Acxiom (NASDAQ:ACXM)
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Acxiom® Corporation
(Nasdaq: ACXM) today reported full-year and fourth-quarter financial
results for fiscal 2007 ended March 31, 2007, and also announced a new
organizational alignment designed to increase focus on the company’s
three core areas of business. The reported results, excluding unusual
charges, met the Company’s expectations and
consensus analysts’ estimates of $.20 earnings
per share for the quarter.
Full 2007 fiscal-year results include revenue of $1.4 billion, income
from operations of $158.8 million and diluted earnings per share of
$.84. These results include the impact in the fourth quarter of unusual
charges that reduced diluted EPS for the fourth quarter and full fiscal
year by $.12.
Fourth-quarter results include revenue of $357.3 million, income from
operations of $29.3 million, diluted earnings per share of $.08,
operating cash flow of $76.5 million and free cash flow available to
equity of $15.4 million.
Acxiom will hold a conference call at 6:45 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.
Acxiom’s new organizational structure reflects
the unique characteristics within each area of the business and will
facilitate the execution of operational strategies designed to maximize
financial performance in each division. The re-segmentation took effect
April 1, 2007, the first day of the company’s
fiscal year 2008.
“This change is all about bringing focus and
dedicated management to each key area of our business,”
Acxiom chairman and chief executive Charles D. Morgan said. “We
believe this structure more closely aligns with our overall mission and
therefore will lead to greater returns for our shareholders.”
Acxiom is composed of, and will report financial results by, three
divisions under a single company umbrella. Those divisions, chief
executives, and business characteristics include:
Acxiom Services Division – Lee Hodges,
chief executive: The division develops, sells and delivers
industry-tailored solutions globally through the integration of
products, services and consulting. The primary target market is the
Fortune 1000 and other large global firms. This division is
responsible for Acxiom’s marketing database
solutions, customer data integration (CDI) offerings, e-mail and
internet search marketing services, consulting and professional
services, and the Business Information Grid (BIG) non-hosted solutions
that will be offered in fiscal 2008, utilizing a client-intimate
engagement model characterized by long-term client relationships.
Acxiom Information Products Division –
Alex Dietz, chief executive: The division develops and sells all
data and risk mitigation products, including InfoBase®,
Personicx® and
InsightIdentify in the U.S. as well as all Acxiom European Data
Products. It focuses on product development, product lifecycle
management, data content management and innovation. Its primary
go-to-market channels are the Acxiom Services Division for Fortune
1000 clients, a direct sales force for the mid-tier and the broker and
reseller market.
Acxiom Infrastructure Management Division –
Marty Sunde, chief executive: The division is fully responsible
for developing and delivering Information Technology products and
services that improve a company’s ability
to manage its information technology deliver platform at lower costs
and higher efficiencies. Such offerings include traditional IT
outsourcing and transformational solutions such as the Acxiom data
factory. The division primarily focuses on supporting an entire
infrastructure for high growth, emerging companies, or specific
components of larger enterprise IT organizations. Operational
excellence and efficient asset and capital management practices
characterize this division.
“At this point in Acxiom’s
evolution, re-segmenting our company into three autonomous but very
tightly connected divisions creates a business that can be more
effectively and efficiently managed,” Morgan
said. “We’ll be
able to make better-targeted investment and operational decisions in
each area, and the added transparency into our financial performance
will provide more clarity – internally and
externally.”
Acxiom also announced that it has hired Chris Wolf to become the company’s
Chief Financial Officer. Wolf will begin working at Acxiom in a few
weeks and will transition into the CFO role over the next few months.
Wolf most recently has served as a senior advisor at Boulder Specialty
Brands and previously was executive vice president and CFO at Catalina
Marketing Corporation.
Acxiom’s fiscal 2007 highlights include:
Revenue of $1.40 billion, up 4.7 percent from $1.33 billion a year
ago, an increase of $63 million in annual revenue.
Income from operations of $158.8 million, an increase of 21.1 percent
compared to $131.1 million in fiscal 2006.
Diluted earnings per share of $.84, up 18 percent from $.71 the year
before.
Fiscal year results include the impact of pretax charges of $9.7
million and income tax expense of $3.8 million related to closing
Acxiom’s business in Spain, cost of
severance and retirement of debt in the U.S. and additional research
tax credit reserves that reduced diluted EPS for the full fiscal year
by $.12.
Operating cash flow of $260.0 million and free cash flow available to
equity of $55.2 million.
The acquisition of Equitec, a business with strong marketing and
merchandizing optimization expertise in the retail industry, based in
Cleveland, Ohio.
The acquisition of Harbinger Technologies Group, a McLean, Va.-based
international consulting and technology firm that develops software
tools and training programs for personnel involved in homeland
defense, national security and the prevention of international
terrorism.
