ACXM Acxiom Holdngs (delisted)

Acxiom(R) Corporation (Nasdaq:ACXM) today announced financial results for the third quarter of fiscal 2006 ended December 31, 2005. Revenue for the quarter was $347.4 million, income from operations was $52.7 million, pre-tax earnings were $44.0 million, and diluted earnings per share (EPS) were $0.31. All represent record quarterly performances in the Company's history. Acxiom will hold a conference call at 4:30 p.m. CST 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. "Our third-quarter results are very encouraging and demonstrate the continuing improvement in our financial performance," Company Leader Charles D. Morgan said. "Combined with the recent announcement of our strategic partnership with EMC Corporation and the outlook for the fourth quarter and fiscal 2007, our performance in the third quarter is clear evidence of the growing momentum at Acxiom." Highlights of Acxiom's third-quarter performance include: -- Revenue of $347.4 million, up 11 percent from $312.4 million in the third quarter a year ago. The net impact of acquisitions and divestitures contributed 5 percentage points of this 11 percentage-point growth in revenue. -- Income from operations of $52.7 million, a 34 percent increase compared to $39.4 million in the third quarter last year. -- Pre-tax earnings of $44.0 million, up 27 percent from $34.6 million in the third quarter of fiscal 2005. -- Diluted earnings per share of $.31, a 29 percent increase compared to $.24 in the third quarter last year. -- Operating cash flow of $95.4 million and free cash flow of $91.7 million, both of which represent record quarterly cash flow results. The free cash flow of $91.7 million is a non-GAAP financial measure and a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release. -- A technology and distribution agreement with EMC Corporation that includes $30 million from EMC to purchase the grid operating system developed by Acxiom and license certain other grid-related software. The deal contributed to $20 million of the Company's free cash flow performance in the third quarter but had no impact on revenue, earnings or operating cash flow. -- New contracts that will deliver $41 million in annual revenue and renewals that total $31 million in annual revenue. -- Committed new deals in the pipeline that are expected to generate $68.4 million in annual revenue. "The operational improvements we have made, combined with a strong pipeline and the continued signing of new contracts, add up to an improving performance at Acxiom," Company Operations Leader Lee Hodges said. "Our expense-savings initiatives have produced better-than-expected results, and we continue to focus on expense containment and control, which we expect to result in continued improvement in operating margins." Morgan noted that Acxiom recently completed new contracts with AIG Marketing, Inc., Canadian Tire Financial Services, Inc., Federated Department Stores, Inc., Hyundai Motor America, Lowe's, Nationwide, Novartis Pharmaceuticals Corporation, Staples, ZelnickMedia and Primedia. Outlook The Company's expectations for fiscal 2006, fiscal 2007 and beyond are communicated in the Financial Road Map, which is attached. The Financial Road Map has been updated based on current expectations for fiscal year 2007, and the long-term goals have been updated to reflect the expectation for fiscal year 2010. For the fiscal year ending March 31, 2007, the Company estimates that U.S. revenue will grow 7 percent to 10 percent, the U.S. operating margins will be 14 percent to 15 percent, international revenue will grow 0 percent to 5 percent, and international margin will be 2 percent to 4 percent. The financial projections stated today are based on the Company's current expectations and the assumption 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 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 with the exception of the impact of the net unusual charges recorded in the quarter ended September 30, 2005, 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 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 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 