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, 1999 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 8180, 1 Information Way,
Little Rock, Arkansas 72203
(Address of Principal Executive Offices) (Zip Code)
(501) 342-1000
(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 November 5, 1999 was 85,926,582.
<PAGE>
Form 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company for which report is filed:
ACXIOM CORPORATION
The condensed 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, March 31,
1999 1999
------- -------
Assets
Current assets:
Cash and cash equivalents $ 13,315 12,604
Trade accounts receivable, net 210,362 184,799
Refundable income taxes - 12,651
Deferred income taxes 30,643 30,643
Other current assets 73,438 61,302
------- -------
Total current assets 327,758 301,999
------- -------
Property and equipment 347,307 341,841
Less - Accumulated depreciation and
amortization 112,016 115,460
------- -------
Property and equipment, net 235,291 226,381
------- -------
Software, net of accumulated amortization 47,681 37,400
Excess of cost over fair value of net
assets acquired 144,501 122,483
Other assets 237,958 201,537
------- -------
$ 993,189 889,800
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt 20,467 23,355
Trade accounts payable 61,269 60,216
Accrued merger and integration costs 17,759 33,181
Accrued payroll and related expenses 13,942 18,224
Other accrued expenses 18,692 25,744
Deferred revenue 6,187 7,195
Income taxes 8,851 -
------- -------
Total current liabilities 147,167 167,915
------- -------
Long-term debt, excluding current installments 310,421 325,223
Deferred income taxes 38,889 38,889
Stockholders' equity:
Common stock 8,633 8,106
Additional paid-in capital 286,870 186,011
Retained earnings 204,062 167,013
Accumulated other comprehensive income (loss) 403 (324)
Treasury stock, at cost (3,256) (3,033)
------- -------
Total stockholders' equity 496,712 357,773
------- -------
Commitments and contingencies $ 993,189 889,800
======= =======
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Three Months Ended
September 30
1999 1998
------- -------
Revenue $ 246,840 180,030
Operating costs and expenses:
Salaries and benefits 91,840 71,348
Computer, communications and other equipment 38,570 28,232
Data costs 29,532 28,028
Other operating costs and expenses 47,015 25,757
Special charges - 109,372
------- -------
Total operating costs and expenses 206,957 262,737
------- -------
Income (loss) from operations 39,883 (82,707)
------- -------
Other income (expense):
Interest expense (6,534) (4,323)
Other, net 731 2,400
------- -------
(5,803) (1,923)
------- -------
Earnings (loss) before income taxes 34,080 (84,630)
Income taxes 12,780 (24,082)
------- -------
Net earnings (loss) $ 21,300 (60,548)
======= =======
Earnings (loss) per share:
Basic $ 0.25 (0.79)
======= =======
Diluted
$ 0.24 (0.79)
======= =======
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Six Months Ended
September 30
1999 1998
------- -------
Revenue $ 458,346 344,542
Operating costs and expenses:
Salaries and benefits 175,549 135,065
Computer, communications and other equipment 72,744 53,188
Data costs 54,648 54,435
Other operating costs and expenses 85,276 54,868
Special charges - 109,372
------- -------
Total operating costs and expenses 388,217 406,928
------- -------
Income (loss) from operations 70,129 (62,386)
------- -------
Other income (expense):
Interest expense (12,353) (8,399)
Other, net 1,500 4,914
------- -------
(10,853) (3,485)
------- -------
Earnings (loss) before income taxes 59,276 (65,871)
Income taxes 22,227 (17,060)
------- -------
Net earnings (loss) $ 37,049 (48,811)
======= =======
Earnings (loss) per share:
Basic $ 0.44 (0.64)
======= =======
Diluted $ 0.42 (0.64)
======= =======
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30
1999 1998
------ -------
Cash flows from operating activities:
Net earnings (loss) $ 37,049 (48,811)
Non-cash operating activities:
Depreciation and amortization 40,849 30,058
Loss (gain) on disposal of assets 265 (13)
Provision for returns and doubtful accounts 528 1,549
ESOP compensation - 1,388
Special charges - 109,372
Changes in operating assets and liabilities:
Accounts receivable (23,188) (37,419)
Other assets (18,100) (35,483)
Accounts payable and other liabilities (13,332) (14,887)
Merger and integration costs (15,422) (1,255)
------ -------
Net cash provided by operating activities 8,649 4,499
------ -------
Cash flows from investing activities:
Disposition of assets 1,211 135
Development of software (20,736) (16,908)
Capital expenditures (64,701) (47,323)
Proceeds from sale and leaseback transaction 32,513 -
Sales of marketable securities - 7,761
Investments in joint ventures (1,401) (8,145)
Net cash paid in acquisitions (15,581) (22,296)
------ -------
Net cash used by investing activities (68,695) (86,776)
------ -------
Cash flows from financing activities:
Proceeds from debt 76,076 40,186
Payments of debt (77,939) (81,544)
Sale of common stock 62,636 15,784
------ -------
Net cash used by financing activities 60,773 (25,574)
------ -------
Effect of exchange rate changes on cash (16) 31
------ -------
Net increase (decrease) in cash and
cash equivalents 711 (107,820)
Cash and cash equivalents at beginning of
period 12,604 117,652
------ -------
Cash and cash equivalents at end of period $ 13,315 9,832
====== =======
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 16,454 8,210
Income taxes 717 4,164
====== =======
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Form 10-Q
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Certain note information has been omitted because it has not changed
significantly from that reflected in Notes 1 through 18 of the Notes to
Supplemental Consolidated Financial Statements filed as a part of the
Registrant's restated consolidated financial statements as a result of the
Registrant's merger with Computer Graphics of Arizona, Inc. and all of its
affiliated companies, as filed with the Securities and Exchange Commission on a
Form 8-K dated June 21, 1999.