The acquisition of Kefta, the leading company for real-time, dynamic
personalization solutions for the Internet, based in San Francisco.
Acxiom’s fourth-quarter highlights include:
Revenue of $357.3 million, a 4 percent increase over $344.3 million in
the fourth quarter of fiscal 2006.
Income from operations of $29.3 million, a 34 percent decrease from
$44.6 million the year before.
Diluted earnings per share of $.08, down 69 percent from $.26 in the
same period a year ago.
The quarter results include the impact of pretax charges of $9.7
million and income tax expense of $3.8 million related to closing
Acxiom’s business in Spain, cost of
severance and retirement of debt in the U.S. and additional research
tax credit reserves that reduced diluted EPS for the fourth quarter by
$.12.
Operating cash flow of $76.5 million and free cash flow available to
equity of $15.4 million. Free cash flow available to equity is a
non-GAAP financial measure, and a reconciliation to the comparable
GAAP measure, operating cash flow, is attached to this press release.
Fiscal 2007 Recognition
In fiscal 2007, Acxiom:
Was named as one of the top 30 providers of financial services in the “FinTech
100” listing of the top technology
providers as complied by American Banker and the research firm
Financial Insights.
Saw its Acxiom Digital business ranked No. 17 by Advertising Age
magazine on its list of top 50 interactive agencies based on annual
U.S. revenues.
Was included on Forbes magazine’s “Platinum
400” list of the best large publicly traded
companies in America.
Outlook
Acxiom’s Board of Directors has approved a
business plan for fiscal 2008 of $1.02 in earnings per share. The
Company continues to focus on its initiatives to improve performance and
is in the process of restructuring into the three new divisions
previously explained.
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, China and Canada.
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 we expect that our emphasis on revenue growth will lead to
increased rates of revenue growth, 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 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 certain contracts may
not be closed, or may not be closed within the anticipated time frames;
the possibility that clients may attempt to reduce the amount of
business they do with the Company; the possibility that in the event
that a change of control of the Company 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; and the possibility that we may be
affected by other competitive factors.
With respect to the board-approved business plan, all of the above
factors apply, along with the following which were assumptions made in
creating the board-approved business plan: 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, communications and other equipment expenses will continue to
fall as a percentage of revenue; that the Customer Information
Infrastructure (CII) grid-based environment 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 equity instruments 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.
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 or any other forward-looking statement.
Acxiom, InfoBase and Personicx are registered trademarks 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,
2007
2006
$
Variance
%
Variance
Revenue:
Services
267,314
257,591
9,723
3.8%
Data
89,957
86,752
3,205
3.7%
Total revenue
357,271
344,343
12,928
3.8%
Operating costs and expenses:
Cost of revenue
Services
209,830
196,428
13,402
6.8%
Data
52,991
52,142
849
1.6%
Total cost of revenue
262,821
248,570
14,251
5.7%
Services gross margin
21.5%
23.7%
Data gross margin
41.1%
39.9%
Total gross margin
26.4%
27.8%
Selling, general and administrative
56,031
51,642
4,389
8.5%
Gains, losses and other items, net
9,122
(456)
9,578
0.0%
Total operating costs and expenses
327,974
299,756
28,218
9.4%
Income from operations
29,297
44,587
(15,290)
(34.3%)
Other income (expense):
Interest expense
(15,002)
(7,531)
(7,471)
99.2%
Other, net
1,444
135
1,309
969.6%
