What changed in this filing

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Item 9A. Controls and Procedures

2021-02-25 compared with 2020-02-27 · 633 added, 418 removed, 973 unchanged (52% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of the interim Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report, December 31, 2019 .

Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report, December 31, 2020.

In connection with our evaluation of disclosure controls and procedures, we have concluded that our disclosure controls and procedures are effective as of December 31, 2020.

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Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S.

Under the supervision of, and with the participation of our interim Chief Executive Officer and Chief Financial Officer, management assessed the effectiveness of internal control over financial reporting as of December 31, 2019 .

Under the supervision of, and with the participation of our Chief Executive Officer and Chief Financial Officer, management assessed the effectiveness of internal control over financial reporting as of December 31, 2020.

Management based its assessment on criteria established in “Internal Control Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2020.

As permitted by applicable requirements, our evaluation of and conclusion on the effectiveness of internal control over financial reporting exclude Speedpay, which was acquired by us on May 9, 2019.

Since the date of acquisition, Speedpay's financial results are included in the Company's consolidated financial statements and constituted approximately 18% of revenues and 16% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2019 .

The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by Deloitte & Touche, LLP, an independent registered public accounting firm, and Deloitte & Touche, LLP has issued an attestation report on our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

On May 9, 2019, we completed our acquisition of Speedpay.

We consider the transaction material to our results of operations, cash flows, and financial position from the date of the acquisition through December 31, 2019 , and believe the internal controls and procedures of Speedpay have a material effect on our internal control over financial reporting.

See Note 3 , Acquisition , to our Notes to Consolidated Financial Statements in Part 1V, Item 15 of this Form 10-K for discussion of the acquisition and related financial data.

We are currently in the process of integrating Speedpay operations, and we anticipate a successful integration of operations and internal controls over financial reporting.

Management will continue to evaluate its internal control over financial reporting as it executes integration activities.

There were no additional changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of FASB Accounting Standards Update 2016-02, Leases , effective January 1, 2019.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Speedpay, Inc., which was acquired on May 9, 2019, and whose financial statements constitute 18% of revenues and 16% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2019 .

Accordingly, our audit did not include the internal control over financial reporting at Speedpay, Inc.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue upon transfer of control of promised products and/or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

The Company recognizes revenue upon transfer of control of promised products and/or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services.

The Company’s software license arrangements provide the customer with the right to use functional intellectual property for the duration of the contract term and are typically bundled with implementation, support, and other services.

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• Assessment of whether the extension of payment terms in a software licensing arrangement results in variable consideration and, if so, the amount to be included in the transaction price.

Determination of the stand-alone selling price for each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service.

As the selling prices of the Company’s software licenses are highly variable, the Company estimates stand-alone selling price of its software licenses using the residual approach when the software license is sold with other services and observable stand-alone selling prices exist for the other services.

• Determination of the standalone selling price for each performance obligation and whether it depicts the amount that the Company expects to be entitled to in exchange for the related product and/or service.

As the selling prices of the Company’s software licenses are highly variable, the Company estimates standalone selling price of its software licenses using the residual approach when the software license is sold with other services and observable standalone selling prices exist for the other services.

Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for software license arrangements was extensive and required a high degree of auditor judgment.

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Our audit procedures related to the Company’s accounting for software license arrangements included the following, among others:

We tested the effectiveness of controls over the review of software license arrangements, including, among others, the determination of the contract term, identification of performance obligations, determination of significant financing component, estimation of variable consideration, and determination of stand-alone selling prices, including those controls over the determination that software license pricing is highly variable.

• We tested the effectiveness of controls over the review of software license arrangements, including, among others, the determination of the contract term, identification of performance obligations, determination of significant financing component, estimation of variable consideration, and determination of standalone selling prices, including those controls over the determination that software license pricing is highly variable.

• We selected a sample of software license arrangements and performed the following, among others:

• Obtained contract source documents for each selection, including separate contracts or agreements that should be combined with the selected arrangement, and other documents that were part of the arrangement.

Tested management’s determination of the contract term, identification of performance obligations, determination of significant financing component, estimation of variable consideration, and determination of stand-alone selling prices.

• Tested management’s determination of the contract term, identification of performance obligations, determination of significant financing component, estimation of variable consideration, and determination of standalone selling prices.

• Evaluated the reasonableness of the methodology and estimates used by management and the appropriateness of its revenue recognition conclusions for these key judgment areas.

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• Testing the mathematical accuracy of management’s calculations.

Acquisition-Refer to Note 3 to the Financial Statements

Critical Audit Matter Description

The Company completed the acquisition of Speedpay, Inc., a subsidiary of The Western Union Company, for $754 million on May 9, 2019 in a cash transaction.

The Company accounted for the acquisition as a business combination.

Accordingly, the purchase price was allocated to the assets acquired, including intangible assets, and liabilities assumed based on their respective fair values.

Intangible assets included goodwill and other identified intangible assets.

Other identified intangible assets totaling $322 million as of May 9, 2019 included assets attributable to software (developed technologies) and customer relationships.

The determination of the fair values of other identified intangible assets required significant management judgment as fair values are based on assumptions, including future expected cash flows from customer relationships and acquired developed technologies and the discount rate.

To determine the estimated fair values of the other identified intangible assets, management utilized generally accepted valuation principles and the work of third-party valuation specialists.

Given the nature of future expected cash flows and the discount rate utilized in the process to determine the fair values of the other identified intangible assets, performing audit procedures to evaluate the reasonableness of these future expected cash flows and the discount rate assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of other identified intangible assets from the Speedpay Inc.

acquisition included the following, among others:

We tested the effectiveness of the controls over the Company’s valuation process, including, among others, controls over future expected cash flows and the discount rate.

We evaluated the reasonableness of the future expected cash flows utilized in determining fair values of the other intangible assets, tested the accuracy and completeness of significant data underlying those future expected cash flows and assumptions, and made inquiries of management regarding the basis for their key judgments.

Our primary procedures related to management’s future expected cash flows included the following:

Evaluated the reasonableness of management’s future expected cash flows by comparing the future expected cash flows to historical results, internal communications to management, and certain peer companies.

Compared current-year actual performance as of the acquisition date to future projected cash flows used in the fair value model.

With the assistance of our fair value specialists, we evaluated the methodologies and calculations used by management to determine the fair value of the other identified intangible assets by:

Evaluating the reasonableness of the basis for the various valuation techniques utilized by management’s third-party valuation specialists to value the other identified intangibles, and the valuation assumptions, including the discount rate.

Testing the mathematical accuracy of the valuation model and calculations.

Testing certain valuation assumptions, including the discount rate by evaluating management’s underlying source information and developing a range of independent estimates to compare to those selected by management.

/s/ DELOITTE & TOUCHE LLP

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Cash and cash equivalents

$ 165,374 $ 121,398

Receivables, net of allowances of $ 3,912 and $ 5,149 , respectively

342,879 359,197

Settlement assets

605,008 391,039

Prepaid expenses

24,288 24,542

Other current assets

17,365 24,200

Total current assets

1,154,914 920,376

Noncurrent assets

Accrued receivables, net

215,772 213,041

Property and equipment, net

64,734 70,380

Operating lease right-of-use assets

41,243 57,382

Software, net

196,456 234,517

1,280,226 1,280,525

Intangible assets, net

321,983 356,969

Deferred income taxes, net

57,476 51,611

Other noncurrent assets

54,099 72,733

$ 3,386,903 $ 3,257,534

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable

$ 41,223 $ 37,010

Settlement liabilities

604,096 368,719

Employee compensation

48,560 29,318

Current portion of long-term debt

34,265 34,148

Deferred revenue

95,849 65,784

Other current liabilities

81,612 76,971

Total current liabilities

905,605 611,950

Noncurrent liabilities

Deferred revenue

33,564 53,155

Long-term debt

1,120,742 1,339,007

Deferred income taxes, net

40,504 32,053

Operating lease liabilities

39,958 46,766

Other noncurrent liabilities

39,933 44,635

Total liabilities

2,180,306 2,127,566

Commitments and contingencies (Note 13)

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Treasury stock, at cost, 23,412,870 and 24,538,703 shares at December 31, 2020 and 2019, respectively

( 387,581 ) ( 377,639 )

Accumulated other comprehensive loss ( 92,445 ) ( 91,583 )

Total stockholders’ equity

1,206,597 1,129,968

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 3,386,903 $ 3,257,534

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

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Years Ended December 31,

2020 2019 2018

Software as a service and platform as a service

$ 769,180 $ 677,669 $ 433,025

246,896 288,261 280,556

211,697 213,409 219,145

66,549 78,955 77,054

Total revenues

1,294,322 1,258,294 1,009,780

Operating expenses

Cost of revenue (1)

622,459 617,453 430,351

Research and development

139,293 146,573 143,630

Selling and marketing

103,567 123,684 117,881

General and administrative

152,468 135,296 107,422

Depreciation and amortization

131,791 111,532 84,585

Total operating expenses

1,149,578 1,134,538 883,869

Operating income 144,744 123,756 125,911

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Interest expense

( 56,630 ) ( 64,033 ) ( 41,530 )

Interest income

11,628 11,967 11,142

( 1,116 ) 520 ( 3,724 )

Total other income (expense)

( 46,118 ) ( 51,546 ) ( 34,112 )

Income before income taxes 98,626 72,210 91,799

Income tax expense 25,966 5,148 22,878

Net income $ 72,660 $ 67,062 $ 68,921

Income per common share

$ 0.62 $ 0.58 $ 0.59

$ 0.62 $ 0.57 $ 0.59

Weighted average common shares outstanding

116,397 116,175 116,057

118,079 118,571 117,632

(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.

