Acxiom(R) Corporation (Nasdaq: ACXM) today announced financial
results for the first quarter of fiscal 2006 ended June 30, 2005.
Revenue of $310.3 million was in line with previous estimates of
$310 million; diluted earnings per share of $.07 exceeded the
Company's previous estimate of $.06. Operating cash flow was $61.5
million and free cash flow was $36.7 million. Acxiom will hold a
conference call at 4:30 p.m. CDT today to discuss this information
further. Interested parties are invited to listen to the call,
which will be broadcast via the Internet at www.acxiom.com. The
Company will reference presentation slides that will be available
on the website prior to the call. "We are making good, steady
progress on the expense reductions we announced on July 12,"
Company Leader Charles D. Morgan said. "We expect to meet or exceed
$14 million to $16 million in savings per quarter by the end of the
fiscal year through the previously announced combination of job
cuts and other targeted expense reductions. All together, this
should position us for a solid FY06." Highlights of Acxiom's
first-quarter performance include: -- Revenue of $310.3 million, up
7 percent from $289.0 million in the first quarter a year ago. U.S.
revenue grew 13 percent. Acquisitions contributed 5% of the U.S.
revenue growth. International revenue was 16 percent below the same
quarter a year ago. -- Diluted earnings per share of $.07, down 50
percent from $.14 the year before. -- Operating cash flow of $61.5
million and free cash flow of $36.7 million. The free cash flow of
$36.7 million is a non-GAAP financial measure, and a reconciliation
to the comparable GAAP measure, operating cash flow, is attached to
this press release. -- The purchase of 8.3 million shares of common
stock through the Company's buy-back program at a total cost of
$156.6 million. -- New contracts that will deliver $15 million in
annual revenue and renewals that total $39 million in annual
revenue. -- Committed new deals in the pipeline that are expected
to generate $74 million in annual revenue. -- Integration of recent
acquisitions Digital Impact and SmartDM into a new Integrated
Marketing Services Organization focused on digital marketing
services. Morgan reported that Acxiom completed contracts in the
quarter with several clients, two of which were particularly
notable based on Acxiom's strategic goals. One was the expansion of
a large, U.S.-based financial services account into the European
market, and the other was new deployment of a fully grid-enabled
prospect database solution for new client Juniper Bank, leveraging
Acxiom's new Customer Information Infrastructure technology. Morgan
also outlined three primary areas that significantly impacted
Acxiom's performance compared with the first quarter of fiscal
2005: European operations down about $4 million in pretax earnings
year-over-year; problems with a large client installation that cost
the Company $6.7 million in profit; and lower profits in the real
estate data business, resulting in a $2.2 million shortfall. "When
you take all three situations together, we're talking about a
negative impact of about $.09 to diluted earnings per share in the
quarter," Morgan added. Outlook The Company's expectations are
communicated in the Financial Road Map, which includes a chart
summarizing the one-year and long-term goals as well as an
explanation of the assumptions and definitions that accompany these
goals. The only change to the previously released financial
projections in the Financial Road Map is in the area of
international revenues. As announced July 12, the estimate for
fiscal 2006 international revenue was reduced to a range of $170
million to $190 million - a reduction of 10-20 percent over fiscal
2005. The financial projections stated today are based on the
Company's current expectations. These projections are forward
looking, and actual results may differ materially. These
projections do not include the potential impact of any mergers,
acquisitions, divestitures or other business combinations that may
be completed in the future. 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) technology, data, database services, IT
outsourcing, consulting and analytics, and privacy leadership.
Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas,
with locations throughout the United States and Europe, and in
Australia and China. For more information, visit www.acxiom.com.