Total other income (expense)
(13,558)
(7,396)
(6,162)
83.3%
Earnings before income taxes
15,739
37,191
(21,452)
(57.7%)
Income taxes
9,468
14,132
(4,664)
(33.0%)
Net earnings
6,271
23,059
(16,788)
(72.8%)
Earnings per share:
Basic
0.08
0.27
(0.19)
(70.4%)
Diluted
0.08
0.26
(0.18)
(69.2%)
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Twelve Months Ended
March 31,
2007
2006
$
Variance
%
Variance
Revenue:
Services
1,061,103
1,012,549
48,554
4.8%
Data
334,033
320,019
14,014
4.4%
Total revenue
1,395,136
1,332,568
62,568
4.7%
Operating costs and expenses:
Cost of revenue
Services
806,991
772,162
34,829
4.5%
Data
206,629
201,950
4,679
2.3%
Total cost of revenue
1,013,620
974,112
39,508
4.1%
Services gross margin
23.9%
23.7%
Data gross margin
38.1%
36.9%
Total gross margin
27.3%
26.9%
Selling, general and administrative
213,849
217,869
(4,020)
(1.8%)
Gains, losses and other items, net
8,897
9,504
(607)
0.0%
Total operating costs and expenses
1,236,366
1,201,485
34,881
2.9%
Income from operations
158,770
131,083
27,687
21.1%
Other income (expense):
Interest expense
(46,632)
(28,744)
(17,888)
62.2%
Other, net
5,933
2,005
3,928
195.9%
Total other income (expense)
(40,699)
(26,739)
(13,960)
52.2%
Earnings before income taxes
118,071
104,344
13,727
13.2%
Income taxes
47,331
40,216
7,115
17.7%
Net earnings
70,740
64,128
6,612
10.3%
Earnings per share:
Basic
0.86
0.73
0.13
17.8%
Diluted
0.84
0.71
0.13
18.3%
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
March 31,
2007
December 31,
2006
$
Variance
%
Variance
Revenue:
Services
267,314
265,798
1,516
0.6%
Data
89,957
87,043
2,914
3.3%
Total revenue
357,271
352,841
4,430
1.3%
Operating costs and expenses:
Cost of revenue
Services
209,830
199,704
10,126
5.1%
Data
52,991
53,004
(13)
(0.0%)
Total cost of revenue
262,821
252,708
10,113
4.0%
Services gross margin
21.5%
24.9%
Data gross margin
41.1%
39.1%
Total gross margin
26.4%
28.4%
Selling, general and administrative
56,031
49,065
6,966
14.2%
Gains, losses and other items, net
9,122
(225)
9,347
0.0%
Total operating costs and expenses
327,974
301,548
26,426
8.8%
Income from operations
29,297
51,293
(21,996)
(42.9%)
Other income (expense):
Interest expense
(15,002)
(14,911)
(91)
0.6%
Other, net
1,444
1,157
287
24.8%
Total other income (expense)
(13,558)
(13,754)
196
(1.4%)
Earnings before income taxes
15,739
37,539
(21,800)
(58.1%)
Income taxes
9,468
12,594
(3,126)
(24.8%)
Net earnings
6,271
24,945
(18,674)
(74.9%)
Earnings per share:
Basic
0.08
0.32
(0.24)
(75.0%)
Diluted
0.08
0.31
(0.23)
(74.2%)
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
March 31,
2007
March 31,
2006
December 31,
2006
Basic earnings per share:
Numerator - net earnings
6,271
23,059
24,945
Denominator - weighted-average shares outstanding
78,385
86,981
77,717
Basic earnings per share
0.08
0.27
0.32
Diluted earnings per share:
Numerator - net earnings
Net earnings
6,271
23,059
24,945
Denominator:
Weighted-average shares outstanding
78,385
86,981
77,717
Dilutive effect of common stock options, warrants and restricted
stock
1,750
2,855
2,238
80,135
89,836
79,955
Diluted earnings per share
0.08
0.26
0.31
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Twelve Months Ended
March 31,
2007
2006
Basic earnings per share:
Numerator - net earnings
70,740
64,128
Denominator - weighted-average shares outstanding
82,564
87,557
Basic earnings per share
0.86
0.73
Diluted earnings per share:
Numerator - net earnings
Net earnings
70,740
64,128
Denominator:
Weighted-average shares outstanding
82,564
87,557
Dilutive effect of common stock options, warrants and restricted
stock
2,115
2,732
84,679
90,289
Diluted earnings per share
0.84
0.71
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
Revenue:
March 31,
2007
March 31,
2006
December 31,
2006
US services & data
305,778
295,795
298,978
International services & data
51,493
48,548
53,863
Total revenue
357,271
344,343
352,841
US supplemental information:
Services & data excluding IT mgmt
217,474
206,853
211,312
IT management services
88,304
88,942
87,666
305,778
295,795
298,978