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Years Ended December 31,

2020 2019 2018

Net income $ 72,660 $ 67,062 $ 68,921

Other comprehensive income (loss):

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Accumulated Other

Comprehensive Loss

Comprehensive Income (Loss) Total

Balance as of December 31, 2017 $ 702 $ 610,345 $ 550,866 $ ( 319,960 ) $ ( 77,356 ) $ 764,597

Other comprehensive income

— — 68,921 — — 68,921

Other comprehensive loss — — — — ( 15,261 ) ( 15,261 )

Stock-based compensation

Shares issued and forfeited, net, under stock plans, including income tax benefits

— 20,360 — — — 20,360

Shares issued and forfeited, net, under stock plans — 1,530 — 21,218 — 22,748

Repurchase of 2,346,427 shares of common stock

— — — ( 54,527 ) — ( 54,527 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 2,588 ) — ( 2,588 )

Cumulative effect of accounting change, ASC 606

— — 243,981 — — 243,981

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

Other comprehensive loss

— — 67,062 — — 67,062

Other comprehensive income — — — — 1,034 1,034

Stock-based compensation

Shares issued and forfeited, net, under stock plans, including income tax benefits

— 36,763 — — — 36,763

Shares issued and forfeited, net, under stock plans — ( 1,340 ) — 17,821 — 16,481

Repurchase of 1,228,102 shares of common stock

— — — ( 35,617 ) — ( 35,617 )

Repurchase of stock-based compensation awards for tax withholdings

Cumulative effect of accounting change, ASC 606

— — — ( 3,986 ) — ( 3,986 )

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

Other comprehensive income

— — 72,660 — — 72,660

Other comprehensive loss

— — — — ( 862 ) ( 862 )

Stock-based compensation

Shares issued and forfeited, net, under stock plans including income tax benefits

— 29,602 — — — 29,602

Shares issued and forfeited, net, under stock plans — ( 14,829 ) — 30,507 — 15,678

Repurchase of 1,000,000 shares of common stock

— — — ( 28,881 ) — ( 28,881 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 11,568 ) — ( 11,568 )

Balance as of December 31, 2020 $ 702 $ 682,431 $ 1,003,490 $ ( 387,581 ) $ ( 92,445 ) $ 1,206,597

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Years Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income $ 72,660 $ 67,062 $ 68,921

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

24,728 24,092 23,805

115,588 98,477 73,545

Amortization of operating lease right-of-use assets

23,448 15,934 —

Amortization of deferred debt issuance costs

4,802 4,128 4,637

Deferred income taxes

3,349 ( 22,140 ) ( 5,734 )

Stock-based compensation expense

29,602 36,763 20,360

6,017 5,175 2,007

Changes in operating assets and liabilities, net of impact of acquisitions:

8,793 ( 19,054 ) ( 14,760 )

Accounts payable

2,484 ( 7,703 ) 5,766

Accrued employee compensation

Current income taxes

18,491 ( 10,829 ) ( 9,684 )

Deferred revenue

9,421 ( 37,561 ) 14,219

Other current and noncurrent assets and liabilities

16,919 ( 16,695 ) 850

Net cash flows from operating activities

336,302 137,649 183,932

Cash flows from investing activities:

Purchases of property and equipment

( 17,804 ) ( 23,099 ) ( 18,265 )

Purchases of software and distribution rights

( 28,829 ) ( 24,915 ) ( 25,628 )

Acquisition of businesses, net of cash acquired

— ( 757,268 ) —

15,934 ( 25,199 ) ( 1,467 )

Net cash flows from investing activities

( 30,699 ) ( 830,481 ) ( 45,360 )

Cash flows from financing activities:

Proceeds from issuance of common stock

3,759 3,591 3,098

Proceeds from exercises of stock options

11,924 12,985 19,674

Repurchase of stock-based compensation awards for tax withholdings

( 11,568 ) ( 3,986 ) ( 2,588 )

Repurchase of common stock

( 28,881 ) ( 35,617 ) ( 54,527 )

Proceeds from senior notes

Redemption of senior notes

— — ( 300,000 )

Proceeds from revolving credit facility

30,000 280,000 109,000

Repayments of revolving credit facility

( 214,000 ) ( 41,000 ) ( 111,000 )

Proceeds from term portion of credit agreement

Repayments of term portion of credit agreement

( 38,950 ) ( 28,900 ) ( 109,289 )

Payment for debt issuance costs

— ( 12,830 ) ( 7,319 )

Payments on or proceeds from other debt, net

( 13,854 ) ( 7,020 ) ( 4,753 )

Net cash flows from financing activities

( 261,570 ) 667,223 ( 57,704 )

Effect of exchange rate fluctuations on cash

( 57 ) ( 1,495 ) ( 2,076 )

Net increase (decrease) in cash and cash equivalents 43,976 ( 27,104 ) 78,792

Cash and cash equivalents, beginning of period

121,398 148,502 69,710

Cash and cash equivalents, end of period

$ 165,374 $ 121,398 $ 148,502

Supplemental cash flow information

Income taxes paid, net

$ 27,760 $ 27,727 $ 32,205

Interest paid

$ 51,991 $ 58,980 $ 35,300

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

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In addition to its own products, the Company distributes or acts as a sales agent for software developed by third parties.

These products and services are used principally by banks, financial intermediaries, merchants, and billers, both in domestic and international markets.

These products and services are used principally by banks, intermediaries, merchants, and billers, both in domestic and international markets.

Consolidated Financial Statements

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All intercompany balances and transactions have been eliminated.

Certain prior period amounts have been reclassified to conform to current year presentation.

The Company reclassified $ 32.3 million from other current assets to settlement assets and $ 31.6 million from other current liabilities to settlement liabilities in the consolidated balance sheet as of December 31, 2018 .

Capital Stock

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The carrying amounts of cash and cash equivalents on the consolidated balance sheets approximate fair value.

Risks and Uncertainties

The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic.

The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the pandemic and available information continues to be evolving.

The Company has experienced changes in volumes for certain Merchant and Biller customers and has received limited requests for extended payment terms under existing contracts.

Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession.

Such economic disruption could have a material adverse effect on our business as our customers curtail and reduce capital and overall spending.

Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole.

The magnitude and overall effectiveness of these actions remains uncertain.

The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted.

The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers.

As of the date of issuance of these consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.

Other Current Liabilities

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Vendor financed licenses 12,901 9,667

Royalties payable

Accrued interest 8,745 9,212

Royalties payable 3,959 6,107

Other 42,569 36,936

Total other current liabilities $ 81,612 $ 76,971

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As of December 31, 2020 and 2019, net property and equipment consisted of the following (in thousands):

Useful Lives 2020 2019

Computer and office equipment

$ 133,346 $ 143,942

Leasehold improvements

Lesser of useful life of improvement or remaining life of lease

Furniture and fixtures

29,535 33,346

Building and improvements

14,588 14,553

Furniture and fixtures

Non-depreciable

Property and equipment, gross

187,793 206,606

accumulated depreciation

( 123,059 ) ( 136,226 )

Property and equipment, net

$ 64,734 $ 70,380

Software may be for internal use or for resale.

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As a result, the carrying amount of the software may be reduced accordingly.

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

Amortization of internal-use software is generally computed using the straight-line method over estimated useful lives of three to eight years .

Business Combinations

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During this assessment, management relies on a number of factors, including operating results, business plans, and anticipated future cash flows.

The Company has identified its reportable segments, ACI On Premise and ACI On Demand, as the reporting units.

The Company has identified its reportable segments, ACI On Demand and ACI On Premise, as the reporting units.

The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections and terminal value rates.

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The WACC considers market and industry data as well as company-specific risk factors.

Operational management,

considering industry and company-specific historical and projected data, develops growth rates and cash flow projections for each reporting unit.

Operational management, considering industry and company-specific historical and projected data, develops growth rates and cash flow projections for each reporting unit.

Terminal value rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period, assuming a constant WACC and low, long-term growth rates.

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Changes in the carrying amount of goodwill attributable to each reporting unit during the year ended December 31, 2020, were as follows (in thousands):

ACI On Demand

ACI On Premise

ACI On Demand ACI On Premise Total

Gross Balance, prior to December 31, 2018

$ 183,783 $ 773,340 $ 957,123

Total impairment prior to December 31, 2018

— ( 47,432 ) ( 47,432 )

Balance, December 31, 2018

183,783 725,908 909,691

Goodwill from acquisitions (1) 370,834 — 370,834

Balance, December 31, 2019

Goodwill from acquisitions relates to the goodwill recorded for the acquisition of E Commerce Group Products, Inc.

554,617 725,908 1,280,525

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

Balance, December 31, 2020

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

(1) Goodwill from acquisitions relates to the goodwill recorded, as well as adjustments, for the acquisitions of E Commerce Group Products, Inc.

("ECG"), along with ECG's subsidiary, Speedpay, Inc.

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("Walletron"), as discussed in Note 3, Acquisition .

The purchase price allocations for Speedpay and Walletron are preliminary as of December 31, 2019 , and are subject to future changes during the maximum one-year measurement period.

Other intangible assets, which include customer relationships and trademarks and trade names, are amortized using the straight-line method over periods ranging from three years to 20 years .

Other intangible assets, which include customer relationships and trademarks and trade names, are amortized using the straight-line method over periods ranging from four to 20 years.

The Company reviews its other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

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The Company accounted for this investment using the equity method in accordance with ASC 323, Investments - Equity Method and Joint Ventures .

Accordingly, the Company recorded an initial investment of $ 18.5 million , which includes direct costs of acquiring the investment, and is included in other cash flows from investing activities in the consolidated statement of cash flows and other noncurrent assets in the consolidated balance sheet as of December 31, 2019.

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 $ 19.3 million and $ 18.5 million, which is included in other noncurrent assets in the consolidated balance sheet as of December 31, 2020 and 2019, respectively.

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

An amended and restated certificate of incorporation was filed with the state of Delaware to reflect the change.

The Official Payments Corporation name and corresponding trade name may continue to be used until all stationary and marketing materials are transitioned to ACI Payments, Inc.

Impairment of Long-Lived Assets

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Stock-Based Compensation Plans

In accordance with ASC 718, Compensation – Stock Compensation , the Company recognizes stock-based compensation expense for awards that are probable of vesting on a straight-line basis over the requisite service period of the award, which is generally the vesting term.

In accordance with ASC 718, Compensation – Stock Compensation, ("ASC 718") the Company recognizes stock-based compensation expense for awards that are probable of vesting on a straight-line basis over the requisite service period of the award, which is generally the vesting term.

Stock-based compensation expense is recorded in operating expenses depending on where the respective individual’s compensation is recorded.

The Company generally utilizes the Black–Scholes option–pricing model to determine the

fair value of stock options on the date of grant.

The Company generally utilizes the Black-Scholes option-pricing model to determine the fair value of stock options on the date of grant.

To determine the grant date fair value of the supplemental stock options and total shareholder return awards (“TSRs”), a Monte Carlo simulation model was used.

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Refer to Note 12, Leases , for further details.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income:

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

This ASU provides an option to reclassify stranded tax effects within accumulated other comprehensive income (“AOCI”) to retained earnings in each period in which the effect of the change in the U.S.

federal corporate income tax rate in the 2017 U.S.

Tax Cuts and Jobs Act (or portion thereof) is recorded.

This ASU requires disclosure of a description of the accounting policy for releasing income tax effects from AOCI;

whether election is made to reclassify the stranded income tax effects from the 2017 U.S.

Tax Cuts and Jobs Act;

and information about the income tax effects that are reclassified.

The Company adopted ASU 2018-2 as of January 1, 2019.

The adoption of ASU 2018-2 did not have an impact on the consolidated balance sheet, statement of operations, and statement of cash flows.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.

33-10532, Disclosure Update and Simplification, and Nos.

33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates , which clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC 's regulations.

ASU 2019-07 was effective upon issuance and did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Standards Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance, ASU 2018-19 in November 2018, ASU 2019-04 in April 2019, ASU 2019-05 in May 2019, and ASU's 2019-10 and 2019-11 in November 2019.

Measurement of Credit Losses on Financial Instruments, codified as ASC 326 .

