Acxiom Announces Third-Quarter Results; Company Generates Record Revenue, Earnings, Cash Flow.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 third quarter of fiscal 2006 ended December December: see month. 31, 2005. Revenue for the quarter was $347.4 million, income from operations was $52.7 million, pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings were $44.0 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 $0.31. All represent record quarterly performances in the Company's history. Acxiom will hold a conference call at 4:30 p.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. 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. "Our third-quarter results are very encouraging and demonstrate the continuing improvement in our financial performance," 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. "Combined with the recent announcement of our strategic partnership with EMC Corporation EMC Corporation (NYSE: EMC) is an American Fortune 500 and S&P 500 manufacturer of software and systems for information management and storage. It is headquartered in Hopkinton, Massachusetts, USA. and the outlook for the fourth quarter and fiscal 2007, our performance in the third quarter is clear evidence of the growing momentum at Acxiom." Highlights of Acxiom's third-quarter performance include: --Revenue of $347.4 million, up 11 percent from $312.4 million in the third quarter a year ago. The net impact of acquisitions and divestitures contributed 5 percentage points of this 11 percentage-point growth in revenue. --Income from operations of $52.7 million, a 34 percent increase compared to $39.4 million in the third quarter last year. --Pre-tax earnings of $44.0 million, up 27 percent from $34.6 million in the third quarter of fiscal 2005. --Diluted earnings per share of $.31, a 29 percent increase compared to $.24 in the third quarter last year. --Operating cash flow of $95.4 million and free cash flow of $91.7 million, both of which represent record quarterly cash flow results. The free cash flow of $91.7 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. --A technology and distribution agreement with EMC Corporation that includes $30 million from EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. to purchase the 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. operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. developed by Acxiom and license certain other grid-related software. The deal contributed to $20 million of the Company's free cash flow performance in the third quarter but had no impact on revenue, earnings or operating cash flow. --New contracts that will deliver $41 million in annual revenue and renewals that total $31 million in annual revenue. --Committed new deals in the pipeline that are expected to generate $68.4 million in annual revenue. "The operational improvements we have made, combined with a strong pipeline and the continued signing of new contracts, add up to an improving performance at Acxiom," Company Operations Leader Lee Hodges Lee Hodges may refer to:
Strategic U.S. foreign policy of the late 1940s and early 1950s intended to check the expansionist designs of the Soviet Union through economic, military, diplomatic, and political means. It was conceived by George Kennan soon after World War II. and control, which we expect to result in continued improvement in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ." Morgan noted that Acxiom recently completed new contracts with AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group Marketing, Inc., Canadian Tire Canadian Tire (TSX: CTC, CTC.A) is one of Canada's 35 largest publicly traded companies and operates an inter-related network of businesses engaged in retailing (hardgoods, apparel and petroleum) and services (financial and automotive). Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Inc., Federated Connected and treated as one. See federated database and federated directories. Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , Inc., Hyundai Motor America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , Lowe's “Lowes” redirects here. For other uses, see Lowes (disambiguation). Lowe's Home Improvement Warehouse (NYSE: LOW) is a US-based chain of retail home improvement and appliance stores. , Nationwide, Novartis Novartis International AG (NYSE: NVS) is a multinational pharmaceutical company based in Basel, Switzerland that manufactures drugs such as diclofenac (Voltaren), carbamazepine (Tegretol), valsartan (Diovan), imatinib mesylate (Gleevec / Glivec), cyclosporin A (Neoral / Pharmaceuticals Corporation, Staples staples U-shaped stainless steel or vitallium units with sharp points used for surgical fixation. epiphyseal staples used to staple epiphysis to metaphysis; have metal bracing at the corners. , ZelnickMedia and Primedia Primedia Inc., NYSE: PRM, formerly known as K-III Communications, is a New York City-based mass media corporation. It is publicly owned, trading on the New York Stock Exchange, but private equity giant KKR holds a controlling stake in the company. . Outlook The Company's expectations for fiscal 2006, fiscal 2007 and beyond are communicated in the Financial Road Map, which is attached. The Financial Road Map has been updated based on current expectations for fiscal year 2007, and the long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. have been updated to reflect the expectation for fiscal year 2010. For the fiscal year ending March 31, 2007, the Company estimates that U.S. revenue will grow 7 percent to 10 percent, the U.S. operating margins will be 14 percent to 15 percent, international revenue will grow 0 percent to 5 percent, and international margin will be 2 percent to 4 percent. The financial projections stated today are based on the Company's current expectations and the assumption and limitations set forth in the Financial Road Map. These projections are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , 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. 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, that with the exception of the impact of the net unusual charges recorded in the quarter ended September September: see month. 30, 2005, 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 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 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 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. 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
December 31,
--------------------------
2005 2004
--------------------------
Revenue:
Services 263,266 225,811
Data 84,165 86,594
-------- --------
Total revenue 347,431 312,405
Operating costs and expenses:
Cost of revenue
Services 190,993 174,960
Data 48,799 52,199
-------- --------
Total cost of revenue 239,792 227,159
Selling, general and administrative 56,134 46,461
Gains, losses and nonrecurring items, net (1,202) (640)
-------- --------
Total operating costs and expenses 294,724 272,980
-------- --------
Income from operations 52,707 39,425
-------- --------
Other income (expense):
Interest expense (8,635) (5,076)
Other, net (71) 210
-------- --------
Total other income (expense) (8,706) (4,866)
-------- --------
Earnings before income taxes 44,001 34,559
Income taxes 16,720 11,079
-------- --------
Net earnings 27,281 23,480
======== ========
Earnings per share:
Basic 0.32 0.27
======== ========
Diluted 0.31 0.24
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Nine Months Ended
December 31,
--------------------------
2005 2004
--------------------------
Revenue:
Services 754,958 653,730
Data 233,267 246,778
-------- --------
Total revenue 988,225 900,508
Operating costs and expenses:
Cost of revenue
Services 580,462 507,459
Data 149,808 153,786
-------- --------
Total cost of revenue 730,270 661,245
Selling, general and administrative 161,499 141,010
Gains, losses and nonrecurring items, net 9,960 (984)
-------- --------
Total operating costs and expenses 901,729 801,271
-------- --------
Income from operations 86,496 99,237
-------- --------
Other income (expense):
Interest expense (21,213) (14,889)
Other, net 1,870 824
-------- --------
Total other income (expense) (19,343) (14,065)
-------- --------
Earnings before income taxes 67,153 85,172
Income taxes 26,084 30,312
-------- --------
Net earnings 41,069 54,860
======== ========
Earnings per share:
Basic 0.47 0.64
======== ========
Diluted 0.45 0.58
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
December 31,
--------------------------
2005 2004
--------------------------
Basic earnings per share:
Numerator - net earnings 27,281 23,480
Denominator - weighted-average shares
outstanding 85,203 86,468
-------- --------
Basic earnings per share 0.32 0.27
======== ========
Diluted earnings per share:
Numerator:
Net earnings 27,281 23,480
Interest expense on convertible bonds
