UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
  
     
 
FORM 8-K
  
     
 
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
  
     
 
Date of report (Date of earliest event reported):  February 4, 2015
  
     
 
ACXIOM CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
  
     
 
DELAWARE
(State or Other Jurisdiction of Incorporation)
 
  
0-13163
71-0581897
(Commission File Number)
(IRS Employer Identification No.)
   
P.O. Box 8190, 601 E. Third Street,
Little Rock, Arkansas
 
72203-8190
(Address of Principal Executive Offices)
(Zip Code)
 
501-342-1000
(Registrant’s Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 
 

 
Item 2.02                      Results of Operations and Financial Condition.

On February 4, 2015, Acxiom Corporation (the “Company”) issued a press release announcing the results of its financial performance for the third quarter of fiscal year 2015. The Company will hold a conference call at 3:30 p.m. CT 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 press release is furnished herewith as Exhibit 99.1 and incorporated by reference herein.

The Company’s press release and other communications from time to time include certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company’s financial statements.

The attached press release includes non-GAAP measures of (i) income from operations, earnings per share attributable to Acxiom shareholders, and segment income from operations, all excluding unusual items and (ii) free cash flow available to equity. Operating income excluding unusual items and earnings per share attributable to Acxiom shareholders excluding unusual items  represent income from the Company’s operations less  expenses related to discontinued operations, gains, losses and other items, the impact of business separation and transformation expenses recorded in selling, general and administrative expense, the impact of purchased intangible asset amortization recorded in cost of revenue and the impact of non-cash stock compensation recorded in both cost of revenue and selling, general and administrative expense.  Segment income from operations excluding unusual items represents segment income from operations excluding purchased intangible asset amortization and non-cash stock compensation that was charged to the segment for GAAP purposes.  The Company’s management believes that these non-GAAP measures are meaningful since they represent the recurring income from the Company’s continuing operations before one-time items, which are not a recurring part of the Company’s ordinary course operations, and before purchased intangible asset amortization and non-cash stock compensation, which are recurring non-cash expenses.  Management also believes these measures are useful in comparison to other companies who report similar measures.  The non-GAAP measures are reconciled to the corresponding GAAP measures of income from operations, earnings per share attributable to Acxiom shareholders, and segment income from operations in schedules to the press release.

Free cash flow available to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt. The Company’s management believes that this measure of free cash flow available to equity is meaningful since it represents the amount of money available for the Company’s discretionary spending after funding all required obligations including scheduled debt payments, and it therefore provides a useful measure of liquidity for assessing the amount of cash available for general corporate and strategic purposes. Free cash flow available to equity is reconciled to operating cash flow, the nearest comparable GAAP measure, in a schedule to the press release.

The non-GAAP financial measures used by the Company may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as substitutes for measures of financial performance or liquidity prepared in accordance with GAAP.



 
 
 


Item 9.01                      Financial Statements and Exhibits
 
(d)           Exhibits

The following exhibits are furnished herewith:
 
Exhibit
Number
  
Description
 
99.1
  
 
Press Release of the Company dated February 4, 2015

 
 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:   February 4, 2015


ACXIOM CORPORATION


By: /s/ Jerry C. Jones                                                                
Name:      Jerry C. Jones
 
Title:
Chief Ethics and Legal Officer & Executive Vice President
 
 

 

 
 
 

EXHIBIT INDEX
 
Exhibit
Number
  
Description
 
99.1
  
 
Press Release of the Company dated February 4, 2015


 
 
 
 




 
 
 
 

 

For more information, contact:
Lauren Dillard
Acxiom Investor Relations
(650) 372-2242
investor.relations@acxiom.com
EACXM
 
 
ACXIOM ANNOUNCES THIRD QUARTER RESULTS
 
Expects AOS and LiveRamp to Generate Approximately $60M in Revenue for FY15
Reiterates Overall Full Year Guidance
 
LITTLE ROCK, Ark. – February 4, 2015 Acxiom® (Nasdaq: ACXM), an enterprise data, analytics and software-as-a-service Company, today announced financial results for its third quarter ended December 31, 2014.
 
Third Quarter Financial Highlights
 
Total revenue was down 3% compared to the third quarter of fiscal 2014 as a result of expected IT Infrastructure Management declines.
 
·  
Marketing and Data Services revenue was $208 million, up 1% compared to the third quarter of fiscal 2014.
·  
Combined AOS and LiveRamp revenue was $21 million, up approximately 40% compared to the second quarter of fiscal 2015.
·  
Gross media spend enabled by the AOS platform was $73 million, up 265% compared to the prior year period and up 97% compared to the second quarter of fiscal 2015.
·  
IT Infrastructure Management revenue was down approximately 16% compared to the same period a year ago.
 
GAAP operating income and diluted earnings per share were down due to expenses associated with business separation and transformation activities, non-cash compensation and acquired intangible asset amortization, as well as declines in IT Infrastructure Management.
 
·  
Net earnings per diluted share from continuing operations were $0.06 compared to earnings per share of $0.19 a year ago. Earnings per share in the prior year period were positively impacted by a tax adjustment resulting in a $0.04 improvement. Unusual items, non-cash compensation and intangible asset amortization impacted GAAP earnings per share by $0.17 in the quarter. Unusual items included expenses associated with the Company’s restructuring activities and separation and transformation initiatives.
·  
Operating cash flow from continuing operations was $111 million for the trailing twelve months, down 43% compared to the same period a year ago. Free cash flow to equity was $1 million for the trailing twelve-month period compared to $103 million for the comparable period. The decline was primarily due to changes in working capital, and to a lesser extent, cash restructuring and business transformation expenditures.
 
