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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1999
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number: 0-26994
ADVENT SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2901952
(State of incorporation) (IRS Employer Identification Number)
301 Brannan Street, San Francisco, California 94107
(Address of principal executive offices and zip code)
(415) 543-7696
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Acts: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes[X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The number of shares of the registrant's Common Stock outstanding as of March 6,
2000 was 29,575,620. The aggregate market value of the registrant's Common Stock
held by non-affiliates, based upon the closing price on March 6, 2000, as
reported on the Nasdaq National Market System, was approximately $1.06 billion.
Shares of Common Stock held by each officer and director and by each person who
owns 5% or more of the outstanding Common Stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference into Parts II and
III of this Form 10-K: (1) 1999 Annual Report to Stockholders of the Registrant
(Part II of this Form 10-K); and (2) Definitive Proxy Statement for the
registrant's Annual Meeting of Stockholders to be held May 4, 2000 (Part III of
this Form 10-K).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K contains forward-looking statements in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
elsewhere. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may", "will", "should", "expects", "plans" "anticipates",
"believes", "estimates", "predicts", "potential" or "continue" or the negative
of such terms or other comparable terminology. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under "Risk Factors and Forward Looking
Statements," that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels or activity, performance or achievements expressed or implied by
such forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward-looking statements after the date
of this Form 10-K or to conform such statements to actual results.
PART I
ITEM 1. BUSINESS
OVERVIEW
We are a leading provider of Enterprise Investment Management, or EIM,
solutions that automate and integrate mission-critical functions for investment
management professionals.
Advent Office(TM), our suite of integrated products, addresses the demand
for software products that automate, simplify and integrate functions for
investment management by automating and integrating work and data flows across
the entire investment management enterprise. Advent Office reduces client costs,
improves the accuracy of client information and enables our clients to provide
enhanced customer service.
INDUSTRY BACKGROUND AND OUR CLIENTS
Our clients include a range of organizations that manage investment
portfolios, including investment advisors, brokerage firms, banks and hedge
funds. Our clients also include corporations, public funds, foundations,
universities and non-profit organizations that manage investment portfolios and
perform similar portfolio management functions. Recently, the investment
management industry has experienced significant growth which, in combination
with other factors, has led to increasing demand for software products that
automate, simplify and integrate functions within investment management
organizations. This increasing demand is driven by several industry dynamics.
Financial assets under management have increased substantially during the last
decade. As the value of total financial assets under management has increased,
there has been a substantial increase in the number of investment management
organizations and a steady introduction of increasingly sophisticated financial
instruments. As a result, investment managers are faced with increasingly
complicated portfolio accounting and management requirements as well as
extensive and evolving industry standards and government regulations.
These dynamics have increased the volume and complexity of information and
data flows within investment management organizations and between such
organizations and third parties, such as brokerage firms, clients, custodians,
banks, pricing services and other data providers. Consequently, investment
management organizations require more sophisticated and integrated software
products for their front, middle and back offices.
The front office operations of an investment manager include the marketing
and customer relationship management aspect of dealing with customers; the
middle office focuses on trade order management and trading workflow; and the
back office includes the accounting functions of the organization. In order to
operate efficiently within this environment, investment management organizations
must automate and integrate their mission-critical and labor-intensive
functions, including (i) investment decision support and client relationship
management, (ii) order management and trading and (iii) portfolio accounting,
performance measurement, report generation and compliance. Investment management
organizations historically have relied on internally developed systems,
timesharing services or simple spreadsheet-based systems to manage information
flows. Due to inherent limitations in each of these types of systems, investment
management organizations are demanding highly
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functional, easy-to-use, scalable, cost-effective and flexible software
applications that automate and integrate their mission-critical business
functions.
THE ADVENT SOLUTION
The Advent solution combines a fully integrated suite of client-centric
software products, with a full range of professional services - from
implementation management and training to technical support and custom
engineering, all aimed at accomplishing our clients' business objectives.
SOFTWARE PRODUCTS
We offer an integrated suite of software products for automating and
integrating work and data flows across the investment management organization,
as well as the information flows between the investment management organization
and external parties. Our products are intended to reduce client costs, improve
the accuracy of client information and generally enable clients to improve the
service they provide to their customers rather than focusing on operational
details. Each software component in the Advent Office suite focuses on certain
mission-critical functions of the investment management organization. Each
Advent Office implementation is tailored to meet the needs of a particular
market segment, as determined by size, assets under management and complexity of
the investment environment.
We believe that our Enterprise Investment Management, or EIM, solution is
well suited for the investment management functions of corporations, public
funds, partnerships, foundations, universities and non-profit organizations. An
Enterprise Investment Management solution is an evolutionary process that
encompasses three phases:
o Investment Process Integration - involves the integration of front-, mid-,
and back-office components with each other as well as with standard
productivity applications such as Microsoft Word(R) and Excel(R). This
integration eliminates ineffective communication between processes and
minimizes processing errors, enabling growth by reducing bottlenecks within
the company.
o Data Collection and Reconciliation - enables the investment firm to
integrate the external data regarding pricing and settlements so that the
firm can quickly and efficiently settle transactions and monitor
performance in an automated fashion.
o Customer Responsiveness - incorporates numerous capabilities enabling our
clients to provide more personal, effective communication with their
customers. This capability enables decision makers for the firm to have
timely access to information in order to make more effective decisions on
behalf of the clients.
BACK OFFICE
We offer three portfolio accounting and management systems: Axys(R), Advent
Partner(R) and Geneva(R), each targeted at a different market segment, to
automate the back office functions. We also offer additional back office
applications, including our REX(TM) solution, which provides reconciliation
management, and our Advent Warehouse(TM) solution, which provides data
warehousing capabilities.
AXYS, our core product, introduced in 1993, is a highly functional
portfolio accounting and management system targeted towards investment
management organizations of all sizes. Axys provides investment professionals
with broad portfolio accounting functionality, timely decision support,
sophisticated performance measurement and flexible reporting. Specifically,
clients can record, account for and report on a variety of investment
instruments, including equities, fixed income, mutual funds and cash. Axys users
gain access on demand to portfolio holdings, asset allocation, realized and
unrealized gains and losses, actual and projected income and other valuable
data. Portfolio performance can be measured for individual portfolios or related
groups, and for any specified time period. Investment professionals can choose
from over 200 pre-defined reports with flexible "as-of" reporting, which can be
customized as to formats and fonts. Clients can easily generate fully customized
reports with the assistance of the Axys Report Writer. Clients can also produce
presentation-quality graphics via an integrated link with Microsoft Excel's
charting capability. In addition, Axys offers integrated multi-currency
capabilities which, among other things, allow reports to be restated in any
currency, tracks reclaimable foreign withholding tax, and can identify
components of return attributable to market prices versus currency rate
fluctuations.
