Good day, ladies and gentlemen, and welcome to the Acxiom second quarter fiscal year 2009 earnings conference 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 the Chief Operating Officer, Mr. John Adams. Please go ahead, sir.

Thank you. Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2009 second quarter results. With me today is John Meyer, our CEO and President, and Chris Wolf, our CFO. Before we begin our formal remarks, I'd like to remind everyone that this release and today’s conference call contains forward-looking statements that are subject to certain risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include, but are not limited to, the factors detailed under the section entitled risk factors and elsewhere in filings with the Securities and Exchange Commission made from time to time by Acxiom including, but not limited to, its annual report on Form 10K filed on May 30, 2008, other current reports on Form 10Q and Form 8K, as well as the press release we issued today. Acxiom undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events and circumstances after the date hereof or to reflect the occurrence of unanticipated events. A copy of our Press Release and financial schedules, including any reconciliation of non-GAAP financial measures, have been posted to our website at acxiom.com. At this time, I’d like to turn the call over to John.

Thanks, John, and thanks to all of you for joining the call today. As you gathered from our press release I hope is even with the ongoing economic crisis, we’re able to hold our own and we finished Q2 better than the street expected. This marks the second consecutive quarter of doing what we said we were going to do as we continue to set the expectations with our teams for consistent market performance. Now that we’ve seen the results for our first half, we can re-infirm our full year guidance of $0.66 to $0.72 in earnings per diluted share, and as you recall, that is a projected growth rate of 10 to 20%. As you can see our earnings, we also projected $86.8 million operating cash flow, more than double the $33.4 million from a year ago. We are exercising discipline with our capital expenditures so that we can enjoy the benefits of a healthy cash flow. In fact, we’re increasing our annual guidance around free cash flow to equity. Now I’ll tough on operating expense. It’s clear that our discipline in the expense management and our efforts to operate more efficiently are resulting in strong bottom line results, even in a period of lagging revenue growth. You can expect this to be our ongoing focus throughout the years with our continuous improvement initiatives. And finally, I should note that our new growth engine, our global sales organization, has completed its initial build-out phase and is getting focused on pipeline growth around full service, multi-channel, and new global opportunities on a global basis. Now although our top line is not growing as we’d like, leading up to adjust our revenue guidance, our results would suggest that most of our clients are still pushing forward with key marketing activities. We…

Great. 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 September 30, 2008, total revenue was $328.9 million, down 5.7% compared to $348.9 million in the same period last year. Operating income was $34.3 million compared to $18.2 million in the same quarter last year. Net income was $15.9 million compared to $9.2 million last year. Fully diluted earnings per share were $0.20 for the second quarter compared to $0.11 in the prior year quarter. The current year quarter included unusual net gain items of $2.4 million. The prior year quarter included unusual loss items of $14.8 million. Excluding any unusual items, operating expenses decreased from $315.9 million to $297 million or 6% while operating income decreased by $1.1 million or 3.2% and operating margins improved from 9.5% last year to 9.7% this year. Also excluding these unusual items from both periods, earnings per share were $0.18 in the second quarter of fiscal 2009, up from $0.15 in the second quarter of fiscal 08. Turning to revenue, services segment revenue includes the company’s global lines of business for customer data integration, CDI, marketing services, digital marketing, information technology, and consulting. Services revenue for the quarter ended September 30, 2008, was $233.68 million. This represents a $11.4 million decrease or 4.7% compared to the prior year period. The decrease in services revenue was driven by decline in IT services of 12.6% and a decline in CDI and marketing services of 3.1%. Consulting revenue was up by 45.8% on a small base and digital services were relatively flat. The decline in IT services was driven by contract reductions over the past…

(Operator Instructions). We'll take our first question today from Randy Hugen with Piper Jaffray.

Wanted to dig into the big sequential decline in SG&A where some of those cuts might have been made.

