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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
July 23, 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 July 23, 2003
ITEM 9. REGULATION FD DISCLOSURE.
See Item 12. Results of Operations and Financial Condition.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 23, 2003, Acxiom Corporation (the "Company") issued a press release announcing the results of
its financial performance for the quarter ending June 30, 2003. The Company will hold a conference call at 4:30
p.m. CDT today to discuss this information further. Interested parties are invited to listen to the call, which
will be broadcast via the Internet at www.acxiom.com. The 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 a measure of free cash flow. 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 while 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, it
nevertheless 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 free cash flow to the comparable
GAAP measure, operating cash flow. This non-GAAP financial measure 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.
2
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: July 23, 2003
ACXIOM CORPORATION
By: /s/ Catherine L. Hughes
----------------------------------------
Name: Catherine L. Hughes
Title: Secretary
3
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release of the Company dated July 23, 2003.
4
Exhibit 99.1
For more information, contact:
Robert S. Bloom
Financial Relations Leader
Acxiom Corporation
(501) 342-1321
EACXM
Acxiom® Meets First-Quarter Financial Projections
Earnings and Cash Flow Top Forecast
LITTLE ROCK, Ark - July 23, 2003 - Acxiom® Corporation (Nasdaq: ACXM) today announced revenue, earnings and cash
flow results that met or exceeded the Company's projections for the first quarter ended June 30, 2003. Revenue
of $236.7 million was in line with previous estimates of $235 million to $240 million; diluted earnings per share
of $.13 exceeded the Company's previous estimates of $.05 to $.10; operating cash flow of $48.1 million and free
cash flow of $34.7 million exceeded internal expectations. First-quarter earnings benefited from an income tax
adjustment of $6.7 million. Acxiom will hold a conference call at 4:30 p.m. CDT today to discuss this
information further. Interested parties are invited to listen to the call, which will be broadcast via the
Internet at www.acxiom.com.
"We are encouraged by our first-quarter results, even though the economic environment remained difficult,"
Company Leader Charles D. Morgan said. "We continue to be very pleased with our strong cash flow performance and
are also encouraged that we continue to sign new contracts and attract new clients."
Highlights of Acxiom's first-quarter performance include:
o Revenue of $236.7 million, up 5 percent from $225.4 million in the first quarter a year ago.
o Diluted earnings per share of $.13, an increase of 8 percent compared to $.12 per share in the first
quarter a year ago.
o Operating cash flow of $48.1 million and free cash flow of $34.7 million, marking the eighth consecutive
quarter of strong cash flow performance for the Company. The free cash flow of $34.7 million is a
non-GAAP financial measure and a reconciliation to the comparable GAAP measure, operating cash flow, is
attached to this press release.
o New contracts that will deliver $16 million in annual revenue and renewals that total $32 million in
annual revenue.
o Committed new deals in the pipeline that are expected to generate $46 million in annual revenue.
Morgan noted that Acxiom recently completed new contracts with blue-chip clients including The Hartford, Time
Life Inc., Nuveen Investments, Kaplan Inc. (a subsidiary of The Washington Post Co.) and Dun & Bradstreet, as
well as the renewal of a significant long-term contract with Bank One Corporation.
During the quarter, the Company's IT outsourcing organization completed the sale of its Los Angeles data center
operation, which resulted in a net gain of approximately $1 million.
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.
The forecast is based on the assumption that the general economic environment will improve somewhat during the
2004 fiscal year ending March 31, 2004. The Company expects revenue of $240 million to $245 million and earnings
per share of $.13 to $.15 for the second quarter ending September 30, 2003.
For fiscal year 2004, ending March 31, 2004, the Company is revising its guidance to take into account
first-quarter results including the income tax benefit of $6.7 million, the sale of the Los Angeles outsourcing
data center operation and the strong cash flow. For fiscal 2004, the Company now expects revenue of $1.015
billion, earnings per share in the range of $.70 to $.78, operating cash flow of $195 million and free cash flow
of $135 million.
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 include a discussion of free cash flow, a non-GAAP financial
measure. There is a reconciliation of this measure to the comparable GAAP measure, operating cash flow, attached
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 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; 7) that the Company will continue to use cash to repurchase stock and reduce debt and 8) that new
products and services will produce the expected results. 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.