Axys also provides integration with a variety of investment tools and data.
These tools include (i) Moxy, our trade order management solution, (ii) pricing,
corporate actions, analytics and fundamental data via interfaces to data
vendors, (iii) automatic
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data entry and reconciliation of trades with interfaces to the Depository Trust
Corporation (DTC), brokerage firms and custodians, (iv) integrating through the
Internet via our custodial data service and software, and (v) Internet reporting
via Advent Browser Reporting(TM) for Enterprise Users, our Internet reporting
service.
ADVENT PARTNER, introduced in December 1996, is an investment partnership
allocation solution, which integrates with Axys. This product is specifically
designed for hedge funds, venture funds and limited investment partnerships that
face the complex and time-consuming task of consistently and accurately
accounting for and reporting on partnership tax allocation and other activities.
The Windows-based system tracks partner-specific information, handles the
complexities of allocating realized and unrealized gains and losses for tax
purposes, allocates performance incentive fees, provides on-demand partner and
partnership reporting on an economic or tax allocation basis and streamlines the
production of partnership tax returns (K-1's).
GENEVA, introduced to target organizations in 1995 and made commercially
available in October 1997, is a high-end portfolio accounting system designed to
meet the needs of large, global investment management organizations with
complex, international accounting requirements. Geneva offers feature-rich
global accounting, extensive reporting (including profit and loss reporting by
strategy) and sophisticated multicurrency capabilities. In addition, Geneva's
highly flexible design allows users to add newly created financial instruments
and tailor accounting treatments to their specific needs.
REX, introduced in the second quarter of 1997, is the Advent Office
solution for reconciliation management. REX is integrated with Axys and is
designed for firms that want to electronically reconcile their Axys information
against their custodial information. REX automates matching and helps users
identify exceptions, correct or add transactions to their portfolios or
communicate and track changes required by their custodian.
ADVENT WAREHOUSE, introduced in 1998, is a data warehouse solution designed
to allow investment professionals to readily access investment data regardless
of how the data was created or maintained, without impacting the performance of
their high volume transaction-based Advent Office systems. Relational technology
and data warehousing tools provide an open environment for ad hoc decision
support and customized reporting on enterprise wide investment information.
Investment professionals can take advantage of the sea of information captured
during the investment process to improve client service and gain competitive
advantage.
MIDDLE OFFICE
MOXY(R), introduced in 1995, automates and streamlines the trading and
order management process. Moxy facilitates accurate trade order management and
preparation, tracks trade-order status, automates the allocation of block trades
across multiple portfolios and electronically interfaces with Axys to provide an
integrated solution. Moxy supports fixed income, mutual funds and equity trading
and offers multicurrency capabilities. Moxy enables investment managers to
accurately adjust portfolio holdings, rebalance portfolios against models,
interactively assess "what-if" scenarios and automatically create orders to be
executed. For traders, Moxy tracks cash and positions during the trading day,
enables the accurate preparation of block trades and internal electronic trade
tickets, facilitates compliance with investment restrictions and trading
requirements and minimizes trading errors. Moxy also allows traders and others
to view the status of orders via customizable screens and maintain an electronic
audit trail of the trade process. Moxy automates the allocation process of
partial and complete executions and allows the user to send allocation results
using OASYS, an electronic allocation system, to communicate allocations to
brokers electronically. Moxy also provides Internet-ready electronic order
routing based on the industry standard FIX messaging protocol so that Moxy users
can route trades electronically to any FIX-compliant broker or crossing network
that supports the Internet or other TCP/IP connections. Moxy electronically
posts allocated trades into Axys on demand, eliminating time-consuming and
error-prone manual entry.
FRONT OFFICE
QUBE(R), introduced in 1995, is designed to help securities professionals
develop and improve client relationships by automating scheduling, client
communications and client data. For example, Qube integrates with portfolio
information on Axys and enables investment professionals to interactively screen
client investment profiles and notes of conversations to identify appropriate
candidates for various investment opportunities. In addition, Qube can be used
to enhance direct marketing campaigns by matching clients with market
opportunities. Qube captures extensive investment profile information, has
on-line query capability, networking features and mail merge capabilities and
facilitates information sharing across professionals in an office.
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ADVENT BROWSER REPORTING FOR DECISION MAKERS, introduced in 1998, puts the
power of data analysis on the portfolio managers' desktop via the Internet.
Using our On-line Analytical Processing tools (OLAP), investment data can be
sliced and diced to improve the decision making process. ADVENT BROWSER
REPORTING FOR INVESTORS, also introduced in 1998, allows investment managers to
post Axys reports to a secure website where their clients can access these
reports 24 hours a day, 7 days a week. ADVENT BROWSER REPORTING FOR ENTERPRISE
USERS allows investment professionals the ability to access Axys from remote
locations via the Internet and run Axys reports as if they were in their office.
GRANTS MANAGEMENT
GIFTS FOR WINDOWS(TM) is a proposal tracking and grants management system
that allows the user to retrieve and classify requests, generate personalized
letters, manage contacts, schedule and monitor activities, maintain complete
organization history, track payments, contingencies and report requests. This
software product is primarily used by the philanthropic community such as
foundations, corporations and other organizations to manage their grant-making
activities.
MAINTENANCE SUPPORT AND DATA INTERFACES
We earn recurring revenues by offering a choice of maintenance contracts
and by providing proprietary interfaces to external sources of critical data.
These interfaces allow clients to (1) download pricing, corporate actions and
other data from third party vendors such as Interactive Data Corporation
(Interactive Data), a wholly owned indirect subsidiary of Pearson plc, and (2)
interface with DTC, certain brokerage firms and custodians for trading activity.
Many of our clients use our proprietary interface to electronically retrieve
pricing and other data from Interactive Data. Interactive Data pays us a
commission based on Interactive Data's revenues from providing such data to our
clients.
