Acxiom Announces First Quarter Fiscal 2009 Results

Acxiom® Corporation (Nasdaq: ACXM) today announced financial results for the first quarter of fiscal year 2009 ended June 30, 2008. Acxiom will hold a conference call at 4:30 p.m. CDT 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. Revenue for the first quarter of fiscal 2009 was $331.1 million, compared to $334.7 million in the first quarter of fiscal 2008. Income from operations for the quarter ended June 30, 2008 was $25.6 million, compared to $0.6 million for the period ended June 30, 2007. Earnings per diluted share for the quarter were $0.14, compared to a loss of $0.17 per diluted share in the prior-year period. The current-year quarter included unusual gain items of $1.6 million. The prior-year quarter included unusual loss items of $20.6 million. If unusual items were excluded, earnings per diluted share would be $0.12 and $0.06 in the current quarter and prior-year quarter, respectively. John Meyer, Acxiom Corporation’s Chief Executive Officer and President, commented, "I am generally pleased with our first quarter results. Despite the challenging economic environment, our operating profitability has improved significantly over the prior year. We tasked every Acxiom associate with improving our profitability, and we are beginning to realize the benefits of those efficiency and cost reduction efforts. Although we have made significant progress in expense control, we will continue to seek opportunities to maximize our operating cash flows.” Meyer concluded, "While managing costs is essential to operating a successful enterprise, we have to be focused on growing revenue in a meaningful way. We have laid the foundation with a new organizational structure led by Global Sales.” First Quarter 2009 Highlights: Revenue of $331.1 million compared to $334.7 million in the first quarter a year ago. Income from operations of $25.6 million compared to $0.6 million in the first quarter last year. Income from operations for the current year included unusual gain items of $0.5 million. The prior year quarter included $20.6 million of unusual expense items. Other income for the current quarter included a $1.1 million unusual gain. Earnings per diluted share of $0.14 compared to a loss per share of $0.17 in the first quarter of fiscal 2008. Excluding the impact of unusual items, earnings per diluted share would be $0.12 in the current period and $0.06 in the prior-year period. Operating cash flow of $28.5 million compared to $33.6 million in the first quarter a year ago. Free cash flow available to equity of negative $9.6 million compared to negative $9.8 million a year ago. Free cash flow available to equity is a non-GAAP financial measure; a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release. Operational Highlights: Information Services: This segment includes the company’s global lines of business for Customer Data Integration (CDI) and Marketing Services, Digital Marketing Services, Information Technology Services, and Consulting Services. Revenue for the quarter was $235.8 million, compared to $241.4 million in the first quarter of the previous year. Operating income for the quarter was $39.2 million, compared to $29.9 million in the first quarter of fiscal 2008. Prior year amounts included $5.2 million of unusual charges. Information Products: This segment is comprised of the company’s global Information Products lines of business and the U.S. Background Screening Products line of business. Revenue for the quarter was $95.3 million, up 2.0 percent from the first quarter of the previous year. Operating income for the quarter was $3.2 million, compared to $2.7 million in the first quarter of the previous year, an increase of 18.5 percent. Corporate and Other Expenses: For the quarter ended June 30, 2008, corporate and other expenses totaled $16.9 million, compared to $32.0 million for the period ended June 30, 2007. The prior period included unusual items of $15.4 million. Outlook The company provided its outlook for fiscal 2009 at an investor conference on June 17. The company affirms those amounts as follows: Revenue is expected to be approximately equal to revenue in fiscal 2008. Earnings per diluted share are expected to be in the range of $0.66 to $0.72. Free cash flow to equity, which is a non-GAAP measure, is expected to be in the range of $77 million to $85 million. Web Link to Financials http://www.acxiom.com/FY09_Q1_Financials is a link to the detailed financial information we typically attach to our earnings releases. About Acxiom Corporation The global leader in interactive marketing services, Acxiom connects clients with their customers through deep