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Acquisitions | 12 Months Ended
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Dec. 31, 2015
Business Combinations [Abstract] |
Acquisitions |
2. | Acquisitions
Fiscal 2015 Acquisitions PAY.ON On November 4, 2015, the Company completed the acquisition of PAY.ON for $186.4 million in cash and stock. PAY.ON is a leader in eCommerce payments gateway solutions to payment service providers globally. Their advanced Software as a Service (“SaaS”) based solution complements and strengthens the Company’s Merchant Retail Omni-Channel Universal Payments offerings. The combined entities will provide customers the ability to deliver a seamless omni-channel customer payment experience in store, mobile, and online. Under the terms of the agreement, the Company acquired 100% of the equity of PAY.ON in a combination of cash and stock. The Company used approximately $181.0 million from its Revolving Credit Facility. See Note 4, Debt, for terms of the Credit Facility. The purchase price of PAY.ON as of the date of the acquisition was comprised of (in thousands):
|  | Amount |
Cash payments to PAY.ON shareholders |  | $ | 180,994 |
Issuance of ACI common stock |  |  | 5,379 |
Total purchase price |  | $ | 186,373 |
The consideration paid by the Company to complete the acquisition has been allocated preliminarily to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. The allocation of the purchase price is based upon certain external valuations and other analyses that have not been completed as of the date of this filing, including but not limited to intangible assets, property and equipment, accruals, and certain tax matters. Accordingly, the purchase price allocation is considered preliminary and is subject to future adjustments during the maximum one-year measurement period. The Company incurred approximately $0.9 million in transaction related expenses during the year ended December 31, 2015, including fees to the investment bank, legal and other professional fees, which are included in general and administrative expenses in the accompanying consolidated financial statements. Under the terms of the PAY.ON acquisition agreement, the Company issued 476,750 shares of ACI common stock to two key PAY.ON employees (“PAY.ON RSAs”) with a fair value of $11.3 million on the date of grant. The awards have requisite service periods of two years and vest in increments of 25% every six months from the date of the acquisition. The PAY.ON RSA grants provide for the payment of dividends on the Company’s common stock, if any, to the participant during the requisite service period (vesting period) and the participant has voting rights for each share of common stock. The Company recognizes compensation expense for the PAY.ON RSAs on a straight-line basis over the requisite service period. PAY.ON contributed approximately $2.9 million in revenue and an operating loss of $2.1 million for the year ended December 31, 2015. The consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of December 31, 2015. The purchase price allocation for PAY.ON is considered preliminary and is subject to completion of valuations and other analyses.
(in thousands, except weighted average useful lives) |  | Weighted-Average Useful Lives |  | PAY.ON |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  |  |  | $ | 1,627 |
Receivables, net of allowance |  |  |  |  | 2,658 |
Other current assets |  |  |  |  | 581 |
Total current assets acquired |  |  |  |  | 4,866 |
Noncurrent assets: |  |  |  |  |  |
Property and equipment |  |  |  |  | 424 |
Goodwill |  |  |  |  | 140,015 |
Software |  | 5 years |  |  | 34,213 |
Customer relationships |  | 15 years |  |  | 22,418 |
Trademarks |  | 5 years |  |  | 2,500 |
Other noncurrent assets |  |  |  |  | 6 |
Total assets acquired |  |  |  |  | 204,442 |
Current liabilities: |  |  |  |  |  |
Accounts payable |  |  |  |  | 1,125 |
Employee compensation |  |  |  |  | 555 |
Other current liabilities |  |  |  |  | 1,115 |
Total current liabilities acquired |  |  |  |  | 2,795 |
Noncurrent liabilities: |  |  |  |  |  |
Deferred income taxes |  |  |  |  | 15,274 |
Total liabilities acquired |  |  |  |  | 18,069 |
Net assets acquired |  |  |  | $ | 186,373 |
Factors contributing to the purchase price that resulted in the goodwill (which is not 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. Pro forma results for PAY.ON are not presented because they are not material. Fiscal 2014 Acquisitions Retail Decisions On August 12, 2014, the Company completed the acquisition of ReD for $205.1 million in cash. As a leader in fraud prevention solutions, the acquisition of ReD enhanced the Company’s Universal Payments strategy and further strengthened the Company’s leadership position in the fast-growing payments risk management space. To fund this acquisition and related transaction fees, the Company drew an additional $60.5 million on the Revolving Credit Facility and increased the Term portion of the Credit Agreement by an additional $150.0 million. See Note 4, Debt, for terms of the financing arrangement. The Company incurred approximately $2.7 million in transaction related expenses during the year ended December 31, 2014, including fees to the investment bank, legal and other professional fees, which are included in general and administrative expenses in the accompanying consolidated financial statements. ReD contributed approximately $42.7 million and $17.9 million in revenue and $6.8 million and $1.9 million of operating income for the years ended December 31, 2015 and 2014, respectively, which includes severance expense related to the integration activities. The consideration paid by the Company to complete the acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of December 31, 2015.
