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EX-32.1 - EXHIBIT 32.1 - LiveRamp Holdings, Inc.acxm-20160630ex3212d6c9b.htm
EX-32.2 - EXHIBIT 32.2 - LiveRamp Holdings, Inc.acxm-20160630ex322eb71be.htm
EX-31.2 - EXHIBIT 31.2 - LiveRamp Holdings, Inc.acxm-20160630ex312b64fbf.htm
EX-31.1 - EXHIBIT 31.1 - LiveRamp Holdings, Inc.acxm-20160630ex311d72923.htm
EX-10.1 - EXHIBIT 10.1 - LiveRamp Holdings, Inc.acxm-20160630ex101e6b0ef.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 June 30, 2016

 

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 8190, 601 E. Third Street,

Little Rock, Arkansas

(Address of Principal Executive Offices)

72203-8190

(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 August 2, 2016 was 77,409,054.

 


 

ACXIOM CORPORATION AND SUBSIDIARIES

INDEX

REPORT ON FORM 10-Q

June 30, 2016

 

Part I.  Financial Information 

Page No.

Item 1. 

Financial Statements

 

 

Condensed Consolidated Balance Sheets
as of June 30, 2016 (Unaudited) and March 31, 2016

3

 

Condensed Consolidated Statements of Operations
for the Three Months ended June 30, 2016 and 2015 (Unaudited)

4

 

Condensed Consolidated Statements of Comprehensive Income (Loss)
for the Three Months ended June 30, 2016 and 2015 (Unaudited)

5

 

Condensed Consolidated Statement of Equity
for the Three Months ended June 30, 2016 (Unaudited)

6

 

Condensed Consolidated Statements of Cash Flows
for the Three Months ended June 30, 2016 and 2015 (Unaudited)

7-8

 

Notes to Condensed Consolidated Financial Statements

9-23

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24-35

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

36

Item 4. 

Controls and Procedures

36

 

 

 

Part II.  Other Information 

 

Item 1. 

Legal Proceedings

37

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 6. 

Exhibits

38

 

 

 

Signature 

39

 

 

 

Exhibit Index 

40

 

 

2


 

 

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

 

 

June 30, 

 

March 31, 

 

 

    

2016

    

2016

 

ASSETS

 

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

150,160

 

$

189,629

 

Trade accounts receivable, net

 

 

127,655

 

 

138,650

 

Refundable income taxes

 

 

7,606

 

 

9,834

 

Other current assets

 

 

34,919

 

 

37,897

 

Total current assets

 

 

320,340

 

 

376,010

 

 

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation and amortization

 

 

179,211

 

 

183,043

 

Software, net of accumulated amortization

 

 

52,537

 

 

55,735

 

Goodwill

 

 

492,598

 

 

492,745

 

Purchased software licenses, net of accumulated amortization

 

 

9,561

 

 

10,116

 

Deferred income taxes

 

 

6,170

 

 

6,885

 

Other assets, net

 

 

23,547

 

 

25,315

 

 

 

$

1,083,964

 

$

1,149,849

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current installments of long-term debt

 

$

32,262

 

$

32,243

 

Trade accounts payable

 

 

26,216

 

 

37,717

 

Accrued expenses

 

 

 

 

 

 

 

Payroll

 

 

27,733

 

 

61,309

 

Other

 

 

47,977

 

 

48,254

 

Deferred revenue

 

 

38,378

 

 

44,477

 

Total current liabilities

 

 

172,566

 

 

224,000

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

150,124

 

 

157,897

 

Deferred income taxes

 

 

52,571

 

 

53,964

 

Other liabilities

 

 

14,939

 

 

15,020

 

Commitments and contingencies

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Common stock

 

 

13,102

 

 

13,039

 

Additional paid-in capital

 

 

1,095,510

 

 

1,082,220

 

Retained earnings

 

 

602,477

 

 

598,501

 

Accumulated other comprehensive income

 

 

7,590

 

 

8,590

 

Treasury stock, at cost

 

 

(1,024,915)

 

 

(1,003,382)

 

Total equity

 

