LiveRamp (RAMP) 8-K Acxiom Announces Third Quarter Results

For more information, contact:

Lauren Dillard

Acxiom Investor Relations

(650) 372-2242

investor.relations@acxiom.com

EACXM

ACXIOM ANNOUNCES THIRD QUARTER RESULTS

Expects AOS and LiveRamp to Generate Approximately $60M in Revenue for FY15

Reiterates Overall Full Year Guidance

LITTLE ROCK, Ark. – February 4, 2015 Acxiom® (Nasdaq: ACXM), an enterprise data, analytics and software-as-a-service Company, today announced financial results for its third quarter ended December 31, 2014.

Third Quarter Financial Highlights

Total revenue was down 3% compared to the third quarter of fiscal 2014 as a result of expected IT Infrastructure Management declines.

·   Marketing and Data Services revenue was $208 million, up 1% compared to the third quarter of fiscal 2014.

·   Combined AOS and LiveRamp revenue was $21 million, up approximately 40% compared to the second quarter of fiscal 2015.

·   Gross media spend enabled by the AOS platform was $73 million, up 265% compared to the prior year period and up 97% compared to the second quarter of fiscal 2015.

·   IT Infrastructure Management revenue was down approximately 16% compared to the same period a year ago.

GAAP operating income and diluted earnings per share were down due to expenses associated with business separation and transformation activities, non-cash compensation and acquired intangible asset amortization, as well as declines in IT Infrastructure Management.

·   Net earnings per diluted share from continuing operations were $0.06 compared to earnings per share of $0.19 a year ago. Earnings per share in the prior year period were positively impacted by a tax adjustment resulting in a $0.04 improvement. Unusual items, non-cash compensation and intangible asset amortization impacted GAAP earnings per share by $0.17 in the quarter. Unusual items included expenses associated with the Company’s restructuring activities and separation and transformation initiatives.

·   Operating cash flow from continuing operations was $111 million for the trailing twelve months, down 43% compared to the same period a year ago. Free cash flow to equity was $1 million for the trailing twelve-month period compared to $103 million for the comparable period. The decline was primarily due to changes in working capital, and to a lesser extent, cash restructuring and business transformation expenditures.

Non-GAAP operating income and diluted earnings per share were down as a result of the declines in the IT Infrastructure Management business.

·   Non-GAAP diluted earnings per share were $0.23 compared to $0.27 a year ago. Earnings per share in the prior year period were positively impacted by a tax adjustment resulting in a $0.04 improvement.

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·   Non-GAAP operating income was $30 million, down from $32 million for the same period last year.

·   Non-GAAP Marketing and Data Services operating margin was roughly 12%, flat compared to the third quarter of fiscal 2014.

Our non-GAAP results exclude unusual items, non-cash compensation and acquired intangible asset amortization. A reconciliation between GAAP and non-GAAP results is attached to this release.

“While we continue to strengthen our Marketing and Data Services business, we are experiencing great momentum with AOS and LiveRamp,” said Acxiom CEO Scott Howe. “We added 25 new AOS and LiveRamp customers during the quarter, more than doubled our subscription revenue year-over-year and expect to exit FY15 with a revenue run-rate of roughly $80 million. Data-driven marketing is still in the early innings, and we are pleased to be at the forefront of powering this trend.”

Third Quarter Business Highlights

·   Acxiom signed several Marketing and Data Services agreements during the quarter including new database contracts with Payless ShoeSource and Guardian Media Group, as well as renewals with a major telecommunications company and a leading insurance firm.

·   The Company signed 25 new AOS and LiveRamp agreements during the quarter. The AOS and LiveRamp client roster now totals 195 and includes 22 Fortune 100 companies.

·   LiveRamp expanded its strategic partnership with Datalogix, which now runs through the end of 2017. Datalogix will continue to leverage LiveRamp as an important partner for data onboarding services used to connect its syndicated and custom segments and its clients’ first-party data assets to digital media.

·   Acxiom data is now being distributed to more than 20 partners, including most of the major demand side platforms and leading enterprise software companies. In the quarter, Acxiom joined the Salesforce Analytics Cloud Ecosystemto provide consumer recognition, data assets and value-added analytic insights to Salesforce users.

