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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 12, 2004
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 12, 2004
ITEM 9. REGULATION FD DISCLOSURE.
See Item 12. Results of Operations and Financial Condition.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 12, 2004, Acxiom Corporation (the "Company") issued a press release announcing the results of its financial
performance for the quarter and fiscal year ending March 31, 2004. 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, including the Financial Road Map, 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 liquidity 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.
In addition, return on invested capital, also included in the attached press release, is a non-GAAP financial measure.
Management defines "return on invested capital" as income from operations adjusted for the implied interest expense included in
operating leases divided by the trailing four quarters average invested capital. The implied interest adjustment for operating
leases is calculated by multiplying the average quarterly balances of the present value of operating leases [(beginning balance +
ending balance)/2] times an 8% implied interest rate on the leases. Average invested capital is defined as the trailing 4 quarter
average of the ending quarterly balances for total assets less cash, less non-interest bearing liabilities, plus the present value
of operating leases. Management believes that return on invested capital is useful because it provides investors with additional
useful information for evaluating the efficiency of the Company's capital deployed in its operations. Return on invested capital
does not consider whether the business is financed with debt or equity, but rather calculates a return on all capital invested in
the business. Return on invested capital includes the present value of future payments on operating leases as a component of the
denominator of the calculation, and adjusts the numerator of the calculation for the implied interest expense on those operating
leases, in order to recognize the fact that the Company finances portions of its operations with leases instead of using either debt
or equity.
The non-GAAP financial measures used by the Company in the 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 or
liquidity 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 12, 2004
ACXIOM CORPORATION
By: /s/ Jefferson D. Stalnaker
-------------------------------------------------------
Name: Jefferson D. Stalnaker
Title: Financial Operations Leader
(principal financial and accounting officer)
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release of the Company dated May 12, 2004.
EXHIBIT 99.1
[ACXIOM LOGO]
For more information, contact:
Robert S. Bloom
Financial Relations Leader
Acxiom Corporation
(501) 342-1321
EACXM
Acxiom® Reports Fourth-Quarter, Fiscal-Year Results
Q4 EPS in line with estimates; revenue and cash flow exceed estimates
LITTLE ROCK, May 12, 2004 - Acxiom® Corporation (Nasdaq:ACXM) today reported revenue and earnings for the fourth quarter of
fiscal 2004 that were in line with the expectations the Company announced March 31, 2004. As projected, revenue of $277.8 million
exceeded the previously estimated range of $265 million to $270 million, and diluted earnings per share of $.17 were within the
previously estimated range of $.16 to $.18. Operating cash flow of $82.6 million was a record quarterly performance for the Company.
Free cash flow of $57.5 million exceeded the previously estimated range of $25 million to $30 million.
This year's fourth-quarter earnings include: a non-recurring pre-tax charge of approximately $4 million associated with severance
costs related to the workforce reduction in the fourth quarter; pre-tax charges of $10.9 million associated with write-downs; and an
after-tax benefit of $9.6 million associated with a one-time reduction in income tax expense. The impact on earnings per share of
the pre-tax charges of $14.9 million was approximately offset by the after-tax benefit of the $9.6 million reduction in income tax.
Fiscal 2004 revenue of $1.011 billion and diluted earnings per share of $.64 compare to $958 million in revenue and $.24 in diluted
EPS in fiscal 2003. 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 pleased with our Q4 performance and particularly our cash flow, which continues to exceed our expectations," Company Leader
Charles D. Morgan said. "We believe that this performance reflects the growing strength of our business, and we're also very
encouraged with the progress we're making with three other critical initiatives: integrating our two European acquisitions into
Acxiom's business; rolling out our new Customer Information Infrastructure grid-based solutions; and transitioning to our new
organizational structure, which was designed to help us better serve clients and take advantage of our newer technologies."