 

693,764

 

 

698,968

 

 

 

$

1,083,964

 

$

1,149,849

 

 

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

 

 

 

June 30, 

 

 

    

2016

    

2015

 

 

 

 

 

 

 

 

 

Revenues

 

$

214,801

 

$

196,895

 

Cost of revenue

 

 

122,819

 

 

117,709

 

Gross profit

 

 

91,982

 

 

79,186

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

18,652

 

 

20,011

 

Sales and marketing

 

 

37,348

 

 

29,494

 

General and administrative

 

 

27,506

 

 

31,743

 

Gains, losses and other items, net

 

 

314

 

 

807

 

Total operating expenses

 

 

83,820

 

 

82,055

 

Income (loss) from operations

 

 

8,162

 

 

(2,869)

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

 

 

(1,812)

 

 

(1,885)

 

Other, net

 

 

307

 

 

304

 

Total other expense

 

 

(1,505)

 

 

(1,581)

 

Income (loss) from continuing operations before income taxes

 

 

6,657

 

 

(4,450)

 

Income taxes

 

 

2,681

 

 

732

 

Net earnings (loss) from continuing operations

 

 

3,976

 

 

(5,182)

 

Earnings from discontinued operations, net of tax

 

 

 —

 

 

4,143

 

Net earnings (loss)

 

$

3,976

 

$

(1,039)

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share:

 

 

 

 

 

 

 

Net earnings (loss) from continuing operations

 

$

0.05

 

$

(0.07)

 

Net earnings from discontinued operations

 

 

 —

 

 

0.05

 

Net earnings (loss)

 

$

0.05

 

$

(0.01)

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

Net earnings (loss) from continuing operations

 

$

0.05

 

$

(0.07)

 

Net earnings from discontinued operations

 

 

 —

 

 

0.05

 

Net earnings (loss)

 

$

0.05

 

$

(0.01)

 

 

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

See accompanying notes to condensed consolidated financial statements.

 

4


 

 

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)

 

 

 

For the Three months ended

 

 

 

June 30, 

 

 

    

2016

    

2015

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

3,976

 

$

(1,039)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

(1,005)

 

 

718

 

Unrealized gain on interest rate swap

 

 

5

 

 

11

 

Other comprehensive income (loss)

 

 

(1,000)

 

 

729

 

Comprehensive income (loss)

 

$

2,976

 

$

(310)

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

5


 

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

THREE MONTHS ENDED JUNE 30, 2016

(Unaudited)

(Dollars in thousands)

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Additional

 

 

 

 

other

 

Treasury Stock

 

 

 

 

 

 

Number

 

 

 

 

paid-in

 

Retained

 

comprehensive

 

Number

 

 

 

 

Total 

 

 

    

of shares

    

Amount

    

Capital

    

earnings

    

income

    

of shares

    

Amount

    

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at March 31, 2016

 

130,390,106

 

$

13,039

 

$

1,082,220

 

$

598,501

 

$

8,590

 

(53,030,682)

 

$

(1,003,382)

 

$

698,968

 

Employee stock awards, benefit plans and other issuances

 

288,212

 

 

29

 

 

4,271

 

 

 —

 

 

 —

 

(66,955)

 

 

(1,326)

 

 

2,974

 

Tax impact of stock options and restricted stock

 

 —

 

 

 —

 

 

463

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

463

 

Non-cash stock-based compensation

 

14,746

 

 

1

 

 

8,589

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

8,590

 

Restricted stock units vested

 

331,800

 

 

33

 

 

(33)

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

Acquisition of treasury stock

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

(925,838)

 

 

(20,207)

 

 

(20,207)

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,005)

 

 —

 

 

 —

 

 

(1,005)

 

Unrealized gain on interest rate swap

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

5

 

 —

 

 

 —

 

 

5

 

Net earnings

 

 —

 

 

 —

 

 

 —

 

 

3,976

 

 

 —

 

 —

 

 

 —

 

 

3,976

 

Balances at June 30, 2016

 

131,024,864

 

$

13,102

 

$

1,095,510

 