Our Hub Data subsidiary consolidates securities information and data from
various third party providers such as Muller Data Corporation, Standard and
Poor's J.J. Kenny, a division of The McGraw-Hill Companies, Interactive Data and
others, and provides data feeds and services to a range of financial
institutions via electronic interfaces to many portfolio software systems.
Due to the mission-critical nature of our products, many clients purchase
annual maintenance contracts, which entitle them to technical support and
product upgrades as they become available. We continually upgrade and enhance
our products to respond to changing market needs, evolving regulatory
requirements and new technologies.
INTERNET INITIATIVE
We believe the Internet will be a low-cost communications platform used to
integrate external information into our products, thereby providing our clients
with straight through processing of business information. To take advantage of
the Internet, we have launched an Internet Initiative, developing services, both
announced and unannounced, to bring Internet-based products and services to our
clients. We launched REX, our first Internet service during the second quarter
of 1997. Using the Internet, REX consolidates communication and information from
all participating custodians, enabling our clients to quickly and easily
reconcile transactions and holdings with a click of the mouse. Our second
Internet-based product is Advent Browser Reporting, which we introduced in 1998.
Advent Browser Reporting is a reporting component of Advent Office, which
provides users the ability to access Advent Office information through a web
browser. In May 1999, we introduced Advent Corporate Actions, an enterprise-wide
notification service that automates and simplifies the process of tracking
corporate actions such as mergers, spin-offs and bankruptcies.
Additionally we have added Distance Learning and Advent Connection.
Distance Learning is Advent's online interactive classroom offering education
services via the Internet. Now our clients can participate in an interactive
education session with a certified Advent instructor from the comfort of their
office or home. Advent Connection is our client-only website which provides
technical information, support, educational offerings, discussion groups and a
software center that allows our clients to download free client reports.
From time to time, as we begin the development of new products and
services, including our Internet Initiative, we plan to continue to enter into
development agreements with information providers, clients, or other companies
in order to accelerate the delivery of new products and services.
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ALLIANCE PROGRAM
Our Alliance Program was launched in May 1998 and is designed to benefit
both our clients and our partners. The program provides a formal process through
which partners can develop, promote, and sell their products, services, and
solutions in conjunction with our suite of applications. Our Alliance Program
was created to further extend our breadth of product and service offerings.
PROFESSIONAL SERVICES
Professional services consist of consulting, implementation management,
integration management, custom programming, and training. To ensure a successful
product implementation, consultants assist clients with the initial installation
of a system, assist in the conversion of the client's historical data and
provide ongoing training and education. Consulting services may be required for
as little as two days for small systems or up to many weeks for large
implementations. We believe that consulting services facilitate a client's early
success with our products, strengthen the relationship with the client and
generate valuable feedback for us.
Implementation management provides a single point-of-contact who will work
closely with our client's project team to plan the implementation, to optimize
the use of our products, to coordinate Advent resources, to advocate on their
behalf, and to minimize schedule delays and project risks. Additionally,
implementation managers provide documentation for the implementation from
planning through production.
Integration management provides services to clients with more complex
needs. Integration managers work with the clients during implementation to
integrate their systems and workflows with our products. The services include:
development of custom interfaces from back-office systems to our Axys and Moxy
products, configuration and management of large volumes of data, and strategies
for deployment of our products for distributed sites.
We provide our clients with custom programming services that enable clients
to tailor end-user reports to their own specifications. We also provide training
sessions to our clients at various sites across the country. Additionally, we
host semi-annual conferences that provide product information and user workshops
for our clients.
CLIENTS
Our clients vary significantly in size and assets under management and
include investment advisors, brokerage firms, banks, hedge funds, corporations,
public funds, universities and non-profit organizations. At present, we have
licensed products to over 5,800 institutions in 36 countries for use by more
than 60,000 concurrent users.
SALES AND MARKETING
Sales
We sell our products and services primarily through a direct sales
organization comprised of field sales and telesales representatives. Our field
sales force is organized by geographic region and is primarily responsible for
selling our suite of products to mid-sized and large investment management
organizations. We have sales offices in San Francisco, CA, New York, NY,
Cambridge, MA and Melbourne, Australia. Our telesales organization is primarily
focused on selling our products to existing Axys clients and small and mid-sized
investment management organizations. Our telesales representatives are located
in San Francisco, CA, New York, NY, Cambridge, MA and Melbourne, Australia. Our
sales force is supported by extensive, ongoing product and sales training.
Marketing
Our marketing department is responsible for assessing market opportunities,
product planning and management and specific sales support. In addition to its
traditional marketing functions, our marketing organization is actively involved
in a process called "Market Validation." Market Validation uses a system of
interaction with and input from potential and existing clients, product
development, sales and client services and support departments to define the
scope, features and functionality of new products and product upgrades. In
addition, our product managers are responsible for all phases of a product life
cycle from product development through product introduction and beyond. Our
marketing department is also responsible for corporate marketing, including
generating client leads, targeted direct mail campaigns, seminars, advertising,
trade shows and conferences
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and public relations efforts and also provides the sales force with appropriate
written and electronic materials to use during the sales process.
PRODUCT DEVELOPMENT
In recent years, we have substantially increased our product development
expenditures in order to accelerate the rate of new product introductions,
incorporate new technologies and sustain the quality of our products. In 1999,
1998, and 1997, our product development expenditures were approximately $16.8
million, $12.6 million, and $9.4 million, respectively. Our product development
activities include the identification and validation of product specifications
as well as engineering, quality assurance and documentation.
Our new products and product upgrades require varying degrees of
development time, depending upon the complexity of the accounting requirements
and securities regulations which they are intended to address, as well as the
number and type of features incorporated. To date, we have primarily relied upon
the internal development of our products. We have in the past acquired, and may
again in the future acquire, additional technologies or products from third
parties or consultants. We intend to continue to support industry standard
operating environments, client/server architectures and network protocols.
