority of its valuation allowance established against its U.S.

foreign tax credit deferred tax asset, resulting in a non-cash benefit to income tax expense of approximately $ 18.5 million.

The Company released the valuation allowance following the acquisition of Speedpay and determined it would more likely than not be able to utilize the foreign tax credits in future years due to additional income provided by Speedpay.

The Company released the valuation allowance following the acquisition of Speedpay, determining it would more likely than not be able to utilize the foreign tax credits in future years due to additional income provided by Speedpay.

The Company’s effective tax rate could fluctuate on a quarterly basis due to the occurrence of significant and unusual or infrequent items, such as vesting of stock-based compensation or foreign currency gains and losses.

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The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

As of June 30, 2020, and December 31, 2019, the amount of unrecognized tax benefits for uncertain tax positions was $ 30.0 million and $ 29.0 million, respectively, excluding related liabilities for interest and penalties of $ 1.2 million as of June 30, 2020 and December 31, 2019.

As of September 30, 2020, and December 31, 2019, the amount of unrecognized tax benefits for uncertain tax positions was $ 30.1 million and $ 29.0 million, respectively, excluding related liabilities for interest and penalties of $ 1.2 million as of September 30, 2020, and December 31, 2019.

The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next 12 months by approximately $ 11.7 million, due to the settlement of various audits and the expiration of statutes of limitation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements