Acxiom Announces Second-Quarter Results; Revenue Growth Highlights Company Performance.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 second quarter of fiscal 2006 ended September September: see month. 30, 2005. Revenue for the quarter was $330.5 million, income from operations was $18.8 million, pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings were $12.4 million, and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) were $.08. These results include the impact of net pre-tax charges of $15.8 million associated with the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan, the sale of non-strategic operations and two unusual items explained below. The impact of these items on net earnings after tax was $10.4 million, which reduced 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. EPS by $.12 for the quarter. 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. "During our second quarter, we saw 11 percent year-over-year revenue improvement, the expense-reduction initiative we announced in June June: see month. produced better than expected results, our business in 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). improved, and we signed a number of large, new deals," Company
Leader Charles Charles, archduke of AustriaCharles, 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. "These results give us an encouraging outlook for the third and fourth quarters." An overview of Acxiom's second-quarter performance includes:
-- Revenue of $330.5 million, up 11 percent from $299.1 million in
the second quarter a year ago. The net impact of acquisitions
and divestitures contributed 4 percentage points of this 11
percentage-point growth in revenue.
-- Net unusual charges of $15.8 million, which include:
-- A net $12.8 million in gains, losses and non-recurring items,
which consist of:
-- Restructuring charges of $13.0 million
-- Losses on the sale of assets and operating units of
$2.6 million
-- A gain of $2.8 million on the sale of an unused Phoenix
facility.
-- $2.2 million in legal, investment banking and other fees
associated with representation of the Company related to
activities by ValueAct Capital
-- $0.8 million in expenses related to a lawsuit resolved in
the quarter.
-- Income from operations of $18.8 million, which was reduced by
the $15.8 million noted above, compared to $34.4 million in the
second quarter last year.
-- Pre-tax earnings of $12.4 million, which was reduced by the
$15.8 million noted above, compared to $29.8 million in the
second quarter a year ago.
-- Diluted earnings per share of $.08, which was reduced by the
$.12 EPS noted above, compared to $.20 in the second quarter
last year.
-- Operating cash flow of $44.8 million and free cash flow of
$20.9 million. The free cash flow of $20.9 million is a
non-GAAP financial measure and a reconciliation to the
comparable GAAP measure, operating cash flow, is attached
to this press release.
-- The acquisition of Insight America, a Broomfield, Colo.-based
company that provides data-driven solutions, analytic tools
and background screening services to help clients mitigate risks,
prevent identity theft and limit fraud.
-- The purchase of 3.5 million shares of common stock through the
Company's buy-back program at a total cost of $69.1 million.
-- New contracts that will deliver $49 million in annual revenue
and renewals that total $17 million in annual revenue. The
$49 million in new annual revenue equals the highest new contract
annual revenue total for any quarter.
-- Committed new deals in the pipeline that are expected to generate
$61 million in annual revenue.
"Our profit improvement plan helped us achieve $11 million in pre-tax cost savings in the second quarter, and we will continue to realize benefits from our operational initiatives, including ongoing expense management and an intense focus on performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. ," Company Operations Leader Lee Hodges Lee Hodges may refer to:
Morgan noted that Acxiom recently completed new contracts with Washington Mutual “WaMu” redirects here. For the Washington, DC radio station, see WAMU. Washington Mutual (or WaMu; NYSE: WM) is the United States' largest savings and loan association. Inc. (formerly Providian Providian Financial Corporation was one of the leading credit card issuers in the United States. It was headquartered in San Francisco, California, Providian had more than 10 million card holders and was ranked as the ninth largest credit card issuer. ), NDCHealth Corporation, MGM MIRAGE MGM Mirage (NYSE: MGM) is a Las Vegas, Nevada-based business engaged in the development, ownership and operation of hotels and casinos throughout the world. The company began operations on May 31, 2000 after the completion of a merger of MGM Grand Inc. and Mirage Resorts, Inc. , Yellow Book USA and Reliance Insurance. "The amount and nature of the new contracts we signed in the quarter certainly give us reason for optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. ," Morgan said. "For example, the NDCHealth deal is particularly significant, as it represents our third grid grid: see electron tube. (1) Any interconnected set of nodes such as the electric power network or a communications network. (2) "The Grid" is a nickname for Internet2. See Internet2. computing-based data center re-engineering re-engineering - The examination and modification of a system to reconstitute it in a new form and the subsequent implementation of the new form. http://erg.abdn.ac.uk/users/brant/sre. project." Outlook The Company's expectations for fiscal 2006 and beyond are communicated in the Financial Road Map, which is attached. The financial projections stated today are based on the Company's current expectations. These projections are forward looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed in the future and exclude the net unusual charges recorded in the quarter ended September 30, 2005. 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, 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 with the exception of the impact of the net unusual charges recorded in the quarter ended September 30, 2005, the projected revenue, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , 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 Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. 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 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; 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 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 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; 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 has begun to implement 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 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
September 30,
-------------------------
2005 2004
------------- -----------
Revenue:
Services 253,193 220,072
Data 77,330 79,037
------------- -----------
Total revenue 330,523 299,109
Operating costs and expenses:
Cost of revenue
Services 193,500 168,950
Data 52,124 49,768
------------- -----------
Total cost of revenue 245,624 218,718
Selling, general and administrative 53,285 46,020
Gains, losses and nonrecurring items, net 12,799 -
------------- -----------
Total operating costs and expenses 311,708 264,738
------------- -----------
Income from operations 18,815 34,371
------------- -----------
Other income (expense):
Interest expense (7,416) (4,743)
Other, net 1,050 205
------------- -----------
Total other income (expense) (6,366) (4,538)
------------- -----------
Earnings before income taxes 12,449 29,833
Income taxes 5,300 11,337
------------- -----------
Net earnings 7,149 18,496
============= ===========
Earnings per share:
Basic 0.08 0.22
============= ===========
Diluted 0.08 0.20
============= ===========
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Six Months Ended
September 30,
-------------------------
2005 2004
------------- -----------
Revenue:
Services 491,692 427,919
Data 149,102 160,184
------------- -----------
Total revenue 640,794 588,103
Operating costs and expenses:
Cost of revenue
Services 389,469 332,499
Data 101,009 101,587
------------- -----------
Total cost of revenue 490,478 434,086
Selling, general and administrative 105,365 94,549
Gains, losses and nonrecurring items, net 11,162 (344)
------------- -----------
Total operating costs and expenses 607,005 528,291
------------- -----------
Income from operations 33,789 59,812
------------- -----------
Other income (expense):
Interest expense (12,578) (9,813)
Other, net 1,941 614
------------- -----------
Total other income (expense) (10,637) (9,199)
------------- -----------
Earnings before income taxes 23,152 50,613
Income taxes 9,364 19,233
------------- -----------
Net earnings 13,788 31,380
============= ===========
Earnings per share:
Basic 0.15 0.36
============= ===========
Diluted 0.15 0.34
============= ===========
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
September 30,
---------------------------
2005 2004
------------- -------------
Basic earnings per share:
Numerator - net earnings 7,149 18,496
Denominator - weighted-average shares
outstanding 86,998 86,010
------------- -------------
Basic earnings per share 0.08 0.22
============= =============
Diluted earnings per share:
Numerator:
Net earnings 7,149 18,496
Interest expense on convertible
bonds (net of tax benefit) - 1,017
------------- -------------
7,149 19,513
------------- -------------
Denominator:
Weighted-average shares outstanding 86,998 86,010
Dilutive effect of common stock
options and warrants 2,599 3,464
Dilutive effect of convertible debt - 9,589
------------- -------------
89,597 99,063
------------- -------------
Diluted earnings per share 0.08 0.20
============= =============
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Six Months Ended
September 30,
---------------------------
2005 2004
------------- -------------
Basic earnings per share:
Numerator - net earnings 13,788 31,380
Denominator - weighted-average shares
outstanding 89,021 86,047
------------- -------------
Basic earnings per share 0.15 0.36
============= =============
Diluted earnings per share:
Numerator:
Net earnings 13,788 31,380
Interest expense on convertible
bonds (net of tax benefit) - 2,034
------------- -------------
13,788 33,414
------------- -------------
Denominator:
Weighted-average shares outstanding 89,021 86,047
Dilutive effect of common stock
options and warrants 2,676 3,709
Dilutive effect of convertible debt - 9,589
------------- -------------
91,697 99,345
------------- -------------
Diluted earnings per share 0.15 0.34
============= =============
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
---------------------------
2005 2004
------------ --------------
US Services & Data 286,326 251,216
International Services & Data 44,197 47,893
------------ --------------
Total Revenue 330,523 299,109
============ ==============
US Supplemental Information:
Services & Data Excluding IT Mgmt 200,566 182,558
IT Management Services 85,760 68,658
------------ --------------
286,326 251,216
============ ==============
International Supplemental Information:
Services & Data Excluding IT Mgmt 44,197 47,893
IT Management Services - -
------------ --------------
44,197 47,893
============ ==============
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30,
---------------------------
2005 2004
------------ --------------
US Services & Data 551,760 486,768
International Services & Data 89,034 101,335
------------ --------------
Total Revenue 640,794 588,103
============ ==============
US Supplemental Information:
Services & Data Excluding IT Mgmt 379,198 354,841
IT Management Services 172,562 131,927
------------ --------------
551,760 486,768
============ ==============
International Supplemental Information:
Services & Data Excluding IT Mgmt 89,034 101,335
IT Management Services - -
------------ --------------
89,034 101,335
============ ==============
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, March 31,
2005 2005
------------- ------------
Assets
--------
Current assets:
Cash and cash equivalents $5,962 $4,185
Trade accounts receivable, net 258,004 250,653
Deferred income taxes 31,766 31,415
Refundable income taxes - 1,345
Other current assets 42,048 46,034
------------- ------------
Total current assets 337,780 333,632
------------- ------------
Property and equipment 655,255 581,918
Less - accumulated depreciation and
amortization 304,142 258,532
------------- ------------
Property and equipment, net 351,113 323,386
------------- ------------
Software, net of accumulated amortization 69,927 57,135
Goodwill 474,360 354,182
Purchased software licenses, net of
accumulated amortization 161,321 157,999
Unbilled and notes receivable, excluding
current portions 21,322 20,410
Deferred costs, net 99,035 88,851
Data acquisition costs 42,861 48,915
Other assets, net 25,431 15,369
------------- ------------
$1,583,150 $1,399,879
============= ============
Liabilities and Stockholders' Equity
--------------------------------------
Current liabilities:
Current installments of long-term
obligations 87,623 83,005
Trade accounts payable 54,920 63,295
Accrued payroll and related expenses 24,979 27,435
Other accrued expenses 89,905 74,635
Deferred revenue 112,936 115,892
Income Taxes 1,025 -
------------- ------------
Total current liabilities 371,388 364,262
------------- ------------
Long-term obligations:
Long-term debt and capital leases, net of
current installments 477,461 104,210
Software and data licenses, net of current
installments 31,186 37,494
------------- ------------
Total long-term obligations 508,647 141,704
------------- ------------
Deferred income taxes 87,147 79,079
Commitments and contingencies
Stockholders' equity:
Common stock 10,554 10,440
Additional paid-in capital 617,752 588,156
Retained earnings 368,535 363,556
Accumulated other comprehensive loss 4,747 12,616
Treasury stock, at cost (385,620) (159,934)
------------- ------------
Total stockholders' equity 615,968 814,834
------------- ------------
$1,583,150 $1,399,879
============= ============
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF FREE CASH FLOW TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
Qtr ended Qtr ended Qtr ended Qtr ended Yr ended
6/30/2002 9/30/2002 12/31/2002 3/31/2003 3/31/2003
Net cash provided
by operating
activities 60,243 53,446 76,992 63,112 253,793
Proceeds received
from disposition
of assets 45 155 - 93 293
Capitalized
software (8,652) (8,958) (8,726) (8,237) (34,573)
Capital
expenditures (1,916) (3,000) (5,893) (2,403) (13,212)
Deferral of costs (3,240) (4,108) (3,796) (3,883) (15,027)
Proceeds from sale
and leaseback
transaction - 7,729 - - 7,729
---------------------------------------------------
Free cash flow 46,480 45,264 58,577 48,682 199,003
===================================================
Qtr ended Qtr ended Qtr ended Qtr ended Yr ended
6/30/2003 9/30/2003 12/31/2003 3/31/2004 3/31/2004
Net cash provided
by operating
activities 48,125 49,909 79,282 82,567 259,883
Proceeds received
from disposition
of assets 506 192 39 2,046 2,783
Capitalized
software (6,335) (7,296) (6,510) (7,703) (27,844)
Capital
expenditures (1,588) (3,036) (7,637) (9,917) (22,178)
Deferral of costs (6,026) (4,006) (5,312) (9,537) (24,881)
---------------------------------------------------
Free cash flow 34,682 35,763 59,862 57,456 187,763
===================================================
Qtr ended Qtr ended Qtr ended Qtr ended Yr ended
6/30/2004 9/30/2004 12/31/2004 3/31/2005 3/31/2005
Net cash provided
by operating
activities 34,714 61,742 82,805 67,753 247,014
Capitalized
software (4,107) (4,721) (5,706) (5,760) (20,294)
Capital
expenditures (1,823) (4,813) (3,132) (4,562) (14,330)
Deferral of costs (9,610) (11,113) (15,502) (17,203) (53,428)
---------------------------------------------------
Free cash flow 19,174 41,095 58,465 40,228 158,962
===================================================
Qtr ended Qtr ended
6/30/2005 9/30/2005
Net cash provided
by operating
activities 61,476 44,785
Proceeds received
from disposition
of assets - 3,613
Capitalized
software (5,673) (5,809)
Capital
expenditures (2,929) (3,025)
Deferral of costs (16,192) (18,703)
--------------------
Free cash flow 36,682 20,861
====================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
-----------------------------
2005 2004
-------------- --------------
Cash flows from operating activities:
Net earnings 7,149 18,496
Non-cash operating activities:
Depreciation and amortization 57,104 45,102
Loss (gain) on disposal or impairment
of assets, net (970) -
Deferred income taxes 4,380 10,699
Non-cash stock compensation expense 324 -
Changes in operating assets and
liabilities:
Accounts receivable (22,583) (7,488)
Other assets 2,785 (7,434)
Accounts payable and other
liabilities (3,404) 2,367
-------------- --------------
Net cash provided by operating
activities 44,785 61,742
-------------- --------------
Cash flows from investing activities:
Disposition of operations 1,529 -
Sale of assets 3,613 -
Capitalized software (5,809) (4,721)
Capital expenditures (3,025) (4,813)
Deferral of costs (18,703) (11,113)
Payments received from investments 41 219
Net cash paid in acquisitions (34,807) (11,181)
-------------- --------------
Net cash used by investing
activities (57,161) (31,609)
-------------- --------------
Cash flows from financing activities:
Proceeds from debt 109,583 59,203
Payments of debt (36,647) (75,049)
Dividends paid (4,377) (3,446)
Sale of common stock 8,024 4,354
Acquisition of treasury stock (69,081) (16,397)
-------------- --------------
Net cash used by financing
activities 7,502 (31,335)
-------------- --------------
Effect of exchange rate changes
on cash (53) 128
-------------- --------------
Net decrease in cash and cash
equivalents (4,927) (1,074)
Cash and cash equivalents at beginning
of period 10,889 11,214
-------------- --------------
Cash and cash equivalents at end
of period 5,962 10,140
============== ==============
Supplemental cash flow information:
Cash paid (received) during the
period for:
Interest 6,076 6,554
Income taxes 282 8
Payments on capital leases and
installment payment arrangements 15,967 13,374
Payments on software and data
license liabilities 5,328 3,151
Noncash investing and financing
activities:
Enterprise software licenses
acquired under software obligation 6,219 3,282
Acquisition of property and
equipment under capital lease and
installment payment arrangements 29,115 18,572
Construction of assets under
construction loan 3,144 6,323
============== ==============
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30,
-------------------------
2005 2004
------------ ------------
Cash flows from operating activities:
Net earnings 13,788 31,380
Non-cash operating activities:
Depreciation and amortization 112,638 89,099
Loss (gain) on disposal or impairment of
assets, net (927) -
Deferred income taxes 8,015 19,548
Non-cash stock compensation expense 622 -
Changes in operating assets and
liabilities:
Accounts receivable (5,286) (26,149)
Other assets (15,160) (8,446)
Accounts payable and other liabilities (7,429) (8,976)
------------ ------------
Net cash provided by operating
activities 106,261 96,456
------------ ------------
Cash flows from investing activities:
Disposition of operations 1,529 -
Sale of assets 3,613 -
Capitalized software (11,482) (8,828)
Capital expenditures (5,954) (6,636)
Deferral of costs (34,895) (20,723)
Payments received from investments 762 503
Net cash paid in acquisitions (141,526) (16,741)
------------ ------------
Net cash used by investing activities (187,953) (52,425)
------------ ------------
Cash flows from financing activities:
Proceeds from debt 391,289 98,129
Payments of debt (90,777) (135,609)
Dividends paid (8,809) (6,895)
Sale of common stock 21,551 23,671
Acquisition of treasury stock (229,435) (27,368)
------------ ------------
Net cash used by financing activities 83,819 (48,072)
------------ ------------
Effect of exchange rate changes on cash (350) (174)
------------ ------------
Net decrease in cash and cash
equivalents 1,777 (4,215)
Cash and cash equivalents at beginning of
period 4,185 14,355
------------ ------------
Cash and cash equivalents at end of period 5,962 10,140
============ ============
Supplemental cash flow information:
Cash paid (received) during the period
for:
Interest 10,473 9,888
Income taxes 472 108
Payments on capital leases and
installment payment arrangements 35,896 26,633
Payments on software and data license
liabilities 16,266 14,847
Noncash investing and financing
activities:
Enterprise software licenses acquired
under software obligation 8,380 5,967
Acquisition of property and equipment
under capital lease and installment
payment arrangements 55,573 39,070
Construction of assets under
construction loan 6,798 13,111
============ ============
ACXIOM CORPORATION
Financial Road Map(1)
---------------------
(as of September 30, 2005)
---------- ---------- ---------- --------- ----------
Long-Term
Actual Actual Actual Target Goals
Years Ending Fiscal Q2 Fiscal YTD Fiscal Fiscal Fiscal
March 31, 2005 2006 2006 2006 2009
---------- ---------- ---------- --------- ----------
U.S. Revenue 13% to 7% to 10%
Growth 9.0% 14.0% 13.4% 15% (CAGR)
U.S. Revenue $1,011 $286 $552 $1,140 to
million million million $1,160 mil -
International -10% to 5% to 8%
Revenue Growth 152.9% -7.7% -12.1% -20% (CAGR)
International $213 $44 $89 $170 to
Revenue million million million $190 mil -
U.S. Operating 11.5% to 15% to 18%
Margin 11.3% 9.3% 7.8% 12.5%
Adjusted U.S.
Operating Margin 12.4%(3) 9.4%(3)
International 4.5% to 12% to 15%
Operating Margin 3.9% -17.4% -10.3% 6.5%
Adjusted
International
Operating Margin -2.3%(3) -2.8%(3)
Return on Assets
(2) 9.2% 6.6% 6.6% 9% to 10% 10% to 14%
Return on
Invested Capital 11% to 13% to 18%
(2) 11.0% 9.4%(3) 9.4%(3) 12%
Operating Cash $247 $45 $106 $250 to $270 to
Flow million million million $270 mil $300 mil
$159 $21 $58 $160 to $170 to
Free Cash Flow million million million $180 mil $200 mil
Revolving Credit $11 $367 $367 $200 to less than
Line Balance million million million $375 mil $300 mil
Dividends Per $0.24 to
Share $0.17 $0.05 $0.05 $0.20 $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 approximately 38% for
future years.
2. Interest rates are assumed to increase slightly over the current
levels.