Sequentially we’re down about $10.5 million dollars and that’s kind of composed of two things. First, we actually did reclass on expenses out of SG&A in this quarter to direct expenses. It had to do with some incentive compensation with some of the units as part of the restructuring. We had kept those in SG&A in previous periods and as part of the restructuring we moved them into direct expenses and that was about half of the sequential decline. The other half was a combination of some effectiveness of some of the measures that we’ve taken. We did get some little benefit on some jobs credits so as far as the sustainability, the way I’d look at it, I’d kind of look at it from a total operating expense point of view, but if you really did want to hone in on SG&A, I’d say half of that is sustainable on an ongoing basis of the change.

How have your clients been adjusting the marketing budgets during the quarter and where have you seen that impacting your business?

Randy, actually we haven’t seen dramatic changes yet and I can’t tell you whether it’s because we are going to seem to be maintaining the same. I think some of it is driven especially in the bank mergers. It’s kind of business as usual right now, because banks have been focused more on survival than on efficiencies. I expect sometime in the future we’re going to see some up in work as we are being asked to do a lot of project related things to bring multiple databases into single databases on this. The other part is we’re pushing the team to carry new things into existing customers. The white space analysis like I talked about last time and we’re seeing some traction in that. You know, the good things that we were doing for clients and have done for years, it’s carrying a bit of halo effect into the willingness for clients to look at us and say oh you’re doing the direct mail. You mean you can do direct mail. You can do email. You can do SMS. You can do mobile advertising and you can bring it all back into one place that as a chief marketing officer I can evaluate that. So, so far so good. I’m not happy with the revenue coming down $20 million even though there’s some good logical reason for it. Still that doesn’t make my global sales officer, he’s not off the hook. Okay, there’s a lot of things we can do for the clients and we are pushing to do it.

Just one more here. Is there a way to kind of generalize and give an overall estimate for how close you’re running to contractual minimums with some of the larger clients?

I think generally we’re not perceiving any minimal.

To John’s point, we’re not..we do track the client by client. Unfortunately, I just don’t have that data in front of me that I can share with you.

With the clients, is there a way to say that maybe it’s 5% downside from where you are right now 10% downside?

There really isn’t, only because our expectation is that we’ll ship that into other things and new things to existing clients. I think what we’re seeing is, there’s a focus on marketing spend everywhere, but there is actually an adjustment from some of the more traditional spend to more online spend and certainly a focus on being able to measure the results of that marketing. So we’re seeing a more of a shift in spend rather than a drastic decline.

One of the things we’re running into is we see the clients are cutting marketing expense, but they’re cutting the branding type of marketing spends. The direct consumer, where it’s a measurable amount of value that they can gain from it, they’re holding pretty strong.

We'll go next to Todd Van Fleet of First Analysis.

Looking at the products revenue for the quarter, softer than what we would have expected. Wondering if you comment on the quarter performance and what were some of the things that prohibited more growth than what we saw and I guess what we saw is actually a little bit of decay and in the context of that and your outlook for revenue for the rest of the year, how are you incorporating what’s happening on the 4X front, foreign exchange front, in terms of your outlook? Thanks.

On the product side, we weren’t happy. A big part of that related to Europe and our information product business is there and there’s some turmoil going on in some of the countries and laws that actually caused us to be able to sell less of the individual products there and so that represented about half of it. The other half was just the softness in the demand and they were made up of smaller clients that we just didn’t get it done and get the contracts signed. So there’s a renewed focus on this quarter on making sure that because we know who buys and we know when they buy and so there’s a renewed focus to figure out and why they didn’t buy last quarter and emphasize the importance of having current information, because the amount of money they spend, for example, by not having a current address list in a marketing campaign far exceeds the price of the product obviously.

One thing I want to follow up on John’s comment, Todd, is that on the foreign side part of the decrease as we mentioned in the comments is about $2.8 million of that decrease…so that’s year-over-year comparable that was in there last year. So I just want to point that out. Jumping to 4X, year-to-date or I should talk about Q2, we kind of saw a little divergence in the sense that the Euro was actually stronger and the pound was weaker and so basically on the revenue standpoint, they offset each other. Going forward, part of our forecast, it is baked into the numbers that we threw out there in our range. We are considering a weakening of both the Euro and the pound in our forecast there. So we try to estimate that in.

