ADVENT SOFTWARE INC /DE/ - FORM 10-Q

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2015

o 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 or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

600 Townsend Street, San Francisco, California 94103

(Address of principal executive offices and zip code)

(415) 543-7696

(Registrant’s telephone number, including area code)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x		Accelerated filer ¨

Non-accelerated filer ¨		Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the registrant’s common stock outstanding as of April 30, 2015 was 52,690,357.

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INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	53

Signatures		54

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADVENT SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	March 31			December 31
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	23,490		$	28,784
Short-term marketable securities	4,296			7,298
Accounts receivable, net	62,495			61,870
Deferred taxes, current	31,777			28,275
Prepaid expenses and other	29,673			24,984
Total current assets	151,731			151,211
Property and equipment, net	26,070			27,995
Goodwill	198,554			202,290
Other intangibles, net	16,736			18,803
Long-term marketable securities	—			1,874
Deferred taxes, long-term	18,178			18,358
Other assets	12,464			13,245
Noncurrent assets of discontinued operation	1,093			1,093

Total assets	$	424,826		$	434,869

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	11,397		$	12,041
Dividends payable	—			6,750
Accrued liabilities	37,548			36,541
Deferred revenues	191,740			197,144
Income taxes payable	1,233			132
Current portion of long-term debt	20,000			20,000
Current liabilities of discontinued operation	614			572
Total current liabilities	262,532			273,180
Deferred revenue, long-term	6,273			6,972
Long-term income taxes payable	9,513			9,513
Long-term debt	185,000			200,000
Other long-term liabilities	9,555			7,821
Noncurrent liabilities of discontinued operation	2,008			2,170

Total liabilities	474,881			499,656

Commitments and contingencies (See Note 13)

Stockholders’ deficit:
Common stock	527			519
Additional paid-in capital	75,925			61,455
Accumulated deficit	(125,186		)	(130,234		)
Accumulated other comprehensive (loss) income	(1,321		)	3,473
Total stockholders’ deficit	(50,055		)	(64,787		)
Total liabilities and stockholders’ deficit	$	424,826		$	434,869

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ADVENT SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31
	2015			2014

Net revenues:
Recurring revenues	$	96,174		$	89,129
Non-recurring revenues	7,090			7,675

Total net revenues	103,264			96,804

Cost of revenues:
Recurring revenues	21,501			18,627
Non-recurring revenues	7,431			8,055
Amortization of developed technology	1,570			1,800

Total cost of revenues	30,502			28,482

Gross margin	72,762			68,322

Operating expenses:
Sales and marketing	19,664			19,729
Product development	19,557			17,639
General and administrative	11,457			10,558
Amortization of other intangibles	798			909
Transaction-related fees	8,444			—
Restructuring charges	2,643			174

Total operating expenses	62,563			49,009

Income from continuing operations	10,199			19,313
Interest and other income (expense), net	(897		)	(2,225		)

Income from continuing operations before income taxes	9,302			17,088
Provision for income taxes	4,226			6,181

Net income from continuing operations	$	5,076		$	10,907

Discontinued operation:
Net loss from discontinued operation (net of applicable taxes of $(5) and $(14), respectively)	(28		)	(21		)

Net income	$	5,048		$	10,886

Basic net income (loss) per share:
Continuing operations	$	0.10		$	0.21
Discontinued operation	(0.00		)	(0.00		)
Total operations	$	0.10		$	0.21

Diluted net income (loss) per share:
Continuing operations	$	0.09		$	0.20
Discontinued operation	(0.00		)	(0.00		)
Total operations	$	0.09		$	0.20

Weighted average shares used to compute net income (loss) per share:
Basic	52,411			51,358
Diluted	55,106			53,807

The accompanying notes are an integral part of these condensed consolidated financial statements.

Net income (loss) per share is based on actual calculated values and totals may not sum due to rounding.

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ADVENT SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31
	2015			2014

Net income	$	5,048		$	10,886

Other comprehensive income (loss), net of taxes
Foreign currency translation	(4,765		)	499
Unrealized loss on marketable securities (net of applicable taxes of $12 and $0, respectively)	(29		)	—
Total other comprehensive income (loss), net of taxes	(4,794		)	499

Comprehensive income	$	254		$	11,385

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ADVENT SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31
	2015			2014
Cash flows from operating activities:
Net income	$	5,048		$	10,886
Adjustment to net income for discontinued operation net loss	28			21
Net income from continuing operations	5,076			10,907

Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Stock-based compensation	6,605			7,628
Excess tax benefit from stock-based compensation	(4,162		)	(3,348		)
Depreciation and amortization	6,499			5,475
Amortization of debt issuance costs	367			354
Reduction of doubtful accounts	(20		)	(12		)
Reduction of sales reserves	(96		)	(250		)
Deferred income taxes	697			(135		)
Other	(538		)	130
Effect of statement of operations adjustments	9,352			9,842
Changes in operating assets and liabilities:
Accounts receivable	(604		)	9,633
Prepaid and other assets	(4,062		)	2,094
Accounts payable	(650		)	(1,999		)
Accrued liabilities	2,405			(8,151		)
Deferred revenues	(6,007		)	(5,852		)
Income taxes payable	1,101			4,401
Effect of changes in operating assets and liabilities	(7,817		)	126

Net cash provided by operating activities from continuing operations	6,611			20,875

Cash flows from investing activities:
Purchases of property and equipment	(2,026		)	(2,085		)
Capitalized software development costs	(490		)	(472		)
Change in restricted cash	(197		)	—
Purchases of marketable securities	(2,000		)	—
Sales and maturities of marketable securities	6,831			—

Net cash provided by (used in) investing activities from continuing operations	2,118			(2,557		)

Cash flows from financing activities:
Proceeds from common stock issued from exercises of stock options	5,000			1,246
Excess tax benefits from stock-based compensation	4,162			3,348
Withholding taxes related to equity award net share settlement	(811		)	(1,581		)
Repayment of debt	(15,000		)	(10,000		)
Payment of cash dividend	(6,750		)	—

Net cash used in financing activities from continuing operations	(13,399		)	(6,987		)

Net cash transferred to discontinued operation	(147		)	(161		)

Effect of exchange rate changes on cash and cash equivalents	(477		)	(34		)

Net change in cash and cash equivalents from continuing operations	(5,294		)	11,136
Cash and cash equivalents of continuing operations at beginning of period	28,784			33,828

Cash and cash equivalents of continuing operations at end of period	$	23,490		$	44,964
Supplemental disclosure of cash flow information:
Noncash investing activities:
Capital expenditures included in accounts payable	$	892		$	469

Cash flows from discontinued operation of MicroEdge, Inc.:
Net cash used in operating activities	$	(147	)	$	(161	)
Net cash transferred from continuing operations	147			161

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ADVENT SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Basis of Presentation

The condensed consolidated financial statements include the accounts of Advent Software, Inc. and its subsidiaries (collectively “Advent” or the “Company”). All inter-company amounts and transactions have been eliminated.

Advent has prepared these condensed consolidated financial statements in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial information. Certain information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in these interim statements pursuant to such SEC rules and regulations. These interim financial statements should be read in conjunction with the audited financial statements and related notes included in Advent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Interim results are not necessarily indicative of the results to be expected for the full year, and no representation is made thereto.

These condensed consolidated financial statements include, in the opinion of management, all adjustments necessary to state fairly the financial position, results of continuing operations and cash flows for each interim period shown. All such adjustments occur in the ordinary course of business and are of a normal, recurring nature.

Recent Accounting Pronouncements

With the exception of the below, there have been no recent accounting pronouncements or changes in accounting pronouncements during fiscal year 2015, as compared to the recent accounting pronouncements described in Advent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, that are of significance, or potential significance, to the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (GAAP) when it becomes effective. On April 1, 2015, the Financial Accounting Standards Board (FASB) proposed a one year deferral of the effective date to December 15, 2017 and early application would be permitted, but not before the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the standard. The Company is evaluating the impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.

In January 2015 the FASB issued ASU No. 2015-01, “Income Statement — Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This update eliminates from GAAP the concept of an extraordinary item. As a result, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. ASU 2015-01 is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. Early adoption is permitted. Advent expects to adopt this new standard in the first quarter of fiscal year 2016 and does not expect the adoption to have a material impact on the Company’s condensed consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” ASU 2015-02 is a new consolidation standard to improve targeted areas of the consolidation guidance and reduce the number of consolidation models. ASU 2015-02 is effective for public entities for the annual reporting period ending after December 15, 2015, and for annual and interim periods thereafter, which means that it will be effective for Advent’s fiscal year beginning January 1, 2016. Early adoption is permitted. The Company expects to adopt this new standard effective January 1, 2016 and does not expect the adoption to have a material impact on the Company’s condensed consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of the debt liability. The new guidance does not affect entities’ recognition and measurement of debt issuance costs. Previously, entities were required to present debt issuance costs as deferred charges in the asset section of the statement of financial position. ASU 2015-03 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, which means that it will be effective for Advent’s fiscal year beginning January 1, 2016. Early adoption is permitted. The Company expects to adopt this new standard effective January 1, 2016 and does not expect the adoption to have a material impact on the Company’s condensed consolidated financial statements.

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In April 2015, the FASB issued ASU No. 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” ASU 2015-05 provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for public entities for the annual reporting period, including interim periods within those annual periods, beginning after December 15, 2015, which means that it will be effective for Advent’s fiscal year beginning January 1, 2016. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. Early adoption is permitted. The Company expects to adopt this new standard effective January 1, 2016 and does not expect the adoption to have a material impact on the Company’s condensed consolidated financial statements.

Note 2—Financial Statement Detail

Recurring and non-recurring revenues

The following is a summary of recurring and non-recurring revenues (in thousands):

	Three Months Ended March 31
	2015		2014

Term license revenues	$	52,415	$	47,039
Perpetual maintenance revenues	15,255		16,142
Assets under administration revenues	1,652		1,609
Other recurring revenues	26,852		24,339

Total recurring revenues	$	96,174	$	89,129

Professional services and other revenues	$	6,629	$	7,243
Perpetual license fees	461		432

Total non-recurring revenues	$	7,090	$	7,675

Prepaid expenses and other

The following is a summary of prepaid expenses and other (in thousands):

	March 31		December 31
	2015		2014

Prepaid contract expense	$	10,074	$	9,766
Deferred commissions	6,038		6,665
Debt issuance costs	1,425		1,438
Tenant improvement allowances	1,295		—
Other	10,841		7,115

Total prepaid expenses and other	$	29,673	$	24,984

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Other assets

The following is a summary of other assets (in thousands):

	March 31		December 31
	2015		2014

Debt issuance costs	$	3,128	$	3,483
Deposits	3,108		2,915
Prepaid contract expense, long-term	3,037		3,770
Long-term deferred commissions	3,025		2,919
Other	166		158

Total other assets	$	12,464	$	13,245

Deposits include restricted cash balances totaling $1.7 million at March 31, 2015 and $1.5 million at December 31, 2014 primarily related to the Company’s San Francisco headquarters and facilities in New York. Refer to Note 13, “Commitments and Contingencies” for additional information.

Dividends Payable

On February 2, 2015, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SS&C Technologies Holdings, Inc. (“Parent” or “SS&C”) and Arbor Acquisition Company, Inc., a wholly owned subsidiary of Parent (“Merger Sub”). In accordance with the Merger Agreement, the Company is prohibited from declaring dividends during the pendency of the agreement. Therefore, Advent’s Board of Directors (the “Board”) did not declare a dividend during the first quarter of 2015. Advent’s Board declared a cash dividend during the fourth quarter of 2014 of $0.13 per common share payable to shareholders of record as of December 31, 2014 and paid the dividend on January 15, 2015 totaling $6.8 million.

Accrued liabilities

The following is a summary of accrued liabilities (in thousands):

	March 31		December 31
	2015		2014

Salaries and benefits payable	$	16,073	$	21,381
Accrued dividend equivalents on restricted stock units	3,834		3,404
Accrued legal fees	2,984		346
Deferred rent, current portion	1,498		1,998
Accrued restructuring, current portion	1,460		61
Other	11,699		9,351

Total accrued liabilities	$	37,548	$	36,541

Accrued restructuring charges are discussed further in Note 14, “Restructuring Charges” contained herein. As part of the recapitalization in 2013, as discussed in Advent’s 2013 and 2014 Annual Reports on Form 10-K, holders of restricted stock units (RSUs) have the right to receive a dividend equivalent payment of $9.00 per RSU upon vesting. At March 31, 2015 and December 31, 2014, “Other” accrued liabilities included accruals for sales and business taxes and other miscellaneous items.

Other long-term liabilities

The following is a summary of other long-term liabilities (in thousands):

	March 31		December 31
	2015		2014

Deferred rent	$	7,527	$	5,814
Long-term deferred tax liability	1,298		1,442
Other	730		565

Total other long-term liabilities	$	9,555	$	7,821

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Note 3 - Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities primarily consist of money market mutual funds, U.S. government and U.S. Government Sponsored Entities (GSEs) securities, foreign government debt securities and high credit quality corporate debt securities. All marketable securities were considered available-for-sale and were carried at fair value on the Company’s consolidated balance sheet. Short-term marketable securities mature twelve months or less, and long-term marketable securities mature greater than twelve months, from the date of the consolidated balance sheet.

