RAMP 10-Q Quarterly Report Dec. 31, 2012 | Alphaminr
LiveRamp Holdings, Inc.

RAMP 10-Q Quarter ended Dec. 31, 2012

LIVERAMP HOLDINGS, INC.
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10-Q 1 f10q.htm ACXIOM 3RD QUARTER 10Q FY13 f10q.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2012
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 files).
Yes [X]
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 definitions 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 in 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 February 4, 2013 was 73,827,393.

1


ACXIOM CORPORATION AND SUBSIDIARIES
INDEX
REPORT ON FORM 10-Q
December 31, 2012
Part I.           Financial Information Page No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of December 31, 2012 and March 31, 2012 (Unaudited)
3
Condensed Consolidated Statements of Operations
for the Three Months ended December 31, 2012 and 2011 (Unaudited)
4
Condensed Consolidated Statements of Operations
for the Nine Months ended December 31, 2012 and 2011 (Unaudited)
5
Condensed Consolidated Statements of Comprehensive Income
for the Three Months ended December 31, 2012 and 2011 (Unaudited)
6
Condensed Consolidated Statements of Comprehensive Income
for the Nine Months ended December 31, 2012 and 2011 (Unaudited)
7
Condensed Consolidated Statement of Stockholders’ Equity
for the Nine Months ended December 31, 2012 (Unaudited)
8
Condensed Consolidated Statements of Cash Flows
for the Nine Months ended December 31, 2012 and 2011 (Unaudited)
9-10
Notes to Condensed Consolidated Financial Statements 11-22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23-33
Item 3. Quantitative and Qualitative Disclosures about Market Risk 34
Item 4. Controls and Procedures 34
Part II.           Other Information
Item 1. Legal Proceedings 35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
Item 6. Exhibits 36
Signature 37
Exhibit Index 38
2


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
December 31,
2012
March 31, 2012
ASSETS
Current assets:
Cash and cash equivalents
$ 186,220 $ 229,648
Trade accounts receivable, net
182,457 169,446
Deferred income taxes
15,082 15,107
Other current assets
52,750 57,804
Total current assets
436,509 472,005
Property and equipment, net of accumulated depreciation and amortization
231,774 253,373
Software, net of accumulated amortization
19,491 13,211
Goodwill
382,704 382,285
Purchased software licenses, net of accumulated amortization
21,583 25,294
Deferred costs, net
47,211 61,977
Data acquisition costs, net
11,540 15,009
Other assets, net
2,831 3,697
$ 1,153,643 $ 1,226,851
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt
$ 19,814 $ 26,336
Trade accounts payable
19,873 31,030
Accrued expenses
Payroll
47,041 54,839
Other
73,696 77,062
Deferred revenue
47,389 59,949
Income taxes payable
3,229 16,400
Total current liabilities
211,042 265,616
Long-term debt
240,774 251,886
Deferred income taxes
86,614 93,039
Other liabilities
4,178 4,455
Commitments and contingencies
Equity:
Common stock
12,108 12,003
Additional paid-in capital
877,619 860,165
Retained earnings
580,728 536,359
Accumulated other comprehensive income
14,714 13,601
Treasury stock, at cost
(873,893 ) (810,381 )
Total Acxiom stockholders' equity
611,276 611,747
Noncontrolling interest
(241 ) 108
Total equity
611,035 611,855
$ 1,153,643 $ 1,226,851
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
December 31
2012
2011
Revenues
$ 273,102 $ 280,893
Operating costs and expenses:
Cost of revenue
209,027 213,925
Selling, general and administrative
37,303 36,318
Impairment of goodwill and other intangibles
- 17,803
Gains, losses and other items, net
(126 ) (2,671 )
Total operating costs and expenses
246,204 265,375
Income from operations
26,898 15,518
Other expense:
Interest expense
(3,178 ) (3,883 )
Other, net
565 (98 )
Total other expense
(2,613 ) (3,981 )
Earnings from continuing operations before income taxes
24,285 11,537
Income taxes
9,836 9,700
Net earnings from continuing operations
$ 14,449 $ 1,837
Earnings from discontinued operations, net of tax
- 814
Net earnings
$ 14,449 $ 2,651
Less: Net loss attributable to noncontrolling interest
(76 ) (5,279 )
Net earnings attributable to Acxiom
$ 14,525 $ 7,930
Basic earnings per share:
Net earnings from continuing operations
$ 0.19 $ 0.02
Net earnings from discontinued operations
- 0.01
Net earnings
$ 0.19 $ 0.03
Net earnings attributable to Acxiom stockholders
$ 0.20 $ 0.10
Diluted earnings per share:
Net earnings from continuing operations
$ 0.19 $ 0.02
Net earnings from discontinued operations
- 0.01
Net earnings
$ 0.19 $ 0.03
Net earnings attributable to Acxiom stockholders
$ 0.19 $ 0.10
See accompanying notes to condensed consolidated financial statements.


