WASHINGTON, July 27, 2016 /PRNewswire/ -- The
Advisory Board Company (NASDAQ: ABCO), a leading provider of
insight-driven technology, research,
and services for organizations in transforming
industries, today announced financial results for the quarter ended
June 30, 2016.
Highlights from the second quarter of 2016 are as follows (all
comparisons are to the quarter ended June
30, 2015):
GAAP Highlights:
- Revenue of $198.4 million, an
increase of 8.1%
- Net income of $7.5 million, a
decrease of 2.2%
- Earnings per diluted share of $0.18, unchanged
Non-GAAP and Other Highlights:
- Contract value of $774.9 million,
an increase of 5%
- Adjusted EBITDA of $47.7 million,
an increase of 5%
- Non-GAAP earnings per diluted share of $0.47, an increase of 21%
Robert Musslewhite, Chairman and
Chief Executive Officer of The Advisory Board Company, commented,
"At the close of the June quarter, I am pleased that the company is
performing well against expectations for the year and that we
continue to make progress on our key strategic initiatives.
In particular, the performance of the Royall & Company business
has improved substantially over the course of the last year.
Strong member attachment to Royall's data and insight-driven
capabilities is not only playing out in the Royall financial
results, but is also contributing significantly to our overall
relationships with colleges and universities because we are able to
serve them in a more robust way across the student lifecycle.
As a result, we are set up for solid mid-teens revenue growth in
Royall across the next fiscal year, and now have the robust growth
platform we envisioned when we acquired the business last
year."
Mr. Musslewhite concluded, "Given the complexity members face
today in both of the markets we serve, the need for our help
remains acute, and we continue to deliver deep value to both our
health care and education members. This member value is
driven first and foremost by our passionate and dedicated
people. We are committed to their engagement, development,
opportunity, and growth, and were excited that for the eighth year
running we were honored as one of Modern Healthcare's Best
Places to Work. We view this honor as a tangible reminder of
the importance of our ongoing investment in our employees and their
hard work to make the critical improvements needed today in health
care, education, and our communities."
Second Quarter Financial Review
Revenue increased 8% to $198.4
million for the quarter ended June
30, 2016, up from $183.6
million for the quarter ended June
30, 2015. Contract value increased 5% to $774.9 million as of June
30, 2016, up from $741.7
million as of June 30,
2015.
Net income was $7.5 million, or
$0.18 per diluted share, for the
quarter ended June 30, 2016, compared
to net income of $7.7 million, or
$0.18 per diluted share, for the
quarter ended June 30, 2015. Adjusted
net income was $19.0 million for the
quarter ended June 30, 2016, up from
$16.9 million for the quarter ended
June 30, 2015. Non-GAAP earnings per
diluted share was $0.47 for the
quarter ended June 30, 2016, up from
$0.39 for the quarter ended
June 30, 2015.
Adjusted EBITDA increased 5% to $47.7
million for the quarter ended June
30, 2016, up from $45.6
million for the quarter ended June
30, 2015.
Adjusted net income, non-GAAP earnings per diluted share, and
adjusted EBITDA are non-GAAP financial measures.
Year-to-Date Financial Review
Revenue increased 10% to $399.1
million for the six-month period ended June 30, 2016, up from $362.9 million for the six-month period ended
June 30, 2015. Net income was
$17.8 million, or $0.43 per diluted share, for the six-month period
ended June 30, 2016, compared to a
net loss of $14.4 million, or
$0.35 per diluted share, for the
six-month period ended June 30, 2015.
Adjusted EBITDA was $95.1 million for
the six-month period ended June 30,
2016, up from $84.5 million
for the six-month period ended June 30,
2015. Adjusted net income was $38.4
million for the six-month period ended June 30, 2016, up from $29.4 million for the six-month period ended
June 30, 2015. Non-GAAP earnings per
diluted share was $0.93 for the
six-month period ended June 30, 2016,
compared to $0.70 for the six-month
period ended June 30, 2015.
Share Repurchase
During the quarter ended June 30,
2016, the Company repurchased approximately 803,000 shares
of its common stock at a total cost of $26.2
million. Since 2004, the Company has repurchased
approximately 19.6 million shares of its common stock at a total
cost of $505.5 million. As of
June 30, 2016, the Company had
$44.5 million remaining on its share
repurchase authorization.
