ACXM Acxiom Holdngs (delisted)

Acxiom� Corporation (Nasdaq: ACXM) today announced financial results for the third quarter of fiscal 2008 ended December 31, 2007. Acxiom will hold a conference call at 4:30 p.m. CST today to discuss this information further. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com. Revenue for the three-month period was $350.3 million, a decrease of 0.7 percent from the third quarter of fiscal 2007. Operating income for the quarter was $96.9 million including the unusual items detailed below. This represents an increase of 89 percent compared to the same quarter a year ago. Earnings of $.69 per diluted share include the impact of $.49 per share in unusual benefit, net of income tax effect, in the quarter as detailed below. For the nine-month period ended December 31, 2007, revenue totaled $1.04 billion, up 0.2 percent from the same period in the prior year. Income from operations for the nine months was $121.4 million compared to $129.5 million a year ago. Diluted earnings per share were $.66 compared to $.75 in the prior year. The diluted earnings per share include the impact of $28.1 million, or $.21 per share, of benefit from unusual items, net of income tax effect, for the nine-month period. Third-quarter earnings per diluted share of $.69 include a $63.5 million, or $.49 per diluted share, net benefit related to gains, losses and other items. The significant components of the gains, losses and other items are: A $65 million payment received from Silver Lake and ValueAct Capital after the termination of the firms� agreement to acquire Acxiom A $2.6 million gain realized from the sale of the software distribution unit of Acxiom�s operations in France A $3 million payment to retiring company leader Charles Morgan $0.3 million in transaction costs related to the Silver Lake/ValueAct transaction $0.8 million for ongoing restructuring activities in Europe �Our revenue and earnings on continuing operations continue to be impacted by the difficulty in the financial services industry, which has resulted in reduced spending by many of our clients,� interim company leader Charles D. Morgan said. �With many of our largest clients affected by the downturn, it has had a significant impact on an important sector of our business. As we have discussed previously, due to the decrease in revenue during the first half of our fiscal year, we took measures to reduce expenses. Although these initiatives had a meaningful impact on expenses this quarter, these measures did not fully offset the reduction in revenue in the third quarter. We expect to experience continued reduced spending from some of our clients, especially in the financial services industry.� Details of Acxiom�s third-quarter performance include: Revenue of $350.3 million, down 0.7 percent from $352.8 million in the third quarter a year ago Income from operations of $96.9 million, up 88.9 percent from $51.3 million in the third quarter last year; income from operations included $63.5 million generated by gains, losses and other items Diluted earnings per share of $.69 compared to $.31 in the third quarter of fiscal 2007; included is $.49 in diluted earnings per share that represents the net of gains, losses and other items Operating cash flow of $130.1 million and free cash flow available to equity of $83.9 million; free cash flow available to equity is a non-GAAP financial measure; a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release The repurchase of approximately 4.0 million shares of Acxiom stock for $49.1 million Segment information Information Services Division: The division develops, sells and delivers industry-tailored solutions globally through the integration of products, services and consulting. Revenue for the quarter was $184.5 million, down 1.7 percent from the third quarter of the previous year. For the nine months ended December 31, 2007, revenue was $556.7 million, up 2.4 percent from the previous year. Operating income for the quarter was $25.6 million, down 32.5 percent from the third quarter of the previous year. For the nine months just ended, operating income was $78.3 million, down 23.4 percent from the previous nine-month period. Information Products