Non-GAAP operating income and diluted earnings per share were down as a result of the declines in the IT Infrastructure Management business.
 
·  
Non-GAAP diluted earnings per share were $0.23 compared to $0.27 a year ago. Earnings per share in the prior year period were positively impacted by a tax adjustment resulting in a $0.04 improvement.
 
1
 
·  
Non-GAAP operating income was $30 million, down from $32 million for the same period last year.
·  
Non-GAAP Marketing and Data Services operating margin was roughly 12%, flat compared to the third quarter of fiscal 2014.
 
Our non-GAAP results exclude unusual items, non-cash compensation and acquired intangible asset amortization. A reconciliation between GAAP and non-GAAP results is attached to this release.
 
“While we continue to strengthen our Marketing and Data Services business, we are experiencing great momentum with AOS and LiveRamp,” said Acxiom CEO Scott Howe. “We added 25 new AOS and LiveRamp customers during the quarter, more than doubled our subscription revenue year-over-year and expect to exit FY15 with a revenue run-rate of roughly $80 million. Data-driven marketing is still in the early innings, and we are pleased to be at the forefront of powering this trend.”
 
Third Quarter Business Highlights
 
·  
Acxiom signed several Marketing and Data Services agreements during the quarter including new database contracts with Payless ShoeSource and Guardian Media Group, as well as renewals with a major telecommunications company and a leading insurance firm.
 
·  
The Company signed 25 new AOS and LiveRamp agreements during the quarter. The AOS and LiveRamp client roster now totals 195 and includes 22 Fortune 100 companies.
 
·  
LiveRamp expanded its strategic partnership with Datalogix, which now runs through the end of 2017. Datalogix will continue to leverage LiveRamp as an important partner for data onboarding services used to connect its syndicated and custom segments and its clients’ first-party data assets to digital media.
 
·  
Acxiom data is now being distributed to more than 20 partners, including most of the major demand side platforms and leading enterprise software companies. In the quarter, Acxiom joined the Salesforce Analytics Cloud Ecosystem to provide consumer recognition, data assets and value-added analytic insights to Salesforce users.
 
·  
Acxiom extended the duration of its existing share repurchase program for an additional year, through November 12, 2015. The Company did not repurchase any shares in the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 12.9 million shares, or approximately 16% of the outstanding common stock, for $202 million.
 
Financial Outlook
 
Our guidance includes the impact of the LiveRamp acquisition but excludes the impact of unusual items, non-cash compensation and acquired intangible asset amortization. Acxiom’s estimates for fiscal 2015 are as follows:
 
·  
We continue to expect revenue from continuing operations for the fiscal year to be down roughly 4% compared to fiscal year 2014. The decline in revenue is primarily due to the impact of lost IT Infrastructure Management customers and the exit of our analog paper survey business in Europe.
 
·  
We continue to expect earnings per diluted share to be in the range of $0.73 to $0.78.
 
Conference Call
 
Acxiom will hold a conference call at 3:30 p.m. CT today to further discuss this information. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.
 
 
2
 
About Acxiom
 
Acxiom is an enterprise data, analytics and software-as-a-service company that uniquely fuses trust, experience and scale to fuel data-driven results. For over 40 years, Acxiom has been an innovator in harnessing the most important sources and uses of data to strengthen connections between people, businesses and their partners. Utilizing a channel and media neutral approach, we leverage cutting-edge, data-oriented products and services to maximize customer value. Every week, Acxiom powers more than a trillion transactions that enable better living for people and better results for our clients. For more information about Acxiom, visit Acxiom.com.
 
Forward-Looking Statements
 
This release and today’s conference call may contain forward-looking statements including, without limitation, statements regarding expected levels of revenue and earnings per share. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that the expected revenue from the LiveRamp transaction may not be realized within the expected timeframe; the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce or cancel the amount of business they do 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 data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our 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 the historical seasonality of our business may change; the possibility that we will not be able to achieve anticipated cost reductions and avoid unanticipated costs; 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 unusual charges may be incurred; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; the possibility that new laws may be enacted which limit our ability to provide services to our clients and/or which limit the use of data; and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A, RISK FACTORS” in our Annual Report on Form 10-K for the year ended March 31, 2014, which was filed with the Securities and Exchange Commission on May 28, 2014.
 
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.
 
We undertake no obligation to update the information contained in this press release or any other forward-looking statement.
 
Acxiom is a registered trademark of Acxiom Corporation.
 
 
 
3
 
To automatically receive Acxiom Corporation financial news by email, please visit www.acxiom.com and subscribe to email alerts.

