Acxiom (NASDAQ:ACXM)
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Acxiom(R) 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:
-- 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.
-- Income from operations of $23.0 million, a 4 percent increase
from $22.0 million the year before.
-- Diluted earnings per share of $0.16, down 6 percent from $0.17
in the same period a year ago.
-- 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.
-- 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.
-- New contracts that are expected to deliver $42 million in
annual revenue and renewals that total $42 million in annual
revenue.
-- Committed new deals in the pipeline that are expected to
generate $62 million in annual revenue.
-- 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.
-- 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:
-- 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.
-- Diluted earnings per share of $.74, a 16 percent improvement
over $.64 in fiscal 2004.
-- Operating cash flow of $247.0 million.
-- Free cash flow of $159.0 million.
-- 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.
-- The acquisition of ChinaLOOP, a pioneering business
intelligence, customer relationship management and data
management company based in Shanghai, China.
-- 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.
-- 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.
-- 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:
-- Included in the Computerworld Honors Program for its Customer
Information Infrastructure (CII) grid-computing technology.
-- Named to the DM Review 100.
-- Honored by Computerworld as one of the 100 Best Places to Work
in Information Technology
-- Listed in CIO magazine's "CIO 100 for IT Agility."
-- Honored by CRM magazine with its "CRM Data Quality Market
Leader Award."
-- Included in InformationWeek magazine's "InformationWeek 500
for Innovative Use of Information Technology."
-- 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.
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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
========== ==========
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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
=========== ===========
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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
====================================================
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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 -
======== ========
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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 -
======== ========
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ACXIOM CORPORATION
Financial Road Map(1)
----------------------
(as of March 31, 2005)
Long-Term
Actual(2) Actual(3) Actual(3) Target Goals
Years Ending Fiscal Q4 Fiscal Fiscal Fiscal Fiscal
March 31, 2004 2005 2005 2006 2009
---------- ---------- ----------- ----------- ---------
U.S. Revenue 7% to 10%
Growth 2.7% 13.4% 9.0% 13% to 15% (CAGR)
U.S. Revenue $926 $270 $1,011 $1,140 to
million million million $1,160 mil -
International
Revenue 5% to 8%
Growth 51.3% 32.2% 152.9% 0% to 5% (CAGR)
International $85 $53 $213 $213 to
Revenue million million million $220 mil -
U.S.
Operating 11.5% to 15% to
Margin 9.8% 8.6% 11.3% 12.5% 18%
International
Operating 4.5% to 12% to
Margin 3.1% -0.5% 3.9% 6.5% 15%
Return on 10% to
Assets 8.2% 9.2%(3) 9.2%(3) 9% to 10% 14%
Return on
Invested 13% to
Capital 9.4% 11.0%(3) 11.0%(3) 11% to 12% 18%
Operating $260 $68 $247 $250 to $270 to
Cash Flow million million million $270 mil $300 mil
Free Cash $188 $40 $159 $160 to $170 to
Flow million million million $180 mil $200 mil
Revolving
Credit Line $16 $11 $11 $200 to less than
Balance million million million $375 mil $300 mil
Dividends Per $0.24 to
Share $0.04(4) $0.05 $0.17 $0.20 $0.28
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.
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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.
*T
-0-
*T
ACXIOM CORPORATION
Reconciliation of Non-GAAP Measurements
---------------------------------------
(Dollars in thousands)
----------------------------------------
Actual Actual Actual
Years Ending March 31, Fiscal 2004 Q4 Fiscal 2005 Fiscal 2005
----------- -------------- -----------
Free Cash Flow
--------------
Net cash provided by
operating activities 259,883 67,753 247,014
Proceeds received
from disposition of
assets 2,783 0 0
Capitalized software (27,844) (5,760) (20,294)
Capital expenditures (22,178) (4,562) (14,330)
Deferral of costs (24,881) (17,203) (53,428)
--------- --------- ---------
Free cash flow 187,763 40,228 158,962
========= ========= =========
----------------------------------------
Target
Years Ending March 31, Fiscal 2006
----------------------------------------
Free Cash Flow
--------------
Net cash provided by
operating activities 250,000 270,000
Proceeds received
from disposition of
assets 0 0
Capitalized software (20,000) (20,000)
Capital expenditures (15,000) (15,000)
Deferral of costs (55,000) (55,000)
--------- ---------
Free cash flow 160,000 to 180,000
========= =========
----------------------------------------
Long-Term Goals
Years Ending March 31, Fiscal 2009
----------------------------------------
Free Cash Flow
---------------------
Net cash provided by
operating activities 270,000 300,000
Proceeds received
from disposition of
assets 0 0
Capitalized software (25,000) (25,000)
Capital expenditures (20,000) (20,000)
Deferral of costs (55,000) (55,000)
--------- ---------
Free cash flow 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.
