Acxiom(R) Corporation (Nasdaq:ACXM) today announced financial
results for the third quarter of fiscal 2006 ended December 31,
2005. Revenue for the quarter was $347.4 million, income from
operations was $52.7 million, pre-tax earnings were $44.0 million,
and diluted earnings per share (EPS) were $0.31. All represent
record quarterly performances in the Company's history. Acxiom will
hold a conference call at 4:30 p.m. CST 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. "Our third-quarter results are very encouraging and
demonstrate the continuing improvement in our financial
performance," Company Leader Charles D. Morgan said. "Combined with
the recent announcement of our strategic partnership with EMC
Corporation and the outlook for the fourth quarter and fiscal 2007,
our performance in the third quarter is clear evidence of the
growing momentum at Acxiom." Highlights of Acxiom's third-quarter
performance include: -- Revenue of $347.4 million, up 11 percent
from $312.4 million in the third quarter a year ago. The net impact
of acquisitions and divestitures contributed 5 percentage points of
this 11 percentage-point growth in revenue. -- Income from
operations of $52.7 million, a 34 percent increase compared to
$39.4 million in the third quarter last year. -- Pre-tax earnings
of $44.0 million, up 27 percent from $34.6 million in the third
quarter of fiscal 2005. -- Diluted earnings per share of $.31, a 29
percent increase compared to $.24 in the third quarter last year.
-- Operating cash flow of $95.4 million and free cash flow of $91.7
million, both of which represent record quarterly cash flow
results. The free cash flow of $91.7 million is a non-GAAP
financial measure and a reconciliation to the comparable GAAP
measure, operating cash flow, is attached to this press release. --
A technology and distribution agreement with EMC Corporation that
includes $30 million from EMC to purchase the grid operating system
developed by Acxiom and license certain other grid-related
software. The deal contributed to $20 million of the Company's free
cash flow performance in the third quarter but had no impact on
revenue, earnings or operating cash flow. -- New contracts that
will deliver $41 million in annual revenue and renewals that total
$31 million in annual revenue. -- Committed new deals in the
pipeline that are expected to generate $68.4 million in annual
revenue. "The operational improvements we have made, combined with
a strong pipeline and the continued signing of new contracts, add
up to an improving performance at Acxiom," Company Operations
Leader Lee Hodges said. "Our expense-savings initiatives have
produced better-than-expected results, and we continue to focus on
expense containment and control, which we expect to result in
continued improvement in operating margins." Morgan noted that
Acxiom recently completed new contracts with AIG Marketing, Inc.,
Canadian Tire Financial Services, Inc., Federated Department
Stores, Inc., Hyundai Motor America, Lowe's, Nationwide, Novartis
Pharmaceuticals Corporation, Staples, ZelnickMedia and Primedia.
Outlook The Company's expectations for fiscal 2006, fiscal 2007 and
beyond are communicated in the Financial Road Map, which is
attached. The Financial Road Map has been updated based on current
expectations for fiscal year 2007, and the long-term goals have
been updated to reflect the expectation for fiscal year 2010. For
the fiscal year ending March 31, 2007, the Company estimates that
U.S. revenue will grow 7 percent to 10 percent, the U.S. operating
margins will be 14 percent to 15 percent, international revenue
will grow 0 percent to 5 percent, and international margin will be
2 percent to 4 percent. The financial projections stated today are
based on the Company's current expectations and the assumption and
limitations set forth in the Financial Road Map. These projections
are forward-looking, 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
the Company is continuing to experience continued improvement and
momentum in financial performance, that we expect that continued
focus on expense controls will lead to continued improvement in
operating margins, that with the exception of the impact of the net
unusual charges recorded in the quarter ended September 30, 2005,
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 attached to this release will be within the
estimated ranges; that the estimations of revenue, earnings, cash
flow, growth rates, restructuring charges 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 expenses related to
unsolicited 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 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 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 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 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 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 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 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. -0- *T ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in
