Acxiom(R) Corporation (Nasdaq: ACXM) today announced financial
results for the first quarter of fiscal 2007 ended June 30, 2006.
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. Year over year, first-quarter earnings per diluted
share increased 186 percent to $0.20. Consolidated net earnings for
the quarter increased 168 percent to $17.8 million. First-quarter
revenue totaled $336.7 million, representing an 8.5 percent
increase over the same quarter last year. "Our first-quarter
results were strong and in line with our long-term Financial Road
Map. These results reflect the growing strength of our company and
the benefits from our ongoing initiatives to transform Acxiom,"
Company Leader Charles D. Morgan said. "Our first-quarter operating
income increased 143 percent over the same quarter last year, and
our overall revenue growth of 8.5 percent was led by a 9.8 percent
increase in our services business. We are clearly on the right path
operationally and will continue to stay focused on executing our
priority initiatives to deliver superior financial performance."
Highlights of Acxiom's first-quarter performance include: --
Revenue of $336.7 million, up 8.5 percent from $310.3 million in
the first quarter a year ago. -- Income from operations of $36.3
million, a 143 percent increase compared to $15.0 million in the
first quarter last year. -- Pre-tax earnings of $29.2 million, up
173 percent from $10.7 million in the first quarter of fiscal 2006.
-- Diluted earnings per share of $.20, a 186 percent increase
compared to $.07 in the first quarter last year. -- Operating cash
flow of $56.4 million and free cash flow available to equity of
$11.9 million. The free cash flow available to equity of $11.9
million is a non-GAAP financial measure, and a reconciliation to
the comparable GAAP measure, operating cash flow, is attached to
this press release. -- Services gross margin increased to 25.1
percent from 18.5 percent in the same quarter last year and from
23.7 percent in the sequential quarter ended March 31, 2006. --
Computer and related expense continued to decline as a percentage
of revenue. This key performance metric fell to 21.7 percent versus
25.0 percent in the first quarter last year. -- Share repurchases
for the quarter were approximately 576,000 shares for a total value
of approximately $13.9 million. "Our revenue and operating income
are record results for the first fiscal quarter," Morgan continued.
"We are pleased with our performance in the first quarter, but we
believe we have considerable opportunity to improve operating
performance and deliver additional growth through execution of our
long-term strategies." Morgan noted that Acxiom recently completed
new contracts with General Motors Corporation; AutoNation, Inc.;
Unilever; Yellow Book USA; AccuData and Southern Progress
Corporation. Outlook The Company's expectations are communicated in
the Financial Road Map, which includes a chart summarizing the
one-year and long-term goals as well as an explanation of the
assumptions and definitions that accompany these goals. Acxiom's
current Financial Road Map has been updated to reflect changes to
the free cash flow definition and reflects the Company's current
expectations for fiscal year 2007, and the long-term goals reflect
expected performance in fiscal 2010. These financial projections
are based on the assumptions and limitations set forth in the
Financial Road Map. These projections are forward looking, and
actual results may differ materially. These projections may be
impacted by mergers, acquisitions, divestitures or other business
combinations that may be completed in the future as well as the
other factors set forth below. About Acxiom Acxiom Corporation
(Nasdaq: ACXM) integrates data, services and technology to create
and deliver customer and information management solutions for many
of the largest, most respected companies in the world. The core
components of Acxiom's innovative solutions are Customer Data
Integration (CDI) technology, data, database services, IT
outsourcing, consulting and analytics, and privacy leadership.
Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas,
with locations throughout the United States and Europe, and in
Australia and China. For more information, visit www.acxiom.com.
This release and today's conference call contain forward-looking
statements that are subject to certain risks and uncertainties that
could cause actual results to differ materially. Such statements
may include but are not necessarily limited to the following: that
the Company is continuing to experience continued improvement and
momentum in financial performance, that we expect that continued
focus on expense controls will lead to continued improvement in
operating margins, that the projected revenue, operating margin,
return on assets and return on invested capital, operating cash
flow and free cash flow, borrowings, dividends and other metrics
referred to in the Financial Road Map attached to this release will
be within the estimated ranges; that the 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 due to issues attendant to the current proxy contest clients
may attempt to reduce the amount of business they do with the
Company; the possibility that a significant disruption to the
business of the Company may result from the current proxy contest;
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; and the possibility that we may be
affected by other competitive factors. With respect to the
Financial Road Map, all of the above factors apply, along with the
following which were assumptions made in creating the Financial
Road Map: that the U.S. and global economies will continue to
