What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 175 added, 186 removed, 369 unchanged (49% of the section changed)

15 unchanged sentences

The following discussion should be read together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and with our financial statements and related notes contained in this Form 10-Q.

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.

COVID-19 Pandemic

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We believe we have sufficient liquidity to continue business operations during this volatile and uncertain period.

We have $429 million of available liquidity as of June 30, 2020, consisting of cash on hand and availability under our revolving credit facility.

We have $472.3 million of available liquidity as of September 30, 2020, consisting of cash on hand and availability under our revolving credit facility.

To begin to address the potential long-term financial impacts of the virus, we have delayed non-essential capital spending and operating expenses.

The pandemic presents potential new risks to the Company’s business.

We began to see the impacts of COVID-19 on certain customer transaction volumes in late March and continued to see changes in the second quarter of 2020, primarily within our M erchants and B illers customer base of our ACI On Demand segment.

We began to see the impacts of COVID-19 on certain customer transaction volumes in late March and continued to see changes through the third quarter of 2020, primarily within our Merchants and Billers customer base of our ACI On Demand segment.

The effect of COVID-19 and related events, including those described above, could have an ongoing negative effect on our stock price, business prospects, financial condition, and results of operations.

More specifically, f or those customer s under consumption-based contracts, continued declines in transaction volumes could negatively impact the Company's financial position, results of operations, and cash flows.

The Company has also experienced declines in Biller volumes as a result of the change in timing of assessments and due dates for federal, state, and local taxes.

For the reasons discussed above, ACI cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity.

127 unchanged sentences

In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes.

The following table sets forth our 60-month backlog estimate, by reportable segment, as of June 30, 2020, March 31, 2020, and December 31, 2019 (in millions).

The following table sets forth our 60-month backlog estimate, by reportable segment, as of September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019 (in millions).

Dollar amounts reflect foreign currency exchange rates as of each period end.

June 30, 2020 March 31, 2020 December 31, 2019

September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019

ACI On Demand $ 3,868 $ 3,863 $ 3,781 $ 3,855

1 unchanged sentence

Total $ 5,909 $ 5,839 $ 5,714 $ 5,832

June 30, 2020 March 31, 2020 December 31, 2019

September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019

Committed $ 2,189 $ 2,140 $ 2,095 $ 2,168

11 unchanged sentences

The following table presents the condensed consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our condensed consolidated statements of operations (in thousands):

Three Month Period Ended June 30, 2020, Compared to the Three Month Period Ended June 30, 2019

Three Months Ended June 30,

Three Month Period Ended September 30, 2020, Compared to the Three Month Period Ended September 30, 2019

Three Months Ended September 30,

Amount % of Total

14 unchanged sentences

Total operating expenses 284,701 91 % (14,882) (5) % 299,583 85 %

Operating income (loss) 29,138 10 % 35,020 (595) % (5,882) (2) %

Operating income 31,182 9 % (24,136) (44) % 55,318 15 %

Other income (expense):

3 unchanged sentences

Total other income (expense) (8,642) (3) % 9,726 (53) % (18,368) (5) %

Income (loss) before income taxes 19,991 7 % 36,797 (219) % (16,806) (6) %

Income tax expense (benefit) 5,916 2 % 28,447 (126) % (22,531) (8) %

Income before income taxes 22,540 6 % (14,410) (39) % 36,950 10 %

Income tax expense 6,674 2 % 1,538 30 % 5,136 1 %

Net income $ 15,866 4 % $ (15,948) (50) % $ 31,814 9 %

Total revenue for the three months ended June 30, 2020, increased $2.3 million, or 1%, as compared to the same period in 2019.

• Speedpay contributed an incremental $34.7 million in total revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $3.7 million decrease in total revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental revenue from Speedpay and foreign currency, total revenue for the three months ended June 30, 2020, decreased $28.7 million, or 10%, compared to the same period in 2019.

Total revenue for the three months ended September 30, 2020, decreased $39.0 million, or 11%, as compared to the same period in 2019.

• The impact of certain foreign currencies strengthening against the U.S.

dollar resulted in a $0.8 million increase in total revenue during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, total revenue for the three months ended September 30, 2020, decreased $39.8 million, or 11%, compared to the same period in 2019.

Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue

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All fees from SaaS and PaaS arrangements that do not qualify for treatment as a distinct performance obligation, which includes set-up fees, implementation or customization services, and product support services, are included in SaaS and PaaS revenue.