December 31, -------------------------- 2005 2004 -------------------------- Revenue: Services 263,266 225,811 Data 84,165 86,594 -------- -------- Total revenue 347,431 312,405 Operating costs and expenses: Cost of revenue Services 190,993 174,960 Data 48,799 52,199 -------- -------- Total cost of revenue 239,792 227,159 Selling, general and administrative 56,134 46,461 Gains, losses and nonrecurring items, net (1,202) (640) -------- -------- Total operating costs and expenses 294,724 272,980 -------- -------- Income from operations 52,707 39,425 -------- -------- Other income (expense): Interest expense (8,635) (5,076) Other, net (71) 210 -------- -------- Total other income (expense) (8,706) (4,866) -------- -------- Earnings before income taxes 44,001 34,559 Income taxes 16,720 11,079 -------- -------- Net earnings 27,281 23,480 ======== ======== Earnings per share: Basic 0.32 0.27 ======== ======== Diluted 0.31 0.24 ======== ======== ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share) For the Nine Months Ended December 31, -------------------------- 2005 2004 -------------------------- Revenue: Services 754,958 653,730 Data 233,267 246,778 -------- -------- Total revenue 988,225 900,508 Operating costs and expenses: Cost of revenue Services 580,462 507,459 Data 149,808 153,786 -------- -------- Total cost of revenue 730,270 661,245 Selling, general and administrative 161,499 141,010 Gains, losses and nonrecurring items, net 9,960 (984) -------- -------- Total operating costs and expenses 901,729 801,271 -------- -------- Income from operations 86,496 99,237 -------- -------- Other income (expense): Interest expense (21,213) (14,889) Other, net 1,870 824 -------- -------- Total other income (expense) (19,343) (14,065) -------- -------- Earnings before income taxes 67,153 85,172 Income taxes 26,084 30,312 -------- -------- Net earnings 41,069 54,860 ======== ======== Earnings per share: Basic 0.47 0.64 ======== ======== Diluted 0.45 0.58 ======== ======== ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share) For the Three Months Ended December 31, -------------------------- 2005 2004 -------------------------- Basic earnings per share: Numerator - net earnings 27,281 23,480 Denominator - weighted-average shares outstanding 85,203 86,468 -------- -------- Basic earnings per share 0.32 0.27 ======== ======== Diluted earnings per share: Numerator: Net earnings 27,281 23,480 Interest expense on convertible bonds (net of tax benefit) - 1,017 -------- -------- 27,281 24,497 --------- -------- Denominator: Weighted-average shares outstanding 85,203 86,468 Dilutive effect of common stock options and warrants 2,723 4,191 Dilutive effect of convertible debt - 9,589 -------- -------- 87,926 100,248 -------- -------- Diluted earnings per share 0.31 0.24 ======== ======== ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share) For the Nine Months Ended December 31, ------------------------- 2005 2004 ------------------------- Basic earnings per share: Numerator - net earnings 41,069 54,860 Denominator - weighted-average shares outstanding 87,748 86,187 -------- -------- Basic earnings per share 0.47 0.64 ======== ======== Diluted earnings per share: Numerator: Net earnings 41,069 54,860 Interest expense on convertible bonds (net of tax benefit) - 3,051 -------- -------- 41,069 57,911 -------- -------- Denominator: Weighted-average shares outstanding 87,748 86,187 Dilutive effect of common stock options and warrants 2,691 3,870 Dilutive effect of convertible debt - 9,589 -------- -------- 90,439 99,646 -------- -------- Diluted earnings per share 0.45 0.58 ======== ======== ACXIOM CORPORATION AND SUBSIDIARIES REVENUES BY SEGMENT (Unaudited) (Dollars in thousands) For the Three Months Ended December 31, -------------------------- 2005 2004 -------------------------- US Services & Data 300,086 253,898 International Services & Data 47,345 58,507 -------- -------- Total Revenue 347,431 312,405 ======== ======== US Supplemental Information: Services & Data Excluding IT Mgmt 210,455 178,983 IT Management Services 89,631 74,915 -------- -------- 300,086 253,898 ======== ======== International Supplemental