This release and today's conference call contain forward-looking
statements that are subject to certain risks and uncertainties that
could cause actual results to differ materially. Such statements
may include but are not necessarily limited to the following: that
with the exception of a reduction in the projected International
revenue and the impact of restructuring charges, the projected
revenue, operating margin, return on assets and return on invested
capital, operating cash flow and free cash flow, borrowings,
dividends and other metrics referred to in the Financial Road Map
published on May 11, 2005 will be within the estimated ranges; that
the estimations of revenue, earnings, cash flow, growth rates,
restructuring charges, expense reductions and job eliminations will
be within the estimated ranges; that the business pipeline and our
anticipated cost structure will allow us to continue to meet or
exceed revenue, cash flow and other projections. The following are
important factors, among others, that could cause actual results to
differ materially from these forward-looking statements: The
possibility that we may incur expenses related to unsolicited
proposals or others to acquire 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 or that economic conditions in general will not
be as expected; the possibility that significant customers may
experience extreme, severe economic difficulty; the possibility
that the integration of acquired businesses may not be as
successful as planned; the possibility that the fair value of
certain of our assets may not be equal to the carrying value of
those assets now or in future time periods; the possibility that
sales cycles may lengthen; 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 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, 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 competitive products and services; the
possibility that there will be changes in consumer or business
information industries and markets; the possibility that changes in
accounting pronouncements may occur and may impact these
projections; the possibility that we won't be able to protect
proprietary information and technology or to obtain necessary
licenses on commercially reasonable terms; the possibility that we
may encounter difficulties when entering new markets or industries;
the possibility that there will be changes in the legislative,
accounting, regulatory and consumer environments affecting our
business, including but not limited to litigation, legislation,
regulations and customs relating to 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 contracts which would affect the predictability of our
revenues; the possibility that the amount of ad hoc, volume-based
and project work will not be as expected; the possibility that we
may experience a loss of data center capacity or interruption of
telecommunication 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 rates may increase, thereby leading to reduced volumes
of business; the possibility that our clients may cancel or modify
their agreements with us; the possibility that we will not
successfully complete customer contract requirements on time or
meet the service levels specified 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, their global counterparts and other delivery
systems may be disrupted; 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 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 has begun to implement will continue to be implemented
successfully over the next 3-4 years and that the new CII
infrastructure will continue to provide increasing operational
efficiencies; that the acquisitions of companies operating
primarily outside of the United States will be successfully
integrated and that significant efficiencies will be realized from
this integration; relating to operating cash flow and free cash
flow, that sufficient operating and capital lease arrangements will
continue to be available to the Company to provide for the
financing of most of its computer equipment and that software
suppliers will continue to provide financing arrangements for most
of the software purchases; relating to revolving credit line
balance, that free cash flow will meet expectations and that the
Company will continue to 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 created through the
issuance of stock options and warrants will be mitigated by
continued stock repurchases in accordance with the Company's stock
repurchase program. With respect to the provision of products or
services outside our primary base of operations in the United
States, all of the above factors apply, along with the difficulty
of doing business in numerous sovereign jurisdictions due to
differences in culture, laws and regulations. Other factors are
detailed from time to time in our periodic reports and registration
statements filed with the United States Securities and Exchange
Commission. We believe that we have the product and technology
offerings, facilities, associates and competitive and financial
resources for continued business success, but future revenues,
costs, margins and profits are all influenced by a number of
factors, including those discussed above, all of which are
inherently difficult to forecast. We undertake no obligation to
update the information contained in this press release, including
the Financial Road Map or any other forward-looking statement.