improve at a moderate pace; that global growth will continue to be
strong and that globalization trends will continue to grow at an
increasing pace; that Acxiom's computer and communications related
expenses will continue to fall as a percentage of revenue; that the
Customer Information Infrastructure (CII) grid-based environment
Acxiom will continue to be implemented successfully over the next
3-4 years and that the new CII infrastructure will continue to
provide increasing operational efficiencies; that the acquisitions
of companies operating primarily outside of the United States will
be successfully integrated and that significant efficiencies will
be realized from this integration; relating to operating cash flow
and free cash flow, that sufficient operating and capital lease
arrangements will continue to be available to the Company to
provide for the financing of most of its computer equipment and
that software suppliers will continue to provide financing
arrangements for most of the software purchases; relating to
revolving credit line balance, that free cash flow will meet
expectations and that the Company will use free cash flow to pay
down bank debt, buy back stock and fund dividends; relating to
annual dividends, that the Board of Directors will continue to
approve quarterly dividends and will vote to increase dividends
over time; relating to diluted shares, that the Company will meet
its cash flow expectations and that potential dilution created
through the issuance of stock options and warrants will be
mitigated by continued stock repurchases in accordance with the
Company's stock repurchase program. With respect to the provision
of products or services outside our primary base of operations in
the United States, all of the above factors apply, along with the
difficulty of doing business in numerous sovereign jurisdictions
due to differences in scale, competition, culture, laws and
regulations. 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. -0- *T ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in
thousands, except earnings per share) For the Three Months Ended
June 30, ----------------------------------- $ % 2006 2005 Variance
Variance -------- -------- ----------------- Revenue: Services
261,892 238,499 23,393 9.8% Data 74,813 71,772 3,041 4.2% --------
-------- Total revenue 336,705 310,271 26,434 8.5% Operating costs
and expenses: Cost of revenue Services 196,073 194,349 1,724 0.9%
Data 49,572 48,885 687 1.4% -------- -------- Total cost of revenue
245,645 243,234 2,411 1.0% Services gross margin 25.1% 18.5% Data
gross margin 33.7% 31.9% Total gross margin 27.0% 21.6% Selling,
general and administrative 54,745 53,700 1,045 1.9% Gains, losses
and nonrecurring items, net - (1,637) 1,637 0.0% -------- --------
Total operating costs and expenses 300,390 295,297 5,093 1.7%
-------- -------- Income from operations 36,315 14,974 21,341
142.5% -------- -------- Other income (expense): Interest expense
(7,769) (5,162) (2,607) 50.5% Other, net 647 891 (244) (27.4%)
-------- -------- Total other income (expense) (7,122) (4,271)
(2,851) 66.8% -------- -------- Earnings before income taxes 29,193
10,703 18,490 172.8% Income taxes 11,385 4,064 7,321 180.1%
-------- -------- Net earnings 17,808 6,639 11,169 168.2% ========
======== Earnings per share: Basic 0.20 0.07 0.13 185.7% ========
======== Diluted 0.20 0.07 0.13 185.7% ======== ======== ACXIOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Dollars in thousands, except earnings per share) For
the Three Months Ended ----------------------------------- June 30,
March 31, $ % 2006 2006 Variance Variance
----------------------------------- Revenue: Services 261,892
257,591 4,301 1.7% Data 74,813 86,752 (11,939) (13.8%) --------
-------- Total revenue 336,705 344,343 (7,638) (2.2%) Operating
costs and expenses: Cost of revenue Services 196,073 196,428 (355)
(0.2%) Data 49,572 52,142 (2,570) (4.9%) -------- -------- Total
cost of revenue 245,645 248,570 (2,925) (1.2%) Services gross
margin 25.1% 23.7% Data gross margin 33.7% 39.9% Total gross margin
27.0% 27.8% Selling, general and administrative 54,745 51,642 3,103
6.0% Gains, losses and nonrecurring items, net - (456) 456 (100.0%)
-------- -------- Total operating costs and expenses 300,390
299,756 634 0.2% -------- -------- Income from operations 36,315
44,587 (8,272) (18.6%) -------- -------- Other income (expense):
Interest expense (7,769) (7,531) (238) 3.2% Other, net 647 135 512
379.3% -------- -------- Total other income (expense) (7,122)
(7,396) 274 (3.7%) -------- -------- Earnings before income taxes
29,193 37,191 (7,998) (21.5%) Income taxes 11,385 14,132 (2,747)
(19.4%) -------- -------- Net earnings 17,808 23,059 (5,251)
(22.8%) ======== ======== Earnings per share: Basic 0.20 0.27
(0.07) (25.9%) ======== ======== Diluted 0.20 0.26 (0.06) (23.1%)
======== ======== ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION
OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings
per share) For the Three Months Ended June 30, June 30, March 31,
2006 2005 2006 ------- ------- ------- Basic earnings per share:
Numerator - net earnings 17,808 6,639 23,059 Denominator -
weighted-average shares outstanding 88,155 91,044 86,981 -------
------- ------- Basic earnings per share 0.20 0.07 0.27 =======
======= ======= Diluted earnings per share: Numerator - net
earnings Net earnings 17,808 6,639 23,059 Denominator:
Weighted-average shares outstanding 88,155 91,044 86,981 Dilutive
effect of common stock options, warrants and restricted stock 2,268
2,752 2,855 ------- ------- ------- 90,423 93,796 89,836 -------
------- ------- Diluted earnings per share 0.20 0.07 0.26 =======
