Acxiom(R) Announces Second-Quarter Results

Acxiom® Corporation (NASDAQ: ACXM) today announced financial results for the second quarter of fiscal 2008 ended September 30, 2007. Acxiom will hold a conference call at 4:30 p.m. CDT today to discuss this information further. Interested parties are invited to the call, which will be broadcast via the Internet at www.acxiom.com. Revenue for the three-month period was $351.0 million, an increase of 0.8 percent over $348.3 million for the comparable prior-year period. Income from operations for the three-month period equaled $20.4 million compared to $41.9 million for the quarter ended September 30, 2006. Earnings of $.13 per diluted share include the impact of $14.8 million, or 4 cents per diluted share, in unusual expense items net of income tax effect in the quarter as detailed below. For the six-month period ended September 30, 2007, revenue totaled $689.2 million, an increase of 0.6 percent over $685.0 million for the comparable prior-year period. Income from operations for the six-month period was $24.5 million compared to $78.2 million for the six months ended September 30, 2006. The diluted loss per share of $.01 includes the impact of $35.4 million, or 27 cents per diluted share, in unusual expense items net of income tax effect for the six-month period. Charles D. Morgan, Acxiom’s company leader and chairman of the board stated, "We are moving forward as an independent, publicly owned company. Despite the distraction of the recent course of events, the company posted a slight revenue increase for the quarter. In addition, we instituted an expense reduction plan during mid-September and we expect to see the benefit of the plan during the second half of the fiscal year.” Details of Acxiom’s second-quarter performance include: Revenue of $351.0 million, up 0.8 percent from $348.3 million in the second quarter a year ago. Income from operations of $20.4 million, a 51.4 percent decrease compared to $41.9 million in the second quarter last year. Unusual items that added $14.8 million in expenses in the quarter and $35.4 million for the six-month period. Included were costs related to the terminated transaction with Silver Lake and ValueAct Capital of $2.3 million and $17.4 million, for the current three-month and six-month period, respectively. The transaction costs were treated as non-deductible for income tax purposes in the first quarter. However, as the transaction was terminated on October 1, these costs were determined to be fully deductible in the second quarter. Unusual items also included $4.9 million in the second quarter and $10.0 million in the six-month period related to the write-off of certain long-term assets related to amended contracts with certain information technology outsourcing clients. Also included were restructuring charges, primarily severance payments, of $5.3 million and $5.7 million for the quarter and the six-month period, respectively. Finally, a charge of $2.3 million was recorded during the second quarter related to a lease termination payment. These expenses, including income tax effects, reduced second-quarter and year-to-date diluted earnings per share by $.04 and $.27, respectively. Diluted earnings per share of $.13, compared to diluted earnings per share of $.25 in the second quarter last year. Net income of $10.5 million, compared to net earnings of $21.7 million in the second quarter of fiscal 2007. Operating cash flow of $40.6 million and free cash flow available to equity of negative $11.3 million. The free cash flow available to equity is a non-GAAP financial measure, and reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release. In fiscal 2008, Acxiom implemented a new organizational alignment with three operating divisions. Organization highlights are as follows: 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 $190.7 million, up 4.4 percent from $182.6 million in the second quarter of the previous fiscal year. For