SaaS and PaaS revenue increased $8.1 million, or 5%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $34.7 million in SaaS and PaaS revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.4 million decrease in SaaS and PaaS revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay revenue and foreign currency, SaaS and PaaS revenue for the three months ended June 30, 2020, decreased $26.3 million, or 15%, compared to the same period in 2019.

• The decrease was primarily due to changes in the timing of assessments and due dates by Billers that use the Company's technology to enable customer payments of federal, state and local taxes and declines in Digital Channels associated with customer attrition.

SaaS and PaaS revenue decreased $2.6 million, or 1%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies strengthening against the U.S.

dollar resulted in a $0.5 million increase in SaaS and PaaS revenue during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the three months ended September 30, 2020, decreased $3.1 million, or 2%, compared to the same period in 2019.

• The decrease was primarily due to a modest decline in transaction volumes within the Company's Biller customer base as a result of the impact of COVID-19.

License Revenue

8 unchanged sentences

The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.

License revenue decreased $2.4 million, or 5%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.7 million decrease in license revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, license revenue for the three months ended June 30, 2020, decreased $0.7 million, or 1%, compared to the same period in 2019.

License revenue decreased $35.3 million, or 38%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies strengthening against the U.S.

dollar resulted in a $0.4 million increase in license revenue during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, license revenue for the three months ended September 30, 2020, decreased $35.7 million, or 39%, compared to the same period in 2019.

• The decrease was primarily driven the timing and relative size of license and capacity events during the three months ended September 30, 2020, as compared to the same period in 2019.

Maintenance Revenue

Maintenance revenue includes standard and premium maintenance and any post contract support fees received from customers for the provision of product support services.

Maintenance revenue increased $0.8 million, or 2%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.2 million decrease in maintenance revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, maintenance revenue for the three months ended June 30, 2020, increased $2.0 million, or 4%, compared to the same period in 2019.

Maintenance revenue increased $0.4 million, or 1%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in maintenance revenue during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, maintenance revenue for the three months ended September 30, 2020, increased $0.6 million, or 1%, compared to the same period in 2019.

Services Revenue

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These services include new customer implementations as well as existing customer migrations to new products or new releases of existing products.

Services revenue decreased $4.2 million, or 20%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.4 million decrease in services revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, services revenue for the three months ended June 30, 2020, decreased $3.8 million, or 18%, compared to the same period in 2019.

• The decrease was primarily driven by the timing and magnitude of project-related work during the three months ended June 30, 2020, as compared to the same period in 2019.

Services revenue decreased $1.6 million, or 9%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies was insignificant for services revenue during the three months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily driven by the timing and magnitude of project-related work during the three months ended September 30, 2020, as compared to the same period in 2019.

Operating Expenses

Total operating expenses for the three months ended June 30, 2020, decreased $32.7 million, or 11%, as compared to the same period in 2019.

• Speedpay contributed an incremental $29.1 million to total operating expenses during the three months ended June 30, 2020, as compared to the same period in 2019.

• Total operating expenses for three months ended June 30, 2020, included $5.0 million of significant transaction-related expenses associated with the acquisition of Speedpay and cost reduction strategies implemented during the period.

Total operating expenses for the three months ended June 30, 2019, included $16.6 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $3.7 million decrease in total operating expenses during the three months ended June 30, 2020, compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay operating expenses, significant transaction-related expenses, and foreign currency, total operating expenses during the three months ended June 30, 2020, decreased $46.6 million, or 16%, compared to the same period in 2019.

Total operating expenses for the three months ended September 30, 2020, decreased $14.9 million, or 5%, as compared to the same period in 2019.

• Total operating expenses for the three months ended September 30, 2020, included $12.3 million of significant transaction-related expenses associated with cost reduction strategies implemented during the period.

Total operating expenses for the three months ended September 30, 2019, included $0.9 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.3 million decrease in total operating expenses during the three months ended September 30, 2020, compared to the same period in 2019.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, total operating expenses for the three months ended September 30, 2020, decreased $25.9 million, or 9%, compared to the same period in 2019.

Cost of Revenue

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Such efforts include project management, delivery, product customization and implementation, installation support, consulting, configuration, and on-site support.

Cost of revenue decreased $7.9 million, or 5%, during the three months ended June 30, 2020, compared to the same period in 2019.

• Speedpay contributed an incremental $22.9 million to cost of revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Cost of revenue for the three months ended June 30, 2020 included $2.3 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.4 million decrease in cost of revenue during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense, significant transaction-related expenses, and foreign currency, cost of revenue decreased $31.6 million, or 21%, for the three months ended June 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower payment card interchange and processing fees, personnel and related expenses, and amortization of acquired software of $21.7 million, $9.0 million, and $0.9 million, respectively.

