SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-13163
Acxiom Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 71-0581897
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 Industrial Boulevard, Conway, Arkansas 72032
(Address of principal executive offices)
(Zip Code)
(501) 336-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares of Common Stock, par value of $0.10 per share,
outstanding as of July 15, 1994 was 10,638,131.
Form 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company for which report is filed:
ACXIOM CORPORATION
The consolidated financial statements included herein have been prepared by
Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Registrant's
management, however, all adjustments necessary for a fair statement of the
results for the periods included herein have been made and the disclosures
contained herein are adequate to make the information presented not
misleading. All such adjustments are of a normal recurring nature.
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, March 31,
1994 1994
--------- ---------
Assets
------
Current assets:
Cash and short-term cash investments $ 829,000 475,000
Trade accounts receivable, net 33,093,000 28,204,000
Refundable income taxes 110,000 923,000
Other current assets 2,079,000 6,255,000
---------- ----------
Total current assets 36,111,000 35,857,000
---------- ----------
Property and equipment 104,576,000 102,826,000
Less - Accumulated depreciation and
amortization 44,972,000 43,129,000
----------- -----------
Property and equipment, net 59,604,000 59,697,000
----------- -----------
Software, net of accumulated amortization 5,073,000 5,113,000
Excess of cost over fair value
of net assets acquired 2,802,000 2,716,000
Investment in and advances to joint
venture 3,931,000 3,974,000
Other assets 15,542,000 16,021,000
------------ ------------
$123,063,000 123,378,000
============= ===========
Liabilities and Stockholders' Equity
-------------------------------------
Current liabilities:
Current installments of long-term debt 2,960,000 3,046,000
Short-term borrowings 500,000 500,000
Trade accounts payable 6,299,000 3,006,000
Accrued interest 209,000 609,000
Accrued payroll and related expenses 2,772,000 2,073,000
Other accrued expenses 4,056,000 3,315,000
Advances from customers 501,000 346,000
----------- ------------
Total current liabilities 17,297,000 12,895,000
----------- ------------
Long-term debt, excluding current installments 28,037,000 34,992,000
Deferred income taxes 5,734,000 5,734,000
Deferred revenue 144,000 169,000
Redeemable common stock 7,807,000 7,692,000
Stockholders' equity:
Preferred stock --- ---
Common stock 1,050,000 1,049,000
Additional paid-in capital 25,959,000 25,672,000
Retained earnings 39,963,000 38,562,000
Foreign currency translation adjustment (428,000) (818,000)
Treasury stock, at cost (2,500,000) (2,569,000)
----------- ------------
Total stockholders' equity 64,044,000 61,896,000
------------ -----------
$123,063,000 123,378,000
============= ===========
See accompanying condensed notes to consolidated financial statements.
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Three Months
Ended
---------------------------
June 30,
---------------------------
1994 1993
---------- ----------
Revenue $46,881,000 31,771,000
Operating costs and expenses:
Salaries and benefits 14,821,000 15,862,000
Computer, communications and
other equipment 6,916,000 6,416,000
Data Costs 16,505,000 1,191,000
Other operating costs and expenses 4,927,000 5,959,000
---------- ----------
Total operating costs and expenses 43,169,000 29,428,000
---------- ----------
Income from operations 3,712,000 2,343,000
---------- ----------
Other income (expense):
Interest expense (672,000) (552,000)
Other, net (556,000) 202,000
----------- ----------
(1,228,000) (350,000)
----------- ----------
Earnings before income taxes 2,484,000 1,993,000
Income taxes 968,000 713,000
---------- ----------
Net earnings $1,516,000 1,280,000
========== ==========
Earnings per share $ .14 .12
========== ==========
Weighted average shares outstanding 10,975,000 10,898,000
========== ==========
See accompanying condensed notes to consolidated financial statements.
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
June 30,
------------------------
1994 1993
-------- --------
Cash flows from operating activities:
Net earnings $ 1,516,000 1,280,000
Non-cash operating activities:
Depreciation and amortization 4,940,000 4,763,000
Loss (gain) on disposal of assets 509,000 35,000
Equity in earnings(loss)of joint
venture 43,000 (200,000)
Other, net 187,000 (256,000)
Changes in assets and liabilities:
Accounts receivable (4,963,000) (1,053,000)
Other assets 1,107,000 581,000
Accounts payable and other
liabilities 3,663,000 (876,000)
---------- ----------
Net cash provided by operating
activities 7,002,000 4,274,000
---------- ----------
Cash flows from investing activities:
Sale of assets 4,547,000 86,000
Acquisition and development of software (335,000) (239,000)
Capital expenditures (4,168,000) (7,943,000)
---------- ----------
Net cash provided (used)by investing
activities 44,000 (8,096,000)
---------- ----------
Cash flows from financing activities:
Proceeds from current and long-term debt --- 3,194,000
Payments of long-term debt (7,049,000) (70,000)
Sale of common stock 357,000 131,000
---------- ----------
Net cash provided (used) by financing
activities (6,692,000) 3,255,000
----------- ---------
Net increase (decrease) in cash
and short-term cash investments 354,000 (567,000)
---------- ----------
Cash and short-term cash investments
at beginning of period 475,000 1,479,000
----------- ----------
Cash and short-term cash investments at end of
period $ 829,000 912,000
========== ==========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 1,072,000 1,007,000
Income taxes 155,000 237,000
=========== ==========
See accompanying condensed notes to consolidated financial statements.