Subsequent amendments to the guidance were issued as follows:

ASU 2018-19 in November 2018;

ASU 2019-04 in April 2019;

ASU 2019-05 in May 2019;

ASU's 2019-10 and 2019-11 in November 2019;

and ASU 2020-02 in February 2020.

This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

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GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company will be required to use a forward-looking expected credit loss model for accounts receivables.

ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019.

The Company established a project team to assess implementing changes to its processes and controls in conjunction with a comprehensive review of its financial instruments.

The Company has determined that the adoption of ASU 2016-13 will not have a material impact on its consolidated balance sheet, statement of operations, and statement of cash flows.

The Company is required to use a forward-looking expected credit loss model for billed and accrued receivables.

The Company adopted ASU 2016-13 as of January 1, 2020.

The adoption of ASU 2016-13 did not have a material impact on the consolidated financial statements.

In February 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments , which clarifies or improves various financial instruments topics in the accounting standards codification to increase stakeholder awareness.

ASU 2020-03 was effective upon issuance and did not have a material impact on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate (“LIBOR”).

This guidance includes optional expedients and exceptions for applying U.S.

GAAP to transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 is effective for all entities as of March 12, 2020, through December 31, 2022, when the reference rate replacement activity is expected to be completed.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform - Scope , which clarified the scope and application of the original guidance.

The adoption of ASU 2020-04 did not have an impact on the Company's consolidated financial statements.

Recently Issued Accounting Standards Not Yet Effective

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020.

The Company is currently assessing the impact the adoption of ASU 2019-12 will have on its consolidated balance sheet, statement of operations, and statement of cash flows.

The adoption of ASU 2019-12 will not have a material impact on the Company's consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements , which improves the consistency of the codification by including all disclosure related guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology.

ASU 2020-10 is effective for annual periods after December 15, 2020, and early application is permitted for any annual or interim period for which financial statements have not been issued.

The adoption of ASU 2020-10 will not have a material impact on the Company's consolidated financial statements.

Revenue Recognition

In accordance with ASC 606, Revenue From Contracts With Customers , revenue is recognized upon transfer of control of promised products and/or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.

In accordance with ASC 606, Revenue From Contracts With Customers , revenue is recognized upon transfer of control of promised products and/or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services.

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

Contract Combination.

The Company may execute more than one contract or agreement with a single customer.

The Company may execute more than one contract or agreement with a single customer at or near the same time.

The separate contracts or agreements may be viewed as one combined arrangement or separate agreements for revenue recognition purposes.

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Depending upon the structure of a particular arrangement, the Company:

(1) allocates the variable amount to each distinct service period within the series and recognizes revenue as each distinct service period is performed (i.e.

direct allocation), (2) estimates total variable consideration at contract inception (giving consideration to any constraints that may apply and updating the estimates as new information becomes available) and recognizes the total transaction price over the period to which it relates, or (3) applies the ‘right to invoice’ practical expedient and recognizes revenue based on the amount invoiced to the customer during the period.

(1) allocates the variable amount to each distinct service period within the series and recognizes revenue as each distinct service period is performed, (2) estimates total variable consideration at contract inception (giving consideration to any constraints that may apply and updating the estimates as new information becomes available) and recognizes the total transaction price over the period to which it relates, or (3) applies the ‘right to invoice’ practical expedient and recognizes revenue based on the amount invoiced to the customer during the period.

License Arrangements.

The Company’s software license arrangements provide the customer with the right to use functional intellectual property (as it exists at the point in time at which the license is granted) for the duration of the contract term.

Implementation, support, and other services are typically considered distinct performance obligations when sold with a software license unless these services are determined to significantly modify the software.

Implementation, support, and other services are typically considered distinct performance obligations when sold with a software license.

Payment terms for the Company’s software license arrangements generally include fixed license and capacity fees that are payable up front or over time.

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These include arrangements in which the Company takes control of the products and is responsible for providing the product or service.

For software license arrangements in which the Company acts as a sales agent for another company’s product, revenues are recorded on a net basis.

For software license

arrangements in which the Company acts as a sales agent for another company’s product, revenues are recorded on a net basis.

These include arrangements in which the Company does not take control of products and is not responsible for providing the product or service.

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Revenues from arrangements to provide professional services are generally distinct from the other promises in the contract(s) and are recognized as the related services are performed.

Consideration payable under these arrangements is either fixed fee or on a time-and-materials basis, which represents variable consideration that must be estimated using the most likely amount based on the range of hours expected to be incurred in providing the services.

Consideration received under these arrangements is either fixed fee or on a time-and-materials basis, which represents variable consideration that must be estimated using the most likely amount based on the range of hours expected to be incurred in providing the services.

The Company estimates the stand-alone selling price (“SSP”) for maintenance and professional services based on observable stand-alone sales.

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Judgment is also used in assessing whether the extension of payment terms in a software license arrangement results in variable consideration and, if so, the amount to be included in the transaction price.

The Company applies the portfolio approach to estimating the amount of variable consideration in these arrangements using the most likely amount method that is based on the Company’s historical collection experience under similar arrangements.

Significant judgment is required to determine the SSP for each performance obligation, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service.

The Company applies the portfolio approach to estimate the amount of variable consideration in these arrangements using the most likely amount method that is based on the Company’s historical collection experience under similar arrangements.

Significant judgment is required to determine the SSP for each performance obligation, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to be entitled to in exchange for the related product and/or service.

As the selling prices of the Company’s software licenses are highly variable, the Company estimates SSP of its software licenses using the residual approach when the software license is sold with other services and observable SSPs exist for the other services.

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Billed receivables, net 175,265 208,505

Accrued receivables

Significant financing component

Current accrued receivables, net 167,614 150,692

Long-term accrued receivables, net 215,772 213,041

Total accrued receivables, net 383,386 363,733

current accrued receivables

current significant financing component

Total long-term accrued receivables, net

Total receivables, net $ 558,651 $ 572,238

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

The Company maintains a general allowance for doubtful accounts based on historical experience, along with additional customer-specific allowances.

The Company regularly monitors credit risk exposures in consolidated receivables.

In estimating the necessary level of our allowance for doubtful accounts, management considers the aging of accounts receivable, the creditworthiness of customers, economic conditions within the customer’s industry, and general economic conditions, among other factors.

The Company maintains an allowance for doubtful accounts for expected future credit losses that is calculated based on historical experience, current economic trends, and expectations of near term economic trends.

The Company regularly monitors its credit risk exposures in consolidated receivables.

The following reflects activity in the Company’s allowance for doubtful accounts receivable for the periods indicated (in thousands):

Years Ended December 31,

2020 2019 2018

Balance, beginning of period

Provision increase

$ ( 5,149 ) $ ( 3,912 ) $ ( 4,799 )

Provision (increase) decrease 374 ( 2,561 ) ( 1,505 )

Amounts written off, net of recoveries

941 1,368 2,269

Foreign currency translation adjustments and other

( 78 ) ( 44 ) 123

Balance, end of period

Provision increases recorded in general and administrative expense during the years ended December 31, 2019 , 2018 , and 2017 , reflect increases in the allowance for doubtful accounts based upon collection experience in the geographic regions in which the Company conducts business, net of collection of customer-specific receivables that were previously reserved for as doubtful of collection.

$ ( 3,912 ) $ ( 5,149 ) $ ( 3,912 )

Provision (increases) decreases recorded in general and administrative expense during the years ended December 31, 2020, December 31, 2019, and 2018, reflect (increases) decreases in the allowance for doubtful accounts based upon collection experience, net of collection of customer-specific receivables that were previously reserved for as doubtful of collection.

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.

Changes in deferred revenue were as follows (in thousands):

Balance, January 1, 2018

Balance, December 31, 2018

Deferral of revenue

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• Revenue that will be recognized in future periods from capacity overages that are accounted for as a usage-based royalty.

SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the ‘right to invoice’ practical expedient.

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

• SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the ‘right to invoice’ practical expedient or meets the allocation objective.

Revenue allocated to remaining performance obligations was $ 846.9 million as of December 31, 2020, of which the Company expects to recognize approximately 50 % over the next 12 months and the remainder thereafter.

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Contract fulfillment costs are expensed as the Company transfers the related services to the customer.

As of December 31, 2019 and 2018 , $ 0.2 million of these costs are included in other current assets, and $ 10.2 million and $ 12.6 million of these costs are included in other noncurrent assets, respectively, on the consolidated balance sheets.

As of December 31, 2020 and December 31, 2019, less than $ 0.1 million and $ 0.2 million of these costs are included in other current assets, and $ 9.5 million and $ 10.2 million of these costs are included in other noncurrent assets, respectively, on the consolidated balance sheets.

The amounts capitalized primarily relate to direct costs that enhance resources under the Company’s SaaS and PaaS arrangements.

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The Company has included the financial results of Speedpay in the consolidated financial statements from the date of acquisition.

The combination of the Company and Speedpay bill pay solutions serves more than 4,000 customers across the U.S., bringing expanded reach in existing and complementary market segments such as consumer finance, insurance, healthcare, higher education, utilities, government, and mortgage.

The acquisition of Speedpay increases the scale of the Company’s On Demand platform business and allows the acceleration of platform innovation through increased research and development and investment in ACI's On Demand platform infrastructure.

The combination of the Company and Speedpay bill pay solutions serves more than 4,000 customers across the United States, bringing expanded reach in existing and complementary market segments such as consumer finance, insurance, healthcare, higher education, utilities, government, and mortgage.

The acquisition of Speedpay increased the scale of the Company’s On Demand platform business and allows the acceleration of platform innovation through increased research and development and investment in ACI's On Demand platform infrastructure.

To fund the acquisition, the Company amended its existing Credit Agreement, dated February 24, 2017, for an additional $ 500.0 million senior secured term loan (“Delayed Draw Term Loan”), in addition to drawing $ 250.0 million on the available Revolving Credit Facility.

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

Speedpay contributed approximately $ 227.7 million in revenue and $ 24.9 million in operating income for the year ended December 31, 2019 .

The consideration paid by the Company to complete the acquisition has been allocated preliminarily to the assets acquired and liabilities assumed based upon estimated fair values as of the date of the acquisition.

The allocation of purchase price is based upon external valuation and other analyses that have not been completed as of the date of this filing, including, but not limited to, certain tax matters and accrued liabilities.

Accordingly, the purchase price allocations are preliminary and are subject to future adjustments during the maximum one-year allocation period.

In connection with the acquisition, the Company recorded the following amounts based upon its preliminary purchase price allocation as of December 31, 2019 , which are subject to completion of various analyses (in thousands, except weighted average useful lives):

Weighted Average Useful Lives

Speedpay contributed approximately $ 329.2 million in total revenue the year ended December 31, 2020.

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 year ended December 31, 2020 .

Speedpay contributed approximately $ 227.7 million in total revenue and $ 24.9 million in total operating income for the year ended December 31, 2019.