Outlook for Calendar Year
2016
The Company is raising its financial guidance for calendar year
2016. The Company expects revenue to be in a range of $817 million to $830 million, revised from a
previous range of $810 million to $830
million. The Company expects adjusted EBITDA to be in a
range of $190 million to $195
million, revised from a previous range of $188 million to $195 million, and non-GAAP
earnings per diluted share to be in a range of $1.83 to $1.90, revised from a previous range of
$1.63 to $1.73. For the year,
the Company expects stock-based compensation expense to be
approximately $32 million, interest
expense to be approximately $19
million, amortization of acquisition-related intangible
assets to be approximately $29
million, amortization of non-acquisition related assets to
be approximately $50 million, capital
expenditures to be approximately $60
million, share count to be approximately 41 million, and
effective tax rate to be in a range of 38%-40%.
Conference Call Information
As previously announced, the Company will hold a conference call
to discuss its second quarter performance this evening,
July 27, 2016, at 5:30 p.m. Eastern Time. The conference call will
be available via live webcast on the Company's website at
www.advisory.com/IR. To participate by telephone, the dial-in
number is 888.336.7150. Participants are advised to dial in at
least five minutes prior to the call to register. The webcast will
be archived for seven days from 8:00 p.m.
Eastern Time on Wednesday, July 27,
2016, until 11:00 p.m. Eastern
Time on Wednesday, August 3,
2016. The Company invites all interested parties to attend
the conference call, including the lenders under the Company's
senior secured credit facilities.
A supplemental presentation of information complementary to the
information presented in this release and that will be discussed on
the conference call will be made available on the Company's website
at www.advisory.com/IR prior to the conference call and will be
archived for the same duration as the webcast.
About The Advisory Board Company
The Advisory Board Company is a best practices firm that uses a
combination of research, technology, and consulting to improve
the performance of 5,500+ health care organizations and educational
institutions. Headquartered in Washington, D.C., with offices worldwide, The
Advisory Board Company forges and finds the best new
ideas and proven practices from its network of thousands of
leaders, then customizes and hardwires them into every
level of member organizations, creating enduring value. For
more information, visit www.advisory.com.
Non-GAAP Financial Measures
This news release presents information about the Company's
historical and expected non-GAAP earnings per diluted share and
adjusted EBITDA, as well as the Company's historical adjusted
revenue, adjusted net income, adjusted effective tax rate, and
adjusted weighted average common shares outstanding-diluted, all of
which are non-GAAP financial measures provided as a complement to
the results provided in accordance with accounting principles
generally accepted in the United States
of America ("GAAP"). A reconciliation of each of the
foregoing historical non-GAAP financial measures to the most
directly comparable historical GAAP financial measures is provided
in the accompanying tables found at the end of this release for
each of the fiscal periods indicated.
No reconciliation of the Company's expected adjusted EBITDA and
non-GAAP earnings per diluted share for 2016 is included in this
news release. Both of these non-GAAP financial measures exclude the
impact and tax-effected impact of M&A-related charges,
stock-based compensation expense, and other fair value and non-cash
charges. The Company is not able, without unreasonable efforts, to
accurately forecast this reconciling information at the level of
precision that would be required to be included in the most
directly comparable GAAP financial measures.
Caution Regarding Forward-Looking Statements
Statements in this news release that relate to future results
and events are forward-looking statements and are based on the
Company's expectations as of the date of this news release. In some
cases, you can identify these statements by such forward-looking
words as "anticipate," "believe," "estimate," "expect," "guidance,"
"intend," "may," "outlook," "plan," "potential," "should," "will,"
"would," or similar words or expressions. Forward-looking
statements in this news release include the Company's expectations
regarding its performance and results for fiscal 2016 with respect
to revenue, adjusted EBITDA, non-GAAP earnings per diluted share,
stock-based compensation expense, interest expense, amortization of
acquisition-related intangible assets, amortization of
non-acquisition related assets, capital expenditures, and the
Company's effective tax rate.