======= ======= ACXIOM CORPORATION AND SUBSIDIARIES RESULTS BY
SEGMENT (Unaudited) (Dollars in thousands) For the Three Months
Ended June 30, June 30, March 31, Revenue: 2006 2005 2006 --------
-------- -------- US services & data 291,419 265,434 295,795
International services & data 45,286 44,837 48,548 --------
-------- -------- Total revenue 336,705 310,271 344,343 ========
======== ======== US supplemental information: Services & data
excluding IT mgmt 201,242 178,632 206,853 IT management services
90,177 86,802 88,942 -------- -------- -------- 291,419 265,434
295,795 ======== ======== ======== International supplemental
information: Services & data excluding IT mgmt 45,286 44,837
48,548 ======== ======== ======== Income from operations: US
services & data 35,950 14,717 40,794 International services
& data 365 (1,380) 3,337 Corporate & other 0 1,637 456
-------- -------- -------- Total income from operations 36,315
14,974 44,587 ======== ======== ======== Margin: US services &
data 12.3% 5.5% 13.8% International services & data 0.8% -3.1%
6.9% Total margin 10.8% 4.8% 12.9% ACXIOM CORPORATION AND
SUBSIDIARIES DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE
(Unaudited) (Dollars in thousands) For the Three Months Ended June
30, June 30, $ % 2006 2005 Variance Variance
------------------------------------------------ Data 54,530 53,218
1,312 2.5% Passthrough data 20,283 18,554 1,729 9.3% ----------
----------- Total data revenue 74,813 71,772 3,041 4.2% ==========
=========== Cost of data revenue: Data 29,289 30,331 (1,042) (3.4%)
Passthrough data 20,283 18,554 1,729 9.3% ---------- -----------
Total cost of data 49,572 48,885 687 1.4% ========== ===========
Margin: Data 46.3% 43.0% Passthrough data 0.0% 0.0% Total data
33.7% 31.9% For the Three Months Ended March 31, $ % 2006 Variance
Variance ------------------------------------- Data 66,176 (11,646)
(17.6%) Passthrough data 20,576 (293) (1.4%) ---------- Total data
revenue 86,752 (11,939) (13.8%) ========== Cost of data revenue:
Data 31,566 (2,277) (7.2%) Passthrough data 20,576 (293) (1.4%)
---------- Total cost of data 52,142 (2,570) (4.9%) ==========
Margin: Data 52.3% Passthrough data 0.0% Total data 39.9% ACXIOM
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Dollars in thousands) June 30, March 31, $ % 2006 2006
Variance Variance Assets ---------- ---------- -----------------
------ Current assets: Cash and cash equivalents 4,163 7,705
(3,542) (46.0%) Trade accounts receivable, net 264,933 261,624
3,309 1.3% Deferred income taxes 24,517 24,587 (70) (0.3%) Other
current assets 45,204 44,937 267 0.6% ---------- ---------- Total
current assets 338,817 338,853 (36) (0.0%) ---------- ----------
Property and equipment 685,515 662,948 22,567 3.4% Less -
accumulated depreciation and amortization 353,633 329,177 24,456
7.4% ---------- ---------- Property and equipment, net 331,882
333,771 (1,889) (0.6%) ---------- ---------- Software, net of
accumulated amortization 41,313 45,509 (4,196) (9.2%) Goodwill
477,291 472,401 4,890 1.0% Purchased software licenses, net of
accumulated amortization 161,814 155,518 6,296 4.0% Unbilled and
notes receivable, excluding current portions 17,188 19,139 (1,951)
(10.2%) Deferred costs, net 116,651 112,817 3,834 3.4% Data
acquisition costs 38,712 40,828 (2,116) (5.2%) Other assets, net
21,379 21,662 (283) (1.3%) ---------- ---------- 1,545,047
1,540,498 4,549 0.3% ========== ========== Liabilities and
Stockholders' Equity ---------------------- Current liabilities:
Current installments of long-term obligations 96,701 93,518 3,183
3.4% Trade accounts payable 41,905 44,144 (2,239) (5.1%) Accrued
payroll and related expenses 27,487 32,139 (4,652) (14.5%) Other
accrued expenses 79,345 81,428 (2,083) (2.6%) Deferred revenue
112,313 123,916 (11,603) (9.4%) Income taxes 9,759 4,845 4,914
101.4% Dividends payable 4,403 - 4,403 - ---------- ----------
Total current liabilities 371,913 379,990 (8,077) (2.1%) ----------
---------- Long-term obligations: Long-term debt and capital
leases, net of current installments 345,992 353,692 (7,700) (2.2%)
Software and data licenses, net of current installments 28,854
22,723 6,131 27.0% ---------- ---------- Total long-term
obligations 374,846 376,415 (1,569) (0.4%) ---------- ----------
Deferred income taxes 77,735 77,916 (181) (0.2%) Commitments and
contingencies Stockholders' equity: Common stock 10,985 10,946 39
0.4% Additional paid-in capital 685,086 677,026 8,060 1.2% Unearned
stock-based compensation (1,736) (1,941) 205 (10.6%) Retained
earnings 423,683 410,278 13,405 3.3% Accumulated other
comprehensive loss 8,637 2,205 6,432 291.7% Treasury stock, at cost
(406,102) (392,337) (13,765) 3.5% ---------- ---------- Total
stockholders' equity 720,553 706,177 14,376 2.0% ----------
---------- 1,545,047 1,540,498 4,549 0.3% ========== ==========
ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the
Three Months Ended June 30, ------------------ 2006 2005
------------------ Cash flows from operating activities: Net
earnings 17,808 6,639 Non-cash operating activities: Depreciation
and amortization 59,047 55,534 Loss (gain) on disposal or
impairment of assets, net (84) 43 Deferred income taxes (233) 3,635
Non-cash stock compensation expense 553 298 Changes in operating
assets and liabilities: Accounts receivable (1,796) 17,297 Other
assets 3,186 (17,945) Accounts payable and other liabilities
(9,743) 917 Deferrred revenue (12,388) (4,942) -------- --------
Net cash provided by operating activities 56,350 61,476 --------
-------- Cash flows from investing activities: Capitalized software
(5,719) (5,673) Capital expenditures (217) (2,929) Cash collected
from the sale and license of software 5,000 - Deferral of costs
