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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
October 22, 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 No.)
Incorporation) Number)
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 October 22, 2003
ITEM 9. REGULATION FD DISCLOSURE.
See Item 12. Results of Operations and Financial Condition.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 22, 2003, Acxiom Corporation (the "Company") issued a press release announcing the results of its financial
performance for the quarter ending September 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: October 22, 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 October 22, 2003.
4
For more information, contact:
Robert S. Bloom
Financial Relations Leader
Acxiom Corporation
(501) 342-1321
EACXM
Acxiom® Announces Second-Quarter Financial Results
Strong Cash Flow Continues
LITTLE ROCK, Ark. - October 22, 2003 - Acxiom® Corporation (Nasdaq: ACXM) today announced revenue and earnings
results for the second quarter ended September 30, 2003. Revenue of $241.1 million and diluted earnings per
share of $.13 compares to the Company's previous estimate of $240 million to $245 million in revenue and $.13 to
$.15 in diluted earnings per share. Operating cash flow of $49.9 million and free cash flow of $35.8 million
exceeded internal expectations. For the last twelve months, operating cash flow has totaled $238 million and
free cash flow has totaled $178 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.
"Our financial results continued to be impacted by a less than robust economic environment," Company Leader
Charles D. Morgan said. "However, there are several positives at work in our business. Our cash flow remains
strong and the new business pipeline continues to grow. As we meet with more of our clients about our new
grid-based solution architecture, the excitement continues to grow as they come to understand the improvements it
will bring to their business. We believe this offering will attract new clients and will lead existing clients
to increase their business with us."
Highlights of Acxiom's second-quarter performance include:
o Operating cash flow of $49.9 million and free cash flow of $35.8 million, marking the ninth consecutive
quarter of strong cash flow performance for the Company. The free cash flow of $35.8 million is a
non-GAAP financial measure and a reconciliation to the comparable GAAP measure, operating cash flow, is
attached to this release.
o New contracts that will deliver $16 million in annual revenue and renewals that total $6 million in
annual revenue.
o Committed new deals in the pipeline that are expected to generate $60 million in annual revenue.
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 there will be no substantial change in the general economic
environment for the remainder of the 2004 fiscal year ending March 31, 2004. For the last six months of the 2004
fiscal year, the Company expects revenue of $500 million to $520 million and earnings per share of $.40 to $.42.
The Company also may benefit from one-time items during the last six months of the fiscal year, which could add
another $.05 or more to its earnings per share.
Including one-time items recorded in the first quarter and anticipated in the last six months of the fiscal year,
the Company estimates earnings per share in the range of $.70 to $.78, operating cash flow of $195 million, free
cash flow of $135 million and revenue of approximately $980 million to $1 billion for the 2004 fiscal year ending
March 31, 2004.
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 projected revenue, earnings, earnings per share, operating cash
flow and free cash flow referred to under the caption "Outlook" above will meet or exceed the estimated amount;
2) 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; 3) that new contracts and contract renewals will generate the
indicated amounts of revenue; 4) that the Company has committed new deals in the pipeline that are expected to
deliver the indicated amounts; 5) that Acxiom is well positioned for success going forward; 6) that the future
results of the Company will be within the indicated ranges; 7) that there will be no substantial change in the
general economic environment for the remainder of the 2004 fiscal year, ending March 31, 2004; 8) that the
Company will continue to use cash to repurchase stock and reduce debt and 9) 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 be 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
September 30,
---------------------------------------------
2003 2002
---------------------------------------------
Revenue 241,095 235,396
Operating costs and expenses:
Salaries and benefits 80,522 75,050
Computer, communications and other equipment 64,106 63,829
Data costs 32,224 29,787
Other operating costs and expenses 41,527 43,197
Gains, losses and nonrecurring items, net - (4,102)
----------------- -----------------
Total operating costs and expenses 218,379 207,761
----------------- -----------------
Income from operations 22,716 27,635
----------------- -----------------
Other income (expense):
Interest expense (4,889) (5,068)
Other, net 121 1,551
----------------- -----------------
(4,768) (3,517)
----------------- -----------------
Earnings before income taxes 17,948 24,118
Income taxes 6,730 8,592
