-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CIcKO7qrHy3Zc2dN2ElMYE4k4omI9c3WpPw4crUt8B7HugTRht11gYTCp2wnUZgO YtfWnpmZRXubSyh8+xV7sA== 0000904511-95-000008.txt : 19950803 0000904511-95-000008.hdr.sgml : 19950803 ACCESSION NUMBER: 0000904511-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950802 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACXIOM CORP CENTRAL INDEX KEY: 0000733269 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 710581897 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13163 FILM NUMBER: 95558194 BUSINESS ADDRESS: STREET 1: 301 INDUSTRIAL BLVD CITY: CONWAY STATE: AR ZIP: 72032 BUSINESS PHONE: 5013361000 MAIL ADDRESS: STREET 1: 301 INDUSTRIAL BOULEVARD CITY: CONWAY STATE: AK ZIP: 72032 FORMER COMPANY: FORMER CONFORMED NAME: CCX NETWORK INC DATE OF NAME CHANGE: 19880816 10-Q 1 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. 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. 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 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. 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. 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 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. 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. 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. 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 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. 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 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) EXHIBIT INDEX Exhibits to Form 10-Q Exhibit Number Exhibit 27 Financial Data Schedule EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 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. 1,000 3-MOS MAR-31-1996 JUN-30-1995 1,323 0 8,186 0 0 42,135 131,019 59,056 153,296 23,660 23,391 0 0 2,312 98,327 153,296 0 54,390 0 49,028 67 0 370 4,925 1,921 3,004 0 0 0 3,004 .12 .12
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