3. Excluding acquired NOLs, the Company expects to utilize all of its
federal tax loss carry forwards during fiscal 2006. 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
approximately $5 million for fiscal 2006 and $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
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 is defined as cash flow from operating activities
less cash flow from investing activities excluding net cash paid
or received for acquisitions and divestitures, joint ventures and
investments.
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.
ACXIOM CORPORATION
Reconciliation of Non-GAAP Measurements
----------------------------------------------------------------------
(Dollars in thousands)
Actual Actual
Years Ending March 31, Q2 YTD
Actual Fiscal Fiscal
Fiscal 2005 2006 2006
----------- -------- --------
U.S. Operating Margin
----------------------
U.S. Revenue 1,010,513 286,326 551,760
U.S. Operating Income 113,992 26,498 42,939
U.S. Operating Income Margin 11.3% 9.3% 7.8%
Gains, losses and nonrecurring
items, net 0 6,147 6,147
ValueAct Defense 0 2,216 2,216
Lawsuit Expenses 0 761 761
---------- -------- --------
Adjusted U.S. Operating Income (6) 113,992 35,622 52,063
Adjusted U.S. Operating Income Margin (6) 11.3% 12.4% 9.4%
========== ======== ========
International Operating Margin
--------------------------------
International Revenue 212,529 44,197 89,034
International Operating Income 8,200 (7,684) (9,151)
International Operating Income Margin 3.9% -17.4% -10.3%
Gains, losses and nonrecurring items,
net 0 6,652 6,652
---------- -------- --------
Adjusted International Operating Income
(6) 8,200 (1,032) (2,499)
Adjusted International Operating Income
Margin (6) 3.9% -2.3% -2.8%
========== ======== ========
Free Cash Flow
----------------
Net cash provided by operating activities 247,014 44,785 106,261
Proceeds received from disposition of
assets 0 3,613 3,613
Capitalized software (20,294) (5,809) (11,482)
Capital expenditures (14,330) (3,025) (5,954)
Deferral of costs (53,428) (18,703) (34,895)
---------- -------- --------
Free cash flow 158,962 20,861 57,543
========== ======== ========
Target Long-Term Goals
Years Ending March 31, Fiscal 2006 Fiscal 2009
----------------------------------------
Free Cash Flow
---------------
Net cash provided by operating
activities 250,000 270,000 270,000 300,000
Proceeds received from
disposition of assets 0 0 0 0
Capitalized software (20,000) (20,000) (25,000) (25,000)
Capital expenditures (15,000) (15,000) (20,000) (20,000)
Deferral of costs (55,000) (55,000) (55,000) (55,000)
-------- --------- -------- --------
Free cash flow 160,000 to 180,000 170,000 to 200,000
======== ========= ======== ========
Free cash flow 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 in this Financial Road Map
because although free cash flow does not represent the amount of money
available for the Company's discretionary spending since certain
obligations of the Company must be funded out of free cash flow,
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,
including debt payments, after funding operating activities and
capital expenditures, capitalized software expenses and deferred
costs.
The above table reconciles free cash flow to cash provided by
operating activities, the nearest comparable GAAP measure.