Information: Services & Data Excluding IT Mgmt 47,345 58,507 IT Management Services - - -------- -------- 47,345 58,507 ======== ======== ACXIOM CORPORATION AND SUBSIDIARIES REVENUES BY SEGMENT (Unaudited) (Dollars in thousands) For the Nine Months Ended December 31, ------------------------- 2005 2004 ------------------------- US Services & Data 851,846 740,666 International Services & Data 136,379 159,842 -------- -------- Total Revenue 988,225 900,508 ======== ======== US Supplemental Information: Services & Data Excluding IT Mgmt 589,653 533,824 IT Management Services 262,193 206,842 -------- -------- 851,846 740,666 ======== ======== International Supplemental Information: Services & Data Excluding IT Mgmt 136,379 159,842 IT Management Services - - -------- -------- 136,379 159,842 ======== ======== ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) December 31, March 31, 2005 2005 ----------- ---------- Assets ------ Current assets: Cash and cash equivalents $9,906 $4,185 Trade accounts receivable, net 261,135 250,653 Deferred income taxes 31,615 31,415 Refundable income taxes - 1,345 Other current assets 40,321 46,034 ---------- ---------- Total current assets 342,977 333,632 ---------- ---------- Property and equipment 663,521 581,918 Less - accumulated depreciation and amortization 324,158 258,532 --------- ---------- Property and equipment, net 339,363 323,386 ---------- ---------- Software, net of accumulated amortization 47,850 57,135 Goodwill 474,680 354,182 Purchased software licenses, net of accumulated amortization 157,203 157,999 Unbilled and notes receivable, excluding current portions 20,551 20,410 Deferred costs, net 104,419 88,851 Data acquisition costs 40,530 48,915 Other assets, net 22,757 15,369 ---------- ---------- $1,550,330 $1,399,879 ========== =========== Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Current installments of long-term obligations 87,401 83,005 Trade accounts payable 43,622 63,295 Accrued payroll and related expenses 31,841 27,435 Other accrued expenses 81,000 74,635 Deferred revenue 127,753 115,892 Income Taxes 12,182 - ---------- ---------- Total current liabilities 383,799 364,262 ---------- ---------- Long-term obligations: Long-term debt and capital leases, net of current installments 404,104 104,210 Software and data licenses, net of current installments 26,740 37,494 ---------- ---------- Total long-term obligations 430,844 141,704 ---------- ---------- Deferred income taxes 91,329 79,079 Commitments and contingencies Stockholders' equity: Common stock 10,674 10,440 Additional paid-in capital 627,982 588,156 Retained earnings 391,557 363,556 Accumulated other comprehensive loss 2,141 12,616 Treasury stock, at cost (387,996) (159,934) ---------- ---------- Total stockholders' equity 644,358 814,834 ---------- ---------- $1,550,330 $1,399,879 ========== ========== 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 6/30/02 9/30/02 12/31/02 3/31/03 3/31/03 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 6/30/03 9/30/03 12/31/03 3/31/04 3/31/04 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 6/30/04 9/30/04 12/31/04 3/31/05 3/31/05 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 ========== ========== =========== ========== =========== Qtr ended Qtr ended Qtr ended Qtr ended YTD 6/30/05 9/30/05 12/31/05 3/31/06 12/31/05 Net cash provided by operating activities 61,476 44,785 95,414 201,675 Proceeds received from disposition of assets - 3,613 1,510 5,123 Capitalized software (5,673) (5,809) (5,204) (16,686) Cash collected from sale of software - - 20,000 20,000 Capital expenditures (2,929) (3,025) (401) (6,355) Deferral of costs (16,192) (18,703) (19,603) (54,498) ---------- ---------- ----------- ---------- ----------- Free cash flow 36,682 20,861 91,716 0 149,259 ========== ========== =========== ========== =========== ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Three Months Ended December 31, ------------------------------- 2005 2004 ------------------------------- Cash flows from operating activities: Net earnings 27,281 23,480 Non-cash operating activities: Depreciation and amortization 59,712 50,817 Loss (gain) on disposal