Acxiom Corporation
ACXIOM CORP (Form: 10-Q, Received: 11/06/2009 15:00:11)

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, 2009
   
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
(State or Other Jurisdiction of
Incorporation or Organization)
71-0581897
(I.R.S. Employer
Identification No.)
   
P.O. Box 8180, 601 E. Third Street,
Little Rock, Arkansas
(Address of Principal Executive Offices)
72201
(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  [ ]
     
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such filings).
 
Yes  [ ]
No  [ ]
     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer [X]
 
Accelerated filer   [ ]
   
 
Non-accelerated filer [ ]
 
Smaller reporting company [ ]
   
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.)
 
 
Yes  [ ]
No  [X]
   
     
The number of shares of Common Stock, $ 0.10 par value per share outstanding as of November 3, 2009 was 79,058,990.
 


 
 

 

ACXIOM CORPORATION AND SUBSIDIARIES
INDEX
REPORT ON FORM 10-Q
September 30, 2009
 
Part I.
 
Financial Information
Page No.
 
Item 1.
Financial Statements
 
   
Condensed Consolidated Balance Sheets
 
     
as of September 30, 2009 and March 31, 2009 (Unaudited)
3
   
Condensed Consolidated Statements of Operations
 
     
for the Three Months ended September 30, 2009 and 2008 (Unaudited)
4
   
Condensed Consolidated Statements of Operations
 
     
for the Six Months ended September 30, 2009 and 2008 (Unaudited)
5
   
Condensed Consolidated Statement of Stockholders’ Equity and Comprehensive Income
 
     
for the Six Months ended September 30, 2009 (Unaudited)
6
   
Condensed Consolidated Statements of Cash Flows
 
     
for the Six Months ended September 30, 2009 and 2008 (Unaudited)
7-8
   
Notes to Condensed Consolidated Financial Statements
9-19
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20-29
 
Item 3.
Quantitative and Qualitative Disclosure about Market Risk
30
 
Item 4.
Controls and Procedures
30
         
Part II.
 
Other Information
 
 
Item 1.
Legal Proceedings
31
 
Item 4.
Submissions of Matters to a Vote of Security Holders
31
 
Item 6.
Exhibits
31
         
Signature
     
32
         
         


  2
 

 

PART I.  FINANCIAL INFORMATION
Item 1.  Financials Statements
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
   
September 30,
2009
   
March 31,
2009
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 167,634     $ 177,166  
Trade accounts receivable, net
    182,612       184,814  
Deferred income taxes
    45,503       45,641  
Refundable income taxes
    -       4,579  
Other current assets
    52,002       46,873  
Total current assets
    447,751       459,073  
Property and equipment, net of accumulated depreciation and amortization
    218,806       214,589  
Software, net of accumulated amortization
    45,819       52,798  
Goodwill
    470,621       454,944  
Purchased software licenses, net of accumulated amortization
    55,564       65,341  
Deferred costs, net
    64,699       70,343  
Data acquisition costs, net
    26,624       31,317  
Other assets, net
    17,578       18,938  
    $ 1,347,462     $ 1,367,343  
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Current installments of long-term debt
  $ 43,636     $ 40,967  
Trade accounts payable
    32,242       27,701  
Accrued expenses:
               
Payroll
    24,379       44,823  
Other
    85,713       86,072  
Deferred revenue
    50,118       54,991  
Income taxes
    171       -  
Total current liabilities
    236,259       254,554  
Long-term debt
    490,608       537,272  
Deferred income taxes
    65,586       58,526  
Other liabilities
    9,156       9,321  
Commitments and contingencies
               
Stockholders' equity:
               
Common stock
    11,620       11,576  
Additional paid-in capital
    807,251       800,094  
Retained earnings
    455,589       441,950  
Accumulated other comprehensive income (loss)
    9,994       (6,238 )
Treasury stock, at cost
    (738,601 )     (739,712 )
Total stockholders' equity
    545,853       507,670  
    $ 1,347,462     $ 1,367,343  
See accompanying notes to condensed consolidated financial statements.
               

  3
 

 

ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)

   
For the Three Months ended
September 30
 
   
2009
   
2008
 
Revenue:
           
Services
  $ 210,213     $ 233,605  
Products
    60,892       95,330  
Total revenue
    271,105       328,935  
Operating costs and expenses:
               
Cost of revenue
               
Services
    165,792       180,986  
Products
    46,129       77,038  
Total cost of revenue
    211,921       258,024  
Selling, general and administrative
    37,964       38,988  
Gains, losses and other items, net
    (27 )     (2,370 )
Total operating costs and expenses
    249,858       294,642  
Income from operations
    21,247       34,293  
Other income (expense):
               
Interest expense
    (5,423 )     (8,591 )
Other, net
    223       287  
Total other income (expense)
    (5,200 )     (8,304 )
Earnings before income taxes
    16,047       25,989  
Income taxes
    6,602       10,136  
Net earnings
  $ 9,445     $ 15,853  
                 
Earnings per share:
               
Basic
  $ 0.12     $ 0.20  
Diluted
  $ 0.12     $ 0.20  
                 
See accompanying notes to condensed consolidated financial statements.
               


 

 

ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)

   
For the Six Months ended
September 30
 
   
2009
   
2008
 
Revenue:
           
Services
  $ 409,539     $ 470,300  
Products
    117,547       189,708  
Total revenue
    527,086       660,008  
Operating costs and expenses:
               
Cost of revenue
               
Services
    325,368       359,847  
Products
    92,048       154,755  
Total cost of revenue
    417,416       514,602  
Selling, general and administrative
    75,607       88,470  
Gains, losses and other items, net
    320       (2,915 )
Total operating costs and expenses
    493,343       600,157  
Income from operations
    33,743       59,851  
Other income (expense):
               
Interest expense
    (10,928 )     (18,050 )
Other, net
    105       1,646  
Total other income (expense)
    (10,823 )     (16,404 )
Earnings before income taxes
    22,920       43,447  
Income taxes
    9,281       16,944  
Net earnings
  $ 13,639     $ 26,503  
                 
Earnings per share:
               
Basic
  $ 0.17     $ 0.34  
Diluted
  $ 0.17     $ 0.34  
                 
See accompanying notes to condensed consolidated financial statements.
               



 

 

 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
SIX MONTHS ENDED SEPTEMBER 30, 2009
(Unaudited)
(Dollars in thousands)
   
Common Stock
 
Additional
         
Accumulated other
 
Treasury stock
 
Total
   
Number
of shares
 
Amount
 
paid-in capital
 
Comprehensive income (loss)
 
Retained earnings
 
comprehensive income (loss)
 
Number
of shares
 
Amount
 
stockholders’ equity

Balances at March 31, 2009
 
115,756,876
 
$11,576
 
$800,094
     
$441,950
 
$(6,238)
 
(37,224,867)
 
$(739,712)
 
$507,670
Employee stock awards, benefit plans and other issuances
 
314,829
 
31
 
2,631
 
$           -
 
-
 
-
 
-
 
-
 
2,662
Restricted stock units vested
 
130,508
 
13
 
(13)
 
-
 
-
 
-
 
-
 
-
 
-
Non-cash share-based compensation
 
-
 
-
 
4,539
 
-
 
-
 
-
 
70,631
 
1,111
 
5,650
Comprehensive income
                                   
Foreign currency translation
 
-
 
-
 
-
 
15,932
 
-
 
15,932
 
-
 
-
 
15,932
Unrealized gain on interest rate swap, net of tax
 
-
 
-
 
-
 
327
 
-
 
327
 
-
 
-
 
327
Unrealized loss on marketable securities, net of tax
 
-
 
-
 
-
 
(27)
 
-
 
(27)
 
-
 
-
 
(27)
Net earnings
 
-
 
-
 
-
 
13,639
 
13,639
 
-
 
-
 
-
 
13,639
Total comprehensive income
             
$29,871
                   
Balances at September 30, 2009
 
116,202,213
 
$11,620
 
$807,251
     
$455,589
 
$9,994
 
(37,154,236)
 
$(738,601)
 
$545,853
                                     
  See accompanying notes to condensed consolidated financial statements                                    

 
 

 
 

 

ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

   
For the Six Months ended
September 30
 
   
2009
   
2008
 
Cash flows from operating activities:
           
Net earnings
  $ 13,639     $ 26,503  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    81,742       104,620  
Loss/(gain) on disposal of assets, net
    7       (3,242 )
Deferred income taxes
    8,719       7,853  
Non-cash share-based compensation expense
    5,650       6,232  
Changes in operating assets and liabilities:
               
