Welcome to the Acxiom's third quarter fiscal year 2009 Earnings Call. As a reminder, today’s call is being recorded. At this time for opening remarks and introductions I would like to turn the conference over to Chief Financial Officer, Mr. Christopher Wolf. Please go ahead sir.

Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2009 third quarter results. With me today is John Meyer, our CEO and President. Today’s press release and this call contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. For a detailed description of these risks, please read the risk factor section of our public filings and the press release. Acxiom undertakes no obligation to release publicly any revisions to any of our forward-looking statements. A copy of our press release and financial schedules including any reconciliation of non-GAAP financial measures are available at acxiom.com. At this time, I will turn the call over to John.

Great, thanks, Chris. And thanks to everyone on the call for taking the time and the attention. Overall, I'm very pleased with the strong operating performance we were able to achieve in this economy. Efforts to streamline our business, which began in the first quarter continued to pay off for us with a strong cash position. In fact, our operating cash flow jumped more than 35% year-over-year when you set aside the $65 million one-time gain from the Silver Lakes/ValueAct settlement in the third quarter of 2008. As I previously suggested additional clean up charges were necessary in Q3 to continue to reshape our business for long-term success. These included facility writedowns, impaired software assets and personnel reductions; primarily in Europe this time, to better align that operation with our global business model. Our intent going forward is to minimize any future unusual charges. Now, as you can see from our release, if you exclude these unusual items, our operating performance pushed the diluted earnings per share past consensus estimates to $0.21, up a penny from the prior year quarter. That increase comes in spite of a downward trend in our revenue as clients in numerous industries delay projects in response to their weakened economic condition. Revenue fell from $351 million to $321 million, even as we landed key renewals in most of our industries. Q3 also brought signing 13 new logos valued at over $500,000 annually. Our global sales teams focus on new business is paying dividends. As a number of new logos have pretty much doubled each successive quarter since its formation in the first quarter. As well, our new business pipeline has more than doubled during that time. The new logos signed in Q3 represent a range of industries and markets. In financial services we signed a…

Thanks, John. I'll be reviewing selected financial highlights for the quarter. I direct you to our website for the supporting financial schedules to assist you with your own analysis. Let me begin with consolidated figures. For the three-months ended December 31, 2008, total revenue was $321.1 million down 8.5%, compared to $350.8 million in the same period last year. Total operating expense for the current quarter was $329.7 million compared to $253.4 million for the prior year three-month period. The current year quarter included unusual expense items of $43.2 million and the prior year quarter included unusual net gain items of $63.5 million. Excluding any unusual items, operating expenses decreased from $316.9 million and $286.5 million or 9.6%, while operating income increased by 2% and operating margins improved from 9.7% last year to 10.8% this year. Also excluding these unusual items and the related tax impacts from both periods, earnings per share were $0.21 in the third quarter of fiscal 2009, up from $0.20 in the third quarter of fiscal 2008. I'll discuss these unusual items in more detail later in the call. On a GAAP basis, the company had an operating loss of 8.6 million compared to operating income of 97.4 million in the same quarter last year. Net loss was $11.4 million, compared to net income of 55 million last year. Fully diluted loss per share was $0.15 for the third quarter, compared to earnings per share of $0.69 in the prior year quarter. Turning to revenue. Services segment revenue includes the company's global lines of business for customer data integration, CDI, and marketing services, digital marketing, information technology, and consulting. Services revenue for the quarter ended December 31 was $231.1 million, this represents a $13.6 million decrease or 5.5% compared to the prior year period. The decrease…

Thank you. (Operator Instructions). We'll go first to Carter Malloy, Stephens.

Hey, guys. Thanks for taking my questions. You had some pretty impressive cost saves in the period, but can you give us some detail, or some more detail rather, as to where exactly those came from, maybe like a head count figure? And then, the additional opportunity you've identified, I'm just trying to get a feel for how to look at your expense base run-rate going forward?

Yeah, we don't, Carter, we don't publish headcount figures. But it's fair to say that we have actually, over the past year, have been very cautious as we bring people on and are pushing the business because of the change in organizational structure to make sure that we get a maximum value for every person's part of the company today. And so we are down, but it's not something that, you won't hear us announcing a lay-off, it's just not hard. It's not how I like to run the business. So we are looking at each person's job always on a continuous basis and people earn their salary and therefore are paid everyday based on their contributions. What we've been doing across the whole business is, in addition to salary costs, is to look at everything we spend, and in some cases have put programs together where we've gone back to renegotiate with various vendors that are big suppliers of us for reductions. We've continued to squeeze our existing technology infrastructure to make sure that it was giving us that everything was being utilized to the max and we were getting the maximum value we can gain from it. On an SG&A perspective, we looked at some of the things that we had put into the quarter and decided that in today's economy it wasn't worth spending those types of marketing related things and we pulled back on them. So I'd just say, I don't think you could point at any one thing. I think you could point all across the board and see that we are managing the business reflective in today's economy.

Just one thing I'll add to that, Carter. I agree with what John said, but just the one thing, as far as this data pass-through contract that we mentioned, you'll see our fourth quarter costs come down $13 million to $14 million because of that pass-through item. So that's probably a big dollar item that we can point out to you.