Marketable securities at March 31, 2015 are summarized as follows (in thousands):

					Gross			Gross
					Unrealized			Unrealized
			Gross		Losses			Losses
	Amortized		Unrealized		Less than			12 Months		Aggregate
	Cost		Gains		12 Months			or Longer		Fair Value
Balance at March 31, 2015

Corporate debt securities	$	2,942	$	—	$	(39	)	$	—	$	2,903
U.S. government debt securities	744		—		(14		)	—		730
Municipal bonds	668		—		(5		)	—		663
Total	$	4,354	$	—	$	(58	)	$	—	$	4,296

Marketable securities at December 31, 2014 are summarized as follows (in thousands):

					Gross		Gross
					Unrealized		Unrealized
			Gross		Losses		Losses
	Amortized		Unrealized		Less than		12 Months			Aggregate
	Cost		Gains		12 Months		or Longer			Fair Value
Balance at December 31, 2014

Corporate debt securities	$	7,184	$	—	$	—	$	(22	)	$	7,162
U.S. government debt securities	1,347		—		—		(6		)	1,341
Municipal bonds	671		—		—		(2		)	669
Total	$	9,202	$	—	$	—	$	(30	)	$	9,172

The following table summarizes the contractual maturities of marketable securities at March 31, 2015 (in thousands):

	Amortized		Aggregate
	Cost		Fair Value
Matures in less than one year	$	4,354	$	4,296
Matures in one to three years	—		—
Total	$	4,354	$	4,296

Advent regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition, credit quality and near-term prospects of the investee, and Advent’s ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

For fixed income securities that have unrealized losses as of March 31, 2015, the Company has determined that (i) it does not have the intent to sell any of these investments while in a loss position and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, the Company has evaluated these fixed income securities and has determined that no credit losses exist. As of March 31, 2015, all securities in an unrealized loss position have been in an unrealized loss position for less than one year. The Company’s management has determined that the unrealized losses on its fixed income securities as of March 31, 2015 were temporary in nature. Unrealized gains and losses are a component of “Accumulated other comprehensive income” in the accompanying consolidated balance sheet as of March 31, 2015.

During the first quarter of 2015 and 2014, $6.8 million, and $0, respectively, of marketable securities were sold or matured, which did not have any associated material gross realized gains or losses.

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Note 4—Goodwill

The changes in the carrying value of goodwill for the first quarter of 2015 were as follows (in thousands):

	Carrying Value

Balance at December 31, 2014	$	202,290
Translation adjustments	(3,736		)

Balance at March 31, 2015	$	198,554

Translation adjustments reflect the impact of translating goodwill balances denominated in various foreign currencies to the U.S. Dollar. The $(3.7) million translation adjustment resulted from a strengthening of the U.S. Dollar exchange rate versus other currencies during the first quarter of 2015.

Note 5—Other Intangibles, Net

Other intangibles are summarized as follows (in thousands, except weighted average amortization period):

	Weighted
	Average
	Amortization
	Period			Accumulated
	(Years)	Gross		Amortization			Net

Purchased technologies	5.1	$	49,358	$	(43,588	)	$	5,770
Product development costs	3.0	22,913		(19,834		)	3,079

Developed technology sub-total		72,271		(63,422		)	8,849

Customer relationships	6.4	40,565		(33,115		)	7,450
Other intangibles	4.1	4,604		(4,167		)	437

Other intangibles sub-total		45,169		(37,282		)	7,887

Balance at March 31, 2015		$	117,440	$	(100,704	)	$	16,736

	Weighted
	Average
	Amortization
	Period			Accumulated
	(Years)	Gross		Amortization			Net

Purchased technologies	5.1	$	50,152	$	(43,195	)	$	6,957
Product development costs	3.0	22,423		(19,314		)	3,109

Developed technology sub-total		72,575		(62,509		)	10,066

Customer relationships	6.4	40,783		(32,577		)	8,206
Other intangibles	4.1	4,629		(4,098		)	531

Other intangibles sub-total		45,412		(36,675		)	8,737

Balance at December 31, 2014		$	117,987	$	(99,184	)	$	18,803

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The changes in the carrying value of other intangibles during the three months ended March 31, 2015 are summarized as follows (in thousands):

				Accumulated
	Gross			Amortization			Net

Balance at December 31, 2014	$	117,987		$	(99,184	)	$	18,803
Additions	490			—			490
Amortization	—			(2,368		)	(2,368		)
Translation adjustments	(1,037		)	848			(189		)

Balance at March 31, 2015	$	117,440		$	(100,704	)	$	16,736

Based on the carrying amount of other intangibles as of March 31, 2015, the estimated future amortization is as follows (in thousands):

	Nine
	Months Ending
	December 31		Years Ending December 31
	2015		2016		2017		2018		2019		Thereafter		Total

Developed technology	$	4,372	$	3,810	$	627	$	40	$	—	$	—	$	8,849
Other intangibles	2,395		2,699		1,865		923		5		—		7,887

Total	$	6,767	$	6,509	$	2,492	$	963	$	5	$	—	$	16,736

Note 6—Debt

On June 12, 2013, Advent entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”). The Restated Credit Agreement amended and restated Advent’s prior Credit Agreement, dated November 30, 2011. The Restated Credit Agreement provides for (i) a $200 million revolving credit facility, with a $25 million letter of credit sublimit and a $10 million swingline loan sublimit and (ii) a $225 million term loan facility. Advent may request revolving loans, swingline loans or the issuance of letters of credit until June 12, 2018, subject to demonstrating pro forma compliance with the financial covenant requirement under the Restated Credit Agreement. The Restated Credit Agreement also contains an incremental facility permitting Advent, subject to certain requirements, to arrange with the Lenders and/or new lenders for up to an aggregate of $75 million in additional commitments in the form of revolving loans or term loans. The proceeds of the revolving loans and term loans under the Restated Credit Agreement may be used for general purposes, including to finance dividends, repurchase common shares, finance acquisitions, or to finance other investments.

Minimum principal payments with respect to the term loans are due in 20 equal consecutive quarterly principal installments of $5.0 million, commencing on September 13, 2013, with the remaining outstanding principal balance and all accrued and unpaid interest due on June 12, 2018. Principal payments with respect to the revolving loans, together with all accrued and unpaid interest, are due on June 12, 2018. Advent may prepay the term loans and revolving loans at any time without penalty.

The revolving loans and term loans bear interest, at Advent’s option, at the alternate base rate plus a margin of 0.25% to 1.25% or an adjusted LIBOR rate (based on one, two, three or six-month interest periods) plus a margin of 1.25% to 2.25%, in each case with such margin being determined based on the consolidated leverage ratio for the preceding four fiscal quarter period. The “alternate base rate” means the highest of (i) the Agent’s prime rate, (ii) the federal funds rate plus a margin equal to 0.50% and (iii) the adjusted LIBOR rate for a one-month interest period plus a margin equal to 1.00%. Swingline loans accrue interest at a per annum rate based on the alternate base rate plus the applicable margin for alternate base rate loans. Advent is also obligated to pay other customary closing fees, arrangement fees, administration fees, commitment fees and letter of credit fees for a credit facility of this size and type.

The obligations under the Restated Credit Agreement are guaranteed by Advent’s present and future domestic subsidiaries, subject to certain exceptions. The loan is secured by substantially all of the assets of Advent and the guarantors party thereto, including all of the capital stock of Advent’s domestic subsidiaries and 66% of the capital stock of Advent’s or a guarantor’s first-tier foreign subsidiaries.

The Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict Advent and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, pay dividends or make distributions, make investments, make acquisitions, prepay certain indebtedness, enter into certain transactions with affiliates, enter into sale and leaseback transactions, enter into swap agreements and enter into restrictive agreements, in each case subject to customary exceptions for a credit facility of this size and type. Advent is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio.

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The following is a summary of the Company’s outstanding debt balances (in thousands):

	March 31 2015		December 31 2014

Term loan facility	$	190,000	$	195,000
Revolving credit facility	15,000		25,000
Total	$	205,000	$	220,000

Advent was in compliance with all associated covenants as of March 31, 2015 as follows:

		Ratio Calculation
	Covenant	as of
Covenant	Requirement	March 31, 2015

Leverage ratio (1)	Maximum 3.75x (2)	1.6	x

Interest coverage ratio (3)	Minimum 2.5x	19.1	x

(1) Calculated as the ratio of total debt to EBITDA, as defined by the Restated Credit Agreement, for the period of four consecutive fiscal quarters on the measurement date.

(2) The leverage ratio covenant requirement lowers to a maximum of 3.50x on June 30, 2015 and 3.25x on June 30, 2016.

(3) Calculated as the ratio of EBITDA to interest expense, as defined by the Restated Credit Agreement, for the period of four consecutive fiscal quarters on the measurement date.

The Restated Credit Agreement includes customary events of default that include, among other things, non-payment defaults, defaults due to the inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, defaults due to an unenforceability of the security documents or guarantees, and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Restated Credit Agreement. A default interest rate will apply on all obligations during the existence of a payment event of default under the Restated Credit Agreement at a per annum rate equal to 2.00% above the otherwise applicable interest rate.

Note 7—Stockholders’ Deficit

Accumulated Other Comprehensive (Loss) Income

The following is a summary of the components of accumulated other comprehensive income, net of related taxes:

	March 31			December 31
	2015			2014

Accumulated foreign currency translation adjustments	$	(1,274	)	$	3,491
Accumulated net unrealized loss on marketable securities	(47		)	(18		)
Accumulated other comprehensive (loss) income, net of taxes	$	(1,321	)	$	3,473

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Note 8—Fair Value Measurements

The accounting guidance for fair value measurements establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level Input		Input Definition

Level 1		Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2		Inputs other than quoted prices included within Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.

Level 3		Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine fair value. The Company applied this valuation technique to measure the fair value of the Company’s Level 1 investments, such as treasury obligation money market mutual funds and U.S. and foreign government debt securities. Money market funds consist of cash equivalents with remaining maturities of three months or less at the date of purchase and are composed primarily of U.S. government debt securities and treasury obligation money market mutual funds. Advent’s U.S. government debt securities are securities sponsored by the federal government of the United States.

If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. The Company obtains the fair value of Level 2 financial instruments from its custody bank, which uses various professional pricing services to gather pricing data which may include quoted market prices for identical or comparable instruments, or inputs other than quoted prices that are observable either directly or indirectly. The custody bank then analyzes gathered pricing inputs and applies proprietary valuation techniques, such as consensus pricing, weighted average pricing, distribution-curve-based algorithms, or pricing models such as discounted cash flow techniques to provide the Company with a fair valuation of each security. The Company’s procedures include controls to ensure that appropriate fair values are recorded such as comparing prices obtained to independent sources. Advent reviews the internal controls in place at the custodian bank on an annual basis.

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including available-for-sale securities. The fair value of these certain financial assets was determined using the following inputs as of March 31, 2015 and December 31, 2014 (in thousands):

	Fair Value
	as of
	March 31, 2015		Level 1		Level 2		Level 3
Financial Assets:
Money Market Funds (1)	$	705	$	705	$	—	$	—
U.S. government debt securities (2)	$	730	$	—	$	730	$	—
Corporate debt securities (2)	$	2,903	$	—	$	2,903	$	—
Municipal bonds (2)	$	663	$	—	$	663	$	—

Financial Liabilities:
Debt (5)	$	205,000	$	—	$	205,000	$	—

	Fair Value
	as of
	December 31, 2014		Level 1		Level 2		Level 3
Financial Assets:
Money Market Funds (1)	$	5,013	$	5,013	$	—	$	—
U.S. government debt securities (2)	$	1,341	$	—	$	1,341	$	—
Corporate debt securities (3)	$	7,970	$	—	$	7,970	$	—
Municipal bonds (4)	$	669	$	—	$	669	$	—

Financial Liabilities:
Debt (5)	$	220,000	$	—	$	220,000	$	—

(1) Included in cash and cash equivalents on the Company’s condensed consoldiated balance sheet.

(2) Included in short-term marketable securities on the Company’s condensed consolidated balance sheet.

(3) Included in cash and cash equivalents and short and long-term marketable securities on the Company’s condensed consolidated balance sheet.

(4) Included in short and long-term marketable securities on the Company’s condensed consolidated balance sheet.

(5) Included in current portion of long-term debt and long-term debt on the Company’s condensed consolidated balance sheet.

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There were no transfers between Level 1 and Level 2 assets in the three months ended March 31, 2015 and Advent does not have any significant assets or liabilities that utilize unobservable or Level 3 inputs.

The carrying amounts of cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued liabilities approximate fair value based on the short-term maturities of these instruments.

The carrying amount of debt approximates fair value as the underlying variable interest rate approximates current market rates and the Company’s credit risk has not changed significantly since the date of issuance.

Note 9—Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options, stock appreciation rights (“SARs”), employee stock purchase plan (“ESPP”) shares, and restricted stock units (“RSUs”) was recognized in the Company’s condensed consolidated statements of operations for the periods presented as follows (in thousands):

	Three Months Ended March 31
	2015			2014
Statement of operations classification
Cost of recurring revenues	$	753		$	842
Cost of non-recurring revenues	311			375
Total cost of revenues	1,064			1,217

Sales and marketing	2,380			2,635
Product development	1,502			1,925
General and administrative	1,659			1,851
Total operating expenses	5,541			6,411

Total stock-based employee compensation expense	6,605			7,628

Tax effect on stock-based employee compensation expense	(2,694		)	(2,927		)

Effect on net income from continuing operations, net of tax	$	3,911		$	4,701

As of March 31, 2015, total compensation cost related to unvested awards not yet recognized under all equity compensation plans was $38.2 million and is expected to be recognized over the remaining vesting period of each grant, with a weighted average remaining period of 2.1 years for the group as a whole.

Valuation Assumptions

Advent uses the Black-Scholes option pricing model and the straight-line attribution approach to determine the grant date fair value of stock options, SARs and the ESPP. The fair value of RSUs is equal to the Company’s closing stock price on the date of grant.

The following Black-Scholes option pricing model assumptions were used for stock options and SARs granted in the following periods:

	Three Months Ended March 31
Stock Options & SARs	2015	2014
Risk-free interest rate	1.3% - 1.6%	1.5% - 1.6%
Volatility	22.7% - 33.1%	34.4% - 35.1%
Expected life (in years)	4.73 - 4.89	4.77
Expected dividend yield	0% - 1.5%	None

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Volatility for the periods presented was calculated using an equally weighted average of the Company’s historical and implied volatility of its common stock. The Company believes that this blended calculation of volatility is the most appropriate indicator of expected volatility and best reflects expected market conditions.