(16,887) (16,192) Payments received from investments 783 721 Net
cash paid in acquisitions - (106,719) -------- -------- Net cash
used by investing activities (17,040) (130,792) -------- --------
Cash flows from financing activities: Proceeds from debt 28,873
281,706 Payments of debt (67,866) (54,130) Dividends paid - (4,432)
Sale of common stock 6,773 13,527 Acquisition of treasury stock
(11,965) (160,354) Tax benefit of stock options exercised 1,079 -
-------- -------- Net cash used by financing activities (43,106)
76,317 -------- -------- Effect of exchange rate changes on cash
254 (297) -------- -------- Net increase in cash and cash
equivalents (3,542) 6,704 Cash and cash equivalents at beginning of
period 7,705 4,185 -------- -------- Cash and cash equivalents at
end of period 4,163 10,889 ======== ======== Supplemental cash flow
information: Cash paid during the period for: Interest 7,830 4,397
Income taxes 5,268 190 Payments on capital leases and installment
payment arrangements 18,905 19,929 Payments on software and data
license liabilities 7,847 10,938 Other debt payments, excluding
line of credit 1,711 1,357 Noncash investing and financing
activities: Issuance of options for acquisition - 7,541 Software
licenses and maintenance acquired under software obligation 15,266
2,161 Acquisition of property and equipment under capital lease and
installment payment arrangements 19,426 26,458 Construction and
other financing 5,904 3,654 ACXIOM CORPORATION AND SUBSIDIARIES
FREE CASH FLOW DEFINITION -- There has been discussion over
Acxiom's Free Cash Flow definition -- No single universally
accepted definition of Free Cash Flow exists -- Acxiom's goal is to
communicate Free Cash Flow available to equity vs. available for
debt service -- Going forward calculation will continue to be
transparent and consistent with an equity Free Cash Flow point of
view ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF FREE CASH
FLOW AVAILABLE TO EQUITY (Q1 FY07 Comparison) AND RECONCILIATION TO
OPERATING CASH FLOW (Unaudited) (Dollars in thousands) Old New
Change ------------------ --------------- 06/30/06 06/30/06 $ %
------------------ --------------- Net cash provided by operating
activities 56,350 56,350 - 0.0% Less: Tax benefit of stock options
and warrants - - - - ------------------ --------------- Subtotal
56,350 56,350 - 0.0% Plus: Proceeds received from the disposition
of operations - - - - Proceeds received from the disposition of
assets - - - - Payments received from investments - 783 783 - Less:
Capitalized software (5,719) (5,719) - 0.0% Capital expenditures
(217) (217) - 0.0% Deferral of costs (16,887) (16,887) - 0.0%
Payments on capital leases and installment payment arrangements -
(18,905) (18,905) - Payments on software and data license
liabilities - (7,847) (7,847) - Other required debt payments -
(1,711) (1,711) - ------------------ --------------- Subtotal
33,527 5,847 (27,680) -82.6% Plus: Tax benefit of stock options and
warrants 1,079 1,079 - 0.0% ------------------ ---------------
Subtotal 34,606 6,926 (27,680) -80.0% Plus: Cash collected from
sale of software 5,000 5,000 - 0.0% ------------------
--------------- Total 39,606 11,926 (27,680) -69.9%
================== =============== ACXIOM CORPORATION AND
SUBSIDIARIES CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
(FY06 Comparison) AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited) (Dollars in thousands) Old New Change ----------------
---------------- FY 2006 FY 2006 $ % ----------------
---------------- Net cash provided by operating activities 275,833
275,833 - 0.0% Less: Tax benefit of stock options and warrants -
(19,097) (19,097) - ---------------- ---------------- Subtotal
275,833 256,736 (19,097) -6.9% Plus: Proceeds received from the
disposition of operations - 4,844 4,844 - Proceeds received from
the disposition of assets 5,123 5,123 - 0.0% Payments received from
investments - 3,760 3,760 - Less: Capitalized software
(21,903)(21,903) - 0.0% Capital expenditures (6,848) (6,848) - 0.0%
Deferral of costs (70,454)(70,454) - 0.0% Payments on capital
leases and installment payment arrangements - (72,232) (72,232) -
Payments on software and data license liabilities - (29,069)
(29,069) - Other required debt payments - (9,302) (9,302) -
---------------- ---------------- Subtotal 181,751 60,655 (121,096)
-66.6% Plus: Tax benefit of stock options and warrants - 19,097
19,097 - ---------------- ---------------- Subtotal 181,751 79,752
(101,999) -56.1% Plus: Cash collected from sale of software 20,000
20,000 - 0.0% ---------------- ---------------- Total 201,751
99,752 (101,999) -50.6% ================ ================ 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
-------------------------------------------- -------- Net cash
provided by operating activities 61,476 44,785 95,414 74,158
275,833 56,350 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 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 Less: Capitalized software (5,673) (5,809) (5,204)
(5,217)(21,903) (5,719) Capital expenditures (2,929) (3,025) (401)
(493) (6,848) (217) Deferral of costs (16,192) (18,703) (19,603)
(15,956)(70,454) (16,887) Payments on capital leases and
installment payment arrangements(19,929) (15,967) (17,994)
(18,342)(72,232) (18,905) Payments on software and data license
liabilities (10,938) (5,328) (7,344) (5,459)(29,069) (7,847) Other
required debt payments (1,357) (2,434) (1,715) (3,796) (9,302)
(1,711) -------------------------------------------- --------
Subtotal 5,179 (1,298) 50,071 6,703 60,655 5,847 Plus: Tax benefit
of stock options and warrants - - - 19,097 19,097 1,079
-------------------------------------------- -------- Subtotal