International supplemental information:
Services & data excluding IT mgmt
51,493
48,548
53,863
Income from operations:
US services & data
32,771
40,712
46,832
International services & data
5,648
3,419
4,236
Corporate & other
(9,122)
456
225
Total income from operations
29,297
44,587
51,293
Margin:
US services & data
10.7%
13.8%
15.7%
International services & data
11.0%
7.0%
7.9%
Total margin
8.2%
12.9%
14.5%
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
Revenue:
2007
2006
US services & data
1,196,379
1,147,641
International services & data
198,757
184,927
Total revenue
1,395,136
1,332,568
US supplemental information:
Services & data excluding IT mgmt
841,476
796,506
IT management services
354,903
351,135
1,196,379
1,147,641
International supplemental information:
Services & data excluding IT mgmt
198,757
184,927
Income from operations:
US services & data
155,643
135,840
International services & data
12,024
4,746
Corporate & other
(8,897)
(9,503)
Total income from operations
158,770
131,083
Margin:
US services & data
13.0%
11.8%
International services & data
6.0%
2.6%
Total margin
11.4%
9.8%
ACXIOM CORPORATION AND SUBSIDIARIES
DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
2007
March 31,
2006
$
Variance
%
Variance
December 31,
2006
$
Variance
%
Variance
Data
69,596
65,876
3,720
5.6%
68,520
1,076
1.6%
Passthrough data
20,361
20,576
(215)
(1.0%)
18,523
1,838
9.9%
Total data revenue
89,957
86,452
3,505
4.1%
87,043
2,914
3.3%
Cost of data revenue:
Data
32,630
31,566
1,064
3.4%
34,481
(1,851)
(5.4%)
Passthrough data
20,361
20,576
(215)
(1.0%)
18,523
1,838
9.9%
Total cost of data
52,991
52,142
849
1.6%
53,004
(13)
(0.0%)
Margin:
Data
53.1%
52.1%
49.7%
Passthrough data
0.0%
0.0%
0.0%
Total data
41.1%
39.7%
39.1%
ACXIOM CORPORATION AND SUBSIDIARIES
DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
2007
2006
$
Variance
%
Variance
Data
255,299
243,630
11,669
4.8%
Passthrough data
78,734
76,389
2,345
3.1%
Total data revenue
334,033
320,019
14,014
4.4%
Cost of data revenue:
Data
127,895
125,561
2,334
1.9%
Passthrough data
78,734
76,389
2,345
3.1%
Total cost of data
206,629
201,950
4,679
2.3%
Margin:
Data
49.9%
48.5%
Passthrough data
0.0%
0.0%
Total data
38.1%
36.9%
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31,
2007
March 31,
2006
$
Variance
%
Variance
Assets
Current assets:
Cash and cash equivalents
37,776
7,705
30,071
390.3%
Trade accounts receivable, net
285,850
261,624
24,226
9.3%
Refundable income taxes
7,657
-
7,657
100.0%
Deferred income taxes
22,341
24,587
(2,246)
(9.1%)
Other current assets
59,252
44,937
14,315
31.9%
Total current assets
412,876
338,853
74,023
21.8%
Property and equipment
733,175
662,948
70,227
10.6%
Less - accumulated depreciation and amortization
420,883
329,177
91,706
27.9%
Property and equipment, net
312,292
333,771
(21,479)
(6.4%)
Software, net of accumulated amortization
44,289
45,509
(1,220)
(2.7%)
Goodwill
522,046
472,401
49,645
10.5%
Purchased software licenses, net of accumulated amortization
151,326
155,518
(4,192)
(2.7%)
Unbilled and notes receivable, excluding current portions
16,742
19,139
(2,397)
(12.5%)
Deferred costs, net
137,684
112,817
24,867
22.0%
Data acquisition costs
35,398
40,828
(5,430)
(13.3%)
Other assets, net
23,251
21,662
1,589
7.3%
1,655,904
1,540,498
115,406
7.5%
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term obligations
106,921
93,518
13,403
14.3%
Trade accounts payable
54,808
44,144
10,664
24.2%
Accrued payroll and related expenses
33,663
32,139
1,524
4.7%
Other accrued expenses
79,078
81,428
(2,350)
(2.9%)
Deferred revenue
113,318
123,916
(10,598)
(8.6%)
Income taxes
-
4,845
(4,845)
(100.0%)
Total current liabilities
387,788
379,990
7,798
2.1%
Long-term obligations:
Long-term debt and capital leases, net of current installments
631,184
353,692
277,492
78.5%
Software and data licenses, net of current installments
17,695
22,723
(5,028)
(22.1%)
Total long-term obligations
648,879
376,415
272,464
72.4%
Deferred income taxes
97,926
77,916
20,010
25.7%
Commitments and contingencies
Stockholders' equity:
Common stock