In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of December 31, 2020 (in thousands, except weighted average useful lives):

Amount Weighted Average Useful Lives

Current assets:

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Noncurrent assets:

Customer relationships

Goodwill 366,508

Software 113,600 7 years

Customer relationships 208,500 15 years

Trade names 10,900 5 years

Other noncurrent assets 3,745

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Net assets acquired $ 754,057

During the year ended December 31, 2019 , the Company made adjustments to the preliminary purchase price allocation as additional information became available for receivables.

During the year ended December 31, 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.

The Company's review of the purchase price allocation has been completed.

Factors contributing to the purchase price that resulted in the goodwill (which is tax deductible) include the acquisition of management, sales, and technology personnel with the skills to market new and existing products of the Company, enhanced product capabilities, complementary products, and customers.

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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 year ended December 31, 2019 and 2018 , 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 from the year ended December 31, 2019 .

Certain pro forma adjustments have been made to net income for the years ended December 31, 2019 and 2018, 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 year ended December 31, 2020, is not presented, as Speedpay is included in the Company's consolidated results for the entire period.

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

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Pro forma income per share:

Basic $ 0.71 $ 0.76

Diluted $ 0.69 $ 0.75

On May 9, 2019, the Company also completed the acquisition of Walletron, which delivers patented mobile wallet technology.

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

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):

December 31, 2019

December 31, 2018

Software for resale

Software for internal use

Total software

Software for resale amortization expense totaled $ 11.0 million for the year ended December 31, 2019 , and totaled $ 12.8 million during both the years ended December 31, 2018 and 2017 .

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

Software for internal use amortization expense recorded during the years ended December 31, 2019 , 2018 , and 2017 , totaled $ 55.6 million , $ 41.7 million , and $ 45.2 million , respectively.

These software amortization expense amounts are reflected in depreciation and amortization in the 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):

December 31, 2019

December 31, 2018

Customer relationships

Trademarks and trade names

Total other intangible assets

Other intangible assets amortization expense recorded during the years ended December 31, 2019 , 2018 , and 2017 , totaled $ 31.9 million , $ 19.0 million , and $ 19.4 million , respectively.

Based on capitalized intangible assets as of December 31, 2019 , estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Fiscal Year Ending December 31,

Other Intangible

Assets Amortization

As of December 31, 2019 , the Company had $ 239.0 million , $ 756.1 million , and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $ 261.0 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended.

As of December 31, 2020, the Company had $ 55.0 million, $ 717.1 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $ 443.5 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

On April 5, 2019, the Company (and its wholly-owned subsidiaries, ACI Worldwide Corp.

and Official Payments Corporation ("OPAY")) entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”), with the lenders, and Bank of America, N.A., as administrative agent for the lenders, to amend and restate the Company's existing agreement, as amended, dated February 24, 2017 .

and ACI Payments, Inc.

entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”), with the lenders, and Bank of America, N.A., as administrative agent for the lenders, to amend and restate the Company's existing agreement, as amended, dated February 24, 2017.

The amended Credit Agreement permitted the Company to borrow up to $ 500.0 million in the form of an additional senior secured term loan;

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The Credit Agreement also allows the Company to request optional incremental term loans and increases in the revolving commitment.

At the Company’s option, borrowings under the Credit Facility bear interest at an annual rate equal to either (a) a base rate determined by reference to the highest of (1) the annual interest rate publicly announced by the administrative agent as its Prime Rate, (2) the federal funds effective rate plus 1/2 of 1% or (3) a London Interbank Offered Rate ("LIBOR") rate determined by

reference to the costs of funds for U.S.

At the Company’s option, borrowings under the Credit Facility bear interest at an annual rate equal to either (a) a base rate determined by reference to the highest of (1) the annual interest rate publicly announced by the administrative agent as its Prime Rate, (2) the federal funds effective rate plus 1/2 of 1% or (3) a LIBOR rate determined by reference to the costs of funds for U.S.

dollar deposits for a one-month interest period, adjusted for certain additional costs plus 1 % or (b) a LIBOR rate determined by reference to the costs of funds for U.S.

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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 OPAY, our electronic bill presentment and payment affiliate, to allow OPAY to comply with certain eligible securities and unencumbered asset requirements related to money transmitter or transfer license rules and regulations.

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.

to comply with certain eligible securities and unencumbered asset requirements related to money transmitter or transfer license rules and regulations.

The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s and its subsidiaries' ability to:

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and hold certain assets and incur certain liabilities.

Letter of Credit

On August 12, 2020, the Company and ACI Payments, Inc.

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

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Fiscal Year Ending December 31,

The Credit Facility will mature on April 5, 2024, and the 2026 Notes will mature on August 15, 2026 .

2021 $ 38,950

Total $ 1,172,110

The Revolving Credit Facility and 2026 Notes do not amortize.

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

$ 717,110 $ 756,060

Revolving credit facility

55,000 239,000

5.750 % Senior Notes, due August 2026

400,000 400,000

Debt issuance costs

Less current portion of term credit facility

Less current portion of debt issuance costs

( 17,103 ) ( 21,905 )

1,155,007 1,373,155

current portion of term loans 38,950 38,950

current portion of debt issuance costs ( 4,685 ) ( 4,802 )

Total long-term debt

$ 1,120,742 $ 1,339,007

Overdraft Facility

In 2019 , the Company and OPAY entered in to a $ 140.0 million uncommitted overdraft facility with Bank of America, N.A.

In 2019, the Company and ACI Payments, Inc.

entered in to an uncommitted overdraft facility with Bank of America, N.A.

The overdraft facility bears interest at LIBOR plus 2.25 % based on the Company’s average outstanding balance and the frequency in which overdrafts occur.

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

As of December 31, 2020, there was $ 100.0 million available and no amount outstanding on the overdraft facility.

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

During the year ended December 31, 2019 , the Company financed certain multi-year license agreements for internal-use software for $ 10.4 million with annual payments through April 2022 .

As of December 31, 2019 , $ 13.8 million is outstanding, under these and other license agreements previously entered into, of which $ 6.0 million and $ 7.8 million is included in other current liabilities and other noncurrent liabilities, respectively, in the consolidated balance sheet.

The Company finances certain multi-year license agreements for internal-use software.

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

During the year ended December 31, 2019, the Company financed agreements for $ 10.4 million with annual payments through April 2022.

As of December 31, 2020, $ 7.8 million was outstanding under these and other license agreements previously entered into, of which $ 5.6 million and $ 2.2 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.

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

Corporate Restructuring and Other Organizational Changes

Lease Terminations

During the year ended December 31, 2017, the Company ceased use of a portion of its leased facilities in Edison, NJ;

Chantilly, VA;

Charlotte, NC;

Parsippany, NJ;

and Waltham, MA.

As a result, the Company recorded additional expense of $ 2.4 million , which was recorded in general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2017.

A summary of the facility closures liability is as follows (in thousands):

Balance, December 31, 2017

Amounts paid during the period

Foreign currency translation adjustments

Balance, December 31, 2018

Amounts paid during the period

Foreign currency translation adjustments

Balance, December 31, 2019

Of the $ 2.6 million facility closure liability, $ 1.3 million is recorded to both other current liabilities and operating lease liabilities in the consolidated balance sheet as of December 31, 2019 .

Common Stock and Treasury Stock

In 2005, the board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorize additional funds for the program.

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 1,228,102 shares for $ 35.6 million under the program for the year ended December 31, 2019 .

Under the program to date, the Company has repurchased 45,357,495 shares for approximately $ 583.4 million .

As of December 31, 2019 , the maximum remaining amount authorized for purchase under the stock repurchase program was $ 141.0 million .

During the year ended September 30, 2006, the Company began to issue shares of treasury stock upon exercise of stock options, payment of earned performance shares, issuance of restricted share awards (“RSAs”), vesting of restricted share units (“RSUs”), and for issuances of common stock pursuant to the Company’s employee stock purchase plan ("ESPP").

Treasury shares issued during the year ended December 31, 2017 , included 1,204,559 , 560,174 , and 158,194 shares issued pursuant to stock option exercises, RSA grants, and the ESPP, respectively.

Treasury shares issued during the year ended December 31, 2018 , included 1,379,704 , 10,000 , and 148,520 shares issued pursuant to stock option exercises, RSUs vested, and the ESPP, respectively.

Treasury shares issued during the year ended December 31, 2019 , included 854,524 , 259,634 , and 126,983 shares issued pursuant to stock option exercises, RSUs vested, and the ESPP, respectively.

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):

Years Ended December 31,

Weighted average shares outstanding:

Basic weighted average shares outstanding

Dilutive effect of stock options, RSUs, and contingently issuable shares

Diluted weighted average shares outstanding

The diluted earnings per share computation excludes 1.8 million , 2.2 million , and 3.9 million options to purchase shares, RSUs, and contingently issuable shares during the years ended December 31, 2019 , 2018 , and 2017 , respectively, as their effect would be anti-dilutive.

Common stock outstanding as of December 31, 2019 and 2018 , was 115,986,352 and 116,123,361 , respectively.

Other, net is comprised of foreign currency transaction gains of $ 0.5 million for the year ended December 31, 2019 , and foreign currency transaction losses of $ 3.7 million and $ 2.6 million for the years ended December 31, 2018 and 2017 , respectively.

Segment Information

The Company reports financial performance based on its segments, ACI On Premise and ACI On Demand, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s interim Chief Executive Officer is also the chief operating decision maker ("CODM").

The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from Corporate operations.

ACI On Premise serves customers who manage their software on site or through a third-party cloud service provider.

These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site.

These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business.

These on-demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment for SaaS offerings, or in a multi-tenant environment for PaaS offerings.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer.

Expenses are attributed to the reportable segments in one of three methods, (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated.

Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit.

The Company also allocates certain depreciation costs to the segments.

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).

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

These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

For the year ended December 31, 2017, corporate and unallocated expenses included $ 46.7 million of general and administrative expense for the legal judgment discussed in Note 15 , Commitments and Contingencies .

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

Years Ended December 31,

ACI On Premise

ACI On Demand

Total revenue

Segment Adjusted EBITDA

ACI On Premise

ACI On Demand

Depreciation and amortization

Stock-based compensation expense

Corporate and unallocated expenses

Interest, net

Income before income taxes

Depreciation and amortization

ACI On Premise

ACI On Demand

Total depreciation and amortization

Stock-based compensation expense

ACI On Premise

ACI On Demand

Total stock-based compensation expense

Assets are not allocated to segments, and the Company’s CODM does not evaluate operating segments using discrete asset information.

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

Year Ended December 31, 2019

Year Ended December 31, 2018

Primary Geographic Markets

Americas - United States

Americas - Other

Primary Solution Categories

Bill Payments

Digital Channels

Merchant Payments

Payments Intelligence

Real-Time Payments

Retail Payments

Year Ended December 31, 2017

Primary Geographic Markets

Americas - United States

Americas - Other

Primary Solution Categories

Bill Payments

Digital Channels

Merchant Payments

Payments Intelligence

Real-Time Payments

Retail Payments

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

Long-lived Assets

United States

No single customer accounted for more than 10% of the Company’s consolidated revenues during the years ended December 31, 2019 , 2018 , and 2017 .