Highlights of Acxiom's fourth quarter include:
o Revenue of $277.8 million, up 16 percent from $239.5 million in the same quarter a year ago.
o Diluted earnings per share of $.17 compared to a loss per share of $.27 in the fourth quarter last year.
o Operating cash flow of $82.6 million, a record performance for the Company, compared to $63.1 million generated in the
fourth quarter a year ago.
o Free cash flow of $57.5 million, compared to $48.7 million a year ago, marking the 11th consecutive quarter of strong free
cash flow.
o New contracts that will deliver $26 million in incremental annual revenue and renewals that are expected to generate $38
million in annual revenue.
o Committed new deals in the pipeline that are expected to add, when closed, $58 million in annual revenue.
Highlights of Acxiom's fiscal 2004 include:
o Revenue of $1.011 billion, up 5.5 percent from $958 million a year ago.
o Diluted earnings per share (EPS) of $.64 compared to $.24 in fiscal 2003.
o Operating cash flow of $259.9 million compared to $253.8 million in fiscal 2003.
o Free cash flow of $187.8 million compared to $199.0 million a year ago.
o New contracts that will contribute an annual value of $107 million, compared to $96 million last year.
o Contract renewals that will generate $90 million in annual revenue compared to $137 million in fiscal 2003.
o The completion of the acquisitions of Claritas Europe and the Consodata operations in the UK, France and Spain. (The
acquisition of Consodata Germany was completed
April 13.)
o Signing a strategic partnership with Accenture to help clients in the retail financial services, telecommunications,
consumer products and government sectors better use customer information to improve business results.
o The initiation of the first quarterly cash dividend in the Companys history.
o A Company stock buyback program that included the purchase of approximately 4.4 million shares for approximately $64.5
million in the fiscal year.
In the fourth quarter, Acxiom completed new contracts with several large companies, including General Motors, Bank One Corporation,
Cingular Wireless and Sonoco, and renewed its long-term contract with Deluxe Corporation. Since the close of the quarter, the
Company has partnered with Accenture to close a deal with a major pharmaceutical company.
Fiscal 2004 Recognition
In fiscal 2004 Acxiom:
o Was named to the "DM Review 100" list for the fourth consecutive year. The annual list ranks the top 100 vendors of business
intelligence, analytic applications and customer relationship management products.
o Received the Gold SMART Award for "Best Marketing Database Software" from British business magazine Direct Response, the
second year in a row Acxiom has won a gold SMART Award.
o Was named to Software magazine's "Software 500" ranking for the third consecutive year.
o Was selected as a finalist for the 2004 American Business Award in the "Most Innovative Company" category for its
development of one of the first grid computing systems for use in large commercial applications.
o Also, Charles Morgan, Acxiom's company leader, was inducted into the Arkansas Business Hall of Fame.
Financial Road Map
For the fiscal year ended March 31, 2005 and thereafter, the Company's expectations will be communicated in a new format. The
Financial Road Map was introduced on March 31, 2004 and includes a chart summarizing the one-year and long-term goals as well as an
explanation of the assumptions and definitions that accompany these goals. This Financial Road Map is attached and supercedes all
previous guidance issued by the Company.
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.
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 Japan.
This release (including the Financial Road Map) and the scheduled conference call include a discussion of non-GAAP financial
measures. Whenever the Company reports non-GAAP financial measures, there is a reconciliation to the comparable GAAP measure
attached to the 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: that the
projected revenue, operating margin, return on assets and return on invested capital, operating cash flow and free cash flow,
borrowings and dividends referred to in the Financial Road Map will be within the estimated ranges; that the business pipeline and
our current cost structure will allow us to continue to meet or exceed revenue, cash flow and other projections; that new contracts
and contract renewals will generate the indicated amounts of revenue; that we have committed new deals in the pipeline that are
expected to deliver the indicated amounts; that we are well positioned for success going forward; that future results will be within
the indicated ranges; 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 may not be closed within the anticipated time frames; 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 that the recovery
from the previous three years' economic slowdown may take longer than expected or that economic conditions in general will not be as
expected; the possibility that significant customers may experience extreme, severe economic difficulty; 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; 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 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 the services of the United States Postal Service, their global counterparts and other delivery systems may be
disrupted; the possibility that the integration of our recently acquired businesses may not be successful; and the possibility that
we may be affected by other competitive factors.
