SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ----- to -----
Commission file number 0-13163
Acxiom Corporation
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 71-0581897
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
301 Industrial Boulevard, Conway, Arkansas 72032
(Address of Principal Executive Offices) (Zip Code)
(501) 336-1000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
The number of shares of Common Stock, par value of $0.10 per
share, outstanding as of October 25, 1994 was 10,653,460.
<PAGE>
Form 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company for which report is filed:
ACXIOM CORPORATION
The consolidated financial statements included herein have been
prepared by Registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the
opinion of the Registrant's management, however, all adjustments
necessary for a fair statement of the results for the periods
included herein have been made and the disclosures contained herein
are adequate to make the information presented not misleading. All
such adjustments are of a normal recurring nature.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, March 31,
1994 1994
----------- ---------
Assets
------
Current assets:
Cash and short-term cash investments $ 1,128,000 475,000
Trade accounts receivable, net 34,005,000 28,204,000
Refundable income taxes --- 923,000
Other current assets 1,597,000 6,255,000
----------- -----------
Total current assets 36,730,000 35,857,000
----------- -----------
Property and equipment 109,806,000 102,826,000
Less - Accumulated depreciation and
amortization 48,370,000 43,129,000
----------- -----------
Property and equipment, net 61,436,000 59,697,000
----------- -----------
Software, net of accumulated
amortization 4,863,000 5,113,000
Excess of cost over fair value
of net assets acquired 2,844,000 2,716,000
Investment in and advances to joint
venture 3,695,000 3,974,000
Other assets 15,880,000 16,021,000
------------ -----------
$125,448,000 123,378,000
============ ===========
Liabilities and Stockholders' Equity
-------------------------------------
Current liabilities:
Current installments of long-term debt 2,707,000 3,046,000
Short-term borrowings 500,000 500,000
Trade accounts payable 7,649,000 3,006,000
Accrued interest 522,000 609,000
Accrued payroll and related expenses 3,720,000 2,073,000
Other accrued expenses 4,169,000 3,315,000
Advances from customers 427,000 346,000
Income Taxes 983,000 ---
----------- -----------
Total current liabilities 20,677,000 12,895,000
----------- -----------
Long-term debt, excluding current
installments 23,355,000 34,992,000
Deferred income taxes 5,734,000 5,734,000
Deferred revenue --- 169,000
Redeemable common stock --- 7,692,000
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(continued)
Stockholders' equity:
Preferred stock --- ---
Common stock 1,099,000 1,049,000
Additional paid-in capital 34,618,000 25,672,000
Retained earnings 42,680,000 38,562,000
Foreign currency translation
adjustment (257,000) (818,000)
Treasury stock, at cost (2,458,000) (2,569,000)
----------- -----------
Total stockholders' equity 75,682,000 61,896,000
Commitments and contingencies ----------- -----------
$125,448,000 123,378,000
============ ===========
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Three Months
Ended
--------------------------
September 30,
--------------------------
1994 1993
----------- -----------
Revenue $47,853,000 36,661,000
Operating costs and expenses:
Salaries and benefits 16,010,000 16,550,000
Computer, communications and
other equipment 7,021,000 7,139,000
Data Costs 13,414,000 3,203,000
Other operating costs and expenses 6,054,000 5,701,000
----------- -----------
Total operating costs and expenses 42,499,000 32,593,000
----------- -----------
Income from operations 5,354,000 4,068,000
----------- -----------
Other income (expense):
Interest expense (585,000) (725,000)
Other, net (189,000) 191,000
----------- ----------
(774,000) (534,000)
----------- ----------
Earnings before income taxes 4,580,000 3,534,000
Income taxes 1,787,000 1,442,000
----------- ----------
Net earnings $ 2,793,000 2,092,000
=========== ==========
Earnings per share $ .25 .19
=========== ==========
Weighted average shares outstanding 11,274,000 10,913,000
=========== ==========
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Six Months Ended
-------------------------
September 30,