Accounts receivable, net
    (1,809 )     (11,335 )
Deferred costs
    (3,344 )     (2,068 )
Other assets
    3,461       20,815  
Accounts payable and other liabilities
    (25,105 )     (27,328 )
Deferred revenue
    (6,091 )     (6,774 )
Net cash provided by operating activities
    76,869       115,276  
 
Cash flows from investing activities:
               
Payments received from investments
    -       2,596  
Sale of assets
    -       24,174  
Capitalized software development costs
    (4,815 )     (9,129 )
Capital expenditures
    (21,893 )     (12,951 )
Cash collected from the sale and license of software
    -       2,000  
Data acquisition costs
    (8,781 )     (15,129 )
Net cash paid in acquisitions
    357       (12,703 )
Net cash used in investing activities
    (35,132 )     (21,142 )
 
Cash flows from financing activities:
               
Payments of debt
    (55,125 )     (59,501 )
Dividends paid
    -       (9,312 )
Sale of common stock
    2,662       5,915  
Income tax benefit of stock options, warrants and restricted stock
    -       115  
Acquisition of treasury stock
    (307 )     -  
Net cash used in financing activities
    (52,770 )     (62,783 )
Effect of exchange rate changes on cash
    1,501       (642 )
Net increase (decrease) in cash and cash equivalents
    (9,532 )     30,709  
Cash and cash equivalents at beginning of period
    177,166       62,661  
 
Cash and cash equivalents at end of period
  $ 167,634     $ 93,370  
                 


 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
(Dollars in thousands)

   
For the Six Months ended
September 30
 
   
2009
   
2008
 
 
Supplemental cash flow information:
           
Cash paid (received) during the period for:
           
Interest
  $ 10,586     $ 16,421  
Income taxes
    (4,260 )     (5,887 )
Payments on capital leases and installment payment arrangements
    15,297       24,083  
Payments on software and data license liabilities
    5,718       16,788  
Prepayments of debt
    30,000       14,500  
Other debt payments, excluding line of credit
    4,110       4,130  
Non-cash investing and financing activities:
               
Acquisition of property and equipment under capital leases and installment payment arrangements
    10,387       5,659  
Enterprise software licenses acquired under software obligations
    611       1,546  
 
 
See accompanying notes to condensed consolidated financial statements.
               
                 
                 
                 
                 


 

 

ACXIOM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.           BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

These condensed consolidated financial statements have been prepared by Acxiom Corporation (“Registrant”, “Acxiom” or “the Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC” or “the Commission”).  In the opinion of the Registrant’s management all adjustments necessary for a fair presentation of the results for the periods included have been made and the disclosures are adequate to make the information presented not misleading.  All such adjustments are of a normal recurring nature.  Certain note information has been omitted because it has not changed significantly from that reflected in notes 1 through 19 of the Notes to Consolidated Financial Statements filed as part of Item 8 of the Registrant’s annual report on Form 10-K for the fiscal year ended March 31, 2009 (“2009 Annual Report”), as filed with the Commission on May 29, 2009.  This report and the accompanying condensed consolidated financial statements should be read in connection with the 2009 Annual Report.  The financial information contained in this report is not necessarily indicative of the results to be expected for any other period or for the full fiscal year ending March 31, 2010.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States.  Actual results could differ from those estimates.  Certain of the accounting policies used in the preparation of these condensed consolidated financial statements are complex and require management to make judgments and/or significant estimates regarding amounts reported or disclosed in these financial statements.  Additionally, the application of certain of these accounting policies is governed by complex accounting principles and their interpretation.  A discussion of the Company’s significant accounting principles and their application is included in note 1 and in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, to the Company’s 2009 Annual Report.

In May 2009, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“SFAS No. 165”).  SFAS No. 165 was subsequently codified in the FASB Accounting Standards Codification Topic 855 (“ASC 855”).  ASC 855 establishes principles and standards related to the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued.  ASC 855 requires an entity to recognize, in the financial statements, subsequent events that provide additional information regarding conditions that existed at the balance sheet date.  In accordance with this standard, which was effective beginning with the quarter ended June 30, 2009, management has evaluated subsequent events for accounting and disclosure through the date of filing this quarterly report on Form 10-Q, which is November 6, 2009.


 

 

2.           EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY:

Earnings Per Share

A reconciliation of the numerator and denominator of basic and diluted earnings per share is shown below (in thousands, except per share amounts):
 
   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
2009
   
2008
 
Basic earnings per share:
                       
Numerator – net earnings
  $ 9,445     $ 15,853     $ 13,639     $ 26,503  
Denominator – weighted-average shares outstanding
    78,915       77,716       78,791       77,559  
Basic earnings per share
  $ 0.12     $ 0.20     $ 0.17     $ 0.34  
Diluted earnings per share:
                               
Numerator – net earnings
  $ 9,445     $ 15,853     $ 13,639     $ 26,503  
                                 
Denominator:
                               
Weighted-average shares outstanding
    78,915       77,716       78,791       77,559  
Dilutive effect of common stock options, warrants,
and restricted stock as computed under the
treasury stock method
    464       447       404       400  
      79,379       78,163       79,195       77,959  
Diluted earnings per share
  $ 0.12     $ 0.20     $ 0.17     $ 0.34  


As of September 30, 2009, the Company had options and warrants outstanding providing for the purchase of approximately 12.1 million shares of common stock.  As of September 30, 2008, the Company had options and warrants outstanding providing for the purchase of approximately 12.5 million shares of common stock.  Options, warrants and restricted stock units that were outstanding during the periods presented, but were not included in the computation of diluted earnings per share because the effect was antidilutive are shown below (in thousands, except per share amounts):

   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
2009
   
2008
 
Number of shares outstanding under options, warrants and restricted stock units
    12,386       11,180       11,705       11,062  
Range of exercise prices for options and warrants
  $ 9.51-$268.55     $ 13.14-$268.55     $ 10.22-268.55     $ 12.92-$268.55  


Stockholders’ Equity

The Company did not declare a dividend on its common stock in the six months ended September 30, 2009 and declared a dividend on its common stock of $0.12 per share in the six months ended September 30, 2008.

There were no shares repurchased under the Company’s common stock repurchase program in either the six months ended September 30, 2009 or 2008.  At September 30, 2009, the maximum dollar value of shares that may yet be purchased under the program is $47.9 million.  In the six months ending September 30, 2009, the Company issued 70,631 shares of treasury stock to members of the board who elected to receive their annual compensation in Company stock.


10 
 

 

3.           SHARE-BASED COMPENSATION:

Share-based Compensation Plans

Stock Option Activity
The Company has stock option and equity compensation plans for which a total of 37.7 million shares of the Company’s common stock have been reserved for issuance since inception of the plans.  These plans provide that the option prices of qualified options will be at or above the fair market value of the common stock at the time of the grant.  Board policy has required that nonqualified options be priced at or above the fair market value of the common stock at the time of grant.  At September 30, 2009, there were a total of 4.5 million shares available for future grants under the plans.

The Company granted 532,000 stock options in the six months ended September 30, 2009.  The per-share weighted-average fair value of the stock options granted during the six months ended September 30, 2009 was $4.61.  This valuation was determined using a customized binomial lattice approach with the following weighted-average assumptions: dividend yield of 0.0%; risk-free interest rate of 3.5%; expected option life of 5.4 years and expected volatility of 53.9%.  The Company granted 679,126 stock options in the six months ended September 30, 2008.  The per-share weighted-average fair value of the stock options granted during the six months ended September 30, 2008 was $4.41.  This valuation was determined using a customized binomial lattice approach with the following weighted-average assumptions: dividend yield of 1.7%; risk-free interest rate of 3.9%; expected option life of 5.6 years and expected volatility of 36.4%.

Option activity for the six months ended September 30, 2009 was as follows:

   
Number
of shares
   
Weighted-average exercise price
per share
   
Weighted-average remaining contractual term (in years)
   
Aggregate intrinsic value
(in thousands)
 
Outstanding at March 31, 2009
    10,414,093     $ 20.83              
Granted
    532,000     $ 8.91              
Exercised
    (9,103 )   $ 7.45           $ 18  
Forfeited or cancelled
    (267,905 )   $ 19.65                
Outstanding at September 30, 2009
    10,669,085     $ 20.28       6.57     $ 508  
 
Exercisable at September 30, 2009
    8,824,692     $ 21.75       6.11     $ 203  

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Acxiom’s closing stock price on the last trading day of its second quarter of fiscal 2010 and the exercise price for each in-the-money option) that would have been received by the option holders had vested option holders exercised their options on September 30, 2009.  This amount changes based upon changes in the fair market value of Acxiom’s stock.