 
4 
 

                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS
  
(Unaudited)
  
(Dollars in thousands, except earnings per share)
  
                         
                         
   
For the Three Months Ended
  
   
December 31,
  
                 $       %  
   
2014
    
2013
    
Variance
    
Variance
  
                           
Revenue:
                          
    Marketing and data services
     208,246       206,662       1,584       0.8 %
    IT Infrastructure management services
     52,194       62,099       (9,905 )     (16.0 %)
     Total revenue
     260,440       268,761       (8,321 )     (3.1 %)
                                 
Operating costs and expenses:
                                
    Cost of revenue
     203,728       201,430       2,298       1.1 %
    Selling, general and administrative
     47,345       43,383       3,962       9.1 %
    Gains, losses and other items, net
     4,175       4,657       (482 )     (10.4 %)
                                 
        Total operating costs and expenses
     255,248       249,470       5,778       2.3 %
                                 
    Income from operations
     5,192       19,291       (14,099 )     (73.1 %)
     % Margin
     2.0 %     7.2 %                
   Other income (expense):
                                
     Interest expense
     (2,610 )     (3,114 )     504       16.2 %
     Other, net
     (34 )     1,484       (1,518 )     (102.3 %)
                                 
   Total other income (expense)
     (2,644 )     (1,630 )     (1,014 )     (62.2 %)
                                 
   Earnings from continuing operations before income taxes
     2,548       17,661       (15,113 )     (85.6 %)
                                 
   Income taxes
     (1,926 )     3,083       (5,009 )     (162.5 %)
                                 
   Net earnings from continuing operations
     4,474       14,578       (10,104 )     (69.3 %)
                                 
   Earnings (loss) from discontinued operations, net of tax
     (318 )     489       (807 )     (165.0 %)
                                 
    Net earnings
     4,156       15,067       (10,911 )     (72.4 %)
                                 
  Less: Net earnings attributable to noncontrolling interest
     -       -       -       -  
                                 
  Net earnings attributable to Acxiom
     4,156       15,067       (10,911 )     (72.4 %)
                                 
Basic earnings per share:
                                
   Net earnings from continuing operations
     0.06       0.19       (0.13 )     (69.4 %)
   Earnings from discontinued operations
     -       0.01       (0.01 )     0.0 %
      Net earnings
     0.05       0.20       (0.15 )     (75.0 %)
                                 
      Net earnings attributable to Acxiom stockholders
     0.05       0.20       (0.15 )     (73.0 %)
                                 
                                 
Diluted earnings per share:
                                
   Net earnings from continuing operations
     0.06       0.19       (0.13 )     (69.9 %)
   Earnings from discontinued operations
     -       0.01       (0.01 )     0.0 %
      Net earnings
     0.05       0.19       (0.14 )     (73.7 %)
                                 
      Net earnings attributable to Acxiom stockholders
     0.05       0.19       (0.14 )     (72.1 %)
                                 

 

 
5 
 

                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS
  
(Unaudited)
  
(Dollars in thousands, except earnings per share)
  
                         
                         
   
For the Nine Months Ended
  
   
December 31,
  
                 $       %  
   
2014
    
2013
    
Variance
    
Variance
  
                           
Revenue:
                          
    Marketing and data services
     599,177       595,407       3,770       0.6 %
    IT Infrastructure management services
     163,515       198,309       (34,794 )     (17.5 %)
     Total revenue
     762,692       793,716       (31,024 )     (3.9 %)
                                 
Operating costs and expenses:
                                
    Cost of revenue
     601,349       596,642       4,707       0.8 %
    Selling, general and administrative
     144,766       123,857       20,909       16.9 %
    Gains, losses and other items, net
     12,556       11,241       1,315       11.7 %
                                 
        Total operating costs and expenses
     758,671       731,740       26,931       3.7 %
                                 
    Income (loss) from operations
     4,021       61,976       (57,955 )     (93.5 %)
     % Margin
     0.5 %     7.8 %                
   Other income (expense):
                                
     Interest expense
     (7,576 )     (9,113 )     1,537       16.9 %
     Other, net
     (562 )     1,238       (1,800 )     (145.4 %)
                                 
   Total other income (expense)
     (8,138 )     (7,875 )     (263 )     (3.3 %)
                                 
   Earnings (loss) from continuing operations before income taxes
     (4,117 )     54,101       (58,218 )     (107.6 %)
                                 
   Income taxes
     (1,023 )     17,582       (18,605 )     (105.8 %)
                                 
   Net earnings (loss) from continuing operations
     (3,094 )     36,519       (39,613 )     (108.5 %)
                                 
   Earnings (loss) from discontinued operations, net of tax
     (1,898 )     1,507       (3,405 )     (225.9 %)
                                 
    Net earnings (loss)
     (4,992 )     38,026       (43,018 )     (113.1 %)
                                 
  Less: Net loss attributable to noncontrolling interest
     -       (60 )     60       100.0 %
                                 
  Net earnings (loss) attributable to Acxiom
     (4,992 )     38,086       (43,078 )     (113.1 %)
                                 
Basic earnings (loss) per share:
                                
   Net earnings (loss) from continuing operations
     (0.04 )     0.49       (0.53 )     (108.2 %)
   Earnings (loss) from discontinued operations
     (0.02 )     0.02       (0.04 )     (200.0 %)
      Net earnings (loss)
     (0.06 )     0.51       (0.57 )     (111.8 %)
                                 
      Net earnings (loss) attributable to Acxiom stockholders
     (0.06 )     0.51       (0.57 )     (112.7 %)
                                 
                                 
Diluted earnings (loss) per share:
                                
   Net earnings (loss) from continuing operations
     (0.04 )     0.48       (0.52 )     (108.4 %)
   Earnings (loss) from discontinued operations
     (0.02 )     0.02       (0.04 )     (200.0 %)
      Net earnings (loss)
     (0.06 )     0.50       (0.56 )     (112.0 %)
                                 
      Net earnings (loss) attributable to Acxiom stockholders
     (0.06 )     0.50       (0.56 )     (113.0 %)
                                 


 
6 
 

                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF GAAP TO NON-GAAP EPS
  
(Unaudited)
  
(Dollars in thousands, except earnings per share)
  
                         
   
