Good morning. My name is [Laurie] and I’ll be your conference operator. At this time I would like to welcome everyone to the ACI Worldwide fourth quarter 2008 financial results conference call. (Operator Instructions) I will now turn the call over to Tamar Gerber, Vice President of Investor Relations. Please go ahead.

Thank you operator. Good morning everybody and thanks for joining us on our year end earnings call. Today’s call is subject to the safe harbor acts and all of our forward-looking statements as well as our safe harbor are available on our presentation which is on our website. Management speakers today joining me are Phil Heasley, our CEO; Ron Totaro, our COO; and Scott Behrens, our CFO. Ron and Scott both have prepared remarks and Phil will be available for Q&A as well. So I’m going to turn over the call at this time to Ron Totaro to kick it off. Ron.

Good morning everyone and thanks for joining us today. I’ll be starting my presentation on Slide 5 with a general discussion of the macroeconomic economy and what we’re seeing in our customer markets. As everyone knows, the financial crisis has spread to most markets and we do see its impact on customers in all of our operating regions. This is something that we began to tell you about at the end of 2007 when we described longer sales cycles. Fortunately for us, the [inaudible] to date has remained the same, so when we look at the year ahead we’re still operating on the same premise of dealing with a longer selling process to complete a sale to our end users. But there is still a growing pressure on financial institutions to become more efficient and cost effective by converging their payment platforms, and the explosion of M&A activity at the end of 2008 has acted as a catalyst in many cases for this convergence to occur, as these combined entities seek relevant cost synergies. This creates an interesting opportunity for us as our products help make their inefficient technology go away. Our multi-product Payments Hub Solution is a very timely offering to meet these customers’ needs and we are also seeing renewed interest from Tier 2 banks for enterprise on demand offerings. One potential negative for us resulting from the bank activity is that customers will consolidate licenses as they integrate. We anticipate that some of our largest customers will move to one license stream and while that will cut into some of the software licensee revenue through ILF reductions, we will see growth in our ILF capacity and service revenue offerings as these institutions get larger. The capacity revenues do not totally offset the loss of software ILF but…

Thanks Ron and good morning everyone. I will be starting my prepared remarks on Slide 25, key takeaways from the quarter. As you can see we achieved good revenue growth in the December 2008 quarter compared to December 2007. That’s even taking into consideration the considerable strengthening of the U.S. dollar compared to the prior quarter. Driving the increase was higher implementation services revenue, primarily in our Asia-Pacific and EMEA region and higher recurring revenue, that being our monthly license fees, maintenance fees and the processing portion of our services fees. So overall another strong revenue quarter. Since Ron has already discussed sales quite a bit I’m not going to spend too much time on it here, but just wanted to reiterate his comments that sales were extremely strong for us, up 44% on a comparative basis to the December 2007 quarter and up 78% on a sequential basis compared to our third quarter of ’08. As Ron mentioned we were quite successful in the quarter and rolling over previously discounted puff deals and economically priced deals. OFCF increased versus the prior year December quarter, particularly when you strip out the 2007 IBM cash receipts. They’re included in the $21 million. OFCF also increased $31 million on a sequential basis compared to our December 2008 quarter and I’ll go into OFCF changes in a little bit more detail here in a minute. Turning to Slide 26, the decrease in 12 month backlog was largely due to FX rate changes. We estimated the 12 month backlog would have actually been higher by about $7 million on a constant dollar basis. Overall our operating expenses declined as we began to see the benefits of our restructuring initiatives and other cost control efforts. And finally with respect to non-operating income and expenses, the…

(Operator Instructions) Your first question comes from George Sutton - Craig-Hallum Capital.

I wanted to better understand from your perspective the strong operating income guidance for 2009 certainly relative to what we were expecting. I’m trying to understand how much of that is related to the mix of business and getting more of these high margin term renewals and how much of it is cost related. It does sound like you found an additional $8 million of costs that you can work with.