(net of tax benefit) - 1,017
-------- --------
27,281 24,497
--------- --------
Denominator:
Weighted-average shares outstanding 85,203 86,468
Dilutive effect of common stock
options and warrants 2,723 4,191
Dilutive effect of convertible debt - 9,589
-------- --------
87,926 100,248
-------- --------
Diluted earnings per share 0.31 0.24
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Nine Months Ended
December 31,
-------------------------
2005 2004
-------------------------
Basic earnings per share:
Numerator - net earnings 41,069 54,860
Denominator - weighted-average shares
outstanding 87,748 86,187
-------- --------
Basic earnings per share 0.47 0.64
======== ========
Diluted earnings per share:
Numerator:
Net earnings 41,069 54,860
Interest expense on convertible bonds
(net of tax benefit) - 3,051
-------- --------
41,069 57,911
-------- --------
Denominator:
Weighted-average shares outstanding 87,748 86,187
Dilutive effect of common stock
options and warrants 2,691 3,870
Dilutive effect of convertible debt - 9,589
-------- --------
90,439 99,646
-------- --------
Diluted earnings per share 0.45 0.58
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31,
--------------------------
2005 2004
--------------------------
US Services & Data 300,086 253,898
International Services & Data 47,345 58,507
-------- --------
Total Revenue 347,431 312,405
======== ========
US Supplemental Information:
Services & Data Excluding IT Mgmt 210,455 178,983
IT Management Services 89,631 74,915
-------- --------
300,086 253,898
======== ========
International Supplemental Information:
Services & Data Excluding IT Mgmt 47,345 58,507
IT Management Services - -
-------- --------
47,345 58,507
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Nine Months Ended
December 31,
-------------------------
2005 2004
-------------------------
US Services & Data 851,846 740,666
International Services & Data 136,379 159,842
-------- --------
Total Revenue 988,225 900,508
======== ========
US Supplemental Information:
Services & Data Excluding IT Mgmt 589,653 533,824
IT Management Services 262,193 206,842
-------- --------
851,846 740,666
======== ========
International Supplemental Information:
Services & Data Excluding IT Mgmt 136,379 159,842
IT Management Services - -
-------- --------
136,379 159,842
======== ========
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
December 31, March 31,
2005 2005
----------- ----------
Assets
------
Current assets:
Cash and cash equivalents $9,906 $4,185
Trade accounts receivable, net 261,135 250,653
Deferred income taxes 31,615 31,415
Refundable income taxes - 1,345
Other current assets 40,321 46,034
---------- ----------
Total current assets 342,977 333,632
---------- ----------
Property and equipment 663,521 581,918
Less - accumulated depreciation and
amortization 324,158 258,532
--------- ----------
Property and equipment, net 339,363 323,386
---------- ----------
Software, net of accumulated amortization 47,850 57,135
Goodwill 474,680 354,182
Purchased software licenses, net of
accumulated amortization 157,203 157,999
Unbilled and notes receivable, excluding
current portions 20,551 20,410
Deferred costs, net 104,419 88,851
Data acquisition costs 40,530 48,915
Other assets, net 22,757 15,369
---------- ----------
$1,550,330 $1,399,879
========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term
obligations 87,401 83,005
Trade accounts payable 43,622 63,295
Accrued payroll and related expenses 31,841 27,435
Other accrued expenses 81,000 74,635
Deferred revenue 127,753 115,892
Income Taxes 12,182 -
---------- ----------
Total current liabilities 383,799 364,262
---------- ----------
Long-term obligations:
Long-term debt and capital leases, net of
current installments 404,104 104,210
Software and data licenses, net of current
installments 26,740 37,494
---------- ----------
Total long-term obligations 430,844 141,704
---------- ----------
Deferred income taxes 91,329 79,079
Commitments and contingencies
Stockholders' equity:
Common stock 10,674 10,440
Additional paid-in capital 627,982 588,156
Retained earnings 391,557 363,556
Accumulated other comprehensive loss 2,141 12,616
Treasury stock, at cost (387,996) (159,934)
---------- ----------
Total stockholders' equity 644,358 814,834
---------- ----------
$1,550,330 $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
6/30/02 9/30/02 12/31/02 3/31/03 3/31/03
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
