Acxiom Announces First-Quarter Results; Company Generates Best-Ever Q1 Revenue and Operating Income.LITTLE ROCK, Ark. -- Acxiom Acxiom is a customer and data information management company, offering a range of products and services including information technology outsourcing. It has been described as "one of the biggest companies you've never heard of. (R) Corporation (Nasdaq: ACXM) today announced financial results for the first quarter of fiscal 2007 ended June June: see month. 30, 2006. Acxiom will hold a conference call at 4:30 p.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT today to discuss this information further. Interested parties are invited to listen to the call, which will be broadcast via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.acxiom.com. Year over year, first-quarter earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share increased 186 percent to $0.20. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net earnings for the quarter increased 168 percent to $17.8 million. First-quarter revenue totaled $336.7 million, representing an 8.5 percent increase over the same quarter last year. "Our first-quarter results were strong and in line with our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Financial Road Map. These results reflect the growing strength of our company and the benefits from our ongoing initiatives to transform Acxiom," Company Leader Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by D. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. said. "Our first-quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 143 percent over the same quarter last year, and our overall revenue growth of 8.5 percent was led by a 9.8 percent increase in our services business. We are clearly on the right path operationally and will continue to stay focused on executing our priority initiatives to deliver superior financial performance." Highlights of Acxiom's first-quarter performance include: --Revenue of $336.7 million, up 8.5 percent from $310.3 million in the first quarter a year ago. --Income from operations of $36.3 million, a 143 percent increase compared to $15.0 million in the first quarter last year. --Pre-tax earnings of $29.2 million, up 173 percent from $10.7 million in the first quarter of fiscal 2006. --Diluted earnings per share of $.20, a 186 percent increase compared to $.07 in the first quarter last year. --Operating cash flow of $56.4 million and free cash flow available to equity of $11.9 million. The free cash flow available to equity of $11.9 million is a non-GAAP financial measure, and a reconciliation to the comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure, operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , is attached to this press release. --Services gross margin increased to 25.1 percent from 18.5 percent in the same quarter last year and from 23.7 percent in the sequential One after the other in some consecutive order such as by name or number. quarter ended March 31, 2006. --Computer and related expense continued to decline as a percentage of revenue. This key performance metric fell to 21.7 percent versus 25.0 percent in the first quarter last year. --Share repurchases for the quarter were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 576,000 shares for a total value of approximately $13.9 million. "Our revenue and operating income are record results for the first fiscal quarter," Morgan continued. "We are pleased with our performance in the first quarter, but we believe we have considerable opportunity to improve operating performance and deliver additional growth through execution of our long-term strategies." Morgan noted that Acxiom recently completed new contracts with General Motors Corporation; AutoNation AutoNation is a chain of auto dealerships founded by entrepreneur H. Wayne Huizenga,[2] also founder of Blockbuster and Waste Management.[3] The company, founded in 1996, is headquartered in Fort Lauderdale. Company operations AutoNation, Inc. , Inc.; Unilever Unilever Either of two linked companies, Unilever PLC (based in London) and Unilever NV (based in Rotterdam). They are the holding companies for more than 500 firms worldwide that manufacture and sell soaps, foods, and other products. ; Yellow Book USA; AccuData and Southern Progress Corporation. Outlook The Company's expectations are communicated in the Financial Road Map, which includes a chart summarizing the one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants and long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. as well as an explanation of the assumptions and definitions that accompany To go along with; to go with or to attend as a companion or associate. A motor vehicle statute may require beginning drivers or drivers under a certain age to be accompanied by a licensed adult driver whenever operating an automobile. these goals. Acxiom's current Financial Road Map has been updated to reflect changes to the free cash flow definition and reflects the Company's current expectations for fiscal year 2007, and the long-term goals reflect expected performance in fiscal 2010. These financial projections are based on the assumptions and limitations set forth in the Financial Road Map. These projections are forward looking, and actual results may differ materially. These projections may be impacted by mergers, acquisitions, divestitures or other business combinations that may be completed in the future as well as the other factors set forth below. About Acxiom Acxiom Corporation (Nasdaq: ACXM) integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration (CDI CDI compact disc interactive: a system for storing a mix of software, data, audio, and compressed video for interactive use under processor control ) technology, data, database services, IT outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , consulting and analytics, and privacy leadership. Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas Little Rock, Arkansas required military intervention to desegregate schools (1957–1958). [Am. Hist.: Van Doren, 556–557] See : Bigotry , with locations throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and
China.
For more information, visit www.acxiom.com. This release and today's conference call contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to certain risks and uncertainties that could cause actual results to differ materially. Such statements may include but are not necessarily limited to the following: that the Company is continuing to experience continued improvement and momentum in financial performance, that we expect that continued focus on expense controls will lead to continued improvement in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , that the projected revenue, operating margin, return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). and return on invested capital, operating cash flow and free cash flow, borrowings, dividends and other metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. referred to in the Financial Road Map attached to this release will be within the estimated ranges; that the company has identified categories of opportunity that provide upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside to the ranges of the Financial Road