Acxiom Reports Fourth-Quarter, Fiscal-Year Results

Acxiom Corporation today reported fourth-quarter and full-year financial results for fiscal 2006 ended March 31, 2006. Fourth-quarter results include revenue of $344.3 million, income from operations of $44.6 million, diluted earnings per share of $.26, operating cash flow of $74.2 million and free cash flow of $52.5 million. Full 2006 fiscal-year results include revenue of $1.333 billion, income from operations of $131.1 million and diluted earnings per share of $.71. These results include the impact of net pre-tax charges of $15.8 million described in our second quarter earnings release, which reduced diluted EPS by $.12. Operating cash flow for the year was $275.8 million and free cash flow was $201.8 million, both record results. Acxiom will hold a conference call at 4:30 p.m. CDT today to discuss this information further. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com. The Company will reference presentation slides that will be available on the website prior to the call.

“We have accomplished what we said we would after a challenging first quarter of the fiscal year,” Company Leader Charles D. Morgan said. “We met or exceeded all of our fiscal year Financial Road Map targets for total company performance and U.S. results. International revenue results for the year were at the high end of the revised Road Map range that we set after Q1 and exceeded the adjusted operating margin target for the full year that we set after Q3 results. Our cash flow reached a record level, we have an impressive list of new contracts and the committed pipeline is promising. Based on our team’s execution of the strategies for the business, we are confident that the revenue and earnings will be in line with the fiscal 2007 projections in the Financial Road Map.”

Fourth-quarter highlights:

• Revenue of $344.3 million, a 7 percent increase over $322.5 million in the fourth quarter of fiscal 2005.
• U.S. revenue of $295.8 million, a 10 percent increase over $269.8 million in the fourth quarter of fiscal 2005.
• International profit margin of 7% compared to negative 1% in the fourth quarter a year ago.
• Income from operations of $44.6 million, a 94 percent increase from $23.0 million the year before.
• Diluted earnings per share of $.26, up 63 percent from $.16 in the same period a year ago.
• Operating cash flow of $74.2 million and free cash flow of $52.5 million. The free cash flow of $52.5 million is a non-GAAP financial measure, and a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release.
• New contracts that are expected to deliver $20 million in annual revenue and renewals that total $64 million in annual revenue.
• Committed new deals in the pipeline that are expected to generate $61 million in annual revenue.

Morgan noted that Acxiom recently completed contracts with General Motors, U.S. Bancorp, LaSalle Bank, Deluxe Corporation, SunTrust Banks, Inc., PRIMEDIA Inc., Columbian Chemicals Company, TransUnion and Safety-Kleen Systems, Inc.

Fiscal 2006 highlights:

• Revenue of $1.333 billion, up 9 percent from $1.223 billion a year ago, an increase of $110 million in annual revenue.
• U.S. revenue of $1.148 billion, up 14% from $1.011 billion a year ago, an increase of $137 million.
• Diluted earnings per share of $.71, down 4 percent from $.74 in fiscal 2005. Fiscal 2006 earnings include the impact of net pre-tax charges of $15.8 million in the second quarter, which reduced diluted EPS by $.12.
• Operating cash flow of $275.8 million and free cash flow of $201.8 million, both record performances for Acxiom.
• New contracts that are expected to deliver $128 million in annual revenue and renewals that total $149 million in annual revenue. Total contract value for the new contracts completed in the fiscal year is $458 million, while total contract value for renewals is $410 million.
• The acquisition of Digital Impact, a leading provider of integrated digital marketing solutions, based in San Mateo, California.
• The acquisition of Insight America, a Broomfield, Colo.-based company that provides data-driven solutions, analytic tools and background screening services to help clients mitigate risks, prevent identity theft and limit fraud.
• A technology and distribution agreement with EMC Corporation that includes $30 million from EMC to purchase the grid operating system developed by Acxiom and license certain other grid-related software.
• The purchase of 12.1 million shares of Acxiom stock through the company’s stock buy-back program at a total cost of $231.5 million. From the program’s introduction in December 2002 through March 31, 2006, the Company has purchased a total of 21.2 million shares of Acxiom stock at a total cost of $390.2 million.

Fiscal 2006 Recognition

In fiscal 2006, Acxiom:

• Received the prestigious 21st Century Achievement Award from the Computerworld Honors Foundation for positive contributions to the global information technology revolution with the development and delivery of its grid-based Customer Information Infrastructure (CII).
• Was named one of the “Best Places to Work in Information Technology” by Computerworld magazine, the fourth time the company has been ranked in the top 100 work environments for technology professionals.
• Was named one of the top 30 providers of financial technology applications in the “FinTech 100,” a listing of the top technology providers as complied by American Banker and the research firm Financial Insights.
• Was ranked No. 5 for employee productivity in Gartner’s list of Top 80 Worldwide IT Vendors. Received the Corporate Leadership Award from the Direct Marketing Educational Foundation.
• Saw its Digital Impact business named a “leader” among e-mail service providers in Forrester Research’s annual ranking of e-mail marketing service providers (“Leader” is Forrester’s highest category).

Road Map and Outlook

Fiscal 2006 U.S. revenue of $1.148 billion was within the target range of $1.140 billion to $1.160 billion included in the Company’s Financial Road Map (December 31, 2005). International revenue of $184.9 million for the year was within the target range of $170 million to $190 million. Adjusted U.S. operating margin of 12.4 percent for fiscal 2006 was at the high end of the target range of 11.5 to 12.5 percent. International margin of 2.5 percent was above the target range of 1 to 2 percent that was projected in the updated Road Map adjusted for third quarter results. Return on Invested Capital for the 2006 fiscal year was 11.4% which is near the mid-point of the fiscal 2006 target range of 11 to 12 percent.

Acxiom’s current Financial Road Map (March 31, 2006) reflects the Company’s current expectations for fiscal year 2007, and the long-term goals reflect expected performance in fiscal 2010. For the fiscal year ended March 31, 2007, the Company estimates that: U.S. revenue will grow 7 percent to 10 percent, the U.S. operating margins will be 14 percent to 15 percent, international revenue will grow 0 percent to 5 percent and international margin will be 2 percent to 4 percent.

The financial projections stated today are based on the Company’s current expectations and the assumptions and limitations set forth in the Financial Road Map (March 31, 2006). These projections are forward looking, and actual results may differ materially. These projections may be impacted by mergers, acquisitions, divestitures or other business combinations that may be completed in the future as well as the other factors set forth below.

Leadership Announcement

Morgan today also announced that, effective May 15, 2006, Frank Cotroneo joined Acxiom as chief financial officer. Cotroneo previously has served as CFO for H&R Block and MasterCard International. All financial functions including Finance and Accounting, Investor Relations, Treasury and Corporate Finance will report to Mr. Cotroneo.

“We are thrilled to be able to add an executive of the caliber of Frank Cotroneo to Acxiom’s senior leadership team,” Morgan said. “Frank has served as a public-company CFO, and overseen all aspects of the financial operations of several well-respected companies. The international experience he gained in his four years as regional financial officer for MasterCard in Singapore will be a significant asset given the geographic scope of Acxiom’s business.”

Rodger Kline, who served as the acting chief financial officer in his role as Chief Finance and Administrative Leader during the past 16 months, will continue to serve as a member of the Board of Directors and as Chief Administrative Leader. In this role Mr. Kline will continue to be responsible for administrative processes. Functions for which Mr. Kline will be responsible include hardware and software procurement, facilities and data center support, risk management, internal audit, and physical security & information security.