Acxiom is a registered trademark of Acxiom Corporation. -0- *T
ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Dollars in thousands, except earnings per
share) For the Three Months Ended June 30,
--------------------------- 2005 2004 ---------------------------
Revenue: Services 238,499 207,847 Data 71,772 81,147 -------------
------------- Total revenue 310,271 288,994 Operating costs and
expenses: Cost of revenue Services 195,969 163,549 Data 48,885
51,819 ------------- ------------- Total cost of revenue 244,854
215,368 Selling, general and administrative 52,080 48,529 Gains,
losses and nonrecurring items, net (1,637) (344) -------------
------------- Total operating costs and expenses 295,297 263,553
------------- ------------- Income from operations 14,974 25,441
------------- ------------- Other income (expense): Interest
expense (5,162) (5,070) Other, net 891 409 -------------
------------- Total other income (expense) (4,271) (4,661)
------------- ------------- Earnings before income taxes 10,703
20,780 Income taxes 4,064 7,896 ------------- ------------- Net
earnings 6,639 12,884 ============= ============= Earnings per
share: Basic 0.07 0.15 ============= ============= Diluted 0.07
0.14 ============= ============= ACXIOM CORPORATION AND
SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In
thousands, except earnings per share) For the Three Months Ended
June 30, -------------------------- 2005 2004 -------------
------------ Basic earnings per share: Numerator - net earnings
6,639 12,884 Denominator - weighted-average shares outstanding
91,044 86,084 ------------- ------------ Basic earnings per share
0.07 0.15 ============= ============ Diluted earnings per share:
Numerator: Net earnings 6,639 12,884 Interest expense on
convertible bonds (net of tax benefit) - 1,017 -------------
------------ 6,639 13,901 ------------- ------------ Denominator:
Weighted-average shares outstanding 91,044 86,084 Dilutive effect
of common stock options and warrants 2,752 3,954 Dilutive effect of
convertible debt - 9,589 ------------- ------------ 93,796 99,627
------------- ------------ Diluted earnings per share 0.07 0.14
============= ============ ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT (Unaudited) (Dollars in thousands) For the
Three Months Ended June 30, --------------------------- 2005 2004
------------- ------------- US Services & Data 265,434 235,552
International Services & Data 44,837 53,442 -------------
------------- Total Revenue 310,271 288,994 =============
============= US Supplemental Information: Services & Data
Excluding IT Mgmt 178,632 172,283 IT Management Services 86,802
63,269 ------------- ------------- 265,434 235,552 =============
============= International Supplemental Information: Services
& Data Excluding IT Mgmt 44,837 53,442 IT Management Services -
- ------------- ------------- 44,837 53,442 =============
============= ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) June
30, March 31, 2005 2005 ----------- ----------- Assets ----------
Current assets: Cash and cash equivalents $10,889 $4,185 Trade
accounts receivable, net 236,333 250,653 Deferred income taxes
31,502 31,415 Refundable income taxes 1,165 1,345 Other current
assets 48,658 46,034 ----------- ----------- Total current assets
328,547 333,632 ----------- ----------- Property and equipment
625,650 581,918 Less - accumulated depreciation and amortization
283,941 258,532 ----------- ----------- Property and equipment, net
341,709 323,386 ----------- ----------- Software, net of
accumulated amortization 65,988 57,135 Goodwill 446,327 354,182
Purchased software licenses, net of accumulated amortization
158,030 157,999 Unbilled and notes receivable, excluding current
portions 21,395 20,410 Deferred costs, net 93,299 88,851 Data
acquisition costs 44,840 48,915 Other assets, net 25,620 15,369
----------- ----------- $1,525,755 $1,399,879 ===========
=========== Liabilities and Stockholders' Equity
---------------------------------------- Current liabilities:
Current installments of long-term obligations 76,706 83,005 Trade
accounts payable 63,624 63,295 Accrued payroll and related expenses
23,635 27,435 Other accrued expenses 87,309 74,635 Deferred revenue
111,049 115,892 ----------- ----------- Total current liabilities
362,323 364,262 ----------- ----------- Long-term obligations:
Long-term debt and capital leases, net of current installments
374,162 104,210 Software and data licenses, net of current
installments 33,687 37,494 ----------- ----------- Total long-term
obligations 407,849 141,704 ----------- ----------- Deferred income