I’m going to let Scott answer it. This is Phil, but I’m going to let Scott answer that and maybe Ron chime in, but I just want to give you one piece of information that I think we mentioned several times in the presentations but I want to make sure that we recap it. The way we’re structured in terms of both variable expense and the way we’ve distributed a lot of our R&D around the world, we are virtually – we have a virtual natural hedge in terms of so when FX goes and it reduces our backlog or it reduces our revenue, from a net income standpoint we actually – the expense is both at the margin level and the fixed cost level, actually move in sequence, both down and up. And when we were doing that a couple of years ago people were kind of questioning the wisdom of that and of course we didn’t get these economic conditions but we saw the need to right balance ourself because [inaudible]. So one of the reasons that it doesn’t look like we’re going to have that much increase in sales and revenue but we have an improving bottom line is the fact that the expenses do move in line with the revenues. And I’ll let Scott answer to the extent that it’s renewals versus –

Well, yes, obviously the restructuring initiatives that we have implemented and net of the reinvestments we’re looking at getting an $18 million benefit in 2009 from those activities. And just overall other cost control efforts you can see we had in Q4. You know we expect to continue looking at other areas of cost as well in 2009. So it’s – a large part of it is the restructuring efforts.

Ron made some interesting comments with respect to a focus on going after the bank customers that are still using processors and I’m just – you mentioned and I know there’s some advantage you have on both the cost side and potentially the efficiency side as well. Can you just give us a little picture as to what that focus is going to be from a marketing perspective?

Sure. Well, just again to amplify the comment I think a big point, George, as well is our ability to do customizations and take our core product offering and evolve it to the needs of these ever increasingly larger banks, right? So we have seen a number of requests from banks and I think you will start to see – well, our clients are starting to see relative to our marketing materials and our sales presentations and how we respond to RFP’s and how we can overcome and combat some of the challenges that they face sort of in a static, fixed processor environment if you would.

George I would also say that the processors – you know processors are an important customer base to us, too. And the processors have gotten I think more – much more strategic and intelligent against the size of bank and what – you know, instead of looking for two or three elephants that represent 40% of their revenues, they’re spreading their portfolios out in an intelligent way. And that increases the value of our product to them also. So it’s not only the mega-banks it’s also the mega-processors.

Lastly, if I could ask with respect to the previously puff deals that you signed that you mentioned you were now getting “more sensibly priced” how does that work with other potential, formerly puff deals? Does that improve your negotiating position?

Well, yes. I don’t want to talk too much about that but you know we’ve gone to a very rational pricing mix. You know if you’re a very large customer of ours you get massively improved economics versus processors and other kinds of things and we’re keeping class of customer in the same pricing ranges and whatnot. And it’s going well. It’s not a lot of fun going and saying we gave our product away for five years and the ones who were injured were ourselves and whatnot. It’s not a fun deal. But we have intelligent customers out there. They know the relative pricing versus their other options and whatnot. And they know the value. We’re providing a very value laden offering at reasonable prices. We’re in no way trying to over price our products. We’re just trying to appropriately price our products which is not that hard to do in a logical competitive market.

And I would just add to Phil’s comments, George, that from our services fee and how we look at pricing on a global basis we’ve made some evolutions to be frankly I think more market competitive that have worked in our advantage. So it’s taking a number of best practices, whether it’s the auspices of puffing and many other sort of tactical pricing best practices that we are starting to leverage more now in a holistic way versus just a couple of deals. So I think throughout ’09 we’ll be able to move the needle on these kinds of productivities.

Your next question comes from Nikolai Fisken - Stephens Inc.

Ron can you kind of talk about how customers have responded to the sunset of Base24 Classic thus far?

Sure. I mean you know I think when people sort of really look underneath the hood and understand the EPS story and what we’re doing with the IBM alliance they certainly see the power and the vision of where we’re going. Certainly you get into conversations around the state of readiness to do such and every bank and especially in these sort of market environments that we’re dealing with and some of the uncertain market environments that each bank is going through with some of these consolidations and market conditions, you know, a lot of times they’ll say, “Well, what is the timing of the migration? What makes the most sense?” And so you know we want to work carefully and closely with our customers to identify what their roadmaps are, make sure that they understand the value proposition of an EPS migration with our IBM alliance partner, and make sure though that we’re not doing things that are going to you know make them take steps backwards if you would and with their current operating system. So there’s a fine line we’re walking here but the goal is to sort of coach, cajole and move them towards a migration at some point. And frankly you know we’re preparing our capabilities on an ongoing basis to make sure that when 2011 and beyond comes that we’re going to be in a position to do this kind of work in a profitable manner.