<PAGE>
ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. During the year ended March 31, 1999, the Company recorded special charges
totaling $118.7 million related to merger and integration charges
associated with the May & Speh merger and the write down of other impaired
assets.
The following table shows the balances which were accrued as of March
31,1999 and the changes in those balances during the six months ended
September 30, 1999 (dollars in thousands):
March 31, September 30,
1999 Payments 1999
---- -------- ----
Associate-related reserves $ 4,354 1,531 2,823
Contract termination costs 27,000 13,500 13,500
Other accruals 1,827 391 1,436
------ ------ ------
$ 33,181 15,422 17,759
====== ====== ======
The bulk of the associate-related reserves and contract termination costs
will be paid during the current fiscal year. The other accruals will be
paid out over periods ranging up to five years.
On May 28, 1999, the Company completed the acquisition of Computer Graphics
of Arizona, Inc. ("Computer Graphics") and all of its affiliated companies
in a stock-for-stock merger. The Company issued 1,871,343 shares of its
common stock in exchange for all the outstanding common stock of Computer
Graphics. Computer Graphics, a privately held enterprise headquartered in
Phoenix, Arizona, is a computer service bureau principally serving
financial services direct marketers. This acquisition was accounted for as
a pooling-of-interests and, accordingly, the consolidated financial
statements for periods prior to the combination have been restated to
include the accounts and results of operations of Computer Graphics.
Included in the statement of operations for the six months ended September
30, 1999 are revenues of $5.3 million and earnings before income taxes of
$1.7 million for Computer Graphics for the period from April 1, 1999 to May
28, 1999. For the six months ended September 30, 1998 Computer Graphics had
revenues of $11.4 million and earnings before income taxes of $1.7 million.
Effective April 1, 1999, the Company acquired the assets of Horizon
Systems, Inc. ("Horizon") for $16.5 million in cash and common stock and
the assumption of certain liabilities of Horizon, and other cash and stock
consideration based on the future performance of Horizon. The acquisition
has been accounted for as a purchase and, accordingly, the results of
operations of Horizon are included in the consolidated results of
operations from the date of the acquisition. The excess of the purchase
price over the net assets acquired of $14.1 million is being amortized over
20 years.
<PAGE>
Effective August 1, 1999 the Company acquired all of the issued and
outstanding common stock of Access Communication Systems, Inc. ("Access")
for 300,000 shares of the Company's common stock, valued at $6.3 million.
The acquisition has been accounted for as a purchase and, accordingly, the
results of operations of Access are included in the consolidated results of
operations from the date of acquisition. The excess of the purchase price
over the net assets acquired of $8.6 million is being amortized over 20
years.
2. Included in other assets are unamortized deferred expenses and outsourcing
capital expenditure costs in the amount of $36.7 million and $28.4 million
at September 30, 1999 and March 31, 1999, respectively. These costs are
amortized over the life of the related contract. Noncurrent receivables
from software license, data, and equipment sales are also included in other
assets in the amount of $41.3 million and $24.9 million at September 30,
1999 and March 31, 1999, respectively. The current portion of such
receivables is included in other current assets in the amount of $30.1
million and $24.6 million as of September 30, 1999 and March 31, 1999,
respectively. Other assets also included $125.4 million and $103.5 million
in capitalized software license agreements at September 30, 1999 and March
31, 1999, respectively. These licenses are enterprise-wide agreements for
systems software from several vendors with terms of from five to seven
years. The agreements provide for substantial Company growth and as a
result, reflect considerable discounts from standard list prices. The
licenses are being amortized over their estimated useful lives. The
offsetting liabilities for the present value of the future payments are
included in long-term debt. Also included in other assets are investments
in joint ventures in the amount of $18.4 million and $16.9 million at
September 30, 1999 and March 31, 1999 respectively.
3. Long-term debt consists of the following (dollars in thousands):
September 30, March 31,
1999 1999
5.25% Convertible subordinated notes due 2003; $115,000 115,000
convertible at the option of the holder into
shares of common stock at a conversion price
of $19.89 per share; redeemable at the option
of the Company at any time after April 3, 2001
Unsecured revolving credit agreement 71,314 55,384
6.92% Senior notes due March 30, 2007, payable 30,000 30,000
in annual installments of $4,286 commencing
March 30, 2001; interest is payable semi-annually
<PAGE>
3.12% Convertible note, interest and principal - 25,000
due April 30, 1999; convertible at maturity into
two million shares of common stock
Capital leases on land, buildings and equipment 19,195 20,587
payable in monthly payments of $357 of principal
and interest; remaining terms of from five to
twenty years; interest rates at approximately 8%
Software license liabilities payable over terms 77,598 76,748
of from five to seven years; effective interest
rates at approximately 6%
8.5% Unsecured term loan; quarterly principal 8,800 9,000
payments of $200 plus interest with the balance
due in 2003
9.75% Senior notes, due May 1, 2000, payable in 2,143 4,286
annual installments of $2,143 each May 1;
interest is payable semi-annually
Other capital leases, debt and long-term
liabilities 6,838 12,573
------- -------
Total long-term debt 330,888 348,578
Less current installments 20,467 23,355
------- -------
Long-term debt, excluding current
installments $310,421 325,223
======= =======
In April 1999, the holder of the 3.12% convertible note elected to receive
the two million shares of the Company's common stock. Accordingly, the
balance of the debt and related accrued interest of $2.1 million has been
reclassified into equity.
