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SAN FRANCISCO, CA -- (Marketwired) -- 07/29/13 -- Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services to the global investment management industry, announced today its financial results for the second quarter ended June 30, 2013.
"I am pleased to report Advent delivered a strong second quarter with record revenue and non-GAAP profitability, and strong renewals," said Pete Hess, Chief Executive Officer at Advent. "We continue to win new business, while also investing in our solutions, and we're doing it all while ensuring that we deliver the operational efficiency gains we're committed to achieving. It is exciting to see these results as we continue to execute on our strategy and deliver results and value to our shareholders and clients."
SECOND QUARTER 2013 RESULTS
Recapitalization Transaction
As previously announced, the Company entered into a new $425 million senior credit facility and declared a one-time special cash dividend of $9 per share. In connection with the dividend, the Company modified its outstanding equity awards to preserve the pre-dividend economic value. The special dividend was approved by Advent's Board of Directors on June 12, 2013 and paid to stockholders on July 9, 2013. Of the $9 per share distribution, totaling $470 million, Advent currently expects between $2 to $3 per share to be characterized as a dividend for tax purposes, and the remaining amount of the distribution to be characterized as a return of capital.
GAAP Results for Continuing Operations
The Company reported quarterly revenue of $96.1 million for the second quarter of 2013, compared to $89.7 million in the second quarter of 2012, a 7% increase.
Advent's results for the second quarter of 2013 included costs associated with the recapitalization transaction. These costs, on a pre-tax basis, were composed of $6.7 million of third party costs which were not included in capitalized debt issue costs and $21.9 million of stock-based compensation expense associated with the equity award modification.
Operating loss for the second quarter of 2013 was $(5.8) million, or (6.1)% of revenue, compared to operating income of $12.1 million or 13.4% of revenue for the second quarter of 2012.
Net loss for the second quarter of 2013 was $(4.2) million compared to net income of $7.2 million in the second quarter of 2012.
Diluted net loss per share in the second quarter of 2013 was $(0.08), compared to diluted net income per share of $0.14 in the second quarter of 2012.
Operating cash flow in the second quarter of 2013 was $21.9 million, compared with $14.9 million in the second quarter of 2012.
Cash, cash equivalents and marketable securities totaled $404 million as of June 30, 2013, compared to $247 million as of March 31, 2013, a 64% increase. Total outstanding debt as of June 30, 2013 was $225 million compared to $93 million as of March 31, 2013. After payment of the special dividend on July 9th, 2013, total outstanding debt was $350 million. Total deferred revenue as of June 30, 2013 was $174 million, compared to $177 million as of March 31, 2013.
Non-GAAP Results for Continuing Operations
Non-GAAP operating income for the second quarter of 2013 was $31.0 million, or 32.3% of revenue. This represents a 55% increase compared to $20.0 million from continuing operations, or 22.3% of revenue, in the second quarter of 2012. On a fully diluted basis, non-GAAP earnings per share were $0.37 in the second quarter of 2013 and represent a 56% increase from non-GAAP diluted earnings per share of $0.24 in the second quarter of 2012.
The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release.
SECOND QUARTER HIGHLIGHTS
FINANCIAL GUIDANCE
Advent updates the following financial guidance for the third quarter and fiscal year 2013:
----------------------------------------------------------------------------
Guidance Q3 2013 FY 2013
----------------------------------------------------------------------------
Total Revenue ($M) $93-$95 $375-$379
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YoY Revenue Growth 3% - 5% 5% - 6%
----------------------------------------------------------------------------
GAAP Operating Margin n/a 10.0% - 10.5%
----------------------------------------------------------------------------
Amortization of Intangibles (% of revenue) n/a 3.0%
----------------------------------------------------------------------------
Stock Compensation Expense (% of revenue) n/a 13.0%
----------------------------------------------------------------------------
Restructuring Charges (% of revenue) n/a 1.0%
----------------------------------------------------------------------------
Recapitalization Costs (% of revenue) n/a 1.5%
----------------------------------------------------------------------------
Non-GAAP Operating Margin n/a 28.5% - 29.0%
----------------------------------------------------------------------------
Operating Cash Flow ($M) n/a $93-$97
----------------------------------------------------------------------------
Capital Expenditures ($M) n/a $10-$12
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Effective Tax Rate (GAAP) n/a 30% - 35%
----------------------------------------------------------------------------
Effective Tax Rate (non-GAAP) n/a 35%
----------------------------------------------------------------------------
INVESTOR CALL
Advent Software, Inc. will host its Q2 2013 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q2 2013 earnings presentation and trended disclosures file, which include highlights and detailed financial information, are currently available at http://investor.advent.com. To participate via phone, please dial (800) 706-7745 and request conference ID #45297160. Telephone replay will be available through midnight August 5, 2013. The replay number for domestic callers is (888) 286-8010, and for international callers is (617) 801-6888, with the conference ID of #97701426.
