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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 11, 2005
ACXIOM CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-13163 71-0581897
(Commission File Number) (IRS Employer Identification No.)
1 Information Way, P.O. Box 8180, Little Rock, Arkansas 72203-8180
(Address of Principal Executive Offices) (Zip Code)
501-342-1000
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On May 11, 2005, Acxiom Corporation (the "Company") issued a press release announcing the results of its financial
performance for the fourth quarter of fiscal year 2005. 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.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is not mentioned in the
attached press release, but may be discussed during the conference call. EBITDA can be calculated directly from the financial
statements by adding pre-tax income plus interest expense from the statement of operations plus depreciation and amortization from
the cash flow statement. Management believes EBITDA is a useful measure of liquidity which may be used by investors to assess the
Company's ongoing operations and liquidity.
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.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
The following exhibits are furnished herewith:
Exhibit
Number Description
- ------------ -------------------------------------------------------------------------------------------------------
99.1 Press Release of the Company dated May 11, 2005.
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 11, 2005
ACXIOM CORPORATION
By: /s/ Jerry C. Jones
________________________________
Name: Jerry C. Jones
Title: Business Development/Legal Leader
EXHIBIT INDEX
Exhibit
Number Description
- --------------------------------------------------------------------------------------------------------------------
99.1 Press Release of the Company dated May 11, 2005
For more information, contact:
Investor Relations
Acxiom Corporation
(501) 342-1321
EACXM
Acxiom Reports Fourth-Quarter, Fiscal-Year Results
Revenue up 21%, EPS grows 16% in fiscal 2005
LITTLE ROCK, Ark. -- May 11, 2005 - Acxiom® Corporation (Nasdaq:ACXM) today reported fourth-quarter and full-year financial results
for fiscal 2005 ended March 31, 2005. Fourth-quarter results include revenue of $322.5 million, income from operations of $23.0
million and diluted earnings per share of $.16. The fourth-quarter results include the impact of a $3.6 million non-cash charge
related to the accelerated vesting of stock options. Full-year results include revenue of $1.223 billion, income from operations of
$122.2 million and diluted earnings per share of $.74. 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. The Company will reference presentation slides that will be available on the website prior to the call.
"Our U.S. business remained solid in the fourth quarter and through the fiscal year, despite some reductions in credit card mailing
volumes," Company Leader Charles D. Morgan said. "U.S. revenue grew 9 percent for the fiscal year. While our international operation
didn't meet the expectations that we set for their business, we were able to integrate two large, historically unprofitable data
businesses across seven countries in Europe with our U.K. based services business and generate a profit for the fiscal year. We also
believe that the recent acquisitions of Smart DM and Digital Impact will enhance and expand Acxiom's value proposition - inside and
outside the U.S."
Details of Acxiom's fourth-quarter performance include:
o Revenue of $322.5 million, a 16 percent increase over $277.8 million in the fourth quarter of fiscal 2004. Acquisitions
contributed 4 percentage points of this 16 percentage-point growth in revenue.
o Income from operations of $23.0 million, a 4 percent increase from $22.0 million the year before.
o Diluted earnings per share of $0.16, down 6 percent from $0.17 in the same period a year ago.
o A non-cash charge of $3.6 million related to the acceleration of vesting of stock options, which reduced income from
operations by $3.6 million and reduced diluted earnings per share by 2.3 cents for the quarter.
o Operating cash flow of $67.8 million and free cash flow of $40.2 million. The free cash flow of $40.2 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 are expected to deliver $42 million in annual revenue and renewals that total $42 million in annual
revenue.
o Committed new deals in the pipeline that are expected to generate $62 million in annual revenue.
o The announcement of our agreement to acquire Digital Impact, a leading provider of integrated digital marketing solutions,
based in San Mateo, California. This acquisition closed following the completion of the fourth quarter.
o The acquisition of SmartDM, a full-service direct marketing firm based in Nashville, Tenn., that offers comprehensive direct
marketing services and information management for mid-sized companies.
Morgan noted that Acxiom recently completed contracts with Providian Financial Corporation; Deluxe Corporation; Lands' End, Inc.;
Bankers Life and Casualty, a subsidiary of Conseco Inc.; RR Donnelley & Sons Company; Marriott Vacation Club International; Juniper
Bank; Nationwide Mutual Insurance Company; Southeast Toyota Distributors, LLC; FranklinCovey; and Advance Publications Inc.