We may not be successful in developing, introducing and marketing new
products or product enhancements on a timely and cost effective basis, or at
all, and our new products and product enhancements may not adequately meet the
requirements of the marketplace or achieve market acceptance. Delays in the
commencement of commercial shipments of new products or enhancements may result
in client dissatisfaction and delay or loss of product revenues. If we are
unable, for technological or other reasons, to develop and introduce new
products or enhancements of existing products in a timely manner in response to
changing market conditions or client requirements, or if new products or new
versions of existing products do not achieve market acceptance, our business
would be seriously harmed. In addition, our ability to develop new products and
product enhancements is dependent upon the products of other software vendors,
including certain system software vendors, such as Microsoft Corporation,
database vendors and development tool vendors. If the products of such vendors
have design defects or flaws, or if such products are unexpectedly delayed in
their introduction, our business could be seriously harmed. Software products as
complex as those offered by us may contain undetected defects or errors when
first introduced or as new versions are released. Although we have not
experienced adverse effects resulting from any software errors, we cannot assure
you that, despite testing by us and our clients, defects or errors will not be
found in new products after commencement of commercial shipments, resulting in
loss of or delay in market acceptance, which could seriously harm our business.
COMPETITION
The market for investment management software is segmented by the relative
size of the organizations that manage investment portfolios. The market in each
segment is intensely competitive and highly fragmented, subject to rapid change
and highly sensitive to new product introductions and marketing efforts by
industry participants. Our competitors include providers of software and related
services as well as providers of timeshare services. Competitors vary in size,
scope of services offered and platforms supported. In addition, we compete
indirectly with existing and potential clients, many of whom develop their own
software for their particular needs and therefore may be reluctant to license
software products offered by independent vendors such as Advent. With respect to
the market for our portfolio accounting products, we currently compete primarily
with Shaw Data, a division of SunGard Data Systems, Inc., Thomson Financial, a
division of The Thomson Corporation, and with a number of other smaller
companies. We believe that the principal competitive factors affecting our
market include product performance and functionality, ease of use, scalability,
ability to integrate external data sources, product and company reputation,
client service and support and price. We may not compete successfully against
current and future competitors, and competitive pressures could result in price
reductions, reduced operating margins or the loss of market share.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
Our success is dependent in part on our ability to protect our proprietary
technology. We rely on a combination of copyright and trademark laws, trade
secrets, software security measures, confidentiality agreements and license
agreements to establish and protect our proprietary rights and our software. We
have registered trademarks including our "Advent" name and logo. We will
continue to evaluate the registration of additional trademarks as appropriate.
We generally enter into confidentiality agreements with our employees and with
our resellers and customers. Despite these efforts, it may be possible for
unauthorized third parties to copy certain portions of our products or to
reverse engineer or otherwise obtain and use our proprietary information. We do
not have any patents, and existing copyright laws afford only limited
protection. In addition, we cannot be certain that others will not develop
substantially equivalent or superseding proprietary technology, or that
equivalent products will not be marketed in
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competition with our products, thereby substantially reducing the value of our
proprietary rights. Furthermore, confidentiality agreements between us and our
employees or any license agreements with our clients may not provide meaningful
protection of our proprietary information in the event of any unauthorized use
or disclosure of it. In addition, the laws of certain countries do not protect
our proprietary rights to the same extent as do the laws of the United States.
Accordingly, we may not be able to protect our proprietary software against
unauthorized third party copying or use, which could significantly harm our
business.
EMPLOYEES
As of March 1, 2000, we had 603 employees, including 75 in sales, 109 in
professional services, 30 in marketing, 168 in product development, 117 in
client services and support and 104 in finance, administration, operations and
general management. We believe that we maintain competitive compensation,
benefits, equity participation and work environment policies to assist in
attracting and retaining qualified personnel. Our success depends to a
significant extent upon a limited number of members of senior management and
other key employees, including Stephanie DiMarco, our Chairman of the Board. The
loss of the service of one or more senior managers or other employees could have
a material adverse effect upon our business, operating results and financial
condition. None of our employees are represented by a labor union. We have not
experienced any work stoppages and we consider relations with our employees to
be good.
ITEM 2. PROPERTIES
We lease office space in San Francisco, CA, New York, NY, Millburn, NJ,
Cambridge, MA, and Melbourne, Australia. We have three separate leases in San
Francisco; a 59,000 square foot lease on our main office that expires in 2008
with a five-year extension option; a 32,000 square foot lease in an adjacent
building that expires in 2004 with a five-year extension option; and a 60,000
square foot lease that expires in 2009 with two consecutive five-year extension
options. This office space is directly across the street from the main office.
These are Advent's principal executive offices, where product development,
marketing, technical support and production are located. Advent leases three
separate office spaces in New York. We currently have a 12,100 square foot
lease, expiring in April 2000. We signed a new lease for 30,100 square feet,
expiring in 2010, with a five-year extension option at another location near the
current space and plan to occupy the premises by April 2000. Our third lease in
New York is a 29,000 square foot lease for MicroEdge that expires in 2008 with a
five-year extension. We have a 1000 square foot lease in New Jersey that expires
in June 2002. We have a 6,700 square foot lease in Cambridge, MA, which expires
in 2003. In addition, there is a 5,300 square foot lease in Melbourne, Australia
that expires in 2004, with a five-year extension option. We believe that these
facilities are adequate for our near-term needs and that suitable additional or
alternative space will be available as needed.
ITEM 3. LEGAL PROCEEDINGS
From time to time we are involved in litigation incidental to the conduct
of our business. We are not party to any lawsuit or proceeding that, in our
opinion, is likely to seriously harm our business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
None.
Executive Officers of the Registrant
The following sets forth certain information regarding the executive
officers of Advent as of March 6, 2000:
Name Age Position
---------------------- ---- -----------------------------------------
Stephanie G. DiMarco 42 Chairman of the Board
Peter M. Caswell 43 President and Chief Executive Officer
Lily S. Chang 51 Executive Vice President and Chief
Technology Officer
Irv H. Lichtenwald 44 Senior Vice President, CFO and Secretary
Armistead D. Puryear 53 Senior Vice President, Worldwide Sales
Ms. DiMarco founded Advent in June 1983. She became Chairman of the Board
in November 1995. In addition, she served as President until April 1997 and
Chief Executive Officer until November 1999. Ms. DiMarco holds a B.S. in
Business Administration from the University of California at Berkeley.
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Mr. Caswell joined Advent in December 1993 as Vice President, Sales and
Professional Services. In 1996, Mr. Caswell took on responsibility for our
marketing efforts and was promoted to Senior Vice President. In April 1997, Mr.