Map, that the estimations of revenue, earnings, cash flow, growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and expense reductions will be within the estimated ranges; and that the business pipeline and our anticipated cost structure will allow us to continue to meet or exceed revenue, cash flow and other projections. The following are important factors, among others, that could cause actual results to differ materially from these forward-looking statements: The possibility that we may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. expenses related to unsolicited un·so·lic·it·ed adj. Not looked for or requested; unsought: an unsolicited manuscript; unsolicited opinions. unsolicited Adjective proposals or other efforts by others to acquire or control the Company; certain contracts may not be closed, or may not be closed within the anticipated time frames; the possibility that due to issues attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. to the current proxy contest Proxy contest A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights. clients may attempt to reduce the amount of business they do with the Company; the possibility that a significant disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. to the business of the Company may result from the current proxy contest; the possibility that in the event that a change of control was sought that certain of the clients of the Company would invoke To activate a program, routine, function or process. certain provisions in their contracts resulting in a decline in the revenue and profit of the company; the possibility that certain contracts may not generate the anticipated revenue or profitability; the possibility that negative changes in economic or other conditions might lead to a reduction in demand for our products and services; the possibility of an economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. or that economic conditions in general will not be as expected; the possibility that the historical seasonality of our business may change; the possibility that significant customers may experience extreme, severe economic difficulty; the possibility that the integration of acquired businesses may not be as successful as planned; the possibility that the fair value of certain of our assets may not be equal to the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of those assets now or in future time periods; the possibility that sales cycles may lengthen length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length  en·er n. ; the possibility
that we may not be able to attract and retain qualified technical and
leadership associates, or that we may lose key associates to other
organizations; the possibility that we won't won't Contraction of will not. won't will not won't will be able to properly motivate our sales force or other associates; the possibility that we won't be able to achieve cost reductions and avoid unanticipated costs; the possibility that we won't be able to continue to receive credit upon satisfactory terms and conditions; the possibility that competent Possessing the necessary reasoning abilities or legal qualifications; qualified; capable; sufficient. A court is competent if it has been given jurisdiction, by statute or constitution, to hear particular types of lawsuits. , competitive products, technologies or services will be introduced into the marketplace by other companies; the possibility that we may be subjected to pricing pressure due to market conditions and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. competitive products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the Company; the possibility that changes in accounting pronouncements may occur and may impact these projections; the possibility that we won't be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that there will be changes in the legislative, accounting, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and consumer environments affecting our business, including but not limited to litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , legislation, regulations and customs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our ability to collect, manage, aggregate and use data; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services; the possibility that we may enter into short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. contracts which would affect the predictability of our revenues; the possibility that the amount of ad hoc For this purpose. Meaning "to this" in Latin, it refers to dealing with special situations as they occur rather than functions that are repeated on a regular basis. See ad hoc query and ad hoc mode. , volume-based and project work will not be as expected; the possibility that we may experience a loss of data center capacity or interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. of telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. links or power sources; the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties; the possibility that postal Postal can refer to:
tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. in the contracts, which may result in contract penalties or lost revenue; the possibility that we experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; the possibility that the services of the United States Postal Service postal service, arrangements made by a government for the transmission of letters, packages, and periodicals, and for related services. Early courier systems for government use were organized in the Persian Empire under Cyrus, in the Roman Empire, and in medieval , their global counterparts and other delivery systems may be disrupted dis·rupt tr.v. dis·rupt·ed, dis·rupt·ing, dis·rupts 1. To throw into confusion or disorder: Protesters disrupted the candidate's speech. 2. ; and the possibility that we may be affected by other competitive factors. With respect to the Financial Road Map, all of the above factors apply, along with the following which were assumptions made in creating the Financial Road Map: that the U.S. and global economies will continue to improve at a moderate pace; that global growth will continue to be strong and that globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation trends will continue to grow at an increasing pace; that Acxiom's computer and communications related expenses will continue to fall as a percentage of revenue; that the Customer Information Infrastructure (CII CII Confederation of Indian Industry CII Chartered Insurance Institute (UK) CII Construction Industry Institute (University of Texas) CII Council of Institutional Investors ) grid-based environment Acxiom will continue to be implemented successfully over the next 3-4 years and that the new CII infrastructure will continue to provide increasing operational efficiencies; that the acquisitions of companies operating primarily outside of the United States will be successfully integrated and that significant efficiencies will be realized from this integration; relating to operating cash flow and free cash flow, that sufficient operating and capital lease arrangements will continue to be available to the Company to provide for the financing of most of its computer equipment and that software