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 June 30, 1995
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.)
P.O. Box 2000, 301 Industrial Boulevard,
Conway, Arkansas 72033-2000
(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, $0.10 par value per
share, outstanding as of July 28, 1995, was 22,480,297.
<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)
June 30, March 31,
1995 1995
-------- ---------
Assets
------
Current assets:
Cash and short-term cash $ 1,323,000 3,149,000
investments
Trade accounts receivable, net 38,186,000 37,764,000
Other current assets 2,626,000 2,604,000
----------- -----------
Total current assets 42,135,000 43,517,000
----------- -----------
Property and equipment 131,019,000 123,321,000
Less - Accumulated depreciation
and amortization 59,056,000 55,902,000
----------- -----------
Property and equipment, net 71,963,000 67,419,000
----------- -----------
Software, net of accumulated 9,179,000 9,693,000
amortization
Excess of cost over fair value
of net assets acquired 9,410,000 9,638,000
Other assets 20,609,000 17,903,000
----------- -----------
$153,296,000 148,170,000
=========== ===========
Liabilities and Stockholders'
Equity
-----------------------------------
Current liabilities:
Current installments of long-term 3,288,000 3,564,000
debt
Trade accounts payable 7,739,000 8,342,000
Accrued interest 174,000 522,000
Accrued payroll and related 4,061,000 5,280,000
expenses
Other accrued expenses 6,568,000 7,055,000
Advances from customers 185,000 162,000
Income taxes 1,645,000 39,000
----------- -----------
Total current liabilities 23,660,000 24,964,000
----------- -----------
Long-term debt, excluding current 20,391,000 18,219,000
installments
Deferred income taxes 7,138,000 7,138,000
Deferred revenue 1,468,000 672,000
<PAGE>
Stockholders' equity:
Preferred stock --- ---
Common stock 2,312,000 2,308,000
Additional paid-in capital 47,125,000 46,493,000
Retained earnings 53,780,000 50,776,000
Foreign currency translation 171,000) 7,000
adjustment
Treasury stock, at cost (2,407,000) (2,407,000)
----------- -----------
Total stockholders' equity 100,639,000 97,177,000
Commitments and contingencies ----------- -----------
$153,296,000 148,170,000
=========== ===========
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
-------------------------
June 30,
-------------------------
1995 1994
---------- ----------
Revenue $ 54,390,000 46,881,000
Operating costs and expenses:
Salaries and benefits 20,106,000 14,821,000
Computer, communications and
other equipment 7,493,000 6,916,000
Data costs 15,107,000 16,505,000
Other operating costs and 6,322,000 4,927,000
expenses ----------- -----------
Total operating costs and 49,028,000 43,169,000
expenses ----------- ----------
Income from operations 5,362,000 3,712,000
----------- ----------
Other income (expense):
Interest expense (370,000) (672,000)
Other, net (67,000) (556,000)
----------- ----------
(437,000) (1,228,000)
----------- ----------
Earnings before income taxes 4,925,000 2,484,000
Income taxes 1,921,000 968,000
----------- ----------
Net earnings $ 3,004,000 1,516,000
=========== ==========
Earnings per share $ .12 .07
=========== ==========
Weighted average shares outstanding 24,270,000 21,950,000
=========== ==========
See accompanying condensed notes to consolidated financial
statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended
-------------------------
June 30,
-------------------------
1995 1994
-------- --------
Cash flows from operating
activities:
Net earnings $ 3,004,000 1,516,000
Non-cash operating activities:
Depreciation and amortization 4,731,000 4,940,000
Loss on disposal of assets --- 509,000
Equity in operations of joint
venture --- 43,000
Other, net 152,000 187,000
Changes in assets and
liabilities:
Accounts receivable (604,000) (4,963,000)
Other assets (1,112,000) 1,107,000
Accounts payable and other (193,000) 3,663,000
liabilities ---------- ----------
Net cash provided by operating
activities 5,978,000 7,002,000
---------- ----------
Cash flows from investing
activities:
Sale of assets 131,000 4,547,000
Development of software (250,000) (335,000)
Capital expenditures (10,156,000) (4,168,000)
Net cash used by investing ---------- ----------
activities (10,275,000) 44,000
---------- ----------
Cash flows from financing
activities:
Proceeds from debt 4,099,000 ---
Payments of debt (2,240,000) (7,049,000)
Sale of common stock 636,000 357,000
---------- ----------
Net cash provided (used) by
financing activities 2,495,000 (6,692,000)
---------- ----------
Effect of exchange rate changes (24,000) ---
on cash
---------- ----------
Net increase in cash and
short-term cash investments (1,826,000) 354,000
<PAGE>
Cash and short-term cash investments
at beginning of period 3,149,000 475,000
---------- ----------
Cash and short-term cash investments
at end of period $ 1,323,000 829,000
========== ==========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 718,000 1,072,000
Income taxes 315,000 155,000
========== ==========
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 15
of the Notes to Consolidated Financial Statements filed as a part
of Item 14 of Registrant's 1995 Annual report on Form 10-K as
filed with the Securities and Exchange Commission on June 28,
1995.
Notes to Consolidated Financial Statements:
On July 14, 1995, the Company purchased the outstanding stock
1.
of Generator Datamarketing Limited ("Generator"). Generator
is located in Hertfordshire, near London, and provides data
and database marketing software and processing services to
its customers. The purchase price was 4,000,000 pounds
sterling (approximately $6,460,000). The acquisition will be
accounted for as a purchase and, accordingly, Generator's
results of operations will be included in the consolidated
statements of earnings from July 1, 1995. Generator had
revenue from operations of $3,122,000 and earnings before
income taxes of $215,000 for the year ended December 31,
1994.
