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 December 31, 1997 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 January 30, 1998 was 52,260,283.
<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)
December 31, March 31,
1997 1997
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 2,586,000 2,721,000
Trade accounts receivable, net 89,995,000 70,636,000
Refundable income taxes --- 1,809,000
Other current assets 11,515,000 9,379,000
----------- -----------
Total current assets 104,096,000 84,545,000
----------- -----------
Property and equipment 221,118,000 199,286,000
Less - Accumulated depreciation and
amortization 94,055,000 83,115,000
----------- -----------
Property and equipment, net 127,063,000 116,171,000
----------- -----------
Software, net of accumulated amortization 19,785,000 18,627,000
Excess of cost over fair value of net
assets acquired 54,666,000 38,297,000
Other assets 63,761,000 42,028,000
----------- -----------
$ 369,371,000 299,668,000
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term notes payable 587,000 158,000
Current installments of long-term debt 4,318,000 3,923,000
Trade accounts payable 14,844,000 15,323,000
Accrued interest 1,989,000 1,128,000
Accrued payroll and related expenses 8,473,000 7,519,000
Accrued royalties 2,185,000 2,047,000
Other accrued expenses 10,785,000 5,492,000
Advances from customers 660,000 519,000
Income taxes 6,461,000 ---
----------- -----------
Total current liabilities 50,302,000 36,109,000
----------- -----------
Long-term debt, excluding current installments 110,273,000 87,120,000
Deferred income taxes 17,324,000 17,324,000
Deferred revenue 5,095,000 3,018,000
Stockholders' equity:
Preferred stock --- ---
Common stock 5,316,000 5,274,000
Additional paid-in capital 66,198,000 61,322,000
Retained earnings 116,622,000 91,738,000
Foreign currency translation adjustment 594,000 278,000
Treasury stock, at cost (2,353,000) (2,515,000)
----------- -----------
Total stockholders' equity 186,377,000 156,097,000
----------- -----------
Commitments and contingencies $ 369,371,000 299,668,000
=========== ===========
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
----------------------------
December 31
----------------------------
1997 1996
----------- -----------
Revenue $ 120,692,000 104,534,000
Operating costs and expenses:
Salaries and benefits 44,791,000 35,175,000
Computer, communications and other equipment 15,910,000 16,585,000
Data costs 21,358,000 17,920,000
Other operating costs and expenses 19,084,000 19,047,000
----------- -----------
Total operating costs and expenses 101,143,000 88,727,000
----------- -----------
Income from operations 19,549,000 15,807,000
----------- -----------
Other income (expense):
Interest expense (1,260,000) (773,000)
Other, net (359,000) (622,000)
----------- -----------
(1,619,000) (1,395,000)
----------- -----------
Earnings before income taxes 17,930,000 14,412,000
Income taxes 6,724,000 5,549,000
----------- -----------
Net earnings $ 11,206,000 8,863,000
=========== ===========
Earnings per share:
Basic $ 0.21 0.17
=========== ===========
Diluted $ 0.19 0.15
=========== ===========
See accompanying condensed notes to consolidated financial statements.
