5. ACQUISITIONS

On July 1, 2014, the Company acquired all of the outstanding shares of LiveRamp, Inc. (“LiveRamp”), a leading service provider for onboarding customer data into digital marketing applications. As a result of this transaction, LiveRamp is now a wholly-owned subsidiary of the Company. The Company acquired LiveRamp to, among other things, provide clients with solutions for bringing offline customer data online with better matching, more connectivity, and faster onboarding. The Company has included the financial results of LiveRamp in the condensed consolidated financial statements from the date of acquisition. LiveRamp is included in the Marketing and data services segment. The acquisition date fair value of the consideration transferred for LiveRamp was approximately $272.7 million which consisted of the following (dollars in thousands):

	July 1, 2014
Cash, net of $12.0 million cash acquired	$	234,672
Restricted cash held in escrow	31,000
Fair value of stock options issued included in purchase price	6,978
Total fair value of consideration transferred	$	272,650

The fair value of the stock options issued by the Company was determined using a binomial lattice approach (see note 3). The total fair value of the stock options issued was $30.5 million of which $7.0 million was allocated to the purchase consideration and $23.5 million was allocated to future services and will be expensed over the remaining service periods on a straight-line basis.

On the acquisition date, the Company delivered $31.0 million of cash to an escrow agent according to the terms of the purchase agreement. The cash is restricted as to withdrawal or use by the Company and is expected to be delivered to the LiveRamp sellers one year from the acquisition date. The escrowed cash can be used to reimburse the Company for any indemnification claims against the sellers, as described in the purchase agreement. The principal escrow amount is owned by the Company until funds are delivered to the LiveRamp sellers. All interest and earnings on the principal escrow amount remain property of the Company. The restricted cash is reported as restricted cash held in escrow, with an offsetting liability reported as acquisition escrow payable, on the condensed consolidated balance sheet.

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of the acquisition (dollars in thousands):

	July 1, 2014
Assets acquired:
Cash	$	12,016
Trade accounts receivable	5,206
Deferred income tax assets	10,444
Goodwill	215,967
Developed technology (Software)	40,000
Other intangible assets (Other assets, net)	26,500
Other current and noncurrent assets	1,307
	311,440
Deferred income tax liabilities	(21,820		)
Accounts payable, accrued expenses and deferred revenue	(4,954		)
Net assets acquired	284,666
Less:
Cash acquired	12,016
Net purchase price allocated	$	272,650
Less:
Fair value of stock options issued included in purchase price	6,978
Net cash paid	$	265,672

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributed to expectations to continue to develop future technology and products related to the onboarding of customer data into digital marketing applications, development of future customer relationships, and LiveRamp’s assembled workforce. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on preliminary calculations and valuations and on management’s estimates and assumptions and were based on the information that was available as of the date of the acquisition. The Company believes that the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but certain items such as current and noncurrent income taxes payable and deferred taxes may be subject to change as additional information is received and certain tax returns are finalized. Therefore, the provisional measurements of fair value shown above are subject to change. Any adjustments required will result in adjustment to goodwill. The Company expects to finalize the valuation as soon as practicable, but not later than the end of the current fiscal year. The goodwill balance is not deductible for U.S. income tax purposes.

The fair value of trade accounts receivable was comprised of $5.2 million of gross accounts receivable, of which an immaterial amount is expected to be uncollectible. The amounts allocated to other intangible assets in the table above included developed technology, customer relationships, and a trade name. Intangible assets will be amortized on a straight-line basis over the estimated useful lives of 2 to 6 years. The following table presents the components of intangible assets acquired and their estimated useful lives as of the acquisition date (dollars in thousands):

	Fair value		Useful life (in years)
Developed technology	$	40,000	4
Customer relationship	25,000		6
Trade name	1,500		2
Total intangible assets subject to amortization	$	66,500

The amounts of revenue and loss of LiveRamp included in the Company’s condensed consolidated statement of operations from the acquisition date of July 1, 2014 to December 31, 2014 are as follows (dollars in thousands):

Revenues		$	15,916
Net loss		$	(10,022	)

The $10.0 million net loss reported above includes pretax expenses of $7.5 million of intangible asset amortization associated with acquired LiveRamp intangible assets and $9.9 million of non-cash share-based compensation expense.

Following are the Company’s supplemental consolidated results on an unaudited pro forma basis, as if the LiveRamp acquisition had taken place at the beginning of each of the fiscal years presented (dollars in thousands):

	For the quarter ended December 31				For the nine months ended December 31
	2014		2013		2014			2013
Revenues	$	260,440	$	274,276	$	769,400		$	807,156
Net earnings (loss) attributable to Acxiom	$	4,156	$	10,263	$	(10,363	)	$	23,102
Diluted earnings per share	$	0.05	$	0.13	$	(0.13	)	$	0.30

These pro forma results are based on estimates and assumptions, which we believe are reasonable. They are not the results that would have been realized had we been a combined company during the periods presented and are not necessarily indicative of our consolidated results of operations in future periods. The pro forma results include adjustments primarily related to purchase accounting adjustments, including amortization expense of $3.7 million per quarter related to acquired intangible assets, stock-based compensation expense of approximately $4.8 million per quarter related to unvested stock options and restricted stock units issued to former LiveRamp employees, and the related income tax effects as though the acquisition occurred as of the beginning of the Company’s fiscal years 2014 and 2015.

During the nine months ended December 31, 2014, the Company incurred $0.8 million of acquisition costs related to the purchase of LiveRamp. The costs are included in gains, losses, and other items, net on the condensed consolidated statement of operations.