Fiscal 2005 highlights:
o Revenue of $1.223 billion, up 21 percent from $1.011 billion a year ago. Acquisitions contributed 11 percentage points of
this 21 percentage-point growth in revenue.
o Diluted earnings per share of $.74, a 16 percent improvement over $.64 in fiscal 2004.
o Operating cash flow of $247.0 million.
o Free cash flow of $159.0 million.
o New contracts that are expected to deliver $137 million in annual revenue and renewals that also total $168 million in
annual revenue. Highlights include a new 15-year contract with Information Resources, Inc. (IRI), including renewal options
after years 5 and 10, that is expected to average $25 million to $30 million in annual revenue; and a five-year extension of
Acxiom's data center management outsourcing agreement with TransUnion with an estimated average annual revenue of $60
million to $70 million.
o The acquisition of ChinaLOOP, a pioneering business intelligence, customer relationship management and data management
company based in Shanghai, China.
o The purchase of 2.97 million shares of Acxiom stock through the company's stock buy-back program at a total cost of $67.4
million. From the program's introduction in December 2002 through March 31, 2005, the Company has purchased a total of 9.1
million shares of Acxiom stock at a total cost of $158.6 million.
o An increase in the Company's quarterly cash dividend, which was raised from 4 cents per share to 5 cents per share in
February 2005.
o The redemption of a $175 million convertible bond in February 2005, resulting in an annual cash savings of approximately
$6.6 million.
Fiscal 2005 Recognition
In fiscal 2005, Acxiom was:
o Included in the Computerworld Honors Program for its Customer Information Infrastructure (CII) grid-computing technology.
o Named to the DM Review 100.
o Honored by Computerworld as one of the 100 Best Places to Work in Information Technology
o Listed in CIO magazine's "CIO 100 for IT Agility."
o Honored by CRM magazine with its "CRM Data Quality Market Leader Award."
o Included in InformationWeek magazine's "InformationWeek 500 for Innovative Use of Information Technology."
o Honored with a TDWI Best Practices in Data Warehousing award in the "Radical Data Warehousing/Business Intelligence"
category.
Road Map and Outlook
Fiscal 2005 U.S. revenue of $1.011 billion exceeded the range of $991 million to $1.010 billion the Company projected in its
Financial Road Map. International revenue of $213 million for the year was slightly below the Road Map range of $215 million to $225
million. U.S. operating margin, which was impacted by the $3.6 million non-cash charge, was 11.3 percent for fiscal 2005 compared to
a projected range of 12 to 12.5 percent. International margin of 3.9 percent was below the 5 to 7 percent projected range.
Acxiom's Financial Road Map has been updated based on current expectations for fiscal year 2006, and the long-term goals reflect
expected performance in fiscal 2009. For the fiscal year ended March 31, 2006, the Company estimates that: U.S. revenue will grow 13
percent to 15 percent, the U.S. operating margins will be 11.5 percent to 12.5 percent, international revenue will grow 0 percent to
5 percent (5 to 10 percent when adjusted for the recent divestiture of letter shop operations in Germany) and international margin
will be 4.5 percent to 6.5 percent.
The financial projections stated today are based on the Company's current expectations and the assumptions and limitations set forth
in the Financial Road Map. 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 China.
For more information, visit www.acxiom.com.
