ACXM Acxiom Holdngs (delisted)

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. -0- *T 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 ========== ========== *T -0- *T 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 =========== =========== *T -0- *T 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 ==================================================== *T -0- *T 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 - ======== ======== *T -0- *T 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 - ======== ======== *T -0- *T 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. *T -0- *T 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