consumer insight that enables effective and profitable marketing initiatives and business decisions. Our consultative approach spans multiple industries and incorporates decades of experience in consumer data and analytics, information technology, data integration, and consulting solutions for effective marketing across digital, Internet, email, mobile and direct mail channels. Founded in 1969, Acxiom is headquartered in Little Rock, Ark., and serves clients around the world from locations in the United States, Europe, and Asia-Pacific. For more information about Acxiom, 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 projected revenue, earnings per share and free cash flow to equity will be within the estimated ranges for fiscal year 2009. The following are 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 clients may attempt to reduce the amount of business they do with the company; the possibility that in the event that a change of control of the company was sought that certain of the clients of the company would invoke certain provisions in their contracts resulting in a decline in the revenue and profit of the company; the possibility that certain contracts may not generate the anticipated revenue or profitability; the possibility that negative changes in economic or other conditions might lead to a reduction in demand for our products and services; the possibility of an economic slowdown or that economic conditions in general will not be as expected; the possibility that the historical seasonality of our business may change; the possibility that significant customers may experience extreme, severe economic difficulty; the possibility that the integration of acquired businesses may not be as successful as planned; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that sales cycles may lengthen; the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations; the possibility that we won’t be able to properly motivate our sales force or other associates; the possibility that we won’t be able to achieve cost reductions and avoid unanticipated costs; the possibility that we won’t be able to continue to receive credit upon satisfactory terms and conditions; the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies; the possibility that we may be subjected to pricing pressure due to market conditions and/or competitive products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that changes in accounting pronouncements may occur and may impact these projections; the possibility that we won’t be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that there will be changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not limited to litigation, legislation, regulations and customs relating to our ability to collect, manage, aggregate and use data; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services; the possibility that we may enter into short-term contracts which would affect the predictability of our revenues; the possibility that the amount of ad hoc, volume-based and project work will not be as expected; the possibility that we may experience a loss of data center capacity or interruption of telecommunication links or power sources; the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties; the possibility that postal rates may increase, thereby leading to reduced volumes of business; the possibility that our clients may cancel or modify their agreements with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that we experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; the possibility that the services of the United States Postal Service, their global counterparts and other delivery systems may be disrupted; and the possibility that we may be affected by other competitive factors. With respect to the 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 or any other forward-looking statement. Acxiom is a registered trademark of Acxiom Corporation.   ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share)           For the Three Months Ended June 30, $ % 2008 2007 Variance   Variance   Revenue: Services 235,770 241,355 (5,585 ) (2.3 %) Products 95,303   93,314   1,989 2.1 % Total revenue 331,073 334,669 (3,596 ) (1.1 %)   Operating costs and expenses: Cost of revenue Services 177,300 196,584 (19,284 ) (9.8 %) Products 76,720   76,290   430 0.6 % Total cost of revenue 254,020 272,874 (18,854 ) (6.9 %)   Services gross margin 24.8 % 18.5 % Products gross margin 19.5 % 18.2 % Total gross margin 23.3 % 18.5 %   Selling, general and administrative 52,040 45,766 6,274 13.7 % Gains, losses and other items, net (545 ) 15,390   (15,935 ) (103.5 %)   Total operating costs and expenses 305,515   