Actual results and events in future periods may differ
materially from those expressed or implied by these forward-looking
statements because of a number of risks, uncertainties, and other
factors, including those relating to: factors that adversely
affect the financial condition of the health care and education
industries; federal and state law and regulations governing the
health care and education industries and our members' and our
respective compliance with those applicable laws and regulations;
effects of federal and state privacy and security laws and
cyberattacks and other data security breaches; liability for
failure to provide accurate information or for deficient
submissions to third party payors; compliance with federal and
state laws governing healthcare fraud and abuse or reimbursement;
the Company's ability to attract new members, obtain renewals from
existing members, and sell additional products and services;
maintenance of the Company's reputation and expansion of its name
recognition; the Company's ability to offer new and valuable
products and services; effects of competition; the Company's
ability to maintain a highly-skilled workforce; unsuccessful design
or implementation of our software or delivery of our consulting and
management services; delays in generating revenue; disruptions in
service or operational failures at our data centers or at other
service provider locations; ability to collect and maintain member
and third party data and to obtain proper permissions and waivers
for use and disclosure of information received from members or on
their behalf; maintenance of third-party providers and strategic
alliances and entry into new alliances; ability to license,
integrate, and access third-party technologies and data; potential
liability claims; protection of the Company's intellectual
property; claims of infringement, misappropriation, or violation of
proprietary rights of third parties; limitations associated with
use of open source technology; estimates and assumptions used to
prepare the Company's consolidated financial statements and any
changes made to those estimates; any significant increase in bad
debt in excess of recorded estimates; failure to realize the
anticipated benefits of the Company's acquisition of Royall; the
inability to integrate successfully the operations of Royall and
other acquisitions into the Company's business; business and
financial risks associated with the pursuit of acquisition
opportunities; any significant additional impairment of the
Company's goodwill; the Company's ability to realize a return on
its strategic investments; potential imposition of sales and use
taxes on sales of the Company's services; the Company's ability to
realize fully its deferred tax assets; the potential effects of
changes in, or interpretations of, tax rules on our effective tax
rates; inherent limitations in, and the potential impact of any
failure to maintain, effective internal control over financial
reporting; effects of issuance of additional capital stock;
provisions in the Company's charter and bylaws that could
discourage takeover attempts; and limitations caused by our level
of debt, interest payment obligations, and covenants under our
senior credit agreement.
This list of risks, uncertainties, and other factors is not
complete. The Company discusses some of these matters more fully,
as well as certain risk factors that could affect the Company's
business, financial condition, results of operations, and
prospects, in its filings with the Securities and Exchange
Commission, including the Company's annual report on Form 10-K for
the year ended December 31, 2015,
quarterly reports on Form 10-Q, and current reports on Form 8-K.
These filings are available for review through the Securities and
Exchange Commission's website at www.sec.gov. Any or all
forward-looking statements the Company makes may turn out to be
wrong, and can be affected by inaccurate assumptions the Company
might make or by known or unknown risks, uncertainties, and other
factors, including those identified in this news release.
Accordingly, you should not place undue reliance on the
forward-looking statements made in this news release, which speak
only as of its date. The Company does not undertake to update, and
expressly disclaims any duty to update, its forward-looking
statements, whether as a result of circumstances or events that
arise after the date they are made, new information, or
otherwise.
Reconciliation of Non-GAAP Financial Measures
This news release presents information about the Company's
adjusted revenue, adjusted EBITDA, adjusted net income, non-GAAP
earnings per diluted share, adjusted effective tax rate, and
adjusted weighted average common shares outstanding-diluted, which
are non-GAAP financial measures provided as a complement to the
results provided in accordance with GAAP.