-------------------------
1994 1993
---------- ----------
Revenue $94,734,000 68,432,000
Operating costs and expenses:
Salaries and benefits 30,831,000 32,412,000
Computer, communications and
other equipment 13,937,000 13,555,000
Data Costs 29,919,000 4,394,000
Other operating costs and expenses 10,981,000 11,660,000
---------- ----------
Total operating costs and expenses 85,668,000 62,021,000
---------- ----------
Income from operations 9,066,000 6,411,000
---------- ----------
Other income (expense):
Interest expense (1,257,000) (1,282,000)
Other, net ( 745,000) 398,000
----------- ----------
(2,002,000) (884,000)
---------- ----------
Earnings before income taxes 7,064,000 5,527,000
Income taxes 2,755,000 2,155,000
---------- ----------
Net earnings $4,309,000 3,372,000
========== ==========
Earnings per share $ .39 .31
========== ==========
Weighted average shares outstanding 11,125,000 10,906,000
========== ==========
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended
September 30,
------------------------
1994 1993
--------- ----------
Cash flows from operating activities:
Net earnings $ 4,309,000 3,372,000
Non-cash operating activities:
Depreciation and amortization 9,321,000 9,627,000
Loss on disposal of assets 547,000 35,000
Equity in operations of joint
venture 279,000 (395,000)
Other, net 1,049,000 (173,000)
Changes in assets and liabilities:
Accounts receivable (6,660,000) (2,066,000)
Other assets 408,000 329,000
Accounts payable and other
liabilities 7,115,000 (1,878,000)
--------- -----------
Net cash provided by operating
activities 16,368,000 8,851,000
---------- -----------
Cash flows from investing activities:
Sale of assets 5,308,000 259,000
Acquisition and development of
software (546,000) (513,000)
Capital expenditures (9,178,000) (15,800,000)
---------- -----------
Net cash used by investing
activities (4,416,000) (16,054,000)
---------- -----------
Cash flows from financing activities:
Proceeds from current and long-term
debt --- 7,651,000
Payments of long-term debt (11,987,000) (570,000)
Sale of common stock 688,000 393,000
----------- ----------
Net cash provided (used) by
financing activities (11,299,000) 7,474,000
---------- ----------
Net increase in cash and
short-term cash investments 653,000 271,000
Cash and short-term cash investments
at beginning of period 475,000 1,479,000
---------- ----------
Cash and short-term cash investments
at end of period $ 1,128,000 1,750,000
========== ==========
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 1,344,000 1,357,000
Income taxes 849,000 714,000
========== ==========
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Certain note information has been omitted because it has not changed
significantly from that reflected in Notes 1 through 14 of the Notes
to Consolidated Financial Statements filed as a part of Item 14 of
Registrant's 1994 Annual report on Form 10-K as filed with the
Securities and Exchange Commission on June 29, 1994.
Notes to Consolidated Financial Statements:
1. Accretion on redeemable common stock of $191,000 for the six
months ended September 30, 1994 is reflected as a direct charge
to retained earnings.
2. On August 31, 1994 the Company announced the extension of its
data center management agreement with Trans Union Corporation.
The extension will carry the contract through July 2002, its
full term of 10 years. As part of the extension agreement,
Trans Union agreed to give up its right to cause the
Company to repurchase the 480,000 shares of common stock now held
by Trans Union. At the same time, the Company gave up its right
to call the stock. At September 30,1994, the carrying value of
the redeemable common stock has been reclassified to stockholders'
equity.
The election to extend the data center agreement gives Trans Union
the right to exercise 750,000 additional shares under the warrant
which was issued at the inception of the contract, giving Trans
Union the right to acquire a total of 1,000,000 shares. However,
Trans Union is precluded from exercising the warrant to the extent
that the shares acquired thereunder would cause its percentage
ownership of the Company's common stock acquired pursuant to the
data center management agreement to exceed 10% of the Company's
then issued and outstanding common stock. The $536,000 estimated
value of the additional shares now exercisable under the warrant
has been credited to additional paid-in capital.
