Acxiom Reports Fourth-Quarter, Fiscal-Year Results; Results in line with Financial Road Map.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. Corporation (Nasdaq: ACXM) today reported fourth-quarter and full-year financial results for fiscal 2006 ended March 31, 2006. Fourth-quarter results include revenue of $344.3 million, income from operations of $44.6 million, 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 of $.26, 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. of $74.2 million and free cash flow of $52.5 million. Full 2006 fiscal-year results include revenue of $1.333 billion, income from operations of $131.1 million and diluted earnings per share of $.71. These results include the impact of net pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $15.8 million described in our second quarter earnings release, 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 (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. by $.12. Operating cash flow for the year was $275.8 million and free cash flow was $201.8 million, both record results. 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. The Company will reference presentation slides that will be available on the website prior to the call. "We have accomplished what we said we would after a challenging first quarter of the fiscal year," 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. "We met or exceeded all of our fiscal year Financial Road Map targets for total company performance and U.S. results. International revenue results for the year were at the high end of the revised Road Map range that we set after Q1 and exceeded the adjusted operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: target for the full year that we set after Q3 results. Our cash flow reached a record level, we have an impressive list of new contracts and the committed pipeline is promising. Based on our team's execution of the strategies for the business, we are confident that the revenue and earnings will be in line with the fiscal 2007 projections in the Financial Road Map." Fourth-quarter highlights: --Revenue of $344.3 million, a 7 percent increase over $322.5 million in the fourth quarter of fiscal 2005. --U.S. revenue of $295.8 million, a 10 percent increase over $269.8 million in the fourth quarter of fiscal 2005. --International profit margin of 7% compared to negative 1% in the fourth quarter a year ago. --Income from operations of $44.6 million, a 94 percent increase from $23.0 million the year before. --Diluted earnings per share of $.26, up 63 percent from $.16 in the same period a year ago. --Operating cash flow of $74.2 million and free cash flow of $52.5 million. The free cash flow of $52.5 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, is attached to this press release. --New contracts that are expected to deliver $20 million in annual revenue and renewals that total $64 million in annual revenue. --Committed new deals in the pipeline that are expected to generate $61 million in annual revenue. Morgan noted that Acxiom recently completed contracts with General Motors, U.S. Bancorp  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. , LaSalle Bank LaSalle Bank Corporation is the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. With $116 billion in assets, it is headquartered at 135 South LaSalle Street in Chicago, Illinois. , Deluxe de·luxe also de luxe adj. Particularly elegant and luxurious; sumptuous: deluxe accommodations; a de luxe automobile. adv. Corporation, SunTrust Banks SunTrust Banks, Inc. (NYSE: STI) is an American bank holding company. The largest subsidiary is SunTrust Bank. It had $182.2 billion in assets as of December 31, 2006. , Inc., 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. Inc., Columbian Co·lum·bi·an adj. 1. Of or relating to the United States. 2. Of or relating to Christopher Columbus. Adj. 1. Columbian - of or relating to Christopher Columbus Chemicals Company, TransUnion TransUnion (full name Trans Union LLC) is a consumer credit reporting agency, considered one of the "big three" agencies in the United States. Like its main competitors, Experian and Equifax, it now markets its credit reports directly to consumers, in addition to its core and Safety-Kleen Safety-Kleen Systems, Inc. is the leading provider of cleaning, environmental and re-refining solutions. Their EMS (Environmental Management System) is compliant with the ISO 14001 Standards of Excellence and their oil re-refineries are ISO 9001 certified. Systems, Inc. Fiscal 2006 highlights: --Revenue of $1.333 billion, up 9 percent from $1.223 billion a year ago, an increase of $110 million in annual revenue. --U.S. revenue of $1.148 billion, up 14% from $1.011 billion a year ago, an increase of $137 million. --Diluted earnings per share of $.71, down 4 percent from $.74 in fiscal 2005. Fiscal 2006 earnings include the impact of net pre-tax charges of $15.8 million in the second quarter, which reduced diluted EPS by $.12. --Operating cash flow of $275.8 million and free cash flow of $201.8 million, both record performances for Acxiom. --New contracts that are expected to deliver $128 million in annual revenue and renewals that total $149 million in annual revenue. Total contract value for the new contracts completed in the fiscal year is $458 million, while total contract value for renewals is $410 million. --The acquisition of Digital Impact, a leading provider of integrated digital marketing solutions, based in San Mateo, California San Mateo is a city in San Mateo County, California, in the San Francisco Bay Area. It is one of the larger suburbs on the San Francisco Peninsula, located between Burlingame to the north, Foster City to the East, and Belmont to the south. . --The acquisition of Insight 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. , a Broomfield Broomfield can be: In the United Kingdom:
adj. 1. Of or relating to analysis or analytics. 2. Expert in or using analysis, especially one who thinks in a logical manner. 3. Psychoanalytic. tools and background screening services to help clients mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. risks, prevent
identity theft and limit fraud.