For the Three Months Ended
    
For the Nine Months Ended
  
   
December 31,
    
December 31,
  
   
2014
    
2013
    
2014
    
2013
  
                         
                         
   Earnings (loss) from continuing operations before income taxes
     2,548       17,661       (4,117 )     54,101  
                                 
   Income taxes
     (1,926 )     3,083       (1,023 )     17,582  
                                 
   Net earnings (loss) from continuing operations
     4,474       14,578       (3,094 )     36,519  
                                 
   Earnings (loss) from discontinued operations, net of tax
     (318 )     489       (1,898 )     1,507  
                                 
   Net earnings (loss)
     4,156       15,067       (4,992 )     38,026  
                                 
   Less: Net earnings (loss) attributable to noncontrolling interest
     -       -       -       (60 )
                                 
   Net earnings (loss) attributable to Acxiom
     4,156       15,067       (4,992 )     38,086  
                                 
Earnings (loss) per share attributable to Acxiom stockholders:
                                
                                 
    Basic
     0.05       0.20       (0.06 )     0.51  
                                 
    Diluted
     0.05       0.19       (0.06 )     0.50  
                                 
Unusual items:
                                
  Legal settlement accruals
     -       1,000       -       4,200  
  Purchased intangible asset amortization
     3,783       62       7,667       272  
  Live Ramp acquisition costs
     -       -       820       -  
  Non-cash stock compensation
     8,582       3,455       20,538       10,344  
  Restructuring charges and other adjustments
     4,175       3,657       11,737       7,041  
  Separation and transformation costs
     8,116       4,897       29,444       7,083  
  Gain on investment (other income)
     -       (2,567 )     -       (2,567 )
                                 
 Total unusual items, continuing operations
     24,656       10,504       70,206       26,373  
                                 
   Earnings from continuing operations before income taxes
                                
     and excluding unusual items
     27,204       28,165       66,089       80,474  
                                 
   Income taxes
     8,977       6,979       23,947       27,541  
                                 
   Non-GAAP earnings from continuing operations
     18,227       21,186       42,142       52,933  
                                 
   Earnings from discontinued operations, net of tax
     -       -       -       -  
                                 
   Non-GAAP net earnings
     18,227       21,186       42,142       52,933  
                                 
   Less: Net loss attributable to noncontrolling interest
     -       -       -       (60 )
                                 
   Non-GAAP Net earnings attributable to Acxiom
     18,227       21,186       42,142       52,993  
                                 
Non-GAAP earnings per share attributable to Acxiom stockholders:
                                
                                 
    Basic
     0.24       0.28       0.55       0.71  
                                 
    Diluted
     0.23       0.27       0.54       0.69  
                                 
Basic weighted average shares
     77,039       75,009       76,998       74,155  
                                 
Diluted weighted average shares
     78,302       77,839       78,316       76,456  
                                 
                                 



 
7 
 

                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS
  
(Unaudited)
  
(Dollars in thousands, except earnings per share)
  
                         
   
For the Three Months Ended
    
For the Nine Months Ended
  
   
December 31,
    
December 31,
  
   
2014
    
2013
    
2014
    
2013
  
                         
   Income from operations
     5,192       19,291       4,021       61,976  
                                 
   Unusual items
     24,656       13,071       70,206       28,940  
                                 
   Income from operations before unusual items
     29,848       32,362       74,227       90,916  
                                 
                                 


 
8 
 

             
ACXIOM CORPORATION AND SUBSIDIARIES
  
CALCULATION OF EARNINGS PER SHARE
  
(Unaudited)
  
(In thousands, except earnings per share)
  
             
             
   
For the Three Months Ended
  
             
   
December 31,
    
December 31,
  
   
2014
    
2013
  
             
Basic earnings per share from continuing operations:
            
    Numerator - net earnings
     4,474       14,578  
    Denominator - weighted-average shares outstanding
     77,039       75,009  
        Basic earnings per share
     0.06       0.19  
                 
Basic earnings per share - net earnings attributable to Acxiom stockholders:
                
    Numerator - net earnings attributable to Acxiom
     4,156       15,067  
    Denominator - weighted-average shares outstanding
     77,039       75,009  
        Basic earnings per share - net earnings attributable to Acxiom stockholders
     0.05       0.20  
                 
Diluted earnings per share from continuing operations:
                
    Numerator - net earnings
     4,474       14,578  
                 
    Denominator - weighted-average shares outstanding
     77,039       75,009  
    Dilutive effect of common stock options, warrants and restricted stock
     1,263       2,830  
      78,302       77,839  
                 
        Diluted earnings per share from continuing operations
     0.06       0.19  
                 
Diluted earnings per share - net earnings attributable to Acxiom stockholders:
                
    Numerator - net earnings attributable to Acxiom
     4,156       15,067  
                 
    Denominator - weighted-average shares outstanding
     77,039       75,009  
    Dilutive effect of common stock options, warrants, and restricted stock
     1,263       2,830  
      78,302       77,839  
                 
        Diluted earnings per share - net earnings attributable to Acxiom stockholders
     0.05       0.19  
                 
                 


 
9 
 

             
ACXIOM CORPORATION AND SUBSIDIARIES
  
CALCULATION OF EARNINGS PER SHARE
  
(Unaudited)
  
(In thousands, except earnings per share)
  
             
             
   
For the Nine Months Ended
  
             
   
December 31,
    
December 31,
  
   
2014
    
2013
  
             
Basic earnings (loss) per share from continuing operations:
            