A reconciliation of each of the foregoing historical non-GAAP
financial measures to the most directly comparable historical GAAP
financial measures is provided below for each of the fiscal periods
indicated.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenue
|
$ 198,382
|
|
$ 183,583
|
|
$ 399,117
|
|
$ 362,905
|
Effect on revenue of
fair value adjustments to
acquisition-related deferred revenue
|
—
|
|
6,617
|
|
—
|
|
12,499
|
Adjusted revenue
|
$ 198,382
|
|
$ 190,200
|
|
$ 399,117
|
|
$ 375,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
7,495
|
|
$
7,666
|
|
$
17,834
|
|
$ (14,406)
|
Effect on revenue of
fair value adjustments to
acquisition-related deferred revenue
|
—
|
|
6,617
|
|
—
|
|
12,499
|
Equity in loss
(income) of unconsolidated entities
|
411
|
|
(4,000)
|
|
445
|
|
(1,621)
|
Provision for income
taxes
|
4,870
|
|
3,372
|
|
10,533
|
|
3,094
|
Interest
expense
|
4,389
|
|
5,154
|
|
9,210
|
|
10,766
|
Other expense,
net
|
923
|
|
128
|
|
862
|
|
1,247
|
Loss on financing
activities
|
—
|
|
—
|
|
—
|
|
17,398
|
Depreciation and
amortization
|
18,917
|
|
18,499
|
|
38,684
|
|
35,773
|
Acquisition and
similar transaction charges
|
—
|
|
961
|
|
—
|
|
6,610
|
Fair value
adjustments to acquisition-related
earn-out liabilities
|
1,775
|
|
(1,427)
|
|
705
|
|
(1,083)
|
Build-to-suit land
rent
|
995
|
|
—
|
|
1,871
|
|
—
|
Vacation accrual
adjustment
|
—
|
|
—
|
|
—
|
|
(850)
|
Stock-based
compensation expense
|
7,965
|
|
8,631
|
|
14,947
|
|
15,036
|
Adjusted EBITDA
|
$
47,740
|
|
$
45,601
|
|
$
95,091
|
|
$
84,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
7,495
|
|
$
7,666
|
|
$
17,834
|
|
$ (14,406)
|
Effect of adjusted
tax rate on net income (loss)
|
—
|
|
332
|
|
—
|
|
8,861
|
Effect on revenue of
fair value adjustments to
acquisition-related deferred revenue, net of tax
|
—
|
|
3,758
|
|
—
|
|
7,046
|
Equity in loss
(income) of unconsolidated entities
|
411
|
|
(4,000)
|
|
445
|
|
(1,621)
|
Amortization of
acquisition-related intangibles, net of tax
|
4,437
|
|
4,562
|
|
9,116
|
|
8,782
|
Loss on financing
activities, net of tax
|
—
|
|
—
|
|
—
|
|
9,725
|
Acquisition and
similar transaction charges, net of tax
|
—
|
|
546
|
|
—
|
|
3,704
|
Fair value
adjustments to acquisition-related earn-out
liabilities, net of tax
|
1,099
|
|
(811)
|
|
407
|
|
(619)
|
Gain on investment in
common stock warrants,
net of tax
|
—
|
|
(40)
|
|
—
|
|
(40)
|
Build-to-suit land
rent, net of tax
|
616
|
|
—
|
|
1,183
|
|
—
|
Vacation accrual
adjustment, net of tax
|
—
|
|
—
|
|
—
|
|
(475)
|
Stock-based
compensation expense, net of tax
|
4,930
|
|
4,902
|
|
9,447
|
|
8,483
|
Adjusted net
income
|
$
18,988
|
|
$
16,915
|
|
$
38,432
|
|
$
29,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - diluted
|
$
0.18
|
|
$
0.18
|
|
$
0.43
|
|
$
(0.35)
|
Effect of adjusted
tax rate on net income (loss)
|
—
|
|
0.01
|
|
—
|
|
0.22
|
Effect of adjusted
weighted average common
shares outstanding – diluted on (loss) earnings
per share
|
—
|
|
—
|
|
—
|
|
0.01
|
Effect on revenue of
fair value adjustments to
acquisition-related deferred revenue, net of tax
|
—
|
|
0.09
|
|
—
|
|
0.17
|
Equity in loss
(income) of unconsolidated entities
|
0.01
|
|
(0.09)
|
|
0.01
|
|
(0.03)
|
Amortization of
acquisition-related intangibles,
net of tax
|
0.11
|
|
0.11
|
|
0.22
|
|
0.21
|
Loss on financing
activities, net of tax
|
—
|
|
—
|
|
—
|
|
0.23
|
Acquisition and
similar transaction charges, net of tax
|
—
|
|
0.01
|
|
—
|
|
0.09
|
Fair value
adjustments to acquisition-related earn-out
liabilities, net of tax
|
0.03
|
|
(0.02)
|
|
0.01
|
|
(0.02)
|
Gain on investment in
common stock warrants,
net of tax
|
—
|
|
(0.01)
|
|
—
|
|
(0.01)
|
Build-to-suit land
rent, net of tax
|
0.02
|
|
—
|
|
0.03
|
|
—
|
Vacation accrual
adjustment, net of tax
|
—
|
|
—
|
|
—
|
|
(0.01)
|
Stock-based
compensation expense, net of tax
|
0.12
|
|
0.11
|
|
0.23
|
|
0.19
|
Non-GAAP earnings per
diluted share
|
$
0.47
|
|
$
0.39
|
|
$
0.93
|
|
$
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
38.1%
|
|
47.9%
|
|
36.6%
|
|
(23.9%)
|
Effect on tax rate of
Washington, D.C. tax law
change, including write-off of Washington, D.C.
