CDex can extract the data directly (digital) from an Audio CD, which is generally called a CD Ripper or a CDDA utility. The resulting audio file can be a plain WAV file (useful for making compilation audio CDs) or the ripped audio data can be compressed using an audio encoder. Many encoders are supported, to name a few:

Lame MP3 encoder
Internal MP2 encoder
APE lossles audio format
Ogg Vorbis encoder
The Windows MP3 encoder (Fraunhofer MP3 encoder)
NTT VQF encoder
FAAC encoder
Windows WMA8 encoder
In addition, WAV files on the hard drive can be converted to a Compressed Audio File (and visa versa). CDex also supports many audio file tag formats like the ID3V1 and ID3V2 tags, which can be automatically inserted as part of the ripping process.

Feature List

Direct recording of multiple tracks
Read / store album information from/to the cdplayer.ini file
Read / store album information from/to a local and/or remote CD Database (CDDB)
Support CD-Text (if your CD-drive supports it)
Advanced jitter correction (based on the cd-paranoia ripping library)
Indicates track progress and jitter control
Normalization of audio signal
Supports many CD-Drive from many manufacters
Conversion of external WAV files
Support for M3U and PLS play list files
Best of all, it`s free (GPL license, source code available)
Serveral languages are supported