the six-month period ended September 30, 2007, revenue was $372.2 million, a 4.6 percent increase over $355.8 million for the six-month period ended September 30, 2006. Information Products Division: The division develops and sells all global data products, including InfoBase® 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 $108.2 million, a 3.6 percent increase over $104.4 million in the same quarter last year. Revenue for the six-month period ended September 30, 2007 increased 2.5 percent to $204.9 million from $199.9 million in the comparable prior-year 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 second quarter was $112.9 million, compared to $119.3 million the same quarter last year, a decrease of 5.4 percent. For the six-month period ended September 30, 2007, revenue was $226.4 million, a 5.6 percent decrease in revenue from $239.8 million for the six-month period ended September 30, 2006. Revenue from five large contracts decreased by $12.9 million in the quarter and $25.5 million for the six months. Revenue for all other Infrastructure Management customers increased 8.8 percent for the quarter and 8.3 percent for the six months. Other Second-Quarter Highlights During the quarter, Acxiom expanded its interactive marketing offerings with the acquisition of New York-based EchoTarget, a leader in dynamic banner retargeting. The company provides customized targeting solutions for online advertisers and publishers, extending Acxiom’s personalization expertise across digital channels that already include email, search and website. EchoTarget works with marketers and publishers to identify and target high-value marketing segments based on users’ online behaviors. Those users are then targeted through relevant banners on the company’s network of websites. Acxiom was named to the InformationWeek 500 list and ranked No. 117 among the 500 companies listed. For nearly 20 years, InformationWeek has identified and honored the nation's most innovative users of information technology. The list is unique among corporate rankings because it spotlights the power of innovation in information technology, rather than simply identifying the biggest IT spenders. Outlook For the fiscal year ending March 31, 2008, revenue is expected to be flat to up 1 percent compared to fiscal 2007. Earnings per diluted share, before the effect of any unusual gains or losses, is expected to be in the range of $.69 to $.73. Reflecting the $35.4 million of unusual items recorded during the first two quarters of the fiscal year, and including the receipt of the $65 million merger termination fee in the third quarter, earnings per diluted share for the fiscal year are expected to be between $.91 and $.95. In previous communications, the Company provided financial guidance under a Financial Road Map. At the present time, the Company no longer intends to update this guidance. As such, previous guidance issued under the Financial Road Map should no longer be relied upon. About Acxiom Corporation Acxiom Corporation (NASDAQ: ACXM; www.acxiom.com) 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, Ark., with locations throughout the United States and Europe, and in Australia, China, and Canada. For more information, visit www.acxiom.com. This release contains 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 we expect to remain focused on improving operating results, that we expect to see the full impact of expense reductions during the second half of the fiscal year and that we expect revenue and earnings to be within the ranges noted above. The following are important 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 of a change of control of the Company 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. 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, InfoBase and Personicx are registered trademarks of Acxiom Corporation.   ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share)           For the Three Months Ended September 30, $ % 2007 2006 Variance Variance   Revenue: Services 267,653 266,099 1,554 0.6 % Data 83,373   82,220   1,153 1.4 % Total revenue 351,026 348,319 2,707 0.8 %   Operating costs and expenses: Cost of revenue Services 208,697 201,384 7,313 3.6 % Data 56,998   51,062   5,936 11.6 % Total cost of revenue 265,695 252,446 13,249 5.2 %   Services gross margin 22.0 % 24.3 % Data gross margin 31.6 % 37.9 % Total gross margin 24.3 % 27.5 %   Selling, general and administrative 55,042 54,008 1,034 1.9 % Gains, losses and other items, net 9,932   -   9,932 100.0 %   Total operating costs and expenses 330,669   306,454   24,215 7.9 %   Income from operations 20,357   41,865   (21,508 ) (51.4 %)   Other income (expense): Interest expense (13,842 ) (8,950 ) (4,892 ) 54.7 % Other, net 1,331   2,685   (1,354 ) (50.4 %)   Total other income (expense) (12,511 ) (6,265 ) (6,246 ) 99.7 %   Earnings before income taxes 7,846 35,600 (27,754 ) (78.0 %)   Income taxes (2,696 ) 13,884   (16,580 ) (119.4 %)   Net earnings 10,542   21,716   (11,174 ) (51.5 %)   Earnings per share:   Basic 0.13   0.25   (0.12 ) (48.0 %)   Diluted 0.13   0.25   (0.12 ) (48.0 %)         ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share)     For the Six Months Ended September 30, $ % 2007 2006 Variance Variance   Revenue: Services 532,388 527,991 4,397 0.8 % Data 156,806   157,033   (227 ) (0.1 %) Total revenue 689,194 685,024 4,170 0.6 %   Operating costs and expenses: Cost of revenue Services 420,783 397,457 23,326 5.9 % Data 110,883   100,634   10,249 10.2 % Total cost of revenue 531,666 498,091 33,575 6.7 %   Services gross margin 21.0 % 24.7 % Data gross margin 29.3 % 35.9 % Total gross margin 22.9 % 27.3 %   Selling, general and administrative 107,711 108,753 (1,042 ) (1.0 %) Gains, losses and other items, net 25,322   -   25,322 100.0 %   Total operating costs and expenses 664,699   606,844   57,855 9.5 %   Income from operations 24,495   78,180   (53,685 ) (68.7 %)   Other income (expense): Interest expense (27,417 ) (16,719 ) (10,698 ) 64.0 % Other, net 1,514   3,332   (1,818 ) (54.6 %)   Total other income (expense) (25,903 ) (13,387 ) (12,516 ) 93.5 %   Earnings (loss) before income taxes (1,408 ) 64,793 (66,201 ) (102.2 %)   Income taxes (429 ) 25,269   (25,698 ) (101.7 %)   Net earnings (loss) (979 ) 39,524   (40,503 ) (102.5 %)   Earnings (loss) per share:   Basic (0.01 ) 0.45   (0.46 ) (102.2 %)   Diluted (0.01 ) 0.44   (0.45 ) (102.3 %)         ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except earnings per share)     For the Three Months Ended   September 30, June 30, $ % 2007 2007 Variance   Variance   Revenue: Services 267,653 264,735 2,918 1.1 % Data 83,373   73,433   9,940 13.5 % Total revenue 351,026 338,168 12,858 3.8 %   Operating costs and expenses: Cost of revenue Services 208,697 212,086 (3,389 ) (1.6 %) Data 56,998   53,885   3,113 5.8 % Total cost of revenue 265,695 265,971 (276 ) (0.1 %)   Services gross margin 22.0 % 19.9 % Data gross margin 31.6 % 26.6 % Total gross margin 24.3 % 21.3 %   Selling, general and administrative 55,042 52,669 2,373 4.5 % Gains, losses and other items, net 9,932   15,390   (5,458 ) (35.5 %)   Total operating costs and expenses 330,669   334,030   (3,361 ) (1.0 %)   Income from operations 20,357   4,138   16,219 392.0 %   Other income (expense): Interest expense (13,842 ) (13,575 ) (267 ) 2.0 % Other, net 1,331   183   1,148 627.3 %   Total other income (expense) (12,511 ) (13,392 ) 881 (6.6 %)   Earnings (loss) before income taxes 7,846 (9,254 ) 17,100 (184.8 %)   Income taxes (2,696 ) 2,267   (4,963 ) (218.9 %)   Net earnings (loss) 10,542   (11,521 ) 22,063 (191.5 %)   Earnings (loss) per share:   Basic 0.13   (0.15 ) 0.28 (186.7 %)   Diluted 0.13   (0.15 ) 0.28 (186.7 %)       ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share)     For the Three Months Ended   September 30, September 30, June 30, 2007 2006 2007   Basic earnings per share:   Numerator - net earnings (loss) 