--A technology and distribution agreement 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. 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 purchase of 12.1 million shares of Acxiom stock through the company's stock buy-back program at a total cost of $231.5 million. From the program's introduction in December December: see month. 2002 through March 31, 2006, the Company has purchased a total of 21.2 million shares of Acxiom stock at a total cost of $390.2 million. Fiscal 2006 Recognition In fiscal 2006, Acxiom: --Received the prestigious 21st Century Achievement Award from the Computerworld Honors Foundation for positive contributions to the global information technology revolution with the development and delivery of its grid-based 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 ). --Was named one of the "Best Places to Work in Information Technology" by Computerworld magazine, the fourth time the company has been ranked in the top 100 work environments for technology professionals. --Was named one of the top 30 providers of financial technology applications in the "FinTech 100," a listing of the top technology providers as complied by American Banker American Banker is a daily newspaper covering the financial services industry. Founded in 1835 and based in New York, American Banker's 70 reporters and editors in six cities monitor developments and breaking news affecting banks. and the research firm Financial Insights. --Was ranked No. 5 for employee productivity in Gartner's list of Top 80 Worldwide IT Vendors. --Received the Corporate Leadership Award from the Direct Marketing Educational Foundation. --Saw its Digital Impact business named a "leader" among e-mail service See Internet e-mail service. providers in Forrester Forrester is a surname. It may refer to
Road Map and Outlook Fiscal 2006 U.S. revenue of $1.148 billion was within the target range of $1.140 billion to $1.160 billion included in the Company's Financial Road Map (December 31, 2005). International revenue of $184.9 million for the year was within the target range of $170 million to $190 million. Adjusted U.S. operating margin of 12.4 percent for fiscal 2006 was at the high end of the target range of 11.5 to 12.5 percent. International margin of 2.5 percent was above the target range of 1 to 2 percent that was projected in the updated Road Map adjusted for third quarter results. Return on Invested Capital for the 2006 fiscal year was 11.4% which is near the mid-point of the fiscal 2006 target range of 11 to 12 percent. Acxiom's current Financial Road Map (March 31, 2006) reflects the Company's 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. reflect expected performance in fiscal 2010. For the fiscal year ended 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 assumptions and limitations set forth in the Financial Road Map (March 31, 2006). These projections are forward looking, and actual results may differ materially. These projections may be impacted by mergers, acquisitions, divestitures or other business combinations that may be completed in the future as well as the other factors set forth below. Leadership Announcement Morgan today also announced that, effective May 15, 2006, Frank Cotroneo joined Acxiom as chief financial officer. Cotroneo previously has served as CFO See Chief Financial Officer. for H&R Block and MasterCard MasterCard Worldwide (NYSE: MA) is a mutinational corporation based in Purchase, NY in the United States. Throughout the world, its principal business is to process payments between the banks of merchants and the banks of purchasers that use its "Mastercard" branded debit- and International. All financial functions including Finance and Accounting, Investor Relations Investor relations The process by which the corporation communicates with its investors. , Treasury and Corporate Finance will report to Mr. Cotroneo. "We are thrilled thrill v. thrilled, thrill·ing, thrills v.tr. 1. To cause to feel a sudden intense sensation; excite greatly. 2. To give great pleasure to; delight. See Synonyms at enrapture. to be able to add an executive of the caliber of Frank Cotroneo to Acxiom's senior leadership team," Morgan said. "Frank has served as a public-company CFO, and overseen all aspects of the financial operations of several well-respected companies. The international experience he gained in his four years as regional financial officer for MasterCard in Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). will be a significant asset given the geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. scope of Acxiom's business." Rodger Rodger is a surname, and may refer to:
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 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) grid-based environment Acxiom will continue to be implemented successfully over the next 3-4 years and that the new CII infrastructure will continue to provide increasing operational efficiencies; that the acquisitions of companies operating primarily outside of the United States will be successfully integrated and that significant efficiencies will be realized from this integration; relating to operating cash flow and free cash flow, that sufficient operating and capital lease arrangements will continue to be available to the Company to provide for the financing of most of its computer equipment and that software suppliers will continue to provide financing arrangements for most of the software purchases; relating to revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. line balance, that free cash flow will meet expectations and that the Company will use free cash flow to pay down bank debt, buy back stock and fund dividends; relating to annual dividends, that the Board of Directors will continue to approve quarterly dividends and will vote to increase dividends over time; relating to diluted shares, that the Company will meet its cash flow expectations and that potential dilution potential dilution The decrease in the proportional equity position of a share of stock that will occur eventually if additional authorized shares are actually issued. created through the issuance of stock options and warrants will be mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by continued stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Company's stock repurchase program. With respect to the provision of products or services outside our primary base of operations Noun 1. base of operations - installation from which a military force initiates operations; "the attack wiped out our forward bases" base air base, air station - a base for military aircraft army base - a large base of operations for an army in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign SOVEREIGN. A chief ruler with supreme power; one possessing sovereignty. (q.v.) It is also applied to a king or other magistrate with limited powers. 2. In the United States the sovereignty resides in the body of the people. Vide Rutherf. Inst. 282. jurisdictions due to differences in scale, competition, culture, laws and regulations. Other factors are detailed from time to time in our periodic reports and registration statements filed with the United States Securities and Exchange Commission. We believe that we have the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast. We undertake no obligation to update the information contained in this press release, including the Financial Road Map or any other forward-looking statement. Acxiom is a registered trademark of Acxiom Corporation.
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
March 31,
---------------------------
2006 2005
---------------------------
Revenue:
Services 257,591 235,945
Data 86,752 86,589
------------- -------------
Total revenue 344,343 322,534
Operating costs and expenses:
Cost of revenue
Services 198,028 189,864
Data 52,142 54,602
------------- -------------
Total cost of revenue 250,170 244,466
Selling, general and administrative 50,042 55,113
Gains, losses and nonrecurring items,
net (456) -
------------- -------------
Total operating costs and expenses 299,756 299,579
------------- -------------
Income from operations 44,587 22,955
------------- -------------
Other income (expense):
Interest expense (7,531) (4,302)
Other, net 135 2,376
------------- -------------
Total other income (expense) (7,396) (1,926)
------------- -------------
Earnings before income taxes 37,191 21,029
Income taxes 14,132 6,171
------------- -------------
Net earnings 23,059 14,858
============= =============
Earnings per share:
Basic 0.27 0.17
============= =============
Diluted 0.26 0.16
============= =============
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Twelve Months Ended
March 31,
---------------------------
2006 2005
---------------------------
Revenue:
Services 1,012,549 889,675
Data 320,019 333,367
------------- -------------
Total revenue 1,332,568 1,223,042
Operating costs and expenses:
Cost of revenue
Services 778,490 697,323
Data 201,950 208,388
------------- -------------
Total cost of revenue 980,440 905,711
Selling, general and administrative 211,541 196,123
Gains, losses and nonrecurring items,
net 9,504 (984)
------------- -------------
Total operating costs and expenses 1,201,485 1,100,850
------------- -------------
Income from operations 131,083 122,192
------------- -------------
