What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-29 compared with 2023-03-01 · 132 added, 104 removed, 1222 unchanged (16% of the section changed)

17 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

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, 2022, of the Company and our report dated March 1, 2023, expressed an unqualified opinion on those financial statements.

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, 2023, of the Company and our report dated February 29, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

16 unchanged sentences

Omaha, Nebraska

March 1, 2023

February 29, 2024

OTHER INFORMATION

Rule 10b5-1 Plans

None of the Company’s directors or officers adopted , modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended December 31, 2023.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

32 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

13 unchanged sentences

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 be entitled to in exchange for those products or services.

7 unchanged sentences

• Determination of the standalone selling price 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 standalone selling prices 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.

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.

10 unchanged sentences

• Testing the accuracy of management’s analysis by selecting a sample of contracts from the highly variable analysis, obtaining the contract and price detail, and evaluating whether discounts were appropriately included in the analysis.

• Testing the mathematical accuracy of management’s calculations.

• Testing the mathematical accuracy of management’s calculation.

/s/ Deloitte & Touche LLP

Omaha, Nebraska

March 1, 2023

February 29, 2024

We have served as the Company’s auditor since 2009.

135 unchanged sentences

Net income $ 121,509 $ 142,177 $ 127,791

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustments 8,190 ( 18,113 ) ( 7,102 )

Total other comprehensive loss ( 18,113 ) ( 7,102 ) ( 862 )

Total other comprehensive income (loss)

8,190 ( 18,113 ) ( 7,102 )

Comprehensive income $ 129,699 $ 124,064 $ 120,689

25 unchanged sentences

Net income — — 121,509 — — 121,509

Other comprehensive loss — — — — ( 18,113 ) ( 18,113 )

Other comprehensive income

— — — — 8,190 8,190

Stock-based compensation — 24,547 — — — 24,547

26 unchanged sentences

1,921 3,028 855

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

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

( 62,998 ) ( 132,194 ) ( 43,830 )

34 unchanged sentences

( 16,766 ) ( 12,123 ) ( 15,185 )

Payments for debt issuance costs ( 2,160 ) — —

Net increase (decrease) in settlement assets and liabilities ( 15,404 ) 26,849 ( 37,834 )

120 unchanged sentences

The Company has identified its reportable segments, Banks, Merchants, and Billers, as the reporting units.

As of December 31, 2023, the Company's goodwill balance of $ 1.2 billion was allocated $ 671.7 million to Banks, $ 137.3 million to Merchants, and $ 417.0 million to Billers.

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

6 unchanged sentences

The calculated fair value substantially exceeded the current carrying value for all reporting units for all periods.

Changes in the carrying amount of goodwill attributable to each reporting unit during the year ended December 31, 2022 were as follows (in thousands):

Banks Merchants Billers Total

Balance, December 31, 2021

$ 725,903 $ 137,289 $ 417,034 $ 1,280,226

Divestiture (1) ( 54,200 ) — — ( 54,200 )

Balance, December 31, 2022

$ 671,703 $ 137,289 $ 417,034 $ 1,226,026

(1) In connection with the divestiture, $ 54.2 million of goodwill from the Banks segment was allocated to the net assets sold.

See Note 3, Divestiture, for further information on the divestiture.

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.

12 unchanged sentences

Such shares are recorded at cost and reflected separately on the consolidated balance sheets as a reduction of stockholders’ equity.

The Company issues shares of treasury stock upon exercise of stock options, issuance of restricted share units, payment of earned performance shares, and for issuances of common stock pursuant to the Company’s employee stock purchase plan.

The Company issues shares of treasury stock upon exercise of stock options, issuance of restricted share units, payment of earned performance shares, and for issuance of common stock pursuant to the Company’s employee stock purchase plan.

For purposes of determining the cost of the treasury shares re-issued, the Company uses the average cost method.

16 unchanged sentences

Such unrecognized tax benefits represent the estimated provision for income taxes expected to ultimately be paid.

Recently Issued Accounting Standards Not Yet Effective

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and early application is permitted.