10,542 21,716 (11,521 )   Denominator - weighted-average shares outstanding 80,646 86,000 79,341     Basic earnings (loss) per share 0.13 0.25 (0.15 )   Diluted earnings per share:   Numerator - net earnings (loss) 10,542 21,716 (11,521 )   Denominator - weighted-average shares outstanding 80,646 86,000 79,341   Dilutive effect of common stock options, warrants and restricted stock 1,839 2,203 -     82,485 88,203 79,341     Diluted earnings (loss) per share 0.13 0.25 (0.15 )     ACXIOM CORPORATION AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (Unaudited) (In thousands, except earnings per share)     For the Six Months Ended   September 30, September 30, 2007 2006   Basic earnings per share:   Numerator - net earnings (loss) (979 ) 39,524   Denominator - weighted-average shares outstanding 79,993   87,078   Basic earnings (loss) per share (0.01 ) 0.45   Diluted earnings per share:   Numerator - net earnings (loss) (979 ) 39,524   Denominator - weighted-average shares outstanding 79,993 87,078   Dilutive effect of common stock options, warrants and restricted stock -   2,235   79,993   89,313   Diluted earnings (loss) per share (0.01 ) 0.44     ACXIOM CORPORATION AND SUBSIDIARIES RESULTS BY SEGMENT (Unaudited) (Dollars in thousands)     For the Three Months Ended   September 30, September 30, Revenue: 2007 2006   Information services 190,650 182,611 Information products 108,230 104,433 Infrastructure management 112,883 119,283 Eliminations (60,737) (58,008)   Total revenue 351,026 348,319     Income from operations:   Information services 27,757 33,633 Information products 6,822 5,303 Infrastructure management 12,573 11,763 Corporate & other (26,795) (8,834)   Total income from operations 20,357 41,865   Margin:   Information services 14.6% 18.4% Information products 6.3% 5.1% Infrastructure management 11.1% 9.9%   Total margin 5.8% 12.0%     ACXIOM CORPORATION AND SUBSIDIARIES RESULTS BY SEGMENT (Unaudited) (Dollars in thousands)     For the Six Months Ended   September 30, September 30, Revenue: 2007 2006   Information services 372,207 355,828 Information products 204,904 199,869 Infrastructure management 226,403 239,774 Eliminations (114,320 ) (110,447 )   Total revenue 689,194   685,024       Income from operations:   Information services 52,689 64,305 Information products 2,438 3,091 Infrastructure management 24,878 25,857 Corporate & other (55,510 ) (15,073 )   Total income from operations 24,495   78,180     Margin:   Information services 14.2 % 18.1 % Information products 1.2 % 1.5 % Infrastructure management 11.0 % 10.8 %   Total margin 3.6 % 11.4 %               ACXIOM CORPORATION AND SUBSIDIARIES DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE (Unaudited) (Dollars in thousands)     For the Three Months Ended   September 30, September 30, $ % June 30, $ % 2007 2006 Variance   Variance 2007 Variance   Variance   Data 63,534 62,654 880 1.4% 53,841 9,693 18.0% Passthrough data 19,839 19,566 273 1.4% 19,592 247 1.3%   Total data revenue 83,373 82,220 1,153 1.4% 73,433 9,940 13.5%     Cost of data revenue: Data 37,159 31,496 5,663 18.0% 34,293 2,866 8.4% Passthrough data 19,839 19,566 273 1.4% 19,592 247 1.3%   Total cost of data 56,998 51,062 5,936 11.6% 53,885 3,113 5.8%   Margin:   Data 41.5% 49.7% 36.3% Passthrough data 0.0% 0.0% 0.0% Total data 31.6% 37.9% 26.6%         ACXIOM CORPORATION AND SUBSIDIARIES DATA REVENUE AND COST OF DATA SUPPLEMENTAL SCHEDULE (Unaudited) (Dollars in thousands)     For the Six Months Ended   September 30, September 30, $ % 2007 2006 Variance   Variance   Data 117,375 117,183 192 0.2 % Passthrough data 39,431   39,850   (419 ) (1.1 %)   Total data revenue 156,806   157,033   (227 ) (0.1 %)     Cost of data revenue: Data 71,452 60,784 10,668 17.6 % Passthrough data 39,431   39,850   (419 ) (1.1 %)   Total cost of data 110,883   100,634   10,249 10.2 %   Margin:   Data 39.1 % 48.1 % Passthrough data 0.0 % 0.0 % Total data 29.3 % 35.9 %         ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)   September 30, March 31, $ % 2007 2007 Variance   Variance Assets Current assets: Cash and cash equivalents 53,831 37,776 16,055 42.5 % Trade accounts receivable, net 294,822 285,850 8,972 3.1 % Refundable income taxes 11,421 7,657 3,764 49.2 % Deferred income taxes 22,244 22,341 (97 ) (0.4 %) Other current assets 52,421   59,252   (6,831 ) (11.5 %)   Total current assets 434,739   412,876   21,863 5.3 %   Property and equipment 763,381 733,175 30,206 4.1 % Less - accumulated depreciation and amortization 471,529   420,883   50,646 12.0 %   Property and equipment, net 291,852   312,292   (20,440 ) (6.5 %)   Software, net of accumulated amortization 55,641 44,289 11,352 25.6 % Goodwill 529,039 522,046 6,993 1.3 % Purchased software licenses, net of accumulated amortization 136,683 151,326 (14,643 ) (9.7 %) Unbilled and notes receivable, excluding current portions 13,285 16,742 (3,457 ) (20.6 %) Deferred costs, net 132,016 137,684 (5,668 ) (4.1 %) Data acquisition costs 34,941 35,398 (457 ) (1.3 %) Other assets, net 22,735   23,251   (516 ) (2.2 %)   1,650,931   1,655,904   (4,973 ) (0.3 %)   Liabilities and Stockholders' Equity Current liabilities: Current installments of long-term obligations 95,193 106,921 (11,728 ) (11.0 %) Trade accounts payable 54,070 54,808 (738 ) (1.3 %) Accrued payroll and related expenses 31,235 33,663 (2,428 ) (7.2 %) Other accrued expenses 80,352 79,078 1,274 1.6 % Deferred revenue 86,911   113,318   (26,407 ) (23.3 %)   Total current liabilities 347,761   387,788   (40,027 ) (10.3 %)   Long-term obligations: Long-term debt and capital leases, net of current installments 618,981 631,184 (12,203 ) (1.9 %) Software and data licenses, net of current installments 7,010   17,695   (10,685 ) (60.4 %)   Total long-term obligations 625,991   648,879   (22,888 ) (3.5 %)     Deferred income taxes 96,333 97,926 (1,593 ) (1.6 %)   Commitments and contingencies   Stockholders' equity: Common stock 11,371 11,145 226 2.0 % Additional paid-in capital 769,096 718,336 50,760 7.1 % Retained earnings 461,865 462,844 (979 ) (0.2 %) Accumulated other comprehensive income 27,011 17,526 9,485 54.1 % Treasury stock, at cost (688,497 ) (688,540 ) 43 (0.0 %)   Total stockholders' equity 580,846   521,311   59,535 11.4 %   1,650,931   1,655,904   (4,973 ) (0.3 %)     ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)   For the Three Months Ended September 30, 2007   2006   Cash flows from operating activities: Net earnings 10,542 21,716 Non-cash operating activities: Depreciation and amortization 60,819 56,936 Loss (gain) on disposal or impairment of assets, net (384 ) (1,586 ) Deferred income taxes (360 ) (189 ) Non-cash stock compensation expense 1,672 591 Changes in operating assets and liabilities: Accounts receivable (17,838 ) (5,039 ) Other assets 2,178 (4,576 ) Accounts payable and other liabilities (195 ) 920 Deferred revenue (15,790 ) (4,364 ) Net cash provided by operating activities 40,644   64,409   Cash flows from investing activities: Capitalized software (9,820 ) (6,926 ) Capital expenditures (5,291 ) (3,260 ) Cash collected from the sale and license of software - 5,000 Deferral of costs (11,630 ) (16,559 ) Payments received from investments 1,799 1,925 Net cash paid in acquisitions (2,791 ) -   Net cash used by investing activities (27,733 ) (19,820 ) Cash flows from financing activities: Proceeds from debt - 621,396 Payments of debt (27,346 ) (300,059 ) Dividends paid - (8,808 ) Sale of common stock 6,281 10,132 Acquisition of treasury stock - (281,335 ) Tax benefit of stock options exercised 344   1,765   Net cash used by financing activities (20,721 ) 43,091   Effect of exchange rate changes on cash 262   (11 )   Net increase (decrease) in cash and cash equivalents (7,548 ) 87,669 Cash and cash equivalents at beginning of period 61,379   4,163   Cash and cash equivalents at end of period 53,831   91,832     Supplemental cash flow information: Cash paid during the period