·   Acxiom extended the duration of its existing share repurchase program for an additional year, through November 12, 2015. The Company did not repurchase any shares in the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 12.9 million shares, or approximately 16% of the outstanding common stock, for $202 million.

Financial Outlook

Our guidance includes the impact of the LiveRamp acquisition but excludes the impact of unusual items, non-cash compensation and acquired intangible asset amortization. Acxiom’s estimates for fiscal 2015 are as follows:

·   We continue to expect revenue from continuing operations for the fiscal year to be down roughly 4% compared to fiscal year 2014. The decline in revenue is primarily due to the impact of lost IT Infrastructure Management customers and the exit of our analog paper survey business in Europe.

·   We continue to expect earnings per diluted share to be in the range of $0.73 to $0.78.

Conference Call

Acxiom will hold a conference call at 3:30 p.m. CT today to further discuss this information. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.

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About Acxiom

Acxiom is an enterprise data, analytics and software-as-a-service company that uniquely fuses trust, experience and scale to fuel data-driven results. For over 40 years, Acxiom has been an innovator in harnessing the most important sources and uses of data to strengthen connections between people, businesses and their partners. Utilizing a channel and media neutral approach, we leverage cutting-edge, data-oriented products and services to maximize customer value. Every week, Acxiom powers more than a trillion transactions that enable better living for people and better results for our clients. For more information about Acxiom, visit Acxiom.com.

Forward-Looking Statements

This release and today’s conference call may contain forward-looking statements including, without limitation, statements regarding expected levels of revenue and earnings per share. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that the expected revenue from the LiveRamp transaction may not be realized within the expected timeframe; the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce or cancel the amount of business they do with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that the historical seasonality of our business may change; the possibility that we will not be able to achieve anticipated cost reductions and avoid unanticipated costs; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that unusual charges may be incurred; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; the possibility that new laws may be enacted which limit our ability to provide services to our clients and/or which limit the use of data; and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A, RISK FACTORS” in our Annual Report on Form 10-K for the year ended March 31, 2014, which was filed with the Securities and Exchange Commission on May 28, 2014.

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.

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.

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ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
	For the Three Months Ended
	December 31,
							$				%
	2014			2013			Variance			Variance
Revenue:
Marketing and data services		208,246			206,662			1,584			0.8	%
IT Infrastructure management services		52,194			62,099			(9,905	)		(16.0	%)
Total revenue		260,440			268,761			(8,321	)		(3.1	%)
Operating costs and expenses:
Cost of revenue		203,728			201,430			2,298			1.1	%
Selling, general and administrative		47,345			43,383			3,962			9.1	%
Gains, losses and other items, net		4,175			4,657			(482	)		(10.4	%)
Total operating costs and expenses		255,248			249,470			5,778			2.3	%
Income from operations		5,192			19,291			(14,099	)		(73.1	%)
% Margin		2.0	%		7.2	%
Other income (expense):
Interest expense		(2,610	)		(3,114	)		504			16.2	%
Other, net		(34	)		1,484			(1,518	)		(102.3	%)
Total other income (expense)		(2,644	)		(1,630	)		(1,014	)		(62.2	%)
Earnings from continuing operations before income taxes		2,548			17,661			(15,113	)		(85.6	%)
Income taxes		(1,926	)		3,083			(5,009	)		(162.5	%)
Net earnings from continuing operations		4,474			14,578			(10,104	)		(69.3	%)
Earnings (loss) from discontinued operations, net of tax		(318	)		489			(807	)		(165.0	%)
Net earnings		4,156			15,067			(10,911	)		(72.4	%)
Less: Net earnings attributable to noncontrolling interest		-			-			-			-
Net earnings attributable to Acxiom		4,156			15,067			(10,911	)		(72.4	%)
Basic earnings per share:
Net earnings from continuing operations		0.06			0.19			(0.13	)		(69.4	%)
Earnings from discontinued operations		-			0.01			(0.01	)		0.0	%
Net earnings		0.05			0.20			(0.15	)		(75.0	%)
Net earnings attributable to Acxiom stockholders		0.05			0.20			(0.15	)		(73.0	%)
Diluted earnings per share:
Net earnings from continuing operations		0.06			0.19			(0.13	)		(69.9	%)
Earnings from discontinued operations		-			0.01			(0.01	)		0.0	%
Net earnings		0.05			0.19			(0.14	)		(73.7	%)
Net earnings attributable to Acxiom stockholders		0.05			0.19			(0.14	)		(72.1	%)