thousands, except earnings per share) For the Three Months Ended
December 31, -------------------------- 2005 2004
-------------------------- Revenue: Services 263,266 225,811 Data
84,165 86,594 -------- -------- Total revenue 347,431 312,405
Operating costs and expenses: Cost of revenue Services 190,993
174,960 Data 48,799 52,199 -------- -------- Total cost of revenue
239,792 227,159 Selling, general and administrative 56,134 46,461
Gains, losses and nonrecurring items, net (1,202) (640) --------
-------- Total operating costs and expenses 294,724 272,980
-------- -------- Income from operations 52,707 39,425 --------
-------- Other income (expense): Interest expense (8,635) (5,076)
Other, net (71) 210 -------- -------- Total other income (expense)
(8,706) (4,866) -------- -------- Earnings before income taxes
44,001 34,559 Income taxes 16,720 11,079 -------- -------- Net
earnings 27,281 23,480 ======== ======== Earnings per share: Basic
0.32 0.27 ======== ======== Diluted 0.31 0.24 ======== ========
ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Dollars in thousands, except earnings per
share) For the Nine Months Ended December 31,
-------------------------- 2005 2004 --------------------------
Revenue: Services 754,958 653,730 Data 233,267 246,778 --------
-------- Total revenue 988,225 900,508 Operating costs and
expenses: Cost of revenue Services 580,462 507,459 Data 149,808
153,786 -------- -------- Total cost of revenue 730,270 661,245
Selling, general and administrative 161,499 141,010 Gains, losses
and nonrecurring items, net 9,960 (984) -------- -------- Total
operating costs and expenses 901,729 801,271 -------- --------
Income from operations 86,496 99,237 -------- -------- Other income
(expense): Interest expense (21,213) (14,889) Other, net 1,870 824
-------- -------- Total other income (expense) (19,343) (14,065)
-------- -------- Earnings before income taxes 67,153 85,172 Income
taxes 26,084 30,312 -------- -------- Net earnings 41,069 54,860
======== ======== Earnings per share: Basic 0.47 0.64 ========
======== Diluted 0.45 0.58 ======== ======== ACXIOM CORPORATION AND
SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In
thousands, except earnings per share) For the Three Months Ended
December 31, -------------------------- 2005 2004
-------------------------- Basic earnings per share: Numerator -
net earnings 27,281 23,480 Denominator - weighted-average shares
outstanding 85,203 86,468 -------- -------- Basic earnings per
share 0.32 0.27 ======== ======== Diluted earnings per share:
Numerator: Net earnings 27,281 23,480 Interest expense on
convertible bonds (net of tax benefit) - 1,017 -------- --------
27,281 24,497 --------- -------- Denominator: Weighted-average
shares outstanding 85,203 86,468 Dilutive effect of common stock
options and warrants 2,723 4,191 Dilutive effect of convertible
debt - 9,589 -------- -------- 87,926 100,248 -------- --------
Diluted earnings per share 0.31 0.24 ======== ======== ACXIOM
CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE
(Unaudited) (In thousands, except earnings per share) For the Nine
Months Ended December 31, ------------------------- 2005 2004
------------------------- Basic earnings per share: Numerator - net
earnings 41,069 54,860 Denominator - weighted-average shares
outstanding 87,748 86,187 -------- -------- Basic earnings per
share 0.47 0.64 ======== ======== Diluted earnings per share:
Numerator: Net earnings 41,069 54,860 Interest expense on
convertible bonds (net of tax benefit) - 3,051 -------- --------
41,069 57,911 -------- -------- Denominator: Weighted-average
shares outstanding 87,748 86,187 Dilutive effect of common stock
options and warrants 2,691 3,870 Dilutive effect of convertible
debt - 9,589 -------- -------- 90,439 99,646 -------- --------
Diluted earnings per share 0.45 0.58 ======== ======== ACXIOM
CORPORATION AND SUBSIDIARIES REVENUES BY SEGMENT (Unaudited)
(Dollars in thousands) For the Three Months Ended December 31,
-------------------------- 2005 2004 -------------------------- US
Services & Data 300,086 253,898 International Services &
Data 47,345 58,507 -------- -------- Total Revenue 347,431 312,405
======== ======== US Supplemental Information: Services & Data
Excluding IT Mgmt 210,455 178,983 IT Management Services 89,631
74,915 -------- -------- 300,086 253,898 ======== ========
International Supplemental Information: Services & Data
Excluding IT Mgmt 47,345 58,507 IT Management Services - - --------
-------- 47,345 58,507 ======== ======== ACXIOM CORPORATION AND
SUBSIDIARIES REVENUES BY SEGMENT (Unaudited) (Dollars in thousands)
For the Nine Months Ended December 31, -------------------------
2005 2004 ------------------------- US Services & Data 851,846