5,179 (1,298) 50,071 25,800 79,752 6,926 Plus: Cash collected from
sale of software - - 20,000 - 20,000 5,000
-------------------------------------------- -------- Total 5,179
(1,298) 70,071 25,800 99,752 11,926
============================================ ======== ACXIOM
CORPORATION AND SUBSIDIARIES CALCULATION OF FREE CASH FLOW (Old
Format) (Unaudited) (Dollars in thousands)
-------------------------------------------- -------- 06/30/05
09/30/05 12/31/05 03/31/06 FY2006 06/30/06
-------------------------------------------- -------- Net cash
provided by operating activities 61,476 44,785 95,414 74,158
275,833 56,350 Less: Tax benefit of stock options and warrants - -
- - - - -------------------------------------------- --------
Subtotal 61,476 44,785 95,414 74,158 275,833 56,350 Plus: Proceeds
received from the disposition of operations - - - - - - Proceeds
received from the disposition of assets - 3,613 1,510 - 5,123 -
Payments received from investments - - - - - - Less: Capitalized
software (5,673) (5,809) (5,204) (5,217)(21,903) (5,719) Capital
expenditures (2,929) (3,025) (401) (493) (6,848) (217) Deferral of
costs (16,192) (18,703) (19,603) (15,956)(70,454) (16,887) Payments
on capital leases and installment payment arrangements - - - - - -
Payments on software and data license liabilities - - - - - - Other
required debt payments - - - - - -
-------------------------------------------- -------- Subtotal
36,682 20,861 71,716 52,492 181,751 33,527 Plus: Tax benefit of
stock options and warrants - - - - - 1,079
-------------------------------------------- -------- Subtotal
36,682 20,861 71,716 52,492 181,751 34,606 Plus: Cash collected
from sale of software - - 20,000 - 20,000 5,000
-------------------------------------------- -------- Total 36,682
20,861 91,716 52,492 201,751 39,606
============================================ ======== ACXIOM
CORPORATION AND SUBSIDIARIES RECONCILIATION OF FREE CASH FLOW AS
REPORTED (Unaudited) (Dollars in thousands) ------------------- FY
2005 FY 2006 ------------------- Free cash flow as previously
reported 158,962 201,751 Plus: Proceeds received from the
disposition of operations - 4,844 Payments received from
investments 2,533 3,760 ------------------- Subtotal free cash flow
available for debt service 161,495 210,355 Less: Required payments
of debt 94,105 110,603 ------------------- Total free cash flow
available to equity 67,390 99,752 =================== ACXIOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Dollars in thousands, except earnings per share)
-------------------------------------------- --------- 06/30/05
09/30/05 12/31/05 03/31/06 FY2006 06/30/06
-------------------------------------------- --------- Revenue:
Services 238,499 253,193 263,266 257,591 1,012,549 261,892 Data
71,772 77,330 84,165 86,752 320,019 74,813
-------------------------------------------- --------- Total
revenue 310,271 330,523 347,431 344,343 1,332,568 336,705 Operating
costs and expenses: Cost of revenue Services 194,349 191,883
189,502 196,428 772,162 196,073 Data 48,885 52,124 48,799 52,142
201,950 49,572 --------------------------------------------
--------- Total cost of revenue 243,234 244,007 238,301 248,570
974,112 245,645 Selling, general and administrative 53,700 54,902
57,625 51,642 217,869 54,745 Gains, losses and nonrecurring items,
net (1,637) 12,799 (1,202) (456) 9,504 0
-------------------------------------------- --------- Total
operating costs and expenses 295,297 311,708 294,724 299,756
1,201,485 300,390 Income from operations 14,974 18,815 52,707
44,587 131,083 36,315 % Margin 4.8% 5.7% 15.2% 12.9% 9.8% 10.8%
Other income (expense) Interest expense (5,162) (7,416) (8,635)
(7,531) (28,744) (7,769) Other, net 891 1,050 (71) 135 2,005 647
-------------------------------------------- --------- Total other
income (expense) (4,271) (6,366) (8,706) (7,396) (26,739) (7,122)
Earnings before income taxes 10,703 12,449 44,001 37,191 104,344
29,193 Income taxes 4,064 5,300 16,720 14,132 40,216 11,385
-------------------------------------------- --------- Net earnings
6,639 7,149 27,281 23,059 64,128 17,808
============================================ ========= Diluted
earnings (loss) per share 0.07 0.08 0.31 0.26 0.71 0.20
============================================= ========= Q1 FY06 to
Q1 Q4 FY06 to Q1 FY07 FY07 ---------------- ---------------- % $ %
$ ---------------- ---------------- Revenue: Services 9.8% 23,393
1.7% 4,301 Data 4.2% 3,041 -13.8% (11,939) ----------------
---------------- Total revenue 8.5% 26,434 -2.2% (7,638) Operating
costs and expenses: Cost of revenue Services 0.9% 1,724 -0.2% (355)
Data 1.4% 687 -4.9% (2,570) ---------------- ---------------- Total
cost of revenue 1.0% 2,411 -1.2% (2,925) Selling, general and
administrative 1.9% 1,045 6.0% 3,103 Gains, losses and nonrecurring
items, net -100.0% 1,637 -100.0% 456 ----------------
---------------- Total operating costs and expenses 1.7% 5,093 0.2%
634 Income from operations 142.5% 21,341 -18.6% (8,272) % Margin
Other income (expense) Interest expense 50.5% (2,607) 3.2% (238)
Other, net -27.4% (244) 379.3% 512 ----------------
---------------- Total other income (expense) 66.8% (2,851) -3.7%
274 Earnings before income taxes 172.8% 18,490 -21.5% (7,998)
Income taxes 180.1% 7,321 -19.4% (2,747) ----------------
---------------- Net earnings 168.2% 11,169 -22.8% (5,251)
================ ================ Diluted earnings (loss) per share
185.7% 0.13 -23.1% (0.06) ================ ================ ACXIOM
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
- INTERNAL FORMAT (Unaudited) (Dollars in thousands, except
earnings per share) ----------------------------------------------