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ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
	For the Nine Months Ended
	December 31,
							$				%
	2014			2013			Variance			Variance
Revenue:
Marketing and data services		599,177			595,407			3,770			0.6	%
IT Infrastructure management services		163,515			198,309			(34,794	)		(17.5	%)
Total revenue		762,692			793,716			(31,024	)		(3.9	%)
Operating costs and expenses:
Cost of revenue		601,349			596,642			4,707			0.8	%
Selling, general and administrative		144,766			123,857			20,909			16.9	%
Gains, losses and other items, net		12,556			11,241			1,315			11.7	%
Total operating costs and expenses		758,671			731,740			26,931			3.7	%
Income (loss) from operations		4,021			61,976			(57,955	)		(93.5	%)
% Margin		0.5	%		7.8	%
Other income (expense):
Interest expense		(7,576	)		(9,113	)		1,537			16.9	%
Other, net		(562	)		1,238			(1,800	)		(145.4	%)
Total other income (expense)		(8,138	)		(7,875	)		(263	)		(3.3	%)
Earnings (loss) from continuing operations before income taxes		(4,117	)		54,101			(58,218	)		(107.6	%)
Income taxes		(1,023	)		17,582			(18,605	)		(105.8	%)
Net earnings (loss) from continuing operations		(3,094	)		36,519			(39,613	)		(108.5	%)
Earnings (loss) from discontinued operations, net of tax		(1,898	)		1,507			(3,405	)		(225.9	%)
Net earnings (loss)		(4,992	)		38,026			(43,018	)		(113.1	%)
Less: Net loss attributable to noncontrolling interest		-			(60	)		60			100.0	%
Net earnings (loss) attributable to Acxiom		(4,992	)		38,086			(43,078	)		(113.1	%)
Basic earnings (loss) per share:
Net earnings (loss) from continuing operations		(0.04	)		0.49			(0.53	)		(108.2	%)
Earnings (loss) from discontinued operations		(0.02	)		0.02			(0.04	)		(200.0	%)
Net earnings (loss)		(0.06	)		0.51			(0.57	)		(111.8	%)
Net earnings (loss) attributable to Acxiom stockholders		(0.06	)		0.51			(0.57	)		(112.7	%)
Diluted earnings (loss) per share:
Net earnings (loss) from continuing operations		(0.04	)		0.48			(0.52	)		(108.4	%)
Earnings (loss) from discontinued operations		(0.02	)		0.02			(0.04	)		(200.0	%)
Net earnings (loss)		(0.06	)		0.50			(0.56	)		(112.0	%)
Net earnings (loss) attributable to Acxiom stockholders		(0.06	)		0.50			(0.56	)		(113.0	%)