In connection with the construction of the Company's new headquarters
building and a new customer service facility in Little Rock, Arkansas, the
Company has entered into 50/50 joint ventures with local real estate
developers. In each case, the Company is guaranteeing portions of the loans
for the buildings. The aggregate amount of the guarantees at September 30,
1999 was approximately $4.4 million.
<PAGE>
4. Below is a calculation and reconciliation of the numerator and denominator
of basic and diluted earnings per share (dollars in thousands, except per
share amounts):
For the For the
Quarter Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
Basic earnings (loss) per share:
Numerator - net earnings (loss) $ 21,300 (60,548) 37,049 (48,811)
====== ====== ====== ======
Denominator
Weighted average shares
outstanding 84,741 76,584 83,764 75,869
====== ====== ====== ======
Earnings (loss) per share: $ 0.25 (0.79) 0.44 (0.64)
====== ====== ====== ======
Diluted earnings (loss) per share:
Numerator:
Net earnings (loss) $ 21,300 (60,548) 37,049 48,811
Interest expense on
convertible debt
(net of tax effect) 943 - 1,886 -
------ ------ ------ ------
$ 22,243 (60,548) 38,935 (48,811)
====== ====== ====== ======
Denominator
Weighted average shares
outstanding 84,741 76,584 83,764 75,869
Effect of common stock
options and warrants 3,569 - 3,849 -
Convertible debt 5,783 - 5,783 -
------ ------ ------ ------
94,093 76,584 93,396 75,869
====== ====== ====== ======
Earnings (loss) per share $ 0.24 (0.79) 0.42 (0.64)
====== ====== ====== ======
Options to purchase shares of common stock that were outstanding during the
periods reported, but were not included in the computation of diluted
earnings per share because the option exercise price was greater than the
average market price of the common shares, are shown below:
<PAGE>
For the For the
Quarter Ended Six Months Ended
September 30, September 30,
1999 1999
Number of shares under
option (in thousands) 4,059 2,713
Range of exercise prices $23.55 - 54.00 $23.55 - 54.00
============= =============
All potentially dilutive securities were excluded from the diluted earnings
per share calculations for the quarter and six months ended September 30,
1998 because they were antidilutive. The effect of common stock options and
warrants which were excluded was 6,743,000 and 6,939,000 for the quarter
and six months, respectively. Potentially dilutive shares related to
convertible debt which were excluded were 7,783,000 for both the quarter
and six months. Interest expense on the convertible debt (net of tax
effect) excluded in computing diluted earnings (loss) per share was
$1,057,000 and $2,125,000 for the quarter and six months, respectively.
5. Trade accounts receivable are presented net of allowances for doubtful
accounts, returns, and credits of $5.3 million and $5.6 million at
September 30, 1999 and March 31, 1999, respectively.
6. The following tables present information by business segment (dollars in
thousands):
For the Quarter Ended For the Six Months Ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
------- ------- ------- -------
Services $ 162,666 105,303 292,758 202,468
Data Products 59,953 48,020 107,899 91,807
Information Technology (I. T.)
Management 43,650 36,604 89,989 68,076
Intercompany eliminations (19,429) (9,897) (31,300) (17,809)
------- ------- ------- -------
Total revenue $ 246,840 180,030 458,346 344,542
======= ======= ======= =======
Services 32,645 20,734 58,751 38,472
Data Products 6,622 6,802 8,039 11,494
Information Technology (I. T.)
Management 10,999 7,948 22,261 13,515
Intercompany eliminations (9,715) (4,847) (15,651) (8,829)
Corporate and other (668) (113,344) (3,271) (117,038)
------- ------- ------- -------
Income from operations $ 39,883 (82,707) 70,129 (62,386)
======= ======= ======= =======
<PAGE>
7. On July 28, 1999 the Company completed a secondary offering of 1,500,000
shares of its common stock. In addition, four shareholders of the Company
sold 4,011,076 shares of common stock. In connection with the offering, the
Company granted an over-allotment option to the underwriters to purchase up
to an additional 800,000 shares. The underwriters exercised the option on
August 17, 1999 for 500,000 shares, bringing the total shares sold by the
Company to 2,000,000. The net proceeds to the Company, after deducting
underwriting discounts and offering expenses, were approximately $51.3
million.
8. On September 30, 1999 the Company entered into a synthetic lease
arrangement under which a lessor committed to purchase and lease to the
Company up to $100 million of equipment under a master lease agreement. The
initial funding was approximately $32.5 million paid directly to the
Company for the sale and leaseback of existing equipment, purchased
generally over the previous 18 months, and an additional $3.7 million for
new equipment which was paid directly to vendors. The Company presently
intends to lease only new equipment in the future. There was no gain or
loss on the sale and leaseback transaction. The leases, which have minimum
terms of 24 months for the sale and leaseback on the used equipment portion
and 36 months for the new equipment portion, are being accounted for as
operating leases.
9. The accumulated balance of other comprehensive income (loss), which
consists solely of foreign currency translation adjustment was $0.4 million
and ($0.3 million) as of September 30, 1999 and March 31, 1999,
respectively. Comprehensive income was $22.2 million and $37.8 million for
the quarter and six months ended September 30, 1999, respectively.