740,666 International Services & Data 136,379 159,842 --------
-------- Total Revenue 988,225 900,508 ======== ======== US
Supplemental Information: Services & Data Excluding IT Mgmt
589,653 533,824 IT Management Services 262,193 206,842 --------
-------- 851,846 740,666 ======== ======== International
Supplemental Information: Services & Data Excluding IT Mgmt
136,379 159,842 IT Management Services - - -------- --------
136,379 159,842 ======== ======== ACXIOM CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands) December 31, March 31, 2005 2005 -----------
---------- Assets ------ Current assets: Cash and cash equivalents
$9,906 $4,185 Trade accounts receivable, net 261,135 250,653
Deferred income taxes 31,615 31,415 Refundable income taxes - 1,345
Other current assets 40,321 46,034 ---------- ---------- Total
current assets 342,977 333,632 ---------- ---------- Property and
equipment 663,521 581,918 Less - accumulated depreciation and
amortization 324,158 258,532 --------- ---------- Property and
equipment, net 339,363 323,386 ---------- ---------- Software, net
of accumulated amortization 47,850 57,135 Goodwill 474,680 354,182
Purchased software licenses, net of accumulated amortization
157,203 157,999 Unbilled and notes receivable, excluding current
portions 20,551 20,410 Deferred costs, net 104,419 88,851 Data
acquisition costs 40,530 48,915 Other assets, net 22,757 15,369
---------- ---------- $1,550,330 $1,399,879 ========== ===========
Liabilities and Stockholders' Equity
------------------------------------ Current liabilities: Current
installments of long-term obligations 87,401 83,005 Trade accounts
payable 43,622 63,295 Accrued payroll and related expenses 31,841
27,435 Other accrued expenses 81,000 74,635 Deferred revenue
127,753 115,892 Income Taxes 12,182 - ---------- ---------- Total
current liabilities 383,799 364,262 ---------- ---------- Long-term
obligations: Long-term debt and capital leases, net of current
installments 404,104 104,210 Software and data licenses, net of
current installments 26,740 37,494 ---------- ---------- Total
long-term obligations 430,844 141,704 ---------- ----------
Deferred income taxes 91,329 79,079 Commitments and contingencies
Stockholders' equity: Common stock 10,674 10,440 Additional paid-in
capital 627,982 588,156 Retained earnings 391,557 363,556
Accumulated other comprehensive loss 2,141 12,616 Treasury stock,
at cost (387,996) (159,934) ---------- ---------- Total
stockholders' equity 644,358 814,834 ---------- ----------
$1,550,330 $1,399,879 ========== ========== ACXIOM CORPORATION AND
SUBSIDIARIES RECONCILIATION OF FREE CASH FLOW TO OPERATING CASH
FLOW (Unaudited) (Dollars in thousands) Qtr ended Qtr ended Qtr
ended Qtr ended Yr ended 6/30/02 9/30/02 12/31/02 3/31/03 3/31/03
Net cash provided by operating activities 60,243 53,446 76,992
63,112 253,793 Proceeds received from disposition of assets 45 155
- 93 293 Capitalized software (8,652) (8,958) (8,726) (8,237)
(34,573) Capital expenditures (1,916) (3,000) (5,893) (2,403)
(13,212) Deferral of costs (3,240) (4,108) (3,796) (3,883) (15,027)
Proceeds from sale and leaseback transaction - 7,729 - - 7,729
---------- ---------- ----------- ---------- ----------- Free cash
flow 46,480 45,264 58,577 48,682 199,003 ========== ==========
=========== ========== =========== Qtr ended Qtr ended Qtr ended
Qtr ended Yr ended 6/30/03 9/30/03 12/31/03 3/31/04 3/31/04 Net
cash provided by operating activities 48,125 49,909 79,282 82,567
259,883 Proceeds received from disposition of assets 506 192 39
2,046 2,783 Capitalized software (6,335) (7,296) (6,510) (7,703)
(27,844) Capital expenditures (1,588) (3,036) (7,637) (9,917)
(22,178) Deferral of costs (6,026) (4,006) (5,312) (9,537) (24,881)
---------- ---------- ----------- ---------- ----------- Free cash
flow 34,682 35,763 59,862 57,456 187,763 ========== ==========
=========== ========== =========== Qtr ended Qtr ended Qtr ended
Qtr ended Yr ended 6/30/04 9/30/04 12/31/04 3/31/05 3/31/05 Net
cash provided by operating activities 34,714 61,742 82,805 67,753
247,014 Capitalized software (4,107) (4,721) (5,706) (5,760)
(20,294) Capital expenditures (1,823) (4,813) (3,132) (4,562)
(14,330) Deferral of costs (9,610) (11,113) (15,502) (17,203)
(53,428) ---------- ---------- ----------- ---------- -----------
Free cash flow 19,174 41,095 58,465 40,228 158,962 ==========
========== =========== ========== =========== Qtr ended Qtr ended
Qtr ended Qtr ended YTD 6/30/05 9/30/05 12/31/05 3/31/06 12/31/05
Net cash provided by operating activities 61,476 44,785 95,414
201,675 Proceeds received from disposition of assets - 3,613 1,510
5,123 Capitalized software (5,673) (5,809) (5,204) (16,686) Cash
collected from sale of software - - 20,000 20,000 Capital
expenditures (2,929) (3,025) (401) (6,355) Deferral of costs
(16,192) (18,703) (19,603) (54,498) ---------- ----------