Return on Assets (ROA) and Actual Actual
Return on Invested Fiscal 2005 Q2 Fiscal 2006
Capital (ROIC)(5) ROA ROIC ROA ROIC
---------- ---------- ---------- ----------
Numerator:
Income from operations 122,192 122,192 96,169 96,169
Unusual Charges, Net
(6) 0 15,776
Add implied interest on
operating leases (1) 13,903 12,513
---------- ---------- ---------- ----------
122,192 136,095 96,169 124,457
---------- ---------- ---------- ----------
Denominator:
Average total assets
(2) 1,321,122 1,321,122 1,463,339 1,463,339
Less average cash (3) (11,858) (10,733)
Less average non-
interest bearing
current liabilities (4) (246,280) (276,286)
Plus average present
value of operating
leases (1) 168,734 151,919
------------------------------------- ---------- ---------- ----------
1,321,122 1,231,717 1,463,339 1,328,239
---------- ---------- ---------- ----------
Return on invested capital 9.2% 11.0% 6.6% 9.4%
========== ========== ========== ==========
Actual
Return on Assets (ROA) and YTD Fiscal 2006
Return on Invested Capital (ROIC)(5) ROA ROIC
------------------------------------ ---------- ----------
Numerator:
Income from operations 96,169 96,169
Unusual Charges, Net (6) 0 15,776
Add implied interest on operating leases (1) 12,513
---------- ----------
96,169 124,457
---------- ----------
Denominator:
Average total assets (2) 1,463,339 1,463,339
Less average cash (3) (10,733)
Less average non-interest bearing current
liabilities (4) (276,286)
Plus average present value of operating leases
(1) 151,919
---------- ----------
1,463,339 1,328,239
---------- ----------
Return on invested capital 6.6% 9.4%
========== ==========
Return on Assets (ROA) Target
and Return on Invested Fiscal 2006
Capital (ROIC)(5) ROA ROIC
----------------------- -----------------------
Numerator:
Income from
operations 141,000 160,000 141,000 160,000
Unusual Charges,
Net (6)
Add implied
interest on
operating leases
(1) 14,200 14,200
---------- ---------- ---------- ----------
141,000 160,000 155,200 174,200
---------- ---------- ---------- ----------
Denominator:
Average total
assets (2) 1,542,000 1,552,000 1,542,000 1,552,000
Less average cash
(3) (6,300) (12,700)
Less average non-
interest bearing
current
liabilities (4) (280,000) (280,200)
Plus average
present value of
operating leases
(1) 180,000 179,500
---------- ---------- ---------- ----------
1,542,000 1,552,000 1,435,700 1,438,600
---------- ---------- ---------- ----------
Return on invested
capital 9% to 10% 11% to 12%
========== ========== ========== ==========
Return on Assets
(ROA) and Return on Long-Term Goals
Invested Capital Fiscal 2009
(ROIC)(5) ROA ROIC
------------------------ ------------------------
Numerator:
Income from
operations 191,000 272,000 191,000 272,000
Unusual Charges,
Net (6)
Add implied
interest on
operating leases
(1) 19,000 19,000
---------- ---------- ---------- ----------
191,000 272,000 210,000 291,000
---------- ---------- ---------- ----------
Denominator:
Average total
assets (2) 1,840,000 1,938,000 1,840,000 1,938,000
Less average cash
(3) (214,800) (285,100)
Less average non-
interest bearing
current
liabilities (4) (290,000) (291,500)
Plus average
present value of
operating leases
(1) 237,000 237,000
---------- ---------- ---------- ----------
1,840,000 1,938,000 1,572,200 1,598,400
---------- ---------- ---------- ----------
Return on invested
capital 10% to 14% 13% to 18%
========== ========== ========== ==========
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.
(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.
ACXIOM CORPORATION AND SUBSIDIARIES
SUMMARIZED SUPPLEMENTAL CASH FLOW INFORMATION
(Unaudited)
(Dollars in thousands)
Quarters ended
--------------------------------------- Last 12
12/31/04 03/31/05 06/30/05 09/30/05 Months
--------------------------------------- ----------
Free cash flow 58,465 40,228 36,682 20,861 156,236
Payments received
from investments 1,795 235 721 41 2,792
Change in revolver (22,440) 10,921 259,800 96,665 344,946
Other debt proceeds 0 4,175 0 0 4,175
Sale of common stock 14,537 5,776 13,527 8,024 41,864
Acquisition of
treasury stock (2,840) (33,551) (160,354) (69,081) (265,826)
Dividends paid (3,464) (4,290) (4,432) (4,377) (16,563)
Debt payments
(excluding payments
on line of credit) (28,072) (22,316) (32,224) (23,729) (106,341)
Proceeds from the
disposition of
operations - - - 1,529 1,529
Net cash paid in
acquisitions (6,847) (18,612) (106,719) (34,807) (166,985)
Effect of exchange
rate changes on
cash 620 (275) (297) (53) (5)
--------------------------------------- ----------
Net change in cash 11,754 (17,709) 6,704 (4,927) (4,178)
======================================= ==========
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