Comprehensive loss was $59.9 million and $48.1 million for the quarter and
six months ended September 30, 1998, respectively.
<PAGE>
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
On May 28, 1999, the Company completed the acquisition of Computer Graphics of
Arizona, Inc. ("Computer Graphics") and all of its affiliated companies in a
stock-for-stock merger. The acquisition was accounted for as a
pooling-of-interests, and accordingly, the consolidated financial statements for
periods prior to the combination have been restated to include the accounts and
results of operations of Computer Graphics.
Results of Operations
For the quarter ended September 30, 1999, consolidated revenue was $246.8
million, up 37% from the same quarter a year ago. For the six months ended
September 30, 1999, revenue was $458.3 million, an increase of 33% over the same
period in the prior year.
The following table shows the Company's revenue by business segment for the
quarters ended September 30, 1999 and 1998 (dollars in millions):
September 30, September 30, %
1999 1998 Change
----- ----- ------
Services $ 162.7 $ 105.3 +54%
Data Products 59.9 48.0 +25
I. T. Management 43.6 36.6 +19
Intercompany eliminations (19.4) (9.9) +96
----- ----- ---
$ 246.8 $ 180.0 +37%
===== ===== ===
Services segment revenue grew 54% for the quarter when compared to the same
quarter in the prior year. Led by the Financial Services Division, which doubled
over the prior year, the Services segment also reported strong growth from the
media, telecommunications, pharmaceutical and Sigma business units. The
International Division also reported strong growth with revenue increasing 38%
over the prior year. The Services segment continues to benefit from companies
implementing customer relationship management (CRM) strategies. The Allstate
business unit revenue, which is now less than 10% of the Company's total
revenue, decreased 8% from the prior year due to lower volumes and reduced
pricing under the new contract.
The Data Products segment second quarter revenue increased by 25% over the prior
year. A strong performance from the Infobase and DataQuick units which grew a
combined 45% was partially offset by flat revenues from the Direct Media unit.
<PAGE>
Revenues from I. T. Management for the quarter increased 19% over the prior
year. Revenue from new contracts including Montgomery Wards, City of Chicago,
Atlanta Gas and Light and approximately 15 smaller customers was partially
offset by Waste Management ending their contract during the quarter and
consequently reporting lower year-over-year revenue.
For the six months ended September 30, 1999, Services segment revenue was up
45%, Data Products was up 18%, and I. T. Management increased 32%. The
discussion above related to the second quarter is also generally applicable to
understanding the revenue increases for the six month period.
Salaries and benefits grew 29% for the quarter. This increase primarily reflects
headcount and merit increases associated with the growth of the business
combined with acquisitions not included in the prior year. A benefit from an
accrual adjustment related to an employee benefit plan of $1.3 million was
largely offset by a severance charge of approximately $1.0 million related to
terminations during the quarter. For the six months ended September 30, 1999,
salaries and benefits increased 30%, which also generally reflects both
headcount and normal salary increases resulting from the growth in the business.
Headcount increases are partially driven by acquisitions and new outsourcing
contracts signed since the comparable period in the prior year. Excluding the
accrual adjustment and severance charge noted above, as well as additional
accrual adjustment in the first quarter, the increase for the six months would
have been 32%.
Computer, communications and other equipment costs for the quarter increased
37%, reflecting increased capital expenditures and software costs associated
with the increased revenue volume. For the six months ended September 30, 1999,
computer, communications and other equipment costs were also up 37%.
Data costs increased 5% for the quarter due to the impact of fixed royalty
arrangements with outside data vendors combined with lower data costs associated
with the reduced volumes under the Allstate contract. For the six months, data
costs increased less than 1%.
Other operating costs and expenses increased 83% for the quarter principally due
to large sales of server equipment during the quarter. These server sales are
part of our data warehouse solution being delivered to our customers. Excluding
the impact of these sales, other operating expenses for the quarter would have
been 28% greater than in the prior year. This adjusted increase was generally
caused by the higher volume in revenue along with higher goodwill amortization
from acquisitions occurring since the same period in the prior year. For the six
months, other operating costs and expenses increased 55%, principally for the
same reasons noted above.
Income from operations for the quarter was $39.9 million, compared to an
operating loss in the prior year of $82.7 million. The prior year included
special charges of $109.4 million which were merger and integration charges
associated with the May & Speh merger and the write down of other impaired
assets. Excluding the special charges, operating margin increased from 14.8% to
16.2% for the quarter. For the six months ended September 30, 1999, income from
operations was $70.1 million, compared to a loss from operations in the prior
year of $62.4 million. Again excluding the special charges, operating margin
increased from 12.6% to 15.3% for the six months.
<PAGE>
Interest expense increased by $2.2 million in the current quarter compared to
the same quarter a year ago, as a result of higher debt levels. The increase for
the six months was $4.0 million for the same reason. Other income decreased $1.7
million from the previous year due to lower interest income from invested cash
related to the $115 million May & Speh convertible debt offering which was
completed in March of 1998. For the six-month period, the decrease was $3.4
million. The Company's effective tax rate for both the quarter and six months
was 37.5%. The effective tax rate in the prior year was impacted by the special
charges, which were not fully deductible for tax purposes. The Company recorded
net earnings of $21.3 million for the quarter and $37.0 million for the six
months, compared to net loss of $60.5 million for the quarter and $48.8 million
for the six months in the previous year. Earnings per share for the quarter on a
basic and diluted basis were $.25 and $.24, respectively. For the six months,
earnings per share on a basic and diluted basis were $.44 and $.42,
respectively.
