We characterize norm-one complemented subspaces of Orlicz sequence spaces $\ell_M$ equipped with either Luxemburg or Orlicz norm, provided that the Orlicz function $M$ is sufficiently smooth and sufficiently different from the square function. We measure smoothness of $M$ using $AC^1$ and $AC^2$ classes introduced by Maleev and Troyanski in 1991, and the condition for $M$ to be different from a square function is essentially a requirement that the second derivative $M''$ of $M$ cannot have a finite nonzero limit at zero. This paper treats the real case; the complex case follows from previously known results.