The Company is currently assessing the impact the adoption of ASU 2023-07 will have on its segment reporting disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this update will require disclosure of more disaggregated information about a reporting entity's effective tax rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and early application is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company is currently assessing the impact the adoption of ASU 2023-09 will have on its income tax disclosures.

Revenue Recognition

76 unchanged sentences

Total receivables, net $ 766,320 $ 701,599

One customer accounted for 10.1 % and 13.8 % of the Company's consolidated receivables balance as of December 31, 2022 and 2021, respectively.

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of December 31, 2023.

One customer accounted for 10.1 % of the Company's consolidated receivables balance as of December 31, 2022.

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.

11 unchanged sentences

$ ( 4,295 ) $ ( 3,779 ) $ ( 2,861 )

Provision increases recorded in general and administrative expense during the years ended December 31, 2022, and provision decreases recorded in general and administrative expense during the years ended December 31, 2021, and 2020, reflect adjustments 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.

Provision (increases) decreases recorded in general and administrative expense during the years ended December 31, 2023, December 31, 2022, and 2021, reflect adjustments 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.

3 unchanged sentences

Recognition of deferred revenue

Divestiture ( 21,581 )

Foreign currency translation

2 unchanged sentences

Recognition of deferred revenue ( 117,420 )

Divestiture ( 21,581 )

Foreign currency translation 503

15 unchanged sentences

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

As of December 31, 2022 and 2021, less than $ 0.1 million and $ 0.2 million of these costs are included in other current assets, and $ 9.7 million and $ 10.1 million of these costs are included in other noncurrent assets, respectively, on the consolidated balance sheets.

As of both December 31, 2023 and 2022, less than $ 0.1 million of these costs are included in other current assets, and $ 9.7 million of these costs are included in other noncurrent assets on the consolidated balance sheets.

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

1 unchanged sentence

Corporate Online Banking Solutions

On June 7, 2022, the Company announced a definitive agreement to divest its corporate online banking solutions related assets and liabilities to One Equity Partners ("OEP") for $ 100.1 million, including a preliminary net working capital adjustment.

The sale included employees and customer contracts as well as technology assets and intellectual property and closed on September 1, 2022.

For the year ended December 31, 2022, the Company recognized a gain of $ 38.5 million on the sale, which is recorded in other, net on the consolidated statements of operations.

This gain is preliminary subject to finalization of post-closing adjustments pursuant to the definitive transaction agreement.

The Company and OEP have also entered into a Transition Services Agreement ("TSA"), whereby the Company will continue to perform certain functions on OEP's behalf during a migration period not expected to exceed 18 months.

During the year ended December 31, 2023 , the Company recognized a loss for the final post-closing adjustment pursuant to the definitive agreement of $ 0.5 million, which is recorded in other, net on the consolidated statements of operations.

The Company and OEP have also entered into a Transition Services Agreement ("TSA"), whereby the Company will continue to perform certain functions on OEP's behalf during a migration period.

The TSA is meant to reimburse the Company for direct costs in order to provide such functions, which are no longer generating revenue for the Company.

As of December 31, 2022, the Company had $ 105.0 million, $ 592.7 million and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, and Senior Notes, respectively, with up to $ 393.5 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.

As of December 31, 2023, the Company had $ 124.0 million, $ 519.7 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, and Senior Notes, respectively, with up to $ 373.9 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended, and up to $ 2.1 million of unused borrowings under the Letter of Credit agreements.

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

10 unchanged sentences

No other terms or conditions of the Credit Agreement were changed as a result of the Amendment.

On April 28, 2023, the Company and Bank of America entered into the 2023 Extension Amendment to extend the term of the Credit Facility one year to April 5, 2025.

All other terms remained the same.

The Credit Agreement consists of (a) a five-year $ 500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), which includes sublimits for (1) the issuance of standby letters of credit and (2) swingline loans, (b) a five-year $ 279.0 million senior secured term loan facility (the “Initial Term Loan”) and (c) a five-year $ 500.0 million Delayed Draw Term Loan (together with the Initial Term Loan, the "Term Loans", and together with the Initial Term Loan and the Revolving Credit Facility, the “Credit Facility”).