or impairment of assets, net (524) (50) Deferred income taxes 4,386 11,385 Non-cash stock compensation expense 346 - Changes in operating assets and liabilities: Accounts receivable (8,552) 3,403 Other assets (6,587) 5,915 Accounts payable and other liabilities 4,161 (18,896) Deferred revenue 15,191 6,751 ----------- ------------ Net cash provided by operating activities 95,414 82,805 ----------- ------------ Cash flows from investing activities: Disposition of operations 3,315 1,636 Sale of assets 1,510 - Capitalized software (5,204) (5,706) Capital expenditures (401) (3,132) Cash collected from sale of software 20,000 - Deferral of costs (19,603) (15,502) Payments received from investments 2,093 159 Net cash paid in acquisitions (2,983) (6,847) ----------- ------------ Net cash used by investing activities (1,273) (29,392) ----------- ------------ Cash flows from financing activities: Proceeds from debt 31,833 31,663 Payments of debt (125,264) (82,175) Dividends paid (4,259) (3,464) Sale of common stock 10,058 14,537 Acquisition of treasury stock (2,430) (2,840) ----------- ------------ Net cash used by financing activities (90,062) (42,279) ----------- ------------ Effect of exchange rate changes on cash (135) 620 ----------- ------------ Net increase in cash and cash equivalents 3,944 11,754 Cash and cash equivalents at beginning of period 5,962 10,140 ----------- ------------ Cash and cash equivalents at end of period 9,906 21,894 ----------- ------------ Supplemental cash flow information: Cash paid during the period for: Interest 7,932 3,521 Income taxes 1,070 583 Payments on capital leases and installment payment arrangements 17,994 23,012 Payments on software and data license liabilities 7,344 4,842 Noncash investing and financing activities: Issuance of warrants in acquisition - 1,833 Enterprise software licenses acquired under software obligation - 6,715 Acquisition of property and equipment under capital lease and installment payment arrangements 14,804 27,289 Construction of assets under construction loan 402 4,868 ----------- ------------ ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Nine Months Ended December 31, -------------------------- 2005 2004 -------------------------- Cash flows from operating activities: Net earnings 41,069 54,860 Non-cash operating activities: Depreciation and amortization 172,350 139,916 Loss (gain) on disposal or impairment of assets, net (1,451) (50) Deferred income taxes 12,401 30,933 Non-cash stock compensation expense 968 - Changes in operating assets and liabilities: Accounts receivable (13,838) (22,746) Other assets (21,747) (2,531) Accounts payable and other liabilities 2,790 (23,474) Deferred revenue 9,133 2,353 ----------- ------------ Net cash provided by operating activities 201,675 179,261 ----------- ------------ Cash flows from investing activities: Disposition of operations 4,844 1,636 Sale of assets 5,123 - Capitalized software (16,686) (14,534) Capital expenditures (6,355) (9,768) Cash collected from the sale of software 20,000 - Deferral of costs (54,498) (36,225) Payments received from investments 2,855 662 Net cash paid in acquisitions (144,509) (23,588) ----------- ------------ Net cash used by investing activities (189,226) (81,817) ----------- ------------ Cash flows from financing activities: Proceeds from debt 423,122 129,792 Payments of debt (216,041) (217,784) Dividends paid (13,068) (10,359) Sale of common stock 31,609 38,208 Acquisition of treasury stock (231,865) (30,208) ----------- ------------ Net cash used by financing activities (6,243) (90,351) ----------- ------------ Effect of exchange rate changes on cash (485) 446 ----------- ------------ Net increase in cash and cash equivalents 5,721 7,539 Cash and cash equivalents at beginning of period 4,185 14,355 ----------- ------------ Cash and cash equivalents at end of period 9,906 21,894 ----------- ------------ Supplemental cash flow information: Cash paid (received) during the period for: Interest 18,405 13,409 Income taxes (376) 1,080 Payments on capital leases and installment payment arrangements 53,890 49,645 Payments on software and data license liabilities 17,141 13,899 