Following is a summary of stock options outstanding and exercisable as of September 30, 2009:

     
Options outstanding
   
Options exercisable
 
Range of
exercise price
per share
   
Options
outstanding
 
Weighted- average remaining contractual life
 
Weighted-average
exercise price
per share
   
Options
exercisable
   
Weighted-average
exercise price
per share
 
                             
$ 3.69 - $ 9.62       658,399  
9.04 years
  $ 8.69       86,399     $ 7.13  
$ 10.22 - $ 15.00       2,424,349  
7.54 years
  $ 12.41       1,615,706     $ 12.31  
$ 15.10 - $ 19.82       2,482,571  
6.35 years
  $ 16.48       2,193,821     $ 16.59  
$ 20.12 - $ 25.00       2,590,415  
6.84 years
  $ 22.97       2,490,415     $ 22.89  
$ 25.44 - $ 29.30       1,417,597  
5.22 years
  $ 26.81       1,342,597     $ 26.76  
$ 30.93 - $ 39.12       809,827  
4.49 years
  $ 35.70       809,827     $ 35.70  
$ 40.50 - $ 75.55       283,197  
4.82 years
  $ 44.51       283,197     $ 44.51  
$ 168.61 - $268.55       2,730  
0.39 years
  $ 213.46       2,730     $ 213.46  
          10,669,085  
6.57 years
  $ 20.28       8,824,692     $ 21.75  


11 
 

 

3.           SHARE-BASED COMPENSATION (continued):

Total expense related to stock options for the six months ended September 30, 2009 and 2008 was approximately $1.1 million and $1.4 million respectively.  Future expense for these options is expected to be approximately $6.5 million over the next four years.

Restricted Stock Unit Activity
Non-vested restricted stock unit activity for the period ending September 30, 2009 was as follows:

   
Number
of shares
   
Weighted average fair value per
share at grant date
(in thousands)
   
Weighted-average remaining contractual term (in years)
 
Outstanding at March 31, 2009
    1,499,470     $ 13.83       2.49  
Granted
    1,529,000     $ 9.54          
Vested
    (130,508 )   $ 24.09          
Forfeited or cancelled
    (152,952 )   $ 12.90          
Outstanding at September 30, 2009
    2,745,010     $ 11.24       2.66  

During the six months ended September 30, 2009, the Company granted restricted stock units covering 1,529,000 shares of common stock with a value at the date of grant of $14.2 million.  The value at the date of grant is determined by reference to quoted market prices for the shares.  Of the restricted stock units granted in the current period, 930,000 vest in equal annual increments over four years.  The remaining 599,000 vest subject to 1) the Company’s achievement of certain performance criteria and 2) the individual remaining employed by the Company for three years.  If both criteria are met the units vest three years from the date of grant.  The expense related to restricted stock in the six months ended September 30, 2009 was $3.8 million.  During the six months ended September 30, 2008, the Company granted restricted stock units covering 831,532 shares of common stock with a value at the date of grant of $10.9 million.  Of the restricted stock units granted in that period, 255,963 vest in equal annual increments over four years and the remaining 575,569 vest at the end of three years and were subject to performance criteria that was met as of March 31, 2009.  Future expense for restricted stock units is expected to be approximately $18.2 million over the next four years.

4.           ACQUISITIONS:

In July 2008, the Company acquired the database marketing unit of ChoicePoint Precision Marketing, LLC (“Precision Marketing”).  The Company paid $9.0 million, of which $4.5 million was paid into two escrow accounts which were subject to escrow arrangements which were finally resolved during the quarter ended September 30, 2009.  A total of $0.5 million of one of the escrow funds has been released to reimburse the Company for costs incurred.  Of the remaining $4.0 million escrow fund, $3.6 million has been paid to the sellers and approximately $0.4 million has been returned to the Company.  The $4.0 million placed into escrow was originally treated as purchase price, therefore the $0.4 million returned to the Company has been recorded as a reduction of purchase price and the $3.6 million has been charged to goodwill.  The acquired business had annual revenue of approximately $16.0 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material to the Company’s consolidated results for any period presented.  Precision Marketing’s results of operations are included in the Company’s consolidated results beginning July 1, 2008.

5.           OTHER CURRENT AND NONCURRENT ASSETS:

Other current assets consist of the following (dollars in thousands):

   
September 30,
2009
   
March 31,
2009
 
Current portion of unbilled and notes receivable
  $ 1,105     $ 1,730  
Prepaid expenses
    38,625       31,313  
Assets of non-qualified retirement plan
    11,284       8,155  
Escrowed cash
    -       4,344  
Other miscellaneous assets
    988       1,331  
Other current assets
  $ 52,002     $ 46,873  

 
12

 
5.           OTHER CURRENT AND NONCURRENT ASSETS (continued):

Other noncurrent assets consist of the following (dollars in thousands):

   
September 30,
2009
   
March 31,
2009
 
Acquired intangible assets, net
  $ 9,731     $ 11,579  
Noncurrent portion of unbilled and notes receivable
    4,110       3,367  
Other miscellaneous noncurrent assets
    3,737       3,992  
Other assets
  $ 17,578     $ 18,938  

The acquired intangible assets noted above include customer relationship intangibles acquired through purchase acquisitions, net of accumulated amortization.

6.           GOODWILL:

Goodwill represents the excess of acquisition costs over the fair values of net assets acquired in business combinations.  Goodwill is reviewed at least annually for impairment under a two-part test.  Impairment exists to the extent that the reporting unit’s recorded goodwill exceeds the residual fair value assigned to goodwill.  Any impairment that results from the completion of the two-part test is recorded as a charge to operations during the period in which the impairment test is completed.  Completion of the Company’s most recent annual impairment test during the quarter ended June 30, 2009 indicated that no potential impairment of its goodwill balances existed as of April 1, 2009.

The carrying amount of goodwill, by business segment, for the six months ended September 30, 2009 is presented in the following table.

(dollars in thousands)
 
 
Services
   
Products
   
Total
 
Balance at March 31, 2009
  $ 336,406     $ 118,538     $ 454,944  
Purchase adjustments
    5,064       -       5,064  
Change in foreign currency translation adjustment
    3,183       7,430       10,613  
Balance at September 30, 2009
  $ 344,653     $ 125,968     $ 470,621  

7.           LONG-TERM DEBT:

Long-term debt consists of the following (dollars in thousands):


   
September 30,
2009
   
March 31,
2009
 
Term loan credit agreement
  $ 457,500     $ 490,500  
Capital leases and installment payment obligations on land, buildings and equipment payable in monthly payments of principal plus interest at rates ranging from approximately 3% to 8%; remaining terms up to twelve years
    41,862       46,646  
Warrants
    1,499       1,492  
Software license liabilities payable over terms up to three years; effective interest rates ranging from approximately 4% to 7%
    10,249       12,423  
Data license agreement
    -       2,934  
Other debt and long-term liabilities
    23,134       24,244  
Total long-term debt and capital leases
    534,244       578,239  
Less current installments
    43,636       40,967  
Long-term debt, excluding current installments
  $ 490,608     $ 537,272  


13 
 

 

7.           LONG-TERM DEBT (continued):

Effective September 15, 2006, the Company entered into an amended and restated credit agreement allowing (1) term loans up to an aggregate principal amount of $600 million and (2) revolving credit facility borrowings consisting of revolving loans, letter of credit participations and swing-line loans up to an aggregate amount of $200 million.  The term loan is payable in quarterly principal installments of $1.5 million through September 2011, followed by quarterly principal installments of $111.4 million through September 2012.  The term loan also allows prepayments before maturity.  Revolving loan commitments and all borrowings of revolving loans mature on September 15, 2011.  The credit agreement is secured by the accounts receivable of Acxiom and its domestic subsidiaries, as well as by the outstanding stock of certain Acxiom subsidiaries.

Revolving credit facility borrowings under the facility currently bear interest at LIBOR plus 1.5% or at an alternative base rate or at the federal funds rate plus 2.25%, depending on the type of borrowing.  Term loan borrowings currently bear interest at LIBOR plus 1.75%.  There were no revolving loan borrowings outstanding at September 30, 2009 or March 31, 2009.  The interest rate on term loan borrowings outstanding at September 30, 2009 was 2.9%.   Outstanding letters of credit at September 30, 2009 were $12.5 million.

Under the terms of certain of the above borrowings, the Company is required to maintain certain debt-to-cash flow and debt service coverage ratios, among other restrictions.  At September 30, 2009, the Company was in compliance with these covenants and restrictions.  In addition, if certain financial ratios and other conditions are not satisfied, the revolving credit facility limits the Company’s ability to pay dividends in excess of $30 million in any fiscal year (plus additional amounts in certain circumstances).

