LITTLE ROCK, Ark., Oct 20, 2004 -- Acxiom(R) Corporation (NASDAQ:ACXM) today announced financial results for the second quarter of fiscal 2005 ended September 30, 2004. Revenue of $299.1 million, income from operations of $34.4 million, pre-tax earnings of $29.8 million and diluted earnings per share of $.20 all represent significant improvements compared to the same quarter a year ago. Acxiom will hold a conference call at 4:30 p.m. CDT today to discuss this information further. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com.
"We are pleased with our second-quarter performance, which keeps us solidly on track to meet the financial goals we have communicated in our Financial Road Map," Company Leader Charles D. Morgan said. "We are particularly encouraged with the growth in our U.S. operations, with revenue up 11 percent and operating income up 58 percent compared to the same quarter last year."
Highlights of Acxiom`s second-quarter performance include:
-- Revenue of $299.1 million, up 24 percent from $241.1 million
in the second quarter a year ago. Acquisitions contributed 12
percentage points of this 24 percentage-point growth in
revenue.
-- Income from operations of $34.4 million, an increase of 51
percent compared to $22.7 million in the second quarter last
year.
-- Pre-tax earnings of $29.8 million, an increase of 66 percent
compared to $17.9 million in the second quarter a year ago.
-- Diluted earnings per share of $.20, up 54 percent from $.13
the year before.
-- Operating cash flow of $61.7 million and free cash flow of
$41.1 million. The free cash flow of $41.1 million is a
non-GAAP financial measure and a reconciliation to the
comparable GAAP measure, operating cash flow, is attached to
this press release.
-- New contracts that are expected to deliver $43 million in
annual revenue and renewals that total $71 million in annual
revenue.
-- Committed new deals in the pipeline that are expected to
generate $71 million in annual revenue.
Morgan noted that Acxiom recently completed contracts with Information Resources, Inc. (IRI); TransUnion; Accenture; MGM MIRAGE; GE Consumer Finance; E-LOAN(R); Southeast Toyota Distributors, LLC; Ziff Davis Media, Inc.; CopperKey Inc.; and Wolters Kluwer Health.
"We were very pleased with the new business we won in the quarter," Morgan said. "Many of these deals are significant for Acxiom and our future. The relationship with IRI takes our integrated outsourcing value proposition to a new level, as we`ll use our Customer Information Infrastructure (CII) grid-based solutions architecture to transform the way IRI builds and delivers its data products. And we`re also beginning to deploy CII in a limited capacity at TransUnion, our long-time business partner with whom we have recently completed a five-year extension of our data center outsourcing agreement."
Recognition
Acxiom recently:
-- Was included in CIO magazine`s "CIO 100," which recognizes
organizations around the world that exemplify the highest
level of operational and strategic excellence in information
technology.
-- Was named one of the "Best Places to Work in Information
Technology" by Computerworld magazine.
-- Won the "CRM Data Quality Market Leader" award from CRM
magazine.
-- Was named "2004 Best Practices Award" winner for "Radical Data
Warehousing/Business Intelligence" by The Data Warehousing
Institute.
-- Received Sonoco`s "Supplier of the Year" Award.
-- Was honored as a member of the InformationWeek 500, which
recognizes the most innovative corporate users of information
technology.
Organizational Changes
Effective January 1, 2005, a new "Office of the Company Leader" will be established and two new positions are being created within that office, namely, Chief Finance & Administration Leader and Chief Operations Leader. Rodger S. Kline, currently serving as Company Operations Leader, will be appointed as Chief Finance & Administration Leader and will serve as the Company`s principal financial and accounting officer. L. Lee Hodges, currently the Company`s Outsourcing & IT Services Leader, will be appointed as Chief Operations Leader. The "Office of the Company Leader" will be headed by Charles Morgan, Chairman and Company Leader, and will include Mr. Kline and Mr. Hodges. All of the Company`s organizations and functions will report to Messrs. Morgan, Kline or Hodges.
James T. Womble, currently Client Services Organization Leader for financial services, government and health, will be appointed as Global Business Development Leader, a new position which will be focused on the continued expansion of the Company`s global business opportunities. Jefferson D. Stalnaker, currently serving as Company Financial Operations Leader, will be appointed as Client Services Organization Leader for financial services, government and health.