Other income (expense):
Interest expense (28,744) (19,191)
Other, net 2,005 3,200
------------- -------------
Total other income (expense) (26,739) (15,991)
------------- -------------
Earnings before income taxes 104,344 106,201
Income taxes 40,216 36,483
------------- -------------
Net earnings 64,128 69,718
============= =============
Earnings per share:
Basic 0.73 0.80
============= =============
Diluted 0.71 0.74
============= =============
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
March 31,
---------------------------
2006 2005
---------------------------
Basic earnings per share:
Numerator - net earnings 23,059 14,858
Denominator - weighted-average shares
outstanding 86,981 88,216
-------------- ------------
Basic earnings per share 0.27 0.17
============== ============
Diluted earnings per share:
Numerator:
Net earnings 23,059 14,858
Interest expense on convertible
bonds (net of tax benefit) - 509
-------------- ------------
23,059 15,367
-------------- ------------
Denominator:
Weighted-average shares
outstanding 86,981 88,216
Dilutive effect of common stock
options, warrants and restricted
stock 2,855 3,274
Dilutive effect of convertible
debt - 7,351
-------------- ------------
89,836 98,841
-------------- ------------
Diluted earnings per share 0.26 0.16
============== ============
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Twelve Months Ended
March 31,
---------------------------
2006 2005
---------------------------
Basic earnings per share:
Numerator - net earnings 64,128 69,718
Denominator - weighted-average shares
outstanding 87,557 86,695
-------------- ------------
Basic earnings per share 0.73 0.80
============== ============
Diluted earnings per share:
Numerator:
Net earnings 64,128 69,718
Interest expense on convertible
bonds (net of tax benefit) - 3,560
-------------- ------------
64,128 73,278
-------------- ------------
Denominator:
Weighted-average shares
outstanding 87,557 86,695
Dilutive effect of common stock
options, warrants and restricted
stock 2,732 3,721
Dilutive effect of convertible
debt - 9,030
-------------- ------------
90,289 99,446
-------------- ------------
Diluted earnings per share 0.71 0.74
============== ============
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
---------------------------
2006 2005
---------------------------
US Services & Data 295,795 269,848
International Services & Data 48,548 52,686
-------------- ------------
Total Revenue 344,343 322,534
============== ============
US Supplemental Information:
Services & Data Excluding IT Mgmt 206,853 186,613
IT Management Services 88,942 83,235
-------------- ------------
295,795 269,848
============== ============
International Supplemental Information:
Services & Data Excluding IT Mgmt 48,548 52,686
IT Management Services - -
-------------- ------------
48,548 52,686
============== ============
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
---------------------------
2006 2005
---------------------------
US Services & Data 1,147,641 1,010,514
International Services & Data 184,927 212,528
-------------- ------------
Total Revenue 1,332,568 1,223,042
============== ============
US Supplemental Information:
Services & Data Excluding IT Mgmt 796,506 720,437
IT Management Services 351,135 290,077
-------------- ------------
1,147,641 1,010,514
============== ============
International Supplemental Information:
Services & Data Excluding IT Mgmt 184,927 212,528
IT Management Services - -
-------------- ------------
184,927 212,528
============== ============
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31, March 31,
2006 2005
-------------- ------------
Assets
------
Current assets:
Cash and cash equivalents $ 7,705 $ 4,185
Trade accounts receivable, net 261,624 250,653
Deferred income taxes 24,587 31,415
Refundable income taxes - 1,345
Other current assets 44,937 46,034
-------------- ------------
Total current assets 338,853 333,632
-------------- ------------
Property and equipment 662,948 581,918
Less - accumulated depreciation and
amortization 329,177 258,532
-------------- ------------
Property and equipment, net 333,771 323,386
-------------- ------------
Software, net of accumulated amortization 45,509 57,135
Goodwill 472,401 354,182
Purchased software licenses, net of
accumulated amortization 155,518 157,999
Unbilled and notes receivable, excluding
current portions 19,139 20,410
Deferred costs, net 112,817 88,851
Data acquisition costs 40,828 48,915
Other assets, net 21,662 15,369
-------------- ------------
$ 1,540,498 $ 1,399,879
============== ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term
obligations 93,518 83,005
Trade accounts payable 44,144 63,295
