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Advisory Board Company Reports Operating Results (10-Q)

February 09, 2010 | About:
10qk

10qk

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Advisory Board Company (ABCO) filed Quarterly Report for the period ended 2009-12-31.

Advisory Board Company has a market cap of $497.6 million; its shares were traded at around $32.04 with a P/E ratio of 30.5 and P/S ratio of 2.2. Advisory Board Company had an annual average earning growth of 3.9% over the past 5 years.ABCO is in the portfolios of Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, Chuck Royce of ROYCE & ASSOCIATES.

Highlight of Business Operations:

Overview. Revenue increased 2.7% to $60.9 million for the three months ended December 31, 2009 from $59.3 million for the three months ended December 31, 2008, and for the nine months ended December 31, 2009 revenue increased 1.0% to $175.9 million from $174.2 million for the same period in 2008. Net income for the three and nine months ended December 31, 2009 was $4.3 million and $6.4 million, respectively. Net income for the three and nine months ended December 31, 2008 was $5.8 million and $17.6 million, respectively. The decrease in net income during fiscal 2010 is primarily due to two non-cash charges. During the three months ended September 30, 2009 certain members of the Companys senior management and Board of Directors voluntarily surrendered for cancellation a total of 830,025 options that had exercise prices between $51.56 per share and $60.60 per share. This cancellation led to a nonrecurring non-cash charge during the quarter of $1.9 million. Also during the three months ended September 30, 2009 we recognized a $7.4 million non-cash charge resulting from the write-off of capitalized software.

General and administrative. General and administrative expense increased 12.0% to $7.7 million for the three months ended December 31, 2009 from $6.8 million for the three months ended December 31, 2008. This increase in general and administrative expense is primarily due to increased new product development costs in addition to $0.5 million in transaction costs resulting from the Southwind acquisition, partially offset by lower stock-based compensation costs. General and administrative expense increased 11.0% to $23.3 million for the nine months ended December 31, 2009 from $21.0 million for the nine months ended December 31, 2008. For the nine months ended December 31, 2009, the increase in general and administrative expense is primarily due to the reasons mentioned above and an accelerated stock-based compensation charge of $1.1 million recorded in the nine months ended December 31, 2009, in connection with the voluntary surrender of certain stock options.

Other income, net. Other income, net consists of interest income and gains/losses on foreign exchange rates. Other income, net decreased to $0.6 million for the three months ended December 31, 2009, from $0.8 million for the three months ended December 31, 2008. Interest income decreased to $0.6 million for the three months ended December 31, 2009, from $0.8 million in the same period of the prior year due to a lower average balance in marketable securities, as well as a lower average interest rate. Other income, net decreased to $2.1 million for the nine months ended December 31, 2009, from $2.9 million for the nine months ended December 31, 2008. Interest income decreased to $1.8 million for the nine months ended December 31, 2009, from $2.9 million in the same period of the prior year due to a lower average balance in marketable securities, as well as a lower average interest rate. As a result of fluctuating currency rates, we recognized a foreign exchange gain of $0.3 million in the nine months ended December 31, 2009, with no significant amount recorded in the three months ended December 31, 2009. The effect of the movement in foreign exchange rates on our income statement was immaterial during the three and nine months ending December 31, 2008.

Investing activities for the nine months ended December 31, 2009 used $9.7 million of cash, primarily consisting of $13.6 million related to the Southwind acquisition and resulting escrow and a $5.0 million investment, partially offset by the net proceeds on the redemption and sales of marketable securities of $10.4 million. Capital expenditures during the nine months ending December 31, 2009 were $1.4 million. Investing activities for the nine months ended December 31, 2008 provided $33.0 million in cash primarily from the net proceeds on the redemption and sales of marketable securities of $65.0 million, which was used primarily for the cash purchase of Crimson for $18.6 million, net of cash received and for capital expenditures of $13.4 million. Capital expenditures during the nine months ended December 31, 2008 included $3.8 million in purchases of property and equipment related primarily to the scheduled expansion of our headquarters facility and $7.1 million of capitalized software development costs related to our newer programs that include software tools.

Cash flows from financing activities. We used net cash flows in financing activities of $2.7 million and $55.9 million in the nine months ended December 31, 2009 and 2008, respectively. We repurchased 76,230 and 1,778,290 shares of our common stock at a total cost of approximately $3.0 million and $56.5 million in the nine months ended December 31, 2009 and 2008, respectively, pursuant to our share repurchase program. During the nine months ended December 31, 2009 and 2008, we received approximately $214,000 and $421,000, respectively, from the exercise of stock options. Also in the nine months ended December 31, 2009 and 2008, we received approximately $109,000 and $282,000, respectively, in proceeds from the issuance of common stock under our employee stock purchase plan.

In January 2004 the Companys Board of Directors authorized the repurchase of up to $50 million of the Companys common stock, which authorization was increased in amount to $100 million in October 2004, to $150 million in February 2006, to $200 million in January 2007, to $250 million in July 31, 2007, and to $350 million in April 2008. All repurchases have been made in the open market. No minimum number of shares has been fixed, and the share repurchase authorization has no expiration date.

Read the The complete Report

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10qk
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