Company Reports Quarterly Revenue of $55.9 Million and Contract Value Growth of 16%
Issues Guidance for Calendar Year 2008; Announces New Program Launch
WASHINGTON,
For the nine months ended
To analyze results on a comparable basis to periods prior to the
implementation of SFAS No. 123R, the Company's management uses and is
providing adjusted financial results, including adjusted net income and
earnings per diluted share, that exclude share-based compensation expense.
Adjusted net income for the third quarter of fiscal year 2008 was
Williams added, 'I am also pleased today to announce the launch of the
University Provost Program, our second program in the education vertical. The
University Provost Program is a renewable membership program that provides
best practice research, peer networking, and tools to help Provosts better
manage university operations, set institutional priorities, and measure and
improve performance. Provost feedback has been very positive about our
ability to provide proven best practices to assist with today's difficult
issues in higher education, such as the continued push to demonstrate academic
outcomes, increased competition for research funding, and the challenge of
faculty recruitment and retention. As always, we have established a strong
charter membership for the program, including Duke University,
Outlook for Calendar Year 2008
Although the Company operates on a fiscal year ending
Share Repurchase
During the three months ended
Web and Conference Call Information
The Company will hold a live conference call to discuss its fiscal year
2008 third quarter news release this evening,
About The Advisory Board Company
The Advisory Board Company provides best practices research and analysis
primarily to the health care industry, focusing on business strategy,
operations and general management issues. The Company provides best practices
and research through discrete programs to a membership of more than 2,600
hospitals, health systems, pharmaceutical and biotech companies, health care
insurers, medical device companies, and universities in the
THE ADVISORY BOARD COMPANY
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Selected
December 31, Growth
2007 2006 Rates
Financial Highlights
(GAAP, as reported)
Revenues $55,912 $48,611 15.0%
Cost of services $26,107 $23,334
Member relations
and marketing $11,869 $10,562
General and administrative $6,754 $5,938
Income from operations $10,234 $8,215
Net income $7,912 $6,545 20.9%
Basic earnings per share $0.44 $0.35 25.7%
Diluted earnings per share $0.42 $0.34 23.5%
Weighted average common
shares outstanding
Basic 18,090 18,694
Diluted 18,871 19,461
Financial Highlights
(Adjusted) (1)
Adjusted cost of
services $24,631 $22,293
Adjusted member relations
and marketing $11,168 $9,859
Adjusted general and
administrative $5,351 $4,770
Adjusted income from
operations $13,814 $11,127 24.1%
Adjusted net income $10,300 $8,469 21.6%
Adjusted diluted earnings
per share $0.55 $0.44 25.0%
Diluted weighted average
common shares outstanding 18,871 19,461
Adjusted percentages of
revenues (1)
Adjusted cost of services 44.1% 45.9%
Adjusted member relations
and marketing 20.0% 20.3%
Adjusted general and
administrative 9.6% 9.8%
Adjusted income from
operations 24.7% 22.9%
Nine Months Ended Selected
December 31, Growth
2007 2006 Rates
Financial Highlights
(GAAP, as reported)
Revenues $161,045 $139,543 15.4%
Cost of services $74,775 $65,824
Member relations and
marketing $33,654 $29,808
General and administrative $19,457 $17,015
Income from operations $30,561 $25,439
Net income $23,529 $20,217 16.4%
Basic earnings per share $1.30 $1.07 21.5%
Diluted earnings per share $1.25 $1.03 21.4%
Weighted average common
shares outstanding
Basic 18,097 18,818
Diluted 18,825 19,554
Financial Highlights
(Adjusted) (1)
Adjusted cost of services $70,995 $62,693
Adjusted member relations
and marketing $31,530 $27,721
Adjusted general and
administrative $14,918 $13,068
Adjusted income from
operations $41,004 $34,604 18.5%
Adjusted net income $30,497 $26,276 16.1%
Adjusted diluted earnings
per share $1.62 $1.34 20.9%
Diluted weighted average
common shares outstanding 18,825 19,554
Adjusted percentages of
revenues (1)
Adjusted cost of services 44.1% 44.9%
Adjusted member relations
and marketing 19.6% 19.9%
Adjusted general and
administrative 9.3% 9.4%
Adjusted income from
operations 25.5% 24.8%
(1) In order to allow investors to assess results on a basis consistent
with those used by management, the tables below under 'Reconciliation
of Non-GAAP Financial Measures' reconcile GAAP to adjusted amounts
for the three and nine months ended December 31, 2007 and 2006.