6/30/03 9/30/03 12/31/03 3/31/04 3/31/04
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
6/30/04 9/30/04 12/31/04 3/31/05 3/31/05
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 Qtr ended Qtr ended YTD
6/30/05 9/30/05 12/31/05 3/31/06 12/31/05
Net cash
provided by
operating
activities 61,476 44,785 95,414 201,675
Proceeds
received from
disposition
of assets - 3,613 1,510 5,123
Capitalized
software (5,673) (5,809) (5,204) (16,686)
Cash collected
from sale of
software - - 20,000 20,000
Capital
expenditures (2,929) (3,025) (401) (6,355)
Deferral of
costs (16,192) (18,703) (19,603) (54,498)
---------- ---------- ----------- ---------- -----------
Free cash flow 36,682 20,861 91,716 0 149,259
========== ========== =========== ========== ===========
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31,
-------------------------------
2005 2004
-------------------------------
Cash flows from operating activities:
Net earnings 27,281 23,480
Non-cash operating activities:
Depreciation and amortization 59,712 50,817
Loss (gain) on disposal or
impairment of assets, net (524) (50)
Deferred income taxes 4,386 11,385
Non-cash stock compensation
expense 346 -
Changes in operating assets and
liabilities:
Accounts receivable (8,552) 3,403
Other assets (6,587) 5,915
Accounts payable and other
liabilities 4,161 (18,896)
Deferred revenue 15,191 6,751
----------- ------------
Net cash provided by operating
activities 95,414 82,805
----------- ------------
Cash flows from investing
activities:
Disposition of operations 3,315 1,636
Sale of assets 1,510 -
Capitalized software (5,204) (5,706)
Capital expenditures (401) (3,132)
Cash collected from sale of
software 20,000 -
Deferral of costs (19,603) (15,502)
Payments received from
investments 2,093 159
Net cash paid in acquisitions (2,983) (6,847)
----------- ------------
Net cash used by investing
activities (1,273) (29,392)
----------- ------------
Cash flows from financing activities:
Proceeds from debt 31,833 31,663
Payments of debt (125,264) (82,175)
Dividends paid (4,259) (3,464)
Sale of common stock 10,058 14,537
Acquisition of treasury stock (2,430) (2,840)
----------- ------------
Net cash used by financing
activities (90,062) (42,279)
----------- ------------
Effect of exchange rate
changes on cash (135) 620
----------- ------------
Net increase in cash and cash
equivalents 3,944 11,754
Cash and cash equivalents at
beginning of period 5,962 10,140
----------- ------------
Cash and cash equivalents at end
of period 9,906 21,894
----------- ------------
Supplemental cash flow information:
Cash paid during the period for:
Interest 7,932 3,521
Income taxes 1,070 583
Payments on capital leases and
installment payment arrangements 17,994 23,012
Payments on software and data
license liabilities 7,344 4,842
Noncash investing and financing
activities:
Issuance of warrants in acquisition - 1,833
Enterprise software licenses
acquired under software obligation - 6,715
Acquisition of property and equipment
under capital lease and installment
payment arrangements 14,804 27,289
Construction of assets under
construction loan 402 4,868
----------- ------------
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Nine Months Ended
December 31,
--------------------------
2005 2004
--------------------------
Cash flows from operating activities:
Net earnings 41,069 54,860
Non-cash operating activities:
Depreciation and amortization 172,350 139,916
Loss (gain) on disposal or impairment
of assets, net (1,451) (50)
Deferred income taxes 12,401 30,933
Non-cash stock compensation expense 968 -
Changes in operating assets and
liabilities:
Accounts receivable (13,838) (22,746)
Other assets (21,747) (2,531)
Accounts payable and other liabilities 2,790 (23,474)
Deferred revenue 9,133 2,353
----------- ------------
Net cash provided by operating
activities 201,675 179,261
----------- ------------
Cash flows from investing activities:
Disposition of operations 4,844 1,636
Sale of assets 5,123 -
Capitalized software (16,686) (14,534)
Capital expenditures (6,355) (9,768)
Cash collected from the sale of
software 20,000 -
Deferral of costs (54,498) (36,225)
Payments received from investments 2,855 662
Net cash paid in acquisitions (144,509) (23,588)
----------- ------------
Net cash used by investing
activities (189,226) (81,817)
----------- ------------
Cash flows from financing activities:
Proceeds from debt 423,122 129,792