11,145
10,946
199
1.8%
Additional paid-in capital
718,336
677,026
41,310
6.1%
Unearned stock-based compensation
-
(1,941)
1,941
(100.0%)
Retained earnings
462,844
410,278
52,566
12.8%
Accumulated other comprehensive income
17,526
2,205
15,321
694.8%
Treasury stock, at cost
(688,540)
(392,337)
(296,203)
75.5%
Total stockholders' equity
521,311
706,177
(184,866)
(26.2%)
1,655,904
1,540,498
115,406
7.5%
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
March 31,
2007
2006
Cash flows from operating activities:
Net earnings
6,271
23,059
Non-cash operating activities:
Depreciation and amortization
59,187
58,787
Loss (gain) on disposal or impairment of assets, net
(235)
(346)
Deferred income taxes
17,102
(2,403)
Tax benefit of stock options and warrants
-
19,097
Non-cash stock compensation expense
1,124
345
Changes in operating assets and liabilities:
Accounts receivable
(14,372)
(7,324)
Other assets
(16,942)
(4,450)
Accounts payable and other liabilities
11,804
(9,043)
Deferred revenue
12,595
(3,564)
Net cash provided by operating activities
76,534
74,158
Cash flows from investing activities:
Capitalized software
(8,000)
(5,217)
Capital expenditures
(8,230)
(493)
Deferral of costs
(17,092)
(15,956)
Payments received from investments
50
905
Net cash paid in acquisitions
(18,667)
(117)
Net cash used by investing activities
(51,939)
(20,878)
Cash flows from financing activities:
Proceeds from debt
-
14,746
Payments of debt
(77,928)
(91,079)
Dividends paid
(4,703)
(4,338)
Sale of common stock
7,663
27,007
Acquisition of treasury stock
-
(1,905)
Tax benefit of stock options exercised
61
-
Net cash used by financing activities
(74,907)
(55,569)
Effect of exchange rate changes on cash
74
88
Net increase (decrease) in cash and cash equivalents
(50,238)
(2,201)
Cash and cash equivalents at beginning of period
88,014
9,906
Cash and cash equivalents at end of period
37,776
7,705
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest
15,270
9,553
Income taxes
6,569
4,561
Payments on capital leases and installment payment arrangements
18,579
18,342
Payments on software and data license liabilities
5,746
5,459
Prepayment of debt
50,000
-
Other debt payments, excluding line of credit
3,603
3,796
Noncash investing and financing activities:
Acquisition of property and equipment under capital lease and
installment payment arrangements
14,474
14,884
Construction and other financing
213
3,572
Software licenses and maintenance acquired under software obligation
8,305
6,570
Note payable issued in acquisition
1,300
-
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Twelve Months Ended
March 31,
2007
2006
Cash flows from operating activities:
Net earnings
70,740
64,128
Non-cash operating activities:
Depreciation and amortization
229,566
231,137
Gain on disposal or impairment of assets, net
(1,718)
(1,797)
Deferred income taxes
16,127
9,998
Tax benefit of stock options and warrants
-
19,097
Non-cash stock compensation expense
3,823
1,313
Changes in operating assets and liabilities:
Accounts receivable
(30,140)
(21,162)
Other assets
(19,101)
(26,197)
Accounts payable and other liabilities
3,960
(6,253)
Deferred revenue
(13,305)
5,569
Net cash provided by operating activities
259,952
275,833
Cash flows from investing activities:
Disposition of operations
-
4,844
Sale of assets
-
5,123
Capitalized software
(27,443)
(21,903)
Capital expenditures
(14,225)
(6,848)
Cash collected from the sale and license of software
10,000
20,000
Deferral of costs
(66,687)
(70,454)
Payments received from investments
2,758
3,760
Net cash paid in acquisitions
(33,067)
(144,626)
Net cash used by investing activities
(128,664)
(210,104)
Cash flows from financing activities:
Proceeds from debt
649,756
437,868
Payments of debt
(471,670)
(307,120)
Dividends paid
(18,174)
(17,406)
Sale of common stock
33,464
58,616
Acquisition of treasury stock
(299,301)
(233,770)
Tax benefit of stock options exercised
4,142
-
Net cash used by financing activities
(101,783)
(61,812)
Effect of exchange rate changes on cash
566
(397)