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ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS
(Unaudited)
(Dollars in thousands, except earnings per share)
	For the Three Months Ended						For the Nine Months Ended
	December 31,						December 31,
	2014			2013			2014			2013
Earnings (loss) from continuing operations before income taxes		2,548			17,661			(4,117	)		54,101
Income taxes		(1,926	)		3,083			(1,023	)		17,582
Net earnings (loss) from continuing operations		4,474			14,578			(3,094	)		36,519
Earnings (loss) from discontinued operations, net of tax		(318	)		489			(1,898	)		1,507
Net earnings (loss)		4,156			15,067			(4,992	)		38,026
Less: Net earnings (loss) attributable to noncontrolling interest		-			-			-			(60	)
Net earnings (loss) attributable to Acxiom		4,156			15,067			(4,992	)		38,086
Earnings (loss) per share attributable to Acxiom stockholders:
Basic		0.05			0.20			(0.06	)		0.51
Diluted		0.05			0.19			(0.06	)		0.50
Unusual items:
Legal settlement accruals		-			1,000			-			4,200
Purchased intangible asset amortization		3,783			62			7,667			272
Live Ramp acquisition costs		-			-			820			-
Non-cash stock compensation		8,582			3,455			20,538			10,344
Restructuring charges and other adjustments		4,175			3,657			11,737			7,041
Separation and transformation costs		8,116			4,897			29,444			7,083
Gain on investment (other income)		-			(2,567	)		-			(2,567	)
Total unusual items, continuing operations		24,656			10,504			70,206			26,373
Earnings from continuing operations before income taxes
and excluding unusual items		27,204			28,165			66,089			80,474
Income taxes		8,977			6,979			23,947			27,541
Non-GAAP earnings from continuing operations		18,227			21,186			42,142			52,933
Earnings from discontinued operations, net of tax		-			-			-			-
Non-GAAP net earnings		18,227			21,186			42,142			52,933
Less: Net loss attributable to noncontrolling interest		-			-			-			(60	)
Non-GAAP Net earnings attributable to Acxiom		18,227			21,186			42,142			52,993
Non-GAAP earnings per share attributable to Acxiom stockholders:
Basic		0.24			0.28			0.55			0.71
Diluted		0.23			0.27			0.54			0.69
Basic weighted average shares		77,039			75,009			76,998			74,155
Diluted weighted average shares		78,302			77,839			78,316			76,456

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ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
	For the Three Months Ended				For the Nine Months Ended
	December 31,				December 31,
	2014		2013		2014		2013
Income from operations		5,192		19,291		4,021		61,976
Unusual items		24,656		13,071		70,206		28,940
Income from operations before unusual items		29,848		32,362		74,227		90,916

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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,
	2014		2013
Basic earnings per share from continuing operations:
Numerator - net earnings		4,474		14,578
Denominator - weighted-average shares outstanding		77,039		75,009
Basic earnings per share		0.06		0.19
Basic earnings per share - net earnings attributable to Acxiom stockholders:
Numerator - net earnings attributable to Acxiom		4,156		15,067
Denominator - weighted-average shares outstanding		77,039		75,009
Basic earnings per share - net earnings attributable to Acxiom stockholders		0.05		0.20
Diluted earnings per share from continuing operations:
Numerator - net earnings		4,474		14,578
Denominator - weighted-average shares outstanding		77,039		75,009
Dilutive effect of common stock options, warrants and restricted stock		1,263		2,830
		78,302		77,839
Diluted earnings per share from continuing operations		0.06		0.19
Diluted earnings per share - net earnings attributable to Acxiom stockholders:
Numerator - net earnings attributable to Acxiom		4,156		15,067
Denominator - weighted-average shares outstanding		77,039		75,009
Dilutive effect of common stock options, warrants, and restricted stock		1,263		2,830
		78,302		77,839
Diluted earnings per share - net earnings attributable to Acxiom stockholders		0.05		0.19

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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,
	2014			2013
Basic earnings (loss) per share from continuing operations:
Numerator - net earnings (loss)		(3,094	)		36,519
Denominator - weighted-average shares outstanding		76,998			74,155
Basic earnings (loss) per share		(0.04	)		0.49
Basic earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders:
Numerator - net earnings (loss) attributable to Acxiom		(4,992	)		38,086
Denominator - weighted-average shares outstanding		76,998			74,155
Basic earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders		(0.06	)		0.51
Diluted earnings (loss) per share from continuing operations:
Numerator - net earnings (loss)		(3,094	)		36,519
Denominator - weighted-average shares outstanding		76,998			74,155
Dilutive effect of common stock options, warrants and restricted stock		-			2,301
		76,998			76,456
Diluted earnings (loss) per share from continuing operations		(0.04	)		0.48
Diluted earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders:
Numerator - net earnings (loss) attributable to Acxiom		(4,992	)		38,086
Denominator - weighted-average shares outstanding		76,998			74,155
Dilutive effect of common stock options, warrants, and restricted stock		-			2,301
		76,998			76,456
Diluted earnings (loss) per share - net earnings (loss) attributable to Acxiom stockholders		(0.06	)		0.50