Cost of revenue decreased $15.6 million, or 9%, during the three months ended September 30, 2020, compared to the same period in 2019.

• Cost of revenue for the three months ended September 30, 2020, included $1.2 million of significant transaction-related expenses associated with cost reduction strategies implemented during the period.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in cost of revenue during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, cost of revenue decreased $16.6 million, or 10%, for the three months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower payment card interchange and processing fees, personnel and related expenses, and travel and entertainment expenses of $10.7 million, $4.1 million, and $1.2 million, respectively.

Research and Development

Research and development (“R&D”) expenses are primarily human resource costs related to the creation of new products, improvements made to existing products as well as compatibility with new operating system releases and generations of hardware.

R&D expense decreased $3.7 million, or 9%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $1.3 million to R&D expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.0 million decrease in R&D expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, R&D expense decreased $4.1 million, or 11%, for the three months ended June 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses and professional fees of $3.2 million and $0.9 million, respectively.

R&D expense decreased $3.0 million, or 8%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies was insignificant for R&D expense during the three months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses of $3.0 million.

Selling and Marketing

3 unchanged sentences

Marketing costs include costs incurred to promote the Company and its products, perform or acquire market research to help the Company better understand impending changes in customer demand for and of our products, and the costs associated with measuring customers’ opinions toward the Company, our products and personnel.

Selling and marketing expense decreased $8.5 million, or 26%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $1.1 million to selling and marketing expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.8 million decrease in selling and marketing expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, selling and marketing expense decreased $8.8 million, or 27%, for the three months ended June 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses, commissions, and professional fees of $5.5 million, $1.9 million, and $1.4 million, respectively.

Selling and marketing expense decreased $8.3 million, or 27%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies was insignificant for selling and marketing expense during the three months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower commissions, professional fees, and travel and entertainment expenses of $3.4 million, $2.3 million, and $1.8 million, respectively.

General and Administrative

General and administrative expenses are primarily human resource costs including executive salaries and benefits, personnel administration costs, and the costs of corporate support functions such as legal, administrative, human resources, and finance and accounting.

General and administrative expense decreased $19.6 million, or 40%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $0.3 million to general and administrative expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• General and administrative expenses for the three months ended June 30, 2020, included $2.5 million of significant transaction-related expenses associated with the acquisition of Speedpay and cost reduction strategies implemented during the period.

General and administrative expense for the three months ended June 30, 2019, included $16.4 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.3 million decrease in general and administrative expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense, significant transaction-related expenses, and foreign currency, general and administrative expense decreased $5.6 million, or 17%, for the three months ended June 30, 2020, as compared to the same period in 2019, primarily due to a decrease in personnel and related expenses.

General and administrative expense increased $9.7 million, or 36%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• General and administrative expenses for the three months ended September 30, 2020, included $10.8 million of significant transaction-related expenses associated with cost reduction strategies implemented during the period.

General and administrative expenses for the three months ended September 30, 2019, included $0.7 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in general and administrative expense during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense decreased $0.2 million, or 1%, for the three months ended September 30, 2020, as compared to the same period in 2019, primarily due to a decrease in travel and entertainment expenses.

Depreciation and Amortization

Depreciation and amortization increased $6.9 million, or 26%, during the three months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $3.6 million, of depreciation and amortization expense during the three months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in depreciation and amortization during the three months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, depreciation and amortization increased $3.6 million, or 13%, for the three months ended June 30, 2020, as compared to the same period in 2019, primarily due to additional amortization of internal-use software in our On Demand business.

Depreciation and amortization increased $2.2 million, or 7%, during the three months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies strengthening against the U.S.

dollar resulted in a $0.1 million increase in depreciation and amortization during the three months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, depreciation and amortization increased $2.1 million, or 7%, for the three months ended September 30, 2020, as compared to the same period in 2019, primarily due to additional amortization of internal-use software in our On Demand business.

Other Income and Expense

Interest expense for the three months ended June 30, 2020, decreased $1.2 million, or 8%, as compared to the same period in 2019, primarily due to lower comparative interest rates.

Interest expense for the three months ended September 30, 2020, decreased $6.1 million, or 32%, as compared to the same period in 2019, primarily due to lower comparative debt balances and lower interest rates.

Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component.

Interest income for the three months ended June 30, 2020 remained flat as compared to the same period in 2019.

Other, net primarily consists of foreign currency gains.

Foreign currency gains for the three months ended June 30, 2020 and 2019 was $1.9 million and $1.4 million, respectively.