taxes 82,716 79,079 Commitments and contingencies Stockholders'
equity: Common stock 10,535 10,440 Additional paid-in capital
609,122 588,156 Retained earnings 365,763 363,556 Accumulated other
comprehensive loss 3,989 12,616 Treasury stock, at cost (316,542)
(159,934) ----------- ----------- Total stockholders' equity
672,867 814,834 ----------- ----------- $1,525,755 $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
6/30/2005 Net cash provided by operating activities 61,476
Capitalized software (5,673) Capital expenditures (2,929) Deferral
of costs (16,192) ---------- Free cash flow 36,682 ==========
ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the
Three Months Ended June 30, ---------------------------- 2005 2004
---------------------------- Cash flows from operating activities:
Net earnings 6,639 12,884 Non-cash operating activities:
Depreciation and amortization 55,534 43,997 Loss (gain) on disposal
or impairment of assets, net 43 - Deferred income taxes 3,635 8,849
Non-cash stock compensation expense 298 - Changes in operating
assets and liabilities: Accounts receivable 17,297 (18,661) Other
assets (17,945) (1,012) Accounts payable and other liabilities
(4,025) (8,833) Merger, integration and impairment costs - (2,510)
-------------- ------------- Net cash provided by operating
activities 61,476 34,714 -------------- ------------- Cash flows
from investing activities: Capitalized software (5,673) (4,107)
Capital expenditures (2,929) (1,823) Deferral of costs (16,192)
(9,610) Payments received from investments 721 284 Net cash paid in
acquisitions (106,719) (5,560) -------------- ------------- Net
cash used by investing activities (130,792) (20,816) --------------
------------- Cash flows from financing activities: Proceeds from
debt 281,706 38,926 Payments of debt (54,130) (60,560) Dividends
paid (4,432) (3,449) Sale of common stock 13,527 19,317 Acquisition
of treasury stock (160,354) (10,971) -------------- -------------
Net cash used by financing activities 76,317 (16,737)
-------------- ------------- Effect of exchange rate changes on
cash (297) (302) -------------- ------------- Net decrease in cash
and cash equivalents 6,704 (3,141) Cash and cash equivalents at
beginning of period 4,185 14,355 -------------- ------------- Cash
and cash equivalents at end of period 10,889 11,214 ==============
============= Supplemental cash flow information: Cash paid
(received) during the period for: Interest 4,397 3,334 Income taxes
190 100 Payments on capital leases and installment payment
arrangements 19,929 13,259 Payments on software and data license
liabilities 10,938 11,696 Noncash investing and financing
activities: Enterprise software licenses acquired under software
obligation 2,161 2,685 Acquisition of property and equipment under
capital lease and installment payment arrangements 26,458 20,498
Construction of assets under construction loan 3,654 6,788
============== ============= ACXIOM CORPORATION Financial Road
Map(1) ------------------------- (as of June 30, 2005) -----------
----------- ---------- ---------- Long-Term Actual Actual Target
Goals Fiscal Q1 Fiscal Fiscal Fiscal Years Ending March 31, 2005(3)
2006(4) 2006 2009 ----------- ----------- ---------- ----------
U.S. Revenue Growth 9.0% 12.7% 13% to 15% 7% to 10% (CAGR) U.S.
Revenue $1,011 $265 $1,140 to million million $1,160 mil -
International Revenue -10% to 5% to 8% Growth 152.9% -16.1% -20%
(CAGR) International Revenue $213 $45 million $170 to million $190
mil - U.S. Operating Margin 11.5% to 15% to 18% 11.3% 6.2% 12.5%
International Operating 4.5% to 12% to 15% Margin 3.9% -3.1% 6.5%
Return on Assets (2) 9.2% 8.0% 9% to 10% 10% to 14% Return on
Invested 11% to 12% 13% to 18% Capital (2) 11.0% 9.7% Operating
Cash Flow $247 $61 million $250 to $270 to million $270 mil $300
mil Free Cash Flow $159 $37 million $160 to $170 to million $180
mil $200 mil Revolving Credit Line $11 million $271 $200 to less
than Balance million $375 mil $300 mil Dividends Per Share $0.24 to
$0.17 $0.05 $0.20 $0.28 ------------------------- (1) Assumptions
and definitions are defined on the following schedule: "Financial
Road Map assumptions and definitions" (2) ROA and ROIC are
calculated on a trailing 4 quarters basis. (3) Results for the
trailing 4 quarters ending March 31, 2005 include $1.0 million
income included in gains, losses & nonrecurring items and $3.6
million in expense related to vesting of stock options. (4) Results
for the trailing 4 quarters ending June 30, 2005 include $2.3
million income included in gains, losses & nonrecurring items
and $3.6 million in expense related to vesting of stock options.