This release (including references to 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, presentation slides 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 may 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, dividends and other metrics 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 the recent acquisitions of SmartDM and Digital
Impact will enhance and expand Acxiom's value proposition - inside and outside the U.S.; 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 of an economic
slowdown 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 integration of acquired businesses may not be as successful as planned;
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
changes in accounting pronouncements may occur and may impact these projections; 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 we may experience failures or breaches of our network and data
security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties; 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 we will not successfully complete customer contract requirements on time or meet the
service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that we
experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; the
possibility that the services of the United States Postal Service, their global counterparts and other delivery systems may be
disrupted; 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; that Acxiom's computer
and communications related expenses will continue to fall as a percentage of revenue; 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; that the acquisitions of companies
operating primarily outside of the United States 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 United States, 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,
------------------------------------------
2005 2004
------------------------------------------
Revenue:
Services 235,945 199,135
Data 86,589 78,702
--------------- ---------------
Total revenue 322,534 277,837
Operating costs and expenses:
Cost of revenue
Services 189,864 165,194
Data 54,602 54,764
--------------- ---------------
Total cost of revenue 244,466 219,958
Selling, general and administrative 55,113 31,017
Gains, losses and nonrecurring items, net - 4,863
--------------- ---------------
Total operating costs and expenses 299,579 255,838
--------------- ---------------
Income from operations 22,955 21,999
--------------- ---------------
Other income (expense):
Interest expense (4,302) (4,911)
Other, net 2,376 (7,154)
--------------- ---------------
Total other income (expense) (1,926) (12,065)
--------------- ---------------
Earnings before income taxes 21,029 9,934
Income taxes 6,171 (5,986)
--------------- ---------------
Net earnings 14,858 15,920
=============== ===============
Earnings per share:
Basic 0.17 0.19
=============== ===============
Diluted 0.16 0.17
=============== ===============
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Twelve Months Ended
March 31,
------------------------------------------
2005 2004
------------------------------------------
Revenue:
Services 889,675 778,154
Data 333,367 232,668
--------------- ---------------
Total revenue 1,223,042 1,010,822
Operating costs and expenses:
Cost of revenue
Services 697,323 635,436
Data 208,388 162,671
--------------- ---------------
Total cost of revenue 905,711 798,107
Selling, general and administrative 196,123 118,576
Gains, losses and nonrecurring items, net (984) 855
--------------- ---------------
Total operating costs and expenses 1,100,850 917,538
--------------- ---------------
Income from operations 122,192 93,284
--------------- ---------------
Other income (expense):
Interest expense (19,191) (19,267)
Other, net 3,200 (6,724)
--------------- ---------------
Total other income (expense) (15,991) (25,991)
--------------- ---------------
Earnings before income taxes 106,201 67,293
Income taxes 36,483 8,949
--------------- ---------------
Net earnings 69,718 58,344
=============== ===============
Earnings per share:
Basic 0.80 0.68
=============== ===============
Diluted 0.74 0.64
=============== ===============
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
March 31,
-------------------------------------
2005 2004
---------------------- ---------------
Basic earnings per share:
Numerator - net earnings 14,858 15,920
Denominator - weighted-average shares outstanding 88,216 85,342
-------------- ---------------
Basic earnings per share 0.17 0.19
============== ===============
Diluted earnings per share:
Numerator:
Net earnings 14,858 15,920
Interest expense on convertible bonds (net of tax benefit) 509 1,026
-------------- ---------------
15,367 16,946
-------------- ---------------
Denominator:
Weighted-average shares outstanding 88,216 85,342
Dilutive effect of common stock options and warrants 3,274 3,025
Dilutive effect of convertible debt 7,351 9,589
-------------- ---------------
98,841 97,956
-------------- ---------------
Diluted earnings per share 0.16 0.17
============== ===============
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Twelve Months Ended
March 31,
-------------------------------------
2005 2004
-------------------------------------
Basic earnings per share:
Numerator - net earnings 69,718 58,344
Denominator - weighted-average shares outstanding 86,695 85,487
-------------- ---------------
Basic earnings per share 0.80 0.68
============== ===============
Diluted earnings per share:
Numerator:
Net earnings 69,718 58,344
Interest expense on convertible bonds (net of tax benefit) 3,560 4,102
-------------- ---------------
73,278 62,446
-------------- ---------------
Denominator:
Weighted-average shares outstanding 86,695 85,487
Dilutive effect of common stock options and warrants 3,721 2,161