4



ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Nine Months ended
December 31
2012
2011
Revenues
$ 822,228 $ 843,369
Operating costs and expenses:
Cost of revenue
628,239 649,701
Selling, general and administrative
111,393 112,554
Impairment of goodwill and other intangibles
- 17,803
Gains, losses and other items, net
66 38
Total operating costs and expenses
739,698 780,096
Income from operations
82,530 63,273
Other expense:
Interest expense
(9,735 ) (14,057 )
Other, net
(36 ) (1,150 )
Total other expense
(9,771 ) (15,207 )
Earnings from continuing operations before income taxes
72,759 48,066
Income taxes
28,739 25,291
Net earnings from continuing operations
$ 44,020 $ 22,775
Earnings from discontinued operations, net of tax
- 2,868
Net earnings
$ 44,020 $ 25,643
Less: Net loss attributable to noncontrolling interest
(349 ) (5,554 )
Net earnings attributable to Acxiom
$ 44,369 $ 31,197
Basic earnings per share:
Net earnings from continuing operations
$ 0.59 $ 0.28
Net earnings from discontinued operations
- 0.04
Net earnings
$ 0.59 $ 0.32
Net earnings attributable to Acxiom stockholders
$ 0.59 $ 0.39
Diluted earnings per share:
Net earnings from continuing operations
$ 0.57 $ 0.28
Net earnings from discontinued operations
- 0.04
Net earnings
$ 0.57 $ 0.32
Net earnings attributable to Acxiom stockholders
$ 0.58 $ 0.39
See accompanying notes to condensed consolidated financial statements.


5




ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands)
For the Three Months ended
December 31
2012
2011
Net earnings
$ 14,449 $ 2,651
Other comprehensive income:
Change in foreign currency translation adjustment
862 1,528
Unrealized gain on interest rate swap
200 494
Other comprehensive income
1,062 2,022
Comprehensive income
15,511 4,673
Less: Comprehensive loss attributable to noncontrolling interest
(76 ) (5,279 )
Comprehensive income attributable to Acxiom stockholders
$ 15,587 $ 9,952
See accompanying notes to condensed consolidated financial statements.


6




ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands)
For the Nine Months ended
December 31
2012
2011
Net earnings
$ 44,020 $ 25,643
Other comprehensive income (loss):
Change in foreign currency translation adjustment
1,046 (4,190 )
Unrealized gain on interest rate swap
67 194
Other comprehensive income (loss)
1,113 (3,996 )
Comprehensive income
45,133 21,647
Less: Comprehensive loss attributable to noncontrolling interest
(349 ) (5,554 )
Comprehensive income attributable to Acxiom stockholders
$ 45,482 $ 27,201
See accompanying notes to condensed consolidated financial statements.