Capital Resources and Liquidity
Working capital at September 30, 1999 totaled $180.6 million compared to $134.1
million at March 31, 1999. At September 30, 1999, the Company had available
credit lines of $151.5 million of which $72.8 million was outstanding. The
available credit lines included a temporary increase in the Company's $125.0
million revolving credit facility to $150.0 million until October 15, 1999. The
Company's debt-to-capital ratio (capital defined as long-term debt plus
stockholders' equity) was 38% at September 30, 1999 compared to 48% at March 31,
1999. Included in long-term debt at March 31, 1999 were two convertible debt
facilities totaling $140 million, of which $25 million was converted to equity
in April, 1999. The conversion price of the remaining $115 million convertible
debt is $19.89 per share. The market price of the Company's common stock has
been in excess of this conversion price for most of the current fiscal year,
although since September 30 it has dropped below the conversion price. If the
price of the Company's common stock increases to above the conversion price,
management expects this debt to be converted as well. Assuming that the
remaining $115 million converts to equity, the Company's debt-to-capital ratio
would be reduced to 24% at September 30, 1999. From March 31, 1999 to September
30, 1999, total stockholders equity increased 39% to $496.7 million.
Cash provided by operating activities was $8.6 million for the six months ended
September 30, 1999, compared with $4.5 million for the same period in the prior
year. Excluding special charges, earnings before interest, taxes, depreciation,
and amortization ("EBITDA"), increased by 37% compared to a year ago. EBITDA is
not intended to represent cash flows for the period, is not presented as an
alternative to operating income as an indicator of operating performance, may
not be comparable to other similarly titled measures of other companies, and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. However, EBITDA is a relevant measure of the Company's operations
and cash flows and is used internally as a surrogate measure of cash provided by
operating activities. The resulting operating cash flow in both the current and
prior year was reduced by the change in operating assets and liabilities. Days
sales outstanding was 80 days at both September 30, 1999 and March 31, 1999. The
days sales outstanding calculation reflects the impact of adjusting revenue and
receivables for long-term receivables included in other assets and pass-through
amounts receivable associated with the outsourcing contracts and VAT taxes in
the United Kingdom. These adjustments are made to properly reflect receivables
<PAGE>
and revenues on a comparable basis. The Company has set a target of 72 days
sales outstanding for March 31, 2000. The Company has designated 10% of its
leadership bonus plans toward achieving this goal.
Investing activities used $68.7 million in the six months ended September 30,
1999 compared to $86.8 million in the prior year. Investing activities included
$64.7 million in capital expenditures, compared to $47.3 million in the prior
year. Capital expenditures are principally due to purchases of data center
equipment to support the Company's outsourcing agreements, as well as the
purchase of additional data center equipment in the Company's core data centers.
Capital expenditures were partially offset by the sale and leaseback of
equipment under a synthetic leasing arrangement. The Company has obtained a
commitment from a financial institution for up to $100 million in equipment
purchases under this leasing facility. At September 30, 1999, the Company
obtained funding for $36.2 million of assets. Of this amount, $32.5 million was
paid to the Company for previously purchased assets and the remainder was paid
directly to vendors for asset purchases which were in process. Investing
activities also include cash paid for acquisitions, including the purchase of
Horizon Systems, Inc. in April 1999.
Financing activities provided $60.8 million for the six months ended September
30, 1999, compared to the use of $25.6 million in the previous year. Most of the
amount provided through debt proceeds represents borrowing under the revolving
credit agreement. Financing activities also include the proceeds of
approximately $51.3 million related to the sale of two million shares of stock
in a secondary public offering, as well as sales of common stock under existing
option and warrant agreements.
During fiscal 1999, construction was substantially completed on the Company's
new headquarters building and a new customer service facility in Little Rock,
Arkansas. These two buildings were built pursuant to 50/50 joint ventures
between the Company and local real estate investors. The Company has now
occupied both of these buildings. During the current fiscal year, the Company
has begun construction on a new customer service facility in Conway, Arkansas
and expects to begin construction on another customer service facility in Little
Rock. The Conway project is expected to be completed in the spring of 2000 and
to cost approximately $12.0 million. The Little Rock building is expected to
cost approximately $30.0 to $35.0 million and construction is expected to last
from January 2000 to September 2001. Subsequent to September 30, 1999, the
Company has secured construction and permanent financing for the Conway project
through a local bank. The City of Little Rock has committed to issue revenue
bonds for the Little Rock project.
While the Company does not have any other 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 hardware to customers
under extended payment terms or notes receivable collectible generally over
three years. These arrangements also require up-front expenditures of cash,
which are repaid over the life of the agreement. The Company also continues to
evaluate acquisitions which may require up-front payments of cash. As a result,
management expects that it will be necessary to raise additional capital. The
<PAGE>
Company is actively pursuing additional capital sources, including financing
arrangements for the new buildings noted above, additional equipment leasing,
and a possible permanent increase in the revolving credit line. In May of 1999,
the Company arranged a $25 million increase in the current revolving credit
facility. This temporary increase expired July 31, 1999, but was subsequently
extended through October 15, 1999. The Company also completed a secondary
offering of common stock July 28, 1999 under which 1.5 million shares of stock
were sold. The Company granted an option to the underwriters under which they
could purchase an additional 800,000 shares at a price of $25.85 per share. The
underwriters exercised the option for 500,000 shares on August 17, 1999. The
total net proceeds from these stock sales for the quarter after deducting
underwriting discounts and offering expenses were approximately $51.3 million.