3. The Company has completed the sale of certain U.S. assets of
its BSA, Inc. subsidiary for $500,000 in cash. The sale closed
July 15, 1994, effective as of June 1, 1994. The effect of the
transaction on consolidated net earnings for the periods reported
was not significant.
4. On March 9, 1994, the chapter 11 bankruptcy trustee for CIS
Corporation ("CIS") initiated suit in the United States Bankruptcy
Court for the Southern District of New York seeking to recover
certain computer equipment, together with alleged past due lease
payments, taxes and interest amounting to approximately
$2,500,000. The Company had entered into several capital leases
with CIS prior to CIS declaring bankruptcy in January 1989. The
majority of the amounts sought by CIS relate to continuing lease,
tax and interest charges assessed after the initial lease terms
expired and after the Company had exercised its options to
purchase the equipment, after which time no lease payments were
due under the terms of the lease agreements. The Company intends
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
to defend the case on the merits, based upon CIS' failure to (1)
deliver title, (2) make scheduled sub-lease payments to the
Company, (3) properly record and acknowledge lease payments
actually paid by Acxiom which CIS claims were not paid, and (4)
remit property taxes to the proper authorities after the Company
paid such taxes to CIS. Under current circumstances, management
believes that the ultimate outcome of the litigation will result
in a final settlement, if any, substantially lower than the amount
noted above.
The Company is involved in other various claims and legal actions
in the ordinary course of business. In the opinion of management,
the ultimate disposition of these matters will not have a material
adverse effect on the Company's consolidated financial position or
its expected future consolidated results of operations.
5. At its quarterly meeting held on October 26, 1994, the Company's
board of directors approved a two-for-one stock split effective
January 10, 1995. The split will be effected in the form of a
stock dividend. The split is subject to approval by the Company's
shareholders of an increase in the number of authorized shares of
common stock from 20 million to 30 million at a special meeting
of shareholders which is scheduled to be held December 15, 1994.
Following shareholders' approval of the additional authorized
shares, certificates for the additional shares will be mailed
on January 10, 1995 to shareholders of record as of December 27,
1994.
6. On October 27, 1994, the Company reached an agreement in
principle to purchase the one-half interest in the Infobase
Services partnership owned by ADVO, Inc. In addition the
agreement provides that the Company will license the use of ADVO's
resident list. The Company will pay ADVO $9 million in cash and
provide ADVO with service discounts over the next four years. If
the service discounts do not aggregate at least $2.6 million over
the four-year period, the yearly shortfall will be paid in cash.
<PAGE>
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
_____________________
Consolidated revenue was $47.9 million for the quarter ended September
30, 1994, a 31% increase over the same quarter a year ago. The
increase of $11.2 million included an increase of $8.4 million under
the data management agreement with Allstate Insurance Company,
partially offset by a $4.4 million decrease from Acxiom Mailing
Services and the U.S. operation of BSA which were recently disposed
of. Excluding these effects, U.S. revenue increased 31% due primarily
to greater volumes in list and database services. Revenue was flat in
the United Kingdom.
For the six months ended September 30, 1994, revenue was $94.7
million, a 38% increase over the comparable period a year ago. The
Allstate contract accounted for $21.7 million of the increase, again
partially offset by decreases at Acxiom Mailing Services and the U.S.
operations of BSA of $10.1 million. Other U.S. revenue increased 31%
and U.K. revenue declined 11%.
For the quarter ended September 30, 1994, operating costs and expenses
increased 30% when compared to the same quarter a year ago. Salaries
and benefits decreased 3%, computer, communications and other
equipment expenses decreased 2%, and other operating costs and
expenses increased 6%. Data costs increased $10.2 million principally
due to the Allstate agreement noted above. Income from operations for
the quarter was 11% of revenue in both years.
Operating costs and expenses for the six months ended September 30,
1994 increased 38% over the comparable period a year ago. Salaries
and benefits decreased 5%, computer, communications and other
equipment expenses increased 3%, and other operating costs and
expenses decreased 6%. Data costs increased $25.5 million primarily
due to the Allstate agreement. Income from operations was 10% of
revenue for the six months ended September 30, 1994, compared to 9%
for the first six months of the previous fiscal year.