Expected life for the periods presented was determined based on the Company’s historical experience of similar awards, giving consideration to the contractual terms or offering periods, vesting schedules and expectations of future employee behavior.

Risk-free interest rate for the periods presented was based on the U.S. Treasury yield curve in effect at the date of grant for periods corresponding with the expected life.

The expected dividend yield for grants in January 2015 was determined by annualizing the most recent dividend declared and dividing the result by the Company’s closing stock price on the date of grant. On February 2, 2015 the Company entered into a Merger Agreement with SS&C and is prohibited from paying dividends during the pendency of the agreement. Therefore, the expected dividend yield for grants in February and March 2015 was zero. The dividend yield assumption for grants prior to April 28, 2014 was zero based on the Company’s history of not paying regular dividends and the future expectation of no recurring dividend payouts at the time of grant.

Equity Award Activity

The Company’s stock option and SAR activity for the three months ended March 31, 2015 was as follows:

					Weighted
			Weighted		Average	Aggregate
	Number of		Average		Remaining	Intrinsic
	Shares		Exercise		Contractual Life	Value
	(in thousands)		Price		(in years)	(in thousands)

Outstanding at December 31, 2014	5,076		$	17.38
Options & SARs granted	28		$	43.66
Options & SARs exercised	(946	)	$	13.39
Options & SARs canceled	(50	)	$	24.68
Outstanding at March 31, 2015	4,108		$	18.38	6.63	$	105,694
Exercisable at March 31, 2015	2,187		$	14.11	5.19	$	65,606

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the Company’s closing stock price of $44.11 on March 31, 2015 for options and SARs that were in-the-money as of that date.

The weighted average grant date fair value of options and SARs granted, total intrinsic value of options and SARs exercised and cash received from options exercised during the periods presented were as follows (in thousands, except weighted average grant date fair value):

	Three Months Ended March 31
	2015		2014
Options and SARs
Weighted average grant date fair value	$	12.17	$	10.34
Total intrinsic value of awards exercised	$	24,748	$	5,955

Options
Cash received from exercises	$	5,000	$	1,246

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The Company’s RSU activity for the three months ended March 31, 2015 was as follows:

			Weighted
	Number of		Average
	Shares		Grant Date
	(in thousands)		Fair Value

Outstanding and unvested at December 31, 2014	1,481		$	22.71
RSUs granted	10		$	42.20
RSUs vested	(6	)	$	27.81
RSUs canceled	(47	)	$	28.87
Outstanding and unvested at March 31, 2015	1,438		$	22.62

The weighted average grant date fair value of RSUs was determined based on the closing market price of the Company’s common stock on the date of the award. The aggregate intrinsic value of RSUs outstanding at March 31, 2015 was $63.4 million based on the Company’s closing stock price of $44.11 per share on that date.

Note 10—Income Taxes

The following table summarizes the activity relating to the Company’s unrecognized tax benefits during the three months ended March 31, 2015 (in thousands):

	Total

Balance at December 31, 2014	$	16,387
Gross increases related to current period tax positions	154
Balance at March 31, 2015	$	16,541

At March 31, 2015 and December 31, 2014, Advent had gross unrecognized tax benefits of $16.5 million and $16.4 million, respectively. During the three months ended March 31, 2015, the Company increased the amount of unrecognized tax benefits by approximately $0.2 million related primarily to state research credits. If recognized, the total unrecognized tax benefits would decrease Advent’s tax provision and increase net income by approximately $13.6 million. The impact on net income reflects the liabilities for unrecognized tax benefits, net of the federal tax benefit of state income tax items. The Company’s liabilities for unrecognized tax benefits relate primarily to federal research credits, state research credits and enterprise zone tax credits and various state net operating losses.

The effective tax rate was approximately 45% and 36% for the first quarter of 2015 and 2014, respectively. The increase in the effective tax rate for the first quarter of 2015 compared to the same quarter last year was primarily due to the correction of an error in the first quarter of 2015 and the suspension of the federal research credit as of March 31, 2015. The Company recorded a correction of an error of $0.9 million in income tax expense related to the calculation of New York City and State income tax provision in prior periods. The Company assessed the impact of this error on previously reported financial statements, as well as for interim and annual financial statements for fiscal 2015, and concluded that the adjustment is not material, either individually or in the aggregate to either the previously reported or to the current interim or annual consolidated financial statements. On that basis, the Company recorded the adjustment in its results for the first quarter of 2015.

Advent is subject to taxation in the U.S. and various states and jurisdictions outside the U.S. Advent is currently undergoing a State of California franchise tax examination for the 2006 and 2007 tax years and a state of New York corporate income tax examination for the 2011, 2012, and 2013 tax years. At March 31, 2015, Advent was not under examination in any other significant income tax jurisdiction and at the present time does not anticipate the total amount of its unrecognized tax benefits will significantly change over the next 12 months. The material jurisdictions that are subject to examination by tax authorities include federal for tax years after 2010 and California for tax years after 2005.

As of March 31, 2015, Advent made no provision for a cumulative total of $27.9 million of undistributed earnings for certain non-U.S. subsidiaries, which are deemed to be permanently reinvested.

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Note 11—Discontinued Operation

During 2009, the Company discontinued the operations of its wholly-owned subsidiary, MicroEdge, Inc. (“MicroEdge”). In connection with the sale of MicroEdge, the Company vacated its MicroEdge facilities in New York and entered into a sub-lease agreement with the purchaser, whereby the purchaser contracted to sub-lease the premises through the end of the amended lease term in November 2018.

The following table sets forth an analysis of the components of the restructuring charges related to the Company’s discontinued operation and the payments and non-cash charges made against the accrual during the three months ended March 31, 2015 (in thousands):

	Facility Exit
	Costs

Balance of restructuring accrual at December 31, 2014	$	2,742
Restructuring charges	12
Cash payments	(152		)
Adjustment of prior restructuring costs	20

Balance of restructuring accrual at March 31, 2015	$	2,622

Of the remaining restructuring accrual of $2.6 million at March 31, 2015, $0.6 million is included in “Current liabilities of discontinued operation” and $2.0 million is included in “Noncurrent liabilities of discontinued operation” in the accompanying condensed consolidated balance sheet. These facility exit costs will be paid over the remaining lease term through November 2018.

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Note 12—Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended March 31
	2015			2014
Numerator:
Net income (loss):
Continuing operations	$	5,076		$	10,907
Discontinued operation	(28		)	(21		)

Total operations	$	5,048		$	10,886

Denominator:
Denominator for basic net income (loss) per share - weighted average shares outstanding	52,411			51,358

Dilutive common equivalent shares:
Employee stock options and other	2,695			2,449

Denominator for diluted net income (loss) per share - weighted average shares outstanding, assuming exercise of potential dilutive common equivalent shares	55,106			53,807

Net income (loss) per share (1):
Basic:
Continuing operations	$	0.10		$	0.21
Discontinued operation	(0.00		)	(0.00		)

Total operations	$	0.10		$	0.21

Diluted:
Continuing operations	$	0.09		$	0.20
Discontinued operation	(0.00		)	(0.00		)

Total operations	$	0.09		$	0.20

(1) Net income (loss) per share is based on actual calculated values and totals may not sum due to rounding.

Weighted average stock options, SARs and RSUs of approximately 38,000 and 1.1 million for the three months ended March 31, 2015 and March 31, 2014, respectively, were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been anti-dilutive.

Note 13—Commitments and Contingencies

Lease Obligations

On January 28, 2015, the Company entered into a definitive amendment to its San Francisco headquarters lease whereby the term of the lease has been extended for an additional ten years commencing on November 1, 2016 and ending October 31, 2026 and whereby the Company’s total leased space will be reduced from approximately 158,000 square feet to approximately 129,000 square feet by November 1, 2016. This lease extension will result in total operating lease payments of approximately $71 million over the extension term.

Advent’s office space and equipment leased under non-cancelable operating lease agreements expire at various dates through October 2026. Some operating leases contain escalation provisions for adjustments in the consumer price index. Advent is responsible for maintenance, insurance, utilities and property taxes. Excluding leases and associated sub-leases for MicroEdge facilities, as of March 31, 2015, Advent’s remaining operating lease commitments through 2026 were approximately $98.2 million.

On October 1, 2009, Advent completed the sale of the Company’s MicroEdge subsidiary. At March 31, 2015, the gross operating lease commitments and sub-lease income related to this discontinued operation facility totaled $4.8 million and $2.1 million, respectively.

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Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, Advent has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at Advent’s request in such capacity. These indemnification obligations are valid as long as the director or officer acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The maximum potential amount of future payments Advent could be required to make under these indemnification obligations is unlimited; however, Advent has a director and officer insurance policy that mitigates Advent’s exposure and enables Advent to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification obligations is minimal.

Legal Contingencies

From time to time, in the course of its operations, the Company is a party to litigation matters and claims, including claims related to employee relations, business practices and other matters, but does not consider these matters to be material either individually or in the aggregate at this time. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and related events unfold. An unfavorable outcome in any legal matter, if material, could have a material adverse effect on the Company’s financial position, liquidity or results of operations in the period in which the unfavorable outcome occurs and potentially in future periods.

Advent reviews the status of each litigation matter or other claim and records a provision for a liability when it is considered both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, the Company reassesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of loss or range of loss, discloses that the amount is immaterial (if true), or discloses that an estimate of loss cannot be made. In assessing potential loss contingencies, the Company considers a number of factors, including those listed in the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 450-20, Contingencies—Loss Contingencies, regarding assessing the probability of a loss occurring and assessing whether a loss is reasonably estimable. The Company expenses legal fees as incurred.

Following the announcement of the proposed merger, three putative class action complaints challenging the transactions contemplated by the Merger Agreement were filed by purported Advent stockholders in the Court of Chancery of the State of Delaware (the “Court”) against Advent, the Board of Directors, SS&C, and Merger Sub (“Defendants”). The complaints were captioned Chitwood v. Advent Software, Inc., et al., Case No. 10623-VCL, City of Atlanta Firefighters’ Pension Fund v. David Peter F. Hess, Jr., et al., Case No. 10633-VCL, and Klein v. Advent Software, Inc., et al., Case No. 10670-VCL. The complaints were consolidated into a single action by a February 25, 2015 court order and captioned In re Advent Software, Inc., C.A. No. 10623-VCL (the “Consolidated Action”). On February 27, 2015, plaintiffs filed a Verified Consolidated Amended Class Action Complaint (the “Consolidated Complaint”). The Consolidated Complaint generally alleges, among other things, that the Board of Directors breached its fiduciary duties to Advent’s stockholders by engaging in a flawed sales process, agreeing to a transaction price that does not adequately compensate Advent stockholders, agreeing to certain deal protection provisions in the Merger Agreement that the plaintiffs allege impeded or precluded a potential topping bid, and allegedly failing to disclose material information regarding the proposed merger. The Consolidated Complaint also asserts that Advent, SS&C, and Merger Sub aided and abetted the Board of Directors’ breaches of fiduciary duties. The Consolidated Complaint sought to enjoin the merger or, alternatively, an award of rescissory or other compensatory damages in the event it is consummated, as well as attorneys’ fees and costs.

On March 4, 2015, plaintiffs filed a motion for an order preliminarily enjoining the Advent stockholder vote on the adoption of the Merger Agreement and approval of the Merger. The Court scheduled a hearing on plaintiffs’ motion for April 10, 2015.

On April 1, 2015, following expedited discovery, the parties to the Consolidated Action entered into a memorandum of understanding (“MOU”) setting forth the terms of a settlement of the Consolidated Action. Pursuant to the MOU, defendants agreed to make certain supplemental disclosures demanded by plaintiffs in the Consolidated Action via a Form 8-K filed on April 1, 2015, without admitting any wrongdoing or that these supplemental disclosures were material or required to be made. The MOU further provided that, among other things, (a) the plaintiffs in the Consolidated Action would withdraw their motion to preliminarily enjoin the shareholder vote on the proposed merger; (b) the parties will negotiate a definitive stipulation of settlement (the “Stipulation”) and will submit the Stipulation to the Court for review and approval; (c) the Stipulation will provide for dismissal of the Consolidated Action with prejudice; (d) the Stipulation will include a release of defendants of claims relating to, among other things, the merger and the Merger Agreement; and (e) the settlement is conditioned on, among other things, consummation of the merger, completion of confirmatory discovery, class certification, and final approval of the settlement by the Court after notice to the

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Advent’s stockholders. On April 1, 2015, plaintiffs withdrew their motion to preliminarily enjoin the shareholder vote on the proposed merger.

Defendants believe that the allegations and claims in the Consolidated Action are without merit and, if the settlement does not receive final approval, intend to defend against them vigorously. Defendants entered into the settlement solely to eliminate the burden and expense of further litigation and to put the claims that were or could have been asserted to rest. The settlement will not affect the timing of the merger or the amount or form of consideration to be paid in the merger.

Management believes that any potential losses associated with the legal proceedings regarding the merger are neither probable nor reasonably estimable at this time and accordingly has not accrued any amounts for any potential loss.

Based on currently available information, the Company’s management does not believe that the ultimate outcome of unresolved matters, individually and in the aggregate, is likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Note 14—Restructuring Charges

Restructuring charges of $2.6 million during the three months ended March 31, 2015 were primarily due to employee termination benefits of $2.1 million associated with a re-organization plan, approved in the first quarter of 2015, with the objective of improving operating results. As a result of this restructuring activity, Advent expects annual operating expense run rate savings of approximately $4 million which will be used to fund investments in other areas of the business to improve productivity, efficiency and client experience. Additionally in the first quarter of 2015, Advent recognized exit costs of $0.5 million due to adjustments to assumptions associated with the exit of San Francisco office space originally initiated in the third quarter of 2014.