24 unchanged sentences

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, currently effective through July 31, 2023, will automatically renew for successive one-year renewal terms unless Bank of America, N.A.

provides written notice of its intent to terminate the agreement at least 90 days prior to the end of the remaining renewal term.

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 would return to $ 500.0 million.

On February 26, 2024, the Company entered into a Refinance Amendment (the “Amendment”) to the Second Amended and Restated Credit Agreement, dated as of April 5, 2019 (as amended, restated, supplemented or otherwise modified from time to time, including by the Amendment, the “Credit Agreement”) with ACI Worldwide Corp and ACI Payments, Inc.

as co-borrowers, the lenders, and Bank of America N.A, as administrative agent and lender.

The Amendment, among other things, (i) provides a senior secured term loan facility in an aggregate principal amount of $ 500 million, (ii) provides a senior secured revolving credit facility in an aggregate principal amount of $ 600 million, and (iii) extends the maturity date of the Facilities to February 26, 2029.

The proceeds of the borrowings under the Amendment, together with cash on hand, were used to refinance all outstanding borrowings and replace all existing revolving commitments under the Credit Agreement immediately prior to the date of the Amendment and will be used to provide ongoing working capital and for other general corporate purposes.

Letters of Credit

From time to time the Company enters into standby letters of credit under the terms of the Credit Agreement.

These letters of credit typically have one-year terms and may include auto-renewal terms without notice of intent to terminate the agreement.

As of December 31, 2023, the Company had three letter of credit agreements outstanding for a total of $ 2.1 million.

The letters of credit reduce the maximum available borrowings under the Revolving Credit Facility to $ 497.9 million.

Upon expiration of the letters of credit, maximum borrowings would return to $ 500.0 million.

On August 21, 2018, the Company completed a $ 400.0 million offering of the 2026 Notes at an issue price of 100 % of the principal amount in a private placement for resale to qualified institutional buyers.

15 unchanged sentences

Revolving credit facility

124,000 105,000

5.750 % Senior Notes, due August 2026

18 unchanged sentences

During the year ended December 31, 2022, the Company financed certain multi-year license agreements for internal-use software for $ 10.7 million, with annual payments through April 2024.

As of December 31, 2023, $ 3.6 million was outstanding under these and other license agreements previously entered into, all of which is included in other current liabilities in the consolidated balance sheet.

As of December 31, 2022, $ 9.3 million was outstanding under these and other license agreements previously entered into, of which $ 5.8 million and $ 3.5 million is included in other current liabilities and other noncurrent liabilities, respectively, in the consolidated balance sheet.

As of December 31, 2021, $ 2.9 million was outstanding, all of which is included in other current liabilities in the consolidated balance sheet.

Software and Other Intangible Assets

6 unchanged sentences

Software for internal use $ 469,325 $ ( 360,907 ) $ 108,418 $ 454,171 $ ( 325,062 ) $ 129,109

Software for resale 124,257 ( 124,257 ) — 127,904 ( 127,255 ) 649

Total software

$ 578,428 $ ( 449,319 ) $ 129,109 $ 568,146 $ ( 410,364 ) $ 157,782

Software for internal use amortization expense recorded during the years ended December 31, 2023, 2022, and 2021, totaled $ 64.8 million, $ 68.0 million, and $ 69.3 million, respectively.

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

Software for resale amortization expense recorded during the years ended December 31, 2022, 2021, and 2020, totaled $ 0.7 million, $ 6.2 million, and $ 8.5 million, respectively.

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

Software for resale amortization expense recorded during the years ended December 31, 2022 and 2021, totaled $ 0.7 million and $ 6.2 million, respectively.

Software for resale was fully amortized during the first quarter of 2022 and, therefore, there was no amortization expense recorded during the year ended December 31, 2023.

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

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

21 unchanged sentences

$ 108,418 $ 195,646

$ 129,109 $ 228,698

Stock-Based Compensation Plans

55 unchanged sentences

There are no LTIP performance shares outstanding as of December 31, 2023.

Total Shareholder Return Awards

During the years ended December 31, 2022, 2021, and 2020, pursuant to the 2020 Plan and 2016 Incentive Plan, the Company granted total shareholder return awards (“TSRs”).