John, back in your comments, regarding the legal issues that play in Europe. Could you extrapolate a little bit or least go into a little bit more detail as to what some of those issues are? Does it affect just a portion of the product business or certain types of list sales? A little more detail on what the issues are there. Is it isolated circumstances in just a few smaller countries or is it broader?

Particularly the focus that we’re seeing is in Germany. Second behind that is the UK. There’s been a very strong push as a result of some particular circumstances in the market where a whole series of…were released, but should not have been released. But really, there’s been a big push by the government to move for an entirely opt-in as opposed to opt-out use of marketing information. Now that hasn’t been passed and a lot of industry lobbying going on, but there’s a great focus on it and it’s making some of the clients a little more wary of doing business at the moment. There’s sort of a little bit of silver lining. Eventually some of our…business that we have in Germany is entirely opt-in as it’s taken from surveys. So we’re in a reasonably strong position from the point of view that the data we’ve got; however, there’s just one certainty in the market. Otherwise, just a general decline in the Netherlands, which is one of our smaller areas.

Can you quantify for us the German, how much revenue you think was forgot or lost rather in Germany related to that issue?

In going along with what John said just now, some of it was lost through exactly what I just described, but in truth, some of it was really, you know, we slightly took our eye off on some of the high volume deals and we got to focus on that to get back.

We’ll go next to Troy Mastin with William Blair.

My first question relates to the credit card industry as a whole and I think it was yesterday or the day before Counselor published a study in which they said credit card applications at least online were down. I believe the number was 6%. Also, there’s been more press about growing concerns that the next debt crisis might be in the credit card industry. I’m curious first what your perspective is on this and second if you’re hearing anything in particular from your clients in terms of their decision to maybe step back from marketing in some form or another and how you think this could play out in the next couple quarters.

Troy, a couple of things. You probably read the New York Times article this morning, there was another thing on credit card. It represents about 17-18% of our business. We are not seeing a decline in their efforts to continue mailing, but I would say because I had the question a couple of times from people who say that the credit bureaus are blaming credit card applications and the decline in that as a reason why their revenue is going down. That specific to the type of product that was being done in good economic times. As you’d expect when there’s good economic times, what our customers were doing was credit scoring an entire universe and marketing people, making offers that were specific to offering an amount of credit line in the initial offer. So the volume that they gained, a credit bureau would have gained in credit scoring an entire universe of people to be marketed to was substantial. What our customers have done is shifted to we’re going to do a mailing and then when people come back and say yes I want a credit card. Then we’re going to credit score them. So the amount of mailing is still happening. The amount of solicitation is still going. It’s not really hurting us in this. So I can’t really tell you, because the customers are still doing kind of business as usual right now. The next logical question is what about the bank mergers? We’re staying close to it, because it is important to us. We expect an uptick in revenue initially in that and that’s why we’re pushing very hard to make sure that we’ve got increased number of touchpoints inside our client base.

And if we see a dramatic spike up that some are projecting in the defaults or bad debts in credit cards. Do you have a sense for how that might play out or too early to tell?

It’s all speculation, but if we had an uptick, then having better knowledge of the consumer is our sweet spot, because that’s what we do. And so, if there’s a spike up and we’ve seen historically spikes up and I think 2001 and we did see some slippage in volume, but it wasn’t like it fell off the map.

A couple of maintenance questions. I thought in the past you said your data path to revenue would be renegotiated in some form to where it wouldn’t show up as revenue. I’m curious if you expect that to change anytime soon and also specific contributions from acquisitions in the quarter. Was there anything in addition to the disposition of the French mapping business that may have positively affected revenue?

Troy, this is Chris. Talking about the data paths through contract. We had mentioned back in June that we were in the process of renegotiating that contract and at the time we did think we were close, but time has kind of warn on and we’re still talking. So I wouldn’t say in the foreseeable future that that’s going to go clearly where we said in the beginning of Q3. I would tell you it’s not eminent that it’s going to go in Q3. The expectation is though that we’ll get renegotiated net as opposed to a gross for revenue recognition and that we’re still in the process of that discussion. As far as acquisitions during the quarter, we did a couple. We completed the Choice Point acquisition in the beginning of the second quarter and at the end of this quarter we did the Albion acquisition. It was very little on Albion. We did that in October. I mean it was barely over $100,000. The run rate for Choice Point, it’s about $16 million annually and so it played out a little less than 25% did come through in the quarter. So pretty much evened out over the four quarters.