The remaining restructuring accrual of $1.5 million at March 31, 2015 is included in “Accrued liabilities” in the accompanying condensed consolidated balance sheet. The following table sets forth an analysis of the changes in the restructuring accrual during the three months ended March 31, 2015 (in thousands):

	Facility Exit			Severance &
	Costs			Benefits			Total

Balance of restructuring accrual at December 31, 2014	$	60		$	—		$	60

Restructuring charges	545			2,099			2,644
Cash payments	(93		)	(1,151		)	(1,244		)

Balance of restructuring accrual at March 31, 2015	$	512		$	948		$	1,460

Note 15—Subsequent Event

On April 14, 2015, Advent stockholders voted in favor of adopting the Agreement and Plan of Merger by and among Advent, SS&C and Arbor Acquisition Company, Inc.

On April 23, 2015, Advent and SS&C each received a request for additional information (“second requests”) from the Department of Justice (“DOJ”) in connection with the DOJ’s review of the Merger. The issuance of the second requests extends the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) until 30 days after both parties have substantially complied with the DOJ’s requests (unless the waiting period is terminated earlier by the DOJ).

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and related notes included under Item 1 of this Form 10-Q. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, including, but not limited to statements referencing our expectations relating to future revenues, expenses and operating margins. Forward-looking statements can be identified by the use of terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “intends” or other similar terms and the negative of such terms regarding beliefs, plans, expectations or intentions regarding the future. Forward-looking statements include, among others, statements referencing our expectations relating to our pending acquisition by SS&C Technologies Holdings, Inc., future revenues, expenses and operating margins, product releases, the future of the investment management market and opportunities for us related thereto, future expansion, acquisition, divestment of or investment in other businesses, projections of revenues, future cost and expense levels, expected timing and amount of amortization expenses related to past acquisitions, future effective tax rates, future exchange rates, the adequacy of resources to meet future cash requirements, renewal rates, expected cash flow, capital expenditures, future financing activities, future dividends, estimates or predictions of actions by customers, suppliers, competitors or regulatory authorities, future client wins, future hiring and future product introductions and acceptance. Such forward-looking statements are based on our current plans and expectations and involve known and unknown risks and uncertainties which may cause our actual results or performance to be materially different from any results or performance expressed or implied by such forward-looking statements. Such factors include, but are not limited to the “Risk Factors” set forth in “Item 1A. Risk Factors” in this Form 10-Q, as well as other risks identified from time to time in other Securities and Exchange Commission (“SEC”) reports. You should not place undue reliance on our forward-looking statements, as they are not guarantees of future results, levels of activity or performance and represent our expectations only as of the date they are made.

Unless expressly stated or the context otherwise requires, the terms “we”, “our”, “us”, the “Company” and “Advent” refer to Advent Software, Inc. and its subsidiaries.

Overview

We offer software products and services for automating and integrating data and work flows across the investment management organization, as well as between the investment management organization and external parties. Our products are intended to increase operational efficiency, improve the accuracy of client information and enable better decision-making. Each solution focuses on specific mission-critical functions of the investment management organization (portfolio accounting and reporting; trade order management and post-trade processing; research management; account management; and custodial reconciliation) and is tailored to meet the needs of the particular market segment of the investment management industry, as determined by size, assets under management and complexity of the investment process.

The results of MicroEdge, a former subsidiary which we sold in 2009, have been reclassified as a discontinued operation for all periods presented. Unless otherwise noted, discussion in this document pertains to our continuing operations.

Recent Developments

On February 2, 2015, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SS&C Technologies Holdings, Inc. (“Parent” or “SS&C”) and Arbor Acquisition Company, Inc., a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, subject to the satisfaction or waiver of certain conditions therein, Merger Sub will merge with and into Advent. As a result of the merger, Merger Sub will cease to exist, and Advent will survive as a wholly owned subsidiary of SS&C.

Upon the consummation of the merger, subject to the terms of the Merger Agreement, which has been unanimously approved by our Board of Directors, each share of Advent common stock outstanding immediately prior to the effective time of the merger (the “Effective Time”), subject to certain exceptions, will be converted into the right to receive $44.25 in cash, without interest.

The merger was approved by our shareholders on April 14, 2015 and is subject to customary conditions, including without limitation, expiration or termination of the applicable waiting periods under the HSR Act. On April 23, 2015, Advent and SS&C each received a request for additional information (“second requests”) from the DOJ in connection with the DOJ’s review of the merger. The issuance of the second requests extends the waiting period under the HSR Act until 30 days after both parties have substantially complied with the DOJ’s requests (unless the waiting period is terminated earlier by the DOJ).

The Merger Agreement contains certain termination rights for both Advent and Parent, and provides that, upon termination of the Merger Agreement under specified circumstances, including, but not limited to, if we accept a superior acquisition proposal, we may be required to pay Parent a termination fee of $80.0 million. We may also be required to reimburse Parent for up to $12.5 million of its out-of-pocket expenses in connection with the transaction under certain circumstances.

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A copy of the Merger Agreement is available as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on February 3, 2015.

Operating Overview

Operating highlights of our first quarter of 2015 include:

· Revenue growth. Revenues in the first quarter of 2015 were $103.3 million, an increase of 7% compared to $96.8 million in the comparable quarter of 2014.

· Annualized recurring run rate. Annualized recurring run rate of all of our contracted recurring revenue streams was $394.2 million at March 31, 2015, an increase of 5% compared to $375.8 million at March 31, 2014.

· Renewal rates. Initially disclosed renewal rates, which are based on cash collections and therefore reported one quarter in arrears, were 93% for the fourth quarter of 2014, compared to 95% for the fourth quarter of 2013.

· New and incremental bookings. The term license, Advent OnDemand and Black Diamond contracts signed in the first quarter of 2015 will contribute approximately $4.2 million in annual revenue (“annual contract value” or “ACV”) once they are fully implemented, compared to $5.1 million of ACV booked from contracts signed in the same period last year.

· Operating income. Operating income in the first quarter of 2015 was $10.2 million compared to $19.3 million in the first quarter of 2014. Included in our first quarter of 2015 operating income were $8.4 million of transaction-related fees in connection with the pending merger with SS&C, $2.6 million of restructuring charges and accelerated depreciation of $1.6 million.

· Facilities and accelerated depreciation.

· In January 2015, we entered into a definitive amendment to our lease at 600 Townsend Street in San Francisco, California with Toda America, Inc. (the “Landlord”) whereby the term of such lease has been extended for an additional 10 years commencing on November 1, 2016 and ending October 31, 2026 and whereby our total leased space will be reduced from approximately 158,000 square feet to approximately 129,000 square feet by November 1, 2016.

· During the first quarter of 2015, we committed to a plan to reduce or exit certain office space in Boston and New Rochelle by June 30, 2015.

· As a result, we incurred approximately $1.6 million of accelerated depreciation expense in our first quarter of 2015 results.

Financial Overview

Financial highlights of our first quarter of 2015 and 2014 were as follows (in thousands, except per share amounts, percentage and margin changes):

							Percentage /
	Three Months Ended March 31						Margin
	2015			2014			Change

Net revenues	$	103,264		$	96,804		7	%
Gross margin	$	72,762		$	68,322		6	%
Gross margin percentage	70.5		%	70.6		%	(0.1	) pts
Operating income	$	10,199		$	19,313		-47	%
Operating margin percentage	9.9		%	20.0		%	(10.1	) pts
Net income from continuing operations	$	5,076		$	10,907		-53	%
Net income from continuing operations per diluted share	$	0.09		$	0.20		-55	%
Operating cash flows	$	6,611		$	20,875		-68	%

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Our financial results for the first quarter of 2015 included transaction-related fees of $8.4 million, restructuring charges of $2.6 million and accelerated depreciation of $1.6 million. See “Operating Overview” above for further description.

Term License and Term License Deferral

Term license revenues comprise substantially all of our license revenues. When a customer purchases a term license together with implementation services, we do not recognize any revenue under the contract until the implementation services are substantially complete. If the implementation services are still in progress as of quarter-end, we defer all of the contract revenues to a subsequent quarter. When professional services are substantially completed, we recognize a pro-rata amount of the term license revenue, professional services fees earned and related expenses, based on the elapsed time from the start of the term license to the substantial completion of professional services. Term license revenue for the remaining contract years and the remaining deferred professional services revenue and related expenses are recognized ratably over the remaining contract term.

The term license component of the deferred revenue balance related to implementations in process will increase or decrease in the future depending on the amount of new term license bookings relative to the number of implementations that reach completion in a particular quarter. For the first quarter of 2015 and 2014, changes in the net term license component of deferred revenues increased (decreased) our revenues, costs and operating income as follows (in thousands):

	Three Months Ended March 31
	2015			2014			Change

Term license revenues	$	(351	)	$	(272	)	$	(79	)
Professional services and other	363			1,665			(1,302		)

Total net revenues	$	12		$	1,393		$	(1,381	)


Professional services costs	$	427		$	1,102		$	(675	)
Sales commissions costs	(64		)	115			(179		)

Total net costs	$	363		$	1,217		$	(854	)

Operating income	$	(351	)	$	176		$	(527	)

As of March 31, 2015 and December 31, 2014, deferred revenue and directly related expense balances associated with our term license deferral were as follows (in thousands):

	March 31		December 31
	2015		2014
Deferred revenues
Short-term	$	36,341	$	35,739
Long-term	5,279		5,893

Total	$	41,620	$	41,632

Directly-related expenses
Short-term	$	11,263	$	10,894
Long-term	3,037		3,770

Total	$	14,300	$	14,664

Deferred net revenues are classified as “Deferred revenues” (short-term and long-term), and directly-related expenses are classified as “Prepaid expenses and other” and “Other assets,” respectively, in the accompanying condensed consolidated balance sheets.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2015 as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

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Recent Accounting Pronouncements

With the exception of the pronouncements included in Note 1, “Basis of Presentation” to the accompanying condensed consolidated financial statements, there have been no recent accounting pronouncements or changes in accounting pronouncements during fiscal year 2015, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, that are of significance, or potential significance, to our condensed consolidated financial statements.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

The following table summarizes, for the periods indicated, certain items in the condensed consolidated statements of operations as a percentage of net revenues. The financial information and the ensuing discussion should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto:

	Three Months Ended March 31
	2015		2014

Net revenues:
Recurring revenues	93	%	92	%
Non-recurring revenues	7		8

Total net revenues	100		100

Cost of revenues:
Recurring revenues	21		19
Non-recurring revenues	7		8
Amortization of developed technology	2		2

Total cost of revenues	30		29

Gross margin	70		71

Operating expenses:
Sales and marketing	19		20
Product development	19		18
General and administrative	11		11
Amortization of other intangibles	1		1
Transaction-related fees	8		*
Restructuring charges	3		*

Total operating expenses	61		51

Income from continuing operations	10		20
Interest and other income (expense), net	(1	)	(2	)

Income from continuing operations before income taxes	9		18
Provision for income taxes	4		6

Net income from continuing operations	5		11

Discontinued operation:
Net loss from discontinued operation	*		*

Net income	5	%	11	%

Percentages are based on actual values. Totals may not sum due to rounding.

* Less than 1%.

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NET REVENUES

	Three Months Ended March 31
	2015		2014		Change

Total net revenues (in thousands)	$	103,264	$	96,804	$	6,460

We derive our revenues from two sources: recurring revenues and non-recurring revenues. Recurring revenues are comprised of term license, perpetual maintenance arrangements and other recurring revenues (which includes revenues from Black Diamond, Advent OnDemand and incremental Assets Under Administration (“AUA”) fees from perpetual licenses). The revenues from a term license, which includes both software license and maintenance services, are earned under a time based contract. Maintenance revenues are derived from maintenance fees on perpetual license arrangements. Other recurring revenues are derived from our subscription services and transaction-based services as well as AUA fees for certain perpetual arrangements. Non-recurring revenues consists of professional services and other revenue and perpetual license fees. Professional services and other revenues include fees for consulting, fees from training, project management services and our client conferences. Perpetual license revenues are derived from the licensing of software products under a perpetual arrangement. Sales returns, which we generally do not provide to customers, are accounted for as deductions to these two revenue categories based on our historical experience.

Revenues derived from sales outside the U.S. were 17% and 18% of total net revenues in the first quarter of 2015 and 2014, respectively. The decrease as a percentage of total revenues during the first quarter of 2015 primarily reflects higher average billings to domestic customers. We plan to continue expanding our sales efforts outside the U.S., both in our current markets and elsewhere. Except for the U.S., the revenues from customers in any single country did not exceed 10% of total net revenues.

Recurring Revenues

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Term license revenues	$	52,415		$	47,039		$	5,376
Maintenance revenues	15,255			16,142			(887		)
Other recurring revenues	28,504			25,948			2,556

Total recurring revenues	$	96,174		$	89,129		$	7,045

Percent of total net revenues	93		%	92		%

Revenues from term licenses, which includes both software license and maintenance services for term licenses, increased $5.4 million during the first quarter of 2015 compared to the same quarter of 2014. This growth reflects renewals, the continued layering of incremental annual contract value (ACV) of term licenses sold in previous periods into our term revenue, and the continued market acceptance of our products, partially offset by more deferral of term license revenue in both of the comparative periods.

For our term licenses, we defer all revenue on new bookings until our implementation services are complete. The change in our term license implementation deferral decreased term license revenues for the periods presented as follows (in thousands):

	Three Months Ended March 31
	2015			2014			Change

Term license revenues	$	(351	)	$	(272	)	$	(79	)

The net deferral of term license revenues for the first quarter of 2015 compared to the same period last year was primarily due to the dollar value associated with projects that commenced the implementation phase exceeding the dollar value of projects that completed the implementation phase. This resulted in a corresponding decrease in term license revenues of $(0.1) million during the first quarter of 2015 compared to the same quarter of 2014.