Dilutive effect of convertible debt 9,030 9,589
-------------- ---------------
99,446 97,237
-------------- ---------------
Diluted earnings per share 0.74 0.64
============== ===============
ACXIOM CORPORATION AND SUBSIDIARIES
REVENUES BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
----------------------------------------------------------------------------------------
2005 2004
----------------------------------------------------------------------------------------
US Services & Data 190,392 181,351
International Services & Data 52,687 39,866
IT Management 83,615 62,227
Intercompany eliminations (4,160) (5,607)
------------------------------------------- ------------------------------------------
Total Revenue 322,534 277,837
=========================================== ==========================================
For the Twelve Months Ended
March 31,
------------------------------------------------------------------------------------------
2005 2004
------------------------------------------- --- ------------------------------------------
US Services & Data 735,319 688,643
International Services & Data 212,529 84,033
IT Management 292,225 251,462
Intercompany eliminations (17,031) (13,316)
------------------------------------------- ------------------------------------------
Total Revenue 1,223,042 1,010,822
=========================================== ==========================================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31, March 31,
2005 2004
____________ ____________
Assets
Current assets:
Cash and cash equivalents $ 4,185 $ 14,355
Trade accounts receivable, net 250,653 212,387
Deferred income taxes 29,692 14,032
Refundable income taxes 1,345 2,280
Other current assets 46,034 43,272
____________ ____________
Total current assets 331,909 286,326
____________ ____________
Property and equipment 581,918 521,064
Less - accumulated depreciation and amortization 258,532 253,976
____________ ____________
Property and equipment, net 323,386 267,088
____________ ____________
Software, net of accumulated amortization 57,135 64,553
Goodwill 354,182 282,971
Purchased software licenses, net of accumulated amortization 157,999 157,217
Unbilled and notes receivable, excluding current portions 20,410 13,030
Deferred costs, net 88,851 88,096
Data acquisition costs 48,915 36,557
Other assets, net 15,369 19,946
____________ ____________
$ 1,398,156 $ 1,215,784
=================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations 83,005 73,245
Trade accounts payable 63,295 41,527
Accrued merger, integration and impairment costs - 2,881
Accrued payroll and related expenses 27,435 23,979
Other accrued expenses 74,635 63,411
Deferred revenue 115,892 91,060
____________ ____________
Total current liabilities 364,262 296,103
____________ ____________
Long-term obligations:
Long-term debt and capital leases, net of current installments 104,210 239,327
Software and data licenses, net of current installments 37,494 54,130
____________ ____________
Total long-term obligations 141,704 293,457
____________ ____________
Deferred income taxes 77,356 39,008
Commitments and contingencies
Stockholders' equity:
Common stock 10,440 9,226
Additional paid-in capital 588,156 361,256
Retained earnings 363,556 308,487
Accumulated other comprehensive loss 12,616 2,940
Treasury stock, at cost (159,934) (94,693)
____________ ____________
Total stockholders' equity 814,834 587,216
____________ ____________
$ 1,398,156 $ 1,215,784
=================== ===================
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
============================= ============================= ============================== =========================== ============================
Qtr ended Qtr ended Qtr ended Qtr ended Yr ended
6/30/2004 9/30/2004 12/31/2004 3/31/2005 3/31/2005
Net cash provided by operating activities 34,714 61,742 82,805 67,753 247,014
Capitalized software (4,107) (4,721) (5,706) (5,760) (20,294)
Capital expenditures (1,823) (4,813) (3,132) (4,562) (14,330)
Deferral of costs (9,610) (11,113) (15,502) (17,203) (53,428)
----------------------------- ----------------------------- ------------------------------ --------------------------- ----------------------------
Free cash flow 19,174 41,095 58,465 40,228 158,962
============================= ============================= ============================== =========================== ============================
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
------------------------------------------------
2005 2004
------------------------------------------------
Cash flows from operating activities:
Net earnings 14,858 15,919
Non-cash operating activities:
Depreciation and amortization 55,204 42,496
Loss (gain) on disposal or impairment of assets, net (361) 10,948
Deferred income taxes 3,232 (9,781)
Tax benefit of stock options and warrants 9,043 4,313
Non-cash stock compensation expense 3,595 -
Changes in operating assets and liabilities:
Accounts receivable (21,540) 27,981
Other assets (19,367) (4,560)
Accounts payable and other liabilities 23,089 (7,630)
Merger, integration and impairment costs - 2,881
____________ ____________
Net cash provided by operating activities 67,753 82,567
____________ ____________
Cash flows from investing activities:
Proceeds received from the disposition of assets - 2,046
Capitalized software (5,760) (7,703)
Capital expenditures (4,562) (9,917)
Deferral of costs (17,203) (9,537)
Payments received from investments 235 159
Net cash paid in acquisitions (18,612) (55,591)
____________ ____________
Net cash used by investing activities (45,902) (80,543)
____________ ____________
Cash flows from financing activities:
Proceeds from debt 86,346 48,698