Accrued payroll and related expenses 32,139 27,435
Other accrued expenses 81,428 74,635
Deferred revenue 123,916 115,892
Income Taxes 4,845 -
-------------- ------------
Total current liabilities 379,990 364,262
-------------- ------------
Long-term obligations:
Long-term debt and capital leases, net
of current installments 353,439 104,210
Software and data licenses, net of
current installments 22,976 37,494
-------------- ------------
Total long-term obligations 376,415 141,704
-------------- ------------
Deferred income taxes 77,916 79,079
Commitments and contingencies
Stockholders' equity:
Common stock 10,946 10,440
Additional paid-in capital 677,026 588,156
Unearned stock-based compensation (1,941) -
Retained earnings 410,278 363,556
Accumulated other comprehensive loss 2,205 12,616
Treasury stock, at cost (392,337) (159,934)
-------------- ------------
Total stockholders' equity 706,177 814,834
-------------- ------------
$ 1,540,498 $ 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 Qtr ended Qtr ended Yr ended
6/30/2005 9/30/2005 12/31/2005 3/31/2006 3/31/2006
Net cash provided
by operating
activities 61,476 44,785 95,414 74,158 275,833
Proceeds received
from disposition
of assets - 3,613 1,510 - 5,123
Capitalized
software (5,673) (5,809) (5,204) (5,217) (21,903)
Cash collected from
sale of software - - 20,000 - 20,000
Capital
expenditures (2,929) (3,025) (401) (493) (6,848)
Deferral of costs (16,192) (18,703) (19,603) (15,956) (70,454)
---------------------------------------------------
Free cash flow 36,682 20,861 91,716 52,492 201,751
===================================================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
---------------------------
2006 2005
---------------------------
Cash flows from operating activities:
Net earnings 23,059 14,858
Non-cash operating activities:
Depreciation and amortization 58,787 55,204
Loss (gain) on disposal or impairment
of assets, net (346) (361)
Deferred income taxes (2,403) 3,232
Tax benefit of stock options and
warrants 19,097 9,043
Non-cash stock compensation expense 345 3,595
Changes in operating assets and
liabilities:
Accounts receivable (7,324) (21,540)
Other assets (4,450) (19,367)
Accounts payable and other
liabilities (9,043) 1,013
Deferred revenue (3,564) 22,076
-------------- ------------
Net cash provided by operating
activities 74,158 67,753
-------------- ------------
Cash flows from investing activities:
Capitalized software (5,217) (5,760)
Capital expenditures (493) (4,562)
Deferral of costs (15,956) (17,203)
Payments received from investments 905 235
Net cash paid in acquisitions (117) (18,612)
-------------- ------------
Net cash used by investing
activities (20,878) (45,902)
-------------- ------------
Cash flows from financing activities:
Proceeds from debt 14,746 86,346
Payments of debt (91,079) (93,566)
Dividends paid (4,338) (4,290)
Sale of common stock 27,007 5,776
Acquisition of treasury stock (1,905) (33,551)
-------------- ------------
Net cash used by financing
activities (55,569) (39,285)
-------------- ------------
Effect of exchange rate changes on
cash 88 (275)
-------------- ------------
Net increase in cash and cash
equivalents (2,201) (17,709)
Cash and cash equivalents at beginning
of period 9,906 21,894
-------------- ------------
Cash and cash equivalents at end of
period 7,705 4,185
============== ============
Supplemental cash flow information:
Cash paid during the period for:
Interest 9,553 7,064
Income taxes 4,561 385
Payments on capital leases and
installment payment arrangements 18,342 11,241
Payments on software and data
license liabilities 5,459 5,151
Noncash investing and financing
activities:
Software licenses and maintenance
acquired under software obligation 6,570 1,200
Acquisition of property and
equipment under capital lease and
installment payment arrangements 14,884 24,268
Construction of assets under
construction loan 3,572 3,853
============== ============
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
---------------------------
2006 2005
---------------------------
Cash flows from operating activities:
Net earnings 64,128 69,718
Non-cash operating activities:
Depreciation and amortization 231,137 195,120
Loss (gain) on disposal or impairment
of assets, net (1,797) (411)
Deferred income taxes 9,998 34,165
Tax benefit of stock options and
warrants 19,097 9,043
Non-cash stock compensation expense 1,313 3,595
Changes in operating assets and
liabilities:
Accounts receivable (21,162) (44,286)
Other assets (26,197) (21,898)
Accounts payable and other
liabilities (6,253) (22,461)
Deferred revenue 5,569 24,429
------------- ------------
Net cash provided by operating