No other country outside the United States accounted for more than 10% of the Company’s consolidated revenues during the years ended December 31, 2019 , 2018 , and 2017 .

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):

December 31, 2020 December 31, 2019

Gross Carrying

Amount Accumulated

Gross Carrying

Amount Accumulated

Software for resale

$ 130,261 $ ( 123,418 ) $ 6,843 $ 138,823 $ ( 122,061 ) $ 16,762

Software for internal use

430,330 ( 240,717 ) 189,613 400,065 ( 182,310 ) 217,755

Total software

$ 560,591 $ ( 364,135 ) $ 196,456 $ 538,888 $ ( 304,371 ) $ 234,517

Software for resale amortization expense recorded during the years ended December 31, 2020, 2019, and 2018, totaled $ 8.5 million, $ 11.0 million, and $ 12.8 million, respectively.

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

Software for internal use amortization expense recorded during the years ended December 31, 2020, 2019, and 2018, totaled $ 70.0 million, $ 55.6 million, and $ 41.7 million, respectively.

These software amortization expense amounts are reflected in depreciation and amortization in the 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):

December 31, 2020 December 31, 2019

Gross Carrying

Amount Accumulated

Gross Carrying

Amount Accumulated

Customer relationships

$ 512,389 $ ( 197,787 ) $ 314,602 $ 507,785 $ ( 160,775 ) $ 347,010

Trademarks and trade names

24,115 ( 16,734 ) 7,381 27,312 ( 17,353 ) 9,959

Total other intangible assets

$ 536,504 $ ( 214,521 ) $ 321,983 $ 535,097 $ ( 178,128 ) $ 356,969

Other intangible assets amortization expense recorded during the years ended December 31, 2020, 2019, and 2018, totaled $ 37.1 million, $ 31.9 million, and $ 19.0 million, respectively.

Based on capitalized intangible assets as of December 31, 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

2021 $ 67,599 $ 37,062

2022 50,179 36,903

2023 32,004 36,564

2024 20,608 32,044

2025 18,354 23,452

7,712 155,958

$ 196,456 $ 321,983

Stock-Based Compensation Plans

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The 2017 ESPP provides employees with an opportunity to purchase shares of the Company’s common stock.

The 1999 Employee Stock Purchase Plan terminated upon the August 1, 2017, effective date of the 2017 ESPP.

Under the Company’s 2017 ESPP, a total of 3,000,000 shares of the Company’s common stock have been reserved for issuance to eligible employees.

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Consequently, the entire 15 % discount to employees is deemed to be compensatory for purposes of calculating expense using a fair value method.

Compensation expense related to the ESPP for the year ended December 31, 2019 , was approximately $ 0.6 million and compensation expense related to the ESPP for both the years ended December 31, 2018 and 2017 , was approximately $ 0.5 million .

Compensation expense related to the ESPP for the years ended December 31, 2020, 2019, and 2018, was approximately $ 0.7 million, $ 0.6 million, and $ 0.5 million, respectively.

Stock Incentive Plans – Active Plans

2020 Equity and Incentive Compensation Plan

On June 9, 2020, upon recommendation of the board, stockholders approved the ACI Worldwide, Inc.

2020 Equity and Incentive Compensation Plan (the “2020 Plan”).

The 2020 Plan authorizes the board to provide for equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, dividend equivalents, and certain other awards, including those denominated or payable in, or otherwise based on, the Company’s common stock ("awards").

The purpose of the 2020 Plan is to provide incentives and rewards for service and/or performance by providing awards to non-employee directors, officers, other employees, and certain consultants and other service providers of the Company and its subsidiaries.

Following the approval of the 2020 Plan, the 2016 Equity and Performance Incentive Plan (the “2016 Incentive Plan”) was terminated.

Termination of the 2016 Incentive Plan did not affect any equity awards outstanding under the 2016 Incentive Plan.

Subject to adjustment and share counting rules as described in the 2020 Plan, a total of 6,658,754 shares of common stock are available for awards granted under the 2020 Plan.

Shares underlying certain awards under the 2020 Plan, the Company’s 2005 Equity and Performance Incentive Plan (the "2005 Incentive Plan"), and the 2016 Incentive Plan (each including as amended or amended and restated) that are cancelled or forfeited, expire, are settled for cash, or are unearned after June 9, 2020, will again be available under the 2020 Plan.

The board generally will be able to amend the 2020 Plan, subject to stockholder approval in certain circumstances, as described in the 2020 Plan.

2016 Equity and Performance Incentive Plan

On March 23, 2016, the board approved the 2016 Equity and Performance Incentive Plan (the “2016 Incentive Plan”).

On March 23, 2016, the board approved the 2016 Incentive Plan.

The 2016 Incentive Plan is intended to meet the Company’s objective of balancing stockholder concerns about dilution with the need to provide appropriate incentives to achieve Company performance objectives.

The 2016 Incentive Plan was adopted by the stockholders on June 14, 2016.

Following the adoption of the 2016 Incentive Plan, the 2005 Equity and Performance Incentive Plan, as amended (the “2005 Incentive Plan”) was terminated.

Following the adoption of the 2016 Incentive Plan, the 2005 Incentive Plan was terminated.

Termination of the 2005 Incentive Plan did not affect any equity awards outstanding under the 2005 Incentive Plan.

The 2016 Incentive Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted share and restricted share units, performance shares and performance units, and other awards (“awards”).

Subject to adjustment in certain circumstances, the maximum number of shares of common stock that may be issued or transferred in connection with awards granted under the 2016 Incentive Plan will be the sum of (i) 8,000,000 shares of common stock and (ii) any shares of common stock that are represented by options previously granted under the 2005 Incentive Plan which are forfeited, expire, or are canceled without delivery of common stock or which result in the forfeiture or relinquishment of common stock back to the Company.

To the extent awards granted under the 2016 Incentive Plan terminate, expire, are canceled without being exercised, are forfeited or lapse for any reason, the shares of common stock subject to such award will again become available for grants under the 2016 Incentive Plan.

Subject to adjustment in certain circumstances, the maximum number of shares of common stock that may be issued or transferred in connection with awards granted under the 2016 Incentive Plan will be the sum of (i) 8,000,000 shares of common stock and (ii) any shares of common stock that are represented by options previously granted under the 2005 Incentive Plan which are forfeited, expire, or are cancelled without delivery of common stock or which result in the forfeiture or relinquishment of common stock back to the Company.

To the extent awards granted under the 2016 Incentive Plan terminate, expire, are cancelled without being exercised, are forfeited or lapse for any reason, the shares of common stock subject to such award will again become available for grants under the 2016 Incentive Plan.

The 2016 Incentive Plan expressly prohibits re-pricing stock options and appreciation rights.

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The 2005 Incentive Plan provided for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, performance awards, and other awards.

options that had been granted under designated terminated stock option plans that were subsequently forfeited, expired, or are canceled without delivery of the Company’s common stock.

The maximum number of shares of the Company’s common stock that was issued or transferred in connection with awards granted under the 2005 Incentive Plan was the sum of (i) 23,250,000 shares and (ii) any shares represented by outstanding options that had been granted under designated terminated stock option plans that were subsequently forfeited, expired, or are cancelled without delivery of the Company’s common stock.

Stock Options

Stock options granted pursuant to the 2016 Incentive Plan are granted at an exercise price not less than the market value per share of the Company’s common stock on the date of grant.

Under the 2016 Incentive Plan, the term of the outstanding options may not exceed ten years nor be less than one year .

Vesting of options is determined by the compensation committee of the board and the administrator of the 2016 Incentive Plan and can vary based upon the individual award agreements.

In addition, outstanding options do not have dividend equivalent rights associated with them under the 2016 Incentive Plan.

Stock options granted pursuant to the Company's incentive plans were granted at an exercise price not less than the market value per share of the Company’s common stock on the date of grant.

The term of the outstanding options may not exceed ten years nor be less than one year .

Vesting of options is determined by the compensation committee of the board and the administrator of the respective plan and can vary based upon the individual award agreements.

In addition, outstanding options do not have dividend equivalent rights associated with them.

A summary of stock option activity is as follows:

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Outstanding, December 31, 2019 4,006,816 $ 18.18

( 1,756,471 ) 18.53

( 57,744 ) 19.08

Expired ( 6,090 ) 18.44

Outstanding, December 31, 2020 2,186,511 $ 17.87 3.96 $ 44,944,958

Exercisable, December 31, 2020 2,039,275 $ 17.72 4.16 $ 42,231,530

The weighted average grant date fair value of stock options granted during the years ended December 31, 2018 and 2017 , was $ 7.03 and $ 6.24 , respectively.

The Company did not grant stock options during the year ended December 31, 2019.

The weighted average grant date fair value of stock options granted during the year ended December 31, 2018, was $ 7.03 .

The Company did not grant stock options during the years ended December 31, 2020 and 2019.

The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2019, and 2018, was $ 19.5 million, $ 16.0 million, and $ 15.8 million, respectively.

The fair value of options granted in the respective fiscal years are estimated on the date of grant using the Black-Scholes option-pricing model, acceptable under ASC 718, with the following weighted average assumptions:

Years Ended December 31,

The fair value of options granted during the year ended December 31, 2018, were estimated on the date of grant using the Black-Scholes option-pricing model, acceptable under ASC 718, with the following weighted average assumptions:

Year Ended December 31, 2018

Expected life (years)

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During the year ended December 31, 2017, pursuant to the Company’s 2016 Incentive Plan, the Company granted long-term incentive program performance share awards (“LTIP performance shares”).

These LTIP performance shares are earned, if at all, based upon the achievement, over a specified period that must not be less than one year and is typically a three-year performance period, of performance goals related to (i) the compound annual growth over the performance period in the sales for the Company as determined by the Company, and (ii) the cumulative operating income or EBITDA over the performance period as determined by the Company.

Up to 200 % of the LTIP performance shares may be earned upon achievement of performance goals equal to or exceeding the maximum target levels for the performance goals over the performance period.

On a quarterly basis, management

must evaluate the probability that the threshold performance goals will be achieved, if at all, and the anticipated level of attainment to determine the amount of compensation expense to record in the consolidated financial statements.

These LTIP performance shares were earned based upon the achievement, over a specified period that must not be less than one year and is typically a three -year performance period, of performance goals related to (i) the compound annual growth over the performance period in the sales for the Company as determined by the Company, and (ii) the cumulative operating income or EBITDA over the performance period as determined by the Company.

Up to 200 % of the LTIP performance shares could be earned upon achievement of performance goals equal to or exceeding the maximum target levels for the performance goals over the performance period.

On a quarterly basis, management evaluated the probability that the threshold performance goals would be achieved, if at all, and the anticipated level of attainment to determine the amount of compensation expense to record in the consolidated financial statements.

