Acxiom (NASDAQ:ACXM)
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Acxiom(R) Corporation (Nasdaq: ACXM) today quantified
the expected cumulative financial impact of the successful completion
of the proxy contest with ValueAct Capital, the anticipated completion
of the Dutch Auction Self Tender, an $800 million credit facility, and
other items reported on the first-quarter earnings conference call
held July 26, 2006. The net impact of these items will reduce the
midpoint of the original fiscal year 2007 Financial Road Map earnings
target by approximately six to seven cents per fully diluted share.
The six- to seven-cent reduction reflects the anticipated impact
for fiscal 2007 of the following five items:
-0-
*T
1. The fiscal 2007 Road Map targets, communicated during the fiscal
2006 year-end conference call on May 17, 2006, were based on 90
million weighted average shares outstanding. Subsequently, the
company reported a net 2 million share increase related to
greater-than-expected exercises of 2.5 million stock options,
partially offset by share repurchases of 0.5 million shares. The
net increase of approximately 2 million shares will increase the
fiscal 2007 weighted average share count to approximately 91
million, a weighted average increase of approximately 1 million
shares that is expected to result in a reduction of approximately
one cent in fiscal 2007 EPS.
2. The company incurred proxy contest expenses related to financial
and non-financial advisory fees of approximately $1.2 million in
addition to expenses previously reported. These fees were not
anticipated in the earlier fiscal 2007 Road Map targets and are
expected to reduce fiscal 2007 EPS by approximately one cent.
3. The company expects to repurchase up to $300 million of its shares
through the Dutch Auction Self Tender (DAST) scheduled to close on
September 12, 2006. The impact on the weighted average fully
diluted shares outstanding for fiscal 2007 is expected to be a
reduction of approximately 6.0 to 6.5 million shares or an
increase to fiscal 2007 EPS of approximately seven to eight cents.
4. The company expects to incur incremental interest expense of
approximately $14.3 million related to the incremental borrowings
under the new credit facilities scheduled to close on September
15, 2006. These borrowings are to fund the DAST, restructure
existing debt and be available for general corporate purposes.
These costs are anticipated to result in an approximate 10-cent
reduction in fiscal 2007 EPS.
5. During the first-quarter earnings conference call, the company
reported that its effective tax rate for fiscal year 2007 was
expected to be 39 percent. Previously announced targets
anticipated an effective tax rate of 38 percent. The one
percentage point increase is expected to result in an approximate
two-cent reduction in fiscal 2007 EPS.
*T
"Since the fiscal 2006 year-end conference call, we have publicly
provided a significant amount of information to investors, and
management today is clarifying that information so that shareholders
have a more complete view of Acxiom's full-year earnings expectation
for fiscal year 2007. While the amounts for the DAST and the credit
facilities continue to be estimates, we do not expect the final
amounts to differ materially from our current expectations," said
Frank Cotroneo, Acxiom's Chief Financial Officer.
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 contains 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 estimates and ranges in this
release and the Financial Road Map with respect to the projected
revenue, operating margin, return on assets and return on invested
capital, operating cash flow and free cash flow, borrowings,
dividends, tax rates and other metrics will be within the estimated
ranges; that the company has identified categories of opportunity that
provide upside to the ranges of the Financial Road Map, 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 in the event that a change of control was sought that
certain of the clients of the Company would invoke certain provisions
in their contracts resulting in a decline in the revenue and profit of
the company; 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 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; the possibility that our increased
financial leverage could render us more vulnerable during an economic
downturn; 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 may be mitigated by
continued stock repurchases. 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.
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.