<PAGE>
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Nine Months Ended
----------------------------
December 31
----------------------------
1997 1996
----------- -----------
Revenue $ 330,985,000 296,034,000
Operating costs and expenses:
Salaries and benefits 123,288,000 105,745,000
Computer, communications and other equipment 46,400,000 44,978,000
Data costs 63,247,000 54,572,000
Other operating costs and expenses 54,178,000 53,337,000
----------- -----------
Total operating costs and expenses 287,113,000 258,632,000
----------- -----------
Income from operations 43,872,000 37,402,000
----------- -----------
Other income (expense):
Interest expense (4,264,000) (2,497,000)
Other, net 207,000 (3,408,000)
----------- -----------
(4,057,000) (5,905,000)
----------- -----------
Earnings before income taxes 39,815,000 31,497,000
Income taxes 14,931,000 12,126,000
----------- -----------
Net earnings $ 24,884,000 19,371,000
=========== ===========
Earnings per share:
Basic $ 0.48 0.38
=========== ==========
Diluted $ 0.42 0.33
=========== ==========
See accompanying condensed notes to consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
---------------------------
December 31
---------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net earnings $ 24,884,000 19,371,000
Non-cash operating activities:
Depreciation and amortization 29,283,000 22,857,000
Loss (Gain) on disposal or impairment
of assets (961,000) 2,326,000
Provision for returns and doubtful
accounts 696,000 1,873,000
Changes in assets and liabilities:
Accounts receivable (18,479,000) (19,219,000)
Other assets (14,443,000) (4,297,000)
Accounts payable and other liabilities 7,672,000 3,512,000
---------- ----------
Net cash provided by operating
activities 28,652,000 26,423,000
---------- ----------
Cash flows from investing activities:
Sale of assets 15,682,000 2,407,000
Cash acquired in pooling acquisition --- 21,000
Development of software (7,574,000) (5,016,000)
Capital expenditures (41,139,000) (44,161,000)
Investments in joint ventures (4,942,000) ---
Net cash paid in acquisitions (18,791,000) ---
---------- ----------
Net cash used by investing activities (56,764,000) (46,749,000)
---------- ----------
Cash flows from financing activities:
Proceeds from debt 26,605,000 32,567,000
Payments of debt (3,716,000) (17,125,000)
Sale of common stock 5,080,000 3,476,000
---------- ----------
Net cash provided by financing
activities 27,969,000 18,918,000
---------- ----------
Effect of exchange rate changes on cash 8,000 (32,000)
---------- ----------
Net decrease in cash and short-term
cash investments (135,000) (1,440,000)
Cash and short-term cash investments at
beginning of period 2,721,000 3,469,000
---------- ----------
Cash and short-term cash investments at
end of period $ 2,586,000 2,029,000
========== ==========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 3,403,000 2,208,000
Income taxes 6,661,000 2,026,000
========== ==========
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 17 of the Notes to
Consolidated Financial Statements filed as a part of Item 14 of
Registrant's 1997 Annual Report on Form 10-K as filed with the Securities
and Exchange Commission on June 30, 1997.
<PAGE>
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Included in other assets are unamortized conversion costs in the amount of
$23,846,000 and $18,137,000 at December 31, 1997 and March 31, 1997,
respectively. These costs are primarily incurred in connection with the
conversion phase of outsourcing and facilities management contracts and are
deferred and amortized over their useful lives, generally the life of the
contract.
Also included in other assets are noncurrent receivables from software
license, data, and equipment sales in the amount of $21,440,000 and
$12,477,000 at December 31, 1997 and March 31, 1997, respectively. Such
receivables are generally collectible in monthly installments over one to
eight years.
2. Long-term debt consists of the following:
December 31, March 31,
1997 1997
Unsecured revolving credit agreement $ 47,659,000 21,454,000
6.92% Senior notes due March 30, 2007, 30,000,000 30,000,000
payable in annual installments of
$4,286,000 commencing March 30, 2001;
interest is payable semi-annually
3.12% Convertible note, interest and 25,000,000 25,000,000
principal due April 30, 1999;
partially collateralized by letter
of credit; convertible at maturity
into two million shares of common
stock
9.75% Senior notes due May 1, 2000, 6,429,000 8,571,000
payable in annual installments of
$2,143,000 each May 1; interest is
payable semi-annually
Note payable due in monthly installments 3,805,000 4,031,000
of principal and interest of $50,000
with remaining balance due June 30,
2002; collateralized by real estate;
floating interest rate at 2% above the
Federal Reserve discount rate with a
maximum of 8.75%
Other notes and capital lease obligations 1,698,000 1,987,000
payable ----------- -----------
Total long term debt 114,591,000 91,043,000
Less current installments 4,318,000 3,923,000
----------- -----------
Long-term debt, excluding current
installments $ 110,273,000 87,120,000
=========== ===========
<PAGE>
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. The Company has implemented Statement of Financial Accounting Standards No.