Year 2000
Many computer systems ("IT Systems') and equipment and instruments with embedded
microprocessors ("non-IT systems") were designed to only recognize the last two
digits of a calendar year. With the arrival of the Year 2000, these systems and
microprocessors may encounter operating problems due to their inability to
distinguish years after 1999 from years preceding 1999. This could manifest in a
system failure or miscalculations causing disruption of operations, including,
among other things, a temporary inability to process or transmit data, or engage
in normal business activities. As a result, the Company is engaged in an
extensive project to remediate or replace its date-sensitive IT systems and
non-IT systems.
The following discussion of the implications of the Year 2000 issue for the
Company contains numerous forward-looking statements based on inherently
uncertain information. The information presented is based on the Company's best
estimates, which were derived utilizing a number of assumptions of future
events, including the continued availability of internal and external resources,
third party modifications, and other factors. However, there can be no guarantee
that these estimates will be achieved and actual results could differ. Although
the Company believes it will be able to make the necessary modifications in
advance, there can be no guarantee that failure to correctly modify the systems
would not have a material adverse effect on the Company.
Since 1996 the Company has been engaged in an enterprise-wide effort ("the
Project") to address the risks associated with the Year 2000 problem, both
internal and external. Under the Project, the Company has established a project
office comprised of representatives from each of the operating divisions of the
Company. A Company readiness champion and project leader are responsible for the
readiness process, which includes deliverables such as plans, reviews, and
appropriate sign-offs by the appropriate business unit leaders and the Company's
Year 2000 leadership. The Project also includes the dissemination of internal
communications and status reports on a regular basis to senior leadership.
The Company believes that it has identified and evaluated its internal Year 2000
issues and that sufficient resources have been devoted to renovating IT and
non-IT systems that were not already "Year 2000 ready." The Company set an
internal deadline of December 31, 1998 to achieve Year 2000 readiness status,
with any residual activity to conclude before March 31, 1999. Overall, this
<PAGE>
objective was achieved as outlined in the Project and any exceptions are being
managed. The original timeline was developed to allow the Company to focus on
recent mergers and acquisitions as well as customer-driven dependencies. While
the core Project substantially ended on March 31, 1999, a transition strategy
was implemented moving the Company from a project mode to a standards-based
maintenance mode. On-going activities based on the transition strategy include
reviewing or enhancing contingency plans, continuing vendor product analysis and
evaluation, establishing the Year 2000 readiness of acquisitions, and
maintaining the readiness standing of existing operations through purchasing
procedures and quality control processes.
The Project involved four phases: (1) planning; (2) remediation; (3) testing;
and (4) certification. The planning phase involved developing a detailed
inventory of applications and systems, identifying the scope of necessary
remediation to each application or system, and establishing a conversion
schedule. During the remediation phase, source codes were actually converted,
date fields were expanded or windowed, and the remediated system was tested to
ensure it is functionally the same as the existing production version. In the
testing phase, test data was prepared and the application was tested using a
variety of Year 2000 scenarios. The certification phase validated that a system
could run successfully in a Year 2000 environment and appropriate internal
sign-offs were obtained.
The following chart indicates the estimated state of completion from each phase
of the Project. It is important to note that each phase of the Project was
required to be completed before moving to the next phase.
Current Planned Planned
September December December
1999 1998 1999
---- ---- ----
Planning 100% 100% 100%
Remediation 99% 90% 100%
Testing 99% 80% 100%
Certification 99% 75% 100%
As previously indicated, any exceptions from the Project have been clearly
identified and are being managed. The source of the Company's remaining
exceptions is due primarily to customer driven dependencies and recent
acquisitions. The majority of these exceptions are targeted for conclusion
during November 1999, and the remainder are not material to the Company's
business.
The financial impact of the Project 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 costs to date associated with the Year 2000 effort
primarily represent a reallocation of existing Company resources. Because of the
range of possible issues and the large number of variables involved (including
the Year 2000 readiness of any entities acquired by the Company), it is
impossible to accurately quantify the potential cost of problems if the
Company's remediation efforts or the efforts of those with whom it does business
are not successful. Such costs and any failure of such remediation efforts could
result in a loss of business, damage to the Company's reputation, and legal
liability.
<PAGE>
The Company currently believes that with modifications to existing software and
conversions to new software, the Year 2000 issues can be mitigated. But the
systems of vendors on which the Company's systems rely may not be converted in a
timely fashion, or a vendor or customer may fail to convert its software or may
implement a conversion that is incompatible with the Company's systems, which
could have a material adverse impact on the Company.
In order to assess the readiness status of the Company's vendors, the Company
contacted each vendor, via written and/or telephone inquiries, regarding its
Year 2000 status and set up an internal database of this information. The
Company obtained, when possible, written commitments from each vendor that the
products supplied to the Company are or will be (by a date certain) Year 2000
ready. The Company received responses to 89% of its inquiries. The Company is
also relying on representations made or contained in its vendors' web sites. The
responses received were analyzed and where necessary, testing was undertaken.
Year 2000 ready versions of vendor products were obtained, as available, and
moved onto production platforms. The Company has also identified and continues
to communicate with customers to determine if customers have an effective plan
in place to address their Year 2000 issues, and to determine the extent of the
Company's vulnerability to the failure of customers to remediate their own Year
2000 issues.