In terms of contract renewals, I’m curious how those have been progressing. If the last few weeks or months has had any meaningful impact on your contract renewals or your pipeline for that matter in terms of how you’ve been successful in getting similar terms or similar revenue levels on contract renewals.

No it’s been status quo. I would tell you that customers always want more for less. One thing we’ve done different than I think was done in the past is when we’re being put in the position of they want it less, we actually try to maintain the revenue by giving them new capabilities into areas where we want to grow. So things like digital, we’ll give them that but keep the price the same as opposed to alternatively just giving up the revenue. So early stages on this, but I don’t think we’ll opt to major renewal.

We had them coming in steadily through the quarter and we gave statistics earlier. As John said, there is a real focus to try to get them done and at a minimum hope the revenue comes when we do it. I think we go into those negotiations a little bit better prepared perhaps with a variety of products and solutions and particularly making them relevant to the times we’re in.

We'll take our next question from Dan Leben with Robert W. Baird.

Could you guys talk a little bit about the assumptions you made on adjusting the top guidance to break out any changes you made relative to foreign exchange versus underline change in the tone of the business.

Because of what we saw in this quarter, and I’ll let Chris talk about the FX and the portions in it, is we’re just being a little more cautious and being a $20 million down in a quarter is we think it’s going to take a little more time to get the sales engine generating the revenue that we need to preserve it and with the economic condition, I just think we’re making a prudent call here. On the earnings and stuff and the cash flow, I think we’re managing the business particularly well in this. So even though we had a little downturn in the revenue, we managed to go in a positive direction.

Maybe I could add a little color to the process that we go through. It may help you understand a little better. We go through a pretty detailed forecast with each one of the industry groups and we build the revenue in three or four layers, essentially a wedding cake approach. It’s kind of the base of the contract that we know we have, that we know we’ll run through the period. We add onto that what we have a pretty good predictability of volume we get from the contract and then looking at the potential of new business in the probability of the sale, we add in some proportion of the very high probability sale that we see further down the line. So we’re reasonably conservative in the way we do that approach. We then add a judgment, because there are people that have insight into each of those industries where you may either decide to add a little bit or take a loss. That probability calculation, but it virtually built up line by line, contract by contract, potential sale out of a GSO. So we got a pretty good insight into what it is. The least insight we talked about a little earlier is very small but high volume product sales and we’ve got a real focus on that as a group in the GSO that will be for the next two quarters very heavily focusing on those contracts. So it’s a pretty detailed process and we try to break it down.

The only thing I’ll add on the FX. Dan, it’s relatively small number, somewhere between $5 and $8 million dollars is a pretty reasonable ballpark. So if that gives you any more color.

We talked about financial services. Could you talk about some of the other verticals out there and any trends you saw that may have changed from the previous quarter?

Probably a couple. The retail segment is having some issues. I think that’s well known. So we’re seeing a little pressure on the revenue there. And probably travel and air came in as the other one where we’re seeing some pressure and it’s just what people have disposable where purchase are optional. People are looking at it and saying it’s time to pull in the reigns and therefore companies are not doing as much marketing, because they don’t have as many takers of their marketing offer. I guess on the flip side, we’re seeing great amount of traction in the insurance industry and they’re performing very well and as you know that was one of our segments that we were really trying to explore into and what we found is that our financial industry credit care expertise is directly transferable into that industry and then some of the capability we have around application X, the ability to pre-populate an application based on a phone number and then drop other information in there that would help them. For example, one of our clients got a payback in three months, because it was an insurance customer and when we populated it, we asked would you like to have the family in there? And would you like to have the family’s age in there and so basically popped up a 16-year-old who was not listed on the policy. So the agents were training to say oh I noticed so-and-so just turned 16. Did she get her driver’s license? And would you like to include her on the policy? And that small little piece of information paid back a multi-million dollar investment in a period of months. So the gentleman that runs that business is doing very well. He knows the industry very well and he knows Acxiom very well and so we’re seeing great traction in the insurance bucket space.