    Numerator - net earnings (loss)
     (3,094 )     36,519  
    Denominator - weighted-average shares outstanding
     76,998       74,155  
        Basic earnings (loss) per share
     (0.04 )     0.49  
                 
Basic earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders:
                
    Numerator - net earnings (loss) attributable to Acxiom
     (4,992 )     38,086  
    Denominator - weighted-average shares outstanding
     76,998       74,155  
        Basic earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders
     (0.06 )     0.51  
                 
Diluted earnings (loss) per share from continuing operations:
                
    Numerator - net earnings (loss)
     (3,094 )     36,519  
                 
    Denominator - weighted-average shares outstanding
     76,998       74,155  
    Dilutive effect of common stock options, warrants and restricted stock
     -       2,301  
      76,998       76,456  
                 
        Diluted earnings (loss) per share from continuing operations
     (0.04 )     0.48  
                 
Diluted earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders:
                
    Numerator - net earnings (loss) attributable to Acxiom
     (4,992 )     38,086  
                 
    Denominator - weighted-average shares outstanding
     76,998       74,155  
    Dilutive effect of common stock options, warrants, and restricted stock
     -       2,301  
      76,998       76,456  
                 
        Diluted earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders
     (0.06 )     0.50  
                 
                 


 
10 
 

             
ACXIOM CORPORATION AND SUBSIDIARIES
  
RESULTS BY SEGMENT
  
(Unaudited)
  
(Dollars in thousands)
  
             
             
   
For the Three Months Ended
  
             
   
December 31,
    
December 31,
  
Revenue:
  
2014
    
2013
  
             
Marketing and data services
     208,246       206,662  
IT Infrastructure management services
     52,194       62,099  
                 
Total revenue
     260,440       268,761  
                 
                 
Income from continuing operations:
                
                 
Marketing and data services
     13,703       22,529  
IT Infrastructure management services
     3,780       6,316  
Corporate
     (12,291 )     (9,554 )
                 
Total income from continuing operations
     5,192       19,291  
                 
Margin:
                
                 
Marketing and data services
     6.6 %     10.9 %
IT Infrastructure management services
     7.2 %     10.2 %
                 
Total margin
     2.0 %     7.2 %
                 


 
11 
 

             
ACXIOM CORPORATION AND SUBSIDIARIES
  
RESULTS BY SEGMENT
  
(Unaudited)
  
(Dollars in thousands)
  
             
             
   
For the Nine Months Ended
  
             
   
December 31,
    
December 31,
  
Revenue:
  
2014
    
2013
  
             
Marketing and data services
     599,177       595,407  
IT Infrastructure management services
     163,515       198,309  
                 
Total revenue
     762,692       793,716  
                 
                 
Income from continuing operations:
                
                 
Marketing and data services
     33,372       51,256  
IT Infrastructure management services
     12,649       29,044  
Corporate
     (42,000 )     (18,324 )
                 
Total income from continuing operations
     4,021       61,976  
                 
Margin:
                
                 
Marketing and data services
     5.6 %     8.6 %
IT Infrastructure management services
     7.7 %     14.6 %
                 
Total margin
     0.5 %     7.8 %
                 


 
12 
 

                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT RESULTS
  
(Unaudited)
  
(Dollars in thousands, except earnings per share)
  
                         
   
For the Three Months Ended
    
For the Nine Months Ended
  
   
December 31,
    
December 31,
  
   
2014
    
2013
    
2014
    
2013
  
                         
    Marketing and data services income from operations
     13,703       22,529       33,372       51,256  
                                 
    Unusual items:
                                
                                 
    Purchased intangible asset amortization
     3,783       62       7,667       272  
    Non-cash stock compensation
     7,971       2,685       18,334       7,927  
                                 
   Marketing and data services income
                                
   from operations before unusual items
     25,457       25,276       59,373       59,455  
                                 
   Margin
     12.2 %     12.2 %     9.9 %     10.0 %
                                 
   IT infrastructure management services income
                                
    from operations
     3,780       6,316       12,649       29,044  
                                 
   Unusual items:
                                
                                 
   Non-cash stock compensation
     611       770       2,204       2,417  
                                 
   IT infrastructure management services income
                                
   from operations before unusual items
     4,391       7,086       14,853       31,461  
                                 
   Margin
     8.4 %     11.4 %     9.1 %     15.9 %
                                 


 
13 
 

                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
(Unaudited)
  
(Dollars in thousands)
  
                         
   
December 31,
    
March 31,
      $       %  
   
2014
    
2014
    
Variance
    
Variance
  
Assets
                          
Current assets:
                          
  Cash and cash equivalents
     126,891       418,586       (291,695 )     (69.7 %)
  Trade accounts receivable, net
     155,867       160,718       (4,851 )     (3.0 %)
  Deferred income taxes
     15,809       12,870       2,939       22.8 %
  Refundable income taxes
     11,823       11,535       288       2.5 %
  Restricted cash held in escrow
     31,000       -       31,000       100.0 %
  Other current assets
     50,163       54,484       (4,321 )     (7.9 %)
  Assets of discontinued operations
     478       7,332       (6,854 )     (93.5 %)
                                 
     Total current assets
     392,031       665,525       (273,494 )     (41.1 %)
                                 
Property and equipment
     733,387       852,236       (118,849 )     (13.9 %)
  Less - accumulated depreciation and amortization
     516,899       635,330       (118,431 )     (18.6 %)
                                 
Property and equipment, net
     216,488       216,906       (418 )     (0.2 %)
                                 