Adjusted results exclude the share-based compensation expense
recognized by the Company in accordance with SFAS No. 123R. Adjusted
results include the employer taxes paid in connection with the
exercise of employee stock options of $70,000 and $283,000 for the
three and nine months ended December 31, 2007, respectively, and
$58,000 and $206,000 for the three and nine months ended December 31,
2006, respectively.
Reconciliation of Non-GAAP Financial Measures
The Company believes its calculations of adjusted results to exclude share-based compensation expense provide additional information about the Company's operating performance. The Company's management uses the adjusted presentations to evaluate operating results on a basis that is comparable to that used for periods prior to implementation of SFAS No. 123R and provides such information publicly to assist in comparisons to prior periods. For historical results, a reconciliation between results as adjusted and in conformity with GAAP is shown in the attached schedule. Because adjusted financial results are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable as presented to other similarly titled measures of other companies.
Adjusted financial results are not measures of financial performance under GAAP and should not be viewed as a pro-forma presentation reflecting the elimination of the underlying share-based compensation programs, as those programs are an important element of the Company's compensation structure and generally accepted accounting principles indicate that all forms of share- based payments should be valued and included as appropriate in results of operations. Management compensates for this aspect of the non-GAAP financial measures by separately evaluating its share-based compensation arrangements.
THE ADVISORY BOARD COMPANY
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31, 2007
Financial statement GAAP, as Share-based
descriptions reported compensation Adjusted
Cost of services $26,107 $(1,476) $24,631
Member relations and
marketing $11,869 $(701) $11,168
General and administrative $6,754 $(1,403) $5,351
Income from operations $10,234 $3,580 $13,814
Net income $7,912 $2,388 $10,300
Diluted earnings per share $0.42 $0.13 $0.55
Three Months Ended December 31, 2006
Financial statement GAAP, as Share-based
descriptions reported compensation Adjusted
Cost of services $23,334 $(1,041) $22,293
Member relations and
marketing $10,562 $(703) $9,859
General and administrative $5,938 $(1,168) $4,770
Income from operations $8,215 $2,912 $11,127
Net income $6,545 $1,924 $8,469
Diluted earnings per share $0.34 $0.10 $0.44
Nine Months Ended December 31, 2007
Financial statement GAAP, as Share-based
descriptions reported compensation Adjusted
Cost of services $74,775 $(3,780) $70,995
Member relations and
marketing $33,654 $(2,124) $31,530
General and administrative $19,457 $(4,539) $14,918
Income from operations $30,561 $10,443 $41,004
Net income $23,529 $6,968 $30,497
Diluted earnings per share $1.25 $0.37 $1.62
Nine Months Ended December 31, 2006
Financial statement GAAP, as Share-based
descriptions reported compensation Adjusted
Cost of services $65,824 $(3,131) $62,693
Member relations and
marketing $29,808 $(2,087) $27,721
General and administrative $17,015 $(3,947) $13,068
Income from operations $25,439 $9,165 $34,604
Net income $20,217 $6,059 $26,276
Diluted earnings per share $1.03 $0.31 $1.34
Forward Looking Statements
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on information available to the Company as of
Accordingly, readers are cautioned not to place undue reliance on forward- looking statements made in this news release, which speak only as of the date of this press release, and the Company does not undertake to update these statements, whether as a result of circumstances or events that arise after the date they are made, new information, or otherwise. You should, however, consult any further disclosures the Company may make in its future filings of its reports on Form 10-K, Form 10-Q and Form 8-K.