128, "Earnings per Share" in the current quarter as required by the
statement. Statement No. 128 requires the Company to report both basic
earnings per share and diluted earnings per share for all periods
presented. Below is the calculation and reconciliation of the numerator and
denominator of basic and diluted earnings per share:
For the quarter ended For the nine months ended
-------------------------- --------------------------
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
Basic earnings
per share:
Numerator
(net earnings) $ 11,206,000 8,863,000 24,884,000 19,371,000
========== ========== ========== ==========
Denominator
(weighted
average shares
outstanding) 52,162,000 51,290,000 51,959,000 51,042,000
========== ========== ========== ==========
Earnings per
share $ 0.21 0.17 0.48 0.38
========== ========== ========== ==========
Diluted earnings
per share:
Numerator:
Net earnings $ 11,206,000 8,863,000 24,884,000 19,371,000
Interest
Expense on
convertible
debt (net of
tax effect) 111,000 111,000 333,000 333,000
---------- ---------- ---------- ----------
$ 11,317,000 8,974,000 25,217,000 19,704,000
========== ========== ========== ==========
Denominator:
Weighted
average shares
outstanding 52,162,000 51,290,000 51,959,000 51,042,000
Effect of
common stock
options 2,685,000 3,055,000 2,630,000 2,976,000
Effect of
common stock
warrant 3,017,000 3,096,000 3,002,000 2,993,000
Convertible debt 2,000,000 2,000,000 2,000,000 2,000,000
---------- ---------- ---------- ----------
59,864,000 59,441,000 59,591,000 59,011,000
========== ========== ========== ==========
Earnings per share $ 0.19 0.15 0.42 0.33
========== ========== ========== ==========
4. Trade accounts receivable are presented net of allowances for doubtful
accounts, returns, and credits of $3,937,000 and $4,333,000 at December 31,
1997 and March 31, 1997, respectively.
5. Effective August 22, 1997, the Company sold certain assets of its Pro CD,
Inc. subsidiary ("Pro CD") to CD-ROM Technologies, Inc., a wholly-owned
subsidiary of American Business Information, Inc. (collectively "ABI"). ABI
acquired the retail and direct marketing operations of Pro CD, along with
compiled telephone book data for aggregate cash proceeds
<PAGE>
of $18,000,000, which included consideration for a compiled telephone book
data license. The Company also entered into a data license agreement with
ABI under which the Company will pay ABI $8,000,000 over a two-year period,
and a technology license agreement under which ABI will pay the Company
$8,000,000 over a two-year period. In conjunction with the sale to ABI, the
Company also recorded certain valuation and contingency reserves. Included
in other income is the gain on disposal related to this transaction of
$855,000.
6. During the quarter ended September 30, 1997, the Company sold two parcels
of property which were formerly used by its Acxiom Mailing Services unit.
Aggregate cash proceeds were $2,274,000 resulting in a net gain of $105,000
which is included in other income.
7. Effective October 1, 1997, the Company acquired 100% ownership of
MultiNational Concepts, Ltd. ("MultiNational") and Catalog Marketing
Services, Ltd. (d/b/a Shop the World by Mail), entities under common
control (collectively "STW"). Total consideration was $4,641,000 (net of
cash acquired) and other cash consideration based on the future performance
of STW. MultiNational, headquartered in Hoboken, New Jersey, is an
international mailing list and database maintenance provider for consumer
catalogers interested in developing foreign markets. Shop the World by
Mail, headquartered in Sarasota, Florida, provides cooperative customer
acquisition programs, and also produces an international catalog of
catalogs whereby end-customers in over 60 countries can order catalogs from
around the world.
Also during the quarter, the Company acquired Buckley Dement, L.P. and its
affiliated company, KM Lists, Incorporated (collectively "Buckley Dement").
Buckley Dement, headquartered in Skokie, Illinois, provides list brokerage,
list management, promotional mailing and fulfillment, and merchandise order
processing to pharmaceutical, health care, and other commercial customers.
Total consideration was $14,150,000 (net of cash acquired) and other cash
consideration based on the future performance of Buckley Dement.
Both acquisitions are accounted for as purchases and their operating
results are included with the Company's results beginning October 1, 1997.
The purchase price for the two acquisitions exceeded the fair value of net
assets acquired by $12,597,000 and $5,205,000 for Buckley Dement and STW,
respectively. The resulting excess of cost over net assets acquired for
both acquisitions is being amortized over its estimated economic life of 20
years. The pro forma combined results of operations, assuming the
acquisitions occurred at the beginning of the fiscal year, are not
materially different than the historical results of operations reported.