334,030   (28,515 ) (8.5 %)   Income from operations 25,558   639   24,919 3899.7 %   Other income (expense): Interest expense (9,459 ) (13,575 ) 4,116 (30.3 %) Other, net 1,359   183   1,176 642.6 %   Total other income (expense) (8,100 ) (13,392 ) 5,292 (39.5 %)   Earnings (loss) before income taxes 17,458 (12,753 ) 30,211   Income taxes 6,808   937   5,871 626.6 %   Net earnings (loss) 10,650   (13,690 ) 24,340   Earnings (loss) per share:   Basic 0.14   (0.17 ) 0.31   Diluted 0.14   (0.17 ) 0.31   ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share)           For the Three Months Ended   June 30, March 31, $ % 2008 2008 Variance   Variance   Revenue: Services 235,770 239,973 (4,203 ) (1.8 %) Products 95,303   109,824   (14,521 ) (13.2 %) Total revenue 331,073 349,797 (18,724 ) (5.4 %)   Operating costs and expenses: Cost of revenue Services 177,300 227,056 (49,756 ) (21.9 %) Products 76,720   76,876   (156 ) (0.2 %) Total cost of revenue 254,020 303,932 (49,912 ) (16.4 %)   Services gross margin 24.8 % 5.4 % Products gross margin 19.5 % 30.0 % Total gross margin 23.3 % 13.1 %   Selling, general and administrative 52,040 47,304 4,736 10.0 % Gains, losses and other items, net (545 ) 74,519   (75,064 ) (100.7 %)   Total operating costs and expenses 305,515   425,755   (120,240 ) (28.2 %)   Income (loss) from operations 25,558   (75,958 ) 101,516   Other income (expense): Interest expense (9,459 ) (11,016 ) 1,557 (14.1 %) Other, net 1,359   (1,685 ) 3,044   Total other income (expense) (8,100 ) (12,701 ) 4,601 (36.2 %)   Earnings (loss) before income taxes 17,458 (88,659 ) 106,117   Income taxes 6,808   (30,375 ) 37,183   Net earnings (loss) 10,650   (58,284 ) 68,934   Earnings (loss) per share:   Basic 0.14   (0.76 ) 0.90   Diluted 0.14   (0.76 ) 0.90       ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share)       For the Three Months Ended   June 30, June 30, March 31, 2008 2007 2008   Basic earnings per share:   Numerator - net earnings (loss) 10,650 (13,690 ) (58,284 )   Denominator - weighted-average shares outstanding 77,402 79,341   77,085     Basic earnings (loss) per share 0.14 (0.17 ) (0.76 )   Diluted earnings per share:   Numerator - net earnings (loss) 10,650 (13,690 ) (58,284 )   Denominator - weighted-average shares outstanding 77,402 79,341 77,085   Dilutive effect of common stock options, warrants and restricted stock 354 -   -     77,756 79,341   77,085     Diluted earnings (loss) per share 0.14 (0.17 ) (0.76 )   ACXIOM CORPORATION AND SUBSIDIARIES RESULTS BY SEGMENT (Unaudited) (Dollars in thousands)           For the Three Months Ended   June 30, June 30, Revenue: 2008 2007   Information services 235,770 241,355 Information products 95,303   93,314     Total revenue 331,073   334,669       Income from operations:   Information services 39,205 29,907 Information products 3,213 2,719 Corporate & other (16,860 ) (31,987 )   Total income from operations 25,558   639     Margin:   Information services 16.6 % 12.4 % Information products 3.4 % 2.9 %   Total margin 7.7 % 0.2 %   ACXIOM CORPORATION AND SUBSIDIARIES PRODUCTS REVENUE AND COST OF PRODUCTS SUPPLEMENTAL SCHEDULE (Unaudited) (Dollars in thousands)                 For the Three Months Ended   June 30, June 30, $ % March 31, $ % 2008 2007 Variance   Variance 2008 Variance   Variance   Products 73,089 73,722 (633 ) (0.9 %) 87,730 (14,641 ) (16.7 %) Passthrough data 22,214   19,592   2,622 13.4 % 22,094   120 0.5 %   Total products revenue 95,303   93,314   1,989 2.1 % 109,824   (14,521 ) (13.2 %)     Cost of products revenue: Products 54,506 56,698 (2,192 ) (3.9 %) 54,782 (276 ) (0.5 %) Passthrough data 22,214   19,592   2,622 13.4 % 22,094   120 0.5 %   Total cost of products 76,720   76,290   430 0.6 % 76,876   (156 ) (0.2 %)   Margin:   Products 25.4 % 23.1 % 37.6 % Passthrough data 0.0 % 0.0 % 0.0 % Total products 19.5 % 18.2 % 30.0 %   ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)         June 30, March 31, $ % 2008 2008 Variance   Variance Assets Current assets: Cash and cash equivalents 51,799 62,661 (10,862 ) (17.3 %) Trade accounts receivable, net 231,688 216,462 15,226 7.0 % Refundable income taxes 12,096 16,080 (3,984 ) (24.8 %) Deferred income taxes 44,203 44,211 (8 ) (0.0 %) Other current assets 45,379   45,645   (266 ) (0.6 %)   Total current assets 385,165   385,059   106 0.0 %   Property and equipment 768,914 765,046 3,868 0.5 % Less - accumulated depreciation and amortization 515,239   498,777   16,462 3.3 %   Property and equipment, net 253,675   266,269   (12,594 ) (4.7 %)   Software, net of accumulated amortization 57,093 59,263 (2,170 ) (3.7 %) Goodwill 486,230 484,796 1,434 0.3 % Purchased software licenses, net