Software, net of accumulated amortization
     77,033       39,425       37,608       95.4 %
Goodwill
     572,589       358,384       214,205       59.8 %
Purchased software licenses, net of accumulated amortization
     14,555       18,584       (4,029 )     (21.7 %)
Other assets, net
     41,257       24,477       16,780       68.6 %
                                 
      1,313,953       1,323,301       (9,348 )     (0.7 %)
                                 
Liabilities and Stockholders' Equity
                                
Current liabilities:
                                
  Current installments of long-term debt
     33,269       28,567       4,702       16.5 %
  Trade accounts payable
     33,527       36,179       (2,652 )     (7.3 %)
  Accrued payroll and related expenses
     35,718       62,182       (26,464 )     (42.6 %)
  Other accrued expenses
     69,338       70,412       (1,074 )     (1.5 %)
  Acquisition escrow payable
     31,000       -       31,000       100.0 %
  Deferred revenue
     37,944       47,638       (9,694 )     (20.3 %)
  Income taxes
     -       241       (241 )     (100.0 %)
  Liabilities of discontinued operations
     1,548       4,250       (2,702 )     (63.6 %)
                                 
   Total current liabilities
     242,344       249,469       (7,125 )     (2.9 %)
                                 
Long-term debt
     262,761       289,043       (26,282 )     (9.1 %)
                                 
Deferred income taxes
     103,498       90,226       13,272       14.7 %
                                 
Other liabilities
     14,942       11,706       3,236       27.6 %
                                 
  Stockholders' equity:
                                
  Common stock
     12,723       12,584       139       1.1 %
  Additional paid-in capital
     1,015,697       981,985       33,712       3.4 %
  Retained earnings
     597,837       602,829       (4,992 )     (0.8 %)
  Accumulated other comprehensive income
     9,364       13,662       (4,298 )     (31.5 %)
  Treasury stock, at cost
     (945,213 )     (928,203 )     (17,010 )     (1.8 %)
Total stockholders' equity
     690,408       682,857       7,551       1.1 %
                                 
      1,313,953       1,323,301       (9,348 )     (0.7 %)
                                 


 
14 
 

             
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(Unaudited)
  
(Dollars in thousands)
  
             
   
For the Three Months Ended
  
             
   
December 31,
  
             
   
2014
    
2013
  
             
Cash flows from operating activities:
            
  Net earnings
     4,156       15,067  
  Loss (earnings) from discontinued operations, net of tax
     318       (489 )
  Non-cash operating activities:
                
    Depreciation and amortization
     29,285       25,457  
    Gain on disposal or impairment of assets
     -       (2,567 )
    Loss on early extinguishment of debt
     -       664  
    Deferred income taxes
     4,002       (3,138 )
    Non-cash stock compensation expense
     8,582       3,455  
    Changes in operating assets and liabilities:
                
      Accounts receivable
     (1,080 )     8,806  
      Other assets
     3       6,925  
      Deferred costs
     (105 )     (89 )
      Accounts payable and other liabilities
     (4,873 )     7,118  
      Deferred revenue
     2,376       2,582  
      Net cash provided by operating activities
     42,664       63,791  
Cash flows from investing activities:
                
    Capitalized software
     (4,408 )     (5,495 )
    Capital expenditures
     (13,132 )     (6,681 )
    Data acquisition costs
     (394 )     (1,786 )
    Payments from investments
     -       3,633  
      Net cash provided (used) by investing activities
     (17,934 )     (10,329 )
Cash flows from financing activities:
                
    Proceeds from debt
     -       300,000  
    Payments of debt
     (8,957 )     (220,934 )
    Fees for debt refinancing
     -       (4,370 )
    Sale of common stock, net of stock acquired for withholding taxes
     1,680       50,547  
    Acquisition of treasury stock
     -       (13,826 )
    Acquisition of noncontrolling interest
     -       (600 )
      Net cash provided (used) by financing activities
     (7,277 )     110,817  
Cash flows from discontinued operations:
                
    From operating activities
     140       (19 )
    From investing activities
     -       (19 )
      Net cash provided by discontinued operations
     140       (38 )
      Effect of exchange rate changes on cash
     (512 )     51  
                 
  Net change in cash and cash equivalents
     17,081       164,292  
  Cash and cash equivalents at beginning of period
     109,810       216,616  
  Cash and cash equivalents at end of period
     126,891       380,908  
                 
   Supplemental cash flow information:
                
    Cash paid during the period for:
                
      Interest
     809       3,281  
      Income taxes
     182       4,766  
      Payments on capital leases and installment payment arrangements
     930       1,675  
      Other debt payments, excluding line of credit
     8,027       4,259  
      Prepayment of debt
     -       215,000  
                 


 
15 
 

             
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(Unaudited)
  
(Dollars in thousands)
  
             
   
For the Nine Months Ended
  
             
   
December 31,
  
             
   
2014
    
2013
  
             
Cash flows from operating activities:
            
  Net earnings (loss)
     (4,992 )     38,026  
  Loss (earnings) from discontinued operations, net of tax
     1,898       (1,507 )
  Non-cash operating activities:
                
    Depreciation and amortization
     84,971       75,698  
    Gain on disposal or impairment of assets
     -       (2,567 )
    Loss on early extinguishment of debt
     -       664  
    Deferred income taxes
     (2,020 )     (3,666 )
    Non-cash stock compensation expense
     20,538       10,344  
    Changes in operating assets and liabilities:
                