Return on
Assets
(ROA) ----------------------------------------------------------
and Return Actual Actual Actual
on Invested Fiscal 2004 Q4 Fiscal 2005 Fiscal 2005
Capital ------------------ ------------------- -------------------
(ROIC) ROA ROIC ROA ROIC ROA ROIC
----------- -------- --------- --------- --------- --------- ---------
(5) (5) (5) (5)
Numerator:
Income
from
operations 93,284 93,284 122,192 122,192 122,192 122,192
Add
implied
interest
on
operating
leases
(1) 13,557 13,903 13,903
--------- --------- --------- --------- --------- ---------
93,284 106,841 122,192 136,095 122,192 136,095
--------- --------- --------- --------- --------- ---------
Denominator:
Average
total
assets
(2) 1,143,120 1,143,120 1,321,122 1,321,122 1,321,122 1,321,122
Less
average
cash (3) (10,129) (11,858) (11,858)
Less
average
non-
interest
bearing
current
liabilities
(4) (166,175) (246,280) (246,280)
Plus
average
present
value of
operating
leases
(1) 171,422 168,734 168,734
--------- --------- --------- --------- --------- ---------
1,143,120 1,138,238 1,321,122 1,231,717 1,321,122 1,231,717
--------- --------- --------- --------- --------- ---------
Return on
invested
capital 8.2% 9.4% 9.2% 11.0% 9.2% 11.0%
========= ========= ========= ========= ========= =========
---------------------------------------------
Target
Return on Assets (ROA) Fiscal 2006
and Return on Invested ---------------------- ----------------------
Capital (ROIC) ROA ROIC
------------------------ ---------------------- ----------------------
Numerator:
Income from operations 141,000 160,000 141,000 160,000
Add implied interest on
operating leases (1) 14,200 14,200
---------- ---------- ---------- ----------
141,000 160,000 155,200 174,200
---------- ---------- ---------- ----------
Denominator:
Average total assets
(2) 1,542,000 1,552,000 1,542,000 1,552,000
Less average cash (3) (6,300) (12,700)
Less average non-
interest bearing
current liabilities
(4) (280,000) (280,200)
Plus average present
value of operating
leases (1) 180,000 179,500
---------- ---------- ---------- ----------
1,542,000 1,552,000 1,435,700 1,438,600
---------- ---------- ---------- ----------
Return on invested
capital 9% to 10% 11% to 12%
========== ========== ========== ==========
---------------------------------------------
Long-Term Goals
Return on Assets (ROA) Fiscal 2009
and Return on Invested ---------------------- ----------------------
Capital (ROIC) ROA ROIC
------------------------ ---------------------- ----------------------
Numerator:
Income from operations 191,000 272,000 191,000 272,000
Add implied interest on
operating leases (1) 19,000 19,000
---------- ---------- ---------- ----------
191,000 272,000 210,000 291,000
---------- ---------- ---------- ----------
Denominator:
Average total assets
(2) 1,840,000 1,938,000 1,840,000 1,938,000
Less average cash (3) (214,800) (285,100)
Less average non-
interest bearing
current liabilities
(4) (290,000) (291,500)
Plus average present
value of operating
leases (1) 237,000 237,000
---------- ---------- ---------- ----------
1,840,000 1,938,000 1,572,200 1,598,400
---------- ---------- ---------- ----------
Return on invested
capital 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.
*T