suppliers will continue to provide financing arrangements for most of the software purchases; relating to revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. line balance, that free cash flow will meet expectations and that the Company will use free cash flow to pay down bank debt, buy back stock and fund dividends; relating to annual dividends, that the Board of Directors will continue to approve quarterly dividends and will vote to increase dividends over time; relating to diluted shares, that the Company will meet its cash flow expectations and that potential dilution potential dilution The decrease in the proportional equity position of a share of stock that will occur eventually if additional authorized shares are actually issued. created through the issuance of stock options and warrants will be mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by continued stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Company's stock repurchase program. With respect to the provision of products or services outside our primary base of operations Noun 1. base of operations - installation from which a military force initiates operations; "the attack wiped out our forward bases" base air base, air station - a base for military aircraft army base - a large base of operations for an army in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign SOVEREIGN. A chief ruler with supreme power; one possessing sovereignty. (q.v.) It is also applied to a king or other magistrate with limited powers. 2. In the United States the sovereignty resides in the body of the people. Vide Rutherf. Inst. 282. jurisdictions due to differences in scale, competition, culture, laws and regulations. Other factors are detailed from time to time in our periodic reports and registration statements filed with the United States Securities and Exchange Commission. We believe that we have the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast. We undertake no obligation to update the information contained in this press release, including the Financial Road Map or any other forward-looking statement. Acxiom is a registered trademark of Acxiom Corporation.
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
June 30,
-----------------------------------
$ %
2006 2005 Variance Variance
-------- -------- -----------------
Revenue:
Services 261,892 238,499 23,393 9.8%
Data 74,813 71,772 3,041 4.2%
-------- --------
Total revenue 336,705 310,271 26,434 8.5%
Operating costs and expenses:
Cost of revenue
Services 196,073 194,349 1,724 0.9%
Data 49,572 48,885 687 1.4%
-------- --------
Total cost of revenue 245,645 243,234 2,411 1.0%
Services gross margin 25.1% 18.5%
Data gross margin 33.7% 31.9%
Total gross margin 27.0% 21.6%
Selling, general and
administrative 54,745 53,700 1,045 1.9%
Gains, losses and
nonrecurring items, net - (1,637) 1,637 0.0%
-------- --------
Total operating costs
and expenses 300,390 295,297 5,093 1.7%
-------- --------
Income from operations 36,315 14,974 21,341 142.5%
-------- --------
Other income (expense):
Interest expense (7,769) (5,162) (2,607) 50.5%
Other, net 647 891 (244) (27.4%)
-------- --------
Total other income (expense) (7,122) (4,271) (2,851) 66.8%
-------- --------
Earnings before income taxes 29,193 10,703 18,490 172.8%
Income taxes 11,385 4,064 7,321 180.1%
-------- --------
Net earnings 17,808 6,639 11,169 168.2%
======== ========
Earnings per share:
Basic 0.20 0.07 0.13 185.7%
======== ========
Diluted 0.20 0.07 0.13 185.7%
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
-----------------------------------
June 30, March 31, $ %
2006 2006 Variance Variance
-----------------------------------
Revenue:
Services 261,892 257,591 4,301 1.7%
Data 74,813 86,752 (11,939) (13.8%)
-------- --------
Total revenue 336,705 344,343 (7,638) (2.2%)
Operating costs and expenses:
Cost of revenue
Services 196,073 196,428 (355) (0.2%)
Data 49,572 52,142 (2,570) (4.9%)
-------- --------
Total cost of revenue 245,645 248,570 (2,925) (1.2%)
Services gross margin 25.1% 23.7%
Data gross margin 33.7% 39.9%
Total gross margin 27.0% 27.8%
Selling, general and
administrative 54,745 51,642 3,103 6.0%
Gains, losses and
nonrecurring items, net - (456) 456 (100.0%)
-------- --------
Total operating costs
and expenses 300,390 299,756 634 0.2%
-------- --------
Income from operations 36,315 44,587 (8,272) (18.6%)
-------- --------
Other income (expense):
Interest expense (7,769) (7,531) (238) 3.2%
Other, net 647 135 512 379.3%
-------- --------
Total other income (expense) (7,122) (7,396) 274 (3.7%)
-------- --------
Earnings before income taxes 29,193 37,191 (7,998) (21.5%)
Income taxes 11,385 14,132 (2,747) (19.4%)
-------- --------
Net earnings 17,808 23,059 (5,251) (22.8%)
======== ========
Earnings per share:
Basic 0.20 0.27 (0.07) (25.9%)
======== ========
Diluted 0.20 0.26 (0.06) (23.1%)
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the
Three Months Ended
June 30, June 30, March 31,
2006 2005 2006
------- ------- -------
Basic earnings per share:
Numerator - net earnings 17,808 6,639 23,059
Denominator - weighted-average shares
outstanding 88,155 91,044 86,981
------- ------- -------
Basic earnings per share 0.20 0.07 0.27
======= ======= =======
Diluted earnings per share:
Numerator - net earnings
Net earnings 17,808 6,639 23,059
Denominator:
Weighted-average shares
outstanding 88,155 91,044 86,981
Dilutive effect of common stock
options, warrants and
restricted stock 2,268 2,752 2,855
------- ------- -------
90,423 93,796 89,836
------- ------- -------
Diluted earnings per share 0.20 0.07 0.26
======= ======= =======
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
June 30, June 30, March 31,
Revenue: 2006 2005 2006
-------- -------- --------
US services & data 291,419 265,434 295,795
International services & data 45,286 44,837 48,548
-------- -------- --------
Total revenue 336,705 310,271 344,343
======== ======== ========
US supplemental information:
Services & data excluding IT mgmt 201,242 178,632 206,853
IT management services 90,177 86,802 88,942
-------- -------- --------
291,419 265,434 295,795
======== ======== ========
International supplemental information:
Services & data excluding IT mgmt 45,286 44,837 48,548
======== ======== ========
Income from operations:
US services & data 35,950 14,717 40,794
International services & data 365 (1,380) 3,337
Corporate & other 0 1,637 456
-------- -------- --------
Total income from operations 36,315 14,974 44,587
======== ======== ========
Margin:
US services & data 12.3% 5.5% 13.8%
International services & data 0.8% -3.1% 6.9%
Total margin 10.8% 4.8% 12.9%
ACXIOM CORPORATION AND SUBSIDIARIES
DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
June 30, June 30, $ %
2006 2005 Variance Variance
------------------------------------------------
Data 54,530 53,218 1,312 2.5%
Passthrough data 20,283 18,554 1,729 9.3%
---------- -----------
Total data revenue 74,813 71,772 3,041 4.2%
========== ===========
Cost of data revenue:
Data 29,289 30,331 (1,042) (3.4%)
Passthrough data 20,283 18,554 1,729 9.3%
---------- -----------
Total cost of data 49,572 48,885 687 1.4%
========== ===========
Margin:
Data 46.3% 43.0%
Passthrough data 0.0% 0.0%
Total data 33.7% 31.9%
For the Three Months Ended
March 31, $ %
2006 Variance Variance