$

602,477

 

$

7,590

 

(54,023,475)

 

$

(1,024,915)

 

$

693,764

 

 

See accompanying notes to condensed consolidated financial statements

 

6


 

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

 

 

    

For the Three months ended June 30, 

 

 

 

2016

    

2015

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net earnings (loss)

 

$

3,976

 

$

(1,039)

 

Earnings from discontinued operations, net of tax

 

 

 —

 

 

(4,143)

 

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

20,790

 

 

21,775

 

Loss on disposal or impairment of assets

 

 

 —

 

 

241

 

Deferred income taxes

 

 

(678)

 

 

(1,522)

 

Non-cash stock-based compensation expense

 

 

8,590

 

 

8,123

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

9,487

 

 

(8,037)

 

Other assets

 

 

5,383

 

 

384

 

Accounts payable and other liabilities

 

 

(41,021)

 

 

(3,530)

 

Deferred revenue

 

 

(5,777)

 

 

(255)

 

Net cash provided by operating activities

 

 

750

 

 

11,997

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capitalized software development costs

 

 

(3,982)

 

 

(2,797)

 

Capital expenditures

 

 

(10,694)

 

 

(12,876)

 

Data acquisition costs

 

 

(20)

 

 

(430)

 

Net cash used in investing activities

 

 

(14,696)

 

 

(16,103)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Payments of debt

 

 

(8,053)

 

 

(8,099)

 

Sale of common stock, net of stock acquired for withholding taxes

 

 

2,974

 

 

2,069

 

Excess tax benefits from stock-based compensation

 

 

514

 

 

(77)

 

Acquisition of treasury stock

 

 

(20,207)

 

 

(14,951)

 

Net cash used in financing activities

 

 

(24,772)

 

 

(21,058)

 

Net cash used in continuing operations

 

 

(38,718)

 

 

(25,164)

 

 

 

 

 

 

 

 

 

Cash flows from discontinued operations:

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

 —

 

 

11,653

 

Net cash used in investing activities

 

 

 —

 

 

(4,484)

 

Net cash used in financing activities

 

 

 —

 

 

(153)

 

Net cash provided by discontinued operations

 

 

 —

 

 

7,016

 

Net cash used in continuing and discontinued operations

 

 

(38,718)

 

 

(18,148)

 

Effect of exchange rate changes on cash

 

 

(751)

 

 

330

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(39,469)

 

 

(17,818)

 

Cash and cash equivalents at beginning of period

 

 

189,629

 

 

141,010

 

Cash and cash equivalents at end of period

 

$

150,160

 

$

123,192

 

 

 

See accompanying notes to condensed consolidated financial statements.

7


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in thousands)

 

 

 

    

For the Three months ended June 30, 

 

 

 

2016

    

2015

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid (received) during the period for:

 

 

 

 

 

 

 

Interest

 

$

2,258

 

$

2,185

 

Income taxes

 

 

(76)

 

 

(1,044)

 

Payments on capital leases and installment payment arrangements

 

 

 —

 

 

216

 

Other debt payments

 

 

8,053

 

 

8,036

 

 

See accompanying notes to condensed consolidated financial statements.

 

8


 

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”, we, us or the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “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, 2016 (“2016 Annual Report”), as filed with the Commission on May 27, 2016.  This quarterly report and the accompanying condensed consolidated financial statements should be read in connection with the 2016 Annual Report.  The financial information contained in this quarterly report is not necessarily indicative of the results to be expected for any other period or for the full fiscal year ending March 31, 2017.

 

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 (“U.S. GAAP”).  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 of the Notes to Consolidated Financial Statements and in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s 2016 Annual Report.

 

Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to continuing operations.

