ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of payment systems, today announced financial results for the period ended September 30, 2011.
This quarter we released more projects from our backlog into current period revenue which demonstrates our continued success in project completions. The strong implementation rate in services projects results in higher future recurring revenue for our business, said Chief Executive Officer Philip Heasley. Additionally, we have reached an agreement to acquire S1 Corporation and believe that together we will create a leader in the global enterprise payments industry. The combined companys enhanced scale, breadth and additional capabilities will better serve the entire spectrum of global financial institutions, processors and retailers.
SalesSales bookings in the quarter totaled $115.1 million, which is relatively flat as compared to $116.7 million in the September 2010 quarter, excluding the impact of a global account signing in prior-year quarter.
BacklogAs of September 30, 2011, our estimated 60-month backlog was $1.612 billion, an increase of $46 million as compared to $1.566 billion at December 31, 2010. Foreign exchange translation accounted for the reduction in backlog from the second to the third quarter of 2011. As of September 30, 2011, our 12-month backlog was $398 million, an increase of $17 million as compared to $381 million for the quarter ended December 31, 2010.
RevenueRevenue was $112.1 million in the quarter ended September 30, 2011, an increase of $15.1 million, or 16%, over the prior-year quarter revenue. The growth in 2011 revenue over the prior-year quarter was driven by project completions; specifically, higher initial license fees of $6.4 million, or 74%, and higher services revenue of $8.3 million, or 54%.
Operating ExpensesOperating expenses were $100.9 million in the September 2011 quarter compared to $89.6 million in the September 2010 quarter, an increase of $11.3 million, or 13%. Operating expense growth was led primarily by increased sales & marketing and research & development expenses as well as by $3.4 million of professional fees related to the S1 acquisition.
Operating IncomeOperating income was $11.3 million in the September 2011 quarter, an increase of approximately $3.9 million, or 53%, as compared to operating income of $7.4 million in the September 2010 quarter.
Adjusted EBITDAAdjusted EBITDA rose to $20.7 million in the September 2011 quarter, an increase of $4.7 million, or 29%, as compared to Adjusted EBITDA of $16.0 million in the September 2010 quarter.
LiquidityWe had $179.7 million in cash on hand as of September 30, 2011. On September 29, 2011, we entered into a five year senior secured revolving credit facility with Wells Fargo Bank, National Association providing for an aggregate principal amount not to exceed $100 million. The interest rate in effect at September 30, 2011 was 1.74%.
Operating Free Cash FlowOperating free cash flow (OFCF) for the quarter was $24.5 million, a decrease of $2.1 million over the September 2010 quarter. Operating free cash flow year to date 2011 is $38.4 million as compared to Operating free cash flow of $34.6 million at this time in prior-year.
Other ExpenseOther expense for the quarter was $0.3 million, an improvement of $1.5 million compared to other expense of $1.8 million in the September 2010 quarter. The variance was led by a positive $1.4 million change in foreign exchange translation.
TaxesIncome tax expense in the quarter was $0.5 million, or a 4.4% effective tax rate, compared to $3.3 million in the prior-year quarter. The income tax expense for the quarter ended September 30, 2011 was favorably impacted by the release of a $3.1 million liability related to the transfer of certain intellectual property rights from US to non-US entities.
Net Income and Diluted Earnings Per ShareNet income for the quarter ended September 30, 2011 was $10.5 million, compared to net income of $2.3 million during the same period last year, an improvement of $8.2 million.
Earnings per share for the quarter ended September 30, 2011 was $0.31 per diluted share compared to $0.07 per diluted share during the same period last year. The improvement was largely due to stronger operating income and a lower effective tax rate.
Weighted Average Shares OutstandingTotal diluted weighted average shares outstanding were 34.3 million for the quarter ended September 30, 2011 as compared to 33.5 million shares outstanding for the quarter ended September 30, 2010.
2011 GuidanceWe are reiterating our annual guidance based upon what we are seeing in our business markets to date. Hence, guidance for calendar year is as follows: Revenue to achieve a range of $450-460 million, Operating Income of $65-69 million and Adjusted EBITDA of $101-104 million. Guidance for the year excludes the impact of professional fees and transaction-related expenses associated with the acquisition of S1 Corporation.
S1 TransactionOn October 3, 2011 ACI announced the execution of a definitive agreement to acquire S1 Corporation. Under the agreement, ACI will acquire S1 for a blended value of $9.55 per share as of September 30, 2011, consisting of $6.62 per share in cash and 0.1064 shares of ACI common stock per S1 share, assuming full proration. The transaction is subject to satisfaction of customary closing conditions.
ACI has obtained commitments from Wells Fargo Securities, LLC to arrange, and Wells Fargo Bank, National Association to provide, subject to certain conditions, senior bank financing consisting of up to $450 million under a proposed new secured credit facility, comprising of a $200 million senior secured term loan and a $250 million senior secured revolving credit facility for financing the cash component of the consideration to be paid to S1s stockholders in connection with the transaction agreement.