activities 275,833 247,014
------------- ------------
Cash flows from investing activities:
Disposition of operations 4,844 -
Sale of assets 5,123 -
Capitalized software (21,903) (20,294)
Capital expenditures (6,848) (14,330)
Cash collected from the sale of
software 20,000 -
Deferral of costs (70,454) (53,428)
Payments received from investments 3,760 2,533
Net cash paid in acquisitions (144,626) (42,200)
------------- ------------
Net cash used by investing
activities (210,104) (127,719)
------------- ------------
Cash flows from financing activities:
Proceeds from debt 437,868 216,138
Payments of debt (307,120) (311,350)
Dividends paid (17,406) (14,649)
Sale of common stock 58,616 43,984
Acquisition of treasury stock (233,770) (63,759)
------------- ------------
Net cash used by financing
activities (61,812) (129,636)
------------- ------------
Effect of exchange rate changes on
cash (397) 171
------------- ------------
Net increase in cash and cash
equivalents 3,520 (10,170)
Cash and cash equivalents at beginning
of period 4,185 14,355
------------- ------------
Cash and cash equivalents at end of
period 7,705 4,185
============= ============
Supplemental cash flow information:
Cash paid (received) during the period
for:
Interest 27,958 20,473
Income taxes 4,185 1,465
Payments on capital leases and
installment payment arrangements 72,232 60,886
Payments on software and data
license liabilities 29,069 24,748
Noncash investing and financing
activities:
Issuance of stock options and
warrants for acquisitions 7,541 1,833
Software licenses and maintenance
acquired under software obligation 14,950 13,882
Acquisition of property and
equipment under capital lease and
installment payment arrangements 85,261 90,627
Construction of assets under
construction loan 10,772 21,832
============= ============
ACXIOM CORPORATION AND SUBSIDIARIES
SUMMARIZED SUPPLEMENTAL CASH FLOW INFORMATION
(Unaudited)
(Dollars in thousands)
For the
Twelve
For the Three Months Ended Months
---------------------------------- Ended
March 31,
6/30/05 9/30/05 12/31/05 3/31/06 2006
---------------------------------- ---------
Free cash flow 36,682 20,861 91,716 52,492 201,751
Increase (Decrease) in
revolver 259,800 96,665 (66,378)(48,736) 241,351
Debt payments (excluding
payments on line of
credit) (32,224)(23,729) (27,053)(27,597) (110,603)
Sale of common stock 13,527 8,024 10,058 27,007 58,616
Acquisition of treasury
stock (160,354)(69,081) (2,430) (1,905) (233,770)
Dividends paid (4,432) (4,377) (4,259) (4,338) (17,406)
Payments received from
investments 721 41 2,093 905 3,760
Proceeds from the
disposition of operations - 1,529 3,315 - 4,844
Net cash paid in
acquisitions (106,719)(34,807) (2,983) (117) (144,626)
Effect of exchange rate
changes on cash (297) (53) (135) 88 (397)
---------------------------------- ---------
Net increase (decrease) in
cash 6,704 (4,927) 3,944 (2,201) 3,520
================================== =========
ACXIOM CORPORATION
Financial Road Map(1)
----------------------
(as of March 31, 2006)
Actual Long-Term
Years Ending Actual Q4 Target Actual Target Goals
March 31, Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
2005 2006 2006 2006 2007 2010
-------- -------- ------- -------- --------- ---------
U.S. Revenue 13% to 8% to 11%
Growth 9.0% 9.6% 15% 13.6% 7% to 10% (CAGR)
U.S. Revenue $1,140
to $1,230 to
$1,011 $296 $1,160 $1,148 $1,260
million million mil million mil -
International
Revenue -10% to 5% to 8%
Growth 152.9% -7.9% -20% -13.0% 0% to 5% (CAGR)
International $170 to
Revenue $213 $49 $190 $185 $185 to
million million mil million $195 mil -
U.S. Operating 14% to 16% to
Margin 11.3% 13.9% 11.6% 15% 18%
Adjusted U.S. 11.5%
Operating to
Margin 11.3% 13.9% 12.5% 12.4%(3)
International
Operating 12% to
Margin 3.9% 7.0% -1.1% 2% to 4% 15%
Adjusted
International
Operating 1% to
Margin 3.9% 7.0% 2% 2.5%(3)
Return on 11% to 14% to
Assets (2) 9.2% 8.5% 8.5% 13% 17%
Adjusted
Return on 9% to
Assets (2) 9.5%(3) 10% 9.5%(3)
Return on
Invested 11% to 13% to 16% to
Capital (2) 11.0% 11.4%(3) 12% 11.4%(3) 15% 19%
Operating Cash $250 to
Flow $247 $74 $270 $276 $280 to $320 to
million million mil million $300 mil $360 mil
Free Cash Flow $160 to
$159 $52 $180 $202 $175 to $185 to
million million mil million $195 mil $225 mil
Revolving $200 to
Credit Line $11 $252 $375 $252 less than less than
Balance million million mil million $500 mil $500 mil
Dividends Per $0.24 to
Share $0.17 $0.05 $0.20 $0.20 $0.22 $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
(as of March 31, 2006)
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 credits, the Company expects to utilize all of
its federal credits and begin paying regular tax in fiscal 2007.