Payments of debt (216,041) (217,784)
Dividends paid (13,068) (10,359)
Sale of common stock 31,609 38,208
Acquisition of treasury stock (231,865) (30,208)
----------- ------------
Net cash used by financing
activities (6,243) (90,351)
----------- ------------
Effect of exchange rate changes
on cash (485) 446
----------- ------------
Net increase in cash and cash
equivalents 5,721 7,539
Cash and cash equivalents at beginning
of period 4,185 14,355
----------- ------------
Cash and cash equivalents at
end of period 9,906 21,894
----------- ------------
Supplemental cash flow information:
Cash paid (received) during the
period for:
Interest 18,405 13,409
Income taxes (376) 1,080
Payments on capital leases and
installment payment arrangements 53,890 49,645
Payments on software and data license
liabilities 17,141 13,899
Noncash investing and financing
activities:
Issuance of warrants in acquisition - 1,833
Enterprise software licenses acquired
under software obligation 8,380 12,682
Acquisition of property and equipment
under capital lease and installment
payment arrangements 70,377 66,359
Construction of assets under
construction loan 7,200 17,979
----------- ------------
ACXIOM CORPORATION AND SUBSIDIARIES
SUMMARIZED SUPPLEMENTAL CASH FLOW INFORMATION
(Unaudited)
(Dollars in thousands)
Last 12
03/31/05 06/30/05 09/30/05 12/31/05 Months
--------- --------- --------- --------- ---------
Free cash flow 40,228 36,682 20,861 91,716 189,487
Change in revolver 10,921 259,800 96,665 (66,378) 301,008
Other debt proceeds 4,175 - - - 4,175
Debt payments (excluding
payments on line
of credit) (22,316) (32,224) (23,729) (27,053) (105,322)
Sale of common
stock 5,776 13,527 8,024 10,058 37,385
Acquisition of
treasury stock (33,551) (160,354) (69,081) (2,430) (265,416)
Dividends paid (4,290) (4,432) (4,377) (4,259) (17,358)
Payments received
from investments 235 721 41 2,093 3,090
Proceeds from the
disposition of
operations - - 1,529 3,315 4,844
Net cash paid in
acquisitions (18,612) (106,719) (34,807) (2,983) (163,121)
Effect of exchange
rate changes on
cash (275) (297) (53) (135) (760)
--------- --------- --------- --------- ---------
Net change in cash (17,709) 6,704 (4,927) 3,944 (11,988)
========= ========= ========= ========= =========
ACXIOM CORPORATION
Financial Road Map(1)
----------------------------------------------------------------------
(as of December 31, 2005)
Actual Actual Actual
Years Ending March 31, Fiscal 2005 Q3 Fiscal 2006 YTD Fiscal 2006
-------------- -------------- ---------------
U.S. Revenue Growth 9.0% 18.2% 15.0%
U.S. Revenue $1,011 million $300 million $851 million
International Revenue
Growth 152.9% -19.1% -14.7%
International Revenue $213 million $47 million $136 million
U.S. Operating Margin 11.3% 16.3% 10.8%
Adjusted U.S. Operating
Margin 11.3% 16.3% 11.9%(3)
International Operating
Margin 3.9% 7.9% -4.0%
Adjusted International
Operating Margin 3.9% 7.9% 0.9%(3)
Return on Assets (2) 9.2% 7.2% 7.2%
Adjusted Return on
Assets (2) 8.3%(3) 8.3%(3)
Return on Invested
Capital (2) 11.0% 10.1%(3) 10.1%(3)
Operating Cash Flow $247 million $95 million $201 million
Free Cash Flow $159 million $92 million $149 million
Revolving Credit Line $11 million $301 million $301 million
Balance
Dividends Per Share $0.17 $0.05 $0.15
Long-Term
Years Ending Estimated Target Target Goals
March 31, Fiscal 2006(4) Fiscal 2006 Fiscal 2007 Fiscal 2010
-------------- ----------- ----------- -----------
U.S. Revenue Growth 14% 13% to 15% 7% to 10% 8% to 11%
(CAGR)
U.S. Revenue $1,140 to $1,230 to
$1,150 million $1,160 mil $1,260 mil -
International
Revenue Growth -15% -10% to -20% 0% to 5% 5% to 8%
(CAGR)
International $170 to $180 to
Revenue $180 million $190 mil $190 mil -
U.S. Operating
Margin 11.7% 14% to 15% 16% to 18%
Adjusted U.S.
Operating Margin 12.4%(3) 11.5% to 12.5%
International
Operating Margin -2.2% 2% to 4% 12% to 15%
Adjusted
International
Operating Margin 1.6%(3) 1% to 2%
Return on Assets
(2) 8.4% 11% to 13% 14% to 17%
Adjusted Return on
Assets (2) 9.4%(3) 9% to 10%
Return on Invested
Capital (2) 11.3%(3) 11% to 12% 13% to 15% 16% to 19%
Operating Cash Flow $250 to $280 to $320 to
$270 million $270 mil $300 mil $360 mil
Free Cash Flow $160 to $175 to $185 to
$190 million $180 mil $195 mil $225 mil
Revolving Credit $200 to less than less than
Line Balance $290 million $375 mil $500 mil $500 mil
Dividends Per Share $0.20 $0.20 $0.20 $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.