Interest income for the three months ended September 30, 2020 decreased $0.1 million, or 2%, as compared to the same period in 2019.

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.

See Note 11, Income Taxes, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

1 unchanged sentence

Six Month Period Ended June 30, 2020, Compared to the Six Month Period Ended June 30, 2019

Six Months Ended June 30,

Nine Month Period Ended September 30, 2020, Compared to the Nine Month Period Ended September 30, 2019

Nine Months Ended September 30,

Amount % of Total

14 unchanged sentences

Total operating expenses 858,241 94 % 21,210 3 % 837,031 98 %

Operating income (loss) 17,855 3 % 51,830 (153) % (33,975) (7) %

Operating income 49,037 6 % 27,694 130 % 21,343 2 %

Other income (expense):

3 unchanged sentences

Total other income (expense) (41,818) (5) % (2,033) 5 % (39,785) (4) %

Loss before income taxes (15,321) (2) % 40,071 (72) % (55,392) (11) %

Income tax benefit (4,969) (1) % 30,185 (86) % (35,154) (7) %

Net loss $ (10,352) (1) % $ 9,886 (49) % $ (20,238) (4) %

Total revenue for the six months ended June 30, 2020, increased $87.9 million, or 17%, as compared to the same period in 2019.

• Speedpay contributed an incremental $123.3 million in total revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $5.2 million decrease in total revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay revenue and foreign currency, total revenue for the six months ended June 30, 2020, decreased $30.2 million, or 6%, compared to the same period in 2019.

Income (loss) before income taxes 7,219 1 % 25,661 (139) % (18,442) (2) %

Income tax expense (benefit) 1,705 — % 31,723 (106) % (30,018) (3) %

Net income $ 5,514 1 % $ (6,062) (52) % $ 11,576 1 %

Total revenue for the nine months ended September 30, 2020, increased $48.9 million, or 6%, as compared to the same period in 2019.

• Speedpay contributed an incremental $123.3 million in total revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $4.4 million decrease in total revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay revenue and foreign currency, total revenue for the nine months ended September 30, 2020, decreased $70.0 million, or 8%, compared to the same period in 2019.

Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue

SaaS and PaaS revenue increased $92.5 million, or 33%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $123.3 million in SaaS and PaaS revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in $0.7 million decrease in SaaS and PaaS revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental revenue from Speedpay and foreign currency, SaaS and PaaS revenue for the six months ended June 30, 2020, decreased $30.2 million, or 11%, compared to the same period in 2019.

• The decrease was primarily due to changes in the timing of assessments and due dates by Billers that use the Company's technology to enable customer payments of federal, state, and local taxes and declines in Digital Channels associated with customer attrition.

SaaS and PaaS revenue increased $89.9 million, or 19%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $123.3 million in SaaS and PaaS revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in $0.2 million decrease in SaaS and PaaS revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental revenue from Speedpay and foreign currency, SaaS and PaaS revenue for the nine months ended September 30, 2020, decreased $33.3 million, or 7%, compared to the same period in 2019.

• The decrease was primarily due to declines in transaction volumes within the Company's Biller customer base as a result of the impact of COVID-19 and declines in Digital Channels associated with customer attrition.

License Revenue

License revenue increased $4.6 million, or 6%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.8 million decrease in license revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, license revenue for the six months ended June 30, 2020, increased $6.4 million, or 9%, compared to the same period in 2019.

• The increase in license revenue was primarily driven by the timing and relative size of license and capacity events during the six months ended June 30, 2020, as compared to the same period in 2019.

License revenue decreased $30.6 million, or 18%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $1.4 million decrease in license revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, license revenue for the nine months ended September 30, 2020, decreased $29.2 million, or 18%, compared to the same period in 2019.

• The decrease was primarily driven by the timing and relative size of license and capacity events during the nine months ended September 30, 2020, as compared to the same period in 2019.

Maintenance Revenue

Maintenance revenue decreased $1.0 million, or 1%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $2.0 million decrease in maintenance revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, maintenance revenue for the six months ended June 30, 2020, increased $1.0 million, or 1%, compared to the same period in 2019.

Maintenance revenue decreased $0.6 million during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $2.1 million decrease in maintenance revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, maintenance revenue for the nine months ended September 30, 2020, increased $1.5 million, or 1%, compared to the same period in 2019.

Services Revenue

Services revenue decreased $8.2 million, or 20%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.8 million decrease in services revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, services revenue for the six months ended June 30, 2020, decreased $7.4 million, or 18%, compared to the same period in 2019.