The Company expects to gradually begin paying state taxes as state
NOLs are utilized.
4. The Company will pay incentives under its bonus plan of $15 to $25
million for each of the years beginning in fiscal 2007 based on
achievement of the Company's business plan.
5. The Company will maintain a relatively constant mix of business for
each of its three business segments.
6. Foreign exchange rates will remain at approximately the current
levels.
7. Stock repurchases will be in amounts that yield the highest
shareholder return considering all other uses for the available
cash.
8. Diluted outstanding shares will increase slightly to reflect the
impact of in-the-money options as the stock price increases.
9. Long-term goals are based on the Company's current assessment of
opportunities and are subject to change. There are risks
associated with obtaining these goals which are explained under
forward looking statements in the press release accompanying this
Financial Road Map. Acxiom disclaims any obligation to update the
information contained in this Financial Road Map.
Definitions
-----------
1. Revenue Growth is defined as the percentage growth compared to the
previous corresponding fiscal year or comparable period.
2. Operating Margin is defined as the income from operations as a
percentage of revenue.
3. Return on Assets (ROA) is defined as income from operations divided
by average total assets for the trailing four quarters.
4. Return on Invested Capital (ROIC) is defined as income from
operations adjusted for the implied interest expense included in
operating leases divided by the trailing four quarters' average
invested capital. The implied interest adjustment for operating
leases is calculated by multiplying the average quarterly balances
of the present value of operating leases ((beginning balance +
ending balance)/2) x an 8% implied interest rate on the leases.
Average invested capital is defined as the trailing four-quarter
average of the ending quarterly balances for total assets less
operating cash, less non-interest bearing liabilities, plus the
present value of operating leases.
5. Operating Cash Flow is as shown on the Company's cash flow
statement.
6. Free Cash Flow 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)
(as of March 31, 2006)
-----------------------------
Actual Actual
Years Ending March 31, Fiscal 2005 Q4 Fiscal 2006
-----------------------------
U.S. Operating Margin
---------------------
U.S. Revenue 1,010,513 295,795
U.S. Operating Income 113,992 41,169
U.S. Operating Income Margin 11.3% 13.9%
Gains, losses and nonrecurring
items, net 0 0
ValueAct Defense 0 0
Lawsuit Expenses 0 0
-----------------------------
Adjusted U.S. Operating Income (6) 113,992 41,169
Adjusted U.S. Operating Income Margin (6) 11.3% 13.9%
=============================
International Operating Margin
------------------------------
International Revenue 212,529 48,548
International Operating Income 8,200 3,419
International Operating Income Margin 3.9% 7.0%
Gains, losses and nonrecurring
items, net 0 0
-----------------------------
Adjusted International Operating Income (6) 8,200 3,419
Adjusted International Operating
Income Margin (6) 3.9% 7.0%
=============================
Free Cash Flow
--------------
Net cash provided by operating
activities 247,014 74,158
Proceeds received from disposition of
assets 0 0
Capitalized software (20,294) (5,217)
Proceeds received from sale of software 0 0
Capital expenditures (14,330) (493)
Deferral of costs (53,428) (15,956)
-----------------------------
Free cash flow 158,962 52,492
=============================
-----------------------------
Actual
Years Ending Target Fiscal
March 31, Fiscal 2006 2006
-----------------------------
U.S. Operating Margin
---------------------
U.S. Revenue 1,147,641
U.S. Operating Income 133,072
U.S. Operating Income Margin 11.6%
Gains, losses and nonrecurring
items, net 6,147
ValueAct Defense 2,216
Lawsuit Expenses 761
----------
Adjusted U.S. Operating Income (6) 142,196