Net increase in cash and cash equivalents
30,071
3,520
Cash and cash equivalents at beginning of period
7,705
4,185
Cash and cash equivalents at end of period
37,776
7,705
Supplemental cash flow information:
Cash paid (received) during the period for:
Interest
46,645
27,958
Income taxes
37,596
4,185
Payments on capital leases and installment payment arrangements
76,135
72,232
Payments on software and data license liabilities
26,897
29,069
Prepayment of debt
50,000
-
Other debt payments, excluding line of credit
10,235
9,302
Noncash investing and financing activities:
Issuance of options for acquisition
-
7,541
Acquisition of property and equipment under capital lease and
installment payment arrangements
58,928
85,261
Construction and other financing
18,380
10,772
Software licenses and maintenance acquired under software obligation
23,571
14,950
Issuance of common stock for acquisition
3,610
-
Note payable issued in acquisition
1,300
-
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
06/30/05
09/30/05
12/31/05
03/31/06
FY2006
06/30/06
09/30/06
12/31/06
03/31/07
YTD FY2007
Net cash provided by operating activities
61,476
44,785
95,414
74,158
275,833
56,350
64,409
62,659
76,534
259,952
Less:
Tax benefit of stock options and warrants
-
-
-
(19,097)
(19,097)
-
-
-
-
-
Subtotal
61,476
44,785
95,414
55,061
256,736
56,350
64,409
62,659
76,534
259,952
Plus:
Proceeds received from the disposition of operations
-
1,529
3,315
-
4,844
-
-
-
-
-
Proceeds received from the disposition of assets
-
3,613
1,510
-
5,123
-
-
-
-
-
Payments received from investments
721
41
2,093
905
3,760
783
1,925
-
50
2,758
Less:
Capitalized software
(5,673)
(5,809)
(5,204)
(5,217)
(21,903)
(5,719)
(6,926)
(6,798)
(8,000)
(27,443)
Capital expenditures
(2,929)
(3,025)
(401)
(493)
(6,848)
(217)
(3,260)
(2,518)
(8,230)
(14,225)
Deferral of costs
(16,192)
(18,703)
(19,603)
(15,956)
(70,454)
(16,887)
(16,559)
(16,149)
(17,092)
(66,687)
Payments on capital leases and installment payment arrangements
(19,929)
(15,967)
(17,994)
(18,342)
(72,232)
(18,905)
(21,951)
(16,700)
(18,579)
(76,135)
Payments on software and data license liabilities
(10,938)
(5,328)
(7,344)
(5,459)
(29,069)
(7,847)
(7,304)
(6,000)
(5,746)
(26,897)
Other required debt payments
(1,357)
(2,434)
(1,715)
(3,796)
(9,302)
(1,711)
(1,804)
(3,117)
(3,603)
(10,235)
Subtotal
5,179
(1,298)
50,071
6,703
60,655
5,847
8,530
11,377
15,334
41,088
Plus:
Tax benefit of stock options and warrants
-
-
-
19,097
19,097
1,079
1,765
1,237
61
4,142
Subtotal
5,179
(1,298)
50,071
25,800
79,752
6,926
10,295
12,614
15,395
45,230
Plus:
Cash collected from sale of software
-
-
20,000
-
20,000
5,000
5,000
-
-
10,000
Total
5,179
(1,298)
70,071
25,800
99,752
11,926
15,295
12,614
15,395
55,230
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
Q4 FY06 to Q4 FY07
FY06 to FY07
06/30/05
09/30/05
12/31/05
03/31/06
FY2006
06/30/06
09/30/06
12/31/06
03/31/07
FY2007
%
$
%
$
Revenue:
Services
238,499
253,193
263,266
257,591
1,012,549
261,892
266,099
265,798
267,314
1,061,103
3.8%
9,723
4.8%
48,554
Data
71,772
77,330
84,165
86,752
320,019
74,813
82,220
87,043
89,957
334,033
3.7%
3,205
4.4%
14,014
Total revenue
310,271
330,523
347,431
344,343
1,332,568
336,705
348,319
352,841
357,271
1,395,136
3.8%
12,928
4.7%
62,568
Operating costs and expenses:
Cost of revenue
Services
194,349
191,883
189,502
196,428
772,162
196,073
201,384
199,704
209,830
806,991
6.8%
13,402
4.5%
34,829
Data
48,885
52,124
48,799
52,142
201,950
49,572
51,062
53,004
52,991
206,629
1.6%
849
2.3%
4,679
Total cost of revenue
243,234
244,007
238,301
248,570
974,112
245,645
252,446
252,708
262,821
1,013,620
5.7%
14,251
4.1%
39,508
Selling, general and administrative
53,700
54,902
57,625
51,642
217,869
54,745
54,008
49,065
56,031
213,849
8.5%
4,389
-1.8%
(4,020)
Gains, losses and other items, net
(1,637)
12,799
(1,202)
(456)
9,504
0
0
(225)
9,122
8,897
-2100.4%
9,578
-6.4%
(607)
Total operating costs and expenses
295,297
311,708
294,724
299,756
1,201,485
300,390
306,454
301,548
327,974
1,236,366
9.4%
28,218
2.9%
34,881
Income from operations
14,974