Caswell became President and Chief Operating Officer. In November 1999, Mr.
Caswell was promoted to President, Chief Executive Officer, and member of the
Board of Directors. Prior to joining Advent, Mr. Caswell held various management
positions, including Vice President and General Manager, Western Region, with
Dun & Bradstreet Software Services, Inc. and its predecessor, Management Science
America, Inc., a supplier of computer software for finance, marketing,
manufacturing and human resource functions. Mr. Caswell holds a diploma in
Management Studies (M.B.A. equivalent) and a Higher National Diploma in
Agriculture (B.S. equivalent) from Seale Hayne College in England.
Ms. Chang joined Advent in May 1993 as Vice President, Technology. In April
1997, Ms. Chang was promoted to Executive Vice President, Technology and was
also named Chief Technology Officer. From July 1989 to May 1993, Ms. Chang held
various positions, including Vice President, Strategic Accounts and Vice
President of Oracle Financial Applications, with Oracle Corporation, a software
licensing and consulting business. Ms. Chang holds a B.S. in Biochemistry from
Taiwan University.
Mr. Lichtenwald joined Advent in March 1995 as Chief Financial Officer.
From February 1984 to March 1995, Mr. Lichtenwald served as Chief Financial
Officer of Trinzic Corporation, a computer software developer, and its
predecessor Aion Corporation. From February 1982 to February 1984, he served as
controller of Visicorp, a computer software developer. Mr. Lichtenwald holds an
M.B.A. from the University of Chicago and a B.B.A. from Saginaw Valley State
College. Mr. Lichtenwald is a Certified Public Accountant.
Mr. Puryear joined Advent in December 1994 as Director of Client Sales. In
July 1998, Mr. Puryear was promoted to Senior Vice President, Worldwide Sales
with responsibility for sales to Advent's client base, new business development
and telemarketing. Before joining Advent, he was with Oracle Corporation and was
responsible for their Western Sales Telesales organization. Mr. Puryear has 14
years of software and technology experience as well as two years in the
investment management industry with PaineWebber, Inc. Prior to his business
career he was a pilot in the U.S. Air Force and received a Bachelor of Science
degree at the U.S. Air Force Academy in 1969.
PART II
With the exception of the information incorporated by reference to the 1999
Annual Report to Stockholders in Part II of this Form 10-K, Advent's 1999 Annual
Report to Stockholders is not deemed to be filed as part of this Form 10-K.
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Advent had approximately 82 stockholders of record at March 6, 2000.
Because many of our shares of Common Stock are held by brokers and other
institutions on behalf of stockholders, we are unable to estimate the total
number of stockholders represented by these record holders. Other information
required by this Item is incorporated by reference to the sections entitled
"Selected Financial Data - Price Range of Common Stock" and "Corporate
Information - Stock Information" in Advent's 1999 Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA
Other information required by this Item is incorporated by reference to the
sections entitled "Selected Financial Data - Selected Annual Data" and "
- -Selected Quarterly Data" in Advent's 1999 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is incorporated by reference to the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Advent's 1999 Annual Report to Stockholders.
In addition, we operate in a rapidly changing environment that involves a
number of risks, some of which are beyond our control. The following discussion
highlights some of these risks.
OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY AND WE MAY NOT BE ABLE TO MAINTAIN
OUR EXISTING GROWTH RATES.
Licenses into multi-user networked environments have increased both in
individual size and number, and the timing and size of individual license
transactions are becoming increasingly important factors in quarterly operating
results. The sales cycles for transactions of this size are often lengthy and
unpredictable. We may not be successful in closing large license transactions
such
9
as these on a timely basis or at all. Accordingly, if future revenues from large
site licenses constitute a material portion of our net revenues, the timing of
such licenses could cause additional variability in our quarterly operating
results. We typically ship our software products shortly after receipt of a
signed license agreement and initial payment and, consequently, software product
backlog at the beginning of any quarter typically represents only a small
portion of that quarter's expected revenues. Our expense levels are based in
significant part on our expectations of future revenues and therefore are
relatively fixed in the short term. Due to the fixed nature of these expenses
combined with the relatively high gross margin historically achieved by us on
products and services, an unanticipated decline in net revenues in any
particular quarter is likely to disproportionately adversely affect operating
results.
We have generally realized lower revenues from license fees in the first
quarter of the year than in the last quarter of the prior year. We believe that
this has been due primarily to the concentration by some clients of larger
capital purchases in the fourth quarter of the calendar year and their lower
purchasing activity during the subsequent first quarter. We believe our annual
incentive compensation plans, which tend to produce increased year-end sales
activity, compound this factor. Furthermore, we have often recognized a
substantial portion of each quarter's license revenues in the last month of that
quarter.
Because of the above factors, we believe that period to period comparisons
of our operating results are not necessarily meaningful and that these
comparisons cannot be relied upon as indicators of future performance.
Our stock price has fluctuated significantly since our initial public
offering in November 1995. Like many companies in the technology and emerging
growth sector, our stock price may be subject to wide fluctuations, particularly
during times of high market volatility. If net revenues or earnings in any
quarter fail to meet the investment community's expectations, our stock price is
likely to decline. In addition, our stock price may be affected by broader
market trends unrelated to our performance.
OUR SALES CYCLE IS LONG AND WE HAVE LIMITED ABILITY TO FORECAST THE TIMING AND
AMOUNT OF SPECIFIC SALES.
Because the purchase of our software products often requires significant,
executive-level investment and systems architecture decisions by prospective
customers, we must generally engage in a relatively lengthy sales effort. These
transactions may be delayed during the customer acceptance process because we
must provide a significant level of education to prospective customers regarding
the use and benefit of our products. As a result, the sales cycle associated
with the purchase of our software products is typically between two and nine
months depending upon the size of the client, though it can be considerably
longer, and is subject to a number of significant risks over which we have
little or no control, including customers' budgeting constraints and internal
acceptance procedures. As a result of the length of our sales cycle, we have
limited ability to forecast the timing and amount of specific sales. The timing
of large individual sales is especially difficult to forecast. Because our
expenses are generally relatively fixed in the near term, any shortfall from
anticipated revenues could result in significant variations in our operating
results from quarter to quarter.