 

Recent Accounting Pronouncements Not Yet Adopted

 

In March 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting as part of its simplification initiative. The objective of the simplification initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining the usefulness of the information provided to users of financial statements. The areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 (fiscal 2018 for the Company), including interim periods within those fiscal years.  Earlier adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as a comprehensive new standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. The new standard will require lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under previous guidance, ASC 840, Leases. ASU 2016-02 creates a new Topic, ASC 842, Leases. This new Topic retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 (fiscal 2020 for the Company), including interim periods within those fiscal years. Earlier

9


 

adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606, to supersede nearly all existing revenue recognition guidance under U.S. GAAP, as well as some cost guidance and guidance on certain gains and losses. The FASB also issued ASU 2016-08, Revenue from Contracts with Customers – Principal versus Agent Considerations, and ASU 2016-10, Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing.  The core principle of the new guidance is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The guidance defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among other areas. The effective date for the update has been deferred until fiscal 2019 for the Company, with early application allowed for fiscal 2018.  Adoption of the update may be applied using either of two methods: (i) retrospective application to each prior reporting period presented with the option to elect certain practical expedients; or (ii) retrospective application with the cumulative effect recognized at the date of initial application and providing certain additional disclosures. The Company is currently evaluating the accounting, transition and disclosure requirements of the standard and cannot currently estimate the financial statement impact of adoption.

 

The Company does not anticipate that the adoption of any other recent accounting pronouncements will have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

 

 

10


 

2.EARNINGS (LOSS) PER SHARE AND STOCKHOLDERS’ EQUITY:

 

Earnings (Loss) Per Share

 

A reconciliation of the numerator and denominator of basic and diluted earnings (loss) per share is shown below (in thousands, except per share amounts):

 

 

 

For the quarter ended

 

 

 

June 30, 

 

 

    

2016

    

2015

    

Basic earnings (loss) per share:

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

3,976

 

$

(5,182)

 

Net earnings from discontinued operations, net of tax

 

 

 —

 

 

4,143

 

Net earnings (loss)

 

$

3,976

 

$

(1,039)

 

 

 

 

 

 

 

 

 

Basic weighted-average shares outstanding

 

 

77,471

 

 

77,918

 

Basic earnings (loss) per share:

 

 

 

 

 

 

 

Continuing operations

 

$

0.05

 

$

(0.07)

 

Discontinued operations

 

 

 —

 

 

0.05

 

Net earnings (loss)

 

$

0.05

 

$

(0.01)

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

Basic weighted-average shares outstanding

 

 

77,471

 

 

77,918

 

Dilutive effect of common stock options, warrants, and restricted stock as computed under the treasury stock method

 

 

1,882

 

 

 —

 

Diluted weighted-average shares outstanding

 

 

79,353

 

 

77,918

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

Continuing operations

 

$

0.05

 

$

(0.07)

 

Discontinued operations

 

 

 —

 

 

0.05

 

Net earnings (loss)

 

$

0.05

 

$

(0.01)

 

 

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

 

Due to the net loss from continuing operations incurred by the Company during the quarter ended June 30, 2015, the dilutive effect of options, warrants and restricted stock units covering 1.4 million shares of common stock was excluded from the diluted loss per share calculation since the impact on the calculation was anti-dilutive.

 

Additional options and warrants to purchase shares of common stock and restricted stock units, including performance-based restricted stock units not meeting performance criteria, that were outstanding during the periods presented but were not included in the computation of diluted earnings (loss) per share because the effect was anti-dilutive are shown below (in thousands, except per share amounts):

 

 

 

For the quarter ended

 

 

 

June 30, 

 

 

 

2016

    

2015

 

Number of shares outstanding under options, warrants and restricted stock units

 

 

709

 

 

2,029

 

Range of exercise prices for options

 

$

19.07 -  $32.85

 

$

2.58 -  $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, most recently on July 28, 2016 (see Note 14).  Under the modified common stock repurchase program, the Company may purchase up to $400.0 million of its common stock through the period ending June 30, 2018. During the three months ended June 30, 2016, the Company repurchased 0.9 million shares of its common stock for $20.2 million.  Through June 30, 2016, the Company

11


 

had repurchased 16.4 million shares of its stock for $275.4 million, leaving remaining capacity of $124.6 million under the stock repurchase program.