4 Based upon an estimated EPS for Q4 FY2006 of $0.25.
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 $5 to $10
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
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 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 Actual Estimated
Years Ending March 31, Fiscal Q3 Fiscal YTD Fiscal Fiscal
2005 2006 2006 2006
---------------------------------------
U.S. Operating Margin
------------------------------
U.S. Revenue 1,010,513 300,086 851,846 1,150,000
U.S. Operating Income 113,992 48,965 91,904 134,000
U.S. Operating Income Margin 11.3% 16.3% 10.8% 11.7%
Gains, losses and
nonrecurring items, net 0 0 6,147 6,147
ValueAct Defense 0 0 2,216 2,216
Lawsuit Expenses 0 0 761 761
-------- -------- -------- --------
Adjusted U.S. Operating
Income (6) 113,992 48,965 101,028 143,124
Adjusted U.S. Operating
Income Margin (6) 11.3% 16.3% 11.9% 12.4%
======== ======== ======== ========
International Operating
Margin
------------------------------
International Revenue 212,529 47,345 136,379 180,000
International Operating
Income 8,200 3,741 (5,410) (3,800)
International Operating
Income Margin 3.9% 7.9% -4.0% -2.1%
Gains, losses and
nonrecurring items, net 0 0 6,652 6,652
-------- -------- -------- --------
Adjusted International
Operating Income (6) 8,200 3,741 1,242 2,852
Adjusted International
Operating Income Margin (6) 3.9% 7.9% 0.9% 1.6%
======== ======== ======== ========
----------------------------------------------------------------------
Free Cash Flow
------------------------------
Net cash provided by operating
activities 247,014 95,414 201,675 270,000
Proceeds received from
disposition of assets 0 1,510 5,123 5,123
Capitalized software (20,294) (5,204) (16,686) (22,000)
Proceeds received from sale of
software 0 20,000 20,000 20,000
Capital expenditures (14,330) (401) (6,355) (12,000)
Deferral of costs (53,428) (19,603) (54,498) (71,000)
-------- -------- -------- --------
Free cash flow 158,962 91,716 149,259 190,123
======== ======== ======== ========
Target Fiscal 2006
----------------------------------------
Free Cash Flow
------------------------------
Net cash provided by
operating activities 250,000 270,000
Proceeds received from
disposition of assets 0 0
Capitalized software (20,000) (20,000)
Proceeds received from sale
of software 0 0
Capital expenditures (15,000) (15,000)
Deferral of costs (55,000) (55,000)
Free cash flow 160,000 to 180,000
=======================
Target Fiscal 2007
---------------------------------------
Free Cash Flow
------------------------------
Net cash provided by
operating activities 280,000 300,000
Proceeds received from
disposition of assets 0 0
Capitalized software (23,000) (23,000)
Proceeds received from sale
of software 10,000 10,000
Capital expenditures (16,000) (16,000)
Deferral of costs (76,000) (76,000)
Free cash flow 175,000 to 195,000
=======================
Long-Term Goals Fiscal 2010
---------------------------------------
Free Cash Flow
------------------------------
Net cash provided by
operating activities 320,000 360,000
Proceeds received from
disposition of assets 0 0
Capitalized software (25,000) (25,000)
Proceeds received from sale
of software 0 0
Capital expenditures (20,000) (20,000)
Deferral of costs (90,000) (90,000)
Free cash flow 185,000 to 225,000
=======================
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.