for: Interest 13,850 8,732 Income taxes 96 17,563 Payments on capital leases and installment payment arrangements 17,651 21,951 Payments on software and data license liabilities 7,279 7,304 Other debt payments, excluding line of credit 2,416 1,804 Noncash investing and financing activities:   Acquisition of property and equipment under capital lease and installment payment arrangements 8,498 14,601 Construction and other financing - 7,752 Software licenses and maintenance acquired under software obligation 493 - Note payable issued in acquisition 300 -     ACXIOM CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)   For theSix Months Ended September 30, 2007   2006   Cash flows from operating activities: Net earnings (loss) (979 ) 39,524 Non-cash operating activities: Depreciation and amortization 119,921 115,983 Loss (gain) on disposal or impairment of assets, net (74 ) (1,670 ) Deferred income taxes (1,586 ) (422 ) Non-cash stock compensation expense 3,030 1,144 Changes in operating assets and liabilities: Accounts receivable (10,117 ) (6,835 ) Other assets 1,386 (1,390 ) Accounts payable and other liabilities (3,292 ) (8,823 ) Deferred revenue (28,513 ) (16,752 ) Net cash provided by operating activities 79,776   120,759   Cash flows from investing activities: Capitalized software (18,267 ) (12,645 ) Capital expenditures (8,158 ) (3,477 ) Cash collected from the sale and license of software - 10,000 Deferral of costs (25,759 ) (33,446 ) Payments received from investments 1,799 2,708 Net cash paid in acquisitions (5,471 ) -   Net cash used by investing activities (55,856 ) (36,860 ) Cash flows from financing activities: Proceeds from debt 2,127 650,269 Payments of debt (58,629 ) (367,925 ) Dividends paid - (8,808 ) Sale of common stock 42,101 16,905 Acquisition of treasury stock - (293,300 ) Tax benefit of stock options exercised 5,968   2,844   Net cash used by financing activities (8,433 ) (15 ) Effect of exchange rate changes on cash 568   243     Net increase in cash and cash equivalents 16,055 84,127 Cash and cash equivalents at beginning of period 37,776   7,705   Cash and cash equivalents at end of period 53,831   91,832     Supplemental cash flow information: Cash paid during the period for: Interest 27,738 16,562 Income taxes 211 22,831 Payments on capital leases and installment payment arrangements 36,788 40,856 Payments on software and data license liabilities 13,772 15,151 Other debt payments, excluding line of credit 5,942 3,515 Revolving credit payments 2,127 - Noncash investing and financing activities:   Acquisition of property and equipment under capital lease and installment payment arrangements 15,720 34,027 Construction and other financing 5,351 13,656 Software licenses and maintenance acquired under software obligation 493 15,266 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   YTD FY2008   Net cash provided by operating activities 56,350 64,409 62,659 76,534 259,952 39,132 40,644 79,776   Plus: Payments received from investments 783 1,925 - 50 2,758 - 1,799 1,799 Less: Capitalized software (5,719) (6,926) (6,798) (8,000) (27,443) (8,447) (9,820) (18,267) Capital expenditures (217) (3,260) (2,518) (8,230) (14,225) (2,867) (5,291) (8,158) Deferral of costs (16,887) (16,559) (16,149) (17,092) (66,687) (14,129) (11,630) (25,759) Payments on capital leases and installment payment arrangements (18,905) (21,951) (16,700) (18,579) (76,135) (19,137) (17,651) (36,788) Payments on software and data license liabilities (7,847) (7,304) (6,000) (5,746) (26,897) (6,493) (7,279) (13,772) Other required debt payments (1,711)   (1,804)   (3,117)   (3,603)   (10,235) (3,526)   (2,416)   (5,942)   Subtotal 5,847 8,530 11,377 15,334 41,088 (15,467) (11,644) (27,111)   Plus: Tax benefit of stock options and warrants 1,079   1,765   1,237   61   4,142 5,624   344   5,968   Subtotal 6,926 10,295 12,614 15,395 45,230 (9,843) (11,300) (21,143)   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)   (21,143)