How would you characterize sales in 4Q and thus far in 1Q?

New sales versus renewals?

Yes.

I think I would say that our pipeline is as strong as ever. I think you know not flipping back through the pages, but we’ve quoted quite a few deals that were over $1 million for both EMEA and Asia-Pac and the Americas. It’s our best sales quarter or year ever and that was driven primarily by a lot of new accounts and new apps and we can get you some of the specific numbers and breakdown. So you know new apps and new accounts was a big part of our sales mix and it will continue to be going forward. I think, too, though that we’re just going to make sure that we’re you know making the most out of the economics around renewals. So I think it’s a good, solid one-two punch and how we’re going to grow our top line.

And Nik this is Phil, in terms of this year we expect this year to follow the same curve. I think Scott said that last year. And we see that on whether it’s cash, whether its sales, whether it’s, you know, we see it following the same deal. One of the smartest moves we made was moving our end of year to match our customer bases end of year. And now we’re, you know, it’s kind of changed our curve to take better advantage of that. Does that answer your question?

Yes. And the $10 to $20 million you guys referenced on the 3Q call, did you guys get those sales in 4Q or were they pushed out to 1Q?

We did very well on renewals. I guess, you know, it’s the best way of saying it.

I think we originally said that $10 to $20 was at risk. We obviously came in better than we had expected so we got what we wanted out of Q4.

And Scott how should we be thinking about the GAAP tax rate?

You know, that’s a good question. You know, at the consolidated level it’s hard to understand because the tax rate – the blended effective tax rate is driven by the combination of our tax rates throughout the world. In certain tax jurisdictions we get little to no benefit and it really depends on what the gains or losses are in that jurisdiction. So it’s really difficult to provide a guidance on that for the year. I mean generally in our tax jurisdictions our rate is somewhere between 35 and 40%, higher in the U.S. than in most foreign countries. But it’s really the impact of especially our IRA structure which we’ve talked about in the past that weighs on that. And as that begins to grow over time, we’ll see a more kind of normalized effective tax rate. But at this point we don’t really have any guidance on what that ETR will be.

The last thing I’ve got is, you know, as you guys have gone through the sunset have you – can you talk about the competitive landscape?

I don’t want to say too much about the competitive landscape, but what I would say is we’re going to give more and more visibility to R&D. And we believe and in two weeks you’ll see a lot on that. I believe the big differentiator for us right now is the amount of money we’re – you know, with [inaudible] and restructuring we’re still spending very, very heavily from an R&D standpoint and I think it’s getting us to a point of differentiation and this EPS hub. And we don’t have enough time to go through it today but I think we’re really differentiating ourselves in terms of what we’re providing. And I also think we’re competing less and less on accounts that are marginal to our customer base and make more sense to other people’s customer base. So to give you a little bit of a smart-aleck answer I would say against our segment we’re doing very, very well and against the segment that’s better handled by Windows or some other kind of product set we’re doing less well and that’s because it’s actually economically less sensible for us to be in those spaces.

Your next question comes from Gil Luria - Wedbush Morgan Securities Inc.

First on IBM it looks like you guys are making a lot of progress and growing the products that you have with them and the customer base. I imagine it’s still from a relatively small base. At what point do you think that IBM can become a really material part of your install base and revenue it? Where do you see a milestone? Let’s say IBM customers being 10% of your overall base or revenue from IBM centric customers becoming 10% of your revenue.

Let me answer it and let Ron continue. I don’t think we’ve ever given the numbers out so I wouldn’t be overly specific, but I think IBM is actually a larger percentage than you quoted today, right? To begin with, right? And you know maybe we’ll give more granularity to that in the future. And we certainly are skewed and our new business is skewed towards IBM. The percentages of the new business have radically moved up. When it becomes critical mass I think it’s still another year or two, Gil, before we really get – before we get really critical mass. And I think IBM – and I should have said that on the R&D side – IBM has been a fantastic R&D partner and what we’re building into this 8.2 and now 9.3 or whatever this year in terms of z/OS capabilities and whatnot. I think the turning point will be – critical mass will come in a year or two years. And I’d love to say that we had a shorter sales cycle than that, but we’ve been – we have a long sale – we have a lot of opportunity but we have a long sales cycle. And so it’s going to come in a year or two.

