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Fourth-quarter highlights:

 

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Revenue of $344.3 million, a 7 percent increase over $322.5 million in the fourth quarter of fiscal 2005.

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U.S. revenue of $295.8 million, a 10 percent increase over $269.8 million in the fourth quarter of fiscal 2005.

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International profit margin of 7% compared to negative 1% in the fourth quarter a year ago.

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Income from operations of $44.6 million, a 94 percent increase from $23.0 million the year before.

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Diluted earnings per share of $.26, up 63 percent from $.16 in the same period a year ago.

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Operating cash flow of $74.2 million and free cash flow of $52.5 million. The free cash flow of $52.5 million is a non-GAAP financial measure, and a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release.

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New contracts that are expected to deliver $20 million in annual revenue and renewals that total $64 million in annual revenue.

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Committed new deals in the pipeline that are expected to generate $61 million in annual revenue.

 

Morgan noted that Acxiom recently completed contracts with General Motors, U.S. Bancorp, LaSalle Bank, Deluxe Corporation, SunTrust Banks, Inc., PRIMEDIA Inc., Columbian Chemicals Company, TransUnion and Safety-Kleen Systems, Inc.

 

Fiscal 2006 highlights:

 

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Revenue of $1.333 billion, up 9 percent from $1.223 billion a year ago, an increase of $110 million in annual revenue.

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U.S. revenue of $1.148 billion, up 14% from $1.011 billion a year ago, an increase of $137 million.

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Diluted earnings per share of $.71, down 4 percent from $.74 in fiscal 2005. Fiscal 2006 earnings include the impact of net pre-tax charges of $15.8 million in the second quarter, which reduced diluted EPS by $.12.

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Operating cash flow of $275.8 million and free cash flow of $201.8 million, both record performances for Acxiom.

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New contracts that are expected to deliver $128 million in annual revenue and renewals that total $149 million in annual revenue. Total contract value for the new contracts completed in the fiscal year is $458 million, while total contract value for renewals is $410 million.

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The acquisition of Digital Impact, a leading provider of integrated digital marketing solutions, based in San Mateo, California.

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The acquisition of Insight America, a Broomfield, Colo.-based company that provides data-driven solutions, analytic tools and background screening services to help clients mitigate risks, prevent identity theft and limit fraud.

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A technology and distribution agreement with EMC Corporation that includes $30 million from EMC to purchase the grid operating system developed by Acxiom and license certain other grid-related software.

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The purchase of 12.1 million shares of Acxiom stock through the company's stock buy-back program at a total cost of $231.5 million. From the program's introduction in December 2002 through March 31, 2006, the Company has purchased a total of 21.2 million shares of Acxiom stock at a total cost of $390.2 million.

 

 

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Fiscal 2006 Recognition

 

In fiscal 2006, Acxiom:

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Received the prestigious 21st Century Achievement Award from the Computerworld Honors Foundation for positive contributions to the global information technology revolution with the development and delivery of its grid-based Customer Information Infrastructure (CII).

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Was named one of the "Best Places to Work in Information Technology" by Computerworld magazine, the fourth time the company has been ranked in the top 100 work environments for technology professionals.

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Was named one of the top 30 providers of financial technology applications in the "FinTech 100," a listing of the top technology providers as complied by American Banker and the research firm Financial Insights.

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Was ranked No. 5 for employee productivity in Gartner's list of Top 80 Worldwide IT Vendors.

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Received the Corporate Leadership Award from the Direct Marketing Educational Foundation.

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Saw its Digital Impact business named a "leader" among e-mail service providers in Forrester Research's annual ranking of e-mail marketing service providers ("Leader" is Forrester's highest category).

 

Road Map and Outlook

 

Fiscal 2006 U.S. revenue of $1.148 billion was within the target range of $1.140 billion to $1.160 billion included in the Company's Financial Road Map (December 31, 2005). International revenue of $184.9 million for the year was within the target range of $170 million to $190 million. Adjusted U.S. operating margin of 12.4 percent for fiscal 2006 was at the high end of the target range of 11.5 to 12.5 percent. International margin of 2.5 percent was above the target range of 1 to 2 percent that was projected in the updated Road Map adjusted for third quarter results. Return on Invested Capital for the 2006 fiscal year was 11.4% which is near the mid-point of the fiscal 2006 target range of 11 to 12 percent.