Maintenance revenues from perpetual licenses decreased during the first quarter of 2015 compared to the same quarter of 2014. Generally, we sell very few perpetual licenses to new customers and therefore have seen a trend of declining maintenance revenues due to maintenance de-activations from customer attrition, maintenance level downgrades, reductions in products licensed or number of users by clients, perpetual license customers migrating to term licenses, and a decrease in new perpetual license customers, partially offset by the impact of price increases. We expect to continue to see a long-term downward trend in maintenance revenues from perpetual licenses as substantially all of our license revenue now is from term licenses.

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Other recurring revenues primarily include revenues from incremental assets under administration (“AUA”) fees from perpetual licenses, data services, outsourced services, Advent OnDemand, web-based services and Black Diamond. The increase of $2.6 million in other recurring revenues for the first quarter of 2015 compared to the same quarter of 2014 primarily reflects growth in Black Diamond revenues.

Our renewal rates are based on cash collections and are disclosed one quarter in arrears. We disclose our renewal rates one quarter in arrears in order to include substantially all payments received against the invoices for that quarter. We also update our renewal rates from the initially disclosed rates to include all cash collections subsequent to the initial disclosure. The following summarizes our initial and updated renewal rates (operational metric) since the fourth quarter of 2013:

	Renewal Quarter
Renewal Rates	Q115	Q414	Q314	Q214	Q114	Q413
Based on cash collections relative to prior year collections

Initially Disclosed Renewal Rate (1)	(2)	93%	93%	95%	94%	95%
Updated Disclosed Renewal Rate (3)	n/a	n/a	94%	98%	99%	101%

(1) “Initially Disclosed Renewal Rate” is based on cash collections and reported one quarter in arrears.

(2) The initially disclosed renewal rate for the first quarter of 2015 is not currently available as it is disclosed one quarter in arrears in order to include substantially all payments against invoices for this quarter.

(3) “Updated Disclosed Renewal Rate” reflects initially disclosed rate updated for subsequent cash collections.

Non-Recurring Revenues

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Professional services and other revenues	$	6,629		$	7,243		$	(614	)
Perpetual license fees	461			432			29

Total non-recurring revenues	$	7,090		$	7,675		$	(585	)

Percent of total net revenues	7		%	8		%

Non-recurring revenues consists of professional services, perpetual license fees and other revenues. Professional services and other revenues include fees for consulting, project management, custom implementation and integration, custom report writing, training and our client conference. Perpetual license revenues are derived from the licensing of software products under a perpetual arrangement.

Professional services projects related to Axys, Moxy and Partner products generally can be completed in a two- to six-month time period, while services related to Geneva and APX products may require four to nine months. We defer professional services revenue for services performed on term license implementations that are not considered substantially complete. Service revenue is deferred until the implementation is complete and remaining services are substantially completed. Upon substantial completion, we recognize a pro-rata amount of professional services fees earned based on the elapsed time from the start of the term license to the substantial completion of professional services. The remaining deferred professional services revenue is recognized ratably over the remaining contract term.

Professional services and other revenues changed due to the following (in thousands):

	Change From
	Q114 to Q115

Decreased revenue related to term license implementation deferral	$	(1,302	)
Increased consulting services	387
Increased data conversion	310
Other items	(9		)

Total change	$	(614	)

The decrease in professional services and other revenues during the first quarter of 2015 compared to the same quarter of 2014 was primarily due to a decrease in the term license implementation deferral release as new consulting project revenue deferred helped to offset the release of revenue from completed projects in the first quarter of 2015 more so than in the comparable quarter, partially offset by increased revenue from consulting and data conversion services in the first quarter of 2015.

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The change in our term license implementation deferral increased professional services and other revenues for the first quarter of 2015 as follows (in thousands):

	Three Months Ended March 31
	2015		2014		Change

Professional services and other	$	363	$	1,665	$	(1,302	)

During the first quarter of 2015, revenue decreased $1.3 million compared to the same period last year due to a term license implementation revenue release (relatively more projects completed than were in the implementation stage) of $0.4 million during 2015, compared to a release of $1.7 million in the same period last year.

Total perpetual license fees were flat in the first quarter of 2015 compared to the same quarter of 2014 as we predominantly sell term licenses.

COST OF REVENUES

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Total cost of revenues	$	30,502		$	28,482		$	2,020
Percent of total net revenues	30		%	29		%

Cost of revenues is made up of three components: cost of recurring revenues, cost of non-recurring revenues and amortization of developed technology, and are discussed individually in the narrative below. Gross margin decreased slightly to 70% in the first quarter of 2015 compared to 71% the same quarter of 2014 which primarily resulted from increased allocation-in of facility expense. The allocation of facility expense increased as a result of an increase in accelerated depreciation for certain facilities in San Francisco, Boston and New Rochelle which we now plan to exit by June 30, 2015.

Cost of Recurring Revenues

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Cost of recurring revenues	$	21,501		$	18,627		$	2,874
Percent of total recurring revenues	22		%	21		%

Cost of recurring revenues consists of the direct costs related to providing and supporting our outsourced services, providing technical support services under maintenance and term license agreements and other services for recurring revenues, and royalties paid to third party vendors.

Cost of recurring revenues changed due to the following (in thousands):

	Change From
	Q114 to Q115

Increased allocation-in of facility and infrastucture expenses	$	1,240
Increased payroll and related	956
Increased travel	342
Other items	336

Total change	$	2,874

The increase in the cost of recurring revenues for the first quarter of 2015 compared to the same quarter of 2014 was primarily due to increased allocation-in of facility and infrastructure expenses, payroll and related expenses and travel costs. Headcount in our client support group increased to 366 at March 31, 2015 from 341 at March 31, 2014, which resulted in higher payroll and related costs. During the second quarter of 2014, we re-categorized 15 relationship management employees from sales and marketing to cost of recurring as their responsibilities have changed to focus primarily on customer satisfaction. Allocation-in of facility increased as a result of accelerated depreciation at certain facilities in San Francisco, Boston and New Rochelle during the first quarter of 2015.

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Cost of Non-Recurring Revenues

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Cost of non-recurring revenues	$	7,431		$	8,055		$	(624	)
Percent of total non-recurring revenues	105		%	105		%

Cost of non-recurring revenues consists of expenses associated with professional services and other fees, and perpetual license fees. Costs associated with professional services and other revenue consists primarily of personnel-related costs associated with the professional services organization in providing consulting, custom report writing and data conversion from clients’ previous systems. Costs associated with perpetual license fees consists primarily of royalties and other fees paid to third parties, the fixed direct labor and third party costs involved in producing and distributing our software, and cost of product media including duplication, manuals and packaging materials. Also included are direct costs associated with third party consultants.

At the point professional services are substantially completed, we recognize a pro-rata amount of the related expenses based on the elapsed time from the start of the term license to the substantial completion of professional services. The remainder of the related expenses is recognized ratably over the remaining contract term. Indirect costs such as management and other overhead expenses are recognized in the period in which they are incurred.

Cost of non-recurring revenues changed due to the following (in thousands):

	Change From
	Q114 to Q115

Decreased cost related to term license implementation deferral	$	(675	)
Decreased payroll and related	(475		)
Increased outside contractors	478
Other items	48

Total change	$	(624	)

The decrease in cost of non-recurring revenues during the first quarter of 2015 compared to the same quarter of 2014 was primarily related to increased term license implementation deferral as more professional services costs (and associated revenue) were deferred than released compared to the same period last year, and decreased payroll and related costs; partially offset by increased outside contractor costs. Headcount in our professional services group decreased to 94 at March 31, 2015 from 113 at March 31, 2014 and outside contractor costs increased as we utilized more outside services related to implementation projects.

The change in our term license deferral increased professional services costs for the first quarters of 2015 and 2014 was as follows (in thousands):

	Three Months Ended March 31
	2015		2014		Change

Professional services costs	$	427	$	1,102	$	(675	)

Gross margins for non-recurring revenues were flat at (5)% for the first quarter of 2015 and 2014 as costs associated with project implementations exceeded revenues during the periods. The company has focused on improving non-recurring gross margin through improved efficiency in our global support organization and higher billable utilization.

Amortization of Developed Technology

	Three Months Ended March 31
	2015			2014			Change

Amortization of developed technology (in thousands)	$	1,570		$	1,800		$	(230	)
Percent of total net revenues	2		%	2		%

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Amortization of developed technology represents amortization of acquisition-related intangibles and capitalized software development costs. The decrease for the first quarter of 2015 compared to the same period last year resulted primarily from capitalized software development assets that fully amortized after the first quarter of 2014.

OPERATING EXPENSES

Sales and Marketing

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Sales and marketing expense	$	19,664		$	19,729		$	(65	)
Percent of total net revenues	19		%	20		%

Sales and marketing expenses consist primarily of the costs of personnel involved in the sales and marketing process, sales commissions, advertising and promotional materials, sales facilities expense, trade shows, and seminars.

Sales and marketing expense changed due to the following (in thousands):

	Change From
	Q114 to Q115

Decreased payroll and related	$	(278	)
Decreased professional fees	(171		)
Increased travel	314
Other items	70

Total change	$	(65	)

The decrease in total sales and marketing expenses during the first quarter of 2015 compared to the same period last year was primarily due to decreased payroll and related expense, and professional fees, partially offset by increased travel costs. Payroll and related expense decreased during the first quarter of 2015 primarily due to lower salary and commission expense. Headcount was flat at 186 at March 31, 2015 and 2014.

Product Development

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

Product development expense	$	19,557		$	17,639		$	1,918
Percent of total net revenues	19		%	18		%

Product development expense consists primarily of salary and benefits for our development staff as well as contractors’ fees and other costs associated with the enhancements of existing products and services and development of new products and services.

Product development expense changed due to the following (in thousands):

	Change From
	Q114 to Q115

Increased payroll and related	$	863
Increased outside services	548
Increased allocation-in of facility and infrastructure expenses	537
Other items	(30		)

Total change	$	1,918

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The increase in total product development expenses during the first quarter of 2015 compared to the same period last year was primarily due to increased payroll and related expense, outside services, and allocation-in of facility and infrastructure expenses. Payroll and related costs increased primarily due to higher salary expense of $0.6 million from increased headcount to 369 at March 31, 2015 from 344 at March 31, 2014 as well as higher payroll taxes of $0.4 million resulting from increased employee equity award exercise activity as our common stock price increased from $30.64 at December 31, 2014 to $44.11 at March 31, 2015. Additionally, outside services costs increased due to higher utilization of cloud computing services. As the pool of allocable corporate expenses increased due to accelerated depreciation and headcount increased in our product development team, it was allocated more costs during the first quarter of 2015.

General and Administrative

	Three Months Ended March 31
(in thousands, except percent of total net revenues)	2015			2014			Change

General and administrative expense	$	11,457		$	10,558		$	899
Percent of total net revenues	11		%	11		%

General and administrative expenses consist primarily of personnel costs for information technology, finance, administration, operations and general management, as well as legal and accounting expenses.

General and administrative expense changed due to the following (in thousands):

	Change From
	Q114 to Q115

Increased depreciation expense	$	1,461
Increased payroll and related	924
Increased rent expense	159
Increased allocations-out of facility and infrastructure expenses	(1,838		)
Other items	193

Total change	$	899

The increase in total general and administrative expense for the first quarter of 2015 was primarily due to increased depreciation expense, payroll and related expenses and rent expense; partially offset by increased allocations-out of facility and infrastructure expenses. In the first quarter of 2015, we shortened the depreciable lives of certain assets in connection with the planned exit of certain office space in San Francisco, Boston and New Rochelle by June 30, 2015, resulting in the increase in depreciation expense. Payroll and related expenses increased as headcount increased to 184 at March 31, 2015 from 169 and March 31, 2014 as well as higher payroll taxes associated with option exercises. Rent expense increased due to the amendment in the first quarter of 2015 of our San Francisco headquarters lease.

These increases were partially offset by an increase in the allocation-out of corporate expenses to other departments. Corporate expenses, such as facility and information technology (IT) costs, are initially recognized in our general and administrative department and then allocated out to other departments based on relative headcount. As our facility costs increased due to accelerated depreciation expense for our San Francisco, Boston and New Rochelle facilities, and headcount in our other departments grew at a higher rate than our general and administrative department, we allocated out more facility and IT costs from our general and administrative department in the first quarter of 2015.

Amortization of Other Intangibles

	Three Months Ended March 31
	2015			2014			Change

Amortization of other intangibles (in thousands)	$	798		$	909		$	(111	)
Percent of total net revenues	1		%	1		%

Other intangibles represent amortization of non-technology related to acquired intangible assets. The decrease in the first quarter of 2015 compared to the same period last year reflects certain assets related to Black Diamond that fully amortized after March 31, 2014.

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Transaction-related Fees

	Three Months Ended March 31
	2015			2014			Change

Transaction-related Fees (in thousands)	$	8,444		$	—		$	8,444
Percent of total net revenues	8		%	0		%

In connection with our pending merger with SS&C, we incurred a total of $8.4 million in operating expenses during the first quarter of 2015 related to advisory fees from third parties including financial advisory fees and legal fees. We had no transaction-related fees in 2014.

Restructuring Charges

	Three Months Ended March 31
	2015			2014			Change

Restructuring charges (in thousands)	$	2,643		$	174		$	2,469
Percent of total net revenues	3		%	0		%

Restructuring charges of $2.6 million during the first quarter of 2015 were primarily due to employee termination benefits of $2.1 million associated with a re-organization plan, approved in the first quarter of 2015, with the objective of improving operating results. As a result of this restructuring activity, we expect annual operating expense run rate savings of approximately $4 million which will be used to fund investments in other areas of the business to improve productivity, efficiency and client experience. Additionally, in the first quarter of 2015 Advent recognized exit costs of $0.5 million due to adjusted assumptions associated with the exit of San Francisco office space originally initiated in the third quarter of 2014.

For additional analysis of the components of the payments and charges made against the restructuring accrual during the first three months of 2015, see Note 14, “Restructuring Charges” to the accompanying condensed consolidated financial statements.