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. The Company will
utilize all of its tax loss carry forwards and begin to pay income
taxes during FY06. 4. The Company will pay incentives under its
bonus plan commensurate with its business performance. If the
Company attains its business plan for fiscal 2006 the total would
be approximately $13 million and should grow in future years. 5.
The Company will maintain a relatively constant mix of business for
each of its three business segments. 6. Foreign exchange rates will
remain at approximately the current levels. 7. Stock repurchases
will be in amounts that yield the highest shareholder return
considering all other uses for the available cash. 8. Diluted
outstanding shares will increase slightly to reflect the impact of
in-the-money options as the stock price increases. 9. Long-term
goals are based on the Company's current assessment of
opportunities and are subject to change. There are risks associated
with obtaining these goals which are explained under forward
looking statements in the press release accompanying this Financial
Road Map. Acxiom disclaims any obligation to update the information
contained in this Financial Road Map. Definitions ----------- 1.
Revenue Growth is defined as the percentage growth compared to the
previous corresponding fiscal year or comparable period. 2.
Operating Margin is defined as the income from operations as a
percentage of revenue. 3. Return on Assets (ROA) is defined as
income from operations divided by average total assets for the
trailing four quarters. 4. Return on Invested Capital (ROIC) is
defined as income from operations adjusted for the implied interest
expense included in operating leases divided by the trailing four
quarters' average invested capital. The implied interest adjustment
for operating leases is calculated by multiplying the average
quarterly balances of the present value of operating leases
((beginning balance + ending balance)/2) x an 8% implied interest
rate on the leases. Average invested capital is defined as the
trailing four-quarter average of the ending quarterly balances for
total assets less cash, less non-interest bearing liabilities, plus
the present value of operating leases. 5. Operating Cash Flow is as
shown on the Company's cash flow statement. 6. Free Cash Flow is
defined as cash flow from operating activities less cash flow from
investing activities excluding net cash paid or received for
acquisitions and divestitures, joint ventures and investments. 7.
Revolving Credit Line Balance is defined as actual funds borrowed
under the Company's revolving line of credit facility at the end of
the period. 8. Dividends Per Share is defined as the sum of the
dividends for that period. ACXIOM CORPORATION Reconciliation of
Non-GAAP Measurements ---------------------------------------
(Dollars in thousands) -------- -------- -------------------
------------------- Actual Actual Target Long-Term Goals Years
Ending Fiscal Q1 Fiscal Fiscal 2006 Fiscal 2009 March 31, 2005 2006
-------- -------- ------------------- ------------------- Free Cash
Flow -------------- Net cash provided by operating activities
247,014 61,476 250,000 270,000 270,000 300,000 Proceeds received
from disposition of assets 0 0 0 0 0 0 Capitalized software
(20,294) (5,673) (20,000) (20,000) (25,000) (25,000) Capital
expendi- tures (14,330) (2,929) (15,000) (15,000) (20,000) (20,000)
Deferral of costs (53,428) (16,192) (55,000) (55,000) (55,000)
(55,000) -------- -------- -------- -------- -------- -------- Free
cash flow 158,962 36,682 160,000 to 180,000 170,000 to 200,000
======== ======== ======== ======== ======== ======== Free cash
flow as defined by the Company may not be comparable to similarly
titled measures reported by other companies. Management of the
Company has included free cash flow in this Financial Road Map
because although free cash flow does not represent the amount of
money available for the Company's discretionary spending since
certain obligations of the Company must be funded out of free cash
flow, management believes that it provides investors with a useful
alternative measure of liquidity by allowing an assessment of the
amount of cash available for general corporate and strategic
purposes, including debt payments, after funding operating
activities and capital expenditures, capitalized software expenses
and deferred costs. The above table reconciles free cash flow to
cash provided by operating activities, the nearest comparable GAAP
measure.
