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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 14, 2003
Date of Report (Date of earliest event reported)
ACXIOM CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 0-13163 71-0581897
(State or Other Jurisdiction of (Commission File (IRS Employer Identification
Incorporation) Number) No.)
1 Information Way, P.O. Box 8180, Little Rock, Arkansas 72203-8180
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 501-342-1000
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press Release dated May 14, 2003
ITEM 9. REGULATION FD DISCLOSURE.
See Item 12. Results of Operations and Financial Condition.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 14, 2003, Acxiom Corporation (the "Company") issued a press release reporting its revenue and
earnings for the fourth quarter and fiscal year ended March 31, 2003. The press release is furnished herewith
as Exhibit 99.1 and incorporated by reference herein.
The Company's press release and other communications from time to time include certain non-GAAP
financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial
performance, financial position or cash flows that excludes (or includes) amounts that are included in (or
excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the
Company's financial statements. The attached press release utilizes measures of earnings per share before giving
effect to certain write-offs that were taken during the relevant periods and measures of free cash flow.
The Company's management believes that the presentation of earnings per share (before write-offs)
provides useful information regarding the Company's financial performance and earnings potential by calculating
and quantifying the effect of certain write-offs on earnings per share calculated in accordance with GAAP and
gives investors insight into the profitability of the Company's operating business. Management also believes
that the presentation of the non-GAAP financial measure is consistent with its past practice, as well as industry
practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP
measures presented in prior periods.
Free cash flow is defined as operating cash flow less cash used by investing activities excluding the
impact of investments in joint ventures and other business alliances and cash paid and/or received in
acquisitions and dispositions. The Company's management believes that free cash flow provides a useful measure
of operating performance for assessing the amount of cash available for general corporate and strategic purposes
after funding operating activities and capital expenditures, capitalized software expenses, and deferred costs.
The attached press release contains a quantitative reconciliation of each non-GAAP financial measure
used by the Company to the comparable GAAP measure. The non-GAAP financial measures used by the Company in the
2
attached press release may not be comparable to similarly titled measures used by other companies and should not
be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 14, 2003
ACXIOM CORPORATION
By: /s/ Jerry C. Jones
-----------------------------------------
Name: Jerry C. Jones
Title: Business Development/Legal Leader
3
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release of the Company dated May 14, 2003.
4
For more information, contact:
Robert S. Bloom
Financial Relations Leader
Acxiom Corporation
(501) 342-1321
Acxiom® Reports Fourth-Quarter Results
Fiscal 2003 Revenue, Earnings Improved; Highlights Include Cash Flow, New Contracts
LITTLE ROCK, Ark. - May 14, 2003 - Acxiom® Corporation (Nasdaq:ACXM), today reported revenue and earnings for the fourth quarter
of fiscal 2003 ended March 31, 2003, that were substantially in line with the expectations the Company announced April 8, 2003.
Revenue of $239 million is slightly above the estimate of $238 million, and the loss per share of $.27 is slightly more than the
loss of $.22 to $.26 the Company had projected, due to larger-than-expected non-cash charges in the quarter. These non-cash charges
totaled $43.1 million, compared to expectations of $35 million to $40 million.
Fiscal 2003 revenue of $958 million and earnings per share of $.24 compare to $866 million in revenue and a loss per share of $.36
in fiscal 2002. 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.
"As we discussed in April, the war in Iraq and the continued sluggish economy negatively impacted our data sales, project and
volume-based revenue. Despite our fourth quarter performance, we made positive strides in fiscal 2003 that position Acxiom for
success going forward," Company Leader Charles D. Morgan said. "We generated record cash flow, signed many strategic new contracts
and renewed large deals while growing our revenue more than 10 percent in a tough economic climate."
Highlights of Acxiom's fourth quarter include:
o Revenue of $239 million, up 6 percent from $225 million in the same quarter a year ago.
o A loss per share of $.27 compared to earnings of $.15 per share in the fourth quarter last year.
o Included in the quarter's earnings are the non-cash charges of $43.1 million, which negatively impacted EPS by $.31.
o Operating cash flow of $63.1 million and free cash flow of $48.7 million, which exceeded free cash flow projections of $25
million and is 15 percent higher than free cash flow in the fourth quarter last year.
o New contracts that will deliver $25 million in incremental annual revenue and renewals that are expected to generate $103
million in annual revenue.
o Committed new deals in the pipeline that are expected to add, when closed, $47 million in annual revenue.