income tax credits
|
—
|
|
—
|
|
—
|
|
73.2%
|
Effect on tax rate of
loss on financing activities
|
—
|
|
0.9%
|
|
—
|
|
(8.5%)
|
Effect on tax rate of
asset impairment
|
|
|
|
|
|
|
|
Effect on tax rate of
unconsolidated equity method
investment related FIN 48 liability
|
—
|
|
(14.9%)
|
|
—
|
|
—
|
Effect on tax rate of
Royall acquisition costs and
other acquisition-related tax items
|
—
|
|
9.3%
|
|
—
|
|
2.8%
|
Adjusted effective tax rate
|
38.1%
|
|
43.2%
|
|
36.6%
|
|
43.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
– diluted
|
40,570
|
|
42,914
|
|
41,222
|
|
41,686
|
Diluted shares
outstanding (1)
|
—
|
|
—
|
|
—
|
|
555
|
Adjusted weighted
average common
shares outstanding – diluted
|
40,570
|
|
42,914
|
|
41,222
|
|
42,241
|
|
|
|
|
|
|
|
|
(1) For non-GAAP purposes the
Company has net income and therefore has included diluted shares in
its calculation of non-GAAP earnings per diluted share.
|
THE ADVISORY BOARD
COMPANY
|
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
|
AND OTHER
OPERATING STATISTICS
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Selected
|
|
Six Months
Ended
|
|
Selected
|
|
|
|
June
30,
|
|
Growth
|
|
June
30,
|
|
Growth
|
|
|
|
2016
|
|
2015
|
|
Rates
|
|
2016
|
|
2015
|
|
Rates
|
Statements
of Income
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(1)
|
$ 198,382
|
|
$ 183,583
|
|
8.1%
|
|
$ 399,117
|
|
$ 362,905
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services, excluding depreciation and
amortization (2) (3) (4)
|
96,440
|
|
92,536
|
|
|
|
192,389
|
|
188,026
|
|
|
Member
relations and marketing (2) (3)
|
32,718
|
|
29,375
|
|
|
|
65,113
|
|
60,101
|
|
|
General and
administrative (2) (3) (5)
|
32,219
|
|
30,853
|
|
|
|
64,047
|
|
62,527
|
|
|
Depreciation
and amortization (6)
|
18,917
|
|
18,499
|
|
|
|
38,684
|
|
35,773
|
|
|
Operating
income
|
18,088
|
|
12,320
|
|
46.8%
|
|
38,884
|
|
16,478
|
|
136.0%
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(4,389)
|
|
(5,154)
|
|
|
|
(9,210)
|
|
(10,766)
|
|
|
Other expense,
net
|
(923)
|
|
(128)
|
|
|
|
(862)
|
|
(1,247)
|
|
|
Loss on financing
activities
|
-
|
|
-
|
|
|
|
-
|
|
(17,398)
|
|
|
|
|
Total other
expense, net
|
(5,312)
|
|
(5,282)
|
|
|
|
(10,072)
|
|
(29,411)
|
|
|
Income (loss) before
provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
and equity
in loss of unconsolidated entities
|
12,776
|
|
7,038
|
|
|
|
28,812
|
|
(12,933)
|
|
|
Provision for
income taxes
|
4,870
|
|
3,372
|
|
|
|
10,533
|
|
3,094
|
|
|
Equity in loss
(income) of unconsolidated entities
|
(411)
|
|
4,000
|
|
|
|
(445)
|
|
1,621
|
|
|
Net income
(loss)
|
$
7,495
|
|
$
7,666
|
|
|
|
$
17,834
|
|
$ (14,406)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.19
|
|
$
0.18
|
|
|
|
$
0.44
|
|
$
(0.35)
|
|
|
|
Diluted
|
$
0.18
|
|
$
0.18
|
|
|
|
$
0.43
|
|
$
(0.35)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
40,365
|
|
42,440
|
|
|
|
40,928
|
|
41,686
|
|
|
|
Diluted
|
40,570
|
|
42,914
|
|
|
|
41,222
|
|
41,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
Value (at end of period)
|
$ 774,879
|
|
$ 741,673
|
|
4.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages
of Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services, excluding depreciation and
amortization (2) (3) (4)
|
48.6%
|
|
50.4%
|
|
|
|
48.2%
|
|
51.8%
|
|
|
Member
relations and marketing (2) (3)