In fiscal 2009, the Company entered into an interest rate swap agreement.  The agreement provides for the Company to pay interest through July 25, 2011 at a fixed rate of 3.25% which when combined with a 1.75% credit spread equals a total rate of 5.00% on $95.0 million notional amount while receiving interest for the same period at the LIBOR rate on the same notional amount.  The LIBOR rate as of September 30, 2009 was 0.5%.  The swap was entered into as a cash flow hedge against LIBOR interest rate movements on the term loan.  The Company assesses the effectiveness of the hedge based on the hypothetical derivative method.  There was no ineffectiveness for the period ended September 30, 2009.  Under the hypothetical derivative method, the cumulative change in fair value of the actual swap is compared to the cumulative change in fair value of the hypothetical swap, which has terms that identically match the critical terms of the hedged transaction.  Thus, the hypothetical swap is presumed to perfectly offset the hedged cash flows.  The change in the fair value of the hypothetical swap will then be regarded as a proxy for the present value of the cumulative change in the expected future cash flows from the hedged transactions.  All of the fair values are derived from an interest-rate futures model.  As of September 30, 2009, the hedge relationship qualified as an effective hedge under applicable accounting standards.  Consequently, all changes in fair value of the derivative are deferred and recorded in other comprehensive income until the related forecasted transaction is recognized in the consolidated statement of operations.  The fair market value of the derivative was zero at inception and an unrealized loss of $3.6 million since inception is recorded in other comprehensive income (loss) with the offset recorded to other noncurrent liabilities.  The fair value of the interest rate swap agreement recorded in accumulated other comprehensive income (loss) may be recognized in the statement of operations if certain terms of the floating-rate debt change, if the floating-rate debt is extinguished or if the interest rate swap agreement is terminated prior to maturity.  The Company has assessed the creditworthiness of the counterparty of the swap and concludes that no substantial risk of default exists as of September 30, 2009.

8.           ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Trade accounts receivable are presented net of allowances for doubtful accounts, returns and credits of $9.1 million at September 30, 2009 and $10.0 million at March 31, 2009.


14  
 

 

9.           SEGMENT INFORMATION:

The Company reports segment information consistent with the way management internally disaggregates its operations to assess performance and to allocate resources.  The Company’s business segments consist of Information Services and Information Products.  The Information Services segment includes the Company’s global lines of business for Customer Data Integration (CDI), Multi-channel Marketing Services, Infrastructure Management Services and Consulting Services.  The Information Products segment is comprised of the Company’s global Consumer Insights and Risk Mitigation Products lines of business and the U.S. Background Screening Products line of business.  The Company evaluates performance of the segments based on segment operating income, which excludes certain gains, losses and other items.  Beginning in the quarter ended September 30, 2009, the Company has revised its calculation of segment operating income to allocate all corporate expenses, excluding those reported as gains, losses, and other items, to the segments.  Segment results for prior periods have been reclassified to reflect the revised segment operating income.  Such reclassifications had no effect on consolidated results.

The gains, losses and other items are reported as other, since the Company does not hold the individual segments responsible for these charges.  The following tables present information by business segment (dollars in thousands):

   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
2009
   
2008
 
Revenue:
                       
Information services
  $ 210,213     $ 233,605     $ 409,539     $ 470,300  
Information products
    60,892       95,330       117,547       189,708  
Total revenue
  $ 271,105     $ 328,935     $ 527,086     $ 660,008  
                                 
Income (loss) from operations:
                               
Information services
  $ 19,971     $ 28,527     $ 35,809     $ 54,166  
Information products
    1,249       3,396       (1,746 )     2,770  
Other
    27       2,370       (320 )     2,915  
Income from operations
  $ 21,247     $ 34,293     $ 33,743     $ 59,851  
                                 


10.           RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES:

The Company records costs associated with employee terminations and other exit activity in accordance with applicable accounting standards when those costs become probable and are reasonably estimable.  The following table summarizes the restructuring activity for the six months ended September 30, 2009 (dollars in thousands):

   
Associate-related reserves
   
Ongoing
contract costs
   
Total
 
Balance at March 31, 2009
  $ 8,233     $ 23,932     $ 32,165  
Payments
    (4,204 )     (2,465 )     (6,669 )
Adjustments
    977       405       1,382  
Balance at September 30, 2009
  $ 5,006     $ 21,872     $ 26,878  
                         

Restructuring Plans

In fiscal 2009, the Company recorded a total of $42.3 million in restructuring charges and adjustments included in gains, losses and other items in the consolidated statement of operations.  The expense includes severance and other associate-related payments of $12.4 million, lease accruals of $3.2 million, asset disposal and write-offs of $26.5 million and adjustments to the fiscal 2008 restructuring plan of $0.2 million.  Included in the asset disposal was a $24.6 million loss incurred as a result of the Company terminating a software contract.


15 
 

 

10.           RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES (continued):

The associate-related payments of $12.4 million relate to the termination of associates in the United States and Europe.  Of the amount accrued, $3.7 million remained accrued as of September 30, 2009.  These costs are expected to be paid out in fiscal 2010.

The lease accruals of $3.2 million were evaluated under the accounting standard which governs exit costs.  The accounting standard requires the Company to make an accrual for the liability for lease costs that will continue to be incurred without economic benefit to the Company upon the date that the Company ceases using the leased property.  The remaining amount accrued at September 30, 2009 is $2.4 million.

In fiscal 2008, the Company recorded a total of $75.1 million in restructuring charges and adjustments included in gains, losses and other items in the consolidated statement of operations.  The expense includes severance and other associate-related payments of $19.3 million, lease accruals of $19.0 million, contract accruals of $6.7 million, asset disposal and write-offs of $29.6 million, and other related costs of $0.5 million.

The associate-related payments of $19.3 million relate to associates in the United States and Europe who either have been terminated or are to be terminated.  Of the $19.3 million accrued, $1.1 million remained accrued as of September 30, 2009.  These costs are expected to be paid out in fiscal 2010.

The lease accruals of $19.0 million were evaluated under the accounting standard which governs exit costs.  The remaining amount accrued at September 30, 2009 is $13.4 million.  These liabilities will be paid out over the remainder of the leased properties’ terms, of which the longest continues through November 2021.

The contract accruals of $6.7 million were evaluated under the applicable accounting standard which requires that a liability to terminate a contract before the end of its term be recognized when the contract is terminated in accordance with its terms.  Prior to March 31, 2008, the Company gave notice under certain service contracts to the other parties which caused the Company to incur termination payments under those contracts.  The remaining amount accrued of $5.8 million is expected to be paid during fiscal 2010.

During fiscal 2006, the Company recorded a total of $13.0 million in restructuring and other impairment charges included in gains, losses and other items in the consolidated statement of operations.  The table above includes the portion of the above charges which are yet to be paid as of March 31, 2009.  The remaining accrued costs of $0.5 million are expected to be paid out over the terms of the related leases or contracts, of which the longest one continues through fiscal 2012.

Collection of Hangar Note

During the six months ended September 30, 2008, the Company collected a note receivable related to an aircraft storage facility.  This note was not recognized by the Company previously since collectability of the note was not assured.  During the six months ended September 30, 2008, the debtor paid off the note in the amount of $1.0 million which was recorded in gains, losses and other items.


16 
 

 

10.           RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES (continued):

Gains, Losses and Other Items

Gains, losses and other items for each of the quarters presented are as follows (dollars in thousands):

   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
2009
   
2008
 
Gain on disposition of operations in France
    -       (720 )     -       (838 )
Leased airplane disposal
    -       -       -       (110 )
Collection of hangar note
    -       -       -       (1,004 )
Legal contingency
    -       -       -       1,000  
Sale of building
    -       (1,146 )     -       (1,146 )
Restructuring plan
    (55 )     (240 )     235       (568 )
Adjustment of Spain operation closure
    28       (264 )     85       (249 )
    $ (27 )   $ (2,370 )   $ 320     $ (2,915 )


11.           COMMITMENTS AND CONTINGENCIES:

Legal Matters

Richard Fresco, et al. v. R.L. Polk and Company and Acxiom Corporation, (U.S. Dist. Court, S.D. Florida, 07-60695) formerly, Linda Brooks and Richard Fresco v. Auto Data Direct, Inc., et al., (U.S. Dist. Court, S.D. Florida, 03-61063) is a putative class action lawsuit, removed to federal court in May 2003, filed against Acxiom and several other information providers.  The plaintiffs allege that the defendants obtained and used drivers’ license data in violation of the federal Drivers Privacy Protection Act.  To date, a class has not been certified.  Among other things, the plaintiffs seek injunctive relief, statutory damages, and attorneys’ fees.  Acxiom has agreed to settle the case and is seeking preliminary approval by the court.  The process of obtaining final approval of the settlement is expected to take several months.  Acxiom has accrued $5.0 million for the settlement and ancillary costs to obtain final approval and has paid $2.5 million of this amount into an escrow fund established for the settlement, leaving a remaining accrual of $2.5 million.  Two companion cases, Sharon Taylor, et al., v. Acxiom, et al., (U.S. District Court, E.D. Texas, 207CV001) and Sharon Taylor, et al. v. Biometric Access Company, et al., (U.S. District Court, E.D. Texas, 2:07-CV-00018 ) , were filed in January 2007.  Both Taylor cases were dismissed by the District Court and are now on appeal.