(in thousands, except weighted average useful lives) |  | Weighted-Average Useful Lives |  | Retail Decisions |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  |  |  | $ | 795 |
Receivables, net of allowance |  |  |  |  | 10,106 |
Deferred income taxes, net |  |  |  |  | 514 |
Other current assets |  |  |  |  | 10,282 |
Total current assets acquired |  |  |  |  | 21,697 |
Noncurrent assets: |  |  |  |  |  |
Property and equipment |  |  |  |  | 3,354 |
Goodwill |  |  |  |  | 137,915 |
Software |  | 5-7 years |  |  | 33,136 |
Customer relationships |  | 18 years |  |  | 50,480 |
Trademarks |  | 5 years |  |  | 3,980 |
Deferred income taxes |  |  |  |  | 51 |
Other noncurrent assets |  |  |  |  | 416 |
Total assets acquired |  |  |  |  | 251,029 |
Current liabilities: |  |  |  |  |  |
Accounts payable |  |  |  |  | 4,624 |
Employee compensation |  |  |  |  | 6,046 |
Other current liabilities |  |  |  |  | 11,683 |
Total current liabilities acquired |  |  |  |  | 22,353 |
Noncurrent liabilities: |  |  |  |  |  |
Deferred income taxes |  |  |  |  | 23,427 |
Other noncurrent liabilities |  |  |  |  | 164 |
Total liabilities acquired |  |  |  |  | 45,944 |
Net assets acquired |  |  |  | $ | 205,085 |
Factors contributing to the purchase price that resulted in the goodwill (which is not 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. Pro forma results for ReD are not presented because they are not material. Fiscal 2013 Acquisitions In 2013, the Company completed three acquisitions at an aggregate cost of $378.1 million. Official Payments Holdings, Inc. On November 5, 2013, the Company completed the tender offer for OPAY and all its subsidiaries. The Company paid cash of $8.35 per share of common stock or approximately $139.8 million using funds on hand and $40 million drawn on the Revolving Credit Facility, which was repaid prior to year-end. As a leading provider of electronic bill payment solutions in the U.S., serving federal, state and local governments, municipal utilities, higher education institutions and charitable giving organizations, OPAY’s team, user base and vertical expertise make it an ideal match for the Company. The acquisition will further extend the Company’s presence in the Electronic Bill Presentment and Payment (“EBPP”) space, expanding its portfolio across key sectors including federal, state and local governments, municipal utilities, higher education institutions and charitable giving organizations. Each outstanding option to acquire OPAY common stock was canceled and terminated at the effective time of the acquisition and converted into the right to receive cash with respect to the number of shares of OPAY common stock that would have been issuable upon a net exercise of such option, assuming the market value of the OPAY common stock at the time of such exercise was equal to the $8.35 per common stock tender offer. Any outstanding option with a per share exercise price that was greater than or equal to such amount was cancelled and terminated and no payment was made with respect thereto. In addition, each OPAY restricted stock unit award outstanding immediately prior to the effective time of the tender offer was fully vested and cancelled, and each holder of such awards became entitled to receive the $8.35 per common stock tender offer for each share of OPAY common stock into which the vested portion of the awards would otherwise have been converted. The Company incurred approximately $1.2 million in transaction related expenses during the year ended December 31, 2013, including fees to the investment bank, legal and other professional fees, which are included in general and administrative expenses in the accompanying consolidated statement of income. OPAY contributed approximately $135.7 million and $23.3 million in revenue for the years ended December 31, 2014 and 2013, respectively. Due to integration activities, the Company is no longer able to separately identify the contribution to operating income generated from the acquisition of OPAY during the year ended December 31, 2014. OPAY contributed less than $0.1 million in operating losses for the year ended December 31, 2013, which includes severance expense related to the integration activities. The consideration paid by the Company to complete the acquisition of OPAY has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition, including $47.4 million of customer relationships and $29.2 million of goodwill. The Company made adjustments to finalize the purchase price allocation as additional information became available to deferred income taxes, other current and noncurrent liabilities. These adjustments and any resulting adjustments to the consolidated statements of income were not material to the Company’s previously reported operating results or financial position. Factors contributing to the purchase price that resulted in the goodwill (which is not 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. Online Resources Corporation On March 11, 2013, the Company completed the tender offer for ORCC and all its subsidiaries. The Company paid cash of $3.85 per share of common stock for approximately $132.9 million and $127.2 million for the Series A-1 Convertible Preferred Stock for a total purchase price of $260.1 million (the “Merger”). The Company has included the financial results of ORCC in the consolidated financial statements from the date of acquisition. As a leading provider of online banking and full service bill pay solutions, the acquisition of ORCC adds EBPP solutions as a strategic part of ACI’s Universal Payments portfolio. It also strengthens the Company’s online banking capabilities with complementary technology, and expands the Company’s leadership in serving community banking and credit union customers. Each outstanding option to acquire ORCC common stock was canceled and