Highlights of Acxiom's fiscal 2003 include:
o Revenue of $958 million, up 11 percent from $866 million a year ago.
o Earnings per share (EPS) of $.24 compared to a loss per share of $.36 in fiscal 2002.
o Operating cash flow of $253.8 million, which represents a 69 percent improvement over fiscal 2002. Free cash flow of $199.0
million, almost triple the amount generated last year. Both fiscal 2003 cash flow numbers are Company records.
o New contracts that will contribute an annual value of $96 million and contract renewals that will generate $137 million in
annual revenue.
o Acxiom continued to purchase company stock as part of the buyback program announced November 14, 2002. During fiscal 2003,
the Company bought 1.8 million shares of common stock, and since March 31, 2003 has purchased an additional 2.2 million
shares for a total of approximately 4 million shares.
In the fourth quarter, Acxiom completed new contracts with many large companies, including Wells Fargo, J.C. Penney and Federal
Express. Other new business highlights in the year included new contracts with IBM; Visa USA; General Motors Corporation; Bank of
America Corporation; Charles Schwab & Co., Inc.; Staples, Inc.; MasterCard International; Sun Microsystems; MGM Mirage; and Jet
Blue Airways Corp., and contract renewals with Microsoft Corp.; E*TRADE Group; Canadian Tire Financial Services; the GM Card;
Unilever; Bank One, NA (Ohio); and Ameritrade, Inc.
Fiscal 2003 Recognition
o Acxiom was ranked for the fifth time on Fortune magazine's list of "100 Best Companies to Work For in America."
o Acxiom was named to the inaugural Fortune 40, a list of companies the magazine calls "a powerful group - one we think has a
strong chance of beating the market."
o Acxiom was recognized by Intelligent Enterprise magazine editors as one of the leading "Companies to Watch" in 2003 and
beyond.
o The Company received a "Best Practices in Storage Award" from Computerworld and the Storage Networking Industry Association
for "Innovation and Promise" in the implementation and design of a large data storage area network.
o Bank Technology News named Acxiom one of 10 tech companies "whose innovations are raising the bar in banking."
o American Demographics magazine named Josh Herman, product manager for Acxiom's Personicx(R)segmentation product, among "the
ones to watch" for future developments in the science of demographics.
o The United States Postal Service awarded technical unit leader Chris Bennett its Special Service Achievement Award at the
USPS' Spring 2003 National Postal Forum.
Outlook
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.
This forecast is conditioned upon a modest improvement in the general economic environment during the 2004 fiscal year ending March
31, 2004, during which the Company expects to generate revenue of approximately $1.03 billion and earnings per share of
approximately $.70. The Company is raising its free cash flow projection from $100 million to $125 million for the 2004 fiscal
year. The Company reiterates its previous projections for the first quarter ending June 30, 2003 of $235 million to $240 million in
revenue and earnings in the range of $.05 to $.10 per share.
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 in
the United Kingdom, France, Australia and Japan.
This release and the scheduled conference call will include certain non-GAAP financial measures. We have included reconciliations of
these measures to comparable GAAP measures for each non-GAAP measure as attachments to this press release.
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 include but are not necessarily limited to the following: 1) that
the business pipeline and that our current cost structure will allow the Company to continue to meet or exceed revenue, earnings and
free cash flow projections; 2) that new contracts and contract renewals will generate the indicated amounts of revenue; 3) that the
Company has committed new deals in the pipeline that are expected to deliver the indicated amounts; 4) that Acxiom is well
positioned for success going forward; 5) that the future results of the Company will be within the indicated ranges; 6) that the
forecasts for the Company are conditioned upon modest improvement in the general economic environment and 7) that the Company will
continue to use cash to repurchase stock and reduce debt. The following are important factors, among others, that could cause actual
results to differ materially from these forward-looking statements: The possibility that certain contracts may not be closed or
closed within the anticipated time frames; the possibility that certain contracts may not generate the anticipated revenue or
profitability; the possibility that economic or other conditions might lead to a reduction in demand for the Company's products and
services; the possibility that the current economic slowdown may worsen and/or persist for an unpredictable period of time; the
possibility that economic conditions will not improve as expected; the possibility that significant customers may experience
extreme, severe economic difficulty; the possibility that the fair value of certain assets of the company 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 continued ability
to attract and retain qualified technical and leadership associates and the possible loss of associates to other organizations; the
ability to properly motivate the sales force and other associates of the Company; the ability to achieve cost reductions and avoid
unanticipated costs; the continued availability of credit upon satisfactory terms and conditions; the introduction of competent,
competitive products, technologies or services by other companies; potential pricing pressure due to market conditions and/or
competitive products and services; changes in consumer or business information industries and markets; the Company's ability to
protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; the difficulties
encountered when entering new markets or industries; changes in the legislative, accounting, regulatory and consumer environments
affecting the Company's business including but not limited to litigation, legislation, regulations and customs relating to the
Company's ability to collect, manage, aggregate and use data; data suppliers might withdraw data from the Company, leading to the
Company's inability to provide certain products and services; short-term contracts affect the predictability of the Company's
revenues; the possibility that the amount of ad hoc, volume based and project work will not be as expected; the potential loss of
data center capacity or interruption of telecommunication links or power sources; postal rate increases that could lead to reduced
volumes of business; customers that may cancel or modify their agreements with the Company; the potential disruption of the services
of the United States Postal Service, their global counterparts and other delivery systems; the successful integration of any
acquired businesses; and other competitive factors. With respect to the providing of products or services outside the Company's
primary base of operations in the U.S., all of the above factors and 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 the Company's
periodic reports and registration statements filed with the United States Securities and Exchange Commission. Acxiom believes that
it has 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. Acxiom undertakes no obligation to update the information contained in this press
release or any other forward-looking statement.