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ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
	For the Three Months Ended
	December 31,			December 31,
Revenue:	2014			2013
Marketing and data services		208,246			206,662
IT Infrastructure management services		52,194			62,099
Total revenue		260,440			268,761
Income from continuing operations:
Marketing and data services		13,703			22,529
IT Infrastructure management services		3,780			6,316
Corporate		(12,291	)		(9,554	)
Total income from continuing operations		5,192			19,291
Margin:
Marketing and data services		6.6	%		10.9	%
IT Infrastructure management services		7.2	%		10.2	%
Total margin		2.0	%		7.2	%

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ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
	For the Nine Months Ended
	December 31,			December 31,
Revenue:	2014			2013
Marketing and data services		599,177			595,407
IT Infrastructure management services		163,515			198,309
Total revenue		762,692			793,716
Income from continuing operations:
Marketing and data services		33,372			51,256
IT Infrastructure management services		12,649			29,044
Corporate		(42,000	)		(18,324	)
Total income from continuing operations		4,021			61,976
Margin:
Marketing and data services		5.6	%		8.6	%
IT Infrastructure management services		7.7	%		14.6	%
Total margin		0.5	%		7.8	%

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ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT RESULTS
(Unaudited)
(Dollars in thousands, except earnings per share)
	For the Three Months Ended						For the Nine Months Ended
	December 31,						December 31,
	2014			2013			2014			2013
Marketing and data services income from operations		13,703			22,529			33,372			51,256
Unusual items:
Purchased intangible asset amortization		3,783			62			7,667			272
Non-cash stock compensation		7,971			2,685			18,334			7,927
Marketing and data services income
from operations before unusual items		25,457			25,276			59,373			59,455
Margin		12.2	%		12.2	%		9.9	%		10.0	%
IT infrastructure management services income
from operations		3,780			6,316			12,649			29,044
Unusual items:
Non-cash stock compensation		611			770			2,204			2,417
IT infrastructure management services income
from operations before unusual items		4,391			7,086			14,853			31,461
Margin		8.4	%		11.4	%		9.1	%		15.9	%

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ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
	December 31,			March 31,			$				%
	2014			2014			Variance			Variance
Assets
Current assets:
Cash and cash equivalents		126,891			418,586			(291,695	)		(69.7	%)
Trade accounts receivable, net		155,867			160,718			(4,851	)		(3.0	%)
Deferred income taxes		15,809			12,870			2,939			22.8	%
Refundable income taxes		11,823			11,535			288			2.5	%
Restricted cash held in escrow		31,000			-			31,000			100.0	%
Other current assets		50,163			54,484			(4,321	)		(7.9	%)
Assets of discontinued operations		478			7,332			(6,854	)		(93.5	%)
Total current assets		392,031			665,525			(273,494	)		(41.1	%)
Property and equipment		733,387			852,236			(118,849	)		(13.9	%)
Less - accumulated depreciation and amortization		516,899			635,330			(118,431	)		(18.6	%)
Property and equipment, net		216,488			216,906			(418	)		(0.2	%)
Software, net of accumulated amortization		77,033			39,425			37,608			95.4	%
Goodwill		572,589			358,384			214,205			59.8	%
Purchased software licenses, net of accumulated amortization		14,555			18,584			(4,029	)		(21.7	%)
Other assets, net		41,257			24,477			16,780			68.6	%
		1,313,953			1,323,301			(9,348	)		(0.7	%)
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt		33,269			28,567			4,702			16.5	%
Trade accounts payable		33,527			36,179			(2,652	)		(7.3	%)
Accrued payroll and related expenses		35,718			62,182			(26,464	)		(42.6	%)
Other accrued expenses		69,338			70,412			(1,074	)		(1.5	%)
Acquisition escrow payable		31,000			-			31,000			100.0	%
Deferred revenue		37,944			47,638			(9,694	)		(20.3	%)
Income taxes		-			241			(241	)		(100.0	%)
Liabilities of discontinued operations		1,548			4,250			(2,702	)		(63.6	%)
Total current liabilities		242,344			249,469			(7,125	)		(2.9	%)
Long-term debt		262,761			289,043			(26,282	)		(9.1	%)
Deferred income taxes		103,498			90,226			13,272			14.7	%
Other liabilities		14,942			11,706			3,236			27.6	%
Stockholders' equity:
Common stock		12,723			12,584			139			1.1	%
Additional paid-in capital		1,015,697			981,985			33,712			3.4	%
Retained earnings		597,837			602,829			(4,992	)		(0.8	%)
Accumulated other comprehensive income		9,364			13,662			(4,298	)		(31.5	%)
Treasury stock, at cost		(945,213	)		(928,203	)		(17,010	)		(1.8	%)
Total stockholders' equity		690,408			682,857			7,551			1.1	%
		1,313,953			1,323,301			(9,348	)		(0.7	%)