A summary of the nonvested LTIP performance shares is as follows:

Number of Shares at

Expected Attainment

Weighted Average

Expected Attainment Weighted Average

Grant Date Fair Value

Nonvested at December 31, 2019 669,469 $ 20.12

Vested ( 668,240 ) 20.12

Forfeited ( 5,368 ) 20.12

Change in expected attainment 4,139 20.12

Nonvested at December 31, 2020 — $ —

During the year ended December 31, 2019 , the Company revised the expected attainment rates for outstanding LTIP performance shares due to changes in forecasted sales and operating income, resulting in additional stock-based compensation expense of approximately $ 3.7 million .

During the year ended December 31, 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.

Restricted Share Awards

During the years ended December 31, 2017, pursuant to the Company’s 2016 Incentive Plan and 2005 Incentive Plan, the Company granted RSAs.

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

Under each arrangement, shares are issued without direct cost to the employee.

RSAs granted to our board vest one year from grant or as of the next annual shareholders meeting, whichever is earlier.

The Company estimates the fair value of the RSAs based upon the market price of the Company’s stock at the date of grant.

The RSA grants provide for the payment of dividends on the Company’s common stock, if any, to the participant during the requisite service period, and the participant has voting rights for each share of common stock.

The Company recognizes compensation expense for RSAs on a straight-line basis over the requisite service period.

During the year ended December 31, 2017, pursuant to the Company’s 2016 Incentive Plan, the Company granted RSAs.

The awards had requisite service periods of three years and vested in increments of 33 % on the anniversary of the grant dates.

Under each arrangement, shares were issued without direct cost to the employee.

The Company estimated the fair value of the RSAs based upon the market price of the Company’s stock on the date of grant.

The RSA grants provided for the payment of dividends on the Company’s common stock, if any, to the participant during the requisite service period, and the participant had

voting rights for each share of common stock.

The Company recognized compensation expense for RSAs on a straight-line basis over the requisite service period.

A summary of nonvested RSAs is as follows:

Weighted Average

Shares Weighted Average

Grant Date Fair Value

Nonvested at December 31, 2019 92,842 $ 20.13

Vested ( 88,913 ) 20.12

Forfeited ( 3,929 ) 20.35

Nonvested at December 31, 2020 — $ —

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The Company recognizes compensation expense for the TSRs over a three-year performance period based on the grant date fair value.

The grant date fair value of the TSRs was estimated using the following weighted-average assumptions:

Years Ended December 31,

Expected life (years)

Interest rate

Expected dividend yield

A summary of nonvested TSRs is as follows:

Number of Shares at

Expected Attainment

Weighted Average

Shares Weighted Average

Grant Date Fair Value

Nonvested as of December 31, 2019 1,062,291 $ 35.77

Granted 677,195 30.01

Vested ( 199,413 ) 24.37

Forfeited ( 158,086 ) 36.69

Change in payout rate ( 14,259 ) 24.37

Nonvested as of December 31, 2020 1,367,728 $ 34.59

During the year ended December 31, 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 years ended December 31, 2020, 2019, and 2018, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted-average assumptions:

Years Ended December 31,

2020 2019 2018

Expected life (years) 2.8 2.8 2.9

Risk-free interest rate 0.5 % 2.5 % 2.4 %

Volatility 31.4 % 29.3 % 28.0 %

Expected dividend yield — — —

Restricted Share Units

During the year ended December 31, 2019 , pursuant to the 2016 Incentive Plan, the Company granted restricted share unit awards (“RSUs”).

During the years ended December 31, 2020, 2019, and 2018, pursuant to the 2020 Plan and the 2016 Incentive Plan, 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.

RSUs granted to our board vest one year from grant or as of the next annual shareholders meeting, whichever is earlier.

RSUs granted to the board vest one year from grant or as of the next annual shareholders meeting, whichever is earlier.

Under each arrangement, RSUs are issued without direct cost to the employee on the vesting date.

The Company estimates the fair value of the RSUs based upon the market price of the Company’s stock at the date of grant.

The Company estimates the fair value of the RSUs based upon the market price of the Company’s stock on the date of grant.

The Company recognizes compensation expense for RSUs on a straight-line basis over the requisite service period.

A summary of nonvested RSUs is as follows:

Weighted Average

Shares Weighted Average

Grant Date Fair Value

Nonvested as of December 31, 2019 1,009,404 $ 29.96

Granted 816,543 25.72

Vested ( 431,504 ) 29.60

Forfeited ( 276,261 ) 28.57

Nonvested as of December 31, 2020 1,118,182 $ 27.34

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The Company withheld 121,564 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of December 31, 2019 , there was unrecognized compensation expense of $ 20.5 million related to RSUs, $ 15.0 million related to TSRs, $ 0.5 million related to LTIP performance shares, $ 0.3 million related to nonvested RSAs, and $ 0.2 million related to nonvested stock options, which the Company expects to recognize over weighted average periods of 1.9 years , 1.9 years , 0.1 years , 0.2 years , and 0.3 years , respectively.

As of December 31, 2020, there was unrecognized compensation expense of $ 18.9 million related to RSUs, $ 17.6 million related to TSRs, and less than $ 0.1 million related to nonvested stock options, which the Company expects to recognize over weighted average periods of 1.8 years, 1.9 years, and 0.2 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 during the years ended December 31, 2020, 2019, and 2018, of $ 29.6 million, $ 36.8 million, and $ 20.4 million, respectively, with corresponding tax benefits of $ 5.4 million, $ 5.9 million, and $ 3.9 million, respectively.

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The Company recognizes compensation expense for stock option awards that vest with service and market-based conditions on a straight-line basis over the longer of the requisite service period or the estimated period to meet the defined market-based condition.

Employee Benefit Plans

ACI 401(k) Plan

The ACI 401(k) Plan is a defined contribution plan covering all domestic employees of the Company.

Participants may contribute up to 75 % of their annual eligible compensation up to a maximum of $ 19,000 (for employees who are under the age of 50 on December 31, 2019 ) or a maximum of $ 25,000 (for employees aged 50 or older on December 31, 2019 ).

After one year of service, the Company matches 100 % of the first 4 % of eligible participant contributions and 50 % of the next 4 % of eligible participant contributions, not to exceed $ 5,000 per employee annually.

Company contributions charged to expense were $ 6.4 million during both the years ended December 31, 2019 and 2018 , and $ 5.3 million during the year ended December 31, 2017 .

ACI Worldwide EMEA Group Personal Pension Scheme

The ACI Worldwide EMEA Group Personal Pension Scheme is a defined contribution plan covering substantially all ACI Worldwide (EMEA) Limited (“ACI-EMEA”) employees.

For those ACI-EMEA employees who elect to participate in the plan, the Company contributes a minimum of 8.5 % of eligible compensation to the plan for employees employed at December 1, 2000 (up to a maximum of 15.5 % for employees aged over 55 years on December 1, 2000) or from 6 % to 10 % of eligible compensation for employees employed subsequent to December 1, 2000.

ACI-EMEA contributions charged to expense were $ 1.5 million during the year ended December 31, 2019 , and $ 1.6 million during both the years ended December 31, 2018 and 2017 .

Common Stock and Treasury Stock

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 for the year ended December 31, 2020.

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

As of December 31, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 112.1 million.

During the year ended September 30, 2006, the Company began to issue shares of treasury stock upon exercise of stock options, payment of earned performance shares (LTIP performance shares and TSRs), vesting of RSUs, and for issuances of common stock pursuant to the Company’s ESPP.

Treasury shares issued by award type are as follows:

Years Ended December 31,

2020 2019 2018

Stock options 1,756,471 854,524 1,379,704

LTIP performance shares 668,240 — —

TSRs 199,413 — —

RSUs 431,504 259,634 10,000

ESPP 151,542 126,983 148,520

Total treasury shares issued 3,207,170 1,241,141 1,538,224

Earnings Per Share

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

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

Years Ended December 31,

2020 2019 2018

Weighted average shares outstanding:

Basic weighted average shares outstanding

116,397 116,175 116,057

Dilutive effect of stock options, RSUs, and contingently issuable shares

1,682 2,396 1,575

Diluted weighted average shares outstanding

118,079 118,571 117,632

The diluted earnings per share computation excludes 1.5 million, 1.8 million, and 2.2 million options to purchase shares, RSUs, and contingently issuable shares during the years ended December 31, 2020, 2019, and 2018, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of December 31, 2020 and 2019, was 117,112,185 and 115,986,352 , respectively.

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

Other, net was $ 1.1 million of expense, $ 0.5 million of income, and $ 3.7 million of expense for the years ended December 31, 2020, 2019, and 2018, respectively.

Segment Information

The Company reports financial performance based on its segments, ACI On Demand and ACI On Premise, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s Chief Executive Officer is also the chief operating decision maker ("CODM").

ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business.

ACI On Premise serves customers who manage their software on site or through a third-party public cloud environment.

These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system

located and managed at the customer specified site.

These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer.

Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit.

The Company also allocates certain depreciation costs to the segments.

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

These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

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

Years Ended December 31,

2020 2019 2018

ACI On Demand

$ 769,180 $ 678,960 $ 433,025

ACI On Premise

525,142 579,334 576,755

Total revenue

$ 1,294,322 $ 1,258,294 $ 1,009,780

Segment Adjusted EBITDA

ACI On Demand

$ 149,610 $ 66,501 $ 12,015

ACI On Premise

290,310 321,305 323,902

Depreciation and amortization

( 140,316 ) ( 122,569 ) ( 97,350 )

Stock-based compensation expense

( 29,602 ) ( 36,763 ) ( 20,360 )

Corporate and unallocated expenses

( 125,258 ) ( 104,718 ) ( 92,296 )

Interest, net

( 45,002 ) ( 52,066 ) ( 30,388 )

( 1,116 ) 520 ( 3,724 )

Income before income taxes $ 98,626 $ 72,210 $ 91,799

Depreciation and amortization

ACI On Demand

$ 40,594 $ 34,395 $ 31,541

ACI On Premise

13,207 11,992 11,634

86,515 76,182 54,175

Total depreciation and amortization

$ 140,316 $ 122,569 $ 97,350

Stock-based compensation expense

ACI On Demand

$ 8,852 $ 7,995 $ 4,338

ACI On Premise

8,872 7,651 4,348

11,878 21,117 11,674

Total stock-based compensation expense

$ 29,602 $ 36,763 $ 20,360

Assets are not allocated to segments, and the Company’s CODM does not evaluate operating segments using discrete asset information.