Division: The division develops and sells all global data products, including InfoBase-X� and PersonicX�, as well as fraud and risk mitigation products sold in the U.S., including InsightIdentify. It focuses on product development, product lifecycle management, data content management and innovation. Revenue for the quarter was $111.2 million, up 4.9 percent from the third quarter of the previous year. For the nine months ended December 31, 2007, revenue was $316.1 million, up 3.4 percent from the previous year. Operating income for the quarter was $8.2 million, up 20.2 percent from the third quarter of the previous year. For the nine months just ended, operating income was $10.7 million, up 7.3 percent from the previous nine-month period. Infrastructure Management Division: The division develops and delivers information technology products and services that improve a company�s ability to manage its information technology delivery platform with lower costs and higher efficiencies. Such offerings include traditional IT outsourcing and transformational solutions such as the Acxiom data factory. Revenue for the quarter was $112.9 million, down 4.3 percent from the third quarter of the previous year. For the nine months ended December 31, 2007, revenue was $339.3 million, down 5.1 percent from the previous year. Operating income for the quarter was $11.1 million, down 18.5 percent from the third quarter of the previous year. For the nine months just ended, operating income was $36.0 million, down 8.9 percent from the previous nine-month period. Recent developments New Chief Executive Officer announced On January 17, 2008, Acxiom announced the naming of John Meyer as its new CEO and President. Meyer has most recently been president of the Global Services group of Alcatel-Lucent. Prior to Alcatel-Lucent, Meyer served in a variety of executive capacities with EDS. Meyer will join Acxiom on February 4, 2008, and will also serve as a member of the board of directors. Meyer said that �Acxiom's position as the leading provider of offline and online marketing services is the envy of the market. Acxiom's proud history of innovation and delivery excellence has created value for its clients for decades. It is an honor to join the Company and do all I can to build on its successes. I look forward to working with our associates to create value for our clients and shareholders.� EMC Update In December 2005, the Company and EMC entered into an agreement whereby EMC purchased Acxiom�s existing grid operating system for a total payment of $30 million, which the Company previously received. As part of the agreement, EMC has the option, in exchange for a $20 million payment by the end of January, to acquire the Acxiom unit responsible for the further development of the technology initially sold to EMC as well as new technology and functionality created by the unit that could be utilized by the Company and EMC. EMC has informed the company that it does not intend to exercise the option, per its original terms, and the parties are now engaged in negotiations concerning an ongoing commercial relationship. ValueAct SmallCap Fund Upon the request of ValueAct Capital Group and pursuant to the August 5, 2006 agreement between the company and ValueAct Capital Group, on January 17, 2008 permission was granted to ValueAct SmallCap Master Fund, L.P. to purchase up to $30 million of the common stock of the company in open market or privately negotiated transactions. It is the understanding of the company that ValueAct Capital Group is associated with but does not control ValueAct SmallCap Master Fund, L.P. Outlook The Company is updating its outlook for the remainder of its 2008 fiscal year. Previous guidance is superseded by the updated guidance and should not be relied upon. Revenue for the 12 months ending March 31, 2008 is expected to be flat to down 1 percent compared to fiscal 2007. Earnings per diluted share, before the effect of any unusual items recorded during the fiscal year, are expected to be in the range of $.60 to $.65. Reflecting the $28.1 million of unusual items recorded during the first three quarters of the fiscal year, earnings per diluted share for the fiscal year are