<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 $120.7 million for the quarter ended December
31, 1997, a 15% increase over the same quarter a year ago. For the nine months
ended December 31, 1997 consolidated revenue was $331.0 million, an increase of
12%. It is important to note that the revenue increases when adjusted for the
pass-through revenue and ProCD retail revenue discussed below, are 24% and 20%
for the quarter and year-to-date, respectively.
Services Division revenue of $38.3 million increased 17% over the third quarter
in the prior year. Business units with increases for the quarter included the
Insurance, High Tech, Publishing, and Utilities business units, along with the
business units serving Allstate, Citicorp, and IBM. The Services Division also
includes revenue in the current quarter from Buckley Dement. This growth was
partially offset by decreases in the Retail and Telecommunications business
units. Telecommunications remains sluggish primarily due to the continued
inability of the regional Bell operating companies to effectively compete in the
long distance phone market to this point.
Alliances Division revenue of $39.3 million for the third quarter reflects a 14%
increase from the prior year. However, adjusting for a reduction in pass-through
revenue recorded on the Trans Union Corporation ("Trans Union") marketing
services contract last year, revenue actually increased by 24%. Financial
services revenue increased 70% including revenue for two servers sold in
connection with the delivery of two open data mart solutions. Trans Union
revenue of $15.1 million increased 6% over the prior year. However, adjusting
for the pass-through revenue recorded last year, the increase is 33% reflecting
growth in the Trans Union data center contract plus revenue related to the
marketing services agreement. All other Alliances Division business units were
down approximately $2.5 million reflecting a software sale to R.L. Polk & Co.
("Polk") last year partially offset by incremental Guideposts revenues this year
and other new business.
The Data Products Division revenue of $33.4 million increased 11% over the prior
year for the third quarter. Adjusting for the Pro CD retail business sold in
August, the increase was 30%. DMI and DataQuick revenue increased 19% and 37%,
respectively, while Acxiom Data Group (formerly known as InfoBase) revenue
increased 46%. Pro CD revenue decreased $3.8 million from the prior year
reflecting the sale of the retail side of the business to ABI.
The International Division recorded revenue of $9.7 million for the quarter, a
37% increase over the prior year reflecting new contracts in the Retail and
Consumer Goods business units.
For the nine months ended December 31, 1997, divisional revenues increased as
follows: Services Division, up 14%; Alliances Division, up 8% (22% after
adjusting for Trans Union pass-through revenues); Data Products Division, up 11%
(24% after adjusting for the Pro CD retail business); and International
Division, up 20%.
<PAGE>
The Company's operating expenses for the quarter increased 14% compared to the
same quarter a year ago. For the nine months ended December 31, 1997, operating
expenses increased 11%. Salaries and benefits increased $9.6 million or 27% over
the prior year's third quarter including a 6% increase due to acquisitions
(primarily Buckley Dement). The remainder of the increase reflects additional
hires, normal merit increases, and a substantially higher incentive accrual
compared to the previous year. For the nine months ended December 31, 1997,
salaries and benefits increased 17% for generally the same reasons as noted for
the quarter. Computer, communications and other equipment costs decreased 4%
from the third quarter in the prior year primarily due to the effect of the
Trans Union pass-through expenses recorded in the prior year which essentially
offset increased computer costs reflecting capital expenditures made to
accommodate business growth over the past year. Computer, communications and
other equipment costs increased 3% for the nine months ended December 31, 1997.
Data costs increased 19% for the quarter and 16% for the nine months principally
due to the increase in data volumes under the Allstate data management agreement
and data costs resulting from strong Acxiom Data Group revenue. Other operating
expenses were flat for the quarter reflecting the impact of the sale of the Pro
CD retail unit offset by normal volume-related increases, increases related to
acquisitions, and hardware costs related to the server sales noted above. For
the nine months ended December 31, 1997, other operating costs and expenses were
up only 2%, reflecting the reasons noted for the quarter, combined with a bad
debt write-off in the prior year.
Income from operations as a percentage of revenue increased from 15.1% to 16.2%
for the third quarter and from 12.6% to 13.3% for the nine months ended December
31, 1997.