14 

ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
	For the Three Months Ended
	December 31,
	2014			2013
Cash flows from operating activities:
Net earnings		4,156			15,067
Loss (earnings) from discontinued operations, net of tax		318			(489	)
Non-cash operating activities:
Depreciation and amortization		29,285			25,457
Gain on disposal or impairment of assets		-			(2,567	)
Loss on early extinguishment of debt		-			664
Deferred income taxes		4,002			(3,138	)
Non-cash stock compensation expense		8,582			3,455
Changes in operating assets and liabilities:
Accounts receivable		(1,080	)		8,806
Other assets		3			6,925
Deferred costs		(105	)		(89	)
Accounts payable and other liabilities		(4,873	)		7,118
Deferred revenue		2,376			2,582
Net cash provided by operating activities		42,664			63,791
Cash flows from investing activities:
Capitalized software		(4,408	)		(5,495	)
Capital expenditures		(13,132	)		(6,681	)
Data acquisition costs		(394	)		(1,786	)
Payments from investments		-			3,633
Net cash provided (used) by investing activities		(17,934	)		(10,329	)
Cash flows from financing activities:
Proceeds from debt		-			300,000
Payments of debt		(8,957	)		(220,934	)
Fees for debt refinancing		-			(4,370	)
Sale of common stock, net of stock acquired for withholding taxes		1,680			50,547
Acquisition of treasury stock		-			(13,826	)
Acquisition of noncontrolling interest		-			(600	)
Net cash provided (used) by financing activities		(7,277	)		110,817
Cash flows from discontinued operations:
From operating activities		140			(19	)
From investing activities		-			(19	)
Net cash provided by discontinued operations		140			(38	)
Effect of exchange rate changes on cash		(512	)		51
Net change in cash and cash equivalents		17,081			164,292
Cash and cash equivalents at beginning of period		109,810			216,616
Cash and cash equivalents at end of period		126,891			380,908
Supplemental cash flow information:
Cash paid during the period for:
Interest		809			3,281
Income taxes		182			4,766
Payments on capital leases and installment payment arrangements		930			1,675
Other debt payments, excluding line of credit		8,027			4,259
Prepayment of debt		-			215,000

15 

ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
	For the Nine Months Ended
	December 31,
	2014			2013
Cash flows from operating activities:
Net earnings (loss)		(4,992	)		38,026
Loss (earnings) from discontinued operations, net of tax		1,898			(1,507	)
Non-cash operating activities:
Depreciation and amortization		84,971			75,698
Gain on disposal or impairment of assets		-			(2,567	)
Loss on early extinguishment of debt		-			664
Deferred income taxes		(2,020	)		(3,666	)
Non-cash stock compensation expense		20,538			10,344
Changes in operating assets and liabilities:
Accounts receivable		7,528			3,964
Other assets		3,483			6,932
Deferred costs		(1,488	)		(89	)
Accounts payable and other liabilities		(29,415	)		(11,756	)
Deferred revenue		(10,180	)		6,511
Net cash provided by operating activities		70,323			122,554
Cash flows from investing activities:
Capitalized software		(14,985	)		(19,109	)
Capital expenditures		(51,529	)		(24,723	)
Data acquisition costs		(1,497	)		(4,660	)
Payments from investments		-			3,633
Net cash paid in acquisitions		(265,672	)		-
Net cash provided (used) by investing activities		(333,683	)		(44,859	)
Cash flows from financing activities:
Proceeds from debt		-			300,000
Payments of debt		(19,815	)		(230,167	)
Fees for debt refinancing		-			(4,370	)
Sale of common stock, net of stock acquired for withholding taxes		(807	)		69,106
Acquisition of treasury stock		(9,868	)		(52,663	)
Acquisition of noncontrolling interest		-			(600	)
Net cash provided (used) by financing activities		(30,490	)		81,306
Cash flows from discontinued operations:
From operating activities		209			(1,412	)
From investing activities		2,927			(166	)
Net cash provided (used) by discontinued operations		3,136			(1,578	)
Effect of exchange rate changes on cash		(981	)		511
Net change in cash and cash equivalents		(291,695	)		157,934
Cash and cash equivalents at beginning of period		418,586			222,974
Cash and cash equivalents at end of period		126,891			380,908
Supplemental cash flow information:
Cash paid during the period for:
Interest		6,200			9,267
Income taxes		538			15,774
Payments on capital leases and installment payment arrangements		3,249			6,914
Other debt payments, excluding line of credit		16,566			8,253
Prepayment of debt		-			215,000