Noncash investing and financing activities: Issuance of warrants in acquisition - 1,833 Enterprise software licenses acquired under software obligation 8,380 12,682 Acquisition of property and equipment under capital lease and installment payment arrangements 70,377 66,359 Construction of assets under construction loan 7,200 17,979 ----------- ------------ ACXIOM CORPORATION AND SUBSIDIARIES SUMMARIZED SUPPLEMENTAL CASH FLOW INFORMATION (Unaudited) (Dollars in thousands) Last 12 03/31/05 06/30/05 09/30/05 12/31/05 Months --------- --------- --------- --------- --------- Free cash flow 40,228 36,682 20,861 91,716 189,487 Change in revolver 10,921 259,800 96,665 (66,378) 301,008 Other debt proceeds 4,175 - - - 4,175 Debt payments (excluding payments on line of credit) (22,316) (32,224) (23,729) (27,053) (105,322) Sale of common stock 5,776 13,527 8,024 10,058 37,385 Acquisition of treasury stock (33,551) (160,354) (69,081) (2,430) (265,416) Dividends paid (4,290) (4,432) (4,377) (4,259) (17,358) Payments received from investments 235 721 41 2,093 3,090 Proceeds from the disposition of operations - - 1,529 3,315 4,844 Net cash paid in acquisitions (18,612) (106,719) (34,807) (2,983) (163,121) Effect of exchange rate changes on cash (275) (297) (53) (135) (760) --------- --------- --------- --------- --------- Net change in cash (17,709) 6,704 (4,927) 3,944 (11,988) ========= ========= ========= ========= ========= ACXIOM CORPORATION Financial Road Map(1) ---------------------------------------------------------------------- (as of December 31, 2005) Actual Actual Actual Years Ending March 31, Fiscal 2005 Q3 Fiscal 2006 YTD Fiscal 2006 -------------- -------------- --------------- U.S. Revenue Growth 9.0% 18.2% 15.0% U.S. Revenue $1,011 million $300 million $851 million International Revenue Growth 152.9% -19.1% -14.7% International Revenue $213 million $47 million $136 million U.S. Operating Margin 11.3% 16.3% 10.8% Adjusted U.S. Operating Margin 11.3% 16.3% 11.9%(3) International Operating Margin 3.9% 7.9% -4.0% Adjusted International Operating Margin 3.9% 7.9% 0.9%(3) Return on Assets (2) 9.2% 7.2% 7.2% Adjusted Return on Assets (2) 8.3%(3) 8.3%(3) Return on Invested Capital (2) 11.0% 10.1%(3) 10.1%(3) Operating Cash Flow $247 million $95 million $201 million Free Cash Flow $159 million $92 million $149 million Revolving Credit Line $11 million $301 million $301 million Balance Dividends Per Share $0.17 $0.05 $0.15 Long-Term Years Ending Estimated Target Target Goals March 31, Fiscal 2006(4) Fiscal 2006 Fiscal 2007 Fiscal 2010 -------------- ----------- ----------- ----------- U.S. Revenue Growth 14% 13% to 15% 7% to 10% 8% to 11% (CAGR) U.S. Revenue $1,140 to $1,230 to $1,150 million $1,160 mil $1,260 mil - International Revenue Growth -15% -10% to -20% 0% to 5% 5% to 8% (CAGR) International $170 to $180 to Revenue $180 million $190 mil $190 mil - U.S. Operating Margin 11.7% 14% to 15% 16% to 18% Adjusted U.S. Operating Margin 12.4%(3) 11.5% to 12.5% International Operating Margin -2.2% 2% to 4% 12% to 15% Adjusted International Operating Margin 1.6%(3) 1% to 2% Return on Assets (2) 8.4% 11% to 13% 14% to 17% Adjusted Return on Assets (2) 9.4%(3) 9% to 10% Return on Invested Capital (2) 11.3%(3) 11% to 12% 13% to 15% 16% to 19% Operating Cash Flow $250 to $280 to $320 to $270 million $270 mil $300 mil $360 mil Free Cash Flow $160 to $175 to $185 to $190 million $180 mil $195 mil $225 mil Revolving Credit $200 to less than less than Line Balance $290 million $375 mil $500 mil $500 mil Dividends Per Share $0.20 $0.20 $0.20 $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. 4 Based upon an estimated EPS for Q4 FY2006 of $0.25. 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. Excluding acquired NOLs, the Company expects to utilize all of its federal tax loss carry forwards during fiscal 2006. 