7


ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
NINE MONTHS ENDED DECEMBER 31, 2012
(Unaudited)
(Dollars in thousands)

Accumulated
Common Stock
Additional
other
Treasury Stock
Number
paid-in
Retained
comprehensive
Number
Noncontrolling
Total
of shares
Amount
Capital
earnings
income
of shares
Amount
Interest
Equity
Balances at March 31, 2012
120,027,013
$12,003
$    860,165
$    536,359
$13,601
(43,213,027)
$(810,381)
$      108
$611,855
Employee stock awards, benefit plans and other issuances
590,028
59
8,594
-
-
(56,600)
(790)
-
7,863
Restricted stock units vested
464,688
46
(46)
-
-
-
-
-
-
Non-cash share-based compensation
-
-
8,906
-
-
-
-
-
8,906
Acquisition of treasury stock
-
-
-
-
-
(4,059,090)
(62,722)
-
(62,722)
Comprehensive income:
Foreign currency translation
-
-
-
-
1,046
-
-
-
1,046
Unrealized loss on interest rate swap
-
-
-
-
67
-
-
-
67
Net earnings (loss)
-
-
-
44,369
-
-
-
(349)
44,020
Balances at December 31, 2012
121,081,729
$12,108
$      877,619
$    580,728
$14,714
(47,328,717)
$(873,893)
$    (241)
$611,035
See accompanying notes to condensed consolidated financial statements

8


ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Nine Months ended
December 31
2012
2011
Cash flows from operating activities:
Net earnings
$ 44,020 $ 25,643
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization
89,594 103,240
Loss on disposal or impairment of assets
25 183
Impairment of goodwill and other intangibles
- 17,803
Deferred income taxes
(6,428 ) 2,539
Non-cash share-based compensation expense
8,906 6,910
Changes in operating assets and liabilities:
Accounts receivable, net
(13,925 ) (2,763 )
Other assets
756 (202 )
Deferred costs
(1,600 ) (1,879 )
Accounts payable and other liabilities
(32,607 ) 7,391
Deferred revenue
(12,830 ) 14,143
Net cash provided by operating activities
75,911 173,008
Cash flows from investing activities:
Disposition of operations
- (1,043 )
Capitalized software development costs
(13,190 ) (3,167 )
Capital expenditures
(21,976 ) (39,147 )
Payments received for investments
- 370
Data acquisition costs
(6,464 ) (8,549 )
Net cash paid in acquisitions
- (255 )
Net cash used in investing activities
(41,630 ) (51,791 )
Cash flows from financing activities:
Payments of debt
(19,790 ) (145,768 )
Acquisition liability payment
- (326 )
Acquisition of treasury stock
(65,356 ) (42,827 )
Sale of common stock
7,863 7,318
Contingent consideration paid for prior acquisitions
(287 ) -
Net cash used in financing activities
(77,570 ) (181,603 )
Effect of exchange rate changes on cash
(139 ) (724 )
Net change in cash and cash equivalents
(43,428 ) (61,110 )
Cash and cash equivalents at beginning of period
229,648 206,973
Cash and cash equivalents at end of period
$ 186,220 $ 145,863


9


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
(Dollars in thousands)
For the Nine Months ended
December 31
2012
2011
Supplemental cash flow information:
Cash paid during the period for:
Interest
$ 9,678 $ 15,491
Income taxes
48,268 15,171
Payments on capital leases and installment payment arrangements
12,948 13,687
Prepayments of debt
- 125,000
Other debt payments
6,842 7,081
Non-cash investing and financing activities:
Acquisition of property and equipment under capital leases and installment payment arrangements
2,157 8,733
See accompanying notes to condensed consolidated financial statements.


10


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 18 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, 2012 (“2012 Annual Report”), as filed with the Commission on May 25, 2012.  This report and the accompanying condensed consolidated financial statements should be read in connection with the 2012 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, 2013.

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 2012 Annual Report.

Discontinued Operations -

During the quarter ended December 31, 2011, the Company announced the sale of its background screening unit, Acxiom Information Security Systems (AISS).  The sale was completed in the quarter ended March 31, 2012.  As a result, AISS results for the prior year are presented as discontinued operations in the condensed consolidated statement of operations.  Revenue and expenses related to discontinued operations are netted and presented on one line, net of tax, in the statement of operations.

Reclassifications -

Certain amounts reported in previous periods have been reclassified to conform to the current presentation.

Recent Accounting Pronouncements -

In June 2011, the FASB issued an amendment to an existing accounting standard which requires companies to present net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements.  The Company adopted the standard in the first quarter of fiscal 2013.