|
16.5%
|
|
16.0%
|
|
|
|
16.3%
|
|
16.6%
|
|
|
General and
administrative (2) (3) (5)
|
16.2%
|
|
16.8%
|
|
|
|
16.0%
|
|
17.2%
|
|
|
Depreciation
and amortization (6)
|
9.5%
|
|
10.1%
|
|
|
|
9.7%
|
|
9.9%
|
|
|
Operating
income
|
9.1%
|
|
6.7%
|
|
|
|
9.7%
|
|
4.5%
|
|
|
Net income
(loss)
|
3.8%
|
|
4.2%
|
|
|
|
4.5%
|
|
-4.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts
include effect on revenue of fair value adjustments to
acquisition-related deferred revenue, as follows:
|
|
Revenue
|
-
|
|
6,617
|
|
|
|
-
|
|
12,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Amounts
include stock-based compensation, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
2,493
|
|
2,566
|
|
|
|
4,680
|
|
4,458
|
|
|
Member relations and marketing
|
1,387
|
|
1,455
|
|
|
|
2,501
|
|
2,601
|
|
|
General and administrative
|
4,085
|
|
4,610
|
|
|
|
7,766
|
|
7,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Amounts
include Build to suit land expense, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
479
|
|
-
|
|
|
|
905
|
|
-
|
|
|
Member relations and marketing
|
351
|
|
-
|
|
|
|
655
|
|
-
|
|
|
General and administrative
|
165
|
|
-
|
|
|
|
311
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Amounts
include fair value adjustments of acquisition-related earn-out
liabilities, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
1,775
|
|
(1,427)
|
|
|
|
705
|
|
(1,083)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Amounts
include acquisition and transaction related costs, as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
-
|
|
961
|
|
|
|
-
|
|
6,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Amounts
include amortization of acquisition-related intangibles, as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
7,168
|
|
8,031
|
|
|
|
14,399
|
|
15,580
|
|
|
THE ADVISORY BOARD
COMPANY
|
CONSOLIDATED
BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2016
|
|
2015
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
17,487
|
|
$
71,825
|
Marketable
securities, current
|
|
-
|
|
-
|
Membership fees
receivable, net
|
|
600,496
|
|
605,444
|
Prepaid expenses
and other current assets
|
|
20,986
|
|
22,543
|
Total current
assets
|
|
638,969
|
|
699,812
|
|
|
|
|
|
Property and
equipment, net
|
|
187,984
|
|
183,057
|
Intangible
assets, net
|
|
264,948
|
|
274,721
|
Deferred
incentive compensation and other charges
|
69,641
|
|
81,181
|
Goodwill
|
|
740,458
|
|
738,200
|
Investments in
unconsolidated entities
|
|
-
|
|
706
|
Other
non-current assets
|
|
1,800
|
|
1,800
|
Total
assets
|
|
$
1,903,800
|
|
$
1,979,477
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Deferred
revenue, current
|
|
$
568,329
|
|
$
581,471
|
Accounts payable
and accrued liabilities
|
|
64,506
|
|
74,879
|
Accrued
incentive compensation
|
|
16,765
|
|
41,173
|
Debt,
current
|
|
51,946
|
|
27,743
|
Total current
liabilities
|
|
701,546
|
|
725,266
|
|
|
|
|
|
Deferred
revenue, net of current portion
|
|
152,039
|
|
173,953
|
Deferred income
taxes, net of current portion
|
|
91,047
|
|
93,893
|
Debt, net of
current portion
|
|
501,015
|
|
522,086
|
Financing
obligation
|
|
15,054
|
|
2,700
|
Other long-term
liabilities
|
|
17,157
|
|
12,488
|
Total
liabilities
|
|
1,477,858
|
|
1,530,386
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
|
403
|
|
416
|
Additional