      Accounts receivable
     7,528       3,964  
      Other assets
     3,483       6,932  
      Deferred costs
     (1,488 )     (89 )
      Accounts payable and other liabilities
     (29,415 )     (11,756 )
      Deferred revenue
     (10,180 )     6,511  
      Net cash provided by operating activities
     70,323       122,554  
Cash flows from investing activities:
                
    Capitalized software
     (14,985 )     (19,109 )
    Capital expenditures
     (51,529 )     (24,723 )
    Data acquisition costs
     (1,497 )     (4,660 )
    Payments from investments
     -       3,633  
    Net cash paid in acquisitions
     (265,672 )     -  
      Net cash provided (used) by investing activities
     (333,683 )     (44,859 )
Cash flows from financing activities:
                
    Proceeds from debt
     -       300,000  
    Payments of debt
     (19,815 )     (230,167 )
    Fees for debt refinancing
     -       (4,370 )
    Sale of common stock, net of stock acquired for withholding taxes
     (807 )     69,106  
    Acquisition of treasury stock
     (9,868 )     (52,663 )
    Acquisition of noncontrolling interest
     -       (600 )
      Net cash provided (used) by financing activities
     (30,490 )     81,306  
Cash flows from discontinued operations:
                
    From operating activities
     209       (1,412 )
    From investing activities
     2,927       (166 )
      Net cash provided (used) by discontinued operations
     3,136       (1,578 )
      Effect of exchange rate changes on cash
     (981 )     511  
                 
  Net change in cash and cash equivalents
     (291,695 )     157,934  
  Cash and cash equivalents at beginning of period
     418,586       222,974  
  Cash and cash equivalents at end of period
     126,891       380,908  
                 
   Supplemental cash flow information:
                
    Cash paid during the period for:
                
      Interest
     6,200       9,267  
      Income taxes
     538       15,774  
      Payments on capital leases and installment payment arrangements
     3,249       6,914  
      Other debt payments, excluding line of credit
     16,566       8,253  
      Prepayment of debt
     -       215,000  
                 
                 


 
16 
 

                             
ACXIOM CORPORATION AND SUBSIDIARIES
      
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
      
AND RECONCILIATION TO OPERATING CASH FLOW
      
(Unaudited)
      
(Dollars in thousands)
      
                             
                             
   
06/30/13
09/30/13
12/31/13
03/31/14
YTD FY2014
  
06/30/14
09/30/14
12/31/14
YTD FY2015
  
TTM 12/31/13
TTM 12/31/14
                             
Net cash provided by operating activities - continuing operations
         16,508
          42,255
          63,791
          40,687
           163,241
  
            1,867
          25,792
          42,664
            70,323
  
           196,417
           111,010
Net cash provided by operating activities - discontinued operations
              341
          (1,734)
               (19)
            3,147
               1,735
  
               (13)
                 82
               140
                 209
  
             (1,054)
               3,356
                             
Less:
                          
 
    Payments for investments
                  -
                    -
            3,633
               190
               3,823
  
                    -
                    -
                    -
                      -
  
               3,633
                  190
 
    Capitalized software
(5,954)
(7,660)
(5,495)
(5,408)
            (24,517)
  
          (4,969)
          (5,608)
          (4,408)
           (14,985)
  
           (25,798)
           (20,393)
 
    Capital expenditures
(8,912)
(9,130)
(6,681)
(14,409)
            (39,132)
  
        (19,001)
        (19,396)
        (13,132)
           (51,529)
  
           (40,986)
           (65,938)
 
    Data acquisition costs
         (1,961)
             (913)
          (1,786)
          (3,085)
              (7,745)
  
             (635)
             (468)
             (394)
             (1,497)
  
             (6,766)
             (4,582)
 
    Discontinued operations investing activities
                (8)
             (139)
               (19)
                    -
                 (166)
  
            2,927
                    -
                    -
              2,927
  
                (418)
               2,927
 
    Payments on capital leases and installment payment arrangements
         (2,900)
          (2,339)
          (1,675)
          (1,465)
              (8,379)
  
          (1,235)
          (1,084)
             (930)
             (3,249)
  
           (10,480)
             (4,714)
 
    Other required debt payments
         (1,990)
          (2,004)
          (4,259)
          (4,263)
            (12,516)
  
          (4,267)
          (4,272)
          (8,027)
           (16,566)
  
           (11,768)
           (20,829)
                             
Total
         (4,876)
          18,336
          47,490
          15,394
             76,344
  
        (25,326)
          (4,954)
          15,913
           (14,367)
  
           102,780
               1,027
                             
                             
 

 
17 
 

                             
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
                             
                         
Q3 FY15 to Q3 FY14
   
06/30/13
09/30/13
12/31/13
03/31/14
YTD FY2014
  
06/30/14
09/30/14
12/31/14
YTD FY2015
  
%
$
Revenue:
                          
 
Marketing and data services
187,793
200,952
206,662
209,746
805,153
  
186,683
204,248
208,246
599,177
  
0.8%
1,584
 
IT Infrastructure management services
69,385
66,825
62,099
58,816
257,125
  
55,532
55,789
52,194
163,515
  
-16.0%
(9,905)
 
  Total revenue
257,178
267,777
268,761
268,562
1,062,278
  
242,215
260,037
260,440
762,692
  
-3.1%
(8,321)
                             
Operating costs and expenses:
                          
 
Cost of revenue
196,105
199,107
201,430
198,920
795,562
  
192,303
205,318
203,728
601,349
  
1.1%
2,298
 
Selling, general and administrative
37,615
42,859
43,383
45,519
169,376
  
46,938
50,483
47,345
144,766
  
9.1%
3,962
 
Impairment of goodwill and other
                  -
                  -
                  -
24,953
24,953
  