2. On July 25, 1995, a customer of the Company, Highlights for
Children, Inc. ("Highlights"), filed a demand for arbitration
with the American Arbitration Association. The demand
alleges, among other things, breaches of express warranties
in connection with a software license agreement for the
Company's GS/2000 software product. The demand seeks
compensatory damages of approximately $22,000,000 and
punitive damages of $44,000,000, plus attorneys' fees and
costs.
The Company believes that the action is without merit and
unwarranted. Highlights is and has been using the GS/2000
software in the daily operation of its business for over
two years. Highlights accepted the software as operational
in February of 1994 and paid the final license fee payment.
Acxiom's software license fee and related fees invoiced to
Highlights for the GS/2000 software totaled approximately
$2,000,000. The Company intends to vigorously defend the
arbitration claim. Management believes that the ultimate
outcome of the arbitration case will result in a final
settlement, if any, in an amount which would not be material
to the financial statements and would be substantially lower
than the amount noted above.
The Company is involved in various other 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.
<PAGE>
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Consolidated revenue was a record $54,390,000 for the quarter
ended June 30, 1995, a 16% increase over revenue of $46,881,000
for the same quarter a year ago. Revenues for the quarter
increased 26% after considering the effects of a one-time
adjustment related to the Allstate Insurance Company contract
recorded in the last year's first quarter. Previously, the
revenue related to this contract had been recorded on a month lag
basis. The financial services segment grew 47% reflecting the
continued strong activity in credit card marketing. The direct
marketing, information and communications, and media segments
grew 28%, 15% and 17%, respectively. The insurance segment was
flat to the prior year including the effects of the adjustment
noted above.
Operating costs and expenses increased 14% when compared to the
comparable period a year ago. Salaries and benefits increased
36% reflecting the 27% increase in headcount over the prior year
combined with larger incentive compensation accrued in the
current year's quarter. Computer, communications and other
equipment costs increased 8% primarily due to increased
depreciation on computers for the core operations. Data costs
decreased 8% as a result of the one-time adjustment on the
Allstate contract noted above. Other operating costs and
expenses increased 28% reflecting higher advertising expenditures
and facilities costs combined with the impact of increased
operating activities on the higher volume. Operating costs
decreased as a percentage of revenue and as a result, income from
operations was 10% compared to 8% in the first quarter of the
prior year.
Interest expense decreased due primarily to decreased levels of
debt during the quarter when compared to the year earlier period.
Other expense in the first quarter of the prior year included
$500,000 for the estimated disposal cost of certain BSA assets in
the United States.
The Company's effective tax rate was 39% for both the current
quarter and the year earlier quarter. The effective tax rate for
the year ended March 31, 1995 was 38%. The Company expects the
effective rate for fiscal year 1996 to be in the 37-39% range.
<PAGE>
Capital Resources and Liquidity
Working capital at June 30, 1995, was $18,475,000 compared to
$18,553,000 at March 31, 1995. At June 30, 1995 the Company had
available credit lines of $31,000,000 of which $4,099,000 was
outstanding. The Company's debt-to-capital ratio (capital
defined as long-term debt plus stockholders' equity) was 17% at
June 30, 1995 compared to 16% at March 31, 1995.
Cash provided by operating activities was $5,978,000 for the
three months ended June 30, 1995 compared to $7,002,000 for the
same period a year earlier. In the current quarter, $10,275,000
was used by investing activities and $2,495,000 was provided by
financing activities. Investing activities included $10,156,000
in capital expenditures compared to $4,168,000 in the prior
year's quarter. Investing activities in the prior year's quarter
included $4,547,000 collected from the sale of assets, primarily
from the sale of substantially all of the assets of Acxiom
Mailing Services.
The Company has substantially completed and is now occupying an
expansion of its Conway, Arkansas data center to accommodate
increasing data processing requirements. The cost of the
expansion totaled approximately $4,000,000. The Company is also
building a new 100,000 square-foot customer service building on
its main campus in Conway. The new customer service facility is
expected to cost $8,000,000 and will be ready for occupancy in
the third quarter of fiscal 1996. Both projects are being funded
through current operations and existing credit lines.
As mentioned in footnote 1 to the consolidated financial
statements, the Company has purchased the outstanding stock of
Generator Datamarketing Limited ("Generator"), a United Kingdom
company that provides data and database marketing software and
processing services. The purchase price was 4,000,000 pounds
sterling (approximately $6,460,000). The transaction was
completed July 14, 1995 and will be accounted for as a purchase.
Accordingly, Generator's results of operations will be included
in the Company's consolidated results beginning in the second
quarter of the fiscal year.
As discussed in footnote 2 to the consolidated financial
statements, the Company is involved in an arbitration claim,
which if resolved against the Company, could result in payment of
an amount which could be material to the financial statements.
However, management believes the ultimate outcome of this case
will result in a settlement, if any, which will not be material
to the financial statements.
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
<PAGE>
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 additional 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 1. Legal Proceedings
Highlights for Children, Inc. has filed a demand
for arbitration against the Company. A detailed
discussion of the dispute appears in Note 2 of
of the Notes to Consolidated Financial Statements,
and such discussion is incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K filed during the first
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
Dated August 1, 1995
/s/ Robert S. Bloom
-------------------------------
(Signature)
Robert S. Bloom
Chief Financial Officer
(Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibits to Form 10-Q
Exhibit Number Exhibit
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS
OF EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1995
<CASH> 1,323
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<PP&E> 131,019
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0
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