Personicx is a registered trademark of Acxiom Corporation.
###
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
-------------------------------------------------------------------
2003 2002
-------------------------------------------------------------------
Services 178,100 168,954
Data and Software Products 43,550 45,861
I. T. Management 61,764 56,684
Intercompany eliminations (43,955) (46,174)
-------------------------------- ---------------------------------
Total Revenue 239,459 225,325
================================ =================================
For the Twelve Months Ended
March 31,
-------------------------------------------------------------------
2003 2002
-------------------------------------------------------------------
Services 718,872 645,735
Data and Software Products 172,979 162,585
I. T. Management 241,096 220,688
Intercompany eliminations (174,725) (162,898)
-------------------------------- ---------------------------------
Total Revenue 958,222 866,110
================================ =================================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
Mar 31, Mar 31,
2003 2002
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 5,491 $ 5,676
Trade accounts receivable, net 189,704 185,579
Deferred income taxes 46,056 48,716
Refundable income taxes 2,576 41,652
Other current assets 45,288 78,602
------------ ------------
Total current assets 289,115 360,225
------------ ------------
Property and equipment 389,168 331,177
Less - accumulated depreciation and amortization 180,862 149,402
------------ ------------
Property and equipment, net 208,306 181,775
------------ ------------
Software, net of accumulated amortization 63,095 61,437
Goodwill 221,184 174,655
Purchased software licenses, net of accumulated amortization 161,432 169,854
Unbilled and notes receivable, excluding current portions 20,249 40,358
Deferred costs, net of accumulated amortization 108,444 125,843
Other assets, net 21,421 42,687
------------ ------------
$ 1,093,246 $ 1,156,834
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt 29,491 23,274
Trade accounts payable 28,760 29,472
Accrued merger, integration and impairment costs 584 3,022
Accrued payroll and related expenses 14,234 17,612
Other accrued expenses 38,689 43,176
Deferred revenue 59,907 61,114
------------ ------------
Total current liabilities
171,665 177,670
------------ ------------
Long-term debt, excluding current installments 289,677 396,850
Deferred income taxes 69,348 71,383
Commitments and contingencies
Stockholders' equity:
Common stock 9,015 8,734
Additional paid-in capital 333,715 281,355
Retained earnings 253,558 231,791
Accumulated other comprehensive loss (2,911) (8,609)
Treasury stock, at cost (30,821) (2,340)
------------ ------------
Total stockholders' equity
562,556 510,931
------------ ------------
$ 1,093,246 $ 1,156,834
============ ============
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
2003 2002
---------- ----------
Cash flows from operating activities:
Net earnings (23,761) 13,368
Non-cash operating activities:
Depreciation and amortization 66,548 31,403
Loss on disposal or impairment of assets, net 8,838 1,317
Deferred income taxes (16,903) 53,074
Tax benefit of stock options and interest 6,737 4,516
Changes in operating assets and liabilities:
Accounts receivable 8,040 (2,791)
Other assets 9,468 (25,753)
Accounts payable and other liabilities 4,810 (13,488)
Merger, integration and impairment costs (665) (1,554)
------------ ------------
Net cash provided by operating activities 63,112 60,092
------------ ------------
Cash flows from investing activities:
Proceeds received from the disposition of operations 638 1,725
Proceeds received from the disposition of assets 93 46
Capitalized software (8,237) (6,890)
Capital expenditures (2,403) (3,474)
Proceeds from sale-and-leaseback transaction - -
Investments in joint ventures and other companies (125) (684)
Deferral of costs (3,883) (7,352)
Net cash paid in acquisitions - (5,331)
Net cash used by investing activities (13,917) (21,960)
------------ ------------
Cash flows from financing activities:
Proceeds from debt 78,489 169,945
Payments of debt (168,916) (206,476)
Sale of common stock 3,708 2,810
Acquisition of treasury stock (23,335) -
Payments on equity forward contracts - -
------------ ------------
Net cash used by financing activities (110,054) (33,721)
------------ ------------
Effect of exchange rate changes on cash (52) (52)
------------ ------------
Net increase (decrease) in cash and cash equivalents (60,911) 4,359
Cash and cash equivalents at beginning of period 66,402 1,317
------------ ------------
Cash and cash equivalents at end of period 5,491 5,676
============ ============
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 8,919 5,035