Okay. And maybe a different way to look at it is, I know there's only one quarter left in the year, but it's a pretty significant raise to guidance so. Maybe, can you give us just some idea around your comfort level there and the primary sections behind your wedding cake approach?

No, I actually think it's made up of a lot of little things that we continue to squeeze and then if you remember in the beginning of the year, we've got rid of flight operations, we closed down a lot of facilities last year, and all of those things that we put in motion there, plus continued through the first quarter, second quarter and the third quarter are flowing through to earnings and cash. And so we're feeling obviously, we're feeling pretty comfortable with the guidance we're giving you or we wouldn't have taken it up. So if it's a question of do we think we've got any risk in that? Well you always have some risk. But we're feeling pretty comfortable with the guidance.

Yeah. That's great. And then one last question and I'll get out of the way here. But, it's good to hear that the direct-to-consumer mass mailings are holding up. But, can you give us an idea specifically around the credit card mail volumes?

Without talking specific numbers, the volumes per customer are staying about the same. The one thing that has, I would say, got us worried, or that we would expect to have a decline in that area, is the mergers, because when you have two customers that were each sending a credit card acquisition mailing out and that collapses from two-to-one, you're only sending one mailing out and so although we'll pick up some work because we're going to help these clients integrate those customers through project related work, it's kind of a one-time deal. I think contrary to what you heard, from I'd say, other people in the industry like Fair Isaac or the credit bureaus, is that the customer is not sending out pre-approved invitations. They are sending out things to say, please come apply and when you apply then we'll evaluate what kind of credit limit we're going to give you. So there's a lot less credit scoring being done on the front end because it's only being done on clients that respond back and they want to check and see what to give them as far as the credit limit So, still the mailings per customer are holding up pretty strong. And I think some of it too, is that our business is growing outside of that direct mail space. We started right from the very beginning to start pushing our digital capabilities and our retention capabilities through using email and other more electronic channels as a way for clients to preserve their relationship with their good clients and so there's a whole bunch of new areas, which I talked about in those 13 new extensions, or 18 new extensions with existing clients, are reflective of that white space analysis I talked about in previous times. What we're saying is: we've got all these great capabilities? Why are we only doing one thing with these clients? So we're expanding our footprint in existing clients and that's helping us in the banks.

Okay, great and you think that move towards the invitation to apply, sorry, to stick on the credit card mails here, but you think it move towards the ITA as opposed to pre-screen is that it’s primarily cost related?

Well, it's risk related too. You don't want to give somebody a line of credit and give them a lot of time to respond to it and not knowing when they would stop paying on their house or things like that. So it's more of a risk prevention to make sure that, yes, they want them to respond back but then they want to check and make sure, do I really want you as a client and is your financial condition as strong and as current as they are willing to give them credit for.

Okay, great. Well good quarter and thanks for taking my questions.

Our next question comes from Todd Van Fleet, First Analysis.

Hi, guys, nice quarter. Chris, a couple quick ones for you. Is it correct that Q4 implied EPS guidance is maybe $0.18 to $.20? Is that embedded in your full year of 73 to 75?

Yes. It's probably a little bit higher than that actually, Todd, but yes.

What's the year-to-date?

On a non-GAAP basis operating, we're about $0.52 right now.

Okay. Great. And then, when do we, Chris ,when do we start getting into the clean quarters where you have the impact of the passthrough contracts going away and all that kind of out of the way? Is that the June quarter?

Yeah. That will be June. That's right.

Okay. John, I guess, touching on the same here that you started on, back at your Analyst Day in New York a while ago and the push into digital for the company: This concept, the concept of channel shift for maybe, perhaps more relevantly, some of your large financial services customers that might be shifting away from direct mail or mailings in general into the digital arena. I think we've heard recently where one of your financial services customers was doing that pretty aggressively in the European marketplace, not sure that was the case here domestically, but can you help us kind of calibrate how you guys are thinking about that potential for channel shift, and then kind of the sense of urgency with respect to getting the digital marketing penetration where you'd like it to be?

It really depends on what you're doing, on whether there's going to be the digital shift versus direct mail. When you think about credit card applications, for example, what they found in those is: first of all, there's not very good information to tie e-mail addresses to people's name and address, and so, that's something in the way of those acquisitions. It's that the digital or the electronic form of e-mail is better used around retention because you're getting the client to willingly opt-in initially, and that gives them an opportunity, then, to try to cross-sell, try to up-sell into different things because they know who that person is, the client has willingly opted in. So, I'm not sure you'll see a direct shift from direct mail to, say, the electronic areas in those credit card acquisition on that. The customer you're talking about in Europe, actually is having some financial problems in that particular segment and if you go back and look you'll see that they closed down country operation after country operation and so, we believe that that decision is not only driven by the belief that they can do the work electronically only. And then, in talking to people, so then you can kind of go “well, you do a website type of thing whereas a potential credit card acquisition versus direct mail”. And when I talked to clients about that, what they have found is the only people that apply for a credit card online, traditionally, are the people that they don't want as customers. And so that's not going to happen either I believe. So, but do I believe that more and more people are going to start communicating with their clients and maintaining the relationships with their clients on electronic form? Very much so. And in fact, in most cases, our business outside the financial industry is done that way. As with a consumer product groups and the retailers that we do email campaigns for or even customers like Nokia, everything they do around managing the customer lifecycle, after they have them as a customer, is all done by electronic means.