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

Year Ended December 31, 2020 Year Ended December 31, 2019

Primary Geographic Markets

Americas - United States

$ 687,923 $ 142,588 $ 830,511 $ 609,160 $ 172,660 $ 781,820

Americas - Other

11,561 61,533 73,094 9,350 68,020 77,370

58,857 234,369 293,226 50,629 251,035 301,664

10,839 86,652 97,491 9,821 87,619 97,440

$ 769,180 $ 525,142 $ 1,294,322 $ 678,960 $ 579,334 $ 1,258,294

Primary Solution Categories

Bill Payments

$ 586,047 $ — $ 586,047 $ 510,300 $ — $ 510,300

Digital Channels

46,269 29,438 75,707 44,731 32,980 77,711

Merchant Payments

84,997 23,730 108,727 77,204 25,693 102,897

Payments Intelligence

40,495 21,570 62,065 36,019 33,790 69,809

Real-Time Payments

3,902 77,158 81,060 3,456 97,153 100,609

Issuing and Acquiring 7,470 373,246 380,716 7,250 389,718 396,968

$ 769,180 $ 525,142 $ 1,294,322 $ 678,960 $ 579,334 $ 1,258,294

Year Ended December 31, 2018

Primary Geographic Markets

Americas - United States

$ 369,097 $ 131,382 $ 500,479

Americas - Other

9,577 61,969 71,546

48,889 296,157 345,046

5,462 87,247 92,709

$ 433,025 $ 576,755 $ 1,009,780

Primary Solution Categories

Bill Payments

$ 275,526 $ — $ 275,526

Digital Channels

40,342 35,231 75,573

Merchant Payments

64,956 30,447 95,403

Payments Intelligence

41,330 42,353 83,683

Real-Time Payments

2,193 92,068 94,261

Issuing and Acquiring 8,678 376,656 385,334

$ 433,025 $ 576,755 $ 1,009,780

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

Long-lived Assets

United States

$ 1,423,862 $ 1,526,046

750,651 759,501

$ 2,174,513 $ 2,285,547

No single customer accounted for more than 10% of the Company’s consolidated revenues during the years ended December 31, 2020, 2019, and 2018.

No other country outside the United States accounted for more than 10% of the Company’s consolidated revenues during the years ended December 31, 2020, 2019, and 2018.

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into U.S.

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Years Ended December 31,

2020 2019 2018

United States $ 19,405 $ ( 16,317 ) $ 16,312

Foreign 79,221 88,527 75,487

Total $ 98,626 $ 72,210 $ 91,799

The expense (benefit) for income taxes consists of the following (in thousands):

Years Ended December 31,

2020 2019 2018

Current $ ( 2,683 ) $ 3,738 $ 6,545

Deferred ( 3,477 ) ( 25,150 ) ( 6,587 )

Total ( 6,160 ) ( 21,412 ) ( 42 )

Current 2,514 590 4,441

Deferred ( 1,758 ) 342 ( 2,649 )

Total 756 932 1,792

Current 22,786 22,960 17,626

Deferred 8,584 2,668 3,502

Total 31,370 25,628 21,128

Total $ 25,966 $ 5,148 $ 22,878

Differences between the income tax expense computed at the statutory federal income tax rate and per the consolidated statements of operations are summarized as follows (in thousands):

Years Ended December 31,

Tax expense at federal rate of 21% (35% pre-2018)

2020 2019 2018

Tax expense at federal rate of 21% $ 20,711 $ 15,164 $ 19,278

State income taxes, net of federal benefit 321 1,227 5,246

1 unchanged sentence

Foreign tax rate differential ( 1,809 ) ( 2,535 ) ( 4,796 )

Unrecognized tax benefit increase

Unrecognized tax benefit increase (decrease) ( 4,405 ) 898 1,262

Tax effect of foreign operations 11,373 6,698 8,546

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Performance-based compensation ( 2,624 ) ( 560 ) ( 4,541 )

Domestic production activities

Other 2,113 ( 478 ) 832

Income tax provision $ 25,966 $ 5,148 $ 22,878

The countries having the greatest impact on the tax rate adjustment line shown in the above table as “Foreign tax rate differential” are Ireland, Luxembourg, and the United Kingdom for the year ended December 31, 2019 ;

Ireland and Luxembourg for the year ended December 31, 2018 ;

and Ireland, Luxembourg, and the United Kingdom for the year ended December 31, 2017 .

The countries having the greatest impact on the tax rate adjustment line shown in the above table as “Foreign tax rate differential” are Ireland, Mexico, Singapore, and the United Kingdom for the year ended December 31, 2020;

Ireland, Luxembourg, and the United Kingdom for the year ended December 31, 2019;

and Ireland and Luxembourg for the year ended December 31, 2018.

The deferred tax assets and liabilities result from differences in the timing of the recognition of certain income and expense items for tax and financial accounting purposes.

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Net operating loss carryforwards $ 20,347 $ 23,030

Tax credits 40,188 47,411

Compensation 18,731 18,791

Deferred revenue 19,169 25,599

Research and development expense deferral

Operating lease 10,162 12,956

Other 9,051 8,517

Gross deferred income tax assets 117,648 136,304

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Depreciation and amortization $ ( 48,967 ) $ ( 52,978 )

Operating lease right-of-use asset ( 7,650 ) ( 11,917 )

Deferred revenue ( 33,947 ) ( 44,198 )

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Net deferred income taxes $ 16,972 $ 19,558

The Company has reclassified certain prior period amounts between deferred income tax line items to conform to the current year presentation of deferred income tax disclosures.

The Company reclassified $ 13.0 million from other deferred tax assets to operating lease deferred tax assets and $ 11.9 million from other deferred tax assets to operating lease right-of-use asset deferred tax liabilities as of December 31, 2019.

The Company also reclassified $ 5.5 million from tax credit deferred tax assets to other deferred tax assets as of December 31, 2019.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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The Company had U.S.

foreign tax credit carryforwards at December 31, 2019 , of $ 40.7 million , for which an $ 1.2 million valuation allowance has been provided.

foreign tax credit carryforwards at December 31, 2020, of $ 38.9 million, for which a $ 2.3 million valuation allowance has been provided.

foreign tax credits will begin to expire in 2025.

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The unrecognized tax benefit at December 31, 2020 and 2019, was $ 24.3 million and $ 29.0 million, respectively, of which $ 17.7 million and $ 22.4 million, respectively, are included in other noncurrent liabilities in the consolidated balance sheets.

unrecognized tax benefit amounts at December 31, 2019 and 2018 , $ 28.2 million and $ 27.5 million , respectively, represent the net unrecognized tax benefits that, if recognized, would favorably impact the effective income tax rate in the respective years.

Of the total unrecognized tax benefit amounts at December 31, 2020 and 2019, $ 23.2 million and $ 28.2 million, respectively, represent the net unrecognized tax benefits that, if recognized, would favorably impact the effective income tax rate in the respective years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows (in thousands):

2020 2019 2018

Balance of unrecognized tax benefits at beginning of year $ 29,000 $ 28,406 $ 27,237

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federal jurisdiction, various state and local jurisdictions, and many foreign jurisdictions.

The United States, Germany, India, Ireland, Luxembourg, Mexico, the United Kingdom, and Uruguay are the main taxing jurisdictions in which the Company operates.

The United States, India, Ireland, Mexico, Singapore, and the United Kingdom are the main taxing jurisdictions in which the Company operates.

The years open for audit vary depending on the tax jurisdiction.

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As of December 31, 2020 and 2019, $ 1.2 million is accrued for the payment of interest and penalties related to income tax liabilities.

The aggregate amount of interest and penalties expense (benefit) recorded in the statements of operations for the years ended December 31, 2019 , 2018 , and 2017 , is $ 0.2 million , $ 0.0 million , and $( 0.8 ) million , respectively.

The aggregate amount of interest and penalties expense (benefit) recorded in the statements of operations for the years ended December 31, 2020, 2019, and 2018, was less than $ 0.1 million, $ 0.2 million, and less than $( 0.1 ) million, respectively.

The Company has operating leases for corporate offices and data centers.

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The components of lease cost are as follows (in thousands):

Year Ended December 31, 2019

Years Ended December 31,

Operating lease cost

$ 25,148 $ 18,486

Variable lease cost

Sublease income

( 134 ) ( 528 )

Total lease cost

$ 28,602 $ 21,714

Supplemental cash flow information related to leases is as follows (in thousands):

Year Ended December 31, 2019

Years Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$ 18,827 $ 19,578

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases

$ 11,431 $ 10,478

Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):

December 31, 2019

Operating lease right-of-use assets

$ 41,243 $ 57,382

Other current liabilities

$ 13,438 $ 15,049

Operating lease liabilities

39,958 46,766

Total operating lease liabilities

$ 53,396 $ 61,815

Weighted average remaining operating lease term (years)

Weighted average operating lease discount rate

3.67 % 4.00 %

The Company uses its incremental borrowing rate as the discount rate.

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Fiscal Year Ending December 31,

2021 $ 15,116

Total lease payments

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Total lease liability

Future payments under operating lease agreements accounted for under ASC 840, Leases, as of December 31, 2018, were as follows (in thousands):

Fiscal Year Ending December 31,

Total minimum lease payments

As of December 31, 2019 , the Company has additional operating leases for office facilities that have not yet commenced with minimum lease payments of $ 2.1 million .

These operating leases will commence in fiscal year 2020 , with lease terms of one to five years .

Commitments and Contingencies

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The Company’s contractual indemnification obligations under these agreements are in addition to the respective directors’ and officers’ rights under the certificate of incorporation or under Delaware law.

Legal Proceedings

On September 23, 2015, a jury verdict was returned against ACI Worldwide Corp.

(“ACI Corp.”), a subsidiary of the Company, for $ 43.8 million in connection with counterclaims brought by Baldwin Hackett & Meeks, Inc.

(“BHMI”) in the District Court of Douglas County, Nebraska.

On September 21, 2012, ACI Corp.

sued BHMI for misappropriation of ACI Corp.’s trade secrets.

The jury found that ACI Corp.

had not met its burden of proof regarding these claims.

On March 6, 2013, BHMI asserted counterclaims alleged to arise out of ACI Corp.’s filing of its lawsuit.

The court entered a judgment against ACI Corp.

for $ 43.8 million for damages and $ 2.7 million for attorney fees and costs.

disagreed with the verdicts and judgment, and, after the trial court denied ACI Corp.’s post-judgment motions, ACI Corp.

perfected an appeal of the dismissal of its claims against BHMI and the judgment in favor of BHMI.

On June 9, 2017, the Nebraska Supreme Court affirmed the District Court judgment.

The Company recorded expense of $ 48.1 million during the year ended December 31, 2017, of which $ 46.7 million is included in general and

administrative expense and $ 1.4 million is included in interest expense in the accompanying consolidated statement of operations.

The Company paid the judgment, including interest, during the year ended December 31, 2017.

Employee Benefit Plans

ACI 401(k) Plan

The ACI 401(k) Plan is a defined contribution plan covering all domestic employees of the Company.

Participants may contribute up to 75 % of their annual eligible compensation up to a maximum of $ 19,500 (for employees who are under the age of 50 on December 31, 2020) or a maximum of $ 26,000 (for employees aged 50 or older on December 31, 2020).

Company contributions charged to expense were $ 6.3 million during the year ended December 31, 2020, and $ 6.4 million during both the years ended December 31, 2019 and 2018.

ACI Worldwide EMEA Group Personal Pension Scheme

The ACI Worldwide EMEA Group Personal Pension Scheme is a defined contribution plan covering substantially all ACI Worldwide (EMEA) Limited (“ACI-EMEA”) employees.