expected to be from $.81 to $.86. These projections are forward looking, and actual results may differ materially. These projections may be impacted by mergers, acquisitions, divestitures or other business combinations that may be completed in the future as well as the other factors set forth below. About Acxiom Acxiom Corporation (Nasdaq: ACXM) integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom�s innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas, with locations throughout the United States and Europe, and in Australia, China and Canada. For more information, visit www.acxiom.com. This release and today�s conference call contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially. Such statements may include but are not necessarily limited to the following: that the projected revenue and earnings per share will be within the estimated ranges. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: The possibility that certain contracts may not be closed, or may not be closed within the anticipated time frames; the possibility that clients may attempt to reduce the amount of business they do with the Company; the possibility that in the event that a change of control of the Company was sought that certain of the clients of the Company would invoke certain provisions in their contracts resulting in a decline in the revenue and profit of the Company; the possibility that certain contracts may not generate the anticipated revenue or profitability; the possibility that negative changes in economic or other conditions might lead to a reduction in demand for our products and services; the possibility of an economic slowdown or that economic conditions in general will not be as expected; the possibility that the historical seasonality of our business may change; the possibility that significant customers may experience extreme, severe economic difficulty; the possibility that the integration of acquired businesses may not be as successful as planned; 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 sales cycles may lengthen; the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations; the possibility that we won�t be able to properly motivate our sales force or other associates; the possibility that we won�t be able to achieve cost reductions and avoid unanticipated costs; the possibility that we won�t be able to continue to receive credit upon satisfactory terms and conditions; the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies; the possibility that we may be subjected to pricing pressure due to market conditions and/or competitive 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 changes in accounting pronouncements may occur and may impact these projections; the possibility that we won�t be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that there will be changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not limited to litigation, legislation, regulations and customs relating to our ability to collect, manage, aggregate and use data; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services; the possibility that we may enter into short-term contracts which would affect the predictability of our revenues; the possibility that the amount of ad hoc, volume-based and project work will not be as expected; the possibility that we may experience a loss of data center capacity or interruption of telecommunication links or power sources; the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties; the possibility that postal rates may increase, thereby leading to reduced volumes of business; the possibility that our clients may cancel or modify their agreements 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 experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; the possibility that the services of the United States Postal Service, their global counterparts and other delivery systems may be disrupted; and the possibility that we may be affected by other competitive factors. 