Okay. And so I guess you're saying that, you're not necessarily seeing that kind of channel shift if you will, because the digital realm and the mailings, I guess, are meant to achieve, perhaps they are done for different purposes and they accomplish different things. So, you're not necessarily seeing the shift from one medium to the other, I guess?

I think in the acquisition part of the business, I do think it's shifting very aggressively, in the retention part.

Okay.

And it'll continue to.

And if you do, when you do, see that shift or where you do, is it typically the case where the dollars that Acxiom sees by way of revenue, shrinks, but the margin profile for that business is higher? Is it fair to say that that would be the case?

It's really actually the opposite. If you looked at our business, you'd see that in the financial industry we do very little retention work. And so, this is us going to them trying to drive people to say “why aren't you doing retentions using email and in some cases SMS, as oppose to direct mail”. Usually, their retention is based on stuffing something in with a credit card bills on that. And we're advocating, why aren't you using electronic means to deliver the credit card bill, for example, or why aren't you using electronic means to cross-sell them into mortgages and other types of retail financial institutions. So, I actually see this being a positive for us, not a negative at all, Todd.

Why I was thinking only a negative from the standpoint that it might hurt the topline and that to some degree, maybe the channel shift would be the result, or at least be spurred by, maybe wanting to save a little bit more money and make more of that one-to-one connection, a more efficient cost effective way to maintain that relationship. However, for you guys it might mean that, the margin profile for that business is better. So while you are receiving less revenue, perhaps the margin profile for the business would be better than it is otherwise, and the pool of profit dollars, I guess, doesn't change. But it sounds like you're saying that the revenue potential is greater.

Yeah, it's actually additive because, at least in the financial industry, we do very little retention work. So it's a positive not a negative. And most of our retention work has actually been in the multiple industry groups, so retail, consumer product groups, technology, so on. And those are all retention based campaigns. We're just adapting that expertise's that we had in those other industries and bringing it to the financial services market space.

Okay. Thank you.

Sure.

Our last question comes from Dan Leben, Robert W. Baird.

Great. Thanks. Just to follow-up on that last question, but asked a different way. Understanding the differences between the direct mail; and using online; and for retention; are you seeing any shifts from customers in terms of where they're spending their marketing investing dollars? Are they more focused on the retention side and keeping their current customers and getting more out of them or are they actually still looking very aggressively to add customers in this economic environment?

It really depends by customer and different customers have different strategies. There are certain customers that see this as an opportunity to add market share. There are other customers that are looking at this and saying “I'd rather just keep my good customers” and therefore, they are emphasizing more on the retention side. I mean some of the revenue pressure we're seeing is more on the discretionary side where they are saying I'm going to run less campaigns, or in some cases, I'm just going to buy the information more infrequently and take the risk that, the steps are just not as current, but I'm going to buy it every two weeks versus every week or every day on that. So, I don't think it really and truly; I don't think I can pull a trend out of it. I think it's different by customer.

Okay, fair enough. And Chris just on the cost side and I apologize, I dropped off for a little while on the call, you may have already answered this. But just looking at the SG&A ticking up sequentially with the cost of revenues coming down pretty meaningfully, total costs were down. Was there anything that shifts between those two; or why did that happen?

Well Dan, I think we mentioned if we're talking sequentially, we did have some adjustments last quarter on the SG&A line, between direct and SG&A and we saw that shift in Q2. But when you look at the run-rate, the total operating expenses here for Q3 as we mentioned last time, this is a pretty good run-rate for where we think we are as far as operating expense. So we think that's a pretty clean number, and that is where we would expect to trend back up.

Okay, great and then just one last question. Particularly in regards to retail, but potentially some other segments, have you seen any changes in January, kind out of getting out of the holiday season, where there were any changes in marketing spend, people pulling back or even getting more aggressive to try to get rid of some inventory?

Right. Retail is down obviously. We're seeing, we're actually seeing some customers, like I talked about in Tommy Bahama, that we were never seeing before, beside that they are establishing a relationship with the consumer directly through some of our loyalty and retention as opening some doors, but generically, I don't see any pick up.

I mean, as far what we see, I mean, we have plenty of deals in our backlog but I don't know, Dan, if we can say it's tied to trying to move inventory per se. We just don't see that correlation. It could be, but we don't see it.

Okay, great. Thanks guys.

That concludes the question and answer session. I would like to turn the conference back over to the speakers for any additional or closing remarks.

That's all we've got for this quarter. We appreciate you taking the time and I would look as you are looking at places to invest, consider us. We believe that we have got a positive story going forward as we provided in the guidance and we are going to continue to work hard and add new customers, add new business, and deliver the results for our shareholders, our customers and our employees. Thank you very much.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.