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 $5 to $10 million for fiscal 2006 and $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 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. ACXIOM CORPORATION Reconciliation of Non-GAAP Measurements ---------------------------------------------------------------------- (Dollars in thousands) Actual Actual Actual Estimated Years Ending March 31, Fiscal Q3 Fiscal YTD Fiscal Fiscal 2005 2006 2006 2006 --------------------------------------- U.S. Operating Margin ------------------------------ U.S. Revenue 1,010,513 300,086 851,846 1,150,000 U.S. Operating Income 113,992 48,965 91,904 134,000 U.S. Operating Income Margin 11.3% 16.3% 10.8% 11.7% Gains, losses and nonrecurring items, net 0 0 6,147 6,147 ValueAct Defense 0 0 2,216 2,216 Lawsuit Expenses 0 0 761 761 -------- -------- -------- -------- Adjusted U.S. Operating Income (6) 113,992 48,965 101,028 143,124 Adjusted U.S. Operating Income Margin (6) 11.3% 16.3% 11.9% 12.4% ======== ======== ======== ======== International Operating Margin ------------------------------ International Revenue 212,529 47,345 136,379 180,000 International Operating Income 8,200 3,741 (5,410) (3,800) International Operating Income Margin 3.9% 7.9% -4.0% -2.1% Gains, losses and nonrecurring items, net 0 0 6,652 6,652 -------- -------- -------- -------- Adjusted International Operating Income (6) 8,200 3,741 1,242 2,852 Adjusted International Operating Income Margin (6) 3.9% 7.9% 0.9% 1.6% ======== ======== ======== ======== ---------------------------------------------------------------------- Free Cash Flow ------------------------------ Net cash provided by operating activities 247,014 95,414 201,675 270,000 Proceeds received from disposition of assets 0 1,510 5,123 5,123 Capitalized software (20,294) (5,204) (16,686) (22,000) Proceeds received from sale of software 0 20,000 20,000 20,000 Capital expenditures (14,330) (401) (6,355) (12,000) Deferral of costs (53,428) (19,603) (54,498) (71,000) -------- -------- -------- -------- Free cash flow 158,962 91,716 149,259 190,123 ======== ======== ======== ======== Target 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) Proceeds received from sale of software 0 0 Capital expenditures (15,000) (15,000) Deferral of costs (55,000) (55,000) Free cash flow 160,000 to 180,000 ======================= Target Fiscal 2007 --------------------------------------- Free Cash Flow ------------------------------ Net cash provided by operating activities 280,000 300,000 Proceeds received from disposition of assets 0 0 Capitalized software (23,000) (23,000) Proceeds received from sale of software 10,000 10,000 Capital expenditures (16,000) (16,000) Deferral of costs (76,000) (76,000) Free cash flow 175,000 to 195,000 ======================= Long-Term Goals Fiscal 2010 --------------------------------------- Free Cash Flow ------------------------------ Net cash provided by operating activities 320,000 360,000 Proceeds received from disposition of assets 0 0 Capitalized software (25,000) (25,000) Proceeds received from sale of software 0 0 Capital expenditures (20,000) (20,000) Deferral of costs (90,000) (90,000) Free cash flow 185,000 to 225,000 ======================= 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. ---------------------------------------------------------------------- Actual Fiscal 2005 -------------------------------- Return on Assets (ROA) and Adjusted Return on Invested Capital (ROIC)(5) ROA ROA ROIC ------------------------------------- ---------- ---------- ---------- Numerator: Income from operations 122,192 122,192 122,192 Unusual Charges, Net (6) 0 0 0 Add implied interest on operating leases (1) 13,903 ------------------------------------------------ ---------- ---------- 122,192 122,192 136,095 ---------- ---------- ---------- Denominator: Average total assets (2) 1,321,122 1,321,122 1,321,122 Less average cash (3) (11,858) Less average non-interest bearing current liabilities (4) (246,280) Plus average present value of operating leases (1) 168,734 ----------------------------------------------------------- ---------- 1,321,122 1,321,122 1,231,717 ---------- ---------- ---------- Return on invested capital 9.2% 9.2% 11.0% ========== ========== ========== Actual Q3 Fiscal 2006 -------------------------------- Return on Assets (ROA) and Adjusted Return on Invested Capital (ROIC)(5) ROA ROA ROIC ------------------------------------- ---------- ---------- ---------- Numerator: Income from operations 109,451 109,451 109,451 Unusual Charges, Net (6) 15,776 15,776 Add implied interest on operating leases (1) 12,241 ------------------------------------- ---------- ---------- ---------- 109,451 125,227 137,467 ---------- ---------- ---------- Denominator: Average total assets (2) 1,514,779 1,514,779 1,514,779 Less average cash (3) (7,736) Less average non-interest bearing current liabilities (4) (286,759) Plus average present value of operating leases (1) 144,860 ------------------------------------- ---------- ---------- ---------- 1,514,779 1,514,779 1,365,143 ---------- ---------- ---------- Return on invested capital 7.2% 8.3% 10.1% ========== ========== ========== Actual YTD Fiscal 2006 -------------------------------- Return on Assets (ROA) and Adjusted Return on Invested Capital (ROIC)(5) ROA ROA ROIC ------------------------------------- ---------- ---------- ---------- Numerator: Income from operations 109,451 109,451 109,451 Unusual Charges, Net (6) 15,776 15,776 Add implied interest on operating leases (1) 12,241 ------------------------------------- ---------- ---------- ---------- 109,451 125,227 137,467 ---------- ---------- ---------- Denominator: Average total assets (2) 1,514,779 1,514,779 1,514,779 Less average cash (3) (7,736) Less average non-interest bearing current liabilities (4) (286,759) Plus average present value of operating leases (1) 144,860 ------------------------------------- ---------- ---------- ---------- 1,514,779 1,514,779 1,365,143 ---------- ---------- ---------- Return on invested capital 7.2% 8.3% 10.1% ========== ========== ========== Estimated Fiscal 2006 Return on Assets (ROA) and --------------------------------- Return on Invested Capital Adjusted (ROIC)(5) ROA ROA ROIC ------------------------------- ----------- ---------- ---------- Numerator: Income from operations 130,000 130,000 130,000 Unusual Charges, Net (6) 15,776 15,776 Add implied interest on operating leases (1) 12,000 ------------------------------- ----------- ---------- ---------- 130,000 145,776 157,776 ----------- ---------- ---------- Denominator: Average total assets (2) 1,550,000 1,550,000 1,550,000 Less average cash (3) (9,000) Less average non-interest bearing current liabilities (4) (285,000) Plus average present value of operating leases (1) 140,000 ------------------------------- ----------- ---------- ---------- 1,550,000 1,550,000 1,396,000 ----------- ---------- ---------- Return on invested capital 8.4% 9.4% 11.3% =========== ========== ========== Target Fiscal 2006 --------------------------------------------- Return on Assets (ROA) ROA ROIC and Return on Invested ---------------------- ---------------------- Capital (ROIC)(5) Low High Low High ------------------------ ---------------------- ---------------------- Numerator: Income from operations 141,000 160,000 141,000 160,000 Unusual Charges, Net (6) 0 0 0 0 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% ====================== ====================== 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) 0 0 0 0 Add implied interest on operating leases (1) 11,000 11,000 ------------------------ ---------------------- ---------------------- 175,500 196,900 186,500 207,900 ---------------------- ---------------------- Denominator: Average total assets (2) 1,566,000 1,574,000 1,566,000 1,574,000 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 ------------------------ ---------------------- ---------------------- 1,566,000 1,574,000 1,412,000 1,409,000 ---------------------- ---------------------- 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) 0 0 0 0 Add implied interest on operating leases (1) 9,000 9,000 ------------------------ ---------------------- ---------------------- 268,600 337,600 277,600 346,600 ---------------------- ---------------------- Denominator: Average total assets (2) 1,864,000 1,965,000 1,864,000 1,965,000 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 ------------------------ ---------------------- ---------------------- 1,864,000 1,965,000 1,707,000 1,784,000 ---------------------- ---------------------- 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