The implementation of our solutions involves a significant commitment of
resources by customers and by us over an extended period of time. Also, the size
and complexity of any particular implementation project can cause delays in the
sales cycle that precedes it. Any such delays could seriously harm our business.
WE DEPEND HEAVILY ON OUR PRODUCT, AXYS.
In 1997, 1998 and 1999, we derived a substantial majority of our net revenues
from the licensing of Axys and related products and services. In addition, many
of our other products, such as Moxy, Qube and various data interfaces were
designed to operate with Axys to provide an integrated solution. As a result, we
believe that a majority of our net revenues, at least through 2000, will depend
upon continued market acceptance of Axys, enhancements or upgrades to Axys and
related products and services.
WE ARE CONTINUING TO EXPAND OUR INTERNET INITIATIVE.
To take advantage of the Internet, we are continuing to expand an Internet
initiative under which we are developing services, both announced and
unannounced, to bring Internet-based products and services to clients. The first
of these services, Rex, was launched during the second quarter of 1997. The
second service, Advent Browser Reporting, was launched in the third quarter of
1998. As we develop new products and services under our Internet Initiative, we
have and will continue to enter into development agreements with information
providers, clients or other companies in order to accelerate the delivery of new
products and services. We may not be successful in marketing our Internet
services or in developing other Internet services. Our failure to do so could
seriously harm our business.
10
WE EXPECT OUR GROSS MARGIN MAY FLUCTUATE OVER TIME.
We also expect that our gross margins may fluctuate from period to period
as we continue to introduce new recurring revenue products, expand our
professional services organization and associated revenue, continue to hire
additional personnel and increase other expenses to support our business. We
plan our expense levels based primarily on forecasted revenue levels. Because
these expenses are relatively fixed in the short term, a fluctuation in revenue
could lead to operating results differing from expectations
WE MUST CONTINUE TO INTRODUCE NEW PRODUCTS AND PRODUCT ENHANCEMENTS.
The market for our products is characterized by rapid technological change,
changes in customer demands and evolving industry standards. As a result, our
future success will continue to depend upon our ability to develop new products
that address the future needs of our target markets and to respond to these
changing standards and practices. Delays in the commencement of commercial
shipments of new products or enhancements may result in client dissatisfaction
and delay or loss of product revenues. In addition, our ability to develop new
products and product enhancements is dependent upon the products of other
software vendors, including system software vendors, such as Microsoft
Corporation, database vendors and development tool vendors. If the products of
these vendors have design defects or flaws, or if these products are
unexpectedly delayed in their introduction, our business could be seriously
harmed.
WE DEPEND UPON FINANCIAL MARKETS.
The target clients for our products include a range of organizations that
manage investment portfolios, including investment advisors, brokerage firms,
banks and hedge funds. In addition, we target corporations, public funds,
universities and non-profit organizations, which also manage investment
portfolios and have many of the same needs. The success of many of our clients
is intrinsically linked to the health of the financial markets. We believe that
demand for our products could be disproportionately affected by fluctuations,
disruptions, instability or downturns in the financial markets which may cause
clients and potential clients to exit the industry or delay, cancel or reduce
any planned expenditures for investment management systems and software
products.
GENERAL ECONOMIC CONDITIONS MAY REDUCE OUR LICENSE REVENUES.
We believe that the market for large management software systems may be
negatively impacted by a number of factors, including:
o reductions in capital expenditures by large customers;
o poor performance of major financial markets, and
o increasing competition.
The above factors may, in turn, give rise to a number of market trends that may
slow license revenue growth across the industry, including:
o longer sales cycles;
o deferral or delay of information technology projects and generally
reduced expenditures for software; and
o increased priced competition.
Although we do not believe these factors have impacted our revenues to
date, the continued presence of these factors in the market for large management
software systems could adversely affect our business and results of operations.
IF OUR RELATIONSHIP WITH INTERACTIVE DATA IS TERMINATED, OUR BUSINESS MAY BE
HARMED.
Many of our clients use our proprietary interface to electronically
retrieve pricing and other data from Interactive Data. Interactive Data pays us
a commission based on their revenues from providing this data to our clients.
Our software products
11
have been customized to be compatible with their system and this software would
need to be redesigned if their services were unavailable for any reason.
Termination of our agreement with Interactive Data would require at least two
years notice by either us or them, or 90 days in the case of material breach. If
our relationship with Interactive Data were terminated or their services were
unavailable to our clients for any reason, replacing these services could be
costly and time consuming.
WE FACE INTENSE COMPETITION.
The market for investment management software is intensely competitive and
highly fragmented, subject to rapid change and highly sensitive to new product
introductions and marketing efforts by industry participants. Our competitors
include providers of software and related services as well as providers of
timeshare services.
Our competitors vary in size, scope of services offered and platforms
supported. In addition, we compete indirectly with existing and potential
clients, many of whom develop their own software for their particular needs and
therefore may be reluctant to license software products offered by independent
vendors like us. Many of our competitors have longer operating histories and
greater financial, technical, sales and marketing resources than we do. We
cannot guarantee that we will be able to compete successfully against current
and future competitors or that competitive pressures will not result in price
reductions, reduced operating margins and loss of market share, any one of which
could seriously harm our business.
WE FACE CHALLENGES IN EXPANDING OUR INTERNATIONAL OPERATIONS.
We market and sell our products in the United States and, to a lesser
extent, internationally. We have established a subsidiary located in Australia
to market and sell our products in Australia. In addition, during 1999 we
entered into a distributor relationship with Advent Europe, an independent
entity financially backed by our existing distributor in Scandinavia. In order
to expand our international operations, we would need to continue to establish
additional facilities, acquire other businesses or enter into additional
distribution relationships in other parts of the world. The expansion of our
existing international operations and entry into additional international
markets will require significant management attention and financial resources.
We cannot be certain that our investments in establishing facilities in other
countries will produce desired levels of revenue. We currently have limited
experience in developing localized versions of our products and marketing and
distributing our products internationally. In addition, international operations
are subject to other inherent risks, including:
o The impact of recessions in economies outside the United States;
o Greater difficulty in accounts receivable collection and longer
collection periods;
o Unexpected changes in regulatory requirements;
o Difficulties in successfully adapting our products to the language and
technology standards of other countries;
o Difficulties and costs of staffing and managing foreign operations;
o Reduced protection for intellectual property rights in some countries;
o Potentially adverse tax consequences; and
o Political and economic instability.