Interest expense was higher in both the quarter and the nine months due
primarily to higher average debt levels. The change in other income and expense
for the third quarter reflects higher interest income on noncurrent receivables
partially offset by higher goodwill amortization due to recent acquisitions. For
the nine months, in addition to the interest income and goodwill amortization
noted above, the current year includes gains of $1.0 million resulting from the
sale of Pro CD's retail business and property formerly used by Acxiom Mailing
Services versus a $2.1 million charge in the prior year due to a write-off
related to the sale of the Acxiom Mailing Services facility.
The Company's effective tax rate for the quarter and nine months was 37.5%
compared to 38.5% for the year-earlier periods. For the full fiscal year ended
March 31, 1997, the effective rate was 37.5%. The Company expects the rate to
remain in the 37-39% range for the current fiscal year.
Net income increased 26% and 28% for the quarter and nine months ended December
31, 1997, respectively.
The Company has implemented Statement of Financial Accounting Standards No. 128,
"Earnings per Share" in the current quarter as required by the statement. See
footnote 3 to the consolidated financial statements for the calculation and
reconciliation of basic and diluted earnings per share. Basic earnings per share
increased 24% and 26% for the quarter and nine months, respectively. Diluted
earnings per share increased 19% and 27% for the quarter and nine months,
respectively. In general, diluted earnings per share will be approximately the
same as the earnings per share historically reported by the Company. Basic
earnings per share will be a greater amount because it does not take into
account dilution from stock options, convertible debt, and warrants which have
been considered common stock equivalents and have previously been included by
the Company in reported earnings per share.
<PAGE>
Capital Resources and Liquidity
Working capital at December 31, 1997 was $53.8 million compared to $48.4 million
at March 31, 1997. At December 31, 1997 the Company had available credit lines
of $64.0 million of which $48.1 million was outstanding. The floating rate note
payable which has a balance as of December 31, 1997 of $3,805,000 has been
refinanced with the same lender and is now due June 30, 2002. This note had
previously been due in full on June 30, 1997. The Company has been allowed by
the holders of the $25 million convertible note to reduce the amount of the
letter of credit which collateralizes the convertible note to $12.5 million,
which increases the Company's available credit line under the revolving credit
agreement from $50 million to $62.5 million. The Company has also renewed its
short-term unsecured credit agreement, in the amount of $1.5 million, which now
expires July 31, 1998. The Company's debt-to-capital ratio (capital defined as
long-term debt plus stockholders' equity) was 37% on December 31, 1997, compared
with 36% on March 31, 1997.
Cash provided by operating activities was $28.7 million for the nine months
ended December 31, 1997, an increase of 8% compared with cash provided by
operating activities of $26.4 million in the previous year's first nine months.
Earnings before interest, taxes, depreciation, and amortization ("EBITDA")
increased by 29% compared to the year-earlier period, while the resulting
operating cash flow was offset by changes in accounts receivable and other
assets and liabilities which had more of a negative effect on cash flow than in
the prior year. In the current year, $56.8 million was used by investing
activities, including capital expenditures of $41.1 million. This represents a
decrease from the $44.2 million of capital expenditures in the prior-year
period, which included significant capital expenditures for the Polk data center
outsourcing contract. The Company expects capital expenditures for the full year
to be approximately $50 million. However, actual capital expenditures are
somewhat dependent on acquisition activities as well as capital requirements for
new business. Investing activities also reflect the cash of $18.8 million paid
for the purchases of STW and Buckley Dement. Note 7 to the consolidated
financial statements discusses the acquisitions in more detail. Investing
activities also included $15.7 million received from the sale of assets,
primarily reflecting $13.0 million from the sale of assets of Pro CD, which is
more fully discussed in note 5 to the consolidated financial statements.
Investing activities also reflect the investment of $4.9 million by the Company
in joint ventures, including an investment of approximately $4.0 million in
Bigfoot International, Inc., an emerging company that provides services and
tools for Internet E-mail users. Financing activities provided $28.0 million,
primarily reflecting additional borrowings under the revolving line of credit.
While the Company does not have any material contractual commitments for capital
expenditures, additional investments in facilities and computer equipment
continue to be necessary to support the growth of the business. In addition, new
outsourcing or facilities management contracts frequently require substantial
up-front capital expenditures in order to acquire or replace existing assets. In
some cases, the Company also sells software, hardware, and data to customers
under extended payment terms or notes receivable collectible over one to eight
years. These arrangements also require up-front expenditures of cash, which are
repaid over the life of the agreement. 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
<PAGE>
levels of 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 unused capacity to raise capital which could be used to
support future growth.