• The decrease in services revenue was primarily driven by the timing and magnitude of project-related work during the six months ended June 30, 2020, as compared to the same period in 2019.

Services revenue decreased $9.7 million, or 17%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.7 million decrease in services revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of foreign currency, services revenue for the nine months ended September 30, 2020, decreased $9.0 million, or 15%, compared to the same period in 2019.

• The decrease was primarily driven by the timing and magnitude of project-related work during the nine months ended September 30, 2020, as compared to the same period in 2019.

Operating Expenses

Total operating expenses for the six months ended June 30, 2020, increased $36.1 million, or 7%, as compared to the same period in 2019.

• Speedpay contributed an incremental $105.5 million to total operating expenses during the six months ended June 30, 2020, as compared to the same period in 2019.

• Total operating expenses for the six months ended June 30, 2020, included $13.5 million of significant transaction-related expenses associated with the acquisition of Speedpay and cost reduction strategies implemented during the period.

Total operating expenses for the six months ended June 30, 2019, included $21.3 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $5.8 million decrease in total operating expenses for the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay operating expenses, significant transaction-related expenses, and foreign currency, total operating expenses for the six months ended June 30, 2020, decreased $55.8 million, or 11%, compared to the same period in 2019.

Total operating expenses for the nine months ended September 30, 2020, increased $21.2 million, or 3%, as compared to the same period in 2019.

• Speedpay contributed an incremental $105.5 million to total operating expenses during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Total operating expenses for the nine months ended September 30, 2020, included $25.8 million of significant transaction-related expenses associated with the acquisition of Speedpay and cost reduction strategies implemented during the period.

Total operating expenses for the nine months ended September 30, 2019, included $22.2 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $6.1 million decrease in total operating expenses for the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay operating expenses, significant transaction-related expenses, and foreign currency, total operating expenses for the nine months ended September 30, 2020, decreased $81.7 million, or 10%, compared to the same period in 2019.

Cost of Revenue

Cost of revenue increased $43.0 million, or 16%, during the six months ended June 30, 2020, compared to the same period in 2019.

• Speedpay contributed an incremental $84.9 million to cost of revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Cost of revenue for the six months ended June 30, 2020, included $2.3 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $2.2 million decrease in cost of revenue during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense, significant transaction-related expenses, and foreign currency, cost of revenue decreased $41.9 million, or 16%, for the six months ended June 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower payment card interchange and processing fees, personnel and related expenses, and amortization of acquired of software of $26.9 million, $11.5 million, and $2.0 million, respectively.

Cost of revenue increased $27.4 million, or 6%, during the nine months ended September 30, 2020, compared to the same period in 2019.

• Speedpay contributed an incremental $84.9 million to cost of revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Cost of revenue for the nine months ended September 30, 2020, included $3.4 million of significant transaction-related expenses associated with the acquisition of Speedpay and cost reduction strategies implemented during the period.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $2.4 million decrease in cost of revenue during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense, significant transaction-related expenses, and foreign currency, cost of revenue decreased $58.6 million, or 13%, for the nine months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower payment card interchange and processing fees, personnel and related expenses, amortization of acquired software, and travel and entertainment expenses of $37.6 million, $15.6 million,$2.6 million, and $2.5 million, respectively.

Research and Development

R&D expense decreased $0.8 million, or 1%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $4.1 million to R&D expense during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.7 million decrease in R&D expense during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, R&D expense decreased $3.4 million, or 5%, for the six months ended June 30, 2020, as compared to the same period in 2019, primarily due to lower personnel and related expenses.

R&D expense decreased $3.8 million, or 3%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $4.1 million to R&D expense during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $1.7 million decrease in R&D expense during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, R&D expense decreased $6.3 million, or 6%, for the nine months ended September 30, 2020, as compared to the same period in 2019, primarily due to lower personnel and related expenses.

Selling and Marketing

Selling and marketing expense decreased $7.9 million, or 13%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $3.9 million to selling and marketing expense during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $1.1 million decrease in selling and marketing expense for the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, selling and marketing expense decreased $10.6 million, or 17%, for the six months ended June 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses, commissions, and professional fees of $5.9 million, $2.6 million, and $2.1 million, respectively.

Selling and marketing expense decreased $16.1 million, or 17%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $3.9 million to selling and marketing expense during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $1.2 million decrease in selling and marketing expense for the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, selling and marketing expense decreased $18.9 million, or 21%, for the nine months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses, commissions, professional fees, and travel and entertainment expenses of $6.6 million, $6.0 million, $4.4 million, and $1.9 million respectively.