The conference call will also be webcast live and then archived on http://investor.advent.com.
ABOUT ADVENT
Advent Software, Inc. (www.advent.com), a global firm, has provided trusted solutions to the world's leading financial professionals since 1983. Firms in more than 60 countries use Advent technology. Advent's quality software, data, services and tools enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs. Advent is the only financial services software company to be awarded the Service Capability and Performance certification for being a world-class support organization. For more information on Advent products visit http://www.advent.com/about/resources/demos/pr.
ABOUT NON-GAAP FINANCIAL INFORMATION
This press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles in the United States of America (U.S. GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures."
FORWARD-LOOKING STATEMENTS
The financial projections under Financial Guidance, and statements regarding our momentum and market opportunities, the tax characterization of our special dividend, and any other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our products; the successful development, release and market acceptance of new products and product enhancements; uncertainties and fluctuations in the financial markets; the Company's ability to satisfy contractual performance requirements; difficulties in achieving organizational objectives and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2012 annual report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Advent, the Advent logo, Advent Software, Advent Rules Manager, Advent Portfolio Exchange, Tamale, and Tamale RMS, are registered trademarks of Advent Software, Inc. Tradex is a registered mark of Advent Norway AS in Norway and the European Union. All other company names or marks mentioned herein are those of their respective owners.
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(GAAP, Unaudited)
June 30 December 31
2013 2012
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 388,743 $ 58,217
Short-term marketable securities 6,013 111,192
Accounts receivable, net 55,375 61,069
Deferred taxes, current 18,931 18,934
Prepaid expenses and other 34,152 25,868
Current assets of discontinued operation - 88
------------- -------------
Total current assets 503,214 275,368
Property and equipment, net 32,917 37,269
Goodwill 204,417 206,932
Other intangibles, net 32,858 38,205
Long-term marketable securities 9,230 61,552
Deferred taxes, long-term 23,509 24,524
Other assets 16,816 12,994
Noncurrent assets of discontinued operation 1,609 1,609
------------- -------------
Total assets $ 824,570 $ 658,453
============= =============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 8,773 $ 5,190
Accrued liabilities 40,159 37,096
Deferred revenues 166,284 174,388
Income taxes payable - 5,593
Current portion of long-term debt 20,000 10,000
Dividends payable 470,133 -
Current liabilities of discontinued
operation 610 262
------------- -------------
Total current liabilities 705,959 232,529
Deferred revenues, long-term 8,107 8,787
Long-term income taxes payable 5,335 5,335
Long-term debt 205,000 85,000
Other long-term liabilities 11,910 13,139
Noncurrent liabilities of discontinued
operation 3,072 3,804
------------- -------------
Total liabilities 939,383 348,594
------------- -------------
Stockholders' (deficit) equity:
Common stock 522 505
Additional paid-in capital 24,582 453,585
Accumulated deficit (146,271) (154,261)
Accumulated other comprehensive income 6,354 10,030
------------- -------------
Total stockholders' (deficit) equity (114,813) 309,859