In terms of SEPA I think up until a year or two ago the assumption was that European governments would put pressure on banks to meet some of the milestones and that was driving some of your pipeline. Do you still some pressure from those governments on their large banks to comply with some of those deadlines? Do you think those deadlines are actually going to be enforced or is there going to be more leniency considering the tough situation that all those banks are facing?

Well, let me give you right hand and left hand. I think that on the legal regulatory side I couldn’t guess and you know I don’t want to get myself in trouble with Europeans, but all my years in Visa and MasterCard I don’t ever think I saw the Europe arena make a date that they set for any piece of – so you know I wouldn’t sit behind that. It’s a very loose confederation – the confederation natures of it. Then on the other hand, Gil, I would say that the corporate mergers that are going on in Europe are forcing people to rethink their systems and that’s moving in our direction because they want very heavy duty – we’re now building much bigger banks as a result of what’s going on. These larger banks are not ignoring SEPA. What they’re saying is, “Okay, we’ve got to go and move this, this and this together and whatnot. We’re now planning for a bigger infrastructure than we were thinking about in SEPA and we might as well be SEPA compliant because why bring the banks together and not have the capabilities?” And we’re seeing some of that in our pipeline and we’re certainly struggling with that, you know, working our tails off in terms of trying to actualize that in a couple of big deals that are in progress right now in Europe.

Then lastly on free cash flow, so obviously very helpful that you have GAAP revenue and GAAP operating income guidance and you also gave some valuable piece parts for free cash flow. But can we get an overall sense if you think you can grow the free cash flow from 2008 in 2009, at what rate or approximately what direction?

Well, I’ll let Scott answer that but we made a conscious decision with FX, you know, with the world in the turmoil and whatnot is we’re going to give you very granular sets of results. And we told you it’s going to follow the same curves as it did last year and whatnot. But Scott can give you more of an answer on that. We’re very good at giving numbers that partially [inaudible] in the past as we’ve been growing, and this is something that we’re – this and backlog and largely because of FX and others, we’d just as soon every quarter tell you how we’re doing and show you the shape of the curve is the same.

Yes, and what I’ll say, you know, part of the reason we are giving the guidance that we are and not giving particular cash guidance is 2009 will be a transition year. If we go back to ’06 when we started to end the puffing deals and started really from a GAAP perspective not making a whole lot of sense in ’07 and ’08, 2009 we said this the latter half of 2009 we’re really going to come out of that cycle. And we really believe we’ll start to normalize on the last half of ’09. We did give as you mentioned we did give operating income. We gave some key cash – or, I’m sorry, non-cash and cash related items to kind of help do the math on that. But at this point we’re not prepared to provide any annual guidance on the cash flow.

But can I extrapolate a little from what you just said in that now that things are getting a little bit more normalized and the historical gaps now are closing we should expect cash flow to trade your earnings numbers a little bit more closely, at least going forward.

Right. They will normalize. When we get to the point where as I mentioned as much is going into the backlog and essentially deferred revenue as is coming out of it, and we’re better managing both the sales side and the application side, those will better align.

Yes. And I would actually agree with you. I would tell you and everyone else we’re on strategic plan. When we went into the situation in ’07 and we said it was going to take us until the middle of ’09 for us to feel that we’re really were at equilibrium, I think we’re very much on schedule. That our strategic plan is very much on schedule, as we said last year and we’re going to say it again. So we’re going to look like last year. We’re going to have the same kind of curve. We are – the reason that we’re giving the GAAP numbers is we’re much more normalized and whatnot. And quite honestly we don’t want to give you – I’ll give the other one. In terms of our partnership with IBM, you know, there’s wild card cash that you know whether cash comes in one quarter or another quarter, whatnot, we don’t want to get into guidance issues where as it’s just a matter of 60, 90 days or something or other like that. We can’t predict it that closely.