----------- ---------- ----------- Free cash flow 36,682 20,861
91,716 0 149,259 ========== ========== =========== ==========
=========== ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in
thousands) For the Three Months Ended December 31,
------------------------------- 2005 2004
------------------------------- Cash flows from operating
activities: Net earnings 27,281 23,480 Non-cash operating
activities: Depreciation and amortization 59,712 50,817 Loss (gain)
on disposal or impairment of assets, net (524) (50) Deferred income
taxes 4,386 11,385 Non-cash stock compensation expense 346 -
Changes in operating assets and liabilities: Accounts receivable
(8,552) 3,403 Other assets (6,587) 5,915 Accounts payable and other
liabilities 4,161 (18,896) Deferred revenue 15,191 6,751
----------- ------------ Net cash provided by operating activities
95,414 82,805 ----------- ------------ Cash flows from investing
activities: Disposition of operations 3,315 1,636 Sale of assets
1,510 - Capitalized software (5,204) (5,706) Capital expenditures
(401) (3,132) Cash collected from sale of software 20,000 -
Deferral of costs (19,603) (15,502) Payments received from
investments 2,093 159 Net cash paid in acquisitions (2,983) (6,847)
----------- ------------ Net cash used by investing activities
(1,273) (29,392) ----------- ------------ Cash flows from financing
activities: Proceeds from debt 31,833 31,663 Payments of debt
(125,264) (82,175) Dividends paid (4,259) (3,464) Sale of common
stock 10,058 14,537 Acquisition of treasury stock (2,430) (2,840)
----------- ------------ Net cash used by financing activities
(90,062) (42,279) ----------- ------------ Effect of exchange rate
changes on cash (135) 620 ----------- ------------ Net increase in
cash and cash equivalents 3,944 11,754 Cash and cash equivalents at
beginning of period 5,962 10,140 ----------- ------------ Cash and
cash equivalents at end of period 9,906 21,894 -----------
------------ Supplemental cash flow information: Cash paid during
the period for: Interest 7,932 3,521 Income taxes 1,070 583
Payments on capital leases and installment payment arrangements
17,994 23,012 Payments on software and data license liabilities
7,344 4,842 Noncash investing and financing activities: Issuance of
warrants in acquisition - 1,833 Enterprise software licenses
acquired under software obligation - 6,715 Acquisition of property
and equipment under capital lease and installment payment
arrangements 14,804 27,289 Construction of assets under
construction loan 402 4,868 ----------- ------------ ACXIOM
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited) (Dollars in thousands) For the Nine Months
Ended December 31, -------------------------- 2005 2004
-------------------------- Cash flows from operating activities:
Net earnings 41,069 54,860 Non-cash operating activities:
Depreciation and amortization 172,350 139,916 Loss (gain) on
disposal or impairment of assets, net (1,451) (50) Deferred income
taxes 12,401 30,933 Non-cash stock compensation expense 968 -
Changes in operating assets and liabilities: Accounts receivable
(13,838) (22,746) Other assets (21,747) (2,531) Accounts payable
and other liabilities 2,790 (23,474) Deferred revenue 9,133 2,353
----------- ------------ Net cash provided by operating activities
201,675 179,261 ----------- ------------ Cash flows from investing
activities: Disposition of operations 4,844 1,636 Sale of assets
5,123 - Capitalized software (16,686) (14,534) Capital expenditures
(6,355) (9,768) Cash collected from the sale of software 20,000 -
Deferral of costs (54,498) (36,225) Payments received from
investments 2,855 662 Net cash paid in acquisitions (144,509)
(23,588) ----------- ------------ Net cash used by investing
activities (189,226) (81,817) ----------- ------------ Cash flows
from financing activities: Proceeds from debt 423,122 129,792
Payments of debt (216,041) (217,784) Dividends paid (13,068)
(10,359) Sale of common stock 31,609 38,208 Acquisition of treasury
stock (231,865) (30,208) ----------- ------------ Net cash used by
financing activities (6,243) (90,351) ----------- ------------
Effect of exchange rate changes on cash (485) 446 -----------
------------ Net increase in cash and cash equivalents 5,721 7,539
Cash and cash equivalents at beginning of period 4,185 14,355
----------- ------------ Cash and cash equivalents at end of period
9,906 21,894 ----------- ------------ Supplemental cash flow
information: Cash paid (received) during the period for: Interest
18,405 13,409 Income taxes (376) 1,080 Payments on capital leases
and installment payment arrangements 53,890 49,645 Payments on
software and data license liabilities 17,141 13,899 Noncash
investing and financing activities: Issuance of warrants in
acquisition - 1,833 Enterprise software licenses acquired under
software obligation 8,380 12,682 Acquisition of property and