With respect to the Financial Road Map exhibit, 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; relating to Operating
Margin, that 1) Acxiom's computer and communications related expenses will continue to fall as a percentage of revenue, 2) that the
Customer Information Infrastructure (CII) grid-based environment Acxiom has begun to implement 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, 3) that the recent acquisitions of Claritas Europe and Consodata Europe 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 continue to 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 will be
mitigated by continued stock repurchases in accordance with the Company's stock repurchase program.
With respect to the provision of products or services outside our primary base of operations in the U.S., all of the above factors
apply, along with 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 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.
###
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
March 31,
--------------------------------------------
2004 2003
--------------------------------------------
Revenue 277,837 239,459
Operating costs and expenses:
Salaries and benefits 95,914 85,988
Computer, communications and
other equipment 70,465 100,686
Data costs 37,480 28,584
Other operating costs and expenses 47,116 50,124
Gains, losses and nonrecurring items, net 4,863 62
------------------- -----------------
Total operating costs and expenses 255,838 265,444
------------------- -----------------
Income (loss) from operations 21,999 (25,985)
------------------- -----------------
Other income (expense):
Interest expense (4,911) (6,280)
Other, net (7,153) (7,830)
------------------- -----------------
(12,064) (14,110)
------------------- -----------------
Earnings (loss) before income taxes 9,935 (40,095)
Income taxes (5,984) (16,334)
------------------- -----------------
Net earnings (loss) 15,919 (23,761)
=================== =================
Earnings per share:
Basic 0.19 (0.27)
=================== =================
Diluted 0.17 (0.27)
=================== =================
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Twelve Months Ended
March 31,
--------------------------------------------
2004 2003
--------------------------------------------
Revenue 1,010,822 958,222
Operating costs and expenses:
Salaries and benefits 347,634 316,304
Computer, communications and
other equipment 267,720 296,607
Data costs 132,593 116,063
Other operating costs and expenses 168,736 179,191
Gains, losses and nonrecurring items, net 855 (5,018)
------------------- -----------------
Total operating costs and expenses 917,538 903,147
------------------- -----------------
Income from operations 93,284 55,075
------------------- -----------------
Other income (expense):
Interest expense (19,267) (21,763)
Other, net (6,724) (5,224)
------------------- -----------------
(25,991) (26,987)
------------------- -----------------
Earnings before income taxes 67,293 28,088
Income taxes 8,949 6,321
------------------- -----------------
Net earnings 58,344 21,767
=================== =================
Earnings per share:
Basic 0.68 0.25
=================== =================
Diluted 0.64 0.24
=================== =================
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended For the Twelve Months Ended
March 31, March 31,
-------------------------- ---------------------------
2004 2003 2004 2003
-------------------------- ---------------------------
Basic earnings per share:
Numerator - net earnings (loss) 15,919 (23,761) 58,344 21,767
Denominator - weighted-average shares outstanding 85,342 88,258 85,487 88,429
----------- ----------- ----------- -----------
Basic earnings (loss) per share 0.19 (0.27) 0.68 0.25
=========== =========== =========== ===========
Diluted earnings per share:
Numerator:
Net earnings (loss) 15,919 (23,761) 58,344 21,767
Interest expense on convertible bonds (net of tax benefit) 1,026 - 4,102 -
----------- ----------- ----------- -----------
16,945 (23,761) 62,446 21,767
----------- ----------- ----------- -----------
Denominator:
Weighted-average shares outstanding 85,342 88,258 85,487 88,429
Dilutive effect of common stock options and warrants 3,025 - 2,161 2,113
Dilutive effect of convertible debt 9,589 - 9,589 -
----------- ----------- ----------- -----------
97,956 88,258 97,237 90,542
----------- ----------- ----------- -----------
Diluted earnings (loss) per share 0.17 (0.27) 0.64 0.24
=========== =========== =========== ===========