-------------------------------------
Data 66,176 (11,646) (17.6%)
Passthrough data 20,576 (293) (1.4%)
----------
Total data revenue 86,752 (11,939) (13.8%)
==========
Cost of data revenue:
Data 31,566 (2,277) (7.2%)
Passthrough data 20,576 (293) (1.4%)
----------
Total cost of data 52,142 (2,570) (4.9%)
==========
Margin:
Data 52.3%
Passthrough data 0.0%
Total data 39.9%
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
June 30, March 31, $ %
2006 2006 Variance Variance
Assets ---------- ---------- -----------------
------
Current assets:
Cash and cash equivalents 4,163 7,705 (3,542) (46.0%)
Trade accounts receivable,
net 264,933 261,624 3,309 1.3%
Deferred income taxes 24,517 24,587 (70) (0.3%)
Other current assets 45,204 44,937 267 0.6%
---------- ----------
Total current assets 338,817 338,853 (36) (0.0%)
---------- ----------
Property and equipment 685,515 662,948 22,567 3.4%
Less - accumulated
depreciation and
amortization 353,633 329,177 24,456 7.4%
---------- ----------
Property and equipment, net 331,882 333,771 (1,889) (0.6%)
---------- ----------
Software, net of accumulated
amortization 41,313 45,509 (4,196) (9.2%)
Goodwill 477,291 472,401 4,890 1.0%
Purchased software licenses,
net of accumulated
amortization 161,814 155,518 6,296 4.0%
Unbilled and notes receivable,
excluding current portions 17,188 19,139 (1,951) (10.2%)
Deferred costs, net 116,651 112,817 3,834 3.4%
Data acquisition costs 38,712 40,828 (2,116) (5.2%)
Other assets, net 21,379 21,662 (283) (1.3%)
---------- ----------
1,545,047 1,540,498 4,549 0.3%
========== ==========
Liabilities and
Stockholders' Equity
----------------------
Current liabilities:
Current installments of
long-term obligations 96,701 93,518 3,183 3.4%
Trade accounts payable 41,905 44,144 (2,239) (5.1%)
Accrued payroll and related
expenses 27,487 32,139 (4,652) (14.5%)
Other accrued expenses 79,345 81,428 (2,083) (2.6%)
Deferred revenue 112,313 123,916 (11,603) (9.4%)
Income taxes 9,759 4,845 4,914 101.4%
Dividends payable 4,403 - 4,403 -
---------- ----------
Total current liabilities 371,913 379,990 (8,077) (2.1%)
---------- ----------
Long-term obligations:
Long-term debt and capital
leases, net of current
installments 345,992 353,692 (7,700) (2.2%)
Software and data licenses,
net of current installments 28,854 22,723 6,131 27.0%
---------- ----------
Total long-term
obligations 374,846 376,415 (1,569) (0.4%)
---------- ----------
Deferred income taxes 77,735 77,916 (181) (0.2%)
Commitments and contingencies
Stockholders' equity:
Common stock 10,985 10,946 39 0.4%
Additional paid-in capital 685,086 677,026 8,060 1.2%
Unearned stock-based
compensation (1,736) (1,941) 205 (10.6%)
Retained earnings 423,683 410,278 13,405 3.3%
Accumulated other
comprehensive loss 8,637 2,205 6,432 291.7%
Treasury stock, at cost (406,102) (392,337) (13,765) 3.5%
---------- ----------
Total stockholders' equity 720,553 706,177 14,376 2.0%
---------- ----------
1,545,047 1,540,498 4,549 0.3%
========== ==========
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three
Months Ended
June 30,
------------------
2006 2005
------------------
Cash flows from operating activities:
Net earnings 17,808 6,639
Non-cash operating activities:
Depreciation and amortization 59,047 55,534
Loss (gain) on disposal or impairment of
assets, net (84) 43
Deferred income taxes (233) 3,635
Non-cash stock compensation expense 553 298
Changes in operating assets and liabilities:
Accounts receivable (1,796) 17,297
Other assets 3,186 (17,945)
Accounts payable and other liabilities (9,743) 917
Deferrred revenue (12,388) (4,942)
-------- --------
Net cash provided by operating activities 56,350 61,476
-------- --------
Cash flows from investing activities:
Capitalized software (5,719) (5,673)
Capital expenditures (217) (2,929)
Cash collected from the sale and license of
software 5,000 -
Deferral of costs (16,887) (16,192)
Payments received from investments 783 721
Net cash paid in acquisitions - (106,719)
-------- --------
Net cash used by investing activities (17,040) (130,792)
-------- --------
Cash flows from financing activities:
Proceeds from debt 28,873 281,706
Payments of debt (67,866) (54,130)
Dividends paid - (4,432)
Sale of common stock 6,773 13,527
Acquisition of treasury stock (11,965) (160,354)
Tax benefit of stock options exercised 1,079 -
-------- --------
Net cash used by financing activities (43,106) 76,317
-------- --------
Effect of exchange rate changes on cash 254 (297)
-------- --------
Net increase in cash and cash equivalents (3,542) 6,704
Cash and cash equivalents at beginning of period 7,705 4,185
-------- --------
Cash and cash equivalents at end of period 4,163 10,889
======== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest 7,830 4,397
Income taxes 5,268 190
Payments on capital leases and installment
payment arrangements 18,905 19,929
Payments on software and data license
liabilities 7,847 10,938
Other debt payments, excluding line of credit 1,711 1,357
Noncash investing and financing activities:
Issuance of options for acquisition - 7,541
Software licenses and maintenance acquired
under software obligation 15,266 2,161
Acquisition of property and equipment
under capital lease and installment
payment arrangements 19,426 26,458
Construction and other financing 5,904 3,654
ACXIOM CORPORATION AND SUBSIDIARIES
FREE CASH FLOW DEFINITION
-- There has been discussion over Acxiom's Free Cash Flow definition
-- No single universally accepted definition of Free Cash Flow exists
-- Acxiom's goal is to communicate Free Cash Flow available to equity
vs. available for debt service
-- Going forward calculation will continue to be transparent and
consistent with an equity Free Cash Flow point of view
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY (Q1 FY07 Comparison)
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
Old New Change
------------------ ---------------
06/30/06 06/30/06 $ %
------------------ ---------------
Net cash provided by operating
activities 56,350 56,350 - 0.0%
Less:
Tax benefit of stock options
and warrants - - - -
------------------ ---------------
Subtotal 56,350 56,350 - 0.0%
Plus:
Proceeds received from the
disposition of operations - - - -
Proceeds received from the
disposition of assets - - - -
Payments received from
investments - 783 783 -
Less:
Capitalized software (5,719) (5,719) - 0.0%
Capital expenditures (217) (217) - 0.0%
Deferral of costs (16,887) (16,887) - 0.0%
Payments on capital leases and
installment payment
arrangements - (18,905) (18,905) -
Payments on software and data
license liabilities - (7,847) (7,847) -
Other required debt payments - (1,711) (1,711) -
------------------ ---------------
Subtotal 33,527 5,847 (27,680) -82.6%
Plus:
Tax benefit of stock options
and warrants 1,079 1,079 - 0.0%
------------------ ---------------
Subtotal 34,606 6,926 (27,680) -80.0%
Plus:
Cash collected from sale of
software 5,000 5,000 - 0.0%
------------------ ---------------
Total 39,606 11,926 (27,680) -69.9%
================== ===============
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY (FY06 Comparison)
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
Old New Change
---------------- ----------------
FY 2006 FY 2006 $ %
---------------- ----------------
Net cash provided by operating
activities 275,833 275,833 - 0.0%