If I may follow up on that, it sounds like maybe there’s another milestone payment. At the time you signed the deal with IBM, I think it was noticeable that the first two pieces that you got from them were $33.3 million and there was a phantom piece that was possible for the future. Could we see another type of large investment from IBM in the future if you hit a certain milestone?

We could see several more. But we’re not predicting or forecasting the timing.

Your next question comes from [Leonard Diprosco] – Janney Montgomery Scott. Leonard Diprosco – Janney Montgomery Scott: I just wanted to first ask if you see the computed split kind of 20-80 current period sales recognition versus backlog kind of maintaining itself or if you see that kind of shifting going forward in 2009?

I think we’ve been inching up towards the 19 percentages. Obviously it’s very contingent upon the mix of sales, but we believe that 2009 will be fairly consistent with 2008. Leonard Diprosco – Janney Montgomery Scott: And the other question I had was the impact – the positive impact of the FX gain, if I’m doing my math right it’s roughly $0.17 after tax which is really high versus prior quarters. I mean, any input as to if this is kind of like a really you know out of the ordinary type of quarter or if these types of large fluctuations in your opinion are going to kind of continue going forward? Just to kind of get a sense of normalcy on the EPS line.

Now, what Scott gave you was the other income line. So that was one of the FX impacts. He also said earlier that there was a $3 million hit to revenue, right? Going the other direction. So you can’t just – I think the best way for us to answer that is that on a going forward basis assuming that there’s not another huge drop, right? Because part of that did come from the huge – that our expense structure and our dollar versus other currency structure, we pretty much from an operating income standpoint, you know, it rounds to zero the impact of that movement going up and down. What would change that movement is if we suddenly sold a lot more or a lot less in one part of the world than the other. There wouldn’t be other structural reasons for that to take place. Or some two currencies – you know, the pound, the euro, the dollar are our main – you know, we have lots of other currencies but those are the three really moving parts. And they’d have to go out of whack with each other on a permanent basis for that to be.

And just to add to that, in the fourth quarter of ’08 the dollar strengthened against the pound by 20% which is almost a darn near historical proportion. The other impact and it’s primarily impacting our EMEA and our UK subsidiary, which is a pound denominated [subsidiary], the euro also strengthened against the pound by about 20% in the fourth quarter. So most of the gain is driven by monetary assets, cash and receivables that our UK subsidiary was holding that was in you know non-pound denominated cash and receivables holding. So that’s what really drove it in Q4. Now it really would be contingent upon what those changes in FX rates are going to do in the future. Now we are working on a pooling our European cash which hope would reduce the amount of any non-functional currency we have to carry at any given point in time. So that at least would mitigate the risk of FX fluctuations on a cash side. And receivables is a little bit more difficult to manage in terms of FX exposure, both good and bad. But we are obviously working to manage our AR balance down and improve the timing of cash receipts and really reduce overall AR and past due AR. So that in of itself should reduce the amount of exposure we have in non-functional currency AR.

And you should understand another way of saying what I said is that we have absolutely no profit center which is FX. We have no interest in making FX that. All we want to happen is natural hedges, just natural structural hedge of the business. We don’t want to be in the FX business.

Your next question comes from John Kraft - D. A. Davidson & Co. John Kraft - D. A. Davidson & Co.: I wanted to try to I guess ballpark or maybe average the total amount that’s spent by some of these big financial institutions to do the EPS migration. I mean, not necessarily in dollars but you know for every dollar that is spent on an upgrade for Base24, what roughly are they spending for the implementation and the professional services and then hardware and IBM and whatever else may be involved?