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
------------------------------------------------------------------
2004 2003
------------------------------------------------------------------
Services 198,298 178,100
Data and Software Products 73,706 43,550
I. T. Management 62,227 61,764
Intercompany eliminations (56,394) (43,955)
------------------------------- -------------------------------
Total Revenue 277,837 239,459
=============================== ===============================
For the Twelve Months Ended
March 31,
------------------------------------------------------------------
2004 2003
------------------------------------------------------------------
Services 749,755 718,872
Data and Software Products 216,241 172,979
I. T. Management 251,463 241,096
Intercompany eliminations (206,637) (174,725)
------------------------------- -------------------------------
Total Revenue 1,010,822 958,222
=============================== ===============================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31, March 31,
2004 2003
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 14,355 $ 5,491
Trade accounts receivable, net 212,387 189,704
Deferred income taxes 14,032 46,056
Refundable income taxes 2,280 2,576
Other current assets 43,272 45,288
------------ ------------
Total current assets 286,326 289,115
------------ ------------
Property and equipment 521,064 389,168
Less - accumulated depreciation and amortization 253,976 180,862
------------ ------------
Property and equipment, net 267,088 208,306
------------ ------------
Software, net of accumulated amortization 64,553 63,095
Goodwill 282,971 221,184
Purchased software licenses, net of accumulated amortization 157,217 161,432
Unbilled and notes receivable, excluding current portions 13,030 20,249
Deferred costs, net of accumulated amortization 124,653 108,444
Other assets, net 19,946 21,421
------------ ------------
$ 1,215,784 $ 1,093,246
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations 73,245 29,491
Trade accounts payable 41,527 28,760
Accrued merger, integration and impairment costs 2,881 584
Accrued payroll and related expenses 23,979 14,234
Other accrued expenses 63,411 38,689
Deferred revenue 91,060 59,907
------------ ------------
Total current liabilities 296,103 171,665
------------ ------------
Long-term obligations:
Long-term debt and capital leases, net of current installments 239,327 233,843
Software and data licenses, net of current installments 54,130 55,834
------------ ------------
Total long-term obligations 293,457 289,677
------------ ------------
Deferred income taxes 39,008 69,348
Commitments and contingencies
Stockholders' equity:
Common stock 9,226 9,015
Additional paid-in capital 361,256 333,715
Retained earnings 308,487 253,558
Accumulated other comprehensive loss 2,940 (2,911)
Treasury stock, at cost (94,693) (30,821)
------------ ------------
Total stockholders' equity 587,216 562,556
------------ ------------
$ 1,215,784 $ 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
===========================================================================
Qtr ended Qtr ended Qtr ended Qtr ended Yr ended
6/30/2003 9/30/2003 12/31/2003 3/31/2004 3/31/2004
Net cash provided by operating activities 48,125 49,909 79,282 82,567 259,883
Proceeds received from disposition of assets 506 192 39 2,046 2,783
Capitalized software (6,335) (7,296) (6,510) (7,703) (27,844)
Capital expenditures (1,588) (3,036) (7,637) (9,917) (22,178)
Deferral of costs (6,026) (4,006) (5,312) (9,537) (24,881)
---------------------------------------------------------------------------
Free cash flow 34,682 35,763 59,862 57,456 187,763
===========================================================================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
--------------------------------------------
2004 2003
--------------------------------------------
Cash flows from operating activities:
Net earnings (loss) 15,919 (23,761)
Non-cash operating activities:
Depreciation and amortization 42,496 66,548
Loss on disposal or impairment of assets, net 10,948 8,838
Deferred income taxes (9,781) (16,903)
Tax benefit of stock options and interest 4,313 6,737
Changes in operating assets and liabilities:
Accounts receivable 27,981 8,040
Other assets (4,560) 9,468
Accounts payable and other liabilities (7,630) 4,810
Merger, integration and impairment costs 2,881 (665)
------------------- ---------------------
Net cash provided by operating activities 82,567 63,112
------------------- ---------------------
Cash flows from investing activities:
Proceeds received from the disposition of operations - 638
Proceeds received from the disposition of assets 2,046 93
Capitalized software (7,703) (8,237)
Capital expenditures (9,917) (2,403)
Investments in joint ventures and other companies - (125)
Deferral of costs (9,537) (3,883)
Payments received from investments 159 -
Net cash paid in acquisitions (55,591) -
------------------- ---------------------
Net cash used by investing activities (80,543) (13,917)
------------------- ---------------------
Cash flows from financing activities:
Proceeds from debt 48,698 78,489
Payments of debt (53,138) (168,916)
Dividends paid (3,415) -
Sale of common stock 10,908 3,708
Acquisition of treasury stock (8,423) (23,335)
------------------- ---------------------
Net cash used by financing activities (5,370) (110,054)
------------------- ---------------------
Effect of exchange rate changes on cash 53 (52)
------------------- ---------------------
Net increase (decrease) in cash and cash equivalents (3,293) (60,911)
Cash and cash equivalents at beginning of period 17,648 66,402
------------------- ---------------------
Cash and cash equivalents at end of period 14,355 5,491
=================== =====================
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 6,692 8,919
Income taxes 3,886 375
Noncash investing and financing activities:
Issuance of warrants 2,000 1,317
Enterprise software licenses acquired under long-term obligation 5,500 -
Acquisition of property and equipment under capital lease 20,323 4,494
Construction of assets under construction loan 4,191 -
=================== =====================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
--------------------------------------------
2004 2003
--------------------------------------------
Cash flows from operating activities:
Net earnings 58,344 21,767
Non-cash operating activities:
Depreciation and amortization 150,241 154,902
Loss (gain) on disposal or impairment of assets, net 9,940 8,799
Deferred income taxes 6,895 7,020
Tax benefit of stock options and interest 4,313 6,894
Changes in operating assets and liabilities:
Accounts receivable 25,594 3,999
Other assets 7,434 63,271
Accounts payable and other liabilities (5,175) (10,422)
Merger, integration and impairment costs 2,297 (2,437)
------------------- ---------------------
Net cash provided by operating activities 259,883 253,793
------------------- ---------------------
Cash flows from investing activities:
Proceeds received from the disposition of operations 7,684 1,089
Proceeds received from the disposition of assets 2,783 293
Payments received from investments 1,678 -
Capitalized software (27,844) (34,573)
Capital expenditures (22,178) (13,212)
Investments in joint ventures and other companies (5,000) (1,177)
Deferral of costs (24,881) (15,027)
Proceeds from sale and leaseback transaction - 7,729
Net cash paid in acquisitions (55,591) (14,105)
------------------- ---------------------
Net cash used by investing activities (123,349) (68,983)
------------------- ---------------------
Cash flows from financing activities:
Proceeds from debt 149,687 161,005
Payments of debt (231,618) (337,399)
Dividends paid (3,415) -
Sale of common stock 21,892 18,061
Acquisition of treasury stock (64,470) (26,734)
------------------- ---------------------
Net cash used by financing activities (127,924) (185,067)
------------------- ---------------------
Effect of exchange rate changes on cash 254 72
------------------- ---------------------
Net increase (decrease) in cash and cash equivalents 8,864 (185)
Cash and cash equivalents at beginning of period 5,491 5,676
------------------- ---------------------
Cash and cash equivalents at end of period 14,355 5,491
=================== =====================
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 20,189 26,347
Income taxes 2,900 (40,045)
Noncash investing and financing activities:
Notes payable, common stock and warrants
issued for acquisitions - 28,486
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 - 1,326
Issuance of warrants 2,000 1,317
Enterprise software licenses acquired under long-term obligation 16,635 2,828
Acquisition of property and equipment under capital lease 80,518 14,139
Construction of assets under construction loan 11,045 -
=================== =====================
ACXIOM CORPORATION
Financial Road Map(1)
(as of May 12, 2004)
The Financial Road Map has been updated to show actual results for fiscal 2004. The target for Fiscal 2005 has been updated and the
long-term goals for fiscal 2008 have not changed.