Payments of debt (93,566) (53,283)
Dividends paid (4,290) (3,415)
Sale of common stock 5,776 11,053
Acquisition of treasury stock (33,551) (8,423)
____________ ____________
Net cash used by financing activities (39,285) (5,370)
____________ ____________
Effect of exchange rate changes on cash (275) 53
____________ ____________
Net decrease in cash and cash equivalents (17,709) (3,293)
Cash and cash equivalents at beginning of period 21,894 17,648
____________ ____________
Cash and cash equivalents at end of period 4,185 14,355
____________ ____________
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 7,064 6,692
Income taxes 385 2,744
Payments on capital leases and installment payment arrangements 11,241 13,929
Payments on software and data license liabilities 5,151 3,097
Noncash investing and financing activities:
Issuance of warrants in acquisition - 2,000
Software licenses acquired under software obligation 1,200 5,500
Acquisition of property and equipment under capital lease
and installment payment arrangements 24,268 20,323
Construction of assets under construction loan 3,853 4,191
Convertible debt converted to common stock (net of deferred
issuance costs) 171,631 -
____________ ____________
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
------------------------------------------------
2005 2004
------------------------------------------------
Cash flows from operating activities:
Net earnings 69,718 58,344
Non-cash operating activities:
Depreciation and amortization 195,120 150,241
Loss (gain) on disposal or impairment of assets, net (411) 9,940
Deferred income taxes 34,165 6,895
Tax benefit of stock options and warrants 9,043 4,313
Non-cash stock compensation expense 3,595 -
Changes in operating assets and liabilities:
Accounts receivable (44,286) 25,594
Other assets (21,898) 7,434
Accounts payable and other liabilities 4,659 (5,175)
Merger, integration and impairment costs (2,691) 2,297
____________ ____________
Net cash provided by operating activities 247,014 259,883
____________ ____________
Cash flows from investing activities:
Proceeds received from the disposition of operations - 7,684
Proceeds received from the disposition of assets - 2,783
Capitalized software (20,294) (27,844)
Capital expenditures (14,330) (22,178)
Investments in joint ventures and other companies - (5,000)
Deferral of costs (53,428) (24,881)
Payments received from investments 2,533 1,678
Net cash paid in acquisitions (42,200) (55,591)
____________ ____________
Net cash used by investing activities (127,719) (123,349)
____________ ____________
Cash flows from financing activities:
Proceeds from debt 216,138 149,687
Payments of debt (311,350) (231,763)
Dividends paid (14,649) (3,415)
Sale of common stock 43,984 22,037
Acquisition of treasury stock (63,759) (64,470)
____________ ____________
Net cash used by financing activities (129,636) (127,924)
____________ ____________
Effect of exchange rate changes on cash 171 254
____________ ____________
Net decrease in cash and cash equivalents (10,170) 8,864
Cash and cash equivalents at beginning of period 14,355 5,491
____________ ____________
Cash and cash equivalents at end of period 4,185 14,355
____________ ____________
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest 20,473 20,189
Income taxes 1,465 1,758
Payments on capital leases and installment payment arrangements 60,886 30,823
Payments on software and data license liabilities 24,748 32,801
Noncash investing and financing activities:
Issuance of warrants in acquisition 1,833 2,000
Acquisition of land in exchange for debt - 2,698
Acquisition of data under long-term obligation - 18,340
Software licenses acquired under software obligation 13,882 16,635
Acquisition of property and equipment under capital lease
and installment payment arrangements 90,627 80,518
Construction of assets under construction loan 21,832 11,045
Convertible debt converted to common stock (net of deferred
issuance cost) 171,633 -
____________ ____________
ACXIOM CORPORATION
Financial Road Map1
_____________________
(as of March 31, 2005)
----------------------------------- ----------------------------------------- ---------------------------------------- ------------------------------------------------------ --------------------------------------------------
Actual 2 Actual 3 Actual 3 Target Long-Term Goals
Years Ending March 31, Fiscal 2004 Q4 Fiscal 2005 Fiscal 2005 Fiscal 2006 Fiscal 2009
----------------------------------- ----------------------------------------- ---------------------------------------- ------------------------------------------------------ --------------------------------------------------
U.S. Revenue Growth 2.7% 13.4% 9.0% 13% to 15% 7% to 10% (CAGR)
U.S. Revenue $926 million $270 million $1,011 million $1,140 to $1,160 mil -
International Revenue Growth 51.3% 32.2% 152.9% 0% to 5% 5% to 8% (CAGR)
International Revenue $85 million $53 million $213 million $213 to $220 mil -
U.S. Operating Margin 9.8% 8.6% 11.3% 11.5% to 12.5% 15% to 18%
International Operating Margin 3.1% -0.5% 3.9% 4.5% to 6.5% 12% to 15%
Return on Assets 8.2% 9.2%3 9.2%3 9% to 10% 10% to 14%
Return on Invested Capital 9.4% 11.0%3 11.0%3 11% to 12% 13% to 18%
Operating Cash Flow $260 million $68 million $247 million $250 to $270 mil $270 to $300 mil
Free Cash Flow $188 million $40 million $159 million $160 to $180 mil $170 to $200 mil
Revolving Credit Line Balance $16 million $11 million $11 million $200 to $375 mil less than $300 mil
Dividends Per Share $0.044 $0.05 $0.17 $0.20 $0.24 to $0.28
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1 Assumptions and definitions are defined on the following schedule: "Financial Road Map assumptions and definitions"
2 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.