THE ADVISORY BOARD COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER OPERATING STATISTICS
(In thousands, except per share data)
Three Months Ended Selected Nine Months Ended Selected
December 31, Growth December 31, Growth
2007 2006 Rates 2007 2006 Rates
Statements of
Operations
Revenues $55,912 $48,611 15.0% $161,045 $139,543 15.4%
Cost of services 26,107 23,334 74,775 65,824
Member relations
and marketing 11,869 10,562 33,654 29,808
General and
administrative 6,754 5,938 19,457 17,015
Depreciation 948 562 2,598 1,457
Income from
operations 10,234 8,215 30,561 25,439
Interest income 1,629 1,686 4,720 5,145
Income before
provision for
income taxes 11,863 9,901 19.8% 35,281 30,584 15.4%
Provision for
income taxes 3,951 3,356 11,752 10,367
Net income $7,912 $6,545 20.9% $23,529 $20,217 16.4%
Earnings per share
Basic $0.44 $0.35 $1.30 $1.07
Diluted $0.42 $0.34 23.5% $1.25 $1.03 21.4%
Weighted average
common shares
outstanding
Basic 18,090 18,694 18,097 18,818
Diluted 18,871 19,461 18,825 19,554
Contract Value
(at end of
period) $225,429 $194,077 16.2%
Percentages of
Revenues
Cost of services 46.7% 48.0% 46.4% 47.2%
Member relations
and marketing 21.2% 21.7% 20.9% 21.4%
General and
administrative 12.1% 12.2% 12.1% 12.2%
Depreciation and
loss on disposal
of assets 1.7% 1.2% 1.6% 1.0%
Income from
operations 18.3% 16.9% 19.0% 18.2%
Net income 14.2% 13.5% 14.6% 14.5%
THE ADVISORY BOARD COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, March 31,
2007 2007
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $29,068 $13,195
Marketable securities 10,675 12,718
Membership fees receivable, net 93,313 57,671
Prepaid expenses and other current assets 3,777 3,123
Deferred income taxes 18,630 21,673
Total current assets 155,463 108,380
Fixed assets, net 20,974 17,421
Intangible assets, net 1,117 1,011
Goodwill 5,426 5,426
Deferred incentive compensation and
other charges 22,827 13,857
Deferred income taxes, net of current
portion 3,114 6,629
Marketable securities 132,046 133,450
Total assets $340,967 $286,174
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred revenues $142,096 $114,069
Accounts payable and accrued liabilities 24,611 18,721
Accrued incentive compensation 10,069 10,608
Total current liabilities 176,776 143,398
Long-term deferred revenues 10,187 2,925
Other long-term liabilities 1,528 1,387
Total liabilities 188,491 147,710
Stockholders' equity:
Common stock 214 208
Additional paid-in capital 210,027 181,380
Retained earnings 104,491 80,962
Accumulated elements of comprehensive
income 472 (1,156)
Treasury stock (162,728) (122,930)
Total stockholders' equity 152,476 138,464
Total liabilities and stockholders'
equity $340,967 $286,174
THE ADVISORY BOARD COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended December 31,
2007 2006
Cash flows from operating activities:
Net income $23,529 $20,217
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation 2,598 1,457
Amortization of intangible assets 188 143
Deferred income taxes 11,032 9,417
Excess tax benefits from share-based
payments (5,377) (4,905)
Share-based compensation expense 10,443 9,165
Amortization of marketable securities
premiums 716 732
Changes in operating assets and
liabilities:
Member fees receivable (35,642) (35,185)
Prepaid expenses and other current
assets (654) 142
Deferred incentive compensation and
other charges (8,970) (3,375)
Deferred revenues 35,289 26,901
Accounts payable and accrued liabilities 5,890 2,222
Accrued incentive compensation (539) 1,459
Other liabilities 141 876
Net cash flows provided
by operating activities 38,644 29,266
Cash flows from investing activities:
Purchases of property and equipment (6,151) (5,954)
Capitalized software development costs (294) (320)
Cash paid for acquisition, net of cash
acquired - (895)
Redemption of marketable securities 31,605 11,500
Purchases of marketable securities (26,345) (9,500)
Net cash flows used in investing activities (1,185) (5,169)
Cash flows from financing activities:
Proceeds on issuance of stock from exercise
of stock options 12,504 3,671
Proceeds on issuance of stock under employee
stock purchase plan 331 316
Excess tax benefits from share-based
compensation arrangements 5,377 4,905
Purchases of treasury stock (39,798) (32,235)
Net cash flows used in
financing activities (21,586 (23,343)
Net increase in cash and cash equivalents 15,873 754
Cash and cash equivalents, beginning of period 13,195 21,678
Cash and cash equivalents, end of period $29,068 $22,432
SOURCE The Advisory Board Company