--------------------- --------------------- --------------------- ---------------------
Actual(2) Actual(3) Target Long-Term Goals
Years Ending March 31, Fiscal 2003 Fiscal 2004 Fiscal 2005 Fiscal 2008
--------------------- --------------------- --------------------- ---------------------
U.S. Revenue Growth 10.1% 2.7% 7.0% to 11.0% 7.0% to 10.0% (CAGR)
U.S. Revenue $903 million $926 million $991 to $1,028 million -
International Revenue Growth 19.3% 51.3% - 14.0% to 18.0% (CAGR)
International Revenue $55 million $85 million $220 to $261 million -
U.S. Operating Margin 6.2% 9.8% 11.5% to 12.0% 15.0% to 16.0%
International Operating Margin (0.8%) 3.1% 8.0% to 11.0% 18.0% to 20.0%
Return on Assets 4.8% 8.2% 10.0% to 12.0% 14.0% to 16.0%
Return on Invested Capital 6.1% 9.4% 12.0% to 14.0% 16.0% to 19.0%
Operating Cash Flow $254 million $260 million $220 to $260 million $220 to $260 million
Free Cash Flow $199 million $188 million $160 to $180 million $160 to $180 million
Revolving Credit Line Balance $29 million $16 million Less than $150 million Less than $200 million
Annual Dividends Per Share $0.00 0.04(4) $0.16 $0.20 to $0.24
- ------------------------------
1 Assumptions and definitions are defined on the following schedule: "Financial Road Map assumptions and definitions"
2 The Fiscal 2003 results include $5.0 million income recorded in gains, losses and nonrecurring items, net and $30.6 million of
write-downs related to impairment of software and long-lived assets.
3 The Fiscal 2004 results include $0.9 million expense recorded in gains, losses and nonrecurring items, net and $2.8 million
related to a write-down of a third-party software package.
4 Acxiom declared its first quarterly dividend in the fourth quarter of Fiscal 2004.
ACXIOM CORPORATION
Financial Road Map Assumptions and Definitions
Assumptions
1. The effective tax rate is projected to be approximately 38% for future years.
2. Investing activities (including capital expenditures, deferred costs and capitalized software) will be $60 million to $80
million for each of the years presented.
3. Interest rates will remain at approximately the current levels.
4. The Company will utilize all of its tax loss carry forwards and begin to pay U.S. federal and state income taxes during FY06.
5. The Company will pay incentives under its bonus plan of approximately $15 million to $25 million for each of the years beginning
in fiscal 2005.
6. The Company will maintain a relatively constant mix of business for each of our three business segments (Services, Data and IT
outsourcing).
7. Foreign exchange rates will remain at approximately the current levels.
8. Stock repurchases will be in amounts that yield the highest shareholder return considering all other uses for the available
cash.
9. Diluted outstanding shares will increase slightly to reflect the impact of in-the-money options as the stock price increases.
10. Long-term goals are based on the Company's current assessment of opportunities and are subject to change. There are risks
associated with obtaining these goals which are explained under forward looking statements in the press release accompanying
this Financial Road Map. Acxiom disclaims any obligation to update the information contained in this Financial Road Map.
Definitions
1. Revenue Growth is defined as the percentage growth compared to the previous corresponding fiscal year or quarter.
2. Operating Margin is defined as the income from operations as a percentage of revenue.
3. Return on Assets (ROA) is defined as income from operations divided by average total assets for the trailing four quarters.
4. Return on Invested Capital (ROIC) is defined as income from operations adjusted for the implied interest expense included in
operating leases divided by the trailing four quarters average invested capital. The implied interest adjustment for operating
leases is calculated by multiplying the average quarterly balances of the present value of operating leases [(beginning balance
+ ending balance)/2] x an 8% implied interest rate on the leases.
Average invested capital is defined as the trailing 4 quarter average of the ending quarterly balances for total assets less
cash, less non-interest bearing liabilities, plus the present value of operating leases.
5. Operating Cash Flow is as shown on the Company's cash flow statement.
6. Free Cash Flow is defined as cash flow from operating activities less cash flow from investing activities excluding net cash
paid or received for acquisitions and divestitures, joint ventures and investments.
7. Revolving Credit Line Balance is defined as actual funds borrowed under the Company's revolving line of credit facility at the
end of the fiscal year.