Less:
Tax benefit of stock options
and warrants - (19,097) (19,097) -
---------------- ----------------
Subtotal 275,833 256,736 (19,097) -6.9%
Plus:
Proceeds received from the
disposition of operations - 4,844 4,844 -
Proceeds received from the
disposition of assets 5,123 5,123 - 0.0%
Payments received from
investments - 3,760 3,760 -
Less:
Capitalized software (21,903)(21,903) - 0.0%
Capital expenditures (6,848) (6,848) - 0.0%
Deferral of costs (70,454)(70,454) - 0.0%
Payments on capital leases and
installment payment
arrangements - (72,232) (72,232) -
Payments on software and data
license liabilities - (29,069) (29,069) -
Other required debt payments - (9,302) (9,302) -
---------------- ----------------
Subtotal 181,751 60,655 (121,096) -66.6%
Plus:
Tax benefit of stock options
and warrants - 19,097 19,097 -
---------------- ----------------
Subtotal 181,751 79,752 (101,999) -56.1%
Plus:
Cash collected from sale of
software 20,000 20,000 - 0.0%
---------------- ----------------
Total 201,751 99,752 (101,999) -50.6%
================ ================
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
-------------------------------------------- --------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006 06/30/06
-------------------------------------------- --------
Net cash provided
by operating
activities 61,476 44,785 95,414 74,158 275,833 56,350
Less:
Tax benefit
of stock
options and
warrants - - - (19,097)(19,097) -
-------------------------------------------- --------
Subtotal 61,476 44,785 95,414 55,061 256,736 56,350
Plus:
Proceeds
received
from the
disposition
of
operations - 1,529 3,315 - 4,844 -
Proceeds
received
from the
disposition
of assets - 3,613 1,510 - 5,123 -
Payments
received
from
investments 721 41 2,093 905 3,760 783
Less:
Capitalized
software (5,673) (5,809) (5,204) (5,217)(21,903) (5,719)
Capital
expenditures (2,929) (3,025) (401) (493) (6,848) (217)
Deferral of
costs (16,192) (18,703) (19,603) (15,956)(70,454) (16,887)
Payments on
capital
leases and
installment
payment
arrangements(19,929) (15,967) (17,994) (18,342)(72,232) (18,905)
Payments on
software and
data license
liabilities (10,938) (5,328) (7,344) (5,459)(29,069) (7,847)
Other
required
debt
payments (1,357) (2,434) (1,715) (3,796) (9,302) (1,711)
-------------------------------------------- --------
Subtotal 5,179 (1,298) 50,071 6,703 60,655 5,847
Plus:
Tax benefit
of stock
options and
warrants - - - 19,097 19,097 1,079
-------------------------------------------- --------
Subtotal 5,179 (1,298) 50,071 25,800 79,752 6,926
Plus:
Cash
collected
from sale of
software - - 20,000 - 20,000 5,000
-------------------------------------------- --------
Total 5,179 (1,298) 70,071 25,800 99,752 11,926
============================================ ========
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW (Old Format)
(Unaudited)
(Dollars in thousands)
-------------------------------------------- --------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006 06/30/06
-------------------------------------------- --------
Net cash provided
by operating
activities 61,476 44,785 95,414 74,158 275,833 56,350
Less:
Tax benefit
of stock
options and
warrants - - - - - -
-------------------------------------------- --------
Subtotal 61,476 44,785 95,414 74,158 275,833 56,350
Plus:
Proceeds
received
from the
disposition
of
operations - - - - - -
Proceeds
received
from the
disposition
of assets - 3,613 1,510 - 5,123 -
Payments
received
from
investments - - - - - -
Less:
Capitalized
software (5,673) (5,809) (5,204) (5,217)(21,903) (5,719)
Capital
expenditures (2,929) (3,025) (401) (493) (6,848) (217)
Deferral of
costs (16,192) (18,703) (19,603) (15,956)(70,454) (16,887)
Payments on
capital
leases and
installment
payment
arrangements - - - - - -
Payments on
software and
data license
liabilities - - - - - -
Other
required
debt
payments - - - - - -
-------------------------------------------- --------
Subtotal 36,682 20,861 71,716 52,492 181,751 33,527
Plus:
Tax benefit
of stock
options and
warrants - - - - - 1,079
-------------------------------------------- --------
Subtotal 36,682 20,861 71,716 52,492 181,751 34,606
Plus:
Cash
collected
from sale of
software - - 20,000 - 20,000 5,000
-------------------------------------------- --------
Total 36,682 20,861 91,716 52,492 201,751 39,606
============================================ ========
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF FREE CASH FLOW AS REPORTED
(Unaudited)
(Dollars in thousands)
-------------------
FY 2005 FY 2006
-------------------
Free cash flow as previously reported 158,962 201,751
Plus:
Proceeds received from the disposition
of operations - 4,844
Payments received from investments 2,533 3,760
-------------------
Subtotal free cash flow available for debt service 161,495 210,355
Less:
Required payments of debt 94,105 110,603
-------------------
Total free cash flow available to equity 67,390 99,752
===================
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
-------------------------------------------- ---------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006 06/30/06
-------------------------------------------- ---------
Revenue:
Services 238,499 253,193 263,266 257,591 1,012,549 261,892
Data 71,772 77,330 84,165 86,752 320,019 74,813
-------------------------------------------- ---------
Total revenue 310,271 330,523 347,431 344,343 1,332,568 336,705
Operating costs
and expenses:
Cost of
revenue
Services 194,349 191,883 189,502 196,428 772,162 196,073
Data 48,885 52,124 48,799 52,142 201,950 49,572
-------------------------------------------- ---------
Total cost of
revenue 243,234 244,007 238,301 248,570 974,112 245,645
Selling, general
and
administrative 53,700 54,902 57,625 51,642 217,869 54,745
Gains, losses and
nonrecurring
items, net (1,637) 12,799 (1,202) (456) 9,504 0
-------------------------------------------- ---------
Total operating
costs and
expenses 295,297 311,708 294,724 299,756 1,201,485 300,390
Income from
operations 14,974 18,815 52,707 44,587 131,083 36,315
% Margin 4.8% 5.7% 15.2% 12.9% 9.8% 10.8%
Other income
(expense)
Interest
expense (5,162) (7,416) (8,635) (7,531) (28,744) (7,769)
Other, net 891 1,050 (71) 135 2,005 647
-------------------------------------------- ---------
Total other
income
(expense) (4,271) (6,366) (8,706) (7,396) (26,739) (7,122)
Earnings before
income taxes 10,703 12,449 44,001 37,191 104,344 29,193
Income taxes 4,064 5,300 16,720 14,132 40,216 11,385
-------------------------------------------- ---------
Net earnings 6,639 7,149 27,281 23,059 64,128 17,808
============================================ =========
Diluted earnings
(loss) per
share 0.07 0.08 0.31 0.26 0.71 0.20
============================================= =========
Q1 FY06 to Q1 Q4 FY06 to Q1
FY07 FY07
---------------- ----------------
% $ % $
---------------- ----------------
Revenue:
Services 9.8% 23,393 1.7% 4,301
Data 4.2% 3,041 -13.8% (11,939)
---------------- ----------------
Total revenue 8.5% 26,434 -2.2% (7,638)
Operating costs and
expenses:
Cost of revenue
Services 0.9% 1,724 -0.2% (355)
Data 1.4% 687 -4.9% (2,570)
---------------- ----------------
Total cost of
revenue 1.0% 2,411 -1.2% (2,925)
Selling, general and
administrative 1.9% 1,045 6.0% 3,103
Gains, losses and
nonrecurring items,