16 

ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
		06/30/13	09/30/13	12/31/13	03/31/14	YTD FY2014	06/30/14	09/30/14	12/31/14	YTD FY2015	TTM 12/31/13	TTM 12/31/14
Net cash provided by operating activities - continuing operations		16,508	42,255	63,791	40,687	163,241	1,867	25,792	42,664	70,323	196,417	111,010
Net cash provided by operating activities - discontinued operations		341	(1,734)	(19)	3,147	1,735	(13)	82	140	209	(1,054)	3,356
Less:
	Payments for investments	-	-	3,633	190	3,823	-	-	-	-	3,633	190
	Capitalized software	(5,954)	(7,660)	(5,495)	(5,408)	(24,517)	(4,969)	(5,608)	(4,408)	(14,985)	(25,798)	(20,393)
	Capital expenditures	(8,912)	(9,130)	(6,681)	(14,409)	(39,132)	(19,001)	(19,396)	(13,132)	(51,529)	(40,986)	(65,938)
	Data acquisition costs	(1,961)	(913)	(1,786)	(3,085)	(7,745)	(635)	(468)	(394)	(1,497)	(6,766)	(4,582)
	Discontinued operations investing activities	(8)	(139)	(19)	-	(166)	2,927	-	-	2,927	(418)	2,927
	Payments on capital leases and installment payment arrangements	(2,900)	(2,339)	(1,675)	(1,465)	(8,379)	(1,235)	(1,084)	(930)	(3,249)	(10,480)	(4,714)
	Other required debt payments	(1,990)	(2,004)	(4,259)	(4,263)	(12,516)	(4,267)	(4,272)	(8,027)	(16,566)	(11,768)	(20,829)
Total		(4,876)	18,336	47,490	15,394	76,344	(25,326)	(4,954)	15,913	(14,367)	102,780	1,027