                       -
                       -
                       -
0
  
                   -
                   -
 
Gains, losses and other items, net
                  -
           6,584
           4,657
         10,673
              21,914
  
               7,452
                  929
               4,175
             12,556
  
-10.4%
(482)
                             
 
     Total operating costs and expenses
233,720
248,550
249,470
280,065
1,011,805
  
246,693
256,730
255,248
758,671
  
2.3%
5,778
                             
 
Income (loss) from operations
23,458
19,227
19,291
(11,503)
50,473
  
(4,478)
3,307
5,192
4,021
  
-73.1%
(14,099)
 
  % Margin
9.1%
7.2%
7.2%
-4.3%
4.8%
  
-1.8%
1.3%
2.0%
0.5%
      
 
Other expense
                          
 
  Interest expense
(3,019)
(2,980)
(3,114)
(2,558)
(11,671)
  
(2,571)
(2,395)
(2,610)
(7,576)
  
16.2%
504
 
  Other, net
104
(350)
1,484
579
1,817
  
(413)
(115)
(34)
(562)
  
-102.3%
(1,518)
 
Total other expense
(2,915)
(3,330)
(1,630)
(1,979)
(9,854)
  
(2,984)
(2,510)
(2,644)
(8,138)
  
62.2%
(1,014)
                             
 
Earnings (loss) from continuing operations before income taxes
20,543
15,897
17,661
(13,482)
40,619
  
(7,462)
797
2,548
(4,117)
  
-85.6%
(15,113)
 
Income taxes
8,040
6,459
3,083
12,045
29,627
  
(1,390)
2,293
(1,926)
(1,023)
  
-162.5%
(5,009)
                             
 
Net earnings (loss) from continuing operations
12,503
9,438
14,578
(25,527)
10,992
  
(6,072)
(1,496)
4,474
(3,094)
  
-69.3%
(10,104)
                             
 
Earnings (loss) from discontinued operations, net of tax
592
426
489
(3,696)
(2,189)
  
(1,532)
(48)
(318)
(1,898)
  
-165.0%
(807)
                             
 
Net earnings (loss)
13,095
9,864
15,067
(29,223)
8,803
  
(7,604)
(1,544)
4,156
(4,992)
  
-72.4%
(10,911)
                             
 
Less: Net gain (loss) attributable
                          
 
         to noncontrolling interest
(85)
25
                  -
                  -
(60)
  
                       -
                       -
                       -
                       -
  
                   -
                   -
                             
 
Net earnings (loss) attributable to Acxiom
13,180
9,839
15,067
(29,223)
8,863
  
(7,604)
(1,544)
4,156
(4,992)
  
-72.4%
(10,911)
                             
 
Diluted earnings (loss) per share - net earnings (loss) attributable
                        
 
to Acxiom stockholders
0.17
0.13
0.19
(0.38)
0.12
  
(0.10)
(0.02)
0.05
(0.06)
  
-73.7%
(0.14)
                             
                             


 
18 
 

ACXIOM CORPORATION AND SUBSIDIARIES
                    
RESULTS BY SEGMENT
                    
(Unaudited)
                    
(Dollars in thousands)
                    
                                                         
Q3 FY15 to Q3 FY14
        
   
06/30/13
    
09/30/13
    
12/31/13
    
03/31/14
    
YTD FY2014
    
06/30/14
    
09/30/14
    
12/31/14
    
YTD FY2015
    
%
      $          
                                                                           
Revenue:
                                                                          
                                                                           
Marketing and data services
     187,793       200,952       206,662       209,746       805,153       186,683       204,248       208,246       599,177       1 %     1,584          
IT Infrastructure management services
     69,385       66,825       62,099       58,816       257,125       55,532       55,789       52,194       163,515       -16 %     (9,905 )        
                                                                                                 
Total revenue
     257,178       267,777       268,761       268,562       1,062,278       242,215       260,037       260,440       762,692       -3 %     (8,321 )        
                                                                                                 
Income from continuing operations:
                                                                                                
                                                                                                 
Marketing and data services
     12,697       16,030       22,529       27,244       78,500       10,272       9,397       13,703       33,372       -39 %     (8,826 )        
IT Infrastructure management services
     10,761       11,967       6,316       3,803       32,847       4,739       4,130       3,780       12,649       -40 %     (2,536 )        
Corporate
     -       (8,770 )     (9,554 )     (42,550 )     (60,874 )     (19,489 )     (10,220 )     (12,291 )     (42,000 )     -29 %     (2,737 )        
                                                                                                 
Total income (loss) from continuing operations
     23,458       19,227       19,291       (11,503 )     50,473       (4,478 )     3,307       5,192       4,021       -73 %     (14,099 )        
                                                                                                 
Margin:
                                                                                                
                                                                                                 
Marketing and data services
     6.8 %     8.0 %     10.9 %     13.0 %     9.7 %     5.5 %     4.6 %     6.6 %     5.6 %                        
IT Infrastructure management services
     15.5 %     17.9 %     10.2 %     6.5 %     12.8 %     8.5 %     7.4 %     7.2 %     7.7 %                        
                                                                                                 
Total
     9.1 %     7.2 %     7.2 %     -4.3 %     4.8 %     -1.8 %     1.3 %     2.0 %     0.5 %                        
                                                                                                 

 

19 
 
 
 


 
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