 

Accumulated Other Comprehensive Income

 

The following table presents the accumulated balances for each component of other comprehensive income (dollars in thousands):

 

 

 

    

June 30, 

    

March 31, 

 

 

 

2016

 

2016

 

Foreign currency translation

 

$

7,699

 

$

8,705

 

Unrealized loss on interest rate swap

 

 

(109)

 

 

(115)

 

 

 

$

7,590

 

$

8,590

 

 

 

 

 

 

 

 

 

 

 

 

 

3.SHARE-BASED COMPENSATION:

 

Share-based Compensation Plans

 

The Company has stock option and equity compensation plans for which a total of 28.9 million shares of the Company’s common stock have been reserved for issuance since the 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 also be priced at or above the fair market value of the common stock at the time of grant.  At June 30, 2016, there were a total of 2.3 million shares available for future grants under the plans.

 

Stock Option Activity

Stock option activity for the three-month period ended June 30, 2016 was:

 

 

    

 

    

 

 

    

Weighted-average

    

 

 

 

 

 

 

 

Weighted-average

 

remaining

 

Aggregate

 

 

 

Number of

 

exercise price

 

contractual term

 

Intrinsic value

 

 

 

shares

 

per share

 

(in years)

 

(in thousands)

 

Outstanding at March 31, 2016

 

3,604,102

 

$

14.52

 

 

 

 

 

 

Exercised

 

(158,632)

 

$

9.00

 

 

 

$

1,997

 

Forfeited or cancelled

 

(28,441)

 

$

13.42

 

 

 

 

 

 

Outstanding at June 30, 2016

 

3,417,029

 

$

14.78

 

5.1

 

$

25,363

 

Exercisable at June 30, 2016

 

2,645,523

 

$

15.03

 

4.3

 

$

19,033

 

 

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 the quarter and the exercise price for each in-the-money option) that would have been realized by the option holders had option holders exercised their options on June 30, 2016.  This amount changes based upon changes in the fair market value of Acxiom’s common stock.

 

A summary of stock options outstanding and exercisable as of June 30, 2016 is presented below:

 

 

 

 

 

 

 

Options outstanding

 

Options exercisable

 

Range of

 

 

 

Weighted-average

 

Weighted-average

 

 

 

Weighted-average

 

exercise price

 

Options

 

 remaining

 

exercise price

 

Options

 

exercise price

 

per share

    

outstanding

    

contractual life

 

per share

    

exercisable

    

per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.85

-

$

9.99

 

626,572

 

6.8

years

 

$

1.85

 

387,045

 

$

1.85

 

$

10.00

-

$

19.99

 

1,756,862

 

5.1

years

 

$

15.10

 

1,439,173

 

$

14.51

 

$

20.00

-

$

24.99

 

1,014,043

 

4.1

years

 

$

21.88

 

809,531

 

$

22.06

 

$

25.00

-

$

32.85

 

19,552

 

7.4

years

 

$

32.85

 

9,774

 

$

32.85

 

 

 

 

 

 

 

3,417,029

 

5.1

years

 

$

14.78

 

2,645,523

 

$

15.03

 

 

12


 

Total expense related to stock options for the three months ended June 30, 2016 and 2015 was approximately $1.8 million and $2.7 million, respectively.  Future expense for these options is expected to be approximately $7.8 million over the next four years.

 

Performance Stock Option Unit Activity

On June 29, 2016, the Company granted 622,084 performance-based stock option units with a value at the date of grant of $4.8 million, determined using a Monte Carlo simulation model.  All of the units granted in the current period vest and become exercisable in three equal tranches, each being subject to attainment of performance criteria and a subsequent service period established by the compensation committee of the board of directors (“Comp Committee”).  Each of the three tranches may vest in a number of stock options, from zero to 300% of the initial award, each having an exercise price of $21.32, based on the attainment of certain revenue growth and operating margin targets for the years ending March 31, 2017, 2018, and 2019 respectively. Each tranche is subject to a service period following the respective performance periods, such that each tranche will cliff vest in two separate 50% increments over two years beginning with the Comp Committee meeting that immediately follows the end of the respective performance period.     