The Company believes that the most likely risks of serious Year 2000 business
disruptions are external in nature, such as disruptions in telecommunications,
electric, or transportation services. In addition, the Company places a high
degree of reliance on computer systems of third parties, such as customers and
computer hardware and software suppliers. Although the Company is assessing the
readiness of these third parties and preparing contingency plans, there can be
no guarantee that the failure of these third parties to modify their systems in
advance of December 31, 1999 would not have a material adverse effect on the
Company. Of all the external risks, the Company believes the most reasonably
likely worst case scenario would be a business disruption resulting from an
extended and/or extensive communications failure.
In an effort to reduce the risks associated with the Year 2000 problem, the
Company has established and is currently continuing to develop Year 2000
contingency plans that build upon existing disaster recovery and contingency
plans. Examples of the Company's existing contingency plans include alternative
power supplies and communication lines. Contingency planning for possible Year
2000 disruptions will continue to be defined, improved and implemented
throughout 1999. To supplement existing disaster recovery and contingency
planning efforts, the Company has developed a Year 2000 response strategy to
specifically address the Year 2000 rollover event. Components of this strategy
include establishing sound, on-site back-up and recovery approaches,
establishing triage procedures and response teams, establishing expedited
communications with key vendors, maintaining the processing capabilities for
mission critical systems, implementing a freeze or controlled reduction in
production system changes from December 1, 1999 to January 31, 2000, and
exercising production systems on January 1, 2000 to promote production systems
availability and usability.
Despite the best efforts of the Company, the failure to correct a material Year
2000 problem could result in an interruption in, or a failure of, certain normal
business activities or operations. Any failures could materially and adversely
affect the Company's results of operations, liquidity and financial condition.
<PAGE>
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of third party vendors and
customers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition. The Project is expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 compliance and readiness of its
material third party vendors and customers. The Company believes that the
continued implementation of the Project will reduce the possibility of
significant interruptions to the Company's normal business operations.
Outlook
In a press release dated October 26, 1999, the Company, in a forward-looking
statement, disclosed plans to increase investment in technology to support the
Acxiom Data Network and AbiliTec products. The nature of the investments over
the next 2 to 2 1/2 years includes costs associated with reengineering
development, providing the production and testing environment, globalization,
incremental data content, sales incentives, marketing support, advertising and
branding. Management expects this required additional investment to be offset by
opportunities and savings in other areas for the current fiscal year. However,
as we ramp up this investment, next year's earnings per share growth may be
impacted and could be in the 15 - 20% range as a result of these investments. As
the more efficient AbiliTec delivered products become a predominant part of our
total revenue, we anticipate the results of our investment will produce margins
well above current levels.
As a result of several recent events, the extent and timing of this increased
investment has become more mission critical for the Acxiom Data Network and
AbiliTec products to become accepted as the industry standards for data
management and delivery. These recent events include:
* The results of the first 100-day project (ended September 1, 1999) for the
Acxiom Data Network and AbiliTec were successful and led to the
establishment of a second 100-day project. The first 100-day project was
principally developmental in nature to render the technology
production-ready for large scale applications.
* As we initiated the second 100-day project, whose primary purpose is to
implement the technology into our processing, we realized that the
potential for this technology to provide a quantum leap for customer data
integration in CRM applications within Acxiom and externally to support
e-commerce and enterprise-wide CRM applications was much larger than
previously recognized. We also realized that we needed to devote
substantial additional resources so that we would be able to service our
current business while at the same time implementing new technologies.
* The number of new business wins during the quarter in which the Acxiom Data
Network and AbiliTec technology was a key part of the selling process were
significant. Additionally, the new business pipeline includes a number of
other opportunities which also have the Acxiom Data Network and AbiliTec as
a significant element. Also the impending passage of legislation in the
U.S. financial services industry, which will allow banks, insurance, and
brokerage firms to merge, demonstrated that there could be significant new
opportunities for us in that industry.
* We also began to understand more fully that when the AbiliTec technology
was implemented internally that we would become substantially more
efficient.
<PAGE>
* The significant momentum of Customer Relationship Management (CRM) and
e-commerce initiatives has heightened the opportunities for Acxiom. Recent
independent studies have underscored this realization.
* A number of our multinational customers have requested us to rapidly build
up our global capabilities to support solutions across the world in the
same manner we deliver these solutions in the U. S.
As a result, the Company has decided to accelerate investment in Acxiom Data
Network and AbiliTec to optimize the opportunity and to ensure that the
technology becomes the industry standard for data integration.