This is Ron speaking and my first reaction in hearing that question, John, is that it’s a very hard dynamic to describe based on and the individual banks operating systems currently. Typically we see in migrations that there’s going to be add on work and new products added into the mix as well you know that ties to things that you’ve heard us talk about – convergence. The services mix varies on a global basis substantially as far as the cost of those services that we offer and the price that we can gain. So it is very hard to put a dollar figure on the average EPS migration. So I mean I’m just hesitant to do such. I think the good news is, though, from our perspective is that it’s accretive in the positive, right? And that we’re improving the economic situation of ACI from in that migration period, both as we sort of spend the money and gain services revenues to migrate them and typically when you look at all the licenses – license fees that are now associated with a migration, that tends to equal more than the current economic situation on Classic. John Kraft - D. A. Davidson & Co.: Could it be – I mean, is the order of magnitude double what the license fee might be in total expense? Is that out of the realm of possibility or?

It’s not out of the realm of possibility, but it’s hard to say that that would be an average, right? You know, it’s the type of thing where you’re going to have two very distinct points at each end of the spectrum and the average is sort of meaningless, so to speak. So I’m not trying to be coy with you, but it really does vary substantially. [Inaudible] as the big get bigger and these mergers are occurring and there’s a tremendous amount of uniqueness to these deals.

Are you trying to figure out the value proposition on the bank side? John Kraft - D. A. Davidson & Co.: No, no, no, no. I’m thinking of simply what all is involved from their perspective and the pros I guess and cons of them migrating versus waiting and having to do some of the upgrades themselves.

So I would answer it in a little bit different, you know, having spent 30 years on the other side, too. I would answer it a little bit differently. If I’m running at 130 milliseconds per switch transaction and EPS on z can get me down to 30 milliseconds, the pipe I’ve just created and the productivity of that pipe is just absolutely massive. If on the risk side I can save 1 or 2 or 3 basis points in my fraud losses, that becomes a – their motivation if I can save four-tenths of a cent per switching or ATM transaction, that’s – you know, their savings are massive, right? And that’s the kind of stuff that’s going on on the other side. And yet that translates itself into big sets of projects, especially if they realize they can – they’re only switching 15 to 30% of their volume per application and they can get up to switching everything through MegaSwitch and, you know, they actually have very massive opportunities which translate themselves into massive projects. That’s why I answered the question it’s going to take a year or two before you really see critical mass with the IBM because these are going to end up being very large projects. And that’s going to be the big motivation to go into, you know, for them to go to EPS is that it’s going to clearly get them to play on a different plane. John Kraft - D. A. Davidson & Co.: And I guess on those lines, then, Ron you were discussing some pretty material increases in business you’re seeing from the retail sector which in some respects is counterintuitive in this environment. Is that along the same lines? I mean, simply outsourcing to processors versus what you guys can do? I mean is it just a cost savings? Is that primarily the reason?

No. Ron, I’m sorry for interrupting but I’d give it to you in a different way. I think what the retailers are realizing is the value of leased cost routing. And so right now they kind of go and they get this blended great deal and whatnot and so as more and more buying moves to debit, they’re giving a bigger and bigger margin to their front ends. And if they can actually intelligently move their volumes so they participate with the same intelligence in the payment system as the switches and the issuers and acquirers, they actually have huge productivity saves. And you know there are certain companies that are leaders and you know, without getting myself in trouble, Wal-Mart is already very, very smart at that, right? And I think a lot of other companies are becoming more and more cognizant that that can be a very big improvement in their cost of sales. John Kraft - D. A. Davidson & Co.: But again I guess the controlling of the routing, it’s cost savings, right? I mean there’s not –

Absolutely. Absolutely. That’s totally what it is. It’s their cost of sale, you know, point of sale, cost of sale. John Kraft - D. A. Davidson & Co.: And then last question, didn’t hear much about the domestic cash management business. How is Ralph’s group doing with is it integration with that product pretty much at your goals now?

They had a record year, right? I think they had absolutely a record year and Ralph’s doing a great job not only of selling that product on demand but we’re really gaining traction on selling the whole suite of ACI products on demand.

At this time there are no further questions. I will now return the call to Tamar Gerber for final remarks.

Thank you very much Beverly. Thank you everybody for joining us. Please don’t forget to listen in to our Investor Day on Tuesday, March 10. We’ll be holding it here in Omaha and we look forward to speaking with you at Investor Day or at our next earnings call. Bye bye.

Thank you. This does conclude today’s ACI Worldwide fourth quarter 2008 financial results conference call. You may now disconnect.