----------------------------------------------------------------------
Actual Fiscal 2005
--------------------------------
Return on Assets (ROA) and Adjusted
Return on Invested Capital (ROIC)(5) ROA ROA ROIC
------------------------------------- ---------- ---------- ----------
Numerator:
Income from operations 122,192 122,192 122,192
Unusual Charges, Net (6) 0 0 0
Add implied interest on operating
leases (1) 13,903
------------------------------------------------ ---------- ----------
122,192 122,192 136,095
---------- ---------- ----------
Denominator:
Average total assets (2) 1,321,122 1,321,122 1,321,122
Less average cash (3) (11,858)
Less average non-interest bearing
current liabilities (4) (246,280)
Plus average present value of
operating leases (1) 168,734
----------------------------------------------------------- ----------
1,321,122 1,321,122 1,231,717
---------- ---------- ----------
Return on invested capital 9.2% 9.2% 11.0%
========== ========== ==========
Actual Q3 Fiscal 2006
--------------------------------
Return on Assets (ROA) and Adjusted
Return on Invested Capital (ROIC)(5) ROA ROA ROIC
------------------------------------- ---------- ---------- ----------
Numerator:
Income from operations 109,451 109,451 109,451
Unusual Charges, Net (6) 15,776 15,776
Add implied interest on operating
leases (1) 12,241
------------------------------------- ---------- ---------- ----------
109,451 125,227 137,467
---------- ---------- ----------
Denominator:
Average total assets (2) 1,514,779 1,514,779 1,514,779
Less average cash (3) (7,736)
Less average non-interest bearing
current liabilities (4) (286,759)
Plus average present value of
operating leases (1) 144,860
------------------------------------- ---------- ---------- ----------
1,514,779 1,514,779 1,365,143
---------- ---------- ----------
Return on invested capital 7.2% 8.3% 10.1%
========== ========== ==========
Actual YTD Fiscal 2006
--------------------------------
Return on Assets (ROA) and Adjusted
Return on Invested Capital (ROIC)(5) ROA ROA ROIC
------------------------------------- ---------- ---------- ----------
Numerator:
Income from operations 109,451 109,451 109,451
Unusual Charges, Net (6) 15,776 15,776
Add implied interest on operating
leases (1) 12,241
------------------------------------- ---------- ---------- ----------
109,451 125,227 137,467
---------- ---------- ----------
Denominator:
Average total assets (2) 1,514,779 1,514,779 1,514,779
Less average cash (3) (7,736)
Less average non-interest bearing
current liabilities (4) (286,759)
Plus average present value of
operating leases (1) 144,860
------------------------------------- ---------- ---------- ----------
1,514,779 1,514,779 1,365,143
---------- ---------- ----------
Return on invested capital 7.2% 8.3% 10.1%
========== ========== ==========
Estimated Fiscal 2006
Return on Assets (ROA) and ---------------------------------
Return on Invested Capital Adjusted
(ROIC)(5) ROA ROA ROIC
------------------------------- ----------- ---------- ----------
Numerator:
Income from operations 130,000 130,000 130,000
Unusual Charges, Net (6) 15,776 15,776
Add implied interest on
operating leases (1) 12,000
------------------------------- ----------- ---------- ----------
130,000 145,776 157,776
----------- ---------- ----------
Denominator:
Average total assets (2) 1,550,000 1,550,000 1,550,000
Less average cash (3) (9,000)
Less average non-interest
bearing current liabilities (4) (285,000)
Plus average present value
of operating leases (1) 140,000
------------------------------- ----------- ---------- ----------
1,550,000 1,550,000 1,396,000
----------- ---------- ----------
Return on invested capital 8.4% 9.4% 11.3%
=========== ========== ==========
Target Fiscal 2006
---------------------------------------------
Return on Assets (ROA) ROA ROIC
and Return on Invested ---------------------- ----------------------
Capital (ROIC)(5) Low High Low High
------------------------ ---------------------- ----------------------
Numerator:
Income from
operations 141,000 160,000 141,000 160,000
Unusual Charges, Net
(6) 0 0 0 0
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%
====================== ======================
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) 0 0 0 0
Add implied interest
on operating leases
(1) 11,000 11,000
------------------------ ---------------------- ----------------------
175,500 196,900 186,500 207,900
---------------------- ----------------------
Denominator:
Average total assets
(2) 1,566,000 1,574,000 1,566,000 1,574,000
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
------------------------ ---------------------- ----------------------
1,566,000 1,574,000 1,412,000 1,409,000
---------------------- ----------------------
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) 0 0 0 0
Add implied interest
on operating leases
(1) 9,000 9,000
------------------------ ---------------------- ----------------------
268,600 337,600 277,600 346,600
---------------------- ----------------------
Denominator:
Average total assets
(2) 1,864,000 1,965,000 1,864,000 1,965,000
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
------------------------ ---------------------- ----------------------
1,864,000 1,965,000 1,707,000 1,784,000
---------------------- ----------------------
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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