Our international revenues are generally denominated in US dollars, with
the exception of our subsidiary, Advent Australia. The revenues, expenses,
assets and liabilities of our subsidiary, Advent Australia, are primarily
denominated in Australian dollars. We do not currently engage in currency
hedging activities. Although exposure to currency fluctuations to date has been
insignificant, future fluctuations in currency exchange rates may adversely
affect revenues from international sales and the US dollar value of Advent
Australia's revenues, expenses, assets and liabilities.
12
UNDETECTED SOFTWARE ERRORS OR FAILURES FOUND IN NEW PRODUCTS MAY RESULT IN LOSS
OF OR DELAY IN MARKET ACCEPTANCE OF OUR PRODUCTS THAT COULD SERIOUSLY HARM OUR
BUSINESS.
Our products may contain undetected software errors or failures when first
introduced or as new versions are released. Despite testing by us and by current
and potential customers, errors may not be found in new products until after
commencement of commercial shipments, resulting in loss of or a delay in market
acceptance, which could seriously harm our business.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY WE MAY BE SUBJECT TO
INCREASED COMPETITION THAT COULD SERIOUSLY HARM OUR BUSINESS.
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our proprietary
rights. We seek to protect our software, documentation and other written
materials under trade secret and copyright laws, which afford only limited
protection. We cannot assure you that we will develop proprietary products or
technologies that are patentable, that any patent, if issued, would provide us
with any competitive advantages or would not be challenged by third parties, or
that the patents of others will not adversely affect our ability to do business.
Litigation may be necessary to protect our proprietary technology. This
litigation may be time-consuming and expensive. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary. In
addition, the laws of some foreign countries do not protect proprietary rights
to as great an extent as do the laws of the United States. We cannot assure you
that our means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop similar technology, duplicate our
products or design around any patent that may be issued to us or other
intellectual property rights of ours.
WE FACE RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR DIVESTITURES.
We may acquire or make investments in complementary companies, products or
technologies. In addition, we continually evaluate the performance of all our
products and product lines and may sell or discontinue current products or
product lines. If we buy a company, we could have difficulty in integrating that
company's personnel and operations. In addition, the key personnel of the
acquired company may decide not to work for us. If we make other types of
acquisitions, we could have difficulty in assimilating the acquired technology
or products into our operations. These difficulties could disrupt our ongoing
business, distract our management and employees and increase our expenses.
Furthermore, we may have to incur debt, write-off software development costs or
other assets, incur severance liabilities, amortize expenses related to goodwill
and other intangible assets or issue equity securities to pay for any future
acquisitions. The issuance of equity securities could dilute our existing
stockholders' ownership.
In addition, potential acquisition candidates targeted by us may not have
audited financial statements, detailed financial information or any degree of
internal controls. There can be no assurance that an audit subsequent to any
successful completion of an acquisition will not reveal matters of significance,
including issues regarding revenues, expenses, liabilities, contingent or
otherwise, and intellectual property. There can be no assurance that the Company
would be successful in overcoming these or any other significant risks
encountered and the failure to do so could have a material adverse effect upon
the Company's business, operating results and financial condition.
WE MUST ATTRACT AND RETAIN QUALIFIED TECHNICAL AND SALES PERSONNEL.
Our continued success depends, in part, on our ability to identify,
attract, motivate and retain qualified technical, sales and other personnel.
Because our future success is dependent on our ability to continue to enhance
and introduce new products, we are particularly dependent on our ability to
identify, attract, motivate and retain qualified engineers with the requisite
education, backgrounds and industry experience. Competition for qualified
engineers, particularly in Northern California and the San Francisco Bay Area,
is intense. The loss of the services of a significant number of our engineers or
sales people could be disruptive to our development efforts or business
relationships and could seriously harm our business.
13
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments". We are
exposed to financial market risks, including changes in foreign currency
exchange rates and interest rates. Much of our revenue and capital spending is
transacted in U.S. dollars. However, since the formation of Advent Australia,
Pty. Ltd., (Advent Australia) whose revenues and capital spending are transacted
in Australian dollars we have greater exposure to foreign currency fluctuations.
Results of operations from Advent Australia are not material to our operating
results, therefore, we believe that foreign currency exchange rates should not
materially adversely affect our overall financial position, results of
operations or cash flows. We believe that the fair value of our investment
portfolio or related income would not be significantly impacted by increases or
decreases in interest rates due mainly to the short-term nature of our
investment portfolio. However, a sharp increase in interest rates could have a
material adverse affect on the fair value of our investment portfolio.
Conversely, sharp declines in interest rates could seriously harm interest
earnings of our investment portfolio.
The table below presents principal amounts by expected maturity (in U.S.
dollars) and related weighted average interest rates by year of maturity for our
investment portfolio.
Estimated Fair Value
at December 31,
2000 2001 Thereafter Total
(in thousands)
Federal Instruments $ 18,450 $ - $ 18,450
Weighted Average Interest Rate 5.58 5.58
Commercial Paper & Short-term obligations 43,320 43,320
Weighted Average Interest Rate 5.65 5.65
Corporate Notes & Bonds 3,000 3,000
Weighted Average Interest Rate 5.25 5.25
Municipal Notes & Bonds 27,300 10,285 37,585
Weighted Average Interest Rate 5.71 6.14 6.46
---------------------------------------------------
Total Portfolio, excluding equity securities $ 92,070 $ 10,285 $ - $102,355
At December 31, 1999, cash, cash equivalents and short-term investments
totaled approximately $119 million, which is comprised of the $102 million in
our investment portfolio presented above, $13 million in other cash and cash
equivalents and $4 million in other investments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(1) Financial Statements.
The following financial statements of Advent and the Report of
Independent Accountants are incorporated by reference to page 36
through 53 of Advent's 1999 Annual Report to Stockholders:
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Operations -Years Ended December 31,
1999, 1998, and 1997
14
Consolidated Statements of Stockholders' Equity- Years Ended
December 31, 1999, 1998, and 1997
Consolidated Statements of Cash Flows- Years Ended December 31,
1999, 1998, and 1997
Notes to Consolidated Financial Statements
Report of Independent Accountants
(2) Financial Statement Schedules.