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

Performance Share Awards

During the years ended December 31, 2023, 2022, and 2021, pursuant to the 2020 Plan and 2016 Incentive Plan, the Company granted performance share awards with a total shareholder return component ("TSRs").

For 2023, performance awards granted are earned, if at all, based upon 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) net revenue growth and (ii) net adjusted EBITDA margin over the performance period as determined by the Company with a total shareholder return multiplier up to plus or minus 20 %.

Up to 200 % of the performance shares could be earned upon achievement of the performance goals, including the multiplier.

For 2022 and 2021, the Company granted performance shares that are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period.

The award payout can range from 0 % to 200 %.

To determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used.

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

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

A summary of nonvested TSRs is as follows:

3 unchanged sentences

Granted 233,404 26.94

Vested ( 212,210 ) 45.86

Forfeited ( 144,474 ) 39.54

1 unchanged sentence

Nonvested as of December 31, 2023 673,126 $ 40.73

During the year ended December 31, 2022, a total of 212,210 TSRs awards granted in fiscal 2019 vested and achieved a payout rate of 65 % 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 47,612 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

During the year ended December 31, 2023, the TSRs granted in 2020 were earned by the employees.

However, the performance goals were not met and no shares were issued.

The fair value of TSRs granted during the years ended December 31, 2023, 2022, and 2021, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted-average assumptions:

9 unchanged sentences

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.

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

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

14 unchanged sentences

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 authorizes additional funds for the program.

In December 2021, the board approved the repurchase of the Company's common stock of up to $ 250.0 million, in place of the remaining purchase amounts previously authorized.

In February 2023, 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 939,567 shares for $ 27.6 million under the program for the year ended December 31, 2023.

1 unchanged sentence

As of December 31, 2023, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 172.4 million.

On February 24, 2023, the Board of Directors approved $ 200.0 million for the stock repurchase program in place of the remaining purchase amounts previously authorized.

Subsequent to December 31, 2023, the Company has repurchased additional shares under the repurchase program.

In 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.

24 unchanged sentences

Other, net is primarily comprised of foreign currency transaction gains and losses and, for the year ended December 31, 2022, the $ 38.5 million gain on the divestiture.

Other, net was $ 43.4 million of income for the year ended December 31, 2022 .

Other, net was $ 1.3 million and $ 1.1 million of expense for the years ended December 31, 2021, and 2020, respectively.

Other, net was $ 8.5 million of expense, $ 43.4 million of income, and $ 1.3 million of expense for the years ended December 31, 2023, 2022, and 2021, respectively.

Segment Information

The Company reports financial performance based on its operating segments, Banks, Merchants, and Billers, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s Chief Executive Officer is also CODM.

The Company’s 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.

10 unchanged sentences

Revenue is attributed to the reportable segments based upon 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 projects, or (3) costs that are allocated.

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 projects, or (3) costs that are allocated.

Allocated costs are generally marketing and sales related activities.

58 unchanged sentences

Total $ 625,125 $ 152,988 $ 592,485 $ 1,370,598

As discussed in Note 3, Divestiture, the Company divested its corporate online banking solution assets, which were included in the Digital Business Banking solution category.

As discussed in Note 3, Divestiture, in 2022 the Company divested its corporate online banking solution assets, which were included in the Digital Business Banking solution category.

The following is revenue by the Company's reportable segments for the periods indicated (in thousands):

72 unchanged sentences

Capitalized research and development 16,903 23,891

Deferred interest

Other 951 2,704

13 unchanged sentences

Net deferred income taxes $ 17,764 $ 13,367

The deferred tax asset and liabilities disclosure above reflects a $ 18.4 million withholding tax liability reclass for the year ended December 31, 2021.

Prior year reported $ 18.4 million related to withholding tax liability as Tax credits within the deferred tax asset section.

This amount is now reported separately within the deferred tax liability section.

The deferred tax asset and liabilities disclosure above reflects a $ 6.8 million deferred interest reclass for the year ended December 31, 2022.

Prior year reported $ 6.8 million related to deferred interest as Other within the deferred tax asset section.

The amount is now reported separately within the deferred tax asset section.