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 our periodic reports and registration statements filed with the United States Securities and Exchange Commission. We believe 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. We undertake no obligation to update the information contained in this press release or any other forward-looking statement. Acxiom is a registered trademark of Acxiom Corporation. � � � � ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share) � � For the Three Months Ended December 31, $ % 2007 2006 Variance � Variance � Revenue: Services 262,697 265,798 (3,101 ) (1.2 %) Data 87,572 � 87,043 � 529 0.6 % Total revenue 350,269 352,841 (2,572 ) (0.7 %) � Operating costs and expenses: Cost of revenue Services 201,648 199,704 1,944 1.0 % Data 60,551 � 53,004 � 7,547 14.2 % Total cost of revenue 262,199 252,708 9,491 3.8 % � Services gross margin 23.2 % 24.9 % Data gross margin 30.9 % 39.1 % Total gross margin 25.1 % 28.4 % � Selling, general and administrative 54,669 49,065 5,604 11.4 % Gains, losses and other items, net (63,489 ) (225 ) (63,264 ) 100.0 % � Total operating costs and expenses 253,379 � 301,548 � (48,169 ) (16.0 %) � Income from operations 96,890 � 51,293 � 45,597 88.9 % � Other income (expense): Interest expense (12,797 ) (14,911 ) 2,114 (14.2 %) Other, net 1,394 � 1,157 � 237 20.5 % � Total other income (expense) (11,403 ) (13,754 ) 2,351 (17.1 %) � Earnings before income taxes 85,487 37,539 47,948 127.7 % � Income taxes 30,791 � 12,594 � 18,197 144.5 % � Net earnings 54,696 � 24,945 � 29,751 119.3 % � Earnings per share: � Basic 0.69 � 0.32 � 0.37 115.6 % � Diluted 0.69 � 0.31 � 0.38 122.6 % � � � � ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share) � � For the Nine Months Ended December 31, $ % 2007 2006 Variance � Variance � Revenue: Services 795,085 793,789 1,296 0.2 % Data 244,378 � 244,076 � 302 0.1 % Total revenue 1,039,463 1,037,865 1,598 0.2 % � Operating costs and expenses: Cost of revenue Services 622,431 597,161 25,270 4.2 % Data 171,434 � 153,638 � 17,796 11.6 % Total cost of revenue 793,865 750,799 43,066 5.7 % � Services gross margin 21.7 % 24.8 % Data gross margin 29.8 % 37.1 % Total gross margin 23.6 % 27.7 % � Selling, general and administrative 162,380 157,818 4,562 2.9 % Gains, losses and other items, net (38,167 ) (225 ) (37,942 ) 100.0 % � Total operating costs and expenses 918,078 � 908,392 � 9,686 1.1 % � Income from operations 121,385 � 129,473 � (8,088 ) (6.2 %) � Other income (expense): Interest expense (40,214 ) (31,630 ) (8,584 ) 27.1 % Other, net 2,908 � 4,489 � (1,581 ) (35.2 %) � Total other income (expense) (37,306 ) (27,141 ) (10,165 ) 37.5 % � Earnings before income taxes 84,079 102,332 (18,253 ) (17.8 %) � Income taxes 30,362 � 37,863 � (7,501 ) (19.8 %) � Net earnings 53,717 � 64,469 � (10,752 ) (16.7 %) � Earnings per share: � Basic 0.67 � 0.77 � (0.10 ) (13.0 %) � Diluted 0.66 � 0.75 � (0.09 ) (12.0 %) � � � � ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share) � � For the Three Months Ended � December 31, September 30, $ % 2007 2007 Variance � Variance � Revenue: Services 262,697 267,653 (4,956 ) (1.9 %) Data 87,572 � 83,373 � 4,199 5.0 % Total revenue 350,269 351,026 (757 ) (0.2 %) � Operating costs and expenses: Cost of revenue Services 201,648 208,697 (7,049 ) (3.4 %) Data 60,551 � 56,998 � 3,553 6.2 % Total cost of revenue 262,199 265,695 (3,496 ) (1.3 %) � Services gross margin 23.2 % 22.0 % Data gross margin 30.9 % 31.6 % Total gross margin 25.1 % 24.3 % � Selling, general and administrative 54,669 55,042 (373 ) (0.7 %) Gains, losses and other items, net (63,489 ) 9,932 � (73,421 ) (739.2 %) � Total operating costs and expenses 253,379 � 330,669 � (77,290 ) (23.4 %) � Income from operations 96,890 � 20,357 � 76,533 376.0 % � Other income (expense): Interest expense (12,797 ) (13,842 ) 1,045 (7.5 %) Other, net 1,394 � 1,331 � 63 4.7 % � Total other income (expense) (11,403 ) (12,511 ) 1,108 (8.9 %) � Earnings before income taxes 85,487 7,846 77,641 989.6 % � Income taxes 30,791 � (2,696 ) 33,487 (1242.1 %) � Net earnings 54,696 � 10,542 � 44,154 418.8 % � Earnings per share: � Basic 0.69 � 0.13 � 0.56 430.8 % � Diluted 0.69 � 0.13 � 0.56 430.8 % � � � ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share) � � For the Three Months Ended � December 31, December 31, September 30, 2007 2006 2007 � Basic earnings per share: � Numerator - net earnings 54,696 24,945 10,542 � Denominator - weighted-average shares outstanding 79,418 77,717 80,646 � Basic earnings per share 0.69 0.32 0.13 � Diluted earnings per share: � Numerator - net earnings 54,696 24,945 10,542 � Denominator - weighted-average shares outstanding 79,418 77,717 80,646 � Dilutive effect of common stock options, warrants and restricted stock 253 2,238 1,839 � 79,671 79,955 82,485 � Diluted earnings per share 0.69 0.31 0.13 � � ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share) � � For the Nine Months Ended � December 31, December 31, 2007 2006 � Basic earnings per share: � Numerator - net earnings 53,717 64,469 � Denominator - weighted-average shares outstanding 79,802 83,957 � Basic earnings per share 0.67 0.77 � Diluted earnings per share: � Numerator - net earnings 53,717 64,469 � Denominator - weighted-average shares outstanding 79,802 83,957 � Dilutive effect of common stock options, warrants and restricted stock 1,380 2,237 � 81,182 86,194 � Diluted earnings per share 0.66 0.75 � � ACXIOM CORPORATION AND SUBSIDIARIES RESULTS BY SEGMENT (Unaudited) (Dollars in thousands) � � For the Three Months Ended � December 31, December 31, Revenue: 2007 2006 � Information services 184,504 187,673 Information products 111,225 106,002 Infrastructure management 112,916 117,966 Eliminations (58,376 ) (58,800 ) � Total revenue 350,269 � 352,841 � � � Income from operations: � Information services 25,626 37,954 Information products 8,216 6,834 Infrastructure management 11,138 13,666 Corporate & other 51,910 � (7,161 ) � Total income from operations 96,890 � 51,293 � � Margin: � Information services 13.9 % 20.2 % Information products 7.4 % 6.4 % Infrastructure management 9.9 % 11.6 % � Total margin 27.7 % 14.5 % � � ACXIOM CORPORATION AND SUBSIDIARIES RESULTS BY SEGMENT (Unaudited) (Dollars in thousands) � � For the Nine Months Ended � December 31, December 31, Revenue: 2007 2006 � Information services 556,713 543,501 Information products 316,127 305,871 Infrastructure management 339,319 357,740 Eliminations (172,696 ) (169,247 ) � Total revenue 1,039,463 � 1,037,865 � � � Income from operations: � Information services 78,315 102,259 Information products 10,654 9,925 Infrastructure management 36,016 39,523 Corporate & other (3,600 ) (22,234 ) � Total income from operations 121,385 � 129,473 � � Margin: � Information services 14.1 % 18.8 % Information products 3.4 % 3.2 % Infrastructure management 10.6 % 11.0 % � Total margin 11.7 % 12.5 % � � � � � � � ACXIOM CORPORATION AND SUBSIDIARIES DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE (Unaudited) (Dollars in thousands) � � For the Three Months Ended � December 31, December 31, $ % September 30, $ % 2007 2006 Variance � Variance 2007 Variance � Variance � Data 67,095 68,520 (1,425 ) (2.1 %) 63,534 3,561 5.6 % Passthrough data 20,477 � 18,523 � 1,954 10.5 % 19,839 � 638 3.2 % � Total data revenue 87,572 � 87,043 � 529 0.6 % 83,373 � 4,199 5.0 % � � Cost of data revenue: Data 40,074 34,481 5,593 16.2 % 37,159 2,915 7.8 % Passthrough data 20,477 � 18,523 � 1,954 10.5 % 19,839 � 638 3.2 % � Total cost of data 60,551 � 53,004 � 7,547 14.2 % 56,998 � 3,553 6.2 % � Margin: � Data 40.3 % 49.7 % 41.5 % Passthrough data 0.0 % 0.0 % 0.0 % Total data 30.9 % 39.1 % 31.6 % � � � � ACXIOM CORPORATION AND SUBSIDIARIES DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE (Unaudited) (Dollars in thousands) � � For the Nine Months Ended � December 31, December 31, $ % 2007 2006 Variance � Variance � Data 184,470 185,704 (1,234 ) (0.7 %) Passthrough data 59,908 � 58,372 � 1,536 2.6 % � Total data revenue 244,378 � 244,076 � 302 0.1 % � � Cost of data revenue: Data 111,526 95,266 16,260 17.1 % Passthrough data 59,908 � 58,372 � 1,536 2.6 % � Total cost of data 171,434 � 153,638 � 17,796 11.6 % � Margin: � Data 39.5 % 48.7 % Passthrough data 0.0 % 0.0 % Total data 29.8 % 37.1 % � � � � ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) � December 31, March 31, $ % 2007 2007 Variance � Variance Assets Current assets: Cash and cash equivalents 66,265 37,776 28,489 75.4 % Trade accounts receivable, net 286,627 285,850 777 0.3 % Refundable income taxes - 7,657 (7,657 ) (100.0 %) Deferred income taxes 22,211 22,341 (130 ) (0.6 %) Other