 

Acxiom's current Financial Road Map (March 31, 2006) reflects the Company's current expectations for fiscal year 2007, and the long-term goals reflect expected performance in fiscal 2010. For the fiscal year ended March 31, 2007, the Company estimates that: U.S. revenue will grow 7 percent to 10 percent, the U.S. operating margins will be 14 percent to 15 percent, international revenue will grow 0 percent to 5 percent and international margin will be 2 percent to 4 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 (March 31, 2006). These projections are forward looking, and actual results may differ materially. These projections may be impacted by mergers, acquisitions, divestitures or other business combinations that may be completed in the future as well as the other factors set forth below.

 

Leadership Announcement

 

Morgan today also announced that, effective May 15, 2006, Frank Cotroneo joined Acxiom as chief financial officer. Cotroneo previously has served as CFO for H&R Block and MasterCard International. All financial functions including Finance and Accounting, Investor Relations, Treasury and Corporate Finance will report to Mr. Cotroneo.

 

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"We are thrilled to be able to add an executive of the caliber of Frank Cotroneo to Acxiom's senior leadership team," Morgan said. "Frank has served as a public-company CFO, and overseen all aspects of the financial operations of several well-respected companies. The international experience he gained in his four years as regional financial officer for MasterCard in Singapore will be a significant asset given the geographic scope of Acxiom's business."

 

Rodger Kline, who served as the acting chief financial officer in his role as Chief Finance and Administrative Leader during the past 16 months, will continue to serve as a member of the Board of Directors and as Chief Administrative Leader. In this role Mr. Kline will continue to be responsible for administrative processes. Functions for which Mr. Kline will be responsible include hardware and software procurement, facilities and data center support, risk management, internal audit, and physical security & information security.

 

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 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 Company is continuing to experience continued improvement and momentum in financial performance, that we expect that continued focus on expense controls will lead to continued improvement in operating margins, 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 attached to this release will be within the estimated ranges; that the estimations of revenue, earnings, cash flow, growth rates, restructuring charges and expense reductions will be within the estimated ranges; and that the business pipeline and our anticipated cost structure will allow us to continue to meet or exceed revenue, cash flow and other projections. The following are important factors, among others, that could cause actual results to differ materially from these forward-looking statements: The possibility that we may incur expenses related to unsolicited proposals or other efforts by others to acquire or control the Company; 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 the historical seasonality of our business may change; 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

 

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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 that negatively impact the Company; 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, 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 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 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 scale, competition, culture, laws and regulations.

 

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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.

 

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Numerator:
Income from operations					122,192	122,192	122,192		131,083	131,083	131,083		141,000		160,000	141,000		160,000		131,083	131,083	131,083		175,500		196,900	175,500		196,900		268,600		337,600	268,600		337,600
Unusual Charges, Net (6)					0	0	0			15,776	15,776		0		0	0		0			15,776	15,776		0		0	0		0		0		0	0		0
Add implied interest on operating leases (1)							13,903				11,696					14,200		14,200				11,696					11,000		11,000					9,000		9,000
					122,192	122,192	136,095		131,083	146,859	158,554		141,000		160,000	155,200		174,200		131,083	146,859	158,554		175,500		196,900	186,500		207,900		268,600		337,600	277,600		346,600
Denominator:
Average total assets (2)					1,321,122	1,321,122	1,321,122		1,549,933	1,549,933	1,549,933		1,542,000		1,552,000	1,542,000		1,552,000		1,549,933	1,549,933	1,549,933		1,566,000		1,574,000	1,566,000		1,574,000		1,864,000		1,965,000	1,864,000		1,965,000
Less average cash (3)							(11,858)				(8,616)					(6,300)		(12,700)				(8,616)					(10,000)		(10,000)					(10,000)		(10,000)
Less average non-interest bearing current liabilities (4)							(246,280)				(288,063)					(280,000)		(280,200)				(288,063)					(277,000)		(288,000)					(261,000)		(285,000)
Plus average present value of operating leases (1)							168,734				135,190					180,000		179,500				135,190					133,000		133,000					114,000		114,000
					1,321,122	1,321,122	1,231,717		1,549,933	1,549,933	1,388,444		1,542,000		1,552,000	1,435,700		1,438,600		1,549,933	1,549,933	1,388,444		1,566,000		1,574,000	1,412,000		1,409,000		1,864,000		1,965,000	1,707,000		1,784,000
Return on invested capital					9.2%	9.2%	11.0%		8.5%	9.5%	11.4%		9%	to	10%	11%	to	12%		8.5%	9.5%	11.4%		11%	to	13%	13%	to	15%		14%	to	17%	16%	to	19%