equipment under capital lease and installment payment arrangements
70,377 66,359 Construction of assets under construction loan 7,200
17,979 ----------- ------------ ACXIOM CORPORATION AND SUBSIDIARIES
SUMMARIZED SUPPLEMENTAL CASH FLOW INFORMATION (Unaudited) (Dollars
in thousands) Last 12 03/31/05 06/30/05 09/30/05 12/31/05 Months
--------- --------- --------- --------- --------- Free cash flow
40,228 36,682 20,861 91,716 189,487 Change in revolver 10,921
259,800 96,665 (66,378) 301,008 Other debt proceeds 4,175 - - -
4,175 Debt payments (excluding payments on line of credit) (22,316)
(32,224) (23,729) (27,053) (105,322) Sale of common stock 5,776
13,527 8,024 10,058 37,385 Acquisition of treasury stock (33,551)
(160,354) (69,081) (2,430) (265,416) Dividends paid (4,290) (4,432)
(4,377) (4,259) (17,358) Payments received from investments 235 721
41 2,093 3,090 Proceeds from the disposition of operations - -
1,529 3,315 4,844 Net cash paid in acquisitions (18,612) (106,719)
(34,807) (2,983) (163,121) Effect of exchange rate changes on cash
(275) (297) (53) (135) (760) --------- --------- ---------
--------- --------- Net change in cash (17,709) 6,704 (4,927) 3,944
(11,988) ========= ========= ========= ========= ========= ACXIOM
CORPORATION Financial Road Map(1)
----------------------------------------------------------------------
(as of December 31, 2005) Actual Actual Actual Years Ending March
31, Fiscal 2005 Q3 Fiscal 2006 YTD Fiscal 2006 --------------
-------------- --------------- U.S. Revenue Growth 9.0% 18.2% 15.0%
U.S. Revenue $1,011 million $300 million $851 million International
Revenue Growth 152.9% -19.1% -14.7% International Revenue $213
million $47 million $136 million U.S. Operating Margin 11.3% 16.3%
10.8% Adjusted U.S. Operating Margin 11.3% 16.3% 11.9%(3)
International Operating Margin 3.9% 7.9% -4.0% Adjusted
International Operating Margin 3.9% 7.9% 0.9%(3) Return on Assets
(2) 9.2% 7.2% 7.2% Adjusted Return on Assets (2) 8.3%(3) 8.3%(3)
Return on Invested Capital (2) 11.0% 10.1%(3) 10.1%(3) Operating
Cash Flow $247 million $95 million $201 million Free Cash Flow $159
million $92 million $149 million Revolving Credit Line $11 million
$301 million $301 million Balance Dividends Per Share $0.17 $0.05
$0.15 Long-Term Years Ending Estimated Target Target Goals March
31, Fiscal 2006(4) Fiscal 2006 Fiscal 2007 Fiscal 2010
-------------- ----------- ----------- ----------- U.S. Revenue
Growth 14% 13% to 15% 7% to 10% 8% to 11% (CAGR) U.S. Revenue
$1,140 to $1,230 to $1,150 million $1,160 mil $1,260 mil -
International Revenue Growth -15% -10% to -20% 0% to 5% 5% to 8%
(CAGR) International $170 to $180 to Revenue $180 million $190 mil
$190 mil - U.S. Operating Margin 11.7% 14% to 15% 16% to 18%
Adjusted U.S. Operating Margin 12.4%(3) 11.5% to 12.5%
International Operating Margin -2.2% 2% to 4% 12% to 15% Adjusted
International Operating Margin 1.6%(3) 1% to 2% Return on Assets
(2) 8.4% 11% to 13% 14% to 17% Adjusted Return on Assets (2)
9.4%(3) 9% to 10% Return on Invested Capital (2) 11.3%(3) 11% to
12% 13% to 15% 16% to 19% Operating Cash Flow $250 to $280 to $320
to $270 million $270 mil $300 mil $360 mil Free Cash Flow $160 to
$175 to $185 to $190 million $180 mil $195 mil $225 mil Revolving
Credit $200 to less than less than Line Balance $290 million $375
mil $500 mil $500 mil Dividends Per Share $0.20 $0.20 $0.20 $0.24
to $0.28 1 Assumptions and definitions are defined on the following
schedule: "Financial Road Map assumptions and definitions" 2 ROA
and ROIC are calculated on a trailing 4 quarters basis. 3 Results
exclude unusual charges of $9.1 million for U.S. and $6.7 million
for International in the quarter ended September 30, 2005. These
charges are excluded when calculating performance compared to the
Road Map since they were not considered in setting the Road Map
target. All other time periods are as reported for GAAP. 4 Based
upon an estimated EPS for Q4 FY2006 of $0.25. ACXIOM CORPORATION
Financial Road Map Assumptions and Definitions
----------------------------------------------------------------------
Assumptions
----------------------------------------------------------------------
1. The effective tax rate is projected to be approximately 38% for
future years. 2. Interest rates are assumed to increase slightly
over the current levels. 3. Excluding acquired NOLs, the Company
expects to utilize all of its federal tax loss carry forwards
during fiscal 2006. Excluding acquired credits, the Company expects
to utilize all of its federal credits and begin paying regular tax
in fiscal 2007. The Company expects to gradually begin paying state
taxes as state NOLs are utilized. 4. The Company will pay
incentives under its bonus plan of $5 to $10 million for fiscal
2006 and $15 to $25 million for each of the years beginning in
fiscal 2007 based on achievement of the Company's business plan. 5.