06/30/05 09/30/05 12/31/05 03/31/06 FY2006
---------------------------------------------- Revenue 310,271
330,523 347,431 344,343 1,332,568 Operating costs and expenses:
Salaries and benefits 126,264 127,325 129,888 132,579 516,056
Computer, communications and other equipment 77,647 76,250 73,614
71,730 299,241 Data costs 41,831 44,752 42,021 44,593 173,197 Other
operating costs and expenses 51,192 50,582 50,403 51,310 203,487
Gains, losses and nonrecurring items, net (1,637) 12,799 (1,202)
(456) 9,504 ---------------------------------------------- Total
operating costs and expenses 295,297 311,708 294,724 299,756
1,201,485 ---------------------------------------------- Income
(loss) from operations 14,974 18,815 52,707 44,587 131,083
---------------------------------------------- Operating Margin
4.8% 5.7% 15.2% 12.9% 9.8% Other income (expense): Interest expense
(5,162) (7,416) (8,635) (7,531) (28,744) Other, net 891 1,050 (71)
135 2,005 ---------------------------------------------- (4,271)
(6,366) (8,706) (7,396) (26,739)
---------------------------------------------- Earnings (loss)
before income taxes 10,703 12,449 44,001 37,191 104,344
---------------------------------------------- Income taxes 4,064
5,300 16,720 14,132 40,216
---------------------------------------------- Net earnings (loss)
6,639 7,149 27,281 23,059 64,128
============================================== Diluted earnings
(loss) per share 0.07 0.08 0.31 0.26 0.71
============================================== FY07 FY07 ---------
---------------- -------------- 06/30/06 % $ % $ ---------
---------------- -------------- Revenue 336,705 8.5% 26,434 -2.2%
(7,638) Operating costs and expenses: Salaries and benefits 135,917
7.6% 9,653 2.5% 3,338 Computer, communications and other equipment
73,119 -5.8% (4,528) 1.9% 1,389 Data costs 43,372 3.7% 1,541 -2.7%
(1,221) Other operating costs and expenses 47,982 -6.3% (3,210)
-6.5% (3,328) Gains, losses and nonrecurring items, net 0 -100.0%
1,637 -100.0% 456 --------- ---------------- -------------- Total
operating costs and expenses 300,390 1.7% 5,093 0.2% 634 ---------
---------------- -------------- Income (loss) from operations
36,315 142.5% 21,341 -18.6% (8,272) --------- ----------------
-------------- Operating Margin 10.8% Other income (expense):
Interest expense (7,769) 50.5% (2,607) 3.2% (238) Other, net 647
-27.4% (244) 379.3% 512 --------- ---------------- --------------
(7,122) 66.8% (2,851) -3.7% 274 --------- ----------------
-------------- Earnings (loss) before income taxes 29,193 172.8%
18,490 -21.5% (7,998) --------- ---------------- --------------
Income taxes 11,385 180.1% 7,321 -19.4% (2,747) ---------
---------------- -------------- Net earnings (loss) 17,808 168.3%
11,169 -22.8% (5,251) ========= ================ ==============
Diluted earnings (loss) per share 0.20 185.7% 0.13 -23.1% (0.06)
========= ================ ============== ACXIOM CORPORATION AND
SUBSIDIARIES MARGIN ANALYSIS (Unaudited)
-------------------------------------------- 06/30/05 09/30/05
12/31/05 03/31/06 FY2006
-------------------------------------------- Gross profit 67,037
86,516 109,130 95,773 358,456 Gross margin 21.6% 26.2% 31.4% 27.8%
26.9% Operating margin 4.8% 5.7% 15.2% 12.9% 9.8% Services gross
profit 44,150 61,310 73,764 61,163 240,387 Services gross margin
18.5% 24.2% 28.0% 23.7% 23.7% Data gross profit 22,887 25,206
35,366 34,610 118,069 Data gross margin 31.9% 32.6% 42.0% 39.9%
36.9% Q1 FY06 to Q4 FY06 to Q1 FY07 Q1 FY07 ---------
--------------- ----------------- 06/30/06 % $ % $ ---------
--------------- ----------------- Gross profit 91,060 35.8% 24,023
-4.9% (4,713) Gross margin 27.0% Operating margin 10.8% Services
gross profit 65,819 49.1% 21,669 7.6% 4,656 Services gross margin
25.1% Data gross profit 25,241 10.3% 2,354 -27.1% (9,369) Data
gross margin 33.7% ACXIOM CORPORATION AND SUBSIDIARIES EXPENSE
TREND ANALYSIS (Unaudited)
------------------------------------------ --------- 06/30/05
09/30/05 12/31/05 03/31/06 FY2006 06/30/06
------------------------------------------ --------- Salaries and
benefits % of revenue 40.7% 38.5% 37.4% 38.5% 38.7% 40.4% Computer,
communications and other equipment % of revenue 25.0% 23.1% 21.2%
20.8% 22.5% 21.7% Data costs % of revenue 13.5% 13.5% 12.1% 13.0%
13.0% 12.9% Other operating costs and expenses % of revenue 16.5%
15.3% 14.5% 14.9% 15.3% 14.3% Total operating costs and expenses %
of revenue 95.2% 94.3% 84.8% 87.1% 90.2% 89.2% SG&A % of
revenue 17.3% 16.6% 16.6% 15.0% 16.3% 16.3% ACXIOM CORPORATION
Financial Road Map(1) --------------------- (as of June 30, 2006)
------------------ ------------------ Actual Actual Years Ending
March 31, Fiscal 2006 Q1 Fiscal 2007 ------------------
------------------ U.S. Revenue Growth 13.6% 9.8% U.S. Revenue
$1,148 million $291 million International Revenue Growth -13.0%
1.0% International Revenue $185 million $45 million U.S. Operating
Margin 11.6% 12.3% Adjusted U.S. Operating Margin 12.4%(3)
International Operating Margin -1.1% 0.8% Adjusted International
Operating Margin 2.5%(3) Return on Assets(2) 8.5% 9.8% Adjusted
Return on Assets(2) 9.5%(3) 10.8%(3) Return on Invested Capital(2)
11.4%(3) 12.8%(3) Operating Cash Flow $276 million $56 million Free
Cash Flow to $100 million $12 million Equity Revolving Credit Line
$252 million $242 million Balance Dividends Per Share $0.20 $0.05
------------------- ----------------- Target Long-Term Goals Years
Ending March 31, Fiscal 2007 Fiscal 2010 -------------------
----------------- U.S. Revenue Growth 7% to 10% 8% to 11% (CAGR)
U.S. Revenue $1,230 to $1,260 mil - International Revenue Growth 0%
to 5% 5% to 8% (CAGR) International Revenue $180 to $190 mil - U.S.