paid-in capital
|
|
759,832
|
|
744,333
|
Accumulated
deficit
|
|
(331,625)
|
|
(295,860)
|
Accumulated
other comprehensive income
|
|
(2,668)
|
|
202
|
Total
stockholders' equity
|
|
425,942
|
|
449,091
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
1,903,800
|
|
$
1,979,477
|
|
|
|
|
|
THE ADVISORY BOARD
COMPANY
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
|
|
Six Months
Ended June 30,
|
|
|
2016
|
|
2015
|
Cash flows
from operating activities:
|
|
|
|
|
Net income
(loss)
|
|
$
17,834
|
|
$
(14,406)
|
Adjustments to
reconcile net income (loss) to net cash provided
|
|
|
|
|
by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
38,684
|
|
35,774
|
Loss on
financing activities
|
|
-
|
|
17,398
|
Amortization of
debt issuance costs
|
|
826
|
|
703
|
Deferred income
taxes
|
|
(881)
|
|
11,357
|
Excess tax
benefits from stock-based awards
|
|
(633)
|
|
(2,745)
|
Stock-based
compensation expense
|
|
14,947
|
|
15,035
|
(Gain) loss on
investment in common stock warrants
|
|
-
|
|
(70)
|
Equity in loss
of unconsolidated entities
|
|
445
|
|
(1,621)
|
Changes in
operating assets and liabilities (net of the effect of
acquisition):
|
|
|
|
Membership fees
receivable
|
|
4,948
|
|
(34,872)
|
Prepaid expenses
and other current assets
|
|
7,268
|
|
(1,994)
|
Deferred
incentive compensation and other charges
|
|
11,408
|
|
869
|
Other
non-current assets
|
|
-
|
|
(258)
|
Deferred
revenue
|
|
(35,056)
|
|
46,655
|
Accounts payable
and accrued liabilities
|
|
(10,738)
|
|
(10,949)
|
Acquisition-related earn-out
payments
|
|
(1,432)
|
|
(1,948)
|
Accrued
incentive compensation
|
|
(24,408)
|
|
(12,031)
|
Other long-term
liabilities
|
|
(131)
|
|
(5,168)
|
Net cash
provided by operating activities
|
|
23,081
|
|
41,729
|
|
|
|
|
|
Cash flows
from investing activities:
|
|
|
|
|
Purchases of
property and equipment
|
|
(19,877)
|
|
(23,285)
|
Capitalized
external-use software development costs
|
|
(1,608)
|
|
(2,181)
|
Cash paid for
acquisitions, net of cash acquired
|
|
(1,900)
|
|
(744,193)
|
Cash paid for
investment in unconsolidated entity
|
|
-
|
|
(3,006)
|
Sales of
marketable securities
|
|
-
|
|
14,714
|
Net cash used in
investing activities
|
|
(23,385)
|
|
(757,951)
|
|
|
|
|
|
Cash flows
from financing activities:
|
|
|
|
|
Proceeds from
debt, net
|
|
17,000
|
|
1,280,292
|
Pay down of
debt
|
|
(14,375)
|
|
(732,189)
|
Debt issuance
costs
|
|
-
|
|
(2,568)
|
Proceeds from
issuance of common stock, net of selling costs
|
|
-
|
|
148,786
|
Proceeds from
issuance of common stock from exercise of stock options
|
3,100
|
|
3,014
|
Withholding of
shares to satisfy minimum employee tax withholding
|
(3,432)
|
|
(6,007)
|
Proceeds from
issuance of stock under employee stock purchase plan
|
256
|
|
263
|
Acquisition-related earn-out
payments
|
|
(3,600)
|
|
(1,500)
|
Excess tax
benefits from stock-based awards
|
|
633
|
|
2,745
|
Purchases of
treasury stock
|
|
(53,616)
|
|
-
|
Net cash (used
in) provided by financing activities
|
|
(54,034)
|
|
692,836
|
|
|
|
|
|
Net decrease
in cash and cash equivalents
|
|
(54,338)
|
|
(23,386)
|
Cash and cash
equivalents, beginning of period
|
|
71,825
|
|
72,936
|
Cash and cash
equivalents, end of period
|
|
$
17,487
|
|
$
49,550
|
|
|
|
|
|
|
|
|
|
|
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SOURCE The Advisory Board Company