General and Administrative

General and administrative expense decreased $15.2 million, or 19%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $0.7 million to general and administrative expense during the six months ended June 30, 2020, as compared to the same period in 2019.

• General and administrative expenses for the six months ended June 30, 2020, included $11.0 million of significant transaction-related expenses associated with cost reduction strategies implemented during the period.

General and administrative expense for the six months ended June 30, 2019, included $21.2 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.4 million decrease in general and administrative expenses during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense, significant transaction-related expenses, and foreign currency, general and administrative expense decreased $5.3 million, or 9%, for the six months ended June 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses of $6.7 million, partially offset by higher professional fees of $1.4 million.

General and administrative expense decreased $5.4 million, or 5%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $0.7 million to general and administrative expense during the nine months ended September 30, 2020, as compared to the same period in 2019.

• General and administrative expenses for the nine months ended September 30, 2020 included $21.8 million of significant transaction-related expenses associated with cost reduction strategies implemented during the period.

General and administrative expense for the nine months ended September 30, 2019, included $21.8 million of significant transaction-related expenses associated with the acquisition of Speedpay.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.6 million decrease in general and administrative expenses during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense, significant transaction-related expenses, and foreign currency, general and administrative expense decreased $5.5 million, or 6%, for the nine months ended September 30, 2020, as compared to the same period in 2019.

• The decrease was primarily due to lower personnel and related expenses and travel and entertainment expenses of $4.2 million and $1.3 million, respectively.

Depreciation and Amortization

Depreciation and amortization increased $16.9 million, or 35%, during the six months ended June 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $11.9 million of depreciation and amortization expense during the six months ended June 30, 2020, as compared to the same period in 2019.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.4 million decrease in depreciation and amortization expense during the six months ended June 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, depreciation and amortization increased $5.5 million, or 11%, for the six months ended June 30, 2020, as compared to the same period in 2019, primarily due to additional amortization of internal-use software in our On Demand business.

Depreciation and amortization increased $19.1 million, or 24%, during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Speedpay contributed an incremental $11.9 million of depreciation and amortization expense during the nine months ended September 30, 2020, as compared to the same period in 2019.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in depreciation and amortization expense during the nine months ended September 30, 2020, as compared to the same period in 2019.

• Adjusted for the impact of incremental Speedpay expense and foreign currency, depreciation and amortization increased $7.5 million, or 9%, for the nine months ended September 30, 2020, as compared to the same period in 2019, primarily due to additional amortization of internal-use software in our On Demand business.

Other Income and Expense

Interest expense for the six months ended June 30, 2020, increased $4.4 million, or 16%, as compared to the same period in 2019, primarily due to higher comparative debt balances, partially offset by lower interest rates.

Interest income for the six months ended June 30, 2020, decreased $0.2 million, or 3%, as compared to the same period in 2019.

Other, net primarily consists of foreign currency gain or loss.

Foreign currency loss for the six months ended June 30, 2020 and 2019, was $7.9 million and $0.5 million, respectively.

The higher foreign currency loss in 2020 was due to the market volatility in the wake of the COVID-19 pandemic.

Interest expense for the nine months ended September 30, 2020, decreased $1.7 million, or 4%, as compared to the same period in 2019, primarily due to lower interest rates, partially offset by higher comparative debt balances.

Interest income for the nine months ended September 30, 2020, decreased $0.2 million, or 3%, as compared to the same period in 2019.

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

Foreign currency loss was higher in 2020 due to the market volatility in the wake of the COVID-19 pandemic.

See Note 11, Income Taxes, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

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The following is selected financial data for our 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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Total stock-based compensation expense $ 8,061 $ 9,371 $ 22,943 $ 30,328

ACI On Demand Segment Adjusted EBITDA increased $15.7 million for the three months ended June 30, 2020, compared to the same period in 2019, of which $9.2 million was due to the acquisition of Speedpay.

Excluding the impact of the acquisition of Speedpay, ACI On Demand Segment Adjusted EBITDA increased $6.5 million, primarily due to a $33.1 million decrease in cash operating expense, partially offset by a $26.7 million decrease in revenue, primarily within the Company's Biller business due to changes in the timing of assessments and due dates for federal, state, and local taxes.

ACI On Demand Segment Adjusted EBITDA increased $39.1 million for the six months ended June 30, 2020, compared to the same period in 2019, of which $30.0 million was due to the acquisition of Speedpay.

Excluding the impact of the acquisition of Speedpay, ACI On Demand Segment Adjusted EBITDA increased $9.1 million, primarily due to a $41.3 million decrease in cash operating expense, partially offset by a $32.2 million decrease in revenue, primarily within the Company's Biller business due to changes in the timing of assessments and due dates for federal, state, and local taxes.