Operating Margin 14% to 15% 16% to 18% Adjusted U.S. Operating
Margin International Operating Margin 2% to 4% 12% to 15% Adjusted
International Operating Margin Return on Assets(2) 11% to 13% 14%
to 17% Adjusted Return on Assets(2) Return on Invested Capital(2)
13% to 15% 16% to 19% Operating Cash Flow $280 to $300 mil $320 to
$360 mil Free Cash Flow to $113 to $133 mil $140 to $160 mil Equity
Revolving Credit Line less than $500 mil less than $500 mil Balance
Dividends Per Share $0.22 $0.24 to $0.28 ------------------- (1)
Assumptions and definitions are defined on the following schedule:
"Financial Road Map assumptions and definitions" (2) ROA and ROIC
are calculated on a trailing 4 quarters basis. (3) Results exclude
unusual charges of $9.1 million for U.S. and $6.7 million for
International in the quarter ended September 30, 2005. These
charges are excluded when calculating performance compared to the
Road Map since they were not considered in setting the Road Map
target. All other time periods are as reported for GAAP. ACXIOM
CORPORATION Financial Road Map Assumptions and Definitions
---------------------------------------------- Assumptions
----------- 1. The effective tax rate is projected to be 38-39% for
future years. 2. Interest rates are assumed to increase slightly
over the current levels. 3. Excluding acquired credits, the Company
expects to utilize all of its federal credits and begin paying
regular tax in fiscal 2007. The Company expects to gradually begin
paying state taxes as state NOLs are utilized. 4. The Company will
pay incentives under its bonus plan of $15 to $25 million for each
of the years beginning in fiscal 2007 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 operating 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 to Equity is
defined as cash flow from operating activities plus or minus cash
flow from investing activities (excluding net cash paid for
acquisitions), less required payments of debt (total debt payments
excluding payments on the line of credit). 7. Revolving Credit Line
Balance is defined as actual funds borrowed under the Company's
revolving line of credit facility at the end of the period. 8.
Dividends Per Share is defined as the sum of the dividends for that
period. Reconciliation of Non-GAAP Measurements
--------------------------------------- (Dollars in thousands)
----------------- ----------------- Actual Actual Years Ending
March 31, Fiscal 2006 Q1 Fiscal 2007 -----------------
----------------- U.S. Operating Margin --------------------- U.S.
Revenue 1,147,641 291,419 U.S. Operating Income 133,072 35,950 U.S.
Operating Income Margin 11.6% 12.3% Gains, losses and nonrecurring
items, net 6,147 0 ValueAct Defense 2,216 0 Lawsuit Expenses 761 0
-------------- -------------- Adjusted U.S. Operating Income(1)
142,196 35,950 Adjusted U.S. Operating Income Margin(1) 12.4% 12.3%
============== ============== International Operating Margin
------------------------------ International Revenue 184,927 45,286
International Operating Income (1,991) 365 International Operating
Income Margin -1.1% 0.8% Gains, losses and nonrecurring items, net
6,652 0 -------------- -------------- Adjusted International
Operating Income(1) 4,661 365 Adjusted International Operating
Income Margin(1) 2.5% 0.8% ============== ==============
----------------------------------------------------------------------
Free Cash Flow to Equity ------------------------ Net cash provided
by operating activities 275,833 56,350 Plus: Proceeds received from
disposition of assets 5,123 0 Proceeds received from disposition of
operations 4,844 0 Cash received from investments 3,760 783 Tax
benefit of stock option and warrant exercise 0 1,079 Proceeds
received from sale of software 20,000 5,000 --------------
-------------- 33,727 6,862 Less: Capitalized software (21,903)
(5,719) Capital expenditures (6,848) (217) Deferral of costs
(70,454) (16,887) Capital lease and installment payments (72,232)
(18,905) Software and data license liability payments (29,069)
(7,847) Other debt payments (9,302) (1,711) --------------
-------------- (209,808) (51,286) -------------- --------------
Free cash flow to equity 99,752 11,926 ==============
============== ---------------------- -------------------- Target
Long-Term Goals Fiscal 2007 Fiscal 2010 ----------------------
-------------------- Free Cash Flow to Equity Low High Low High
------------------------ ----------------------
-------------------- Net cash provided by operating activities
280,000 300,000 320,000 360,000 Plus: Proceeds received from
disposition of assets 0 0 0 0 Proceeds received from disposition of
operations 0 0 0 0 Cash received from investments 1,000 1,000 0 0
Tax benefit of stock option and warrant exercise 7,000 7,000 10,000
10,000 Proceeds received from sale of software 10,000 10,000 0 0
--------- ----------- --------- --------- 18,000 18,000 10,000
10,000 Less: Capitalized software (20,000) (20,000) (20,000)
(25,000) Capital expenditures (7,000) (7,000) (10,000) (10,000)
Deferral of costs (60,000) (60,000) (65,000) (75,000) Capital lease
and installment payments (60,000) (60,000) (65,000) (70,000)
Software and data license liability payments (28,000) (28,000)
(25,000) (25,000) Other debt payments (10,000) (10,000) (5,000)
(5,000) --------- ----------- --------- --------- (185,000)
(185,000) (190,000) (210,000) --------- ----------- ---------
--------- Free cash flow to equity 113,000 to 133,000 140,000 to
160,000 ========= =========== ========= ========= Free cash flow to
equity 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 to equity in this Financial
Road Map representing the amount of money available for the
Company's discretionary spending. 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 after funding operating
activities and capital expenditures, capitalized software expenses,
deferred costs and required debt repayments. The above table
reconciles free cash flow to equity to cash provided by operating
activities, the nearest comparable GAAP measure. Notes ----- (1)
Results exclude unusual charges of $9.1 million for U.S. and $6.7
million for International in the quarter ended September 30, 2005.