The Company, like most owners of computer software, is in the process of
assessing and modifying, where needed, its computer applications to ensure they
will function properly in the year 2000. The financial impact to the Company has
not been and is not expected to be material to its financial position or results
of operations in any given fiscal year. The Company is currently operating under
an internal deadline to ensure all of its computer applications are "year 2000
ready" by December 31, 1998.
The Financial Accounting Standards Board has issued statements No. 130,
"Reporting Comprehensive Income" and No. 131, "Disclosures about Segments of an
Enterprise and Related Information." Both of these statements will be adopted by
the Company in fiscal 1999. Statement No. 130 requires that all components of
comprehensive income be reported in a financial statement displayed with the
same prominence as other financial statements, and requires the reporting of
total comprehensive income in that financial statement. Statement No. 131
requires public companies to report certain information about operating
segments. The Company expects to report segment information using the four
operating divisions into which it was organized effective April, 1997.
Certain statements in this Management's Discussion and Analysis may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements, which are not statements of
historical fact, may contain estimates, assumptions, projections and/or
expectations regarding the Company's financial position, results of operations,
market position, product development, regulatory matters, growth opportunities,
and other similar forecasts and statements of expectation. Such forward-looking
statements are not guarantees of future performance. They involve known and
unknown risks, uncertainties, and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Representative examples of such factors are
discussed in more detail in the Company's Annual Report on Form 10-K and
include, among other things, the possible adoption of legislation or industry
regulation concerning certain aspects of the Company's business; the removal of
data sources and/or marketing lists from the Company; the ability of the Company
to retain customers who are not under long-term contracts with the Company;
technology challenges; year 2000 readiness issues; the risk of damage to the
Company's data centers or interruptions in the Company's telecommunications
links; acquisition integration; the effects of postal rate increases; and other
market factors. See "Additional Information Regarding Forward-looking
Statements" in the Company's Annual Report on Form 10-K filed June 30, 1997.
<PAGE>
Form 10-Q
ACXIOM CORPORATION
PART II - OTHER INFORMATION
Item 5. Other Information
In February, 1998, the Company's Board of Directors adopted a
shareholder rights plan that provided for a dividend distribution of
one preferred stock purchase right (a "Right") for each outstanding
share of common stock, distributed to stockholders of record on
February 9, 1998. The Rights will be exercisable only if a person or
group acquires 20% or more of the Company's common stock or announces
a tender offer for 20% or more of the common stock. Each Right will
entitle stockholders to buy one one-thousandth of a share of newly
created Participating Preferred Stock, par value $1.00 per share, of
the Company at an initial exercise price of $100 per Right. If a
person acquires 20% or more of the Company's outstanding common
stock, each Right will entitle its holder to purchase common stock
(or, in certain circumstances, Participating Preferred Stock) of the
Company having a market value at that time of twice the Right's
exercise price. Under certain conditions, each Right will entitle its
holder to purchase stock of an acquiring company at a discount.
Rights held by the 20% holder will become void. The Rights will
expire on February 9, 2008, unless earlier redeemed by the Board at
$0.01 per Right.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K.
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: February 10, 1998
By: /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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 2,586
<SECURITIES> 0
<RECEIVABLES> 89,995
<ALLOWANCES> 3,937
<INVENTORY> 0
<CURRENT-ASSETS> 104,096
<PP&E> 221,118
<DEPRECIATION> 94,055
<TOTAL-ASSETS> 369,371
<CURRENT-LIABILITIES> 50,302
<BONDS> 110,273
0
0
<COMMON> 5,316
<OTHER-SE> 181,061
<TOTAL-LIABILITY-AND-EQUITY> 369,371
<SALES> 0
<TOTAL-REVENUES> 330,985
<CGS> 0
<TOTAL-COSTS> 287,113
<OTHER-EXPENSES> (207)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,264
<INCOME-PRETAX> 39,815
<INCOME-TAX> 14,931
<INCOME-CONTINUING> 24,884
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,884
<EPS-PRIMARY> .48
<EPS-DILUTED> .42
</TABLE>