Interest and Other Income (Expense), Net

	Three Months Ended March 31
	2015			2014			Change

Interest and other income (expense), net (in thousands)	$	(897	)	$	(2,225	)	$	1,328
Percent of total net revenues	(1		)%	(2		)%

Interest and other income (expense), net consists of interest income and interest expense, realized gains and losses on investments and foreign currency gains and losses.

Interest and other income (expense), net changed due to the following (in thousands):

	Change From
	Q114 to Q115

Decrease in interest expense	$	751
Impact of foreign exchange	543
Other items	34

Total change	$	1,328

Interest and other income (expense), net changed during the first quarter of 2015 compared to the same period last year primarily due to decreased interest expense on lower average outstanding debt balances and foreign exchange impact due to fluctuations in the U.S. Dollar exchange rates against foreign currencies. Our average outstanding debt balance was approximately $220 million and $302 million for the first quarters of 2015 and 2014, respectively.

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Provision for Income Taxes

	Three Months Ended March 31
	2015			2014			Change

Provision for income taxes (in thousands)	$	4,226		$	6,181		$	(1,955	)
Effective tax provision rate	45		%	36		%

The effective tax rate for the first quarter of 2015 was higher than for the same period last year primarily due to the correction of an error in the first quarter of 2015 of $0.9 million related to the calculation of New York City and State income tax provision in prior periods and the suspension of the federal research credit as of March 31, 2015.

LIQUIDITY AND CAPITAL RESOURCES

Cash, Cash Equivalents and Cash Flows

The following is a summary of our cash, cash equivalents and marketable securities (in thousands):

	March 31		December 31
	2015		2014

Cash and cash equivalents	$	23,490	$	28,784
Short-term and long-term marketable securities	$	4,296	$	9,172

Cash and cash equivalents and short-term and long-term marketable securities primarily consist of money market mutual funds, U.S. government and U.S. Government Sponsored Entities (GSEs) and high credit quality corporate debt securities. Cash and cash equivalents are comprised of highly liquid investments purchased with an original or remaining maturity of 90 days or less at the date of purchase. Our short-term and long-term marketable securities were classified as available-for-sale, with long-term investments having a maturity date greater than one year from the end of the period.

The table below, for the periods presented, provides selected cash flow information (in thousands):

	Three Months Ended March 31
	2015			2014

Net cash provided by operating activities from continuing operations	$	6,611		$	20,875
Net cash provided by (used in) investing activities from continuing operations	$	2,118		$	(2,557	)
Net cash used in financing activities from continuing operations	$	(13,399	)	$	(6,987	)
Net cash used in operating activities from discontinued operation	$	(147	)	$	(161	)

Cash Flows from Operating Activities for Continuing Operations

Our cash flows from operating activities for continuing operations represent the most significant source of funding for our operations. The major uses of our operating cash include funding payroll (salaries, commissions, bonuses and benefits), general operating expenses (marketing, travel, computer and telecommunications, legal and professional expenses, and office rent), cost of revenues, interest from debt service and taxes. Our cash provided by operating activities generally follows the trend in our net revenues, operating results and bookings.

Our cash provided by operating activities from continuing operations of $6.6 million during the first quarter of 2015 was primarily the result of our net income plus non-cash charges including stock-based compensation, net of related excess tax benefit, depreciation and amortization and deferred income taxes. Net income was lower in the first quarter of 2015 than the same quarter last year due to $8.4 million of transaction-related fees, $2.6 million of restructuring charges and $1.6 million of accelerated depreciation associated plans to exit office space in San Francisco, Boston and New Rochelle. Cash flows resulting from changes in assets and liabilities include a decrease in deferred revenues and increases in prepaid and other assets and accrued liabilities. The decrease in deferred revenues primarily resulted from the ratable recognition of deferred term license, maintenance and other recurring revenues over their contract period during the first quarter of 2015, and the release of deferred revenue associated with our term license implementations. Prepaid and other assets increased primarily due to the capitalization of tenant improvement allowances associated with the 10-year office lease extension in San Francisco. Accrued liabilities increased primarily as a result of transaction-related fees associated with the pending merger with SS&C, taxes on stock option exercises, partially offset by lower accrued vacation.

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Our cash provided by operating activities from continuing operations of $20.9 million during the first quarter of 2014 was primarily the result of our net income plus non-cash charges including stock-based compensation, net of related excess tax benefit, and depreciation and amortization. Cash flows resulting from changes in assets and liabilities include decreases in accounts payable, accrued liabilities, deferred revenues, accounts receivable and an increase in income taxes payable. Accounts payable decreased as cash was used to pay down open invoices. Accrued liabilities decreased primarily as a result of cash payments for fiscal 2013 liabilities including year-end bonuses, commissions, and payroll taxes. The decrease in deferred revenue primarily resulted from the ratable recognition of deferred term license, maintenance and other recurring revenues over their contract period during the first quarter of 2014, and the release of deferred revenue associated with our term license implementations. Accounts receivable decreased as amounts previously billed were collected. Days’ sales outstanding were 46 days during the first quarter of 2014, compared to 54 days in the same period of 2013. Income taxes payable increased as there were no research and development tax credits available as of the end of the first quarter of 2014, whereas taxes payable in the first quarter of 2013 included the impact of both the 2013 and 2012 years’ tax credits. Other changes in assets and liabilities included a decrease in prepaid expenses and other.

We expect that cash provided by operating activities for continuing operations may fluctuate in future periods as a result of a number of factors including fluctuations in our net revenues and operating results, new term license bookings and renewals that increase deferred revenue, collection of accounts receivable, payment of federal income taxes and timing of payments.

Cash Flows from Investing Activities for Continuing Operations

Net cash provided by investing activities from continuing operations of $2.1 million for the first quarter of 2015 reflects net purchases, sales and maturities of marketable securities of $4.8 million, partially offset by capital expenditures of $2.0 million primarily related to internally developed software and $0.5 million of capitalized software development costs.

Net cash used in investing activities from continuing operations of $2.6 million for the first quarter of 2014 reflects capital expenditures of $2.1 million primarily related to internally developed software and the expansion of our Beijing office, and $0.5 million of capitalized software development costs.

Cash Flows from Financing Activities for Continuing Operations

Net cash used in financing activities was $13.4 million for the first quarter of 2015 and primarily reflects the net repayment of debt of $15.0 million and the payment of cash dividends totaling $6.8 million, partially offset by $5.0 million of proceeds from the issuance of common stock and tax benefits relating to excess stock-based deductions of $4.2 million, which represents the reduction in income taxes payable resulting from tax deductions from stock-based compensation.

Net cash used in financing activities was $7.0 million for first quarter of 2014 compared to cash provided by financing activities of $0.5 million during the first quarter of 2013. The increased use of financing cash flows of $7.5 million primarily reflects the increased repayment of long-term debt of $7.5 million to pay down additional borrowing resulting from the 2013 recapitalization.

Working Capital and Stockholders’ Deficit

As of March 31, 2015, our continuing operations had negative working capital of $(110.2) million, compared to negative working capital of $(121.4) million at December 31, 2014. Our negative working capital as of these dates was primarily due to payment of the special dividend of $470.1 million in July 2013 and stock repurchases. The increase in our working capital of $11.2 million during the first quarter of 2015 primarily reflected cash generated from operating activities and a reduction in deferred revenues and the payment of cash dividends with no dividends declared during the current quarter. Our negative working capital at March 31, 2015 includes approximately $191.7 million of short-term deferred revenues, which represent invoiced bookings not yet recognized as revenue. Generally, deferred revenues do not require cash settlement. Instead, these represent revenue to recognize upon fulfillment of an obligation to customers. The cash costs incurred in fulfilling the obligation are a fraction of the amount of deferred revenue and are evidenced by the Company’s historic gross margins of approximately 70%. As a result, we do not believe that our negative working capital balance reflects an inability to service our obligations over the next 12 months.

As of March 31, 2015, our cash, cash equivalents and marketable securities totaled $27.8 million. We have additional borrowing capacity under our credit facility, as well as future cash flows generated by operating activities, to fund our working capital needs.

After making the special dividend payment of $470.1 million in July 2013 there remains a stockholders’ deficit balance of $(50.1) million on our balance sheet as of March 31, 2015. We believe the Company is solvent as our cash and investment balances, cash generated from operations and availability under our debt agreement will be sufficient to satisfy our working capital needs, capital expenditures, and interest and repayment of debt principal for the next 12 to 24 months.

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Term Loan and Revolving Credit Facility

On June 12, 2013, we entered into a Restated Credit Agreement. The Restated Credit Agreement amended and restated Advent’s prior Credit Agreement, dated November 30, 2011. The Restated Credit Agreement provides for (i) a $200 million revolving credit facility, with a $25 million letter of credit sublimit and a $10 million swingline loan sublimit and (ii) a $225 million term loan facility. Advent may request revolving loans, swingline loans or the issuance of letters of credit until June 12, 2018, subject to demonstrating pro forma compliance with the financial covenant requirement under the Restated Credit Agreement. The Restated Credit Agreement also contains an incremental facility permitting Advent, subject to certain requirements, to arrange with the Lenders and/or new lenders for up to an aggregate of $75 million in additional commitments in the form of revolving loans or term loans. The proceeds of the revolving loans and term loans under the Restated Credit Agreement may be used for general purposes, including to finance dividends, repurchase common shares, finance acquisitions, or to finance other investments.

The following is a summary of the Company’s outstanding debt balances (in thousands):

	March 31 2015		December 31 2014
Term loan facility	$	190,000	$	195,000
Revolving credit facility	15,000		25,000
Total	$	205,000	$	220,000

We were in compliance with all covenants associated with our Restated Credit Agreement as of March 31, 2015 as follows:

		Ratio Calculation
	Covenant	as of
Covenant	Requirement	March 31, 2015

Leverage ratio (1)	Maximum 3.75x(2)	1.6	x

Interest coverage ratio (3)	Minimum 2.5x	19.1	x

(1) Calculated as the ratio of total debt to EBITDA, as defined by the Restated Credit Agreement, for the period of four consecutive fiscal quarters on the measurement date.

(2) The leverage ratio covenant requirement lowers to a maximum of 3.50x on June 30, 2015 and 3.25x on June 30, 2016.

(3) Calculated as the ratio of EBITDA to interest expense, as defined by the Restated Credit Agreement, for the period of four consecutive fiscal quarters on the measurement date.

Off-Balance Sheet Arrangements and Contractual Obligations

The following table summarizes our contractual cash obligations as of March 31, 2015 (in thousands):

	Nine
	Months Ending
	December 31		Years Ending December 31
	2015		2016		2017		2018		2019		Thereafter		Total
Operating lease obligations, net of sub-lease income*	$	6,851	$	9,062	$	9,908	$	8,621	$	8,626	$	55,090	$	98,158
Debt**	15,000		20,000		20,000		20,000		130,000		—		205,000
Total	$	21,851	$	29,062	$	29,908	$	28,621	$	138,626	$	55,090	$	303,158

*On January 28, 2015, we extended our San Francisco lease for an additional 10 years, which increased our operating lease obligations from November 1, 2016 through October 31, 2026 and is reflected in the table above.

**Excludes interest payments on our variable rate debt as amounts are uncertain. Refer to Note 6 “Debt” in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, for information about the terms of our debt.

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As of March 31, 2015, the principal outstanding balance under our Restated Credit Agreement was $205.0 million, which is due in full no later than June 12, 2018. Our Restated Credit Agreement includes covenants requiring us to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio. As of March 31, 2015, we were in compliance with all of our covenants. We believe maintaining compliance with these covenants will not restrict our ability to execute our business plan in this fiscal year.

At March 31, 2015, we had a gross liability of $16.5 million for uncertain tax positions. If recognized, the impact on our statement of operations would be to decrease our income tax expense and increase our net income by $13.6 million. The impact on net income reflects the liabilities for unrecognized tax benefits net of the federal tax benefit of state income tax items. Since almost all of this liability relates to reserves against deferred tax assets that we do not expect to utilize in the short term, we cannot estimate the timing of potential future cash settlements and have not included any estimates in the table of contractual cash obligations above. We expect our cash payments for federal income taxes will be 20% or less of taxable income through 2015 as we have significant net operating losses and tax credit carryforwards to utilize.

At March 31, 2015, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Other Liquidity and Capital Resources Considerations

Our liquidity and capital resources in any period could also be affected by the exercise of outstanding employee stock options and SARs, and issuance of common stock under our employee stock purchase plan. The resulting increase in the number of outstanding shares from this and from the issuance of common stock from our RSUs could also affect our per share results of operations. However, we cannot predict the timing or amount of proceeds from the exercise of these securities, or whether they will be exercised at all. Additionally, we may be obligated to pay fees and other costs in connection with the merger with SS&C that could significantly impact our liquidity and capital resources. We believe our cash flow from operations, as well as our availability under our debt agreement, is sufficient to fund these costs if necessary.

We expect that for the next two years, our debt service costs and other operating expenses will constitute a significant use of cash flow. Accordingly, we anticipate having less available cash to fund acquisitions, repurchase additional common stock, or invest in other businesses when opportunities arise. Based upon the predominance of our revenues from recurring sources, bookings performance and current expectations, we believe that our cash balances and investments, cash generated from operations and availability under our debt agreement will be sufficient to satisfy our working capital needs, capital expenditures and interest and repayment of debt principal. However, we may identify opportunities that require us to raise funds, such as acquisitions or other investments in complementary businesses, products or technologies, and may raise such additional funds through public or private debt or additional borrowings under our current line of credit facility or equity financing. However, such financing may not be available at all, or if available, may not be obtainable on favorable terms, and could be dilutive.