Income taxes 375 (3,295)
============ ============
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
2003 2002
---------- ----------
Cash flows from operating activities:
Net earnings (loss) 21,767 (31,964)
Non-cash operating activities:
Depreciation and amortization 154,902 123,394
Loss on disposal or impairment of assets, net 8,799 46,934
Deferred income taxes 7,020 26,832
Tax benefit of stock options and interest 6,894 4,516
Changes in operating assets and liabilities:
Accounts receivable 3,999 9,120
Other assets 63,271 (62)
Accounts payable and other liabilities (10,422) (15,836)
Merger, integration and impairment costs (2,437) (12,329)
---------- ----------
Net cash provided by operating activities 253,793 150,605
---------- ----------
Cash flows from investing activities:
Proceeds received from the disposition of operations 1,089 9,211
Proceeds received from the disposition of assets 293 173
Capitalized software (34,573) (24,121)
Capital expenditures (13,212) (14,875)
Proceeds from sale-and-leaseback transaction 7,729 5,999
Investments in joint ventures and other companies (1,177) (7,912)
Deferral of costs (15,027) (48,131)
Net cash paid in acquisitions (14,105) (5,331)
------------ ------------
Net cash used by investing activities (68,983) (84,987)
------------ ------------
Cash flows from financing activities:
Proceeds from debt 161,005 319,931
Payments of debt (337,399) (381,876)
Sale of common stock 18,061 11,441
Acquisition of treasury stock (26,734) -
Payments on equity forward contracts - (23,547)
------------ ------------
Net cash used by financing activities (185,067) (74,051)
------------ ------------
Effect of exchange rate changes on cash 72 (67)
------------ ------------
Net increase (decrease) in cash and cash equivalents (185) (8,500)
Cash and cash equivalents at beginning of period 5,676 14,176
------------ ------------
Cash and cash equivalents at end of period 5,491 5,676
============ ============
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 26,347 25,746
Income taxes (40,045) 9,364
============ ============
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
6/30/2001 9/30/2001 12/31/2001 3/31/2002 3/31/2002
Net cash provided by operating activities (39,280) 69,300 60,493 60,092 150,605
Proceeds received from disposition of assets 127 - - 46 173
Capitalized software (5,935) (5,464) (5,832) (6,890) (24,121)
Capital expenditures (8,789) - (2,612) (3,474) (14,875)
Deferral of costs (8,690) (18,012) (14,077) (7,352) (48,131)
Proceeds from sale and leaseback transaction - 1,964 4,035 - 5,999
--------------------------------------------------------------------------------------
Free cash flow (62,567) 47,788 42,007 42,422 69,650
======================================================================================
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
======================================================================================
Forecast
Yr ended
3/31/2004
Net cash provided by operating activities 185,000
Proceeds received from disposition of assets -
Capitalized software (28,000)
Capital expenditures (15,000)
Deferral of costs (17,000)
Proceeds from sale and leaseback transaction -
----------------
Free cash flow 125,000
================
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP EARNINGS MEASUREMENTS
(Unaudited)
(Dollars in thousands, except earnings per share)
FY FY Q4 Q4
2003 2002 2003 2002
-------------------------------------------------------
Pretax income as reported 28,088 (50,526) (40,095) 20,724
Gains, losses and nonrecurring items (5,018) 45,534 62 1,251
Expenses prior to impairment charge (1) - 18,387 - -
Accelerated depreciation, amortization and other impairment charges 34,248 25,846 34,248 -
Investment write-downs 8,838 1,062 8,838 -
-------------------------------------------------------
Pretax income as adjusted 66,156 40,303 3,053 21,975
=======================================================
Net income as reported 21,767 (31,964) (23,761) 13,368
Gains, losses and nonrecurring items (3,211) 29,142 40 801
Expenses prior to impairment charge (1) - 11,768 - -
Accelerated depreciation, amortization and other impairment charges 21,919 16,541 21,919 -
Investment write-downs 5,657 645 5,657 -
Extraordinary item - 1,271 - 1,271
-------------------------------------------------------
Net income as adjusted 46,132 27,403 3,855 15,440
=======================================================
Diluted earnings per share:
As reported 0.24 (0.36) (0.27) 0.15
=======================================================
As adjusted 0.50 0.30 0.04 0.17
=======================================================
(1) Expenses prior to the decision to restructure operations, which will not repeat after the
restructuring.