net -100.0% 1,637 -100.0% 456
---------------- ----------------
Total operating
costs and
expenses 1.7% 5,093 0.2% 634
Income from
operations 142.5% 21,341 -18.6% (8,272)
% Margin
Other income
(expense)
Interest expense 50.5% (2,607) 3.2% (238)
Other, net -27.4% (244) 379.3% 512
---------------- ----------------
Total other income
(expense) 66.8% (2,851) -3.7% 274
Earnings before
income taxes 172.8% 18,490 -21.5% (7,998)
Income taxes 180.1% 7,321 -19.4% (2,747)
---------------- ----------------
Net earnings 168.2% 11,169 -22.8% (5,251)
================ ================
Diluted earnings
(loss) per
share 185.7% 0.13 -23.1% (0.06)
================ ================
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - INTERNAL FORMAT
(Unaudited)
(Dollars in thousands, except earnings per share)
----------------------------------------------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006
----------------------------------------------
Revenue 310,271 330,523 347,431 344,343 1,332,568
Operating costs and
expenses:
Salaries and benefits 126,264 127,325 129,888 132,579 516,056
Computer,
communications
and other equipment 77,647 76,250 73,614 71,730 299,241
Data costs 41,831 44,752 42,021 44,593 173,197
Other operating costs
and expenses 51,192 50,582 50,403 51,310 203,487
Gains, losses and
nonrecurring items,
net (1,637) 12,799 (1,202) (456) 9,504
----------------------------------------------
Total operating
costs and
expenses 295,297 311,708 294,724 299,756 1,201,485
----------------------------------------------
Income (loss) from
operations 14,974 18,815 52,707 44,587 131,083
----------------------------------------------
Operating Margin 4.8% 5.7% 15.2% 12.9% 9.8%
Other income (expense):
Interest expense (5,162) (7,416) (8,635) (7,531) (28,744)
Other, net 891 1,050 (71) 135 2,005
----------------------------------------------
(4,271) (6,366) (8,706) (7,396) (26,739)
----------------------------------------------
Earnings (loss) before
income taxes 10,703 12,449 44,001 37,191 104,344
----------------------------------------------
Income taxes 4,064 5,300 16,720 14,132 40,216
----------------------------------------------
Net earnings (loss) 6,639 7,149 27,281 23,059 64,128
==============================================
Diluted earnings
(loss) per share 0.07 0.08 0.31 0.26 0.71
==============================================
FY07 FY07
--------- ---------------- --------------
06/30/06 % $ % $
--------- ---------------- --------------
Revenue 336,705 8.5% 26,434 -2.2% (7,638)
Operating costs and
expenses:
Salaries and benefits 135,917 7.6% 9,653 2.5% 3,338
Computer,
communications
and other equipment 73,119 -5.8% (4,528) 1.9% 1,389
Data costs 43,372 3.7% 1,541 -2.7% (1,221)
Other operating costs
and expenses 47,982 -6.3% (3,210) -6.5% (3,328)
Gains, losses and
nonrecurring items,
net 0 -100.0% 1,637 -100.0% 456
--------- ---------------- --------------
Total operating
costs and
expenses 300,390 1.7% 5,093 0.2% 634
--------- ---------------- --------------
Income (loss) from
operations 36,315 142.5% 21,341 -18.6% (8,272)
--------- ---------------- --------------
Operating Margin 10.8%
Other income (expense):
Interest expense (7,769) 50.5% (2,607) 3.2% (238)
Other, net 647 -27.4% (244) 379.3% 512
--------- ---------------- --------------
(7,122) 66.8% (2,851) -3.7% 274
--------- ---------------- --------------
Earnings (loss) before
income taxes 29,193 172.8% 18,490 -21.5% (7,998)
--------- ---------------- --------------
Income taxes 11,385 180.1% 7,321 -19.4% (2,747)
--------- ---------------- --------------
Net earnings (loss) 17,808 168.3% 11,169 -22.8% (5,251)
========= ================ ==============
Diluted earnings
(loss) per share 0.20 185.7% 0.13 -23.1% (0.06)
========= ================ ==============
ACXIOM CORPORATION AND SUBSIDIARIES
MARGIN ANALYSIS
(Unaudited)
--------------------------------------------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006
--------------------------------------------
Gross profit 67,037 86,516 109,130 95,773 358,456
Gross margin 21.6% 26.2% 31.4% 27.8% 26.9%
Operating margin 4.8% 5.7% 15.2% 12.9% 9.8%
Services gross profit 44,150 61,310 73,764 61,163 240,387
Services gross margin 18.5% 24.2% 28.0% 23.7% 23.7%
Data gross profit 22,887 25,206 35,366 34,610 118,069
Data gross margin 31.9% 32.6% 42.0% 39.9% 36.9%
Q1 FY06 to Q4 FY06 to
Q1 FY07 Q1 FY07
--------- --------------- -----------------
06/30/06 % $ % $
--------- --------------- -----------------
Gross profit 91,060 35.8% 24,023 -4.9% (4,713)
Gross margin 27.0%
Operating margin 10.8%
Services gross profit 65,819 49.1% 21,669 7.6% 4,656
Services gross margin 25.1%
Data gross profit 25,241 10.3% 2,354 -27.1% (9,369)
Data gross margin 33.7%
ACXIOM CORPORATION AND SUBSIDIARIES
EXPENSE TREND ANALYSIS
(Unaudited)
------------------------------------------ ---------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006 06/30/06
------------------------------------------ ---------
Salaries and
benefits % of
revenue 40.7% 38.5% 37.4% 38.5% 38.7% 40.4%
Computer,
communications
and other
equipment % of
revenue 25.0% 23.1% 21.2% 20.8% 22.5% 21.7%
Data costs % of
revenue 13.5% 13.5% 12.1% 13.0% 13.0% 12.9%
Other operating
costs and
expenses % of
revenue 16.5% 15.3% 14.5% 14.9% 15.3% 14.3%
Total operating
costs and
expenses % of
revenue 95.2% 94.3% 84.8% 87.1% 90.2% 89.2%
SG&A % of revenue 17.3% 16.6% 16.6% 15.0% 16.3% 16.3%
ACXIOM CORPORATION
Financial Road Map(1)
---------------------
(as of June 30, 2006)
------------------ ------------------
Actual Actual
Years Ending March 31, Fiscal 2006 Q1 Fiscal 2007
------------------ ------------------
U.S. Revenue Growth 13.6% 9.8%
U.S. Revenue $1,148 million $291 million
International Revenue Growth -13.0% 1.0%
International Revenue $185 million $45 million
U.S. Operating Margin 11.6% 12.3%
Adjusted U.S. Operating Margin 12.4%(3)
International Operating Margin -1.1% 0.8%
Adjusted International Operating
Margin 2.5%(3)
Return on Assets(2) 8.5% 9.8%
Adjusted Return on Assets(2) 9.5%(3) 10.8%(3)
Return on Invested Capital(2) 11.4%(3) 12.8%(3)
Operating Cash Flow $276 million $56 million
Free Cash Flow to $100 million $12 million
Equity
Revolving Credit Line $252 million $242 million
Balance
Dividends Per Share $0.20 $0.05
------------------- -----------------
Target Long-Term Goals
Years Ending March 31, Fiscal 2007 Fiscal 2010
------------------- -----------------
U.S. Revenue Growth 7% to 10% 8% to 11% (CAGR)
U.S. Revenue $1,230 to $1,260 mil -
International Revenue Growth 0% to 5% 5% to 8% (CAGR)
International Revenue $180 to $190 mil -
U.S. Operating Margin 14% to 15% 16% to 18%
Adjusted U.S. Operating Margin
International Operating Margin 2% to 4% 12% to 15%
Adjusted International Operating
Margin
Return on Assets(2) 11% to 13% 14% to 17%
Adjusted Return on Assets(2)
Return on Invested Capital(2) 13% to 15% 16% to 19%
Operating Cash Flow $280 to $300 mil $320 to $360 mil
Free Cash Flow to $113 to $133 mil $140 to $160 mil
Equity
Revolving Credit Line less than $500 mil less than $500 mil
Balance
Dividends Per Share $0.22 $0.24 to $0.28
-------------------
(1) Assumptions and definitions are defined on the following schedule:
"Financial Road Map assumptions and definitions"
(2) ROA and ROIC are calculated on a trailing 4 quarters basis.