17 

ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
											Q3 FY15 to Q3 FY14
		06/30/13	09/30/13	12/31/13	03/31/14	YTD FY2014	06/30/14	09/30/14	12/31/14	YTD FY2015	%	$
Revenue:
	Marketing and data services	187,793	200,952	206,662	209,746	805,153	186,683	204,248	208,246	599,177	0.8%	1,584
	IT Infrastructure management services	69,385	66,825	62,099	58,816	257,125	55,532	55,789	52,194	163,515	-16.0%	(9,905)
	Total revenue	257,178	267,777	268,761	268,562	1,062,278	242,215	260,037	260,440	762,692	-3.1%	(8,321)
Operating costs and expenses:
	Cost of revenue	196,105	199,107	201,430	198,920	795,562	192,303	205,318	203,728	601,349	1.1%	2,298
	Selling, general and administrative	37,615	42,859	43,383	45,519	169,376	46,938	50,483	47,345	144,766	9.1%	3,962
	Impairment of goodwill and other	-	-	-	24,953	24,953	-	-	-	0	-	-
	Gains, losses and other items, net	-	6,584	4,657	10,673	21,914	7,452	929	4,175	12,556	-10.4%	(482)
	Total operating costs and expenses	233,720	248,550	249,470	280,065	1,011,805	246,693	256,730	255,248	758,671	2.3%	5,778
	Income (loss) from operations	23,458	19,227	19,291	(11,503)	50,473	(4,478)	3,307	5,192	4,021	-73.1%	(14,099)
	% Margin	9.1%	7.2%	7.2%	-4.3%	4.8%	-1.8%	1.3%	2.0%	0.5%
	Other expense
	Interest expense	(3,019)	(2,980)	(3,114)	(2,558)	(11,671)	(2,571)	(2,395)	(2,610)	(7,576)	16.2%	504
	Other, net	104	(350)	1,484	579	1,817	(413)	(115)	(34)	(562)	-102.3%	(1,518)
	Total other expense	(2,915)	(3,330)	(1,630)	(1,979)	(9,854)	(2,984)	(2,510)	(2,644)	(8,138)	62.2%	(1,014)
	Earnings (loss) from continuing operations before income taxes	20,543	15,897	17,661	(13,482)	40,619	(7,462)	797	2,548	(4,117)	-85.6%	(15,113)
	Income taxes	8,040	6,459	3,083	12,045	29,627	(1,390)	2,293	(1,926)	(1,023)	-162.5%	(5,009)
	Net earnings (loss) from continuing operations	12,503	9,438	14,578	(25,527)	10,992	(6,072)	(1,496)	4,474	(3,094)	-69.3%	(10,104)
	Earnings (loss) from discontinued operations, net of tax	592	426	489	(3,696)	(2,189)	(1,532)	(48)	(318)	(1,898)	-165.0%	(807)
	Net earnings (loss)	13,095	9,864	15,067	(29,223)	8,803	(7,604)	(1,544)	4,156	(4,992)	-72.4%	(10,911)
	Less: Net gain (loss) attributable
	to noncontrolling interest	(85)	25	-	-	(60)	-	-	-	-	-	-
	Net earnings (loss) attributable to Acxiom	13,180	9,839	15,067	(29,223)	8,863	(7,604)	(1,544)	4,156	(4,992)	-72.4%	(10,911)
	Diluted earnings (loss) per share - net earnings (loss) attributable
	to Acxiom stockholders	0.17	0.13	0.19	(0.38)	0.12	(0.10)	(0.02)	0.05	(0.06)	-73.7%	(0.14)

18 

ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
																												Q3 FY15 to Q3 FY14
	06/30/13			09/30/13			12/31/13			03/31/14			YTD FY2014			06/30/14			09/30/14			12/31/14			YTD FY2015			%			$
Revenue:
Marketing and data services		187,793			200,952			206,662			209,746			805,153			186,683			204,248			208,246			599,177			1	%		1,584
IT Infrastructure management services		69,385			66,825			62,099			58,816			257,125			55,532			55,789			52,194			163,515			-16	%		(9,905	)
Total revenue		257,178			267,777			268,761			268,562			1,062,278			242,215			260,037			260,440			762,692			-3	%		(8,321	)
Income from continuing operations:
Marketing and data services		12,697			16,030			22,529			27,244			78,500			10,272			9,397			13,703			33,372			-39	%		(8,826	)
IT Infrastructure management services		10,761			11,967			6,316			3,803			32,847			4,739			4,130			3,780			12,649			-40	%		(2,536	)
Corporate		-			(8,770	)		(9,554	)		(42,550	)		(60,874	)		(19,489	)		(10,220	)		(12,291	)		(42,000	)		-29	%		(2,737	)
Total income (loss) from continuing operations		23,458			19,227			19,291			(11,503	)		50,473			(4,478	)		3,307			5,192			4,021			-73	%		(14,099	)
Margin:
Marketing and data services		6.8	%		8.0	%		10.9	%		13.0	%		9.7	%		5.5	%		4.6	%		6.6	%		5.6	%
IT Infrastructure management services		15.5	%		17.9	%		10.2	%		6.5	%		12.8	%		8.5	%		7.4	%		7.2	%		7.7	%
Total		9.1	%		7.2	%		7.2	%		-4.3	%		4.8	%		-1.8	%		1.3	%		2.0	%		0.5	%

19