----------------- -----------------
Net earnings 11,218 15,526
================= =================
Earnings per share:
Basic 0.13 0.18
================= =================
Diluted 0.13 0.17
================= =================
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Six Months Ended
September 30,
----------------------------------------------------
2003 2002
----------------------------------------------------
Revenue 477,777 460,802
Operating costs and expenses:
Salaries and benefits 169,269 149,842
Computer, communications and other equipment 130,392 126,855
Data costs 62,471 58,731
Other operating costs and expenses 82,703 80,610
Gains, losses and nonrecurring items, net (1,008) (4,559)
------------------------- --------------------------
Total operating costs and expenses 443,827 411,479
------------------------- --------------------------
Income from operations 33,950 49,323
------------------------- --------------------------
Other income (expense):
Interest expense (9,654) (10,395)
Other, net 886 1,542
------------------------- --------------------------
(8,768) (8,853)
------------------------- --------------------------
Earnings before income taxes 25,182 40,470
Income taxes 2,701 14,479
------------------------- --------------------------
Net earnings 22,481 25,991
========================= ==========================
Earnings per share:
Basic 0.26 0.29
========================= ==========================
Diluted 0.25 0.28
========================= ==========================
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended For the Six Months Ended
September 30, September 30,
------------------------------- ----------------------------
2003 2002 2003 2002
------------------------------- ----------------------------
Basic earnings per share:
Numerator - net earnings 11,218 15,526 22,481 25,991
Denominator - weighted-average shares outstanding 85,236 88,481 85,839 88,131
-------------- --------------- ------------ --------------
Basic earnings per share 0.13 0.18 0.26 0.29
============== =============== ============ ==============
Diluted earnings per share:
Numerator:
Net earnings 11,218 15,526 22,481 25,991
Interest expense on convertible bonds (net of tax
benefit) 1,026 1,050 2,051 2,100
-------------- --------------- ------------ --------------
12,244 16,576 24,532 28,091
-------------- --------------- ------------ --------------
Denominator:
Weighted-average shares outstanding 85,236 88,481 85,839 88,131
Dilutive effect of common stock options and warrants 1,937 2,354 1,770 2,411
Dilutive effect of convertible debt 9,589 9,589 9,589 9,589
-------------- --------------- ------------ --------------
96,762 100,424 97,198 100,131
-------------- --------------- ------------ --------------
Diluted earnings per share 0.13 0.17 0.25 0.28
============== =============== ============ ==============
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
----------------------------------------------------------------
2003 2002
----------------------------------------------------------------
Services 184,068 178,893
Data and Software Products 46,755 45,059
I. T. Management 60,967 56,907
Intercompany eliminations (50,695) (45,463)
------------------------------ -------------------------------
Total Revenue 241,095 235,396
============================== ===============================
For the Six Months Ended
September 30,
----------------------------------------------------------------
2003 2002
----------------------------------------------------------------
Services 359,760 348,262
Data and Software Products 87,910 83,431
I. T. Management 122,912 113,368
Intercompany eliminations (92,805) (84,259)
------------------------------ -------------------------------
Total Revenue 477,777 460,802
============================== ===============================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, March 31,
2003 2003
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 3,649 $ 5,491
Trade accounts receivable, net 185,402 189,704
Deferred income taxes 46,056 46,056
Refundable income taxes - 2,576
Other current assets 40,276 45,288
----------- -----------
Total current assets 275,383 289,115
----------- -----------
Property and equipment 427,169 389,168
Less - accumulated depreciation and amortization 206,798 180,862
----------- -----------
Property and equipment, net 220,371 208,306
----------- -----------
Software, net of accumulated amortization 64,711 63,095
Goodwill 223,765 221,184
Purchased software licenses, net of accumulated amortization 158,975 161,432
Unbilled and notes receivable, excluding current portions 14,093 20,249
Deferred costs, net of accumulated amortization 118,360 108,444
Other assets, net 27,060 21,421
----------- -----------
$1,102,718 $1,093,246
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations 47,816 29,491
Trade accounts payable 30,726 28,760
Accrued merger, integration and impairment costs 30 584
Accrued payroll and related expenses 14,841 14,234
Other accrued expenses 39,059 38,689
Deferred revenue 52,811 59,907
Income taxes 8,399 -
----------- -----------
Total current liabilities 193,682 171,665
----------- -----------
Long-term obligations:
Long-term debt and capital leases, net of current
installments 252,723 233,843
Software and data licenses, net of current installments 54,398 55,834
----------- -----------