ACI On Premise Segment Adjusted EBITDA increased $2.0 million for the three months ended June 30, 2020, compared to the same period in 2019, primarily due to a $7.7 million decrease in cash operating expense, partially offset by a $5.7 million decrease in revenue.

ACI On Premise Segment Adjusted EBITDA increased $4.7 million for the six months ended June 30, 2020, compared to the same period in 2019, primarily due to a $7.8 million decrease in cash operating expense, partially offset by a $3.2 million decrease in revenue.

ACI On Demand Segment Adjusted EBITDA increased $14.6 million for the three months ended September 30, 2020, compared to the same period in 2019.

The increase was primarily due to a $17.2 million decrease in cash operating expense, partially offset by a $2.6 million decrease in revenue.

ACI On Demand Segment Adjusted EBITDA increased $53.8 million for the nine months ended September 30, 2020, compared to the same period in 2019, of which $30.0 million was due to the acquisition of Speedpay.

Excluding the impact of the acquisition of Speedpay, ACI On Demand Segment Adjusted EBITDA increased $23.8 million, primarily due to a $58.5 million decrease in cash operating expense, partially offset by a $34.7 million decrease in revenue.

ACI On Premise Segment Adjusted EBITDA decreased $30.0 million for the three months ended September 30, 2020, compared to the same period in 2019, primarily due to a $6.4 million decrease in cash operating expense, partially offset by a $36.4 million decrease in revenue.

ACI On Premise Segment Adjusted EBITDA decreased $25.3 million for the nine months ended September 30, 2020, compared to the same period in 2019, primarily due to a $14.4 million decrease in cash operating expense, partially offset by a $39.7 million decrease in revenue.

Liquidity and Capital Resources

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Available Liquidity

The following table sets forth our available liquidity for the periods indicated (in thousands):

June 30, 2020 December 31, 2019

The following table sets forth our available liquidity for the dates indicated (in thousands):

September 30, 2020 December 31, 2019

Cash and cash equivalents $ 133,845 $ 121,398

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Total liquidity $ 472,345 $ 382,398

The increase in total liquidity is primarily attributable to positive operating cash flows of $125.5 million, partially offset by $28.9 million of payments related to stock repurchases, $25.7 million of payments to purchase property and equipment and software and distribution rights, and $19.5 million of repayments on the Term Loans.

The increase in total liquidity is primarily attributable to positive operating cash flows of $192.1 million, partially offset by $35.6 million of payments to purchase property and equipment and software and distribution rights, $29.2 million of repayments on the Term Loans and $28.9 million of payments related to stock repurchases.

We also repaid a net $79.0 million on the Revolving Credit Facility.

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The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process.

As of June 30, 2020, the full $140.0 million was available.

As of September 30, 2020, the full $140.0 million was available.

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less.

As of June 30, 2020, we had $129.2 million of cash and cash equivalents, of which $46.0 million was held by our foreign subsidiaries.

As of September 30, 2020, we had $133.8 million of cash and cash equivalents, of which $59.9 million was held by our foreign subsidiaries.

If these funds were needed for our operations in the U.S., we may potentially be required to accrue and pay foreign and U.S.

state income taxes to repatriate these funds.

As of June 30, 2020, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested.

As of September 30, 2020, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested.

The earnings of all other foreign entities are no longer indefinitely reinvested.

We are also permanently reinvested for outside book/tax basis difference related to foreign subsidiaries.

These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of June 30, 2020.

These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of September 30, 2020.

The following table sets forth summarized cash flow data for the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used by):

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Cash Flows from Operating Activities

Net cash flows provided by operating activities during the six months ended June 30, 2020, were $125.5 million as compared to $56.9 million during the same period in 2019.

Net cash provided by operating activities primarily consists of net loss adjusted to add back depreciation, amortization, and stock-based compensation.

Cash flows provided by operating activities were $68.7 million higher for the six months ended June 30, 2020, compared to the same period in 2019, due to higher cash earnings and improvements in the timing of working capital.

Net cash flows provided by operating activities during the nine months ended September 30, 2020, were $192.1 million as compared to $88.9 million during the same period in 2019.

Net cash provided by operating activities primarily consists of net income adjusted to add back depreciation, amortization, and stock-based compensation.

Cash flows provided by operating activities were $103.1 million higher for the nine months ended September 30, 2020, compared to the same period in 2019, primarily due to the incremental impact of Speedpay and improvements in the timing of working capital.