current assets 46,017 � 59,252 � (13,235 ) (22.3 %) � Total current assets 421,120 � 412,876 � 8,244 2.0 % � Property and equipment 772,176 733,175 39,001 5.3 % Less - accumulated depreciation and amortization 493,394 � 420,883 � 72,511 17.2 % � Property and equipment, net 278,782 � 312,292 � (33,510 ) (10.7 %) � Software, net of accumulated amortization 60,836 44,289 16,547 37.4 % Goodwill 518,608 522,046 (3,438 ) (0.7 %) Purchased software licenses, net of accumulated amortization 132,344 151,326 (18,982 ) (12.5 %) Unbilled and notes receivable, excluding current portions 6,584 16,742 (10,158 ) (60.7 %) Deferred costs, net 130,958 137,684 (6,726 ) (4.9 %) Data acquisition costs 50,552 35,398 15,154 42.8 % Other assets, net 22,555 � 23,251 � (696 ) (3.0 %) � 1,622,339 � 1,655,904 � (33,565 ) (2.0 %) � Liabilities and Stockholders' Equity Current liabilities: Current installments of long-term obligations 85,450 106,921 (21,471 ) (20.1 %) Trade accounts payable 46,631 54,808 (8,177 ) (14.9 %) Accrued payroll and related expenses 28,478 33,663 (5,185 ) (15.4 %) Other accrued expenses 92,036 79,078 12,958 16.4 % Deferred revenue 70,904 113,318 (42,414 ) (37.4 %) Income taxes 7,426 � - � 7,426 100.0 % � Total current liabilities 330,925 � 387,788 � (56,863 ) (14.7 %) � Long-term obligations: Long-term debt and capital leases, net of current installments 594,627 631,184 (36,557 ) (5.8 %) Software and data licenses, net of current installments 10,631 � 17,695 � (7,064 ) (39.9 %) � Total long-term obligations 605,258 � 648,879 � (43,621 ) (6.7 %) � � Deferred income taxes 98,340 97,926 414 0.4 % � Commitments and contingencies � Stockholders' equity: Common stock 11,396 11,145 251 2.3 % Additional paid-in capital 774,527 718,336 56,191 7.8 % Retained earnings 511,711 462,844 48,867 10.6 % Accumulated other comprehensive income 27,777 17,526 10,251 58.5 % Treasury stock, at cost (737,595 ) (688,540 ) (49,055 ) 7.1 % � Total stockholders' equity 587,816 � 521,311 � 66,505 12.8 % � 1,622,339 � 1,655,904 � (33,565 ) (2.0 %) � � ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) � For the Three Months Ended December 31, 2007 � 2006 � Cash flows from operating activities: Net earnings 54,696 24,945 Non-cash operating activities: Depreciation and amortization 57,424 54,396 Loss (gain) on disposal or impairment of assets, net (2,643 ) 187 Deferred income taxes 2,091 (553 ) Non-cash stock compensation expense 2,648 1,555 Changes in operating assets and liabilities: Accounts receivable 8,564 (8,933 ) Other assets 17,777 (769 ) Accounts payable and other liabilities 3,296 979 Deferred revenue (13,759 ) (9,148 ) Net cash provided by operating activities 130,094 � 62,659 � Cash flows from investing activities: Disposition of operations 14,250 - Capitalized software (8,507 ) (6,798 ) Capital expenditures (6,891 ) (2,518 ) Deferral of costs (17,460 ) (16,149 ) Payments received from investments 1,804 - Net cash paid in acquisitions (3,720 ) (14,400 ) Net cash used by investing activities (20,524 ) (39,865 ) Cash flows from financing activities: Proceeds from debt - (513 ) Payments of debt (49,380 ) (25,817 ) Dividends paid (4,850 ) (4,663 ) Sale of common stock 2,711 8,896 Acquisition of treasury stock (45,565 ) (6,001 ) Tax benefit of stock options exercised 25 � 1,237 � Net cash used by financing activities (97,059 ) (26,861 ) Effect of exchange rate changes on cash (77 ) 249 � � Net increase (decrease) in cash and cash equivalents 12,434 (3,818 ) Cash and cash equivalents at beginning of period 53,831 � 91,832 � Cash and cash equivalents at end of period 66,265 � 88,014 � � Supplemental cash flow information: Cash paid during the period for: Interest 12,270 14,813 Income taxes 4,743 8,196 Payments on capital leases and installment payment arrangements 17,542 16,700 Payments on software and data license liabilities 6,226 6,000 Other debt payments, excluding line of credit 5,612 3,117 Prepayment of debt 20,000 - Noncash investing and financing activities: Acquisition of property and equipment under capital lease and installment payment arrangements 5,004 10,427 Disposal of asset under financing (5,304 ) - Construction and other financing 3,995 4,511 Assets acquired under data