One last one. Obviously, you guys did a pretty good job closing new clients in the quarter, but did you see anything as the quarter progressed in terms of the ability to sign new deals and people getting a little bit more hesitant to make decisions and get through the signature process?

Not a trend that we could see.

I don’t think it’s an obvious trend. I think we’re getting a better view of the timing of those deals and we’ll see, just because we’ve got a more accurate process now, if there is any slippage going forward. There’s not a significant trend in what we’re seeing at the moment though.

And we’ll take our final question from Kyle Evans with Stephens.

Could you comment over the flat year in the digital segment, which has kind of been an area of focus for investors and a growth engine for the company and why you think you’re seeing that and maybe what it portends for the rest of the business.

I don’t think this is a trend. It’s a one quarter and we had a customer that went away and it was a big customer and so that revenue was made up at the same time by selling new business and doing more email volume. So I don’t think there’s any trend in that. I wouldn’t even try to read a trend in that. We’re still investing heavily in digital and we’re branching into some new things. You know, the things that I talked about around mobile advertising for the casino, for example, or the television advertising and the interactive nature of that is something that we’re right on the forefront. And so, Tim is doing a great job of expanding into other things. So I don’t see that a trend.

Okay, so that business grew, Acxiom lost the one customer.

Yes.

Is that the same customer that I think Chris was referring to in his discussion of the financial services vertical. It is not? Okay. Maybe we could address that. I think you said that two-thirds of the financial services declined and we were talking about a 7% year-over-year decline was a single client and that leaves about 2.5% left of the decline. Can you talk a little there. Is that pricing? Is that volume? Is that stuff that just expired and didn’t get renewed?

You can’t attribute it to one customer or another. If it is 2%, you know, you’re talking whether there’s, you know, we don’t see any less marketing campaigns occurring. We don’t see any less mailing occurring and I can’t really attribute that 2.5 out of the 7% to one thing or the other. It’s just made up of a whole bunch of little things.

Right, and Chris too about one particular contract which we certainly knew wasn’t happening and the impact it would have. There were a couple or three others in that similar category that effectively were planned going into the year, because we knew about that business going away. Other than that, it really was an awful lot of very small things.

John, you talked about the potential for new business on the front end in consolidation in terms of CDI and putting databases together. How does that kind of tail out after the initial spike in business?

Right now it’s business as usual with these clients, but in bank mergers, one of the reasons they’re doing it is to try to get efficiencies out of the organization while maintaining the customer base. As you turn multiple databases into one, there’s a lot of work to make sure that that can be brought together in that. After the fact then you’re probably not going to end up sending out the same amount…and so we don’t see any of it right now. We don’t have anybody that’s told us yes come do this right now, but we’re staying close, because we anticipate it and we’re proactively talking going to these clients saying here’s how we can help you. Here’s what we can do and feel pretty positive about it, because we have a long standing relationship with these clients and we’re doing good things for.

We are alluding the way we’re talking as though all of these banks are similar banks that are merging. For example, Merrill, which has a very different profile of customers and business. Obviously part of the objective of being acquired was the other spread of products and services across the board of banking base of the acquiring bank and that’s a skill that we have that perfectly fits being able to align that customer information. So I don’t think we should look at this as being entirely negative, but very good examples where we can see other business that has potential that we previously didn’t have.

That does conclude our question-and-answer session. I'd now like to turn the call back over to Mr. John Meyer for any additional or closing remarks.

Great. Thank you, Kevin. In closing, I want to recap the key areas of progress. As I mentioned, we continue to perform well in cash flow and managing our capital expenditures. We’re also continuing to benefit from operating efficiencies and we’re making progress to getting our growth engines focused on new logos and global opportunities. In the next few weeks, we’ll be executing multiple channel campaign of our own to help prospective clients and the media understand the diverse value propositions that we bring in today’s market as a global leader in integrated marketing services. So stay tuned and we appreciate your continued support and interest in Acxiom. Kevin, that’s all we have.

And that does conclude today's conference. We do appreciate everyone’s participation. You may disconnect at this time.