Other expense for the six months includes $500,000 in the first
quarter for the estimated cost of disposal of certain assets of the
U.S. operation of BSA.
The Company's effective tax rate for the quarter was 39% compared to
41% for the same quarter a year ago and 37% for the fiscal year ended
March 31, 1994. The Company expects the effective tax rate to remain
in the 38-40% range for the fiscal year.
<PAGE>
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
Capital Resources and Liquidity
_______________________________
Working capital at September 30, 1994, totaled $16.1 million compared
to $23.0 million at March 31, 1994. At September 30, 1994, the
Company had available credit lines of $31 million of which $7.4
million was outstanding. The Company's debt-to-capital ratio (capital
defined as long-term debt plus redeemable common stock plus
stockholders' equity) was 24% at September 30, 1994, compared to 33%
at March 31, 1994.
Cash provided from operating activities was $16.4 million for the six
months ended September 30, 1994 compared to $8.9 million for the same
period a year earlier. In the current year, investing activities used
$4.4 million and financing activities used $11.3 million. The
investing activities included $5.3 million collected from sales of
assets, primarily from the sales of substantially all the assets of
Acxiom Mailing Services and the U.S. operations of BSA, offset by
capital expenditures of $9.2 million. Capital expenditures in the
same period in the prior year were $15.8 million. Financing
activities included payments on long-term debt of $12.0 million.
On August 31, 1994, the Company announced the extension of its data
center management agreement with Trans Union Corporation which will
carry the contract through July, 2002, its full term of ten years. As
part of the extension agreement, Trans Union agreed to give up its
right to cause the Company to repurchase the 480,000 shares of common
stock now held by Trans Union. At the same time, the Company gave up
its right to call the stock. Accordingly, the carrying value of the
redeemable common stock has been transferred to stockholders' equity.
The Company also announced on August 31, 1994, an agreement in
principle to sell Trans Union an additional 500,000 shares of newly
issued common stock. Under the terms of the agreement, the Company
expects to receive estimated proceeds of $12.0 million. The sale is
expected to be completed during the third quarter of the fiscal year.
As noted in footnote 6 to the consolidated financial statements, the
Company has reached an agreement to purchase the one-half interest in
the Infobase Services partnership owned by ADVO, Inc. The Company
will pay ADVO $9 million in cash and provide service discounts over
the next four years totaling at least $2.6 million.
The Company is proceeding with plans to build a new 92,000 square foot
customer service building on the main campus in Conway, Arkansas and
plans to expand its Conway data center to accommodate increasing data
processing requirements. These building projects are expected to be
completed in the next year at an estimated cost of $12.0 million.
<PAGE>
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
While the Company does not have any other material contractual
commitments for capital expenditures, additional investments in
facilities and computer equipment will continue to be necessary to
support the anticipated growth of the business. In addition, new
outsourcing or facilities management contracts frequently require
substantial up-front capital expenditures in order to acquire existing
assets. Management believes that the combination of existing working
capital, anticipated funds to be generated from future operations and
the Company's available credit lines is sufficient to meet the Company's
current operating needs as well as to fund the anticipated levels of
capital expenditures. If additional funds are required, the Company
would use existing credit lines to generate cash, followed by either
existing borrowings to be secured by the Company's assets or the
issuance of additional equity securities in either public or private
offerings. Management believes that the Company has significant capacity
to raise capital which could be used to support future growth.
<PAGE>
Form 10-Q
ACXIOM CORPORATION
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K filed during the second
quarter:
None
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
SIGNATURE
_________
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Acxiom Corporation
(Registrant)
/s/ Robert S. Bloom
___________________
(Signature)
Robert S. Bloom
Chief Financial Officer
(Chief Accounting Officer)
Dated October 28, 1994
<PAGE>
EXHIBIT INDEX
Exhibits to Form 10-Q
Exhibit Number Exhibit
27 Financial Data Schedule
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS AND
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