Certain statements in this quarterly report 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 growth rates,
acquisition and divestiture opportunities, and other similar forecasts and
statements of expectation. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," and "should," and variations of these
words and similar expressions, are intended to identify these forward-looking
statements. 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. The
forward-looking statements include: statements concerning the Company's need for
additional capital and the ability to raise additional capital; statements
concerning the Company's ability to remediate date sensitive IT-systems and
non-IT systems in conjunction with the arrival of the year 2000 and the impact
of those efforts, and their success or failure, on the Company's future results
of operation; statements concerning the coming year's earnings per share growth;
statements concerning the positive impact of the Company's investment in Acxiom
Data Network and AbiliTec products on the Company's future revenues and margins;
statements concerning the impact of implementation of Acxiom Data Network and
AbiliTec technology in CRM applications, and those concerning the momentum of
CRM application and e-commerce initiatives; statements concerning the impact of
impending passage of legislation in the U.S. banking industry; statements
concerning efficiency gains related to the implementation of AbiliTec; and
statements concerning potential growth of international markets. Other factors
may cause actual results to differ materially from those in the forward-looking
statements. Representative factors include: the complexity and uncertainty
regarding the development of new high technology products, such as the Acxiom
Data Network and AbiliTec, and the loss of market share through competition or
the acceptance of these or other products on a less rapid basis than expected;
the introduction of competent products or technologies by other companies;
changes in the business information industries and markets; the company's
ability to protect proprietary information and technology or to obtain necessary
licenses on commercially reasonable terms; the company's ability to complete the
implementation of its Year 2000 plans and its customers ability to complete
their Year 2000 plans on a timely basis; a reduction in demand for the company's
<PAGE>
products and services resulting from its customers' Year 2000 issues; the
continued ability to attract and retain qualified technical associates and the
possible loss of associates to other organizations; the ability to motivate its
sales force; the ability to achieve cost reductions; changes in the regulatory
environment affecting the company's business, including but not limited to
legislation relating to the company's ability to collect and use data; data
suppliers might withdraw data from the company, leading to the company's
inability to provide certain products and services; short-term contracts affect
the predictability of the company's revenues; the potential loss of data center
capacity or interruption of telecommunication links; postal rate increases that
could lead to reduced volume of business; Acxiom's customers may cancel or
modify their agreements with the company; and other market factors. Other
factors are detailed from time to time in the company's periodic reports and
registration statements. The company undertakes no obligation to publicly
release any revision to any forward looking statement to reflect any future
events or circumstances. See "Additional Information Regarding Forward-looking
Statements" in the Company's Annual Report on Form 10-K.
<PAGE>
Form 10-Q
ACXIOM CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On September 20, 1999 the Company and certain of its directors and
officers were sued by an individual shareholder in a purported class
action filed in the United States District Court for the Eastern
District of Arkansas. The action alleges that the defendants violated
Section 11 of the Securities Act of 1933 in connection with the July
23, 1999 public offering of 5,421,000 shares of the common stock of
the Company. In addition, the action seeks to assert liability against
the Company Leader pursuant to Section 15 of the Securities Act of
1933. The action seeks to have a class certified of all purchasers of
the stock sold in the public offering. Two additional suits were
subsequently filed in the same venue against the same defendants and
asserting the same allegations. The cases are in their infancy and no
substantive filings have been made subsequent to the initial
complaints. The Company believes the allegations are without merit and
the defendants intend to vigorously contest the cases, and at the
appropriate time, seek their dismissal.
There are various other litigation matters that arise in the normal
course of the business of the Company. None of which, however, are
believed to be material in their nature or scope.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on August 4,
1999. At the meeting, the shareholders approved the election of three
directors. Voting results for each individual nominee were as follows:
William T. Dillard II, 64,244,896 votes for and 446,719 votes withheld;
Harry C. Gambill, 64,234,374 votes for and 457,241 votes withheld, and
Thomas F. (Mack) McLarty, III, 64,167,642 votes for and 523,973 votes
withheld. These three elected directors will serve with the other five
Board members: Dr. Ann H. Die and Charles D. Morgan, whose terms will
expire at the 2000 Annual Meeting, and Rodger S. Kline, Robert A.
Pritzker and James T. Womble, whose terms expire at the 2001 Annual
Meeting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Forms 8-K.
A report was filed on July 23, 1999, which reported the
Registrant's first quarter's financial results.
<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: November 12, 1999
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> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 13,315
<SECURITIES> 0
<RECEIVABLES> 210,362
<ALLOWANCES> 5,300
<INVENTORY> 0
<CURRENT-ASSETS> 327,758
<PP&E> 347,307
<DEPRECIATION> 112,016
<TOTAL-ASSETS> 993,189
<CURRENT-LIABILITIES> 147,167
<BONDS> 310,421
0
0
<COMMON> 8,633
<OTHER-SE> 488,079
<TOTAL-LIABILITY-AND-EQUITY> 993,189
<SALES> 0
<TOTAL-REVENUES> 458,346
<CGS> 0
<TOTAL-COSTS> 388,217
<OTHER-EXPENSES> (1,500)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,353
<INCOME-PRETAX> 59,276
<INCOME-TAX> 22,227
<INCOME-CONTINUING> 37,049
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,049
<EPS-BASIC> .44
<EPS-DILUTED> .42
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING IS A RESTATED FINANCIAL DATA SCHEDULE AS A RESULT OF THE POOLING
OF INTERESTS WITH COMPUTER GRAPHICS.
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> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 9,832
<SECURITIES> 0
<RECEIVABLES> 160,812
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 239,016
<PP&E> 336,251
<DEPRECIATION> 151,963
<TOTAL-ASSETS> 665,047
<CURRENT-LIABILITIES> 133,258
<BONDS> 218,594
0
0
<COMMON> 8,009
<OTHER-SE> 271,129
<TOTAL-LIABILITY-AND-EQUITY> 665,047
<SALES> 0
<TOTAL-REVENUES> 344,542
<CGS> 0
<TOTAL-COSTS> 406,928
<OTHER-EXPENSES> (4,914)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,399
<INCOME-PRETAX> (65,871)
<INCOME-TAX> (17,060)
<INCOME-CONTINUING> (48,811)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,811)
<EPS-BASIC> (.64)
<EPS-DILUTED> (.64)
</TABLE>