Total long-term obligations 307,121 289,677
----------- -----------
Deferred income taxes 62,606 69,348
Commitments and contingencies
Stockholders' equity:
Common stock 9,068 9,015
Additional paid-in capital 339,971 333,715
Retained earnings 276,039 253,558
Accumulated other comprehensive loss (651) (2,911)
Treasury stock, at cost (85,118) (30,821)
----------- -----------
Total stockholders' equity 539,309 562,556
----------- -----------
$ 1,102,718 $ 1,093,246
=========== ===========
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 Qtr ended Yr ended
6/30/2003 9/30/2003 3/31/2004
Net cash provided by operating activities 48,125 49,909 195,000
Proceeds received from disposition of assets 506 192 -
Capitalized software (6,335) (7,296) (28,000)
Capital expenditures (1,588) (3,036) (15,000)
Deferral of costs (6,026) (4,006) (17,000)
------------------------------------------ --------------------
Free cash flow 34,682 35,763 135,000
========================================== ====================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
2003 2002
---------- ----------
Cash flows from operating activities:
Net earnings 11,218 10,465
Non-cash operating activities:
Depreciation and amortization 37,140 28,174
Loss (gain) on disposal or impairment of assets, net - -
Deferred income taxes - 7,552
Changes in operating assets and liabilities:
Accounts receivable (1,199) 85
Other assets 6,765 34,079
Accounts payable and other liabilities (3,600) (19,546)
Merger, integration and impairment costs (415) (566)
---------- ----------
Net cash provided by operating activities 49,909 60,243
---------- ----------
Cash flows from investing activities:
Proceeds received from the disposition of assets 192 45
Capitalized software (7,296) (8,652)
Capital expenditures (3,036) (1,916)
Investments in joint ventures and other companies - (1,052)
Deferral of costs (4,006) (3,240)
Payments received from investments 159 -
Net cash paid in acquisitions - (772)
---------- ----------
Net cash used by investing activities (13,987) (15,587)
---------- ----------
Cash flows from financing activities:
Proceeds from debt 29,286 73,707
Payments of debt (50,233) (127,972)
Sale of common stock 3,859 6,168
Acquisition of treasury stock (20,032) -
---------- ----------
Net cash used by financing activities (37,120) (48,097)
---------- ----------
Effect of exchange rate changes on cash (15) 44
---------- ----------
Net increase (decrease) in cash and cash equivalents (1,213) (3,397)
Cash and cash equivalents at beginning of period 4,862 5,676
---------- ----------
Cash and cash equivalents at end of period 3,649 2,279
========== ==========
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 6,794 6,751
Income taxes (2,533) (375)
Noncash investing and financing activities:
Note received in exchange for sale of operations - 736
Issuance of warrants - 1,317
Enterprise software licenses acquired under long-term obligation 991 -
Acquisition of property and equipment under capital lease 14,531 -
Construction of asset under construction loan 2,610 -
========== ==========
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30,
2003 2002
---------- ----------
Cash flows from operating activities:
Net earnings 22,481 25,991
Non-cash operating activities:
Depreciation and amortization 71,036 56,259
Gain disposal or impairment of assets, net (1,008) (51)
Deferred income taxes (6,742) 7,552
Changes in operating assets and liabilities:
Accounts receivable 4,810 (6,907)
Other assets 8,826 45,966
Accounts payable and other liabilities (815) (13,752)
Merger, integration and impairment costs (554) (1,369)
Net cash provided by operating activities 98,034 113,689
---------- ----------
Cash flows from investing activities:
Proceeds received from the disposition of operations 7,684 259
Proceeds received from the disposition of assets 698 200
Payments received from investments 1,360 -
Capitalized software (13,631) (17,610)
Capital expenditures (4,624) (4,916)
Investments in joint ventures and other companies (5,000) (1,052)
Deferral of costs (10,032) (7,348)
Proceeds from sale and leaseback transaction - 7,729
Net cash paid in acquisitions - (8,272)
---------- ----------
Net cash used by investing activities (23,545) (31,010)
---------- ----------
Cash flows from financing activities:
Proceeds from debt 82,473 82,516
Payments of debt (110,888) (156,700)
Sale of common stock 6,709 12,141
Acquisition of treasury stock (54,697) -
---------- ----------
Net cash used by financing activities (76,403) (62,043)
---------- ----------
Effect of exchange rate changes on cash 72 80
---------- ----------
Net increase (decrease) in cash and cash equivalents (1,842) 20,716
Cash and cash equivalents at beginning of period 5,491 5,676
---------- ----------
Cash and cash equivalents at end of period 3,649 26,392
========== ==========
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 10,302 13,453
Income taxes (1,556) (40,281)
Noncash investing and financing activities:
Acquisition of land in exchange for debt 2,698 -
Acquisition of data under long-term obligation 18,340 -
Note received in exchange for sale of operations - 736
Issuance of warrants - 1,317
Enterprise software licenses acquired under long-term obligation 9,212 2,828
Acquisition of property and equipment under capital lease 31,334 2,310
Construction of asset under construction loan 2,610 -
========== ==========