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Certain note information has been omitted because it has not changed
significantly from that reflected in Notes 1 through 14 of the Notes to
Consolidated Financial Statements filed as a part of Item 14 of Registrant's
1994 Annual report on Form 10-K as filed with the Securities and Exchange
Commission on June 29, 1994.
Notes to Consolidated Financial Statements:
1. Accretion on redeemable common stock of $115,000 for the three months
ended June 30, 1994 is reflected as a direct charge to retained earnings.
2. The Company has completed the sale of certain assets of its BSA, Inc.
subsidiary for $500,000 in cash. The sale closed July 15, 1994 effective
as of June 1, 1994. The receivable for the purchase price is included in
other current assets at June 30, 1994. The effect of the transaction on
consolidated net earnings for the three months ended June 30, 1994 was not
significant.
3. On March 9, 1994, the chapter 11 bankruptcy trustee for CIS Corporation
("CIS") initiated suit in the United States Bankruptcy Court for the
Southern District of New York seeking to recover certain computer
equipment, together with alleged past due lease payments, taxes and
interest amounting to approximately $2,500,000. The Company had entered
into several capital leases with CIS prior to CIS declaring bankruptcy
in January 1989. The majority of the amounts sought by CIS relate to
continuing lease, tax and interest charges assessed after the initial
lease terms expired and after the Company had exercised its options to
purchase the equipment, after which time no lease payments were due
under the terms of the lease agreements. The Company intends to defend
the case on the merits, based upon CIS' failure to (1) deliver title,
(2) make scheduled sub-lease payments to the Company, (3) properly
record and acknowledge lease payments actually paid by Acxiom which
CIS claims were not paid, and (4) remit property taxes to the proper
authorities after the Company paid such taxes to CIS. Under current
circumstances, no determination can be made as to the ultimate outcome
of the litigation or as to the necessity for any provision, in the
accompanying financial statements, for any liability that may result
from a final adjudication.
The Company is involved in other various claims and legal actions in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position or its expected future
consolidated results of operations.
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
_____________________
Consolidated revenue was $46,881,000 for the quarter ended June 30, 1994, a
48% increase over revenue of $31,771,000 in the same quarter a year ago.
The increase of $15,110,000 included an increase of $13,252,000 under the
data management agreement with Allstate Insurance Company, offset by
decreases from the Acxiom Mailing Services and BSA, Inc. subsidiaries of
$3,579,000. A substantial portion of the assets of these subsidiaries were
recently disposed of by the Company. Excluding these effects, U.S. revenue
increased 30% due to greater volume in list and database services and
revenue in the United Kingdom decreased 25%. U.K. revenue in the prior
year included a large contract which has since been completed.
Operating costs and expenses increased 47% when compared to the comparable
period a year ago. Salaries and benefits decreased 7%, computer,
communications and other equipment expenses increased 8%, and other
operating costs and expenses decreased 17%. Data costs increased
$15,314,000 principally due to the Allstate agreement noted above. Income
from operations for the quarter was 8% of revenue compared to 7% a year ago.
Other expense for the quarter included $500,000 for the estimated cost of
disposal of the BSA assets in the United States.
The Company's effective tax rate for the quarter was 39% compared to 36%
for the same quarter a year ago and 37% for the fiscal year ended March 31,
1994. The Company expects the effective tax rate to remain in the 37 - 39%
range for the fiscal year.
Capital Resources and Liquidity
_______________________________
Working capital at June 30, 1994 totaled $18,814,000 compared to
$22,962,000 at March 31, 1994. At June 30, 1994 the Company had available
credit lines of $31,000,000 of which $12,020,000 was outstanding. The
Company's debt-to-capital ratio (capital defined as long-term debt plus
redeemable common stock plus stockholders' equity) was 28% at June 30, 1994
compared to 33% at March 31, 1994.
Cash provided from operating activities was $7,002,000 for the three months
ended June 30, 1994 compared to $4,274,000 for the same period a year
earlier. In the current period, $44,000 was provided by investing
activities and $6,692,000 was used by financing activities. The investing
activities included $4,547,000 collected from the sale of assets during
the quarter, primarily from the sale of substantially all of the assets of
Acxiom Mailing Services offset by capital expenditures of $4,168,000.
Capital expenditures were $7,943,000 a year ago. Financing activities
included payments on long-term debt of $7,049,000.
While the Company does not have any material contractual commitments for
capital expenditures, additional investments in facilities and computer
equipment will continue to be necessary to support the anticipated growth
of the business. In addition, new outsourcing or facilities management
contracts frequently require substantial up-front capital expenditures in
order to acquire existing assets. Management believes that the combination
of existing working capital, anticipated funds to be generated from future
operations and the Company's available credit lines is sufficient to meet
the Company's current operating needs as well as to fund the anticipated
levels of capital expenditures. If additional funds are required, the
Company would use existing credit lines to generate cash, followed by
either additional borrowings to be secured by the Company's assets or the
issuance of equity securities in either public or private offerings.
Management believes that the Company has significant capacity to raise
capital which could be used to support future growth.
Form 10-Q
ACXIOM CORPORATION
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) None
(b) None
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
SIGNATURE
_________
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Acxiom Corporation
__________________
Dated July 22, 1994
Robert S. Bloom
____________________
(Signature)
Robert S. Bloom
Chief Financial Officer
(Chief Accounting Officer)