18,815
52,707
44,587
131,083
36,315
41,865
51,293
29,297
158,770
-34.3%
(15,290)
21.1%
27,687
% Margin
4.8%
5.7%
15.2%
12.9%
9.8%
10.8%
12.0%
14.5%
8.2%
11.4%
Other income (expense)
Interest expense
(5,162)
(7,416)
(8,635)
(7,531)
(28,744)
(7,769)
(8,950)
(14,911)
(15,002)
(46,632)
99.2%
(7,471)
62.2%
(17,888)
Other, net
891
1,050
(71)
135
2,005
647
2,685
1,157
1,444
5,933
969.6%
1,309
195.9%
3,928
Total other income (expense)
(4,271)
(6,366)
(8,706)
(7,396)
(26,739)
(7,122)
(6,265)
(13,754)
(13,558)
(40,699)
83.3%
(6,162)
52.2%
(13,960)
Earnings before income taxes
10,703
12,449
44,001
37,191
104,344
29,193
35,600
37,539
15,739
118,071
-57.7%
(21,452)
13.2%
13,727
Income taxes
4,064
5,300
16,720
14,132
40,216
11,385
13,884
12,594
9,468
47,331
-33.0%
(4,664)
17.7%
7,115
Net earnings
6,639
7,149
27,281
23,059
64,128
17,808
21,716
24,945
6,271
70,740
-72.8%
(16,788)
10.3%
6,612
Diluted earnings (loss) per share
0.07
0.08
0.31
0.26
0.71
0.20
0.25
0.31
0.08
0.84
-69.2%
(0.18)
18.3%
0.13
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - INTERNAL FORMAT
(Unaudited)
(Dollars in thousands, except earnings per share)
Q4 FY06 to Q4 FY07
FY06 to FY07
06/30/05
09/30/05
12/31/05
03/31/06
FY2006
06/30/06
09/30/06
12/31/06
03/31/07
FY2007
%
$
%
$
Revenue
310,271
330,523
347,431
344,343
1,332,568
336,705
348,319
352,841
357,271
1,395,136
3.8%
12,928
4.7%
62,568
Operating costs and expenses:
Salaries and benefits
126,264
127,325
129,888
132,579
516,056
135,917
139,557
139,724
154,801
569,999
16.8%
22,222
10.5%
53,943
Computer, communications and other equipment
77,647
76,250
73,614
71,730
299,241
73,119
72,685
71,132
73,409
290,345
2.3%
1,679
-3.0%
(8,896)
Data costs
41,831
44,752
42,021
44,593
173,197
43,372
44,196
43,761
42,569
173,898
-4.5%
(2,024)
0.4%
701
Other operating costs and expenses
51,192
50,582
50,403
51,310
203,487
47,982
50,016
47,156
48,071
193,225
-6.3%
(3,239)
-5.0%
(10,262)
Gains, losses and other items, net
(1,637)
12,799
(1,202)
(456)
9,504
-
-
(225)
9,122
8,897
-2100.4%
9,578
-6.4%
(607)
Total operating costs and expenses
295,297
311,708
294,724
299,756
1,201,485
300,390
306,454
301,548
327,972
1,236,364
9.4%
28,216
2.9%
34,879
Income (loss) from operations
14,974
18,815
52,707
44,587
131,083
36,315
41,865
51,293
29,299
158,772
-34.3%
(15,288)
21.1%
27,689
Operating Margin
4.8%
5.7%
15.2%
12.9%
9.8%
10.8%
12.0%
14.5%
8.2%
11.4%
Other income (expense):
Interest expense
(5,162)
(7,416)
(8,635)
(7,531)
(28,744)
(7,769)
(8,950)
(14,911)
(15,002)
(46,632)
99.2%
(7,471)
62.2%
(17,888)
Other, net
891
1,050
(71)
135
2,005
647
2,685
1,157
1,444
5,933
969.6%
1,309
195.9%
3,928
(4,271)
(6,366)
(8,706)
(7,396)
(26,739)
(7,122)
(6,265)
(13,754)
(13,558)
(40,699)
83.3%
(6,162)
52.2%
(13,960)
Earnings (loss) before income taxes
10,703
12,449
44,001
37,191
104,344
29,193
35,600
37,539
15,741
118,073
-57.7%
(21,450)
13.2%
13,729
Income taxes
4,064
5,300
16,720
14,132
40,216
11,385
13,884
12,594
9,468
47,331
-33.0%
(4,664)
17.7%
7,115
Net earnings (loss)
6,639
7,149
27,281
23,059
64,128
17,808
21,716
24,945
6,273
70,742
-72.8%
(16,786)
10.3%
6,614
Diluted earnings (loss) per share
0.07
0.08
0.31
0.26
0.71
0.20
0.25
0.31
0.08
0.84
-69.2%
(0.18)
18.3%
0.13
ACXIOM CORPORATION AND SUBSIDIARIES
MARGIN ANALYSIS
(Unaudited)
Q4 FY06 to Q4 FY07
FY06 to FY07
06/30/05
09/30/05
12/31/05
03/31/06
FY2006
06/30/06
09/30/06
12/31/06
03/31/07
FY2007
%
$
%
$
Gross profit
67,037
86,516
109,130
95,773
358,456
91,060
95,873
100,133
94,450
381,516
-1.4%
(1,323)
6.4%
23,060
Gross margin
21.6%
26.2%
31.4%
27.8%
26.9%
27.0%
27.5%
28.4%
26.4%
27.3%
Operating margin
4.8%
5.7%
15.2%
12.9%
9.8%
10.8%
12.0%
14.5%
8.2%
11.4%
Services gross profit
44,150
61,310
73,764
61,163
240,387
65,819
64,715
66,094
57,484
254,112
-6.0%
(3,679)
5.7%
13,725
Services gross margin
18.5%
24.2%
28.0%
23.7%
23.7%
25.1%
24.3%
24.9%
21.5%
23.9%
Data gross profit
22,887
25,206
35,366
34,610
118,069
25,241
31,158
34,039
36,966
127,404
6.8%
2,356
7.9%
9,335
Data gross margin
31.9%
32.6%
42.0%
39.9%
36.9%
33.7%
37.9%
39.1%
41.1%
38.1%