terminated at the effective time of the Merger and converted into the right to receive an equivalent number of options to purchase ACI common stock. Each ORCC restricted stock unit was vested immediately prior to the effective time of the Merger and received $3.85 per share. The Company used funds from the $300.0 million of senior bank financing arranged through Wells Fargo Securities, LLC to fund the acquisition. See Note 4, Debt, for terms of the financing arrangement. The Company incurred approximately $5.4 million in transaction related expenses during the twelve months ended December 31, 2013, including fees to the investment bank, legal and other professional fees, which are included in general and administrative expenses in the accompanying statement of income. ORCC contributed approximately $151.3 million and $120.8 million in revenue for the years ended December 31, 2014 and 2013, respectively. Due to integration activities, the Company is no longer able to separately identify the contribution to operating income generated from the acquisition of ORCC during the year ended December 31, 2014. ORCC contributed approximately $6.4 million in operating income for the year ended December 31, 2013, which includes severance expense related to the integration activities. The consideration paid by the Company to complete the Merger has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition, including $68.8 million in customer relationships and $122.2 million in goodwill. The Company made adjustments to finalize the purchase price allocation as additional information became available for certain accruals and deferred income taxes. These adjustments and any resulting adjustments to the consolidated statements of income were not material to the Company’s previously reported operating results or financial position. Factors contributing to the purchase price that resulted in the goodwill (which is not 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. Profesionales en Transacciones Electronicas S.A. During the first quarter of 2013, the Company acquired 100% of Profesionales en Transacciones Electronicas S.A. – Venezuela (“PTESA-V”), 100% of Profesionales en Transacciones Electronicas S.A. – Ecuador (“PTESA-E”), and the ACI related assets of Profesionales en Transacciones Electronicas S.A. – Colombia (“PTESA-C”), collectively “PTESA”. The common stock of PTESA-E and PTESA-V were acquired for $2.8 million and the assets of PTESA-C were acquired for $11.4 million, for a total aggregate purchase price of $14.2 million paid in cash. The Company has included the financial results of PTESA in our consolidated financial statements from the date of acquisition. PTESA has been a long-term partner of the Company, serving customers in South America in sales, service and support functions. The addition of the PTESA team to the Company reinforces its commitment to serve the Latin American market. Factors contributing to the purchase price that resulted in the goodwill (approximately $1.5 million of which is not tax deductible) include the acquisition of management, sales, and services personnel with the skills to market and support products of the Company in the Latin America region. Pro forma results are not presented because they are not material. In connection with the 2013 acquisitions, the Company recorded the following amounts based upon its purchase price allocations as of December 31, 2014 (in thousands, except weighted-average useful lives):
|  | Weighted-Average Useful Lives |  | Official Payments Holdings, Inc. |  |  | Online Resourses Corporation |  |  | PTESA |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  | $ | 25,871 |  |  | $ | 9,930 |  |  | $ | 193 |
Billed and accrued receivables, net |  |  |  |  | 2,858 |  |  |  | 19,394 |  |  |  | 327 |
Deferred income taxes, net |  |  |  |  | 4,692 |  |  |  | 11,726 |  |  |  | — |
Other current assets |  |  |  |  | 27,642 |  |  |  | 17,643 |  |  |  | 95 |
Total current assets acquired |  |  |  |  | 61,063 |  |  |  | 58,693 |  |  |  | 615 |
Noncurrent assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment |  |  |  |  | 6,340 |  |  |  | 7,335 |  |  |  | 6 |
Goodwill |  |  |  |  | 29,236 |  |  |  | 122,247 |  |  |  | 7,113 |
Software |  | 10 years |  |  | 26,125 |  |  |  | 62,215 |  |  |  | — |
Customer relationships |  | 14 - 15 years |  |  | 47,400 |  |  |  | 68,750 |  |  |  | 7,732 |
Trademarks |  | 3 - 5 years |  |  | 3,000 |  |  |  | 3,050 |  |  |  | — |
Other noncurrent assets |  |  |  |  | 19,178 |  |  |  | 459 |  |  |  | 7 |
Total assets acquired |  |  |  |  | 192,342 |  |  |  | 322,749 |  |  |  | 15,473 |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  |  |  | 9,414 |  |  |  | 15,394 |  |  |  | 341 |
Accrued employee compensation |  |  |  |  | 15,006 |  |  |  | 10,549 |  |  |  | 261 |
Note payable |  |  |  |  | — |  |  |  | 7,500 |  |  |  | — |
Other current liabilities |  |  |  |  | 27,312 |  |  |  | 7,559 |  |  |  | — |
Total current liabilities acquired |  |  |  |  | 51,732 |  |  |  | 41,002 |  |  |  | 602 |
Noncurrent liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred income taxes, net |  |  |  |  | — |  |  |  | 18,290 |  |  |  | 225 |
Other noncurrent liabilities acquired |  |  |  |  | 828 |  |  |  | 3,339 |  |  |  | 439 |
Total liabilities acquired |  |  |  |  | 52,560 |  |  |  | 62,631 |  |  |  | 1,266 |
Net assets acquired |  |  |  | $ | 139,782 |  |  | $ | 260,118 |  |  | $ | 14,207 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1500-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1524-128463 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4922-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4934-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=56956791&loc=d3e4926-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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