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.

4 unchanged sentences

The Company had deferred tax assets equal to $ 0.9 million related to domestic state tax NOLs which will begin to expire in 2024.

The Company does not have any valuation allowance against the federal tax NOLs but has provided a $ 0.6 million valuation allowance against the deferred tax asset associated with the state NOLs.

The Company had foreign tax NOLs of $ 17.3 million, of which $ 17.0 million may be utilized over an indefinite life, with the remainder expiring over the next seven years .

The Company has provided a $ 0.1 million valuation allowance against the deferred tax asset associated with the foreign NOLs.

The Company did not have any valuation allowance against the federal tax NOLs but had provided a $ 0.5 million valuation allowance against the deferred tax asset associated with the state NOLs.

The Company had foreign tax NOLs of $ 16.7 million, of which $ 16.5 million may be utilized over an indefinite life, with the remainder expiring over the next five years .

The Company did not have any valuation allowance against the deferred tax asset associated with the foreign NOLs.

The Company had U.S.

foreign tax credit carryforwards at December 31, 2022, of $ 2.1 million, for which a $ 2.1 million valuation allowance has been provided.

foreign tax credit carryforwards at December 31, 2023, of $ 2.2 million, for which a $ 2.2 million valuation allowance had been provided.

foreign tax credits will begin to expire in 2028.

The Company had foreign tax credit carryforwards in other foreign jurisdictions at December 31, 2023, of $ 3.3 million, of which $ 1.0 million may be utilized over an indefinite life, with the remainder expiring over the next seven years .

The Company has provided a $ 1.2 million valuation allowance against the tax benefit associated with these foreign credits.

The Company also has domestic federal and state general business tax credit carryforwards at December 31, 2022, of $ 20.5 million and $ 0.7 million, respectively, which will begin to expire in 2023.

The Company has not provided deferred taxes on $ 37.8 million of unremitted earnings of its Indian subsidiaries that are considered permanently reinvested.

The company has not estimated the deferred tax liability on these earnings as such estimation is not practicable to determine or is immaterial to the financial statements.

The Company had provided a $ 1.0 million valuation allowance against the tax benefit associated with these foreign credits.

The Company also had domestic federal general business tax credit carryforwards at December 31, 2023, of $ 27.4 million, which will expire in 2033 and state general business tax credit carryforwards of $ 0.6 million, which will begin to expire in 2024.

The Company did not provide deferred taxes on $ 41.5 million of unremitted earnings of its Indian subsidiaries that are considered permanently reinvested.

The company did not estimate the deferred tax liability on these earnings as such estimation is not practicable to determine or is immaterial to the financial statements.

As of December 31, 2023, deferred taxes for non-United States withholding and other taxes were provided on $ 23.4 million of unremitted earnings of non-United States subsidiaries that may be remitted to the United States.

As of December 31, 2022 and 2021, we have recorded a deferred tax liability of $ 1.3 million and $ 1.5 million, respectively, related to these non-United States earnings that may be remitted.

As of December 31, 2023 and 2022, the Company recorded a deferred tax liability of $ 0.6 million and $ 1.3 million, respectively, related to these non-United States earnings that may be remitted.

The unrecognized tax benefit at December 31, 2023 and 2022, was $ 20.9 million and $ 26.4 million, respectively, of which $ 10.5 million and $ 19.9 million, respectively, are included in other noncurrent liabilities in the consolidated balance sheets.

10 unchanged sentences

Balance of unrecognized tax benefits at end of year $ 20,889 $ 26,408 $ 24,510

On July 21, 2023, the Internal Revenue Service (“IRS”) issued Notice 2023-55 providing guidance to taxpayers in determining whether a foreign tax is eligible for a U.S.

foreign tax credit for tax years 2022 and 2023 effectively delaying the application of an unfavorable foreign tax credit regulation until 2024.

As a result of this guidance, the Company recorded a tax benefit of $ 6.0 million in the fiscal third quarter of 2023.

The Company files income tax returns in the U.S.

4 unchanged sentences

In the foreign jurisdictions, the tax returns open for audit generally vary by jurisdiction between 2006 and 2022.

