ACQUISITIONS:

12 Months Ended

Mar. 31, 2011

ACQUISITIONS:

ACQUISITIONS:

3.             ACQUISITIONS:

On July 1, 2010, the Company completed the acquisition of a 70% interest in GoDigital Tecnologia E Participacoes, Ltda. (“GoDigital”), a Brazilian marketing services business.  The Company paid $10.9 million, net of cash acquired, and not including amounts, if any, to be paid under an earnout agreement in which the Company may pay up to an additional $9.3 million based on the results of the acquired business over approximately the next two years.  The acquired business has annual revenue of approximately $8 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of the acquisition is not material.  The results of operations for GoDigital are included in the Company’s consolidated results beginning July 1, 2010.

The value of the earnout was originally estimated at $3.6 million.  During the current fiscal period, the Company has estimated the value of the earnout to have decreased by $1.1 million and has recorded the adjustment in gains, losses and other items, net on the consolidated statement of operations.  The value of the earnout liability will continue to be adjusted to its estimated value until the completion of the earnout period.

On April 1, 2010, the Company acquired 100% of the outstanding shares of a digital marketing business (“XYZ”) operating in Australia and New Zealand.  The acquisition gives the Company additional market opportunities in this region.  The Company paid $1.8 million in cash, net of cash acquired, and not including amounts, if any, to be paid under an earnout agreement in which the Company may pay up to an additional $0.6 million if the acquired business achieves a revenue target over the next two years.  The value of the earnout is estimated at $0.5 million.  The acquired business has annual revenue of less than $2 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material.  The results of operation for the acquisition are included in the Company’s consolidated results beginning April 1, 2010.

In December 2009, the Company acquired a 51% interest in Direct Marketing Services (“DMS”), with operations in Saudi Arabia and the United Arab Emirates.  Subsequently, Acxiom’s ownership has increased to 57%.  Upon acquisition DMS was reorganized as a limited liability company registered under the laws and regulations of the Kingdom of Saudi Arabia and renamed Acxiom Middle East and North Africa, LTD (“MENA”).  The purchase price for DMS was $3.8 million in cash, not including the amount, if any, to be paid pursuant to an earnout agreement where additional payment is contingent on MENA’s financial performance for the period ending on December 31, 2012.  Financial performance under the earnout will be measured based on MENA’s calculation of earnings before interest, taxes, depreciation and amortization (“EBITDA”).  The actual EBITDA will be divided by $18.3 million and that percentage multiplied by $6.1 million to determine the earnout payment.  There will be no earnout payment if the actual EBITDA does not exceed $12.8 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material to the Company’s consolidated results for any period presented.  DMS has annual revenue of less than $5 million.  The results of operations for MENA are included in the Company’s consolidated results beginning December 1, 2009.

During the year ended March 31, 2011, triggering events occurred which required the Company to test the goodwill and other intangible assets of MENA for impairment (see note 6).  Management concluded that all of the goodwill and other intangibles were impaired.  A total impairment charge of $7.2 million was recorded in impairment of goodwill and other intangibles on the consolidated statement of operations, of which $4.8 million was related to goodwill and $2.4 million related to other intangible assets.  Approximately 43% of this charge is attributable to the noncontrolling interest.

On November 7, 2008, the Company acquired the assets of Quinetia, LLC, a Rochester, New York-based provider of analytics and predictive modeling for large and medium size businesses.  The acquisition provides the Company additional consumer insight capabilities that enable clients to more effectively retain and grow their customer base and optimize pricing.  The Company paid $2.7 million, net of cash acquired, for the acquisition not including amounts paid pursuant to an earnout agreement.  The earnout agreement allows for payment of up to $1.2 million if the acquired business achieves certain earnings before interest, tax, depreciation and amortization goals.  Payments under the earnout agreement are determined based on results in the target measurement periods ending March 31, 2009, 2010 and 2011.  The first earnout payment of $0.2 million in fiscal 2009 and the second earnout payment of $0.2 million in fiscal 2010 have been added to the purchase price.  The final earnout payment of $0.3 million was added to the purchase price in fiscal 2011.  The acquired business has annual revenues of less than $5.0 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material to the Company’s consolidated results for any period presented. Quinetia’s results of operations are included in the Company’s consolidated results beginning November 7, 2008.