3 ROA and ROIC are calculated on a trailing 4 quarters basis. Results for the trailing 4 quarters ending March 31, 2005 include $1.0 million income included in gains, losses & nonrecurring items and $3.6 million in expense related to
vesting of stock options.
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. Interest rates are assumed to increase slightly over the current levels.
3. The Company will utilize all of its tax loss carry forwards and begin to pay U.S. federal and state income taxes during FY06.
4. The Company will pay incentives under its bonus plan of approximately $15 million to $25 million for each of the years beginning in fiscal 2006
based on achievement of the Company's business plan.
5. The Company will maintain a relatively constant mix of business for each of its three business segments.
6. Foreign exchange rates will remain at approximately the current levels.
7. Stock repurchases will be in amounts that yield the highest shareholder return considering all other uses for the available cash.
8. Diluted outstanding shares will increase slightly to reflect the impact of in-the-money options as the stock price increases.
9. 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 comparable period.
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 four-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 period.
8. Dividends Per Share is defined as the sum of the dividends for that period.
Reconciliation of Non-GAAP Measurements
_________________________________________
(Dollars in thousands)
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Actual Actual Actual Target Long-Term Goals
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Years Ending March 31, Fiscal 2004 Q4 Fiscal 2005 Fiscal 2005 Fiscal 2006 Fiscal 2009
Free Cash Flow
Net cash provided by
operating activities 259,883 67,753 247,014 250,000 270,000 270,000 300,000
Proceeds received from
disposition of assets 2,783 0 0 0 0 0 0
Capitalized software (27,844) (5,760) (20,294) (20,000) (20,000) (25,000) (25,000)
Capital expenditures (22,178) (4,562) (14,330) (15,000) (15,000) (20,000) (20,000)
Deferral of costs (24,881) (17,203) (53,428) (55,000) (55,000) (55,000) (55,000)
____________ _____________ ____________ ___________ __________ __________ _________
Free cash flow 187,763 40,228 158,962 160,000 to 180,000 170,000 to 200,000
============ ============= ============ =========== =========== ========== =========
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.
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Return on Assets (ROA) and
Return on Invested Capital (ROIC) ROA ROIC ROA ROIC ROA ROIC ROA ROIC ROA ROIC
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(5) (5) (5) (5)
Numerator:
Income from operations 93,284 93,284 122,192 122,192 122,192 122,192 141,000 160,000 141,000 160,000 191,000 272,000 191,000 272,000
Add implied interest on
operating leases (1) 13,557 13,903 13,903 14,200 14,200 19,000 19,000
_______ ________ _________ ________ ________ _________ ________ ________ ________ ________ _______ _________ ________ ________
93,284 106,841 122,192 136,095 122,192 136,095 141,000 160,000 155,200 174,200 191,000 272,000 210,000 291,000
Denominator:
Average total assets (2) 1,143,120 1,143,120 1,321,122 1,321,122 1,321,122 1,321,122 1,542,000 1,552,000 1,542,000 1,552,000 1,840,000 1,938,000 1,840,000 1,938,000
Less average cash (3) (10,129) (11,858) (11,858) (6,300) (12,700) (214,800) (285,100)
Less average non-interest
bearing current liabilities (4) (166,175) (246,280) (246,280) (280,000) (280,200) (290,000) (291,500)
Plus average present value
of operating leases (1) (171,422) 168,734 168,734 180,000 179,500 237,000 237,000
__________ __________ __________ _________ __________ _________ __________ _________ _________ ________ __________ __________ __________ __________
1,143,120 1,138,238 1,321,122 1,231,717 1,321,122 1,231,717 1,542,000 1,552,000 1,435,700 1,438,600 1,840,000 1,938,000 1,572,200 1,598,400
__________ __________ __________ _________ __________ _________ __________ _________ _________ ________ __________ __________ __________ __________
Return on invested capital 8.2% 9.4% 9.2% 11.0% 9.2% 11.0% 9% to 10% 11% to 12% 10% to 14% 13% to 18%
========== ========== ========== ========= ========== ========= ========= ========= ========= ======== ========== ========== ======== ========
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.
5 ROA and ROIC for quarterly and YTD figures are calculated on a trailing 4 quarters basis and are therefore the same.
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.