The Company’s Indian income tax returns covering fiscal years ended March 31, 2005, 2014, 2016 through 2018, and 2020 are under audit by the Indian tax authority.

The Company has been notified by the U.S.

Internal Revenue Service that their 2021 federal tax return has been selected to be examined.

The Company’s Indian income tax returns covering fiscal years ended March 31, 2005, 2014, 2016, 2018, and 2020 are under audit by the Indian tax authority.

Other foreign subsidiaries could face challenges from various foreign tax authorities.

19 unchanged sentences

2,663 2,771 3,140

Sublease income

Total lease cost

30 unchanged sentences

Total lease liability

As of December 31, 2022, the Company has additional operating leases for office facilities that have not yet commenced with minimum lease payments of $ 0.6 million.

These operating leases will commence in fiscal year 2023 with lease terms of one year to three years .

Commitments and Contingencies

15 unchanged sentences

In April 2021, ACH files associated with one of the Company's mortgage servicing customers were inadvertently transmitted into the ACH network during a test of the Company's payment processing system.

The Company took immediate correction action and issued reversing ACH files, restoring affected accounts.

The Company took immediate corrective action and issued reversing ACH files, restoring affected accounts.

The Company was named as a defendant in seven class action lawsuits filed in various federal courts purportedly on behalf of consumers whose mortgage accounts were affected by the inadvertent ACH file transmission.

The Company entered into an agreement, which is subject to final court approval and other conditions, to settle these lawsuits for the Company's establishment of a $ 5.0 million fund out of which payments would be made to class members and the Company's payment of attorneys’ fees and administrative costs, plus additional funds totaling $ 1.5 million that could be required to be established under certain circumstances.

There can be no assurance that the conditions to settlement will be satisfied, in which event the class action litigation could proceed.

The Company settled these lawsuits by establishing a $ 5.0 million fund out of which payments were to be made to class members and for attorneys’ fees and administrative costs.

The $ 5.0 million was funded from insurance.

The inadvertent ACH file transmission also gave rise to investigations by the U.S.

Consumer Financial Protection Bureau (the "CFPB") and state attorneys general in 49 states, the District of Columbia, and certain U.S.

territories as well as money transmission regulators in 46 states, the District of Columbia, and certain U.S.

A lead group of attorneys general and regulatory representatives of nine states have led the state investigations of the matter.

The Company has cooperated with the CFPB and state authorities, including furnishing documents and information to them.

There can be no assurance that the matters will be resolved without litigation, and the matters could result in the impositions of material penalties and damages as well as burdensome and costly remedies.

The Company has asserted claims for insurance coverage with respect to potential losses associated with the inadvertent ACH file transmission.

There is no assurance as to the amount of insurance that may be available or its effect on the availability or cost of insurance in the future.

Consumer Financial Protection Bureau (the "CFPB") and state attorneys general in all 50 states, the District of Columbia, and certain U.S.

territories as well as money transmission regulators in most of those jurisdictions.

The Company settled the CFPB investigation for $ 25.0 million plus various undertakings.

Payment was made to the CFPB from funds received from the insurance carriers during the year ended December 31, 2023.

The Company also settled with the state money transmission regulators and attorneys general for a total of $ 20.0 million plus various undertakings.

Funds for the state and money transmission regulator settlements, which were previously received from the insurance carriers and deposited into an escrow account, were paid during the year ended December 31, 2023.

The Company believes that the CPFB and state undertakings will not adversely affect it.

The Company’s customer commenced an action for damages as a result of this event.

The customer action remains pending and the Company presently intends to vigorously defend it.

The Company expects that insurance will fund payments and costs associated with the defense of the customer action, and other claims that may be asserted against it, subject to the policy limits and other terms of the applicable policies.

Funds received from or expected to be received from insurance carriers are generally subject to the respective carriers' reservation of rights.

The Company is from time to time subject to other claims, litigation and investigations.

While we believe that none of the currently pending matters is reasonably likely to have material adverse effect on us, there can be no assurance with respect thereto or future matters.

While the Company believes that none of the currently pending matters is reasonably likely to have a material adverse effect on it, there can be no assurance with respect thereto or future matters.