ACI-EMEA contributions charged to expense were $ 1.5 million during both the years ended December 31, 2020 and 2019, and $ 1.6 million during the year ended December 31, 2018 .

Quarterly Financial Data (Unaudited)

The following consists of quarterly financial data (in thousands, except per share amounts):

Quarter Ended

Quarter Ended Year Ended

2020 June 30,

2020 September 30,

2020 December 31,

Software as a service and platform as a service $ 192,950 $ 180,573 $ 190,369 $ 205,288 $ 769,180

License 28,129 50,136 56,773 111,858 246,896

Maintenance 53,280 52,749 53,049 52,619 211,697

Services 17,126 16,452 15,692 17,279 66,549

Total revenues 291,485 299,910 315,883 387,044 1,294,322

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Interest income 2,900 2,954 2,927 2,847 11,628

Other, net ( 9,758 ) 2,041 1,356 5,245 ( 1,116 )

Total other income (expense) ( 24,029 ) ( 9,147 ) ( 8,642 ) ( 4,300 ) ( 46,118 )

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Earnings (loss) per share

Basic $ ( 0.21 ) $ 0.12 $ 0.14 $ 0.57 $ 0.62

Diluted $ ( 0.21 ) $ 0.12 $ 0.13 $ 0.56 $ 0.62

(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.

Quarter Ended

Quarter Ended Year Ended

2019 June 30,

2019 September 30,

2019 December 31,

Software as a service and platform as a service $ 108,557 $ 172,499 $ 192,952 $ 203,661 $ 677,669

License 21,078 52,541 92,058 122,584 288,261

Maintenance 55,111 51,922 52,638 53,738 213,409

Services 21,109 20,656 17,253 19,937 78,955

Total revenues 205,855 297,618 354,901 399,920 1,258,294

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Interest income 3,033 2,997 2,988 2,949 11,967

Other, net ( 1,912 ) 1,402 ( 2,369 ) 3,399 520

Total other income (expense) ( 10,493 ) ( 10,924 ) ( 18,368 ) ( 11,761 ) ( 51,546 )

3 unchanged sentences

Earnings (loss) per share

Basic $ ( 0.22 ) $ 0.05 $ 0.27 $ 0.48 $ 0.58

Diluted $ ( 0.22 ) $ 0.05 $ 0.27 $ 0.47 $ 0.57

(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.

EXHIBIT INDEX

Stock Purchase Agreement, dated February 28, 2019

3.01 (1) 2013 Amended and Restated Certificate of Incorporation of the Company

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4.03 Form of 5.750% Senior Notes due 2026 (Included as Exhibit A to Exhibit 4.02)

4.04 Description of Securities

10.01 (5)* ACI Worldwide, Inc.

2 unchanged sentences

2005 Equity and Performance Incentive Plan, as amended

Form of Severance Compensation Agreement (Change-in-Control) between the Company and certain officers, including executive officers

10.03 (7)* Form of Indemnification Agreement between the Company and certain officers, including executive officers

Form of Nonqualified Stock Option Agreement – Non-Employee Director for the Company’s 2005 Equity and Performance Incentive Plan, as amended

Form of Nonqualified Stock Option Agreement – Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended

Form of LTIP Performance Shares Agreement for the Company’s 2005 Equity and Performance Incentive Plan, as amended

Amended and Restated Employment Agreement by and between the Company and Philip G.

Heasley, dated December 4, 2015 (effective as of January 7, 2016)

10.04 (8)* ACI Worldwide, Inc.

2013 Executive Management Incentive Compensation Plan

Form of Change-in-Control Employment Agreement between the Company and certain officers, including executive officers

Form of Restricted Share Award Agreement for the Company’s 2005 Equity and Performance Incentive Plan, as amended

10.05 (9)* Amended and Restated Deferred Compensation Plan

2 unchanged sentences

10.07 (11)* Form of 2015 Supplemental LTIP Performance Shares Agreement for the Company’s 2005 Equity and Performance Incentive Plan, as amended

Form of 2015 Supplemental Non-Qualified Stock Option Agreement - Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended

Form of 2015 LTIP Performance Shares Agreement for the Company’s 2005 Equity and Performance Incentive Plan, as amended

Form of 2015 Non-Qualified Stock Option Agreement - Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended

10.08 (12)* ACI Worldwide, Inc.

2016 Equity and Performance Incentive Plan

Form of 2016 Supplemental Performance Share Award Agreement for the Company’s 2016 Equity and Performance Incentive Plan

Form of 2016 Supplemental Nonqualified Stock Option Agreement for the Company’s 2016 Equity and Performance Incentive Plan

Form of 2016 Performance Share Award Agreement for the Company’s 2016 Equity and Performance Incentive Plan

Form of 2016 Nonqualified Stock Option Agreement for the Company’s 2016 Equity and Performance Incentive Plan

Form of 2016 Restricted Share Award Agreement for the Company’s 2016 Equity and Performance Incentive Plan

Form of 2016 Restricted Share Award Agreement – Non-Employee Director for the Company’s 2016 Equity and Performance Incentive Plan

Form of Change-in-Control Employment Agreement

10.09 (13)* Form of 2016 Restricted Share Unit Award Agreement for the Company’s 2016 Equity and Performance Incentive Plan

Form of Restricted Share Unit Award Agreement CEO (RSUs)

10.10 (14)* Form of Performance Share Award Agreement CEO (rTSR Performance Share Awards)

7 unchanged sentences

and certain officers, including executive officers

10.17 (21)* Form of Nonqualified Stock Option Agreement – Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended

10.18 (22)* Form of 2015 Supplemental Nonqualified Stock Option Agreement - Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended

10.19 (23)* Form of 2015 Nonqualified Stock Option Agreement - Employee for the Company's 2005 Equity and Performance Incentive Plan, as amended

10.20 (24)* Form of 2016 Nonqualified Stock Option Agreement for the Company’s 2016 Equity and Performance Incentive Plan, as amended

10.21 (25)* ACI Worldwide, Inc.

2020 Equity and Incentive Compensation Plan

10.22 (26)* Form of Restricted Share Unit Award Agreement for the Company's 2020 Equity and Incentive Compensation Plan

10.23 (27)* Form of Performance Share Award Agreement for the Company's 2020 Equity and Incentive Compensation Plan

21.01 Subsidiaries of the Registrant (filed herewith)

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

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104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated herein by reference to Exhibit 2.01 to the registrant's quarterly report on Form 10-Q for the period ended March 31, 2019.

(1) Incorporated herein by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed August 17, 2017.

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(7) Incorporated herein by reference to Exhibit 10.10 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009.

Incorporated herein by reference to Exhibit 10.10 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009.

Incorporated herein by reference to Exhibit 10.17 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009.

Incorporated herein by reference to Exhibit 10.18 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009.

Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed December 16, 2009.

Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on December 10, 2015.

(8) Incorporated herein by reference to Annex A to the registrant’s Proxy Statement for its 2013 Annual Meeting (File No.

000-25346) filed on April 29, 2013.

Incorporated herein by reference to Exhibit 10.3 the registrant’s current report on Form 8-K filed June 20, 2016.

Incorporated herein by reference to Exhibit 10.29 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009.

(9) Incorporated herein by reference to Exhibit 4.3 to the registrant’s Registration Statement No.

2 unchanged sentences

(11) Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed January 30, 2015.

Incorporated herein by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed January 30, 2015.

Incorporated herein by reference to Exhibit 10.3 to the registrant’s current report on Form 8-K filed January 30, 2015.

Incorporated herein by reference to Exhibit 10.4 to the registrant’s current report on Form 8-K filed January 30, 2015.

(12) Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed June 20, 2016.

Incorporated herein by reference to Exhibit 10.02 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2016.

Incorporated herein by reference to Exhibit 10.03 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2016.

Incorporated herein by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed February 27, 2017.

Incorporated herein by reference to Exhibit 10.05 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2016.

Incorporated herein by reference to Exhibit 10.06 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2016.

Incorporated herein by reference to Exhibit 10.07 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2016.

Incorporated herein by reference to Exhibit 10.3 to the registrant’s current report on Form 8-K filed June 20, 2016.

(13) Incorporated herein by reference to Exhibit 10.26 to the registrant’s annual report on Form 10-K for the year ended December 31, 2017.

2 unchanged sentences

(16) Incorporated herein by reference to Exhibit 10.4 to the registrant’s current report on Form 8-K filed March 8, 2019.

Incorporated herein by reference to Exhibit 10.4 to the registrant’s current report on Form 8-K filed March 8, 2019.

(17) Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed April 11, 2019.

2 unchanged sentences

(20) Incorporated herein by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed February 20, 2020.

(21) Incorporated herein by reference to Exhibit 10.01 to the registrant's quarterly report on Form 10-Q for the period ended March 31, 2020.

(22) Incorporated herein by reference to Exhibit 10.02 to the registrant's quarterly report on Form 10-Q for the period ended March 31, 2020.

(23) Incorporated herein by reference to Exhibit 10.03 to the registrant's quarterly report on Form 10-Q for the period ended March 31, 2020.

(24) Incorporated herein by reference to Exhibit 10.04 to the registrant's quarterly report on Form 10-Q for the period ended March 31, 2020.

(25) Incorporated herein by reference to Appendix A to the registrant's definitive proxy statement on Schedule 14A (Commission File No.

000-25346) filed April 24, 2020.

(26) Incorporated herein by reference to Exhibit 10.06 to the registrant's quarterly report on Form 10-Q for the period ended June 30, 2020.

(27) Incorporated herein by reference to Exhibit 10.07 to the registrant's quarterly report on Form 10-Q for the period ended June 30, 2020.

__________________

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ACI WORLDWIDE, INC.

February 27, 2020

Interim President, Interim Chief Executive Officer, and Chief Operating Officer

February 25, 2021 By:

/s/ ODILON ALMEIDA

Odilon Almeida

President, Chief Executive Officer, and Director (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/ S / CRAIG S.

Interim President, Interim Chief Executive Officer, and Chief Operating Officer (Interim Principal Executive Officer)

Name Title Date

/ S / ODILON ALMEIDA

President, Chief Executive Officer, and Director (Principal Executive Officer)

February 25, 2021

Odilon Almeida

/ S / SCOTT W.

2 unchanged sentences

/ S / DAVID A.

Chairman of the Board and Director

February 27, 2020

Chairman of the Board and Director February 25, 2021

/ S / CHARLES K.

Director February 25, 2021

/ S / JANET O.

Director February 25, 2021

/ S / JAMES C.

February 27, 2020

Director February 25, 2021

/ S / DIDIER R.

Director February 25, 2021

/ S / PAMELA H.

Director February 25, 2021

/ S / CHARLES E.

February 27, 2020

Director February 25, 2021

/ S / ADALIO T.

February 27, 2020

Director February 25, 2021

/ S / THOMAS W.

February 27, 2020

/ S / JANET O.

February 27, 2020

Director February 25, 2021

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-K

Item 9A. Controls and Procedures