###
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
June 30,
----------------------------------------------
2003 2002
----------------------------------------------
Revenue 236,682 225,406
Operating costs and expenses:
Salaries and 88,747 74,792
Computer, communications and other equipment 66,286 63,026
Data costs 30,247 28,944
Other operating costs and expenses 41,176 37,413
Gains, losses and nonrecurring items, net (1,008) (457)
----------------- ------------------
Total operating costs and expenses 225,448 203,718
----------------- ------------------
Income from operations 11,234 21,688
----------------- ------------------
Other income (expense):
Interest expense (4,765) (5,327)
Other, net 765 (9)
----------------- ------------------
(4,000) (5,336)
----------------- ------------------
Earnings before income taxes 7,234 16,352
Income taxes (4,029) 5,887
----------------- ------------------
Net earnings 11,263 10,465
================= ==================
Earnings per share:
Basic 0.13 0.12
================= ==================
Diluted 0.13 0.12
================= ==================
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
June 30,
-----------------------------------------
2003 2002
-----------------------------------------
Basic earnings per share:
Numerator - net earnings 11,263 10,465
Denominator - weighted-average shares outstanding 86,442 87,781
----------------- ------------------
Basic earnings per share 0.13 0.12
================= ==================
Diluted earnings per share:
Numerator:
Net earnings 11,263 10,465
Interest expense on convertible bonds (net of tax benefit) 1,026 1,050
----------------- ------------------
12,289 11,515
----------------- ------------------
Denominator:
Weighted-average shares outstanding 86,442 87,781
Dilutive effect of common stock options and warrants 1,603 2,468
Dilutive effect of convertible debt 9,589 9,589
----------------- ------------------
97,634 99,838
----------------- ------------------
Diluted earnings per share 0.13 0.12
================= ==================
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
June 30,
----------------------------------------------------------------
2003 2002
----------------------------------------------------------------
Services 175,692 169,369
Data and Software Products 41,155 38,372
I. T. Management 61,945 56,461
Intercompany eliminations (42,110) (38,796)
------------------------------ -------------------------------
Total Revenue 236,682 225,406
============================== ===============================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
June 30, March 31,
2003 2003
----------------- ------------------
Assets
Current assets:
Cash and cash equivalents $ 4,862 $ 5,491
Trade accounts receivable, net 184,122 189,704
Deferred income taxes 46,056 46,056
Refundable income taxes 921 2,576
Other current assets 45,224 45,288
----------------- ------------------
Total current assets 281,185 289,115
----------------- ------------------
Property and equipment 408,611 389,168
Less - accumulated depreciation and amortization 193,215 180,862
----------------- ------------------
Property and equipment, net 215,396 208,306
----------------- ------------------
Software, net of accumulated amortization 64,125 63,095
Goodwill 221,522 221,184
Purchased software licenses, net of accumulated amortization 165,770 161,432
Unbilled and notes receivable, excluding current portions 17,472 20,249
Deferred costs, net of accumulated amortization 122,848 108,444
Other assets, net 23,840 21,421
----------------- ------------------
$ 1,112,158 $ 1,093,246
----------------- ------------------
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations 39,420 29,491
Trade accounts payable 38,108 28,760
Accrued merger, integration and impairment costs 445 584
Accrued payroll and related expenses 16,779 14,234
Other accrued expenses 37,601 38,689
Deferred revenue 54,519 59,907
----------------- ------------------
Total current liabilities 186,872 171,665
----------------- ------------------
Long-term obligations:
Long-term debt and capital leases, net of current installments 269,013 234,230
Software and data licenses, net of current installments 49,336 55,447
----------------- ------------------
Total long-term obligations 318,349 289,677
----------------- ------------------
Deferred income taxes 62,606 69,348
Commitments and contingencies
Stockholders' equity:
Common stock 9,037 9,015
Additional paid-in capital 336,393 333,715
Retained earnings 264,821 253,558
Accumulated other comprehensive loss (584) (2,911)
Treasury stock, at cost (65,336) (30,821)
----------------- ------------------
Total stockholders' equity 544,331 562,556
----------------- ------------------
$ 1,112,158 $ 1,093,246
----------------- ------------------
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
June 30,
2003 2002
----------------- ------------------
Cash flows from operating activities:
Net earnings 11,263 10,465
Non-cash operating activities:
Depreciation and amortization 33,896 28,174
Loss (gain) on disposal or impairment of assets, net (1,008) -
Deferred income taxes (6,742) 7,552
Changes in operating assets and liabilities:
Accounts receivable 6,009 85
Other assets 2,061 34,079
Accounts payable and other liabilities 2,785 (19,546)
Merger, integration and impairment costs (139) (566)
----------------- ------------------
Net cash provided by operating activities 48,125 60,243
----------------- ------------------
Cash flows from investing activities:
Proceeds received from the disposition of operations 7,684 -
Proceeds received from the disposition of assets 506 45
Capitalized software (6,335) (8,652)
Capital expenditures (1,588) (1,916)
Investments in joint ventures and other companies (5,000) (1,052)
Deferral of costs (6,026) (3,240)
Payments received from investments 1,201 -
Net cash paid in acquisitions - (772)
----------------- ------------------
Net cash used by investing activities (9,558) (15,587)
----------------- ------------------
Cash flows from financing activities:
Proceeds from debt 53,187 73,707
Payments of debt (60,655) (127,972)
Sale of common stock 2,850 6,168
Acquisition of treasury stock (34,665) -
----------------- ------------------
Net cash used by financing activities (39,283) (48,097)
----------------- ------------------
Effect of exchange rate changes on cash 87 44
----------------- ------------------
Net increase (decrease) in cash and cash equivalents (629) (3,397)
Cash and cash equivalents at beginning of period 5,491 5,676
----------------- ------------------
Cash and cash equivalents at end of period 4,862 2,279
----------------- ------------------
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 3,508 6,702
Income taxes 977 (39,906)
Noncash investing and financing activities:
Acquisition of land in exchange for debt 2,698 -
Acquisition of data under long-term obligation 18,340 -
Enterprise software licenses acquired under long-term
obligation 8,221 2,828
Acquisition of property and equipment under capital lease 16,803 2,310
----------------- ------------------
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
Qtr ended Yr ended
6/30/2003 3/31/2004
Net cash provided by operating activities 48,125 195,000
Proceeds received from disposition of assets 506 -
Capitalized software (6,335) (28,000)
Capital expenditures (1,588) (15,000)
Deferral of costs (6,026) (17,000)
----------- ------------
Free cash flow 34,682 135,000
=========== ============