The Company will maintain a relatively constant mix of business for
each of its three business segments. 6. Foreign exchange rates will
remain at approximately the current levels. 7. Stock repurchases
will be in amounts that yield the highest shareholder return
considering all other uses for the available cash. 8. Diluted
outstanding shares will increase slightly to reflect the impact of
in-the-money options as the stock price increases. 9. Long-term
goals are based on the Company's current assessment of
opportunities and are subject to change. There are risks associated
with obtaining these goals which are explained under forward
looking statements in the press release accompanying this Financial
Road Map. Acxiom disclaims any obligation to update the information
contained in this Financial Road Map. Definitions
----------------------------------------------------------------------
1. Revenue Growth is defined as the percentage growth compared to
the previous corresponding fiscal year or comparable period. 2.
Operating Margin is defined as the income from operations as a
percentage of revenue. 3. Return on Assets (ROA) is defined as
income from operations divided by average total assets for the
trailing four quarters. 4. Return on Invested Capital (ROIC) is
defined as income from operations adjusted for the implied interest
expense included in operating leases divided by the trailing four
quarters' average invested capital. The implied interest adjustment
for operating leases is calculated by multiplying the average
quarterly balances of the present value of operating leases
((beginning balance + ending balance)/2) x an 8% implied interest
rate on the leases. Average invested capital is defined as the
trailing four-quarter average of the ending quarterly balances for
total assets less operating cash, less non-interest bearing
liabilities, plus the present value of operating leases. 5.
Operating Cash Flow is as shown on the Company's cash flow
statement. 6. Free Cash Flow is defined as cash flow from operating
activities less cash flow from investing activities excluding net
cash paid or received for acquisitions and divestitures, joint
ventures and investments. 7. Revolving Credit Line Balance is
defined as actual funds borrowed under the Company's revolving line
of credit facility at the end of the period. 8. Dividends Per Share
is defined as the sum of the dividends for that period. ACXIOM
CORPORATION Reconciliation of Non-GAAP Measurements
----------------------------------------------------------------------
(Dollars in thousands) Actual Actual Actual Estimated Years Ending
March 31, Fiscal Q3 Fiscal YTD Fiscal Fiscal 2005 2006 2006 2006
--------------------------------------- U.S. Operating Margin
------------------------------ U.S. Revenue 1,010,513 300,086
851,846 1,150,000 U.S. Operating Income 113,992 48,965 91,904
134,000 U.S. Operating Income Margin 11.3% 16.3% 10.8% 11.7% Gains,
losses and nonrecurring items, net 0 0 6,147 6,147 ValueAct Defense
0 0 2,216 2,216 Lawsuit Expenses 0 0 761 761 -------- --------
-------- -------- Adjusted U.S. Operating Income (6) 113,992 48,965
101,028 143,124 Adjusted U.S. Operating Income Margin (6) 11.3%
16.3% 11.9% 12.4% ======== ======== ======== ======== International
Operating Margin ------------------------------ International
Revenue 212,529 47,345 136,379 180,000 International Operating
Income 8,200 3,741 (5,410) (3,800) International Operating Income
Margin 3.9% 7.9% -4.0% -2.1% Gains, losses and nonrecurring items,
net 0 0 6,652 6,652 -------- -------- -------- -------- Adjusted
International Operating Income (6) 8,200 3,741 1,242 2,852 Adjusted
International Operating Income Margin (6) 3.9% 7.9% 0.9% 1.6%
======== ======== ======== ========
----------------------------------------------------------------------
Free Cash Flow ------------------------------ Net cash provided by
operating activities 247,014 95,414 201,675 270,000 Proceeds
received from disposition of assets 0 1,510 5,123 5,123 Capitalized
software (20,294) (5,204) (16,686) (22,000) Proceeds received from
sale of software 0 20,000 20,000 20,000 Capital expenditures
(14,330) (401) (6,355) (12,000) Deferral of costs (53,428) (19,603)
(54,498) (71,000) -------- -------- -------- -------- Free cash
flow 158,962 91,716 149,259 190,123 ======== ======== ========
======== Target Fiscal 2006
---------------------------------------- Free Cash Flow
------------------------------ Net cash provided by operating
activities 250,000 270,000 Proceeds received from disposition of
assets 0 0 Capitalized software (20,000) (20,000) Proceeds received
from sale of software 0 0 Capital expenditures (15,000) (15,000)
Deferral of costs (55,000) (55,000) Free cash flow 160,000 to
180,000 ======================= Target Fiscal 2007
--------------------------------------- Free Cash Flow
------------------------------ Net cash provided by operating
activities 280,000 300,000 Proceeds received from disposition of
assets 0 0 Capitalized software (23,000) (23,000) Proceeds received
from sale of software 10,000 10,000 Capital expenditures (16,000)
(16,000) Deferral of costs (76,000) (76,000) Free cash flow 175,000
to 195,000 ======================= Long-Term Goals Fiscal 2010
--------------------------------------- Free Cash Flow
------------------------------ Net cash provided by operating
activities 320,000 360,000 Proceeds received from disposition of
assets 0 0 Capitalized software (25,000) (25,000) Proceeds received
from sale of software 0 0 Capital expenditures (20,000) (20,000)
Deferral of costs (90,000) (90,000) Free cash flow 185,000 to
225,000 ======================= Free cash flow as defined by the
Company may not be comparable to similarly titled measures reported
by other companies. Management of the Company has included free
cash flow in this Financial Road Map because although free cash
flow does not represent the amount of money available for the
Company's discretionary spending since certain obligations of the
Company must be funded out of free cash flow, management believes
that it provides investors with a useful alternative measure of
liquidity by allowing an assessment of the amount of cash available
for general corporate and strategic purposes, including debt
payments, after funding operating activities and capital
expenditures, capitalized software expenses and deferred costs. The
above table reconciles free cash flow to cash provided by operating
activities, the nearest comparable GAAP measure.