Employee Benefit Plans

27 unchanged sentences

and the lenders that are party thereto

Amendment Agreement to the Amended and Restated Credit Agreement, dated April 5, 2019

Extension Agreement, dated as of April 28, 2023, among ACI Worldwide, Inc., ACI Worldwide Corp., ACI Payments, Inc.

and Bank of America, N.A., as administrative agent for the lenders

ACI Worldwide, Inc.

2 unchanged sentences

Form of 2016 Performance Share Award Agreement (rTSR Performance Share Awards)

10.10 (14) Amendment Agreement to the Amended and Restated Credit Agreement, dated April 5, 2019

Form of Change in Control Employment Agreement between ACI Worldwide, Inc.

3 unchanged sentences

ACI Worldwide, Inc.

2020 Equity and Incentive Compensation Plan

2020 Equity and Incentive Compensation Plan, as amended and restated effective June 1, 2023

Form of Restricted Share Unit Award Agreement for the Company's 2020 Equity and Incentive Compensation Plan

5 unchanged sentences

Special Advisor Assignment Letter between the Company and Jeremy Wilmot

Form of Severance Agreement between ACI Worldwide, Inc.

and Thomas Warsop

Form of Change In Control Employment Agreement between ACI Worldwide, Inc.

and Thomas Warsop

21.01 Subsidiaries of the Registrant (filed herewith)

8 unchanged sentences

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

97.1 Clawback Policy

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

18 unchanged sentences

(10) Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed February 27, 2017.

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

(12) Incorporated herein by reference to Exhibit 10.1 to the registrant's current report on Form 8-K filed May 4, 2023.

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

1 unchanged sentence

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

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

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

1 unchanged sentence

(18) 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.

(18) 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.

(19) Incorporated herein by reference to reference to Appendix B to the registrant's Proxy Statement filed April 18, 2023.

(20) Incorporated herein by reference to Exhibit 10.06 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2023.

(21) Incorporated herein by reference to Exhibit 10.07 to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2023.

(21) Incorporated herein by reference to Exhibit 10.01 to the registrant’s current report on Form 8-K filed June 8, 2021.

(22) Incorporated herein by reference to Exhibit 10.05 to the registrant's quarterly report on Form 10-Q for the period ended June 30, 2023.

(23) Incorporated herein by reference to Exhibit 10.01 to the registrant's current report on Form 8-K filed April 19, 2022.

(24) Incorporated herein by reference to Exhibit 10.19 to the registrant’s annual report on Form 10-K for the year ended December 31, 2022.

(25) Incorporated herein by reference to Exhibit 10.20 to the registrant’s annual report on Form 10-K for the year ended December 31, 2022.

(26) Incorporated herein by reference to Exhibit 10.21 to the registrant’s annual report on Form 10-K for the year ended December 31, 2022.

(27) Incorporated herein by reference to Exhibit 10.1 to the registrant's current report on Form 8-K filed May 31, 2023.

(28) Incorporated herein by reference to Exhibit 10.2 to the registrant's current report on Form 8-K filed May 31, 2023.

__________________

4 unchanged sentences

ACI WORLDWIDE, INC.

March 1, 2023 By:

February 29, 2024 By:

/s/ THOMAS W.

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

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.

1 unchanged sentence

/ S / THOMAS W.

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

March 1, 2023

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

February 29, 2024

/ S / SCOTT W.

Executive Vice President, Chief Financial Officer, and Chief Accounting Officer (Principal Financial Officer)

March 1, 2023

February 29, 2024

/ S / ADALIO T.

Chairman of the Board and Director March 1, 2023

Chairman of the Board and Director February 29, 2024

/ S / JANET O.

Director March 1, 2023

Director February 29, 2024

/ S / JAMES C.

Director March 1, 2023

Director February 29, 2024

/ S / MARY HARMAN

Director March 1, 2023

/ S / DIDIER R.

Director March 1, 2023

Director February 29, 2024

/ S / CHARLES E.

Director March 1, 2023

Director February 29, 2024

/ S / SAMIR ZABANEH

Director March 1, 2023

Director February 29, 2024

Samir Zabaneh

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