Epsilon Data Management LLC, et al. v. Acxiom Corporation, (192 nd Judicial District Court of Dallas County, TX, 07-08569) is a case that was brought by a competitor of Acxiom after the acquisition of three long-time data providers and alleges that Acxiom breached certain terms and conditions of the data licenses with those acquired companies in the course of building and distributing Acxiom data products.  The plaintiffs seek injunctive relief and unspecified damages.  Acxiom contends that it has acted in conformance with the data licenses and is vigorously defending the claims.

The Company is involved in a number of actions with the Data Protection Authority of Spain, involving alleged improper usage of individuals’ data.  The Company is negotiating with the Data Protection Authority in an attempt to settle the claims, and the Company maintains that the Company’s usage of data has been in compliance with the applicable law.  However, upon advice of counsel and after review of the pending claims, the Company accrued $3.9 million as part of the cost of closure of the Spain office.  During the quarter ended March 31, 2008, the Company reversed $2.4 million of the accrual as some of the claims had been settled for less than the Company originally accrued.  As of September 30, 2009 the Company has a remaining accrual for this matter of $0.5 million.

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 all of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.


17 
 

 

11.           COMMITMENTS AND CONTINGENCIES (continued):

Commitments

The Company leases or licenses data processing equipment, software, office furniture and equipment, land and office space under noncancellable operating leases or licenses.  Additionally, the Company has entered into synthetic operating leases for computer equipment and furniture (“Leased Assets”).  These synthetic operating lease facilities are accounted for as operating leases under generally accepted accounting principles and are treated as capital leases for income tax reporting purposes.  Initial lease terms under the synthetic computer equipment and furniture facility range from two to six years, with the Company having the option at expiration of the initial lease to return the equipment, purchase the equipment at a fixed price, or extend the term of the lease.

The Company has a future commitment for synthetic lease payments of $1.3 million over the next two years.  In the event the Company elects to return the Leased Assets, the Company has guaranteed a portion of the residual value to the lessors.  Assuming the Company elects to return the Leased Assets to the lessors at its earliest opportunity under the synthetic lease arrangements and assuming the Leased Assets have no significant residual value to the lessors, the maximum potential amount of future payments the Company could be required to make under these residual value guarantees was $0.4 million at September 30, 2009.

In connection with a certain building, the Company has entered into a 50/50 joint venture with a local real estate developer.  The Company is guaranteeing a portion of the loan for the building.  In addition, in connection with the disposal of certain assets, the Company has guaranteed loans for the buyers of the assets.  These guarantees were made by the Company primarily to facilitate favorable financing terms for those third parties.  Should the third parties default on this indebtedness, the Company would be required to perform under its guarantee.  Substantially all of the third-party indebtedness is collateralized by various pieces of real property.  At September 30, 2009 the Company’s maximum potential future payments under this guarantee of third-party indebtedness was $2.5 million.

12.           INCOME TAX

In determining the quarterly provision for income taxes, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year. The anticipated effective tax rate for fiscal 2010 is 40.5%.
 
At September 30, 2009, the Company had $5.5 million in gross unrecognized tax benefits, which is included in other liabilities on the balance sheet. This entire amount, if recognized, would impact the effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits, and included in the amount above, is $0.8 million. It is reasonably possible that the amount of unrecognized tax benefit with respect to the Company's uncertain tax positions will increase or decrease during the next 12 months. However, management does not expect the change to have a significant effect on consolidated results of operations or financial position.

13.           FINANCIAL INSTRUMENTS:

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.

Cash and cash equivalents, trade receivables, unbilled and notes receivable, short-term borrowings and trade payables—The carrying amount approximates fair value because of the short maturity of these instruments.

Long-term debt—The interest rate on the term loan and revolving credit agreement is adjusted for changes in market rates and therefore the carrying value of these loans approximates fair value.  The estimated fair value of other long-term debt was determined based upon the present value of the expected cash flows considering expected maturities and using interest rates currently available to the Company for long-term borrowings with similar terms.  At September 30, 2009, the estimated fair value of long-term debt approximates its carrying value.

Derivative instruments included in other liabilities—The carrying value is adjusted to fair value through other comprehensive income at each balance sheet date.  The fair value is determined from an interest-rate futures model.


18 
 

 

13.           FINANCIAL INSTRUMENTS (continued):

Under applicable accounting standards, financial assets and liabilities are classified in their entirety based on a hierarchy using the  lowest level of input that is significant to the fair value measurements. The Company assigned assets and liabilities to Level 1—quoted prices in active markets for identical assets or liabilities, Level 2—significant other observable inputs and Level 3—significant unobservable inputs.

The following table presents the balances of assets and liabilities measured at fair value as of September 30, 2009 (dollars in thousands):

   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                       
Other current assets
  $ 11,284     $ -     $ -     $ 11,284  
Total assets
  $ 11,284     $ -     $ -     $ 11,284  
                                 
Liabilities:
                               
Other current liabilities
  $ 11,284     $ -     $ -     $ 11,284  
Long-term debt
    -       1,499       -       1,499  
Other liabilities
    -       3,629       -       3,629  
Total liabilities
  $ 11,284     $ 5,128     $ -     $ 16,412  

14.           SUBSEQUENT EVENTS:

On September 17, 2009, the Company entered into an agreement to purchase 51% of a direct marketing business operating in Saudi Arabia and the United Arab Emirates.  The acquisition is expected to close in the quarter ending December 31, 2009.  The purchase price is $3.8 million to be paid in cash, not including the amount, if any, to be paid pursuant to an earnout agreement which will be determined based on the operating results of the business from October 31, 2009 through December 31, 2012.  The purchased business has estimated annual revenues of approximately $6 million.

19
 

 

PART I.  FINANCIAL INFORMATION
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Overview

At Acxiom (“Acxiom” or “the Company”) (Nasdaq: ACXM), we provide global interactive marketing services for the world’s leading companies to help them solve some of their most complex marketing problems.  Our products, services and thought leadership enable them to acquire new customers, retain their most valuable customers, communicate with customers in the methods and times they prefer, and make profitable marketing and business decisions.  Acxiom’s unmatched customer insight is achieved by blending the world’s largest repository of consumer data, award-winning technology and analytics, multi-channel expertise, privacy leadership, and superior knowledge of a wide spectrum of industries.  Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas, with locations throughout the United States (“US”) and Europe, and in Australia and China.

Highlights of the quarter ended September 30, 2009 are identified below.

 
·  
Revenue of $271.1 million, a decrease of 17.6 percent from $328.9 million in the second fiscal quarter a year ago.
 
·  
Revenue increased $15.1 million, or 5.9% compared to the first quarter of the current fiscal year.  This represents the first sequential quarter revenue increase since the third quarter of fiscal 2008.
 
·  
Income from operations of $21.2 million, a $13.0 million decrease compared to $34.3 million in the second fiscal quarter last year.
 
·  
Pre-tax earnings of $16.0 million, compared to $26.0 million in the second quarter of fiscal 2009.
 
·  
Diluted earnings per share of $0.12, compared to diluted earnings per share of $0.20 in the second fiscal quarter last year.
 
·  
Operating cash flow of $60.7 million.

These highlights are not intended to be a full discussion of the Company’s results for the quarter.  These highlights should be read in conjunction with the following discussion of Results of Operations and Capital Resources and Liquidity and with the Company’s condensed consolidated financial statements and footnotes accompanying this report.