----------------------------------------------------------------------
Return on Assets (ROA) and Actual Fiscal 2005 Actual Q1 Fiscal 2006
Return on Invested Capital ---------- ---------- ----------
---------- (ROIC)(5) ROA ROIC ROA ROIC --------------------------
---------- ---------- ---------- ---------- Numerator: Income from
operations 122,192 122,192 111,725 111,725 Add implied interest on
operating leases (1) 13,903 12,426 ---------- ---------- ----------
---------- 122,192 136,095 111,725 124,151 ---------- ----------
---------- ---------- Denominator: Average total assets (2)
1,321,122 1,321,122 1,389,045 1,389,045 Less average cash (3)
(11,858) (11,777) Less average non- interest bearing current
liabilities (4) (246,280) (261,365) Plus average present value of
operating leases (1) 168,734 160,529 ---------- ----------
---------- ---------- 1,321,122 1,231,717 1,389,045 1,276,432
---------- ---------- ---------- ---------- Return on invested
capital 9.2% 11.0% 8.0% 9.7% ========== ========== ==========
========== Return on Assets (ROA) Target Fiscal 2006 and Return on
Invested --------------------------------------------- Capital
(ROIC)(5) ROA ROIC ------------------------ ----------------------
---------------------- Numerator: Income from operations 141,000
160,000 141,000 160,000 Add implied interest on operating leases
(1) 14,200 14,200 ---------- ---------- ---------- ----------
141,000 160,000 155,200 174,200 ---------- ---------- ----------
---------- Denominator: Average total assets (2) 1,542,000
1,552,000 1,542,000 1,552,000 Less average cash (3) (6,300)
(12,700) Less average non- interest bearing current liabilities (4)
(280,000) (280,200) Plus average present value of operating leases
(1) 180,000 179,500 ---------- ---------- ---------- ----------
1,542,000 1,552,000 1,435,700 1,438,600 ---------- ----------
---------- ---------- Return on invested capital 9% to 10% 11% to
12% ========== ========== ========== ========== Return on Assets
(ROA) Long-Term Goals Fiscal 2009 and Return on Invested
--------------------------------------------- Capital (ROIC)(5) ROA
ROIC ------------------------ ----------------------
---------------------- Numerator: Income from operations 191,000
272,000 191,000 272,000 Add implied interest on operating leases
(1) 19,000 19,000 ---------- ---------- ---------- ----------
191,000 272,000 210,000 291,000 ---------- ---------- ----------
---------- Denominator: Average total assets (2) 1,840,000
1,938,000 1,840,000 1,938,000 Less average cash (3) (214,800)
(285,100) Less average non- interest bearing current liabilities
(4) (290,000) (291,500) Plus average present value of operating
leases (1) 237,000 237,000 ---------- ---------- ----------
---------- 1,840,000 1,938,000 1,572,200 1,598,400 ----------
---------- ---------- ---------- Return on invested capital 10% to
14% 13% to 18% ========== ========== ========== ========== Notes
------ (1) Average present value of operating leases is the average
for the trailing 4 quarter ends of the present value of future
payments on operating leases, discounted at 8% which is the assumed
implicit interest rate included in the leases. The implied interest
added to the numerator is the 8% assumed interest charge on the
average quarterly balance ((beginning + Ending) / 2) of the present
value of the leases. (2) Average total assets is the average of the
GAAP amount for the trailing 4 quarter ends. (3) Average cash is
the average of the GAAP amount for the trailing 4 quarter ends. (4)
Average non-interest bearing current liabilities is the average for
the trailing 4 quarter ends of all current liabilities excluding
the current portion of long-term debt. (5) ROA and ROIC figures are
calculated on a trailing 4 quarters basis. 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. *T
Acxiom (NASDAQ:ACXM)
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Acxiom (NASDAQ:ACXM)
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