Adjusted U.S. Operating Income Margin (6) 12.4%
==========
International Operating Margin
------------------------------
International Revenue 184,927
International Operating Income (1,991)
International Operating Income Margin -1.1%
Gains, losses and nonrecurring
items, net 6,652
----------
Adjusted International Operating
Income (6) 4,661
Adjusted International Operating Income
Margin (6) 2.5%
==========
Free Cash Flow
--------------
Net cash provided by operating
activities 250,000 270,000 275,833
Proceeds received from disposition of
assets 0 0 5,123
Capitalized software (20,000) (20,000) (21,903)
Proceeds received from sale of
software 0 0 20,000
Capital expenditures (15,000) (15,000) (6,848)
Deferral of costs (55,000) (55,000) (70,454)
--------- -------- ----------
Free cash flow 160,000 to 180,000 201,751
========= ======== ==========
------------------- -------------------
Years Ending Target Long-Term Goals
March 31, Fiscal 2007 Fiscal 2010
------------------- -------------------
Free Cash Flow
--------------
Net cash provided by operating
activities 280,000 300,000 320,000 360,000
Proceeds received from
disposition of assets 0 0 0 0
Capitalized software (23,000) (23,000) (25,000) (25,000)
Proceeds received from sale of
software 10,000 10,000 0 0
Capital expenditures (16,000) (16,000) (20,000) (20,000)
Deferral of costs (76,000) (76,000) (90,000) (90,000)
-------- -------- -------- --------
Free cash flow 175,000 to 195,000 185,000 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 Actual
Fiscal 2005 Q4 Fiscal 2006
--------------------------- ---------------------------
--------------------------- ---------------------------
Return on
Assets (ROA)
and Invested
Capital Adjusted Adjusted
(ROIC)(5) ROA ROA ROIC ROA ROA ROIC
------------- --------------------------- ---------------------------
Numerator:
Income from
operations 122,192 122,192 122,192 131,083 131,083 131,083
Unusual
Charges,
Net (6) 0 0 0 15,776 15,776
Add implied
interest
on
operating
leases (1) 13,903 11,696
----------------------------- ----------------------------
122,192 122,192 136,095 131,083 146,859 158,554
----------------------------- ----------------------------
Denominator:
Average
total
assets
(2) 1,321,122 1,321,122 1,321,122 1,549,933 1,549,933 1,549,933
Less
average
cash (3) (11,858) (8,616)
Less average
non-interest
bearing current
liabilities
(4) (246,280) (288,063)
Plus average present
value of operating
leases (1) 168,734 135,190
------------------------------ ----------------------------
1,321,122 1,321,122 1,231,717 1,549,933 1,549,933 1,388,444
------------------------------ ----------------------------
Return on
invested
capital 9.2% 9.2% 11.0% 8.5% 9.5% 11.4%
============================= ============================
-----------------------------------------
Target
Fiscal 2006
-----------------------------------------
Return on Assets (ROA) and ROA ROIC
-------------------- --------------------
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%
==================== ====================
-----------------------------
Actual
Fiscal 2006
-----------------------------
Return on Assets (ROA) and
Return on Invested Capital (ROIC)(5) Adjusted
ROA ROA ROIC
-----------------------------
Numerator:
Income from operations 131,083 131,083 131,083
Unusual Charges, Net (6) 15,776 15,776
Add implied interest on operating
leases (1) 11,696
-----------------------------
131,083 146,859 158,554
-----------------------------
Denominator:
Average total assets (2) 1,549,933 1,549,933 1,549,933
Less average cash (3) (8,616)
Less average non-interest bearing
current liabilities (4) (288,063)
Plus average present value of
operating leases (1) 135,190
-----------------------------
1,549,933 1,549,933 1,388,444
-----------------------------
Return on invested capital 8.5% 9.5% 11.4%
=============================
-----------------------------------------
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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