ACI Worldwide (ACIW) Q4 2003 earnings summary

Executive summary

• FY03 returned to profitability, with $277.3M revenue and $14.3M net income; management cited strong cash flow, expense control, and a shift toward open-systems products as positioning for 2004.

• Q4 FY03 revenue was $71.8M, operating income $11.9M, net income $9.1M, and diluted EPS $0.25.

Financial highlights

• FY03 revenue fell 2.6% YoY to $277.3M: software license fees decreased 7.3% to $146.8M, maintenance rose 6.7% to $79.2M, and services declined 1.4% to $51.3M.

• Operating income was $35.3M versus $41.7M in FY02; net income was $14.3M versus $15.3M, with diluted EPS of $0.40 versus $0.43.

• FY03 results included a $9.3M non-deductible goodwill impairment and $2.0M restructuring charges; excluding neither item, reported operating income was $35.3M.

• Operating cash flow was $38.0M, down from $79.0M in FY02, primarily due to changes in billed and accrued receivables.

Outlook and guidance

• Management described the business as well-positioned for 2004 and beyond, citing global reach, broad products, expense control, and software redesigned for open systems.

• BASE24-es had been licensed to 13 customers and was available on HP, IBM, and Sun platforms; management said it could help retain customers and reach new accounts and geographies.

• Backlog at September 30, 2003 was $232.8M, including $167.1M recurring and $65.7M non-recurring; customer renegotiations, cancellations, or delivery delays could affect conversion and timing.

• Existing liquidity and operating cash flows were expected to meet projected liquidity requirements for the foreseeable future.