These charges are excluded when calculating performance compared to
the Road Map since they were not considered in setting the Road Map
target. All other time periods are as reported for GAAP.
Reconciliation of Non-GAAP Measurements
--------------------------------------- (Dollars in thousands)
-------------------------------- Actual Fiscal 2006
-------------------------------- Return on Assets (ROA) and Return
on Invested Adjusted Capital (ROIC)(5) ROA ROA ROIC
------------------ -------------------------------- Numerator:
Income from operations 131,083 131,083 131,083 Unusual Charges,
Net(6) 15,776 15,776 Add implied interest on operating leases(1)
11,696 -------------------------------- 131,083 146,859 158,554
-------------------------------- Denominator: Average total
assets(2) 1,549,933 1,549,933 1,549,933 Less average cash(3)
(8,616) Less average non-interest bearing current liabilities(4)
(288,063) Plus average present value of operating leases(1) 135,190
-------------------------------- 1,549,933 1,549,933 1,388,444
-------------------------------- Return on invested capital 8.5%
9.5% 11.4% ================================
-------------------------------- Actual Q1 Fiscal 2007
-------------------------------- Return on Assets (ROA) and Return
on Invested Adjusted Capital (ROIC)(5) ROA ROA ROIC
------------------ -------------------------------- Numerator:
Income from operations 152,424 152,424 152,424 Unusual Charges,
Net(6) 15,776 15,776 Add implied interest on operating leases(1)
10,674 -------------------------------- 152,424 168,200 178,874
-------------------------------- Denominator: Average total
assets(2) 1,554,756 1,554,756 1,554,756 Less average cash(3)
(6,934) Less average non-interest bearing current liabilities(4)
(285,462) Plus average present value of operating leases(1) 132,750
-------------------------------- 1,554,756 1,554,756 1,395,110
-------------------------------- Return on invested capital 9.8%
10.8% 12.8% ================================
-------------------------------------------- Target Fiscal 2007
-------------------------------------------- Return on Assets (ROA)
ROA ROIC and Return on Invested
-------------------------------------------- Capital (ROIC)(5) Low
High Low High ------------------
-------------------------------------------- Numerator: Income from
operations 175,500 196,900 175,500 196,900 Unusual Charges, Net(6)
Add implied interest on operating leases(1) 11,000 11,000
-------------------------------------------- 175,500 196,900
186,500 207,900 --------------------------------------------
Denominator: Average total assets(2) 1,550,000 1,575,000 1,550,000
1,550,000 Less average cash(3) (10,000) (10,000) Less average
non-interest bearing current liabilities(4) (277,000) (288,000)
Plus average present value of operating leases(1) 133,000 133,000
-------------------------------------------- 1,550,000 1,575,000
1,396,000 1,385,000 --------------------------------------------
Return on invested capital 11% to 13% 13% to 15%
============================================
-------------------------------------------- Long-Term Goals Fiscal
2010 -------------------------------------------- Return on Assets
(ROA) ROA ROIC and Return on Invested
-------------------------------------------- Capital (ROIC)(5) Low
High Low High ------------------
-------------------------------------------- Numerator: Income from
operations 268,600 337,600 268,600 337,600 Unusual Charges, Net(6)
Add implied interest on operating leases(1) 9,000 9,000
-------------------------------------------- 268,600 337,600
277,600 346,600 --------------------------------------------
Denominator: Average total assets(2) 1,860,000 1,960,000 1,860,000
1,960,000 Less average cash(3) (10,000) (10,000) Less average
non-interest bearing current liabilities(4) (261,000) (285,000)
Plus average present value of operating leases(1) 114,000 114,000
-------------------------------------------- 1,860,000 1,960,000
1,703,000 1,779,000 --------------------------------------------
Return on invested capital 14% to 17% 16% to 19%
============================================ 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. Future
cash balances above $10.0 million are assumed to be invested at
money market rates and are excluded from this operating cash
adjustment. (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 figures are calculated on a trailing 4 quarters basis.
(6) Results exclude unusual charges of $9.1 million for U.S. and
$6.7 million for International in the quarter ended September 30,
2005. These charges are excluded when calculating performance
compared to the Road Map since they were not considered in setting
the Road Map target. All other time periods are as reported for
GAAP. 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
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