 

Performance stock option unit activity for the three-month period ended June 30, 2016 was:

 

 

    

 

    

 

 

    

Weighted-average

    

 

 

 

 

 

 

 

 

Weighted-average

 

remaining

 

 

Aggregate

 

 

 

Number

 

 

exercise price

 

contractual term

 

 

intrinsic value

 

 

 

of shares

 

 

per share

 

(in years)

 

 

(in thousands)

 

Outstanding at March 31, 2016

 

 —

 

$

 —

 

 

 

 

 

 

Granted

 

622,084

 

$

21.32

 

 

 

 

 

 

Outstanding at June 30, 2016

 

622,084

 

$

21.32

 

2.9

 

$

417

 

Exercisable at June 30, 2016

 

 —

 

$

 —

 

 

$

 

 

Total expense related to performance stock option units for the three months ended June 30, 2016 was not material.  Future expense for these performance stock option units is expected to be approximately $4.8 million over the next four years.

 

Stock Appreciation Right (SAR) Activity

SAR activity for the three-month period ended June 30, 2016 was:

 

 

    

 

    

 

 

    

Weighted-average

    

 

 

 

 

 

 

 

 

Weighted-average

 

remaining

 

 

Aggregate

 

 

 

Number

 

 

exercise price

 

contractual term

 

 

intrinsic value

 

 

 

of shares

 

 

per share

 

(in years)

 

 

(in thousands)

 

Outstanding at March 31, 2016

 

245,404

 

$

40.00

 

 

 

 

 

 

Outstanding at June 30, 2016

 

245,404

 

$

40.00

 

0.75

 

$

 

Exercisable at June 30, 2016

 

 

$

 

 

$

 

 

Total expense related to SARs for the three months ended June 30, 2016 and 2015 was not material.  Future expense for these SARs is expected to be approximately $0.1 million over the next year.

 

Restricted Stock Unit Activity

During the three months ended June 30, 2016, the Company granted time-vesting restricted stock units covering 1,099,159 shares of common stock with a value at the date of grant of $23.4 million. Of the restricted stock units granted in the current period, 1,085,055 vest in equal annual increments over four years and 14,104 vest in one year. Valuation of these units is equal to the quoted market price for the shares on the date of grant. 

 

13


 

Non-vested time-vesting restricted stock unit activity for the three-month period ended June 30, 2016 was:

 

 

    

 

    

Weighted average

    

 

 

 

 

 

 

fair value per 

 

Weighted-average

 

 

 

Number 

 

share at  grant

 

remaining contractual

 

 

 

of shares

 

date

 

term (in years)

 

Outstanding at March 31, 2016

 

2,279,895

 

$

19.69

 

2.12

 

Granted

 

1,099,159

 

$

21.25

 

 

 

Vested

 

(334,886)

 

$

18.44

 

 

 

Forfeited or cancelled

 

(34,028)

 

$

19.71

 

 

 

Outstanding at June 30, 2016

 

3,010,140

 

$

20.40

 

2.61

 

 

During the three months ended June 30, 2016, the Company granted performance-based restricted stock units covering 254,420 shares of common stock with a value at the date of grant of $6.3 million, using a Monte Carlo simulation model.  All of the performance-based restricted stock units granted in the current period vest subject to attainment of performance criteria established by the Comp Committee.  The units granted in the current period may vest in a number of shares from zero to 200% of the award, based on the total shareholder return of Acxiom common stock compared to total shareholder return of a group of peer companies established by the Comp Committee of the board of directors for the period from April 1, 2016 to March 31, 2019. 

 

Non-vested performance-based restricted stock unit activity for the three-month period ended June 30, 2016 was:

 

    

 

    

Weighted average

    

 

 

 

 

 

 

fair value per

 

Weighted-average

 

 

 

Number

 

share at  grant

 

remaining contractual 

 

 

 

of shares

 

date

 

term (in years)

 

Outstanding at March 31, 2016

 

516,818

 

$

18.62

 

1.67

 

Granted

 

254,420

 

$

24.66

 

 

 

Forfeited or cancelled

 

(8,898)

 

$

17.43

 

 

 

Outstanding at June 30, 2016

 

762,340

 

$

20.65

 

1.87

 

 

Total expense related to all restricted stock units in the three months ended June 30, 2016 and 2015 was approximately $6.2 million and $5.1 million, respectively.  Future expense for these restricted stock units is expected to be approximately $55.3 million over the next four years. 