of accumulated amortization 98,139 111,574 (13,435 ) (12.0 %) Deferred costs, net 85,576 90,707 (5,131 ) (5.7 %) Data acquisition costs 48,593 51,566 (2,973 ) (5.8 %) Other assets, net 20,935   22,621   (1,686 ) (7.5 %)   1,435,406   1,471,855   (36,449 ) (2.5 %)   Liabilities and Stockholders' Equity Current liabilities: Current installments of long-term debt 58,732 69,259 (10,527 ) (15.2 %) Trade accounts payable 32,933 45,749 (12,816 ) (28.0 %) Accrued payroll and related expenses 33,563 39,061 (5,498 ) (14.1 %) Other accrued expenses 108,308 121,441 (13,133 ) (10.8 %) Deferred revenue 64,182   64,116   66 0.1 %   Total current liabilities 297,718   339,626   (41,908 ) (12.3 %)   Long-term debt 564,377 575,308 (10,931 ) (1.9 %)   Deferred income taxes 54,060 51,429 2,631 5.1 %   Other liabilities 5,080 4,980 100 2.0 %   Stockholders' equity: Common stock 11,457 11,428 29 0.3 % Additional paid-in capital 785,723 779,815 5,908 0.8 % Retained earnings 419,759 413,758 6,001 1.5 % Accumulated other comprehensive income 35,697 33,976 1,721 5.1 % Treasury stock, at cost (738,465 ) (738,465 ) 0 0.0 %   Total stockholders' equity 514,171   500,512   13,659 2.7 %   1,435,406   1,471,855   (36,449 ) (2.5 %)     ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)   For the Three Months Ended June 30, 2008   2007   Cash flows from operating activities: Net earnings (loss) 10,650 (13,690 ) Non-cash operating activities: Depreciation and amortization 53,893 59,102 Loss (gain) on disposal or impairment of assets, net (2,111 ) 310 Deferred income taxes 2,715 (2,556 ) Non-cash stock compensation expense 2,604 1,358 Changes in operating assets and liabilities: Accounts receivable (16,258 ) 11,220 Other assets 9,376 (792 ) Deferred costs (616 ) (5,544 ) Accounts payable and other liabilities (31,296 ) (3,097 ) Deferred revenue (484 ) (12,723 ) Net cash provided by operating activities 28,473   33,588   Cash flows from investing activities: Capitalized software (5,011 ) (8,447 ) Capital expenditures (5,706 ) (2,867 ) Cash collected from sale and license of software 2,000 - Data acquisition costs (8,622 ) (8,585 ) Payments received from investments 2,494 - Net cash paid in acquisitions (35 ) (2,680 ) Net cash used by investing activities (14,880 ) (22,579 ) Cash flows from financing activities: Proceeds from debt - 2,127 Payments of debt (23,304 ) (31,284 ) Dividends paid (4,649 ) - Sale of common stock 3,273 35,821 Tax benefit of stock options exercised 60   5,624   Net cash provided (used) by financing activities (24,620 ) 12,288   Effect of exchange rate changes on cash 165   307     Net increase (decrease) in cash and cash equivalents (10,862 ) 23,604 Cash and cash equivalents at beginning of period 62,661   37,776   Cash and cash equivalents at end of period 51,799   61,380     Supplemental cash flow information: Cash paid during the period for: Interest 9,354 13,888 Income taxes 42 115 Payments on capital leases and installment payment arrangements 12,879 19,138 Payments on software and data license liabilities 8,368 6,493 Other debt payments, excluding line of credit 2,057 3,526 Revolving credit payments - 2,127 Noncash investing and financing activities: Acquisition of property and equipment under capital lease and installment payment arrangements 1,824 7,222 Construction and other financing - 5,351   ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY AND RECONCILIATION TO OPERATING CASH FLOW (Unaudited) (Dollars in thousands)                                 06/30/07   09/30/07   12/31/07   03/31/08   YTD FY2008 06/30/08   Cash paid during the period for: 33,588 33,416 122,269 78,533 267,806 28,473   Plus: Payments received from investments - 1,799 1,804 - 3,603 2,494 Disposition of operations - - 14,250 - 14,250 -   Less: Capitalized software (8,447 ) (9,820 ) (8,507 ) (6,571 ) (33,345 ) (5,011 ) Capital expenditures (2,867 ) (5,291 ) (6,891 ) (6,551 ) (21,600 ) (5,706 ) Data acquisition costs (8,585 ) (4,403 ) (9,634 ) (9,541 ) (32,163 ) (8,622 ) Payments on capital leases and installment payment arrangements (19,138 ) (17,651 ) (17,542 ) (15,375 ) (69,706 ) (12,879 ) Payments on software and data license liabilities (6,493 ) (7,279 ) (6,226 ) (11,821 ) (31,819 ) (8,368 ) Other required debt payments (3,526 )   (2,416 )   (5,612 )   (13,493 )   (25,047 ) (2,057 )   Subtotal (15,468 ) (11,645 ) 83,911 15,181 71,979 (11,676 )   Plus: Tax benefit of stock options and warrants 5,624     344     25     (480 )   5,513   60     Subtotal (9,844 ) (11,301 ) 83,936 14,701 77,492 (11,616 )   Plus: Cash collected from sale of software -     -     -     -     -   2,000     Total (9,844 )   (11,301 )   83,936     14,701     77,492   (9,616 )