11



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
December 31
For the nine months ended
December 31
2012
2011
2012
2011
Basic earnings per share:
Net earnings from continuing operations
$ 14,449 $ 1,837 $ 44,020 $ 22,775
Net earnings from discontinued operations
- 814 - 2,868
Net earnings
$ 14,449 $ 2,651 $ 44,020 $ 25,643
Net loss attributable to noncontrolling interest
(76 ) (5,279 ) (349 ) (5,554 )
Net earnings attributable to Acxiom
$ 14,525 $ 7,930 $ 44,369 $ 31,197
Basic weighted-average shares outstanding
74,103 78,189 75,195 80,039
Basic earnings per share:
Continuing operations
$ 0.19 $ 0.02 $ 0.59 $ 0.28
Discontinued operations
- $ 0.01 - $ 0.04
Net earnings
$ 0.19 $ 0.03 $ 0.59 $ 0.32
Net loss attributable to noncontrolling interest
- $ (0.07 ) - $ (0.07 )
Net earnings attributable to Acxiom
$ 0.20 $ 0.10 $ 0.59 $ 0.39
Diluted earnings per share:
Basic weighted-average shares outstanding
74,103 78,189 75,195 80,039
Dilutive effect of common stock options, warrants, and restricted stock as computed under the treasury stock method
1,775 831 1,792 838
Diluted weighted-average shares outstanding
75,878 79,020 76,987 80,877
Diluted earnings per share:
Continuing operations
$ 0.19 $ 0.02 $ 0.57 $ 0.28
Discontinued operations
- $ 0.01 - $ 0.04
Net earnings
$ 0.19 $ 0.03 $ 0.57 $ 0.32
Net loss attributable to noncontrolling interest
- $ (0.07 ) - $ (0.07 )
Net earnings attributable to Acxiom
$ 0.19 $ 0.10 $ 0.58 $ 0.39

Some earnings per share amounts may not add due to rounding.


12



As of December 31, 2012, the Company had options and warrants outstanding providing for the purchase of approximately 9.7 million shares of common stock together with restricted stock units relating to 1.2 million shares of 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
December 31
For the nine months ended
December 31
2012
2011
2012
2011
Number of shares outstanding under options, warrants and restricted stock units
4,752 9,515 7,872 9,438
Range of exercise prices for options and warrants
$ 17.76-$62.06 $ 12.25-$62.06 $ 13.10-$62.06 $ 13.14-$62.06

Stockholders’ Equity

On August 29, 2011, the board of directors adopted a common stock repurchase program.  That program was subsequently modified and expanded on December 5, 2011, on May 24, 2012, and again on February 5, 2013.  Under the modified common stock repurchase program, the Company may purchase up to $200.0 million of its common stock through the period ending February 5, 2014.  During the nine months ended December 31, 2012, the Company repurchased 4.1 million shares of its common stock for $62.7 million.  Cash paid for acquisition of treasury stock in the condensed consolidated statement of cash flows may differ from the aggregate purchase price due to trades made during one fiscal period that settle in a different fiscal period.  Through December 31, 2012, the Company had repurchased 9.9 million shares of its stock for $130.9 million, leaving remaining capacity of $69.1 million under the stock repurchase program.

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 38.2 million shares of the Company’s common stock have been reserved for issuance since inception of the plans.  These plans provide that the exercise 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 requires that nonqualified options be priced at or above the fair market value of the common stock at the time of grant.  At December 31, 2012, there were a total of 4.4 million shares available for future grants under the plans.

The Company granted 497,409 stock options in the nine months ended December 31, 2012.  The per-share weighted-average fair value of the stock options granted during the nine months ended December 31, 2012 was $5.00.  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 1.7%; expected option life of 4.5 years; expected volatility of 43% and a suboptimal exercise multiple of 1.4.

Option activity for the nine months ended December 31, 2012 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, 2012
8,322,077 $ 20.91
Granted
497,409 $ 13.31
Exercised
(243,026 ) $ 13.14 $ 1,050
Forfeited or cancelled
(207,993 ) $ 18.66
Outstanding at December 31, 2012
8,368,467 $ 20.74
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