Results of Operations

A summary of selected financial information for each of the periods reported is presented below (dollars in millions, except per share amounts):
   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
% Change
   
2009
   
2008
   
% Change
 
Revenue
                                   
Services
  $  210.2     $ 233.6       (10)%     $ 409.5     $ 470.3       (13)%  
Products
    60.9       95.3       (36)%       117.6       189.7       (38)%  
    $ 271.1     $ 328.9       (18)%     $ 527.1     $ 660.0       (20)%  
Total operating costs and expenses
    249.9       294.6       (15)%       493.3       600.1       (18)%  
Income from operations
  $ 21.2     $ 34.3       (38)%     $ 33.8     $ 59.9       (44)%  
Diluted earnings per share
  $ 0.12     $ 0.20       (40)%     $ 0.17     $ 0.34       (50)%  




20 
 

 

Revenues
Services revenue for the quarter ended September 30, 2009 was $210.2 million.  This represents a $23.4 million decrease or 10.0% when compared to the same period in the prior year.  On a geographic basis, International services decreased approximately $0.5 million while US services decreased approximately $22.9 million.  Excluding the impact of unfavorable exchange rate movement, International services increased $2.1 million which was due to strong performance in the United Kingdom.  By line of business, revenue declined in most areas including a $22.1 million decrease in CDI and Multi-channel Marketing Services.  Of the $22.1 million decline in CDI and Multi-channel Marketing Services, the Financial Services vertical accounted for a large portion of the decline.  Over the last year, revenue reductions have occurred due to contract renegotiations for reduced amounts, lost contracts, volume reductions and contracts terminated because of economic issues  However, for the first time in several quarters services revenue increased compared to the most recent sequential quarter.  Infrastructure Management revenue was relatively flat, however it was positively impacted by the recent signing of a large new arrangement.

Services revenue for the six months ended September 30, 2009 was $409.5 million.  This represents a $60.8 million decrease or 12.9% when compared to the same period in the prior year.  On a geographic basis, International services decreased approximately $5.2 million while US services decreased approximately $55.5 million.  Approximately $6.9 million of the International services decrease was due to unfavorable exchange rate movement.  US services revenue was positively impacted by prior-year acquisitions which contributed $4.9 million to services revenue in the quarter.  By line of business, revenue declined in most areas including a CDI and Multi-channel Marketing Services decrease of $47.1 million and Infrastructure Management decrease of $9.8 million.  Of the $47.1 million decline in CDI and Multi-channel Marketing Services, the Financial Services vertical accounted for a large portion of the decline.  Over the last year, revenue reductions have occurred due to contract renegotiations for reduced amounts, lost contracts, volume reductions and contracts terminated because of economic issues.  The decline in Infrastructure Management services as well as the CDI and Multi-channel Marketing Services decline in other industry verticals was driven by similar issues.

Products revenue for the quarter ended September 30, 2009 was $60.9 million.  This represents a $34.4 million decrease or 36.1% when compared to the same period in the prior year.  During the fourth quarter of fiscal 2009, a large pass-through data contract was amended and as such the revenue is no longer reported on a gross basis.  Excluding the pass-through revenue related to this contract, products revenue was down $12.9 million, or 17.5%.  The International operations declined $7.2 million of which $1.2 million was due to the impact of exchange rates.  International operations were impacted by much lower ad hoc and project activity.  The remaining $5.7 million decline was due to contract renegotiations for reduced amounts, lost contracts, volume reductions and contracts terminated because of economic issues in US industry verticals.

Products revenue for the six months ended September 30, 2009 was $117.6 million.  This represents a $72.2 million decrease or 38.0% when compared to the same period in the prior year.  Excluding the pass-through revenue related to the amended data contract, products revenue was down $28.4 million, or 19.5%.  The International operations declined $17.4 million of which $3.9 million was due to the impact of exchange rates.  International operations were impacted by much lower ad hoc and project activity.  The remaining $11.0 million decline was due to contract renegotiations for reduced amounts, lost contracts, volume reductions and contracts terminated because of economic issues in US industry verticals.


21 
 

 

Operating Costs and Expenses
The following table presents the Company’s operating costs and expenses for each of the periods presented (dollars in millions):

   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
% Change
   
2009
   
2008
   
% Change
 
Cost of revenue
                                   
Services
  $ 165.8     $ 181.0       (8)%     $ 325.4     $ 359.8       (10)%  
Products
    46.1       77.0       (40)%       92.0       154.8       (41)%  
Total cost of revenue
  $ 211.9     $ 258.0       (18)%     $ 417.4     $ 514.6       (19)%  
Selling, general and
Administrative
    38.0       39.0       (3)%       75.6       88.4       (15)%  
Gains, losses and other items, net
    -       (2.4 )     100%       0.3       (2.9 )     111%  
Total operating costs
and expenses
  $ 249.9     $ 294.6       (15)%     $ 493.3     $ 600.1       (18) %  



   
For the quarter ended
September 30
   
For the six months ended
September 30
 
   
2009
   
2008
   
2009
   
2008
 
Gross profit margin
                       
Services
    21.1%       22.5%       20.6%       23.5%  
Products
    24.2       19.2       21.7       18.4  
Total gross profit margin
    21.8%       21.6%       20.8%       22.0%  
Operating profit margin
    7.8%       10.4%       6.4%       9.1%  

Cost of services revenue of $165.8 million for the quarter ending September 30, 2009 represents a decrease of $15.2 million compared to the same quarter a year ago.  Gross margin for services revenue decreased from 22.5% to 21.1%.  Cost of services revenue of $325.4 million for the six months ended September 30, 2009 represents a decrease of $34.5 million compared to the same period a year ago.  Gross margin for services revenue decreased from 23.5% to 20.6%.  Margin decline was due to significant revenue declines in the current fiscal year.  Operating expenses have been reduced significantly as revenues have declined.  However, due to the reduction in volume-based revenue, margins have suffered.  The margin impact on this volume-based business has been mitigated by efficiency improvements in data processing and delivery operations.

Cost of products revenue of $46.1 million for the quarter ending September 30, 2009 represents a decrease of $30.9 million compared to the same quarter a year ago.  Products revenue gross margins increased from 19.2% a year ago to 24.2% in this quarter.  Excluding pass-through data and related costs in the prior year of $21.5 million, product costs actually decreased approximately 16.9% and margins on non-pass-through products decreased to 24.2% from 24.8% a year ago.  Cost of products revenue of $92.0 million for the six months ending September 30, 2009 represents a decrease of $62.7 million compared to the same six-month period a year ago.  Products revenue gross margins increased from 18.4% a year ago to 21.7%.  Excluding pass-through data and related costs in the prior year of $43.8 million, product costs actually decreased approximately 17.1% and margins on non-pass-through products decreased to 21.7% from 23.9% a year ago.  Although costs have been reduced significantly, the fixed cost structure of the product segment impacts margins to a greater extent as revenue declines.

Selling, general, and administrative expenses were $38.0 million for the quarter ended September 30, 2009.  This represents a $1.0 million decrease over the prior-year quarter.  As a percent of total revenue, these expenses were 14.0% compared to 11.9% a year ago.  Selling, general, and administrative expenses were $75.6 million for the six months ended September 30, 2009.  This represents a $12.9 million decrease over the prior-year period.  As a percent of total revenue, these expenses are 14.3% compared to 13.4% a year ago.  Current year expenses reflect ongoing cost savings initiated in fiscal 2009.


22 
 

 

Other Income (Expense)
Interest expense for the quarter ended September 30, 2009 was $5.4 million compared to $8.6 million a year ago due primarily to a $21.0 million decline in the average term loan debt balance and a decline of approximately 170 basis points on the term loan average interest rate.  Interest expense for the six months ended September 30, 2009 was $10.9 million compared to $18.1 million a year ago due primarily to a $22.0 million decline in the average term loan debt balance and a decline of approximately 175 basis points on the term loan average interest rate.

Other expense decreased to $0.1 million in the six months ended September 30, 2009.  The prior year included a $1.1 million gain from a real estate joint venture.

Income taxes
The anticipated effective tax rate for fiscal 2010 is 40.5%.  The prior-year rate was 39%.

Capital Resources and Liquidity

Working Capital and Cash Flow
Working capital at September 30, 2009 totaled $211.5 million compared to $204.5 million at March 31, 2009.  Total current assets decreased $11.3 million due to decreases in cash and cash equivalents of $9.5 million, refundable income taxes of $4.6 million, and trade accounts receivable of $2.2 million; offset by an increase in other current assets of $5.1 million.  Current liabilities decreased $18.3 million due to decreases in deferred revenue of $4.9 million and payroll accruals of $20.4 million; offset by increases in changes in current installments of long-term debt of $2.7 million and trade accounts payable of $4.5 million.  The Company made a $30 million pre-payment on its term loan during the quarter ended September 30, 2009.

Accounts receivable days sales outstanding (“DSO”) was 62 days at September 30, 2009 and was 56 days at March 31, 2009, and is calculated as follows (dollars in thousands):

   
September 30,
2009
   
March 31,
2009
 
Numerator – trade accounts receivable, net
  $ 182,612     $ 184,814  
Denominator:
               
Quarter revenue
    271,105       295,509  
Number of days in quarter
    92       90  
Average daily revenue
  $ 2,947     $ 3,283  
Days sales outstanding
    62       56  

Net cash provided by operating activities for the current year declined 33.3% to $76.9 million.  The decrease in net earnings of $12.9 million, decrease in depreciation and amortization of $22.9 million and decrease in change in other assets of $17.4 million was offset by an increase in changes in accounts receivable of $13.1 million.