----------------------------------------------------------------------
Actual Fiscal 2005 -------------------------------- Return on
Assets (ROA) and Adjusted Return on Invested Capital (ROIC)(5) ROA
ROA ROIC ------------------------------------- ----------
---------- ---------- Numerator: Income from operations 122,192
122,192 122,192 Unusual Charges, Net (6) 0 0 0 Add implied interest
on operating leases (1) 13,903
------------------------------------------------ ----------
---------- 122,192 122,192 136,095 ---------- ---------- ----------
Denominator: Average total assets (2) 1,321,122 1,321,122 1,321,122
Less average cash (3) (11,858) Less average non-interest bearing
current liabilities (4) (246,280) Plus average present value of
operating leases (1) 168,734
-----------------------------------------------------------
---------- 1,321,122 1,321,122 1,231,717 ---------- ----------
---------- Return on invested capital 9.2% 9.2% 11.0% ==========
========== ========== Actual Q3 Fiscal 2006
-------------------------------- Return on Assets (ROA) and
Adjusted Return on Invested Capital (ROIC)(5) ROA ROA ROIC
------------------------------------- ---------- ----------
---------- Numerator: Income from operations 109,451 109,451
109,451 Unusual Charges, Net (6) 15,776 15,776 Add implied interest
on operating leases (1) 12,241
------------------------------------- ---------- ----------
---------- 109,451 125,227 137,467 ---------- ---------- ----------
Denominator: Average total assets (2) 1,514,779 1,514,779 1,514,779
Less average cash (3) (7,736) Less average non-interest bearing
current liabilities (4) (286,759) Plus average present value of
operating leases (1) 144,860 -------------------------------------
---------- ---------- ---------- 1,514,779 1,514,779 1,365,143
---------- ---------- ---------- Return on invested capital 7.2%
8.3% 10.1% ========== ========== ========== Actual YTD Fiscal 2006
-------------------------------- Return on Assets (ROA) and
Adjusted Return on Invested Capital (ROIC)(5) ROA ROA ROIC
------------------------------------- ---------- ----------
---------- Numerator: Income from operations 109,451 109,451
109,451 Unusual Charges, Net (6) 15,776 15,776 Add implied interest
on operating leases (1) 12,241
------------------------------------- ---------- ----------
---------- 109,451 125,227 137,467 ---------- ---------- ----------
Denominator: Average total assets (2) 1,514,779 1,514,779 1,514,779
Less average cash (3) (7,736) Less average non-interest bearing
current liabilities (4) (286,759) Plus average present value of
operating leases (1) 144,860 -------------------------------------
---------- ---------- ---------- 1,514,779 1,514,779 1,365,143
---------- ---------- ---------- Return on invested capital 7.2%
8.3% 10.1% ========== ========== ========== Estimated Fiscal 2006
Return on Assets (ROA) and --------------------------------- Return
on Invested Capital Adjusted (ROIC)(5) ROA ROA ROIC
------------------------------- ----------- ---------- ----------
Numerator: Income from operations 130,000 130,000 130,000 Unusual
Charges, Net (6) 15,776 15,776 Add implied interest on operating
leases (1) 12,000 ------------------------------- -----------
---------- ---------- 130,000 145,776 157,776 -----------
---------- ---------- Denominator: Average total assets (2)
1,550,000 1,550,000 1,550,000 Less average cash (3) (9,000) Less
average non-interest bearing current liabilities (4) (285,000) Plus
average present value of operating leases (1) 140,000
------------------------------- ----------- ---------- ----------
1,550,000 1,550,000 1,396,000 ----------- ---------- ----------
Return on invested capital 8.4% 9.4% 11.3% =========== ==========
========== Target Fiscal 2006
--------------------------------------------- Return on Assets
(ROA) ROA ROIC and Return on Invested ----------------------
---------------------- Capital (ROIC)(5) Low High Low High
------------------------ ----------------------
---------------------- Numerator: Income from operations 141,000
160,000 141,000 160,000 Unusual Charges, Net (6) 0 0 0 0 Add
implied interest on operating leases (1) 14,200 14,200
------------------------ ----------------------
---------------------- 141,000 160,000 155,200 174,200
---------------------- ---------------------- Denominator: Average
total assets (2) 1,542,000 1,552,000 1,542,000 1,552,000 Less
average cash (3) (6,300) (12,700) Less average non- interest
bearing current liabilities (4) (280,000) (280,200) Plus average