 

Other Performance Unit Activity

Other performance-based unit activity for the three-month period ended June 30, 2016 was:

 

 

 

 

 

Weighted average

 

 

 

 

    

 

    

fair value per

    

Weighted-average

 

 

 

Number

 

share at grant

 

remaining contractual

 

 

    

of shares

    

date

    

term (in years)

 

Outstanding at March 31, 2016

 

635,655

 

$

4.07

 

1.30

 

Outstanding at June 30, 2016

 

635,655

 

$

4.07

 

1.05

 

 

Total expense related to other performance units for the three months ended June 30, 2016 and 2015 was $0.2 million in both periods.  Future expense for these performance units is expected to be approximately $1.1 million over the next two years.

 

14


 

 

 

4.DISCONTINUED OPERATIONS:

 

IT Infrastructure Management business (“ITO”)

 

During fiscal 2016, the Company completed the sale of its ITO business to Charlesbank Capital Partners and M/C Partners. The business qualified for treatment as discontinued operations during fiscal 2016. Accordingly, the results of operations, cash flows, and the balance sheet amounts pertaining to ITO, for all periods reported, have been classified as discontinued operations in the condensed consolidated financial statements.

 

Summary results of operations of ITO for the three months ended June 30, 2015, are segregated and included in earnings from discontinued operations, net of tax, in the condensed consolidated statements of operations.

 

The following table is a reconciliation of the major classes of line items constituting earnings from discontinued operations, net of tax (dollars in thousands):

 

 

 

For the Three months ended

 

 

 

June 30, 

 

 

    

2016

    

2015

 

Major classes of line items constituting earnings from discontinued operations, net of tax:

 

 

 

 

 

 

 

Revenues

 

$

 —

 

$

52,580

 

Cost of revenue

 

 

 —

 

 

40,568

 

Gross profit

 

 

 —

 

 

12,012

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

 

 —

 

 

998

 

General and administrative

 

 

 —

 

 

3,768

 

Total operating expenses

 

 

 —

 

 

4,766

 

Income from discontinued operations

 

 

 —

 

 

7,246

 

Interest expense

 

 

 —

 

 

(564)

 

Other, net

 

 

 —

 

 

(3)

 

Earnings from discontinued operations before income taxes

 

 

 —

 

 

6,679

 

Income taxes

 

 

 —

 

 

2,536

 

Earnings from discontinued operations, net of tax

 

$

 —

 

$

4,143

 

 

 

ITO was a provider of managed hosting and cloud infrastructure services, optimized for mid-tier enterprises.  The Company entered into certain agreements with ITO in which support services, including data center co-location services, are provided from the Company to ITO, and from ITO to the Company. Additionally, the Company entered into certain other agreements with ITO to provide or receive leased office space. The terms of these agreements range from several months to the longest of which continues through July 2020. The agreements generally provide cancellation provisions, without penalty, at various times throughout the term.  For the quarter ended June 30, 2016, cash inflows and outflows related to the agreements, included in cash flows from operating activities in the condensed consolidated statements of cash flows, were $1.8 million and $1.5 million, respectively.  Revenues and expenses related to the agreements, included in income (loss) from continued operations in the condensed consolidated statements of operations, were $1.7 million and $1.4 million, respectively.

 

15


 

5.OTHER CURRENT AND NONCURRENT ASSETS:

 

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

 

 

    

June 30, 

    

March 31, 

 

 

 

2016

 

2016

 

Prepaid expenses

 

$

22,119

 

$

25,365

 

Assets of non-qualified retirement plan

 

 

12,800

 

 

12,532

 

Other current assets

 

$

34,919

 

$

37,897

 

 

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

 

 

    

June 30, 

    

March 31, 

 

 

 

2016