------------- -------------
Total liabilities and stockholders'
(deficit) equity $ 824,570 $ 658,453
============= =============
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
Three Months Ended June
30 Six Months Ended June 30
------------------------ ------------------------
2013 2012 2013 2012
----------- ----------- ----------- -----------
Net revenues:
Recurring revenues $ 88,263 $ 80,942 $ 172,746 $ 159,662
Non-recurring revenues 7,860 8,782 15,867 16,966
----------- ----------- ----------- -----------
Total net revenues 96,123 89,724 188,613 176,628
Cost of revenues (1):
Recurring revenues 17,979 17,820 34,391 34,746
Non-recurring revenues 10,019 10,936 19,587 20,604
Amortization of
developed technology 2,398 2,573 4,897 5,114
----------- ----------- ----------- -----------
Total cost of revenues 30,396 31,329 58,875 60,464
----------- ----------- ----------- -----------
Gross margin 65,727 58,395 129,738 116,164
Operating expenses (1):
Sales and marketing 23,217 19,711 40,421 38,157
Product development 17,923 16,501 34,885 33,300
General and
administrative 22,641 9,198 33,001 18,867
Amortization of other
intangibles 953 956 1,910 1,912
Recapitalization costs 6,041 - 6,041 -
Restructuring charges 801 (34) 3,116 70
----------- ----------- ----------- -----------
Total operating
expenses 71,576 46,332 119,374 92,306
----------- ----------- ----------- -----------
(Loss) income from
continuing operations (5,849) 12,063 10,364 23,858
Interest and other
income (expense), net (1,330) (803) (1,633) (975)
----------- ----------- ----------- -----------
(Loss) income from
continuing operations
before income taxes (7,179) 11,260 8,731 22,883
(Benefit) provision for
income taxes (3,024) 4,063 829 8,369
----------- ----------- ----------- -----------
Net (loss) income from
continuing operations $ (4,155) $ 7,197 $ 7,902 $ 14,514
Discontinued operation:
Net income from
discontinued
operation (net of
applicable taxes of
$76, $162, $61 and
$147, respectively) 110 245 88 222
----------- ----------- ----------- -----------
Net (loss) income $ (4,045) $ 7,442 $ 7,990 $ 14,736
=========== =========== =========== ===========
Basic net (loss) income
per share (2):
Continuing operations $ (0.08) $ 0.14 $ 0.15 $ 0.29
Discontinued operation 0.00 0.00 0.00 0.00
----------- ----------- ----------- -----------
Total operations $ (0.08) $ 0.15 $ 0.16 $ 0.29
=========== =========== =========== ===========
Diluted net (loss)
income per share (2):
Continuing operations $ (0.08) $ 0.14 $ 0.15 $ 0.27
Discontinued operation 0.00 0.00 0.00 0.00
----------- ----------- ----------- -----------
Total operations $ (0.08) $ 0.14 $ 0.15 $ 0.28
=========== =========== =========== ===========
Weighted average shares
used to compute net
(loss) income per
share:
Basic 51,639 50,754 51,101 50,887
Diluted 51,639 52,977 52,243 53,117
(1) Includes stock-based
employee compensation
expense as follows:
Cost of recurring
revenues $ 1,306 $ 610 $ 1,794 $ 1,195
Cost of non-recurring
revenues 1,730 264 2,112 595
----------- ----------- ----------- -----------
Total cost of
revenues 3,036 874 3,906 1,790
Sales and marketing 6,523 1,729 8,046 3,386
Product development 3,532 1,438 4,858 2,898
General and
administrative 14,098 1,043 15,396 1,899
----------- ----------- ----------- -----------
Total operating
expenses 24,153 4,210 28,300 8,183
----------- ----------- ----------- -----------
Total stock-based
employee compensation
expense $ 27,189 $ 5,084 $ 32,206 $ 9,973
=========== =========== =========== ===========
(2) Net income per share is based on actual calculated values and totals
may not sum due to rounding.
ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30
------------------------
2013 2012
----------- -----------
Cash flows from operating activities:
Net income $ 7,990 $ 14,736
Adjustment to net income for discontinued
operation net income (88) (222)
----------- -----------
Net income from continuing operations 7,902 14,514
Adjustments to reconcile net income to net cash
provided by operating activities from
continuing operations:
Stock-based compensation 32,206 9,973
Excess tax benefit from stock-based
compensation (2,783) (3,118)
Depreciation and amortization 12,673 12,851
Amortization of debt issuance costs 239 190
Gain on disposal of fixed assets - (16)
Provision for doubtful accounts 411 200
Provision for (reduction of) sales reserves (150) 735
Deferred income taxes 1,791 2,588
Other (148) (144)
----------- -----------
Effect of statement of operations
adjustments 44,239 23,259
Changes in operating assets and liabilities:
Accounts receivable 5,282 5,109
Prepaid and other assets (4,643) 277
Accounts payable 3,582 532
Accrued liabilities (3,472) (7,020)
Deferred revenues (8,634) (12,000)
Income taxes payable (5,190) 3,847
----------- -----------
Effect of changes in operating assets and
liabilities (13,075) (9,255)
----------- -----------
Net cash provided by operating activities from
continuing operations 39,066 28,518
Cash flows from investing activities:
Cash used in acquisition - (700)
Purchases of property and equipment (1,611) (3,720)
Capitalized software development costs (1,916) (1,700)
Purchases of marketable securities (57,863) (72,270)
Sales and maturities of marketable securities 213,444 60,344
----------- -----------
Net cash provided by (used in) investing
activities from continuing operations 152,054 (18,046)
Cash flows from financing activities:
Proceeds from common stock issued from exercises
of stock options 16,212 3,269
Proceeds from common stock issued under the
employee stock purchase plan 3,211 3,448
Excess tax benefits from stock-based
compensation 2,783 3,118
Withholding taxes related to equity award net
share settlement (6,509) (4,610)
Proceeds from debt 225,000 -
Repayment of debt (95,000) (2,500)
Debt issuance costs (5,725) -
Repurchase of common stock - (26,125)
----------- -----------
Net cash provided by (used in) financing
activities from continuing operations 139,972 (23,400)
Net cash transferred to discontinued operation (208) (337)
Effect of exchange rate changes on cash and cash
equivalents (358) (10)
----------- -----------
Net change in cash and cash equivalents from
continuing operations 330,526 (13,275)
Cash and cash equivalents of continuing operations
at beginning of period 58,217 65,525
----------- -----------
Cash and cash equivalents of continuing operations
at end of period $ 388,743 $ 52,250
=========== ===========
Six Months Ended June 30
------------------------
2013 2012
----------- -----------
Supplemental disclosure of cash flow information
Cash flows from discontinued operation:
Net cash used in operating activities $ (208) $ (337)
Net cash provided by investing activities - -
Net cash transferred from continuing operations 208 337
----------- -----------
Net change in cash and cash equivalents from
discontinued operation - -
Cash and cash equivalents of discontinued
operation at beginning of period - -
----------- -----------
Cash and cash equivalents of discontinued
operation at end of period $ - $ -
=========== ===========
The cash flows from the discontinued operation, as presented in the
condensed consolidated statement of cash flows, relate to the
operations of MicroEdge, Inc.
ADVENT SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands)
(GAAP, Unaudited)
Accumulated Total
Addition- Other Stock-
Common Stock al Accumu- Compre- holder's
------------- Paid-In lated hensive Equity
Shares Amount Capital Deficit Income (Deficit)
------ ------ --------- --------- ----------- -----------
Balances,
December 31,
2011 50,997 $ 510 $ 429,734 $(154,053)$ 6,870 $ 283,061
Stock-based award
activity 556 5 (1,333) - - (1,328)
Common stock
repurchased and
retired (1,012) (10) (6,515) (19,599) - (26,124)
Common stock
issued under
employee stock
purchase plan 155 2 3,446 - - 3,448
Stock-based
compensation - - 10,148 - - 10,148
Tax benefit from
exercise of
stock options - - 3,118 - - 3,118
Net income - - - 14,736 - 14,736
Unrealized loss
on marketable
securities - - - - (16) (16)
Foreign currency
translation
adjustments - - - - (537) (537)
------ ------ --------- --------- ----------- -----------
Balances, June
30, 2012 50,696 $ 507 $ 438,598 $(158,916)$ 6,317 $ 286,506
====== ====== ========= ========= =========== ===========
Balances,
December 31,
2012 50,457 $ 505 $ 453,585 $(154,261)$ 10,030 $ 309,859
Stock-based award
activity 1,606 15 9,691 - - 9,706
Common stock
issued under
employee stock
purchase plan 174 2 3,209 - - 3,211
Stock-based
compensation - - 26,621 - - 26,621
Tax shortfall
from exercise of
stock options - - (1,174) - - (1,174)
Tax benefit from
exercise of
stock options - - 2,783 - - 2,783
Cash dividends
declared on
common stock - - (470,133) - - (470,133)
Net income - - - 7,990 - 7,990
Unrealized loss
on marketable
securities - - - - (26) (26)
Foreign currency
translation
adjustments - - - - (3,650) (3,650)
------ ------ --------- --------- ----------- -----------
Balances, June
30, 2013 52,237 $ 522 $ 24,582 $(146,271)$ 6,354 $ (114,813)
====== ====== ========= ========= =========== ===========
ADVENT SOFTWARE, INC.
RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP
MEASURES
(In thousands, except per share data)
(Unaudited)
To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States of America (or GAAP), Advent uses non-GAAP measures of continuing operations' gross margin, operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses, income, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
Three Months Ended June 30
-----------------------------------------
2013 2012
------------------- -------------------
% of Net % of Net
Amount Revenues Amount Revenues
--------- -------- --------- --------
GAAP gross margin $ 65,727 68.4% $ 58,395 65.1%
Amortization of acquired
intangibles 1,883 1,901
Stock-based compensation 3,036 874
--------- ---------
Non-GAAP gross margin $ 70,646 73.5% $ 61,170 68.2%
========= =========
GAAP operating (loss) income $ (5,849) (6.1)% $ 12,063 13.4%
Amortization of acquired
intangibles 2,836 2,857
Stock-based compensation 27,189 5,084
Restructuring charges (benefit) 801 (34)
Recapitalization costs 6,041 -
--------- ---------
Non-GAAP operating income $ 31,018 32.3% $ 19,970 22.3%
========= =========
GAAP net (loss) income $ (4,155) $ 7,197
Amortization of acquired
intangibles 2,836 2,857
Stock-based compensation 27,189 5,084
Restructuring charges (benefit) 801 (34)
Recapitalization costs 6,692 -
Income tax adjustment (1) (13,642) (2,645)
--------- ---------
Non-GAAP net income $ 19,721 $ 12,459
========= =========
GAAP net (loss) income $ (4,155) $ 7,197
Net interest 1,351 457
(Benefit) provision for income
taxes (3,024) 4,063
Depreciation expense 2,920 2,943
Amortization expense 3,352 3,529
Stock-based compensation 27,189 5,084
--------- ---------
Adjusted EBITDA $ 27,633 $ 23,273
========= =========
Diluted net income (loss) per
share
GAAP $ (0.08) $ 0.14
Non-GAAP $ 0.37 $ 0.24
Shares used to compute GAAP
diluted net (loss) income per
share 51,639 52,977
Shares used to compute Non-GAAP
diluted net income per share 53,772 52,977
(1) The estimated non-GAAP effective tax rate was 35% for the three months
ended June 30, 2013 and 2012, respectively, and has been used to
adjust the provision for income taxes for non-GAAP net income and non-
GAAP diluted net income per share purposes.
ADVENT SOFTWARE, INC.
RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME %
TO NON-GAAP OPERATING INCOME %
(Preliminary and unaudited)
Advent provides projections for the non-GAAP measure of its continuing operations' operating income percentage. This non-GAAP measure excludes certain costs, expenses, gains and losses which we believe is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. Adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP projections are among the information management uses as a basis for planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.
Twelve Months Ending
December 31, 2013
Continuing Operations
Operating Income %
---------------------------
Projected GAAP 10.0% to 10.5%
===========================
Projected amortization of acquired developed
technology
and other acquired intangible asset adjustment 3.0%
Projected stock-based compensation adjustment 13.0%
Projected restructuring charge adjustment 1.0%
Projected recapitalization costs 1.5%
---------------------------
Projected non-GAAP 28.5% to 29.0%
===========================
CONTACTS
Media Contact:
Amanda Diamondstein-Cieplinska
Advent Software, Inc.
(415) 645-1668
Email Contact
Investor Relations Contact:
Justin Ritchie
Advent Software, Inc.
(415) 645-1683
Email Contact
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