The Company has reviewed its needs in the United States for possible repatriation of undistributed earnings or cash of its non-U.S. subsidiaries. The Company presently intends to use all earnings and cash outside of the United States of all non-U.S. subsidiaries to fund investments or meet working capital and property, plant and equipment requirements in those locations. At March 31, 2015, we had approximately $6.8 million of cash in our non-U.S. subsidiaries.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to financial market risks, including changes in interest rates on outstanding debt and changes in foreign currency exchange rates on non-U.S. dollar denominated assets and liabilities. The Company regularly assesses these risks and has established policies and business practices to protect against the adverse effects of these and other potential exposures.

Interest Rate Risk

Our interest rate risk relates primarily to our investment portfolio, which consisted of $27.8 million in cash and cash equivalents, and short-term and long-term marketable securities as of March 31, 2015. Our marketable securities are classified as available-for-sale and are recorded in our condensed consolidated balance sheet at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income. At any time, a rise in interest rates could have a material adverse impact on the fair value of our investment portfolio. Conversely, declines in interest rates could have a material impact on interest earnings of our investment portfolio. We do not currently hedge these interest rate exposures.

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To provide a meaningful assessment of the interest rate risk associated with our investment portfolio, we performed a sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel shift in the yield curve. Based on investment positions as of March 31, 2015, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $20,000 incremental decline in the fair market value of the portfolio.

Interest Expense Risk

We have interest rate risk relating to debt and associated interest expense under our Restated Credit Agreement, which is indexed to JPMorgan Chase Bank, N.A.’s prime rate, federal funds rate or LIBOR. At any time, a rise in interest rates could have a material adverse impact on our earnings and cash flows. Conversely, a decrease in interest rates could result in a material increase in earnings and cash flows. We estimate that a hypothetical plus or minus of 100 BPS would increase or decrease, respectively, our interest expense and cash flows by approximately $2.1 million on an annual basis, based on our $205.0 million debt balance at March 31, 2015.

The revolving loans and term loans bear interest, at our option, at the alternate base rate plus a margin of 0.25% to 1.25% or an adjusted LIBOR rate (based on one, two, three or six-month interest periods) plus a margin of 1.25% to 2.25%, in each case with such margin being determined based on the consolidated leverage ratio for the preceding four fiscal quarter period. The “alternate base rate” means the highest of (i) the Agent’s prime rate, (ii) the federal funds rate plus a margin equal to 0.50% and (iii) the adjusted LIBOR rate for a one-month interest period plus a margin equal to 1.00%. Swingline loans accrue interest at a per annum rate based on the alternate base rate plus the applicable margin for alternate base rate loans.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

The Company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) of the Securities and Exchange Act of 1934, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures were effective as of March 31, 2015 to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to Advent’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting which were identified in connection with the evaluation required by Rule 13a-15(f) of the Exchange Act that occurred during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, Advent’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, in the course of its operations, the Company is a party to litigation matters and claims, including claims related to employee relations, business practices and other matters not specifically identified, but that the Company does not consider to be material either individually or in the aggregate at this time. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. An unfavorable outcome in any legal matter, if material, could have a material adverse effect on the Company’s financial position, liquidity or results of operations in the period in which the unfavorable outcome occurs and potentially in future periods.

Legal Proceedings Regarding the Merger

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Item 1A. Risk Factors

Investors should carefully consider the risks described below before making an investment decision. The trading price of our common stock could decline due to any of, but are not limited to, these risks. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q filed with the SEC, including our condensed consolidated financial statements and related notes thereto and our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

The pendency of our agreement to be acquired by SS&C or our failure to complete the merger could have an adverse effect on our business.

Completion of the merger is subject to the satisfaction of various conditions, including the receipt of approvals from our stockholders and from government or regulatory agencies. There is no assurance that all of the various conditions will be satisfied, or that the merger will be completed on the proposed terms, within the expected timeframe, or at all.

The merger gives rise to inherent risks that include:

· The inability to complete the merger due to the failure to satisfy conditions to the completion of the merger, including receipt of the required regulatory approval;

· Pending and potential future stockholder litigation that could prevent or delay the merger or otherwise negatively impact our business and operations;

· If the merger is not completed, the price of our common stock will change to the extent that the current market price of our stock reflects an assumption that the merger will be completed;

· The amount of cash to be paid under the agreement governing the merger is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations, including any potential long-term value of the successful execution of our current strategy as an independent company or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock;

· Legal or regulatory proceedings, including regulatory approvals from various domestic and foreign governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental entities may delay or deny approval, or other matters that affect the timing or ability to complete the transaction as contemplated , such as the second request we recently received from the Department of Justice;

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· The ability of SS&C Technologies Holdings, Inc. to obtain the necessary funds to complete the merger;

· The possibility of disruption to our business, including increased costs, diversion of management time and resources and employee retention;

· Difficulties maintaining business and operational relationships, including relationships with customers, suppliers, and other business partners;

· The possibility of slowing new license sales (which we experienced in the first quarter of 2015) and renewals by clients;

· The inability to attract and retain key personnel pending consummation of the merger;

· The inability to pursue alternative business opportunities, including acquisitions, or make changes to our business pending the completion of the merger, and other restrictions on our ability to conduct our business, including restrictions on our ability to declare dividends;

· The requirement to pay a termination fee of $80 million or reimburse expenses of up to $12.5 million if the agreement governing the merger is terminated under certain circumstances;

· That under the terms of the Merger Agreement, we are unable to solicit other acquisition proposals during the pendency of the merger;

· The amount of the costs, fees, expenses and charges related to the Merger Agreement or the merger;

· Developments beyond our control including, but not limited to, changes in domestic or global economic conditions that may affect the timing or success of the merger; and

· The risk that if the merger is not completed, the market price of our common stock could decline, investor confidence could decline, shareholder litigation could be brought against us, relationships with customers, suppliers and other business partners may be adversely impacted, we may be unable to retain key personnel, and profitability may be adversely impacted due to costs incurred in connection with the proposed merger.

If our existing customers do not renew their term license, other recurring or perpetual maintenance contracts, our business will suffer.

Total recurring revenues, which we define as term license, other recurring revenue, maintenance from perpetual arrangements and Asset Under Administration (AUA) fees for certain perpetual arrangements, represented 92%, 91% and 90% of total net revenues during 2014, 2013 and 2012, respectively. We expect to continue to derive a significant portion of our revenue from our clients’ renewal of term license, other recurring and perpetual maintenance contracts and such renewals are critical to our future success, although we expect revenues from perpetual maintenance arrangements to continue their downward trend. Some factors that may affect the renewal rate of our contracts include:

· The impact of the economic environment and market volatility on our clients and prospects;

· The impact of customers consolidating or going out of business;

· The price, performance and functionality of our solutions;

· The availability, price, performance and functionality of competing products and services;

· The effectiveness of our maintenance and support services;

· The legacy nature of our perpetual maintenance revenues;

· Our ability to develop complementary products and services;

· Our ability to offer the diversity of business process outsourcing services demanded by our clients and prospects; and

· Potential client reaction to the pending acquisition by SS&C.

We have experience with renewals of our term license contracts only since approximately 2008 and we have even less experience with renewals of certain other recurring contracts, such as our SaaS-based offerings, Advent OnDemand and Black Diamond. Our customers have no obligation to renew their term license or other recurring contracts and given the relatively limited number of years in which we have experience renewing term license and other recurring contracts and fluctuations in term license renewal rates, it is difficult to predict expected renewal rates. Additionally, we cannot predict whether the renewals will be less advantageous to us than the original term or other recurring contract. For example, the renewal periods for our term license contracts are typically shorter than our original term license contract and customers may request a reduction in the number of users or products licensed, resulting in lower annual term license fees. Further, customers may elect to not renew their term license or other recurring contracts at all. We may incur significantly more costs in securing our term license or other recurring contract renewals than we incur for our perpetual maintenance renewals. If our term license or other recurring contract customers renew under terms less favorable to us or choose not to renew their contracts, or if it costs significantly more to secure a renewal for us, our operating results may be harmed.

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Most of our base of perpetual license customers have historically renewed their annual maintenance although our customers have no obligation to renew such maintenance after the first year of their license agreements. Our perpetual license maintenance revenues have been trending downward and decreased 2%, 2% and 5% during fiscal 2014, 2013 and 2012, respectively. In addition, market downturns, such as the downturn beginning in the fall of 2008 and subsequent market fluctuations, and other factors have caused, and may in the future cause, some clients not to renew their maintenance; reduce their level of maintenance; not renew their term license contracts; or renew such term licenses for fewer products or users, all of which adversely affects our renewal rates and revenue from these customers. Our renewal rates are based on cash collections and are disclosed one quarter in arrears. Our reported quarterly renewal rate for perpetual maintenance and term license renewals may fluctuate. Decreases in renewal rates reflect reduced maintenance expenditures, reduced term license renewals, customer attrition, and reductions in products licensed or number of users by clients, as well as from slower payments received from renewal clients.

Our sales cycle is long and we have limited ability to forecast the timing and amount of specific sales and the timing of specific implementations.

The licensing of our software products and services often requires prospective customers to provide significant executive-level sponsorship and to make major systems architecture decisions. As a result, we must generally engage in relatively lengthy sales and contracting efforts. Sales transactions may therefore be delayed during the customer decision process because we must provide a significant level of education to prospective customers regarding the use and benefit of our products. Our business and prospects are subject to uncertainties in the financial markets that can cause customers to remain cautious about capital and information technology expenditures, particularly in uncertain economic environments, or to decrease their information technology budgets as an expense reduction measure. In addition, we have experienced delays in our sales cycle with some clients and prospects as a result of the pending SS&C acquisition. The sales cycle associated with the purchase of our solutions is typically between two and twelve months depending upon the size of the client, and is subject to a number of significant risks that have impacted our sales and over which we have little or no control, including broader financial market volatility, adverse economic conditions, customers’ budgeting constraints, internal selection procedures, competitive products, and changes in customer personnel, among others.

As a result of a lengthy and unpredictable sales cycle, we have limited ability to forecast the timing and amount of specific perpetual license sales, as well as term license, Advent OnDemand and Black Diamond sales, which we report quarterly as annual contract value (ACV) bookings and also include as part of our Annualized Recurring Run Rate metric. The timing of large individual license sales is especially difficult to forecast, and we may not be successful in closing large license transactions on a timely basis or at all. Customers may postpone their purchases of our existing products or product enhancements in advance of the anticipated introduction of new products or product enhancements by us or our competitors, such as we have experienced with our recently introduced Advent Direct cloud platform that we have begun to make more broadly available to selected clients. Accordingly, our level of ACV bookings and Annualized Recurring Run Rate in any particular period is subject to significant fluctuation. For example, during 2014, 2013 and 2012, our ACV bookings decreased 4%, 5% and 3%, respectively, compared to previous periods, which is indicative of the competitive environment in which we sell, especially against competitors with more robust hosted and business process outsourcing offerings. ACV from 2012-2014 affected our Annualized Recurring Run Rate. Our Annualized Recurring Run Rate, which is a broader metric than ACV that includes all of our contracted recurring revenue streams at the end of a particular quarter, increased 7% as of December 31, 2014 compared to December 31, 2013.

When a customer purchases a term license together with implementation services, we do not recognize any revenue under the contract until the implementation services are substantially complete. The timing of large implementations is difficult to forecast. Customers may delay or postpone the timing of their particular projects due to the availability of resources or other customer specific priorities. If we are not able to complete an implementation project for a term license in a quarter, it will cause us to defer all of the contract revenues to a subsequent quarter. Because our expenses are relatively fixed in the near term, any shortfall from anticipated revenues could result in a significant variation in our operating results from quarter to quarter.

Our current operating results may not be reflective of our future financial performance.

We derive most of our revenue from recurring sources. During 2014, 2013 and 2012, we recognized 92%, 91% and 90%, respectively, of total net revenues from recurring sources. We generally recognize revenue from these sources ratably over the terms of these agreements, which typically range from one to three years. As a result, almost all of our revenues in any quarter are generated from contracts entered into during previous periods.

Consequently, a significant decline in new business generated in any quarter may not materially affect our results of operations in that quarter but will have an impact on our revenue growth rate in future quarters. We also experience fluctuations and seasonality in our new business generated each quarter. ACV for fiscal 2014 and 2013 decreased 4% and 5%, respectively, over the prior year; and ACV in 2012 decreased by 3% over 2011. Also, the type of recurring revenue may vary and our Annualized Recurring Run Rate, which includes all of our contracted recurring revenue streams, not just ACV, may fluctuate as well. For example, our Annualized Recurring Run Rate increased as of December 31, 2014, compared to December 31, 2013, but our September 30, 2013 Annualized Recurring Run Rate decreased 1% compared to June 30, 2013.

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Additionally, a decline in renewals of term agreements, maintenance or data and other subscription contracts during a quarter will not be fully reflected in our financial performance in that quarter. For example, because we recognize revenue ratably, the non-renewal of term agreements or maintenance contracts late in a quarter may have very little impact on revenue for that quarter, but will reduce revenue in future quarters. In addition, we may be unable to adjust our costs in response to reduced revenue.

Further, because of the large percentage of revenue from recurring sources in our term license business model, our historical operating results on a U.S. generally accepted accounting principles (GAAP) basis will not necessarily be the sole or most relevant factor in predicting our future operating results. Accordingly, we report certain non-GAAP or operational information, including our quarterly bookings metrics (expressed as ACV), maintenance and term license renewal rates and Annualized Recurring Run Rate, that is intended to provide investors with certain of the information that management uses as a basis for planning and forecasting of future periods. However, we believe that undue reliance should not be placed upon non-GAAP or operating information because this information is neither standardized across companies nor subjected to the same control activities and audit procedures that produce our GAAP financial results.

Uncertain economic and financial market conditions adversely affect our business.