Our current policy is to use our operating cash flow primarily for funding capital expenditures, lease payments, stock repurchases, and acquisitions.

Cash Flows from Investing Activities

During the first six months of 2020, we used cash of $25.7 million to purchase software, property, and equipment, as compared to $21.2 million during the same period in 2019.

During the first six months of 2019, we paid $755.2 million, net of $0.1 million in cash acquired, to acquire Speedpay.

During the first nine months of 2020, we used cash of $35.6 million to purchase software, property, and equipment, as compared to $37.3 million during the same period in 2019.

During the first nine months of 2019, we paid $753.9 million, net of $0.1 million in cash acquired, to acquire Speedpay and used cash of $18.5 million to invest in a payment technology and services company in India.

Cash Flows from Financing Activities

Net cash flows used by financing activities for the six months ended June 30, 2020, were $100.2 million as compared to net cash flows provided by financing activities of $714.7 million during the same period in 2019.

During the first six months of 2020, we repaid a net $39.0 million on the Revolving Credit Facility and $19.5 million on the Term Loans.

Net cash flows used by financing activities for the nine months ended September 30, 2020, were $148.9 million as compared to net cash flows provided by financing activities of $695.7 million during the same period in 2019.

During the first nine months of 2020, we repaid a net $79.0 million on the Revolving Credit Facility and $29.2 million on the Term Loans.

In addition, we used $28.9 million to repurchase common stock and $11.2 million for the repurchase of stock-based compensation awards for tax withholdings.

We also received proceeds of $9.4 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.

During the first six months of 2019, we received proceeds of $500.0 million from our Delayed Draw Term Loan and $250.0 million from our Revolving Credit Facility to fund our purchase of Speedpay, and we repaid $9.4 million on the Initial Term Loan and $15.0 million on the Revolving Credit Facility.

In addition, we received proceeds of $7.6 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and used $2.8 million for the repurchase of stock-based compensation awards for tax withholdings.

We also used $0.6 million to repurchase common stock.

During the first nine months of 2019, we received proceeds of $500.0 million from our Delayed Draw Term Loan and $280.0 million from our Revolving Credit Facility to fund our purchase of Speedpay and stock repurchases, and we repaid $19.2 million on the Initial Term Loan and $15.0 million on the Revolving Credit Facility.

In addition, we received proceeds of $9.3 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.

We also used $35.6 million to repurchase common stock and $2.8 million for the repurchase of stock-based compensation awards for tax withholdings.

We may decide to use cash to acquire new products and services or enhance existing products and services through acquisitions of other companies, product lines, technologies, and personnel, or through investments in other companies.

We believe our existing sources of liquidity, including cash on hand and cash provided by operating activities, will satisfy our projected liquidity requirements, which primarily consists of working capital and debt service requirements, for the next twelve months and foreseeable future.

As of June 30, 2020, we had $200.0 million and $736.6 million outstanding under our Revolving Credit Facility and Term Loans, respectively, with up to $300.0 million of unused borrowings under the Revolving Credit Facility.

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

As of June 30, 2020, we also had $400.0 million outstanding of the 2026 Notes.

As of September 30, 2020, we had $160.0 million and $726.8 million outstanding under our Revolving Credit Facility and Term Loans, respectively, with up to $338.5 million of unused borrowings under the Revolving Credit Facility, as amended, and up to $1.5 million of unused borrowings under the Letter of Credit agreement.

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

As of September 30, 2020, we also had $400.0 million outstanding of the 2026 Notes.

On August 12, 2020, we entered a standby letter of credit agreement (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 renewal for twelve month periods thereafter.

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

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

See Note 4, Debt, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Stock Repurchase Program

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

We 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, we have 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 approximately $112.1 million.

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

See Note 7, Common Stock and Treasury Stock, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Contractual Obligations and Commercial Commitments

For the six months ended June 30, 2020, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2019.

For the nine months ended September 30, 2020, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2019.

We are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Tax .

The liability for unrecognized tax benefits as of June 30, 2020, is $30.0 million.

The liability for unrecognized tax benefits as of September 30, 2020, is $30.1 million.

Critical Accounting Estimates

The preparation of the condensed consolidated financial statements requires we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We base our estimates on historical experience and other assumptions we believe to be proper and reasonable under the circumstances.

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• Accounting for Income Taxes

During the six months ended June 30, 2020, there were no significant changes to our critical accounting policies and estimates.

During the nine months ended September 30, 2020, there were no significant changes to our critical accounting policies and estimates.

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2019, for a more complete discussion of our critical accounting policies and estimates.

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 2. Management’s Discussion and Analysis