obligation 15,306 - � � ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) � For the Nine Months Ended December 31, 2007 � 2006 � Cash flows from operating activities: Net earnings 53,717 64,469 Non-cash operating activities: Depreciation and amortization 177,345 170,379 Loss (gain) on disposal or impairment of assets, net (2,717 ) (1,483 ) Deferred income taxes 505 (975 ) Non-cash stock compensation expense 5,678 2,699 Changes in operating assets and liabilities: Accounts receivable (1,553 ) (15,768 ) Other assets 19,163 (2,159 ) Accounts payable and other liabilities 4 (7,844 ) Deferred revenue (42,272 ) (25,900 ) Net cash provided by operating activities 209,870 � 183,418 � Cash flows from investing activities: Disposition of operations 14,250 - Capitalized software (26,774 ) (19,443 ) Capital expenditures (15,049 ) (5,995 ) Cash collected from the sale and license of software - 10,000 Deferral of costs (43,219 ) (49,595 ) Payments received from investments 3,603 2,708 Net cash paid in acquisitions (9,191 ) (14,400 ) Net cash used by investing activities (76,380 ) (76,725 ) Cash flows from financing activities: Proceeds from debt 2,127 649,756 Payments of debt (108,009 ) (393,742 ) Dividends paid (4,850 ) (13,471 ) Sale of common stock 44,812 25,801 Acquisition of treasury stock (45,565 ) (299,301 ) Tax benefit of stock options exercised 5,993 � 4,081 � Net cash used by financing activities (105,492 ) (26,876 ) Effect of exchange rate changes on cash 491 � 492 � � Net increase in cash and cash equivalents 28,489 80,309 Cash and cash equivalents at beginning of period 37,776 � 7,705 � Cash and cash equivalents at end of period 66,265 � 88,014 � � Supplemental cash flow information: Cash paid during the period for: Interest 40,008 31,375 Income taxes 4,954 31,027 Payments on capital leases and installment payment arrangements 54,330 57,556 Payments on software and data license liabilities 19,998 21,151 Other debt payments, excluding line of credit 11,554 6,632 Prepayment of debt 20,000 - Revolving credit payments 2,127 308,403 Noncash investing and financing activities: Acquisition of property and equipment under capital lease and installment payment arrangements 20,724 44,454 Disposal of asset under financing (5,304 ) - Construction and other financing 9,346 18,167 Software licenses and maintenance acquired under software obligation 493 15,266 Asset acquired under data obligation 15,306 - Note payable issued in acquisition 300 - � � � � � � � � � ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY AND RECONCILIATION TO OPERATING CASH FLOW (Unaudited) (Dollars in thousands) � � � � � � � � � � � � � � � � 06/30/06 � 09/30/06 � 12/31/06 � 03/31/07 � YTD FY2007 06/30/07 � 09/30/07 � 12/31/07 � YTD FY2008 � Net cash provided by operating activities 56,350 64,409 62,659 76,534 259,952 39,132 40,644 130,094 209,870 � Plus: Payments received from investments 783 1,925 - 50 2,758 - 1,799 1,804 3,603 Disposition of operations - - - - - - - 14,250 14,250 � Less: Capitalized software (5,719 ) (6,926 ) (6,798 ) (8,000 ) (27,443 ) (8,447 ) (9,820 ) (8,507 ) (26,774 ) Capital expenditures (217 ) (3,260 ) (2,518 ) (8,230 ) (14,225 ) (2,867 ) (5,291 ) (6,891 ) (15,049 ) Deferral of costs (16,887 ) (16,559 ) (16,149 ) (17,092 ) (66,687 ) (14,129 ) (11,630 ) (17,460 ) (43,219 ) Payments on capital leases and installment payment arrangements (18,905 ) (21,951 ) (16,700 ) (18,579 ) (76,135 ) (19,137 ) (17,651 ) (17,542 ) (54,330 ) Payments on software and data license liabilities (7,847 ) (7,304 ) (6,000 ) (5,746 ) (26,897 ) (6,493 ) (7,279 ) (6,226 ) (19,998 ) Other required debt payments (1,711 ) � (1,804 ) � (3,117 ) � (3,603 ) � (10,235 ) (3,526 ) � (2,416 ) � (5,612 ) � (11,554 ) � Subtotal 5,847 8,530 11,377 15,334 41,088 (15,467 ) (11,644 ) 83,910 56,799 � Plus: Tax benefit of stock options and warrants 1,079 � � 1,765 � � 1,237 � � 61 � � 4,142 � 5,624 � � 344 � � 25 � � 5,993 � � Subtotal 6,926 10,295 12,614 15,395 45,230 (9,843 ) (11,300 ) 83,935 62,792 � Plus: Cash collected from sale of software 5,000 � � 5,000 � � - � � - � � 10,000 � - � � - � � - � � - � � Total 11,926 � � 15,295 � � 12,614 � � 15,395 � � 55,230 � (9,843 ) � (11,300 ) � 83,935 � � 62,792 