On September 15, 2008, the Company acquired the direct marketing technology unit of Alvion, LLC.  The acquisition allowed the Company to obtain a proven online marketing list fulfillment platform that can be used by small and medium-size businesses that need immediate access to marketing information through a software-as-service environment.  The Company paid $3.6 million in cash, net of cash acquired, for the acquisition.  The acquired business has annual revenues of less than $5.0 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material to the Company’s consolidated results for any period presented. Alvion’s results of operations are included in the Company’s consolidated results beginning September 15, 2008.

In July 2008, the Company acquired the database marketing unit of ChoicePoint Precision Marketing, LLC (“Precision Marketing”).  The Company paid $9.0 million, of which $4.5 million was paid into two escrow accounts which were subject to escrow arrangements which were finally resolved during fiscal 2010.  A total of $0.5 million of one of the escrow funds was released to reimburse the Company for costs incurred.  Of the remaining $4.0 million escrow fund, $3.6 million was paid to the sellers and approximately $0.4 million was returned to the Company.  The $4.0 million placed into escrow was originally treated as purchase price, therefore the $0.4 million returned to the Company was recorded as a reduction of purchase price and the $3.6 million was charged to goodwill.  The acquired business had annual revenue of approximately $16.0 million.  The Company has omitted pro forma disclosures related to this acquisition as the pro forma effect of this acquisition is not material to the Company’s consolidated results for any period presented.  Precision Marketing’s results of operations are included in the Company’s consolidated results beginning July 1, 2008.

The following table shows the allocation of GoDigital, XYZ, MENA, Quinetia, Alvion, and Precision Marketing purchase prices to assets acquired and liabilities assumed (dollars in thousands):

	GoDigital		XYZ		MENA		Quinetia		Alvion		Precision Marketing
Assets acquired:
Cash	$	776	$	547	$	40	$	138	$	368	$	—
Goodwill	15,546		1,446		4,824		2,024		873		5,715
Other intangible assets	6,500		779		3,250		900		1,860		2,300
Other current and noncurrent assets	1,178		184		2,139		606		1,049		2,806
	24,000		2,956		10,253		3,668		4,150		10,821
Accounts payable, accrued expenses and capital leases assumed	2,091		120		2,027		191		150		2,178
Net assets acquired	21,909		2,836		8,226		3,477		4,000		8,643
Less:
Cash acquired	776		547		40		138		368		—
Earnout liability	3,611		532		371		—		—		—
Noncontrolling interest	6,573		—		4,030		—		—		—
Net cash paid	$	10,949	$	1,757	$	3,785	$	3,339	$	3,632	$	8,643

The fair values of the noncontrolling interests in GoDigital and MENA in the table above were derived based on the purchase price paid by Acxiom for its interest.  The amount allocated to goodwill is due primarily to assembled work force.  The amounts allocated to other intangible assets in the table above include software, customer relationship intangibles and trademarks.  Amortization lives for those intangibles range from two years to seven years.  The following table shows the amortization activity of these intangible assets (dollars in thousands):

	2011			2010			2009
Database assets, gross	$	—		$	10,040		$	10,040
Accumulated amortization	—			(10,040		)	(10,040		)
Net database assets	$	—		$	—		$	—
Developed technology assets, gross	$	21,165		$	20,990		$	19,590
Accumulated amortization	(15,679		)	(16,615		)	(12,650		)
Net developed technology assets	$	5,486		$	4,375		$	6,940
Customer/trademark assets, gross	$	25,042		$	30,015		$	28,165
Accumulated amortization	(18,146		)	(20,294		)	(16,586		)
Net customer/trademark assets	$	6,896		$	9,721		$	11,579
Total intangible assets, gross	$	46,207		$	61,045		$	57,795
Total accumulated amortization	(33,825		)	(46,949		)	(39,276		)
Net intangible assets	$	12,382		$	14,096		$	18,519
Amortization expense	$	6,950		$	7,673		$	7,929

The following table shows a projection of amortization expense associated with the above assets for the next five years (dollars in thousands):

Year ending March 31,	Projected amortization expense
2012	5,880
2013	2,972
2014	1,803
2015	1,202
2016	463
Thereafter	62

The amounts allocated to intangible assets and goodwill for the Quinetia, Alvion, and Precision Marketing acquisitions are expected to be deductible for income tax purposes.  The amounts allocated to intangible assets for GoDigital, XYZ and MENA are not expected to be deductible.