(3) Results exclude unusual charges of $9.1 million for U.S. and $6.7
million for International in the quarter ended September 30, 2005.
These charges are excluded when calculating performance compared
to the Road Map since they were not considered in setting the Road
Map target. All other time periods are as reported for GAAP.
ACXIOM CORPORATION
Financial Road Map Assumptions and Definitions
----------------------------------------------
Assumptions
-----------
1. The effective tax rate is projected to be 38-39% for future years.
2. Interest rates are assumed to increase slightly over the current
levels.
3. Excluding acquired credits, the Company expects to utilize all of
its federal credits and begin paying regular tax in fiscal 2007.
The Company expects to gradually begin paying state taxes as state
NOLs are utilized.
4. The Company will pay incentives under its bonus plan of $15 to $25
million for each of the years beginning in fiscal 2007 based on
achievement of the Company's business plan.
5. The Company will maintain a relatively constant mix of business for
each of its three business segments.
6. Foreign exchange rates will remain at approximately the current
levels.
7. Stock repurchases will be in amounts that yield the highest
shareholder return considering all other uses for the available
cash.
8. Diluted outstanding shares will increase slightly to reflect the
impact of in-the-money options as the stock price increases.
9. Long-term goals are based on the Company's current assessment of
opportunities and are subject to change. There are risks associated
with obtaining these goals which are explained under forward
looking statements in the press release accompanying this Financial
Road Map. Acxiom disclaims any obligation to update the information
contained in this Financial Road Map.
Definitions
-----------
1. Revenue Growth is defined as the percentage growth compared to the
previous corresponding fiscal year or comparable period.
2. Operating Margin is defined as the income from operations as a
percentage of revenue.
3. Return on Assets (ROA) is defined as income from operations divided
by average total assets for the trailing four quarters.
4. Return on Invested Capital (ROIC) is defined as income from
operations adjusted for the implied interest expense included in
operating leases divided by the trailing four quarters' average
invested capital. The implied interest adjustment for operating
leases is calculated by multiplying the average quarterly balances
of the present value of operating leases ((beginning balance +
ending balance)/2) x an 8% implied interest rate on the leases.
Average invested capital is defined as the trailing four-quarter
average of the ending quarterly balances for total assets less
operating cash, less non-interest bearing liabilities, plus the
present value of operating leases.
5. Operating Cash Flow is as shown on the Company's cash flow
statement.
6. Free Cash Flow to Equity is defined as cash flow from operating
activities plus or minus cash flow from investing activities
(excluding net cash paid for acquisitions), less required payments
of debt (total debt payments excluding payments on the line of
credit).
7. Revolving Credit Line Balance is defined as actual funds borrowed
under the Company's revolving line of credit facility at the end of
the period.
8. Dividends Per Share is defined as the sum of the dividends for that
period.
Reconciliation of Non-GAAP Measurements
---------------------------------------
(Dollars in thousands)
----------------- -----------------
Actual Actual
Years Ending March 31, Fiscal 2006 Q1 Fiscal 2007
----------------- -----------------
U.S. Operating Margin
---------------------
U.S. Revenue 1,147,641 291,419
U.S. Operating Income 133,072 35,950
U.S. Operating Income Margin 11.6% 12.3%
Gains, losses and nonrecurring
items, net 6,147 0
ValueAct Defense 2,216 0
Lawsuit Expenses 761 0
-------------- --------------
Adjusted U.S. Operating Income(1) 142,196 35,950
Adjusted U.S. Operating Income
Margin(1) 12.4% 12.3%
============== ==============
International Operating Margin
------------------------------
International Revenue 184,927 45,286
International Operating Income (1,991) 365
International Operating Income
Margin -1.1% 0.8%
Gains, losses and
nonrecurring items,
net 6,652 0
-------------- --------------
Adjusted International Operating
Income(1) 4,661 365
Adjusted International Operating
Income Margin(1) 2.5% 0.8%
============== ==============
----------------------------------------------------------------------
Free Cash Flow to Equity
------------------------
Net cash provided by
operating activities 275,833 56,350
Plus: Proceeds received from
disposition of assets 5,123 0
Proceeds received from
disposition of operations 4,844 0
Cash received from investments 3,760 783
Tax benefit of stock option
and warrant exercise 0 1,079
Proceeds received from sale
of software 20,000 5,000
-------------- --------------
33,727 6,862
Less: Capitalized software (21,903) (5,719)
Capital expenditures (6,848) (217)
Deferral of costs (70,454) (16,887)
Capital lease and
installment payments (72,232) (18,905)
Software and data license
liability payments (29,069) (7,847)
Other debt payments (9,302) (1,711)
-------------- --------------
(209,808) (51,286)
-------------- --------------
Free cash flow to equity 99,752 11,926
============== ==============
---------------------- --------------------
Target Long-Term Goals
Fiscal 2007 Fiscal 2010
---------------------- --------------------
Free Cash Flow to Equity Low High Low High
------------------------ ---------------------- --------------------
Net cash provided by
operating activities 280,000 300,000 320,000 360,000
Plus: Proceeds received
from disposition of
assets 0 0 0 0
Proceeds received
from disposition of
operations 0 0 0 0
Cash received from
investments 1,000 1,000 0 0
Tax benefit of stock
option and
warrant exercise 7,000 7,000 10,000 10,000
Proceeds received
from sale of
software 10,000 10,000 0 0
--------- ----------- --------- ---------
18,000 18,000 10,000 10,000
Less: Capitalized software (20,000) (20,000) (20,000) (25,000)
Capital expenditures (7,000) (7,000) (10,000) (10,000)
Deferral of costs (60,000) (60,000) (65,000) (75,000)
Capital lease and
installment payments (60,000) (60,000) (65,000) (70,000)
Software and data
license liability
payments (28,000) (28,000) (25,000) (25,000)
Other debt payments (10,000) (10,000) (5,000) (5,000)
--------- ----------- --------- ---------
(185,000) (185,000) (190,000) (210,000)
--------- ----------- --------- ---------
Free cash flow to equity 113,000 to 133,000 140,000 to 160,000
========= =========== ========= =========
Free cash flow to equity as defined by the Company may not be
comparable to similarly titled measures reported by other companies.