The following financial statement schedules of Advent for the
years ended December 31, 1999, 1998, and 1997 are filed as part of
this Form 10-K and should be read in conjunction with Advent's
Financial Statements.
Report of Independent Accountants S-1
Schedule II --- Valuation and Qualifying Accounts S-2
Schedules not listed above have been omitted because they are not
applicable or are not required or because the required information is
included in the Financial Statements or Notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Certain information required by Part III is omitted from this Form 10-K in
that the Registrant will file a definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended, (Proxy
Statement) not later than 120 days after the end of the fiscal year covered by
this Form 10-K and certain information included therein is incorporated herein
by reference. Only those sections of the Proxy Statement that specifically
address the items set forth herein are incorporated by reference and such
incorporation does not include, specifically, the Performance Graph included in
such Proxy Statement.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning our directors required by this Item is
incorporated by reference to our Proxy Statement.
The information concerning our executive officers required by this Item is
incorporated by reference herein to the section of the Form 10-K in Part I, Item
4, entitled "Executive Officers of Advent."
The information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 is to be set forth in our Proxy Statement and such
information is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is incorporated by reference to our Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is incorporated by reference to our Proxy
Statement.
15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is incorporated by reference to our Proxy
Statement.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Annual Report on
Form 10-K:
1. Consolidated Financial Statements required to be filed by Item 8
of Form 10-K. See the list of Financial Statements contained in
Item 8 of this Report.
2. Financial Statement Schedules required to be filed by Item 8 of
Form 10-K. See the list of Financial Statement Schedules
contained in Item 8 of this Report.
3. Exhibits.
The Exhibits listed on the accompanying Index to Exhibits
immediately following the financial statement schedules are filed
as part of, or incorporated by reference into, this Form 10-K.
Exhibit
Number Description of Document
--------- ------------------------------------------------------
3.1+ Certificate of Incorporation of Registrant.
3.2+ Amended and Restated Certificate of Incorporation of
Registrant.
3.3 Amended and Restated Bylaws of Registrant.
4.1+ Specimen Common Stock Certificate of Registrant.
10.1+ Form of Indemnification Agreement for Executive
Officers and Directors.
10.2++ 1992 Stock Plan, as amended, and form of stock option
agreement.
10.3+ 1993 Profit Sharing & Employee Savings Plan, as
amended.
10.4+ 1995 Employee Stock Purchase Plan and form of
subscription agreement.
10.5+ 1995 Director Option Plan and form of stock option
agreement.
10.7+ Full Service Office Lease dated April 14, 1992, as
amended, between Brannan Street Properties and
Advent for facilities located at 301 Brannan in San
Francisco, California.
10.8+ Standard Form of Lease dated November 6, 1992
between Broadway Management Company as agent for 500
Fifth Avenue Associates and Advent for facilities
located at 500 Fifth Avenue, New York, New York.
10.9+ Severance Agreement between Advent and Peter M.Caswell
dated December 10, 1993.
10.10+* Agreement between Advent and Interactive Data
Corporation dated January 1, 1995.
10.14** Office Lease dated August 1, 1998, between SOMA
Partners, L.P. and Advent for facilities located at
301 Brannan in San Francisco, California.
10.15 Office Lease dated July 22, 1999, between 405
Lexington, L.L.C. and Advent for facilities
located at 666 Third Avenue in New York, New York.
13.1 Selected Portions of Advent Software, Inc.'s 1999
Annual Report to Stockholders.
21.1 Subsidiaries of Advent.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
24.1 Power of Attorney (included on page 17 of this Form
10-K).
27.1 Financial Data Schedule.
----------
+ Incorporated by reference to the exhibit filed with
Advent's registration statement filed on Form SB-2
(commission file number 33-97912-LA), declared
effective on November 15, 1995
++ Incorporated by reference to the exhibits filed
with Advent's registration statements file on Form
S-8 on May 28, 1999.
* Confidential treatment requested as to certain
portions of this exhibit.
** Incorporated by reference to Advent's Annual Report
on Form 10-K for the year ended December 31, 1998.
(b) Reports on Form 8-K
None
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on this 17th day of March, 2000.
ADVENT SOFTWARE, INC.
By: /s/ Peter M. Caswell
--------------------
Peter M. Caswell
Chief Executive Officer,
President and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter M. Caswell and Irv H. Lichtenwald,
jointly and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- ------------------------- ---------------------------------- --------------
/s/ Peter M. Caswell Chief Executive Officer, President March 17, 2000
- -------------------- and Director
Peter M. Caswell (Principal Executive Officer)
/s/ Irv H. Lichtenwald Senior Vice President, Chief March 17, 2000
- ---------------------- Financial Officer and Secretary
Irv H. Lichtenwald (Principal Financial Officer)
/s/ Patricia Voll Vice President, Finance March 17, 2000
- ------------------ (Principal Accounting Officer)
Patricia Voll
/s/ Stephanie G. DiMarco Chairman of the Board and March 17, 2000
- ------------------------ Director
Stephanie G. DiMarco
/s/ Frank H. Robinson Director March 17, 2000
- ---------------------
Frank H. Robinson
/s/ Wendell G. Van Auken Director March 17, 2000
- ------------------------
Wendell G. Van Auken
/s/ William F. Zuendt Director March 17, 2000
- ---------------------
William F. Zuendt
/s/ Monte Zweben Director March 17, 2000
- ----------------
Monte Zweben
17
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Advent Software, Inc.
Our audits of the consolidated financial statements referred to in our report
dated January 21, 2000 appearing on page 53 of the 1999 Annual Report to
Shareholders of Advent Software, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedules listed in Item
14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
San Francisco, California
January 21, 2000, except as to the stock split described in Note 8, as to which
the date is February 17, 2000
S-1
SCHEDULE II
ADVENT SOFTWARE, INC
VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1997, 1998, and 1999
Additions
Balance at Charged Charged Balance at
Beginning To to Other End of
Description of Period Expense Accounts Deductions Period
- ------------------ ------------ ------------ -------- ---------- -----------
Allowance for
doubtful accounts:
1997 $ 235,000 $ 248,000 -- $ 218,000 $265,000
1998 $ 265,000 $ 471,000 -- $ 374,000 $362,000
1999 $ 362,000 $1,130,000 -- $ 776,000 $716,000
S-2