8. Annual Dividends Per Share is defined as the sum of the four quarterly dividends for that fiscal year.
ACXIOM CORPORATION
Reconciliation of Non-GAAP Measurements
(Dollars in thousands)
----------- ----------- -------------------- --------------------
Actual Actual Target Long-Term Goals
Years Ending March 31, Fiscal 2003 Fiscal 2004 Fiscal 2005 Fiscal 2008
----------- ----------- -------------------- --------------------
Free Cash Flow
Net cash provided by operating activities 253,793 259,883 220,000 260,000 220,000 260,000
Proceeds received from disposition of assets 293 2,783 0 0 0 0
Capitalized software (34,573) (27,844) (26,000) (28,000) (26,000) (28,000)
Capital expenditures (13,212) (22,178) (16,000) (25,000) (16,000) (25,000)
Deferral of costs (15,027) (24,881) (18,000) (27,000) (18,000) (27,000)
Proceeds from sale and leaseback transaction 7,729 0 0 0 0 0
----------- ----------- -------- -------- -------- --------
Free cash flow 199,003 187,763 160,000 to 180,000 160,000 to 180,000
=========== =========== ======= ======== ======== ========
Free cash flow as defined by the Company, may not be comparable to similarly titled measures reported by other companies. Management
of the Company has included free cash flow in this Financial Road Map because although 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, management believes that it provides investors with a useful alternative measure of liquidity by allowing an assessment of the
amount of cash available for general corporate and strategic purposes, including debt payments, after funding operating activities
and capital expenditures, capitalized software expenses and deferred costs. The above table reconciles free cash flow to cash
provided by operating activities, the nearest comparable GAAP measure.
- -----------------------------------------------------------------------------------------------------------------------------------
Return
on
Assets (ROA)
and
Return
on
Invested
Capital (ROA) (ROIC) ROA ROIC ROA ROIC ROA ROIC
--------- --------- --------- --------- ------------------- ------------------- ------------------- -------------------
Numerator:
Income
from
operations 55,075 55,075 93,284 93,284 131,000 155,000 131,000 155,000 221,000 272,000 221,000 272,000
Add implied
interest
on
operating
leases (1) 15,170 13,557 16,000 16,000 21,000 21,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
55,075 70,245 93,284 106,841 131,000 155,000 147,000 171,000 221,000 272,000 242,000 293,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Denominator:
Average
total
assets
(2) 1,138,968 1,138,968 1,143,120 1,143,120 1,250,000 1,300,000 1,250,000 1,300,000 1,600,000 1,700,000 1,600,000 1,700,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Less
average
cash
(3) (25,141) (10,129) (5,000) (5,000) (100,000) (200,000)
Less
average
non-
interest
bearing
current
liabilities
(4) (139,226) (166,175) (220,000) (230,000) (240,000) (240,000)
Plus
average
present
value
of
operating
leases (1) 185,222 171,422 201,000 201,000 258,000 258,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
1,138,968 1,159,823 1,143,120 1,138,238 1,250,000 1,300,000 1,226,000 1,266,000 1,600,000 1,700,000 1,518,000 1,518,000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Return on
invested
capital 4.8% 6.1% 8.2% 9.4% 10.5% to 11.9% 12.0% to 13.5% 13.8% to 16.0% 15.9% to 19.3%
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Notes
-----
1 Average present value of operating leases is the average for the trailing 4 quarter ends of the present value of future
payments on operating leases, discounted at 8% which is the assumed implicit interest rate included in the leases. The
implied interest added to the numerator is the 8% assumed interest charge on the average quarterly balance [(beginning +
Ending) / 2] of the present value of the leases.
2 Average total assets is the average of the GAAP amount for the trailing 4 quarter ends.
3 Average cash is the average of the GAAP amount for the trailing 4 quarter ends.
4 Average non-interest bearing current liabilities is the average for the trailing 4 quarter ends of all current liabilities
excluding the current portion of long-term debt.
Return on Invested Capital (ROIC) as defined by the Company, may not be comparable to similarly titled measures reported by other
companies. Management of the Company has included ROIC in this Financial Road Map because it measures the capital efficiency of our
business. ROIC does not consider whether the business is financed with debt or equity; rather ROIC calculates a return on all
capital invested in the business.
The above table reconciles ROIC to a ROA calculation using GAAP numbers. The Company uses ROIC in a number of ways, including
pricing analysis, capital expenditure evaluation, and merger and acquisition valuation.