Management of the Company has included free cash flow to equity in
this Financial Road Map representing the amount of money available for
the Company's discretionary spending. Management believes that it
provides investors with a useful alternative measure of liquidity by
allowing an assessment of the amount of cash available for general
corporate and strategic purposes after funding operating activities
and capital expenditures, capitalized software expenses, deferred
costs and required debt repayments. The above table reconciles free
cash flow to equity to cash provided by operating activities, the
nearest comparable GAAP measure.
Notes
-----
(1) Results exclude unusual charges of $9.1 million for U.S. and $6.7
million for International in the quarter ended September 30, 2005.
These charges are excluded when calculating performance compared
to the Road Map since they were not considered in setting the Road
Map target. All other time periods are as reported for GAAP.
Reconciliation of Non-GAAP Measurements
---------------------------------------
(Dollars in thousands)
--------------------------------
Actual
Fiscal 2006
--------------------------------
Return on Assets (ROA)
and Return on Invested Adjusted
Capital (ROIC)(5) ROA ROA ROIC
------------------ --------------------------------
Numerator:
Income from operations 131,083 131,083 131,083
Unusual Charges, Net(6) 15,776 15,776
Add implied interest on
operating leases(1) 11,696
--------------------------------
131,083 146,859 158,554
--------------------------------
Denominator:
Average total assets(2) 1,549,933 1,549,933 1,549,933
Less average cash(3) (8,616)
Less average non-interest
bearing current liabilities(4) (288,063)
Plus average present value of
operating leases(1) 135,190
--------------------------------
1,549,933 1,549,933 1,388,444
--------------------------------
Return on invested capital 8.5% 9.5% 11.4%
================================
--------------------------------
Actual
Q1 Fiscal 2007
--------------------------------
Return on Assets (ROA)
and Return on Invested Adjusted
Capital (ROIC)(5) ROA ROA ROIC
------------------ --------------------------------
Numerator:
Income from operations 152,424 152,424 152,424
Unusual Charges, Net(6) 15,776 15,776
Add implied interest on
operating leases(1) 10,674
--------------------------------
152,424 168,200 178,874
--------------------------------
Denominator:
Average total assets(2) 1,554,756 1,554,756 1,554,756
Less average cash(3) (6,934)
Less average non-interest
bearing current liabilities(4) (285,462)
Plus average present value of
operating leases(1) 132,750
--------------------------------
1,554,756 1,554,756 1,395,110
--------------------------------
Return on invested capital 9.8% 10.8% 12.8%
================================
--------------------------------------------
Target
Fiscal 2007
--------------------------------------------
Return on Assets (ROA) ROA ROIC
and Return on Invested --------------------------------------------
Capital (ROIC)(5) Low High Low High
------------------ --------------------------------------------
Numerator:
Income from operations 175,500 196,900 175,500 196,900
Unusual Charges, Net(6)
Add implied interest on
operating leases(1) 11,000 11,000
--------------------------------------------
175,500 196,900 186,500 207,900
--------------------------------------------
Denominator:
Average total assets(2) 1,550,000 1,575,000 1,550,000 1,550,000
Less average cash(3) (10,000) (10,000)
Less average
non-interest bearing
current liabilities(4) (277,000) (288,000)
Plus average present
value of operating
leases(1) 133,000 133,000
--------------------------------------------
1,550,000 1,575,000 1,396,000 1,385,000
--------------------------------------------
Return on invested capital 11% to 13% 13% to 15%
============================================
--------------------------------------------
Long-Term Goals
Fiscal 2010
--------------------------------------------
Return on Assets (ROA) ROA ROIC
and Return on Invested --------------------------------------------
Capital (ROIC)(5) Low High Low High
------------------ --------------------------------------------
Numerator:
Income from operations 268,600 337,600 268,600 337,600
Unusual Charges, Net(6)
Add implied interest on
operating leases(1) 9,000 9,000
--------------------------------------------
268,600 337,600 277,600 346,600
--------------------------------------------
Denominator:
Average total assets(2) 1,860,000 1,960,000 1,860,000 1,960,000
Less average cash(3) (10,000) (10,000)
Less average
non-interest bearing
current liabilities(4) (261,000) (285,000)
Plus average present
value of operating
leases(1) 114,000 114,000
--------------------------------------------
1,860,000 1,960,000 1,703,000 1,779,000
--------------------------------------------
Return on invested capital 14% to 17% 16% to 19%
============================================
Notes
-----
(1) Average present value of operating leases is the average for the
trailing 4 quarter ends of the present value of future payments on
operating leases, discounted at 8% which is the assumed implicit
interest rate included in the leases. The implied interest added
to the numerator is the 8% assumed interest charge on the average
quarterly balance ((beginning + Ending) / 2) of the present value
of the leases.
(2) Average total assets is the average of the GAAP amount for the
trailing 4 quarter ends.
(3) Average cash is the average of the GAAP amount for the trailing 4
quarter ends. Future cash balances above $10.0 million are assumed
to be invested at money market rates and are excluded from this
operating cash adjustment.
(4) Average non-interest bearing current liabilities is the average
for the trailing 4 quarter ends of all current liabilities
excluding the current portion of long-term debt.
(5) ROA and ROIC figures are calculated on a trailing 4 quarters
basis.
(6) Results exclude unusual charges of $9.1 million for U.S. and $6.7
million for International in the quarter ended September 30, 2005.
These charges are excluded when calculating performance compared
to the Road Map since they were not considered in setting the Road
Map target. All other time periods are as reported for GAAP.
Return on Invested Capital (ROIC) as defined by the Company, may not
be comparable to similarly titled measures reported by other
companies. Management of the Company has included ROIC in this
Financial Road Map because it measures the capital efficiency of our
business. ROIC does not consider whether the business is financed with
debt or equity; rather ROIC calculates a return on all capital
invested in the business. The above table reconciles ROIC to a ROA
calculation using GAAP numbers. The Company uses ROIC in a number of
ways, including pricing analysis, capital expenditure evaluation, and
merger and acquisition valuation.
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