Acxiom Adjusts Road Map Earnings Target to Reflect Anticipated Impact of Proxy Contest, Dutch Auction, New Credit Facilities, O
August 31 2006 - 8:00AM
Business Wire
Acxiom(R) Corporation (Nasdaq: ACXM) today quantified the expected
cumulative financial impact of the successful completion of the
proxy contest with ValueAct Capital, the anticipated completion of
the Dutch Auction Self Tender, an $800 million credit facility, and
other items reported on the first-quarter earnings conference call
held July 26, 2006. The net impact of these items will reduce the
midpoint of the original fiscal year 2007 Financial Road Map
earnings target by approximately six to seven cents per fully
diluted share. The six- to seven-cent reduction reflects the
anticipated impact for fiscal 2007 of the following five items: -0-
*T 1. The fiscal 2007 Road Map targets, communicated during the
fiscal 2006 year-end conference call on May 17, 2006, were based on
90 million weighted average shares outstanding. Subsequently, the
company reported a net 2 million share increase related to
greater-than-expected exercises of 2.5 million stock options,
partially offset by share repurchases of 0.5 million shares. The
net increase of approximately 2 million shares will increase the
fiscal 2007 weighted average share count to approximately 91
million, a weighted average increase of approximately 1 million
shares that is expected to result in a reduction of approximately
one cent in fiscal 2007 EPS. 2. The company incurred proxy contest
expenses related to financial and non-financial advisory fees of
approximately $1.2 million in addition to expenses previously
reported. These fees were not anticipated in the earlier fiscal
2007 Road Map targets and are expected to reduce fiscal 2007 EPS by
approximately one cent. 3. The company expects to repurchase up to
$300 million of its shares through the Dutch Auction Self Tender
(DAST) scheduled to close on September 12, 2006. The impact on the
weighted average fully diluted shares outstanding for fiscal 2007
is expected to be a reduction of approximately 6.0 to 6.5 million
shares or an increase to fiscal 2007 EPS of approximately seven to
eight cents. 4. The company expects to incur incremental interest
expense of approximately $14.3 million related to the incremental
borrowings under the new credit facilities scheduled to close on
September 15, 2006. These borrowings are to fund the DAST,
restructure existing debt and be available for general corporate
purposes. These costs are anticipated to result in an approximate
10-cent reduction in fiscal 2007 EPS. 5. During the first-quarter
earnings conference call, the company reported that its effective
tax rate for fiscal year 2007 was expected to be 39 percent.
Previously announced targets anticipated an effective tax rate of
38 percent. The one percentage point increase is expected to result
in an approximate two-cent reduction in fiscal 2007 EPS. *T "Since
the fiscal 2006 year-end conference call, we have publicly provided
a significant amount of information to investors, and management
today is clarifying that information so that shareholders have a
more complete view of Acxiom's full-year earnings expectation for
fiscal year 2007. While the amounts for the DAST and the credit
facilities continue to be estimates, we do not expect the final
amounts to differ materially from our current expectations," said
Frank Cotroneo, Acxiom's Chief Financial Officer. 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 contains 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
estimates and ranges in this release and the Financial Road Map
with respect to the projected revenue, operating margin, return on
assets and return on invested capital, operating cash flow and free
cash flow, borrowings, dividends, tax rates and other metrics will
be within the estimated ranges; that the company has identified
categories of opportunity that provide upside to the ranges of the
Financial Road Map, 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 in the event that a change of control was sought that certain
of the clients of the Company would invoke certain provisions in
their contracts resulting in a decline in the revenue and profit of
the company; 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; the possibility that our increased
financial leverage could render us more vulnerable during an
economic downturn; 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 may be mitigated
by continued stock repurchases. 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.
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