"These changes position us to better capitalize on our many growth opportunities," Morgan said. "Jim`s experience will be very valuable as we continue to expand our business globally. Lee will help us very tightly coordinate sales, client service and delivery, ensuring we maximize effectiveness, efficiency and growth in all operational areas of our business. Jeff has done a great job as a financial leader over the past several years and will now expand his scope and responsibility. Rodger has previously served as our principal financial officer and has been in that role or one closely associated with it for more than ten years and will provide continuity in our financial operations. I am very excited about these organizational changes and the positive impact they will have on our business."
Outlook
For the fiscal year ended March 31, 2005 and thereafter, the Company`s expectations are communicated in the attached Financial Road Map, which includes a chart summarizing the Company`s one-year and long-term goals as well as an explanation of the assumptions and definitions that accompany these goals.
The financial projections stated today are based on the Company`s current expectations. 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 and do not include the impact of the expensing of employee stock options which is currently proposed by the FASB.
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 Japan.
This release (including references to the Financial Road Map) and the scheduled conference call include a discussion of non-GAAP financial measures. Whenever the Company reports non-GAAP financial measures, there is a reconciliation to the comparable GAAP measure attached to the press release.
This release and today`s conference call contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially. Such statements may include but are not necessarily limited to the following: that the projected revenue, operating margin, return on assets and return on invested capital, operating cash flow and free cash flow, borrowings and dividends referred to in the Financial Road Map will be within the estimated ranges; that the company is on track for a successful year and is currently operating in line with the Financial Road Map; that the business pipeline and our current cost structure will allow us to continue to meet or exceed revenue, cash flow and other projections; that new contracts and contract renewals will generate the indicated amounts of revenue; that we have committed new deals in the pipeline that are expected to deliver the indicated amounts; that we are well positioned for success and improving margins going forward; that future results will be within the indicated ranges; that new products and services will produce the expected results.
The following are important factors, among others, that could cause actual results to differ materially from these forward-looking statements: The possibility that certain contracts may not be closed, or may not be closed within the anticipated time frames; the possibility that certain contracts may not generate the anticipated revenue or profitability; the possibility that negative changes in economic or other conditions might lead to a reduction in demand for our products and services; the possibility that the recovery from the previous three years` economic slowdown may take longer than expected or that economic conditions in general will not be as expected; the possibility that significant customers may experience extreme, severe economic difficulty; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that sales cycles may lengthen; the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations; the possibility that we won`t be able to properly motivate our sales force or other associates; the possibility that we won`t be able to achieve cost reductions and avoid unanticipated costs; the possibility that we won`t be able to continue to receive credit upon satisfactory terms and conditions; the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies; the possibility that we may be subjected to pricing pressure due to market conditions and/or competitive products and services; the possibility that there will be changes in consumer or business information industries and markets; the possibility that changes in accounting pronouncements (including the proposed accounting pronouncement changes which will require expensing of stock option grants and other equity compensation awards) 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; the possibility that the integration of our recently acquired businesses may not be as successful as planned; and the possibility that we may be affected by other competitive factors.
With respect to the Financial Road Map exhibit, all of the above factors apply, along with the following which were assumptions made in creating the Financial Road Map: that the U.S. and global economies will continue to improve at a moderate pace; that global growth will continue to be strong and that globalization trends will continue to grow at an increasing pace; that Acxiom`s computer and communications related expenses will continue to fall as a percentage of revenue; that the Customer Information Infrastructure (CII) grid-based environment Acxiom has begun to implement will continue to be implemented successfully over the next 3-4 years and that the new CII infrastructure will continue to provide increasing operational efficiencies; that the recent acquisitions of Claritas Europe and Consodata Europe will be successfully integrated and that significant efficiencies will be realized from this integration; relating to operating cash flow and free cash flow, that sufficient operating and capital lease arrangements will continue to be available to the Company to provide for the financing of most of its computer equipment and that software suppliers will continue to provide financing arrangements for most of the software purchases; relating to revolving credit line balance, that free cash flow will meet expectations and that the Company will continue to use free cash flow to pay down bank debt, buy back stock and fund dividends; relating to annual dividends, that the Board of Directors will continue to approve quarterly dividends and will vote to increase dividends over time; relating to diluted shares, that the Company will meet its cash flow expectations and that potential dilution created through the issuance of stock options and warrants will be mitigated by continued stock repurchases in accordance with the Company`s stock repurchase program.
With respect to the provision of products or services outside our primary base of operations in the U.S., all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and regulations. Other factors are detailed from time to time in our periodic reports and registration statements filed with the United States Securities and Exchange Commission. We believe that we have the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast. We undertake no obligation to update the information contained in this press release, including the Financial Road Map or any other forward-looking statement.
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