Investing activities used $35.1 million in cash in the current year.  This included capitalization of data acquisition costs of $8.8 million and capitalization of software development costs of $4.8 million.  Capital expenditures were $21.9 million for the current year.  Additionally, the Company received $0.4 million in refunded cash from an escrow account set up for the acquisition of Precision Marketing.  The Company acquired $10.4 million of property under capital leases.  Payments under these arrangements will be reflected in future cash flows as payments of debt.  Prior-year investing activities included $2.6 million cash received from investments, $24.2 million from the sale of assets and $2.0 million received from the sale and license of software.

Cash flows from financing activities include payments of debt of $55.1 million, including capital lease payments of $15.3 million, software license payments of $5.7 million, other debt payments of $4.1 million and a term loan debt prepayment of $30.0 million.  Financing activities also include $2.7 million in proceeds from the sale of stock and $0.3 million for the payment for shares of treasury stock that were purchased in fiscal 2009.  Prior-year financing activities also included dividends paid of $9.3 million.


23 
 

 

Credit and Debt Facilities
Effective September 15, 2006, the Company entered into an amended and restated credit agreement allowing (1) term loans up to an aggregate principal amount of $600 million and (2) revolving credit facility borrowings consisting of revolving loans, letter of credit participations and swing-line loans up to an aggregate amount of $200 million.  On September 15, 2006, the Company borrowed the entire amount of the term loan.   The term loan is payable in quarterly principal installments of $1.5 million through September 2011, followed by quarterly principal installments of $111.4 million through September 2012.  The term loan also allows prepayments before maturity.  Revolving loan commitments and all borrowings of revolving loans mature on September 15, 2011.  The credit agreement is secured by the accounts receivable of Acxiom and its domestic subsidiaries, as well as by the outstanding stock of certain Acxiom subsidiaries.  At September 30, 2009 there were no revolving credit borrowings outstanding.  Borrowings under the revolving credit agreement bear interest at LIBOR plus 1.5%, an alternative base rate, or at the federal funds rate plus 2.25%.

Off-Balance Sheet Items and Commitments
The Company has entered into synthetic operating lease facilities for computer equipment and furniture (“Leased Assets”).  These synthetic operating lease facilities are accounted for as operating leases under GAAP and are treated as capital leases for income tax reporting purposes.  Lease terms under the computer equipment and furniture facility range from two to six years, with the Company having the option at expiration of the initial term to return, or purchase at a fixed price, or extend or renew the term of the leased equipment.  In the event the Company elects to return the Leased Assets, the Company has guaranteed a portion of the residual value to the lessors.  Assuming the Company elects to return the Leased Assets to the lessors at its earliest opportunity under the synthetic lease arrangements and assuming the Leased Assets have no significant residual value to the lessors, the maximum potential amount of future payments the Company could be required to make under these residual value guarantees was $0.4 million at September 30, 2009.  As of September 30, 2009 the Company has a future commitment for synthetic lease payments of $1.3 million over the next two years.

In connection with a certain building, the Company has entered into a 50/50 joint venture with a local real estate developer.  The Company is guaranteeing a portion of the loan for the building.  In addition, in connection with the disposal of certain assets, the Company has guaranteed loans for the buyers of the assets.  Substantially all of the third party indebtedness for which the Company has provided guarantees is collateralized by various pieces of real property.  The aggregate amount of the guarantees at September 30, 2009 was $2.5 million.

Outstanding letters of credit which reduce the borrowing capacity under the Company’s revolving credit were $12.5 million at September 30, 2009.


24 
 

 

Contractual Commitments
The following table presents Acxiom’s contractual cash obligations, exclusive of interest, and purchase commitments at September 30, 2009 (dollars in thousands).  The table does not include the future payment of gross unrealized tax benefit liabilities of $5.5 million or the future payment, if any, against the Company’s non-current interest rate swap liability of $3.6 million as the Company is not able to predict the periods in which these payments will be made. The column for 2010 represents the six months ending March 31, 2010.  All other columns represent fiscal years ending March 31.

   
For the years ending March 31
 
   
2010
   
2011
   
2012
   
2013
   
2014
   
Thereafter
   
Total
 
Capital lease and installment payment obligations
  $ 13,577     $ 12,245     $ 4,361     $ 1,352     $ 631     $ 9,696     $ 41,862  
Software and data license liabilities
    2,104       4,059       2,625       1,461       -       -       10,249  
Warrant liability
    -       -       -       -       -       1,499       1,499  
Other long-term debt
    4,069       19,498       227,380       229,687       -       -       480,634  
Total long-term obligations
    19,750       35,802       234,366       232,500       631       11,195       534,244  
Synthetic equipment and furniture leases
    1,186       125       -       -       -       -       1,311  
Equipment operating leases
    1,587       817       225       62       10       -       2,701  
Building operating leases
    13,553       20,954       14,835       11,795       10,377       37,942       109,456  
Total operating lease payments
    16,326       21,896       15,060       11,857       10,387       37,942       113,468  
Total contractual cash obligations
  $ 36,076     $ 57,698     $ 249,426     $ 244,357     $ 11,018     $ 49,137     $ 647,712  

   
For the years ending March 31
 
   
2010
   
2011
   
2012
   
2013
   
2014
   
Thereafter
   
Total
 
Purchase commitments on synthetic equipment and furniture leases
    1,527       215       -       -       -       -       1,742  
Other purchase commitments
    51,643       41,797       31,410       18,284       9,764       17,197       170,095  
Total purchase commitments
  $ 53,170     $ 42,012     $ 31,410     $ 18,284     $ 9,764     $ 17,197     $ 171,837  

The purchase commitments on the synthetic equipment and furniture leases assume the leases terminate and are not renewed, and the Company elects to purchase the assets.  The other purchase commitments include contractual commitments for the purchase of data and open purchase orders for equipment, paper, office supplies, construction and other items.  Other purchase commitments in some cases will be satisfied by entering into future operating leases, capital leases, or other financing arrangements, rather than payment of cash.

The following table shows contingencies or guarantees under which the Company could be required, in certain circumstances, to make cash payments as of September 30, 2009 (dollars in thousands):

Residual value guarantee on the synthetic computer equipment and furniture leases
  $ 377  
Guarantee on certain partnership and other loans
    2,529  
Outstanding letters of credit
    12,519  

The total of partnership and other loans of which the Company guarantees the portion noted in the above table is $7.0 million as of September 30, 2009.


25 
 

 

While the Company does not have any other material contractual commitments for capital expenditures, certain levels of investments in facilities and computer equipment continue to be necessary to support the growth of the business.  In some cases, the Company also sells software and hardware to clients.  In addition, new outsourcing or facilities management contracts frequently require substantial up-front capital expenditures to acquire or replace existing assets.  Management believes that the Company’s existing available debt and cash flow from operations will be sufficient to meet the Company’s working capital and capital expenditure requirements for the foreseeable future.  The Company also evaluates acquisitions from time to time, which may require up-front payments of cash.  Depending on the size of the acquisition it may be necessary to raise additional capital.  If additional capital becomes necessary as a result of any material variance of operating results from projections or from potential future acquisitions, the Company would first use available borrowing capacity under its revolving credit agreement, followed by the issuance of debt or equity securities.  However, no assurance can be given that the Company would be able to obtain funding through the issuance of debt or equity securities at terms favorable to the Company, or that such funding would be available.

For a description of certain risks that could have an impact on results of operations or financial condition, including liquidity and capital resources, see “Risk Factors” contained in Part I, Item 1A, of the Company’s 2009 Annual Report.

Non-U.S. Operations

The Company has a presence in the United Kingdom, France, the Netherlands, Germany, Portugal, Poland, Australia and China.   Most of the Company’s exposure to exchange rate fluctuation is due to translation gains and losses as there are no material transactions that cause exchange rate impact.  In general, each of the foreign locations is expected to fund its own operations and cash flows, although funds may be loaned or invested from the U.S. to the foreign subsidiaries subject to limitations in the Company’s revolving credit facility.  These advances are considered to be long-term investments, and any gain or loss resulting from changes in exchange rates as well as gains or losses resulting from translating the foreign financial statements into U.S. dollars are included in accumulated other comprehensive income (loss).  Exchange rate movements of foreign currencies may have an impact on the Company’s future costs or on future cash flows from foreign investments.  The Company has not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America.  These accounting principles require management to make certain judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  The consolidated financial statements in the Company’s 2009 Annual Report include a summary of significant accounting policies used in the preparation of Acxiom’s consolidated financial statements.  In addition, the Management’s Discussion and Analysis filed as part of the 2009 Annual Report contains a discussion of the policies which management has identified as the most critical because they require management’s use of complex and/or significant judgments.  None of the Company’s critical accounting policies have materially changed since the date of the last annual report.

New Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations,” (“SFAS 141R”), which replaces SFAS 141.  SFAS 141R has subsequently been codified in the FASB Accounting Standards Codification Topic 805 (“ASC 805”).  ASC 805 requires most assets acquired and liabilities assumed in a business combination, contingent consideration, and certain acquired contingencies to be measured at their fair values as of the date of acquisition.  The new standard also requires that acquisition-related costs and restructuring costs be recognized separately from the business combination.  The new standard is effective for the Company for fiscal year 2010 and will be effective for business combinations entered into this fiscal year.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interest in Consolidated Financial Statements”, (“SFAS 160”).  SFAS 160 has subsequently been codified in the FASB Accounting Standards Codification Topic 810 (“ASC 810”).  The new standard amends previous accounting standards to establish new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  The new standard is effective for the Company this fiscal year.
 
 

 
26

 
 
The FASB’s Emerging Issues Task Force has issued new accounting guidance for revenue arrangements with multiple deliverables.  Under current accounting guidance, one of the requirements for recognition of revenue for a delivered item under a multiple element arrangement is that there must be objective and verifiable evidence of the standalone selling price of the undelivered item.  The new guidance eliminates that requirement and requires an entity to estimate the selling price of each element in the arrangement.  The result will likely be that more arrangements will be separated into multiple elements of accounting than was previously the case.

The new guidance is effective for the Company as of April 1, 2011 and must be applied prospectively to new arrangements entered into beginning on that date.  Early adoption is permitted as of the beginning of a fiscal year.  If the new guidance is adopted early in a period other than the first period of the fiscal year, the guidance must be adopted retrospectively to the beginning of the fiscal year of adoption.  Retrospective application to prior years is allowed, but not required.  In the initial year of application, certain qualitative and quantitative disclosures about the impact of the adoption are required.

The Company has not yet determined the impact of adoption, although management believes that the new guidance will generally require separation of more units of accounting than under the current accounting guidance.  The Company has not yet determined whether to adopt as of the required adoption date or to adopt in an earlier period.


27 
 

 

Forward-looking Statements

This document contains forward-looking statements.  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, growth opportunities, economic conditions, and other similar forecasts and statements of expectation.  The Company indicates these statements by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” and similar words or phrases.  These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.

Forward-looking statements may include but are not limited to the following:
 
·  
that the amounts for restructuring and impairment charges and accruals for litigation will be within estimated ranges;
 
·  
that the cash flows used in estimating the recoverability of assets will be within the estimated ranges; and
 
·  
that items which management currently believes are not material will continue to not be material in the future.

The factors and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, forward-looking statements include but are not limited to the following:
 
·  
the risk factors described in Part I, “Item 1A. Risk Factors” included in the Company’s 2009 Annual Report and in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission;
 
·  
the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames;
 
·  
the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce the amount of business they do with us;
 
·  
the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue;
 
·  
the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates to other organizations;
 
·  
the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions;
 
·  
the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services;
 
·  
the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company;
 
·  
the possibility that the historical seasonality of our business may change;
 
·  
the possibility that we will not be able to achieve cost reductions and avoid unanticipated costs;
 
·  
the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods;
 
·  
the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; and
 
·  
the possibility that we may encounter difficulties when entering new markets or industries.

With respect to the provision of products or services outside our primary base of operations in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in scale, competition, culture, laws and regulations.

Other factors are detailed from time to time in periodic reports and registration statements filed with the United States Securities and Exchange Commission. The Company believes that we have the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast.
 
 
28

 
In light of these risks, uncertainties and assumptions, the Company cautions readers not to place undue reliance on any forward-looking statements.  The Company undertakes no obligation to publicly update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

29
 

 


Item 3.  Quantitative and Qualitative Disclosure about Market Risk

Acxiom’s earnings are affected by changes in short-term interest rates primarily as a result of its term loan and revolving credit agreement, which bears interest at a floating rate.  Acxiom currently uses an interest-rate swap agreement to mitigate the changes in interest rate risk on $95 million of its variable interest debt.  Risk can be estimated by measuring the impact of a near-term adverse movement of one percentage point in short-term market interest rates.  If short-term market interest rates increase one percentage point during the next four quarters compared to the previous four quarters, there would be no material adverse impact on Acxiom’s results of operations.  Acxiom has no material future earnings or cash flow expenses from changes in interest rates related to its other long-term debt obligations as substantially all of Acxiom’s remaining long-term debt instruments have fixed rates.  At both September 30, 2009 and March 31, 2009, the fair value of Acxiom’s fixed rate long-term debt approximated carrying value.

The Company has a presence in the United Kingdom, France, The Netherlands, Germany, Portugal, Poland, Australia and China.  In general, each of the foreign locations is expected to fund its own operations and cash flows, although funds may be loaned or invested from the U.S. to the foreign subsidiaries.  Therefore, exchange rate movements of foreign currencies may have an impact on Acxiom’s future costs or on future cash flows from foreign investments.  Acxiom, at this time, has not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.


Item 4.  Controls and Procedures

(a)
Evaluation of Disclosure Controls and Procedures.

As of September 30, 2009 under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), we evaluated the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of September 30, 2009 our disclosure controls and procedures were effective.

(b)  
Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the six months ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting.


30 
 

 

PART II.  OTHER INFORMATION

  Item 1.
  Legal Proceedings

The Company is involved in various claims and litigation matters that arise in the ordinary course of the business.  None of these, however, are believed to be material in their nature or scope, except those incorporated by reference under this Part II, Item 1.

Refer to the discussion of certain legal proceedings pending against the Company under Part I, Item 1, Notes to Condensed Consolidated Financial Statements, Note 11 Commitments and Contingencies, which discussion is incorporated herein by reference.

Item 4.    Submission of Matters to a Vote of Security Holders

(a)           The Annual Meeting of Shareholders of the Company was held on August 19, 2009.

(c)           At the meeting, the shareholders voted on the following two proposals:

 
1)
A proposal for the election of four directors – Voting results for each individual nominee were as follows: Michael J. Durham – 64,938,158 votes for, 6,311,160 votes against, and 76,278 votes abstained; Ann Die Hasselmo – 65,954,413 votes for, 5,302,477 votes against, and 68,706 votes abstained; William J. Henderson – 66,727,141 votes for, 4,529,262 votes against, and 69,193 votes abstained; and John A. Meyer – 66,276,735 votes for, 4,974,290 votes against, and 74,571 votes abstained.  .

 
2)
A proposal to ratify the independent auditors of the Company – Voting results for this proposal were as follows:  70,155,306 votes for; 1,103,645 votes against, 66,645 votes abstained, and 0 broker non votes.

Item 6.     Exhibits

(a)           The following exhibits are filed with this Report:

 
31(a)
Certification of Chief Executive Officer (principal executive officer) pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002

 
31(b)
Certification of Chief Financial Officer (principal financial and accounting officer) pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002

 
32(a)
Certification of Chief Executive Officer (principal executive officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 
32(b)
Certification of Chief Financial Officer (principal financial and accounting officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





31 
 

 

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 6, 2009


By:  /s/Christopher W. Wolf  
(Signature)
Christopher W. Wolf
Chief Financial Officer
(principal financial and accounting officer)


32 
 
 


 
 
 
 
EXHIBIT 31(a)


ACXIOM CORPORATION AND SUBSIDIARIES

CERTIFICATION

I, John A. Meyer, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Acxiom Corporation;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

 
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated:  November 6, 2009
By:
/s/ John A. Meyer
   
(Signature)
John A. Meyer
Chief Executive Officer & President


.
 
 

 


 
 
 
EXHIBIT 31(b)

ACXIOM CORPORATION AND SUBSIDIARIES

CERTIFICATION

I, Christopher W. Wolf, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Acxiom Corporation;

2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

 
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Dated:  November 6, 2009
By:
/s/ Christopher W. Wolf
   
(Signature)
Christopher W. Wolf
Chief Financial Officer


 
 

 


 
 
 
EXHIBIT 32(a)





CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the accompanying Quarterly Report of Acxiom Corporation (the Company) on Form 10-Q for the period ending September 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John A. Meyer, Chief Executive Officer & President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 19