present value of operating leases (1) 180,000 179,500
------------------------ ----------------------
---------------------- 1,542,000 1,552,000 1,435,700 1,438,600
---------------------- ---------------------- Return on invested
capital 9% to 10% 11% to 12% ======================
====================== Target Fiscal 2007
--------------------------------------------- Return on Assets
(ROA) ROA ROIC and Return on Invested ----------------------
---------------------- Capital (ROIC)(5) Low High Low High
------------------------ ----------------------
---------------------- Numerator: Income from operations 175,500
196,900 175,500 196,900 Unusual Charges, Net (6) 0 0 0 0 Add
implied interest on operating leases (1) 11,000 11,000
------------------------ ----------------------
---------------------- 175,500 196,900 186,500 207,900
---------------------- ---------------------- Denominator: Average
total assets (2) 1,566,000 1,574,000 1,566,000 1,574,000 Less
average cash (3) (10,000) (10,000) Less average non- interest
bearing current liabilities (4) (277,000) (288,000) Plus average
present value of operating leases (1) 133,000 133,000
------------------------ ----------------------
---------------------- 1,566,000 1,574,000 1,412,000 1,409,000
---------------------- ---------------------- Return on invested
capital 11% to 13% 13% to 15% ======================
====================== Long-Term Goals Fiscal 2010
--------------------------------------------- Return on Assets
(ROA) ROA ROIC and Return on Invested ----------------------
---------------------- Capital (ROIC)(5) Low High Low High
------------------------ ----------------------
---------------------- Numerator: Income from operations 268,600
337,600 268,600 337,600 Unusual Charges, Net (6) 0 0 0 0 Add
implied interest on operating leases (1) 9,000 9,000
------------------------ ----------------------
---------------------- 268,600 337,600 277,600 346,600
---------------------- ---------------------- Denominator: Average
total assets (2) 1,864,000 1,965,000 1,864,000 1,965,000 Less
average cash (3) (10,000) (10,000) Less average non- interest
bearing current liabilities (4) (261,000) (285,000) Plus average
present value of operating leases (1) 114,000 114,000
------------------------ ----------------------
---------------------- 1,864,000 1,965,000 1,707,000 1,784,000
---------------------- ---------------------- Return on invested
capital 14% to 17% 16% to 19% ======================
====================== Notes
----------------------------------------------------------------------
1 Average present value of operating leases is the average for the
trailing 4 quarter ends of the present value of future payments on
operating leases, discounted at 8% which is the assumed implicit
interest rate included in the leases. The implied interest added to
the numerator is the 8% assumed interest charge on the average
quarterly balance ((beginning + Ending) / 2) of the present value
of the leases. 2 Average total assets is the average of the GAAP
amount for the trailing 4 quarter ends. 3 Average cash is the
average of the GAAP amount for the trailing 4 quarter ends. Future
cash balances above $10.0 million are assumed to be invested at
money market rates and are excluded from this operating cash
adjustment. 4 Average non-interest bearing current liabilities is
the average for the trailing 4 quarter ends of all current
liabilities excluding the current portion of long-term debt. 5 ROA
and ROIC figures are calculated on a trailing 4 quarters basis. 6
Results exclude unusual charges of $9.1 million for U.S. and $6.7
million for International in the quarter ended September 30, 2005.
These charges are excluded when calculating performance compared to
the Road Map since they were not considered in setting the Road Map
target. All other time periods are as reported for GAAP. Return on
Invested Capital (ROIC) as defined by the Company, may not be
comparable to similarly titled measures reported by other
companies. Management of the Company has included ROIC in this
Financial Road Map because it measures the capital efficiency of
our business. ROIC does not consider whether the business is
financed with debt or equity; rather ROIC calculates a return on
all capital invested in the business. The above table reconciles
ROIC to a ROA calculation using GAAP numbers. The Company uses ROIC
in a number of ways, including pricing analysis, capital
expenditure evaluation, and merger and acquisition valuation. *T
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