The market for investment management software systems has been and may in the future be negatively affected by a number of factors, including reductions in capital expenditures by customers and volatile performance of major financial markets. For example, U.S. and European economies showed signs of weakening during periods in 2012 due to uncertainty about the fate of the eurozone and continued weakness in U.S. labor markets. With this volatile environment and general uncertainty as a backdrop, our customers became cautious and slowed buying decisions which elongated some sales and cash collection cycles. Also, our new contract bookings were lower than expected during 2013. Market conditions have also impacted our performance in the past. For example, macroeconomic concerns in 2011 and again in 2012, such as the European default risk and U.S. debt ceiling debate, resulted in a cautious buying environment and elongated sales cycles in some instances. Also, during the fall of 2008 through 2010, we experienced some clients and prospects delaying or cancelling additional license purchases, while others went out of business, reduced personnel, or were acquired. The target clients for our products include a range of financial services organizations that manage investment portfolios. The success of many of our clients is intrinsically linked to the health of the financial markets. The demand for our solutions has been and continues to be disproportionately affected by fluctuations, disruptions, instability and downturns in the economy and financial services industry, 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.

In addition, the failure of existing investment firms or the slowdown in the formation of new investment firms could cause a decline in demand for our solutions. Consolidation of financial services firms and other clients will result in reduced technology expenditures or acquired customers using the acquirer’s own proprietary software and services solutions or the solutions of another vendor. In some circumstances where both acquisition parties are customers of Advent, the combined entity may require fewer Advent products and services than each individually licensed prior to becoming a combined entity, thus reducing our revenue. Challenging economic conditions may also cause our customers to experience difficulty with gaining timely access to sufficient credit or our customers may become unable to pay for the products or services they have purchased, which could result in their inability to fulfill or make timely payments to us. If that were to occur, our ability to collect receivables would be negatively affected, and our reserves for doubtful accounts and write-offs of accounts receivable may increase.

We have in the past experienced a number of market downturns in the financial services industry and resulting declines in information technology spending, which has caused longer sales and contracting cycles, deferral or delay of information technology projects and generally reduced expenditures for software and related services. The severity of market downturns and volatility and uncertainty in financial markets and the financial services sector that we have experienced in the past and may experience again also makes it difficult for us to forecast operating results and may result in a material adverse effect on our revenues and results of operations in the longer term. In addition, other events such as the federal government’s struggles to reach agreement on the federal budget and debt ceiling have contributed, and may in the future contribute, to macroeconomic problems that result in a cautious buying environment with elongated sales cycles with our clients.

Market downturns may cause clients not to renew their term licenses or perpetual license maintenance. Also, significant declines in market value of our clients affect their Assets Under Administration (AUA) or Assets Under Management (AUM). Consequently, we may also experience a decline in the ACV of bookings and Annualized Recurring Run Rate since the pricing of some of our products is based upon our client’s AUA or AUM. Furthermore, we have some contracts for which clients pay us fees based on the greater of a negotiated annual minimum fee or a calculated fee that is determined by the client’s AUA or AUM. If a client previously paid us based on the calculated fee, rather than the annual minimum fee, we would experience a decline in revenue as a result of any decline in those clients’ AUA or AUM.

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We operate in a highly competitive industry.

The market for investment management software is competitive and highly fragmented, is subject to rapid change and is sensitive to new product introductions and marketing efforts by industry participants. Our largest single source of competition is from proprietary systems used by 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 third party vendors such as Advent. We also face significant competition from other providers of software and related services as well as providers of outsourced services. Many of our competitors have longer operating histories and greater financial, technical, sales and marketing resources than we do. In addition, consolidation has occurred among some of the competitors in our markets. Competitors vary in size, scope of services offered and platforms supported. Many of our competitors have merged with each other or with other larger third parties, and it is possible that even larger companies will emerge through additional acquisitions of companies and technologies. Consolidation among our competitors may result in stronger competitors in our markets and may therefore either result in a loss of market share or harm our results of operations. In addition, we also face competition from potential new entrants into our markets that may develop innovative technologies or business models, particularly for SaaS businesses where barriers to entry are relatively lower. Furthermore, competitors may respond to weak market conditions by lowering prices, offering better contractual terms and attempting to lure away our customers and prospects with lower cost solutions. We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure will not result in price reductions, reduced operating margins or loss of market share, any one of which could seriously harm our business.

We may not be successful in introducing new and enhanced products.

We also must continue to introduce new products and product enhancements. The market for our products is characterized by rapid technological change, changes in customer demands, evolving industry standards and new regulatory requirements. New products based on recent technologies or new industry standards can render existing products obsolete and unmarketable. As a result, our future success will continue to depend upon our ability to develop or acquire new products and product enhancements that address the needs of our target markets and respond to their changing standards and practices. We continue to release numerous products and product upgrades and we believe our future success depends on continuing such releases. In October 2008, we acquired Tamale Software which enabled us to offer a new product in the nascent research management field and in March 2010, Advent Norway AS acquired Goya AS to allow us to provide transfer agency-related solutions to mutual fund managers and mutual fund distributors. In February 2011, Advent Software, Inc. acquired Syncova Solutions, Ltd., a United Kingdom-based company that provides margin management and debt finance reconciliation and optimization software and in June 2011, we acquired Black Diamond, a Florida-based company that provides a web-based, outsourced portfolio management and reporting platforms for investment advisors. In late 2013, we introduced Advent Direct, our new cloud platform, on a beta release basis, and we have begun to make Advent Direct more broadly available to select clients. In order to ensure Advent Direct is successful in the mid- to long-term, we have slowed roll out to enable the addition of key new features. This slowdown means we will not be ramping up sales significantly in the first half of 2015 and now expect to ramp up sales in the first half of 2016. However, it may take longer than we expect to make Advent Direct broadly available or develop related solutions, and we cannot be certain whether new products and enhancements will meet anticipated sales projections or will be broadly accepted in the market, whether a market will develop as expected for new products and enhancements or whether we will be able to continue to introduce more products and enhancements.

We may not be successful in developing, introducing, marketing and licensing our 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 availability of new products or enhancements or delays in client implementations or migrations may result in client dissatisfaction and delay or loss of product revenues. Additionally, existing clients have shown some reluctance to go through the process of migrating from our Axys product to our Advent Portfolio Exchange (APX) or Geneva products, or our Black Diamond platform, which has slowed the migration of our customer base to APX. In addition, clients may delay purchases in anticipation of new products or product enhancements, such as we have experienced and continue to experience with our recently introduced, but not yet broadly available, Advent Direct cloud platform. Our ability to develop new products and product enhancements is also dependent upon the products of other software and service vendors, including certain system software vendors, such as Microsoft Corporation, database vendors, Software-as-a-Service (“SaaS”) providers, hosting and authentication services, and development tool vendors. If the products of such vendors have design defects or flaws, are unexpectedly delayed in their introduction, are unavailable on acceptable terms, or the vendors exit the business, our business could be seriously harmed.

Our stock price may fluctuate significantly.

Like many other companies, our stock price has been subject to wide fluctuations in recent quarters as a result of market volatility. If ACV bookings, Annualized Recurring Run Rate net revenues or earnings in any quarter or our financial guidance for future periods fail to meet the investment community’s expectations, our stock price is likely to decline. Even if our ACV bookings, Annualized Recurring Run Rate, revenues or earnings meet or exceed expectations, our stock price is subject to decline in periods of high market volatility because our stock price is affected by trends in the financial services sector and by broader market trends unrelated to our performance. Unfavorable or uncertain economic and market conditions, which can be caused by many factors, including declines in economic growth, business activity or investor or business confidence; limitation on the availability or increases in the cost of credit or capital; increases in inflation, interest rates, exchange rate volatility, default rates or the price of basic commodities; corporate, political or other scandals that reduce investor confidence in capital markets; outbreaks of hostilities or other geopolitical instability; natural disasters or pandemics; or a combination of these or other factors, have adversely affected, and may in the future adversely affect, our business, profitability and stock price.

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In addition, the Company initiated a quarterly dividend in April 2014 and periodically repurchases shares of its stock (each subject to authorization by its Board), but is under no obligation to continue either action or to do so in certain amounts. Also, our debt repayment and other financial obligations may limit or prevent our ability to issue dividends or repurchase shares of our common stock. In the Merger Agreement with SS&C signed on February 2, 2015, the Company is prohibited from declaring a dividend or repurchasing shares of its common stock during the pendency of the agreement. If the Company reduces the expected value of future dividends or ceases to issue dividends, which are subject to declaration by its Board of Directors, or fails to meet expectations related to future dividends or share repurchases, investors may lose confidence or we may not attract the same type of investors and our stock price may decline significantly.

We depend heavily on our Geneva®, Advent Portfolio Exchange®, Axys® and Moxy® products, and our Black Diamond platform.

We derive a majority of our net revenues from the license and maintenance revenues from our Geneva, Advent Portfolio Exchange (APX), Axys and Moxy products and our Black Diamond platform. In addition, Moxy and many of our applications, such as Partner and various data services, have been designed to provide an integrated solution with Geneva, APX and Axys. As a result, we believe that for the foreseeable future a majority of our net revenues will depend upon continued market acceptance of Geneva, APX, Axys, Moxy and Black Diamond, and related upgrades.

Our operating results may fluctuate significantly.

Most of our revenue comes from recurring sources, which grew to 92% in 2014, from 91% in 2013 and 90% in 2012. During fiscal 2014, term license revenues comprised approximately 53% of recurring revenues as compared to approximately 52% and 49% in fiscal years 2013 and 2012, respectively.

When a customer purchases a term license together with implementation services, we do not recognize any revenue under the contract until the implementation services are substantially completed and then we recognize revenue ratably over the remaining term of the contract. If the implementation services are still in progress as of quarter-end, we will defer all of the contract revenues to a subsequent quarter. At the point professional services are substantially completed, we recognize the professional services fees earned and related expenses, and a pro-rata amount of the term license revenue based on the elapsed time from the start of the term license to the substantial completion of professional services. For example, we deferred net revenues of $1.4 million in 2014. During 2013, the revenue deferred from projects in the process of being implemented exceeded revenue recognized from completed implementations, resulting in a net deferral of $3.9 million for fiscal 2013.

In future periods, our revenues related to completed implementations may vary depending on the number of projects that reach substantial completion during the quarter. Term license revenue for the remaining contract years and the remaining deferred professional services revenue and related expenses are recognized ratably over the remaining contract term. The term license component of the deferred revenue balance will increase or decrease in the future depending on the amount of new term license bookings relative to the number of implementations that reach substantial completion in a particular quarter. Although our substantial revenue from recurring sources under our term license model provides us with longer term stability and more visibility in the short term, our quarterly net revenues and operating results may still fluctuate significantly depending on these and other factors. Our expense levels are relatively fixed in the short-term. Due to the fixed nature of these expenses, combined with the relatively high gross margin historically achieved on our products, an unanticipated decline in net revenues in any particular quarter may adversely affect our operating results.

In addition, we experience seasonality in our licensing. We believe that this seasonality results primarily from customer budgeting cycles and expect this seasonality to continue in the future. The fourth quarter of the year typically has more licensing activity; however, this was not the case in the fourth quarter of 2013, although it was higher in the fourth quarter of 2014. That can result in ACV bookings and perpetual license fee revenue being the highest in the fourth quarter, followed by lower term license bookings and perpetual license revenue in the first quarter of the following year, and which also may result in larger quarterly increases in Annualized Recurring Run Rate for the fourth quarter than in other quarters, although changes in other recurring revenue sources during a quarter may decrease or increase such run rate as well. This seasonality has been, and may be in the future, adversely affected by market downturns and uncertain economic conditions. Also, term licenses entered into during a quarter may not result in recognition of associated revenue until later quarters, as we begin recognizing revenue for such licenses when the related implementation services are substantially complete.

Because of the above factors, we believe that quarter-to-quarter comparisons of our operating results are not necessarily reliable indicators of future performance.

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Our increased emphasis on delivering our products as SaaS may give rise to risks that could harm our business.

Currently, we offer our suite of products to our customers on premise and over the web on an Advent-hosted or third party-hosted basis. Advent OnDemand and Black Diamond are delivered over the web as our current SaaS product offerings. In addition, we introduced Advent Direct, our new cloud platform, on a beta release basis, and we have begun to make Advent Direct more broadly available to selected customers. We plan to continue to expand our current and future SaaS product offerings, including availability on mobile devices, and we believe that over time our SaaS-based product offerings will comprise an increasing share of our total recurring revenues as more customers adopt SaaS as their preferred solution. Our SaaS-based delivery models may vary from the way we price and deliver our products to customers on premise under term licenses or amongst our various SaaS offerings. The SaaS-based model will require continued investment in product development and SaaS operations, and may give rise to a number of risks, including the following:

· Increased competition from current or new SaaS-based solutions providers that offer lower priced or more advanced solutions;

· Concerns among our installed, term license customer base about our increased focus on SaaS-based products;

· Increased price competition with current or new competitors, resulting in eroding profit margins;

· Customers postponing their purchases of our existing products or product enhancements in anticipation of the introduction of new SaaS-based offerings; and

· Incurring higher operating costs and customer information security risks associated with hosting and processing large quantities of customer information.

In addition, our reliance upon third-party service providers as part of our SaaS and data services may expose us to risks arising from disruptions to, or failures in, the facilities and systems operated by such third parties. We currently serve customers from third-party-operated data center facilities located in the United States and other countries. We do not control, or in some cases have limited control over, the operation of the data center facilities we use, and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, and to adverse events caused by operator error. We cannot rapidly switch to new data centers or move customers from one data center to another in the event of any adverse event. Despite precautions taken at these facilities, natural disasters, acts of terrorism or misconduct, closure of facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in our service and the loss of customer data. Our disaster recovery procedures may not be adequate and our service could be interrupted.

Any damage to, or failure of, the systems in any data center (whether operated by us or by a third-party service provider) could result in impairment of, or interruptions in, our service. Impairment of or interruptions in our service may reduce our revenues, cause clients to request credits or penalties from us, subject us to claims and litigation, cause our customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers and retain existing customers. Even with respect to data centers that are operated for us by third-party service providers, we may not be able to negotiate service contracts with these service providers that will