ACXIOM CORPORATION AND SUBSIDIARIES
EXPENSE TREND ANALYSIS
(Unaudited)
06/30/05
09/30/05
12/31/05
03/31/06
FY2006
06/30/06
09/30/06
12/31/06
03/31/07
FY2007
Salaries and benefits % of revenue
40.7%
38.5%
37.4%
38.5%
38.7%
40.4%
40.1%
39.6%
43.3%
40.9%
Computer, communications and other equipment % of revenue
25.0%
23.1%
21.2%
20.8%
22.5%
21.7%
20.9%
20.2%
20.5%
20.8%
Data costs % of revenue
13.5%
13.5%
12.1%
13.0%
13.0%
12.9%
12.7%
12.4%
11.9%
12.5%
Other operating costs and expenses % of revenue
16.5%
15.3%
14.5%
14.9%
15.3%
14.3%
14.4%
13.4%
13.5%
13.8%
Total operating costs and expenses % of revenue
95.2%
94.3%
84.8%
87.1%
90.2%
89.2%
88.0%
85.5%
91.8%
88.6%
SG&A % of revenue
17.3%
16.6%
16.6%
15.0%
16.3%
16.3%
15.5%
13.9%
15.7%
15.3%
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON GAAP MEASURES
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended March 31, 2007
GAAP
Earnings
Unusual
Charges (1)
Unusual
Tax Adj (2)
Earnings on
Operations
Excluding Unusual
Earnings before income taxes
15,739
9,672
0
25,411
Income taxes
9,468
3,579
(3)
(3,755)
9,292
Net earnings
6,271
6,093
3,755
16,119
Diluted earnings per share
$0.078
$0.076
$0.047
$0.201
Tax rate
60%
37%
37%
(1) The unusual charges are $9.7 million in pretax charges,
consisting of $6.6 million related to closing down Spain, $2.5
million in U.S. severance and $0.6 million in non cash write off of
deferred cost associated with the $50 million pay down on the term
loan.
(2) Unusual tax items net, primarily due to the non-deductibility of
the majority of the Spain losses and the adjustment in the R&D tax
credit reserve.
(3) Nominal tax rate of 37%.
For the Twelve Months Ended March 31, 2007
GAAP
Earnings
Unusual
Charges (1)
Unusual
Tax Adj (2)
Earnings on
Operations
Excluding Unusual
Earnings before income taxes
118,071
9,672
0
127,743
Income taxes
47,331
3,579
(3)
(3,755)
47,155
Net earnings
70,740
6,093
3,755
80,588
Diluted earnings per share
$0.835
$0.072
$0.044
$0.952
Tax rate
40%
37%
37%
(1) The unusual charges are $9.7 million in pretax charges,
consisting of $6.6 million related to closing down Spain, $2.5
million in U.S. severance and $0.6 million in non cash write off of
deferred cost associated with the $50 million pay down on the term
loan.
(2) Unusual tax items net, primarily due to the non-deductibility of
the majority of the Spain losses and the adjustment in the R&D tax
credit reserve.
(3) Nominal tax rate of 37%.
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON GAAP MEASURES
USING 37% NOMINAL TAX RATE
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended March 31, 2007
(A)
GAAP
Earnings
(B)
GAAP Pretax
at Nominal
Tax Rate
(C)
Unusual
Charges (1)
(B) + (C)
Earnings on
Operations
Excluding Unusual
Earnings before income taxes
15,739
15,739
9,672
25,411
Income taxes
9,468
5,823
3,579
(3)
9,402
Net earnings
6,271
9,916
6,093
16,009
Diluted earnings per share
$0.078
$0.124
$0.076
$0.200
(2)
Tax rate
60%
37%
37%
37%
(1) The unusual charges are $9.7 million in pretax charges,
consisting of $6.6 million related to closing down Spain, $2.5
million in U.S. severance and $0.6 million in non cash write off of
deferred cost associated with the $50 million pay down on the term
loan.
(2) Calculated using $16,009 in net income and 80,135,000 shares.
(3) Nominal tax rate of 37%.
For the Twelve Months Ended March 31, 2007
(A)
GAAP
Earnings
(B)
GAAP Pretax
at Nominal
Tax Rate
(C)
Unusual
Charges (1)
(B) + (C)
Earnings on
Operations
Excluding Unusual
Earnings before income taxes
118,071
118,071
9,672
127,743
Income taxes
47,331
43,686
3,579
(3)
47,265
Net earnings
70,740
74,385
6,093
80,478
Diluted earnings per share
$0.835
$0.878
$0.072
$0.950
(2)
Tax rate
40%
37%
37%
37%
(1) The unusual charges are $9.7 million in pretax charges,
consisting of $6.6 million related to closing down Spain, $2.5
million in U.S. severance and $0.6 million in non cash write off of
deferred cost associated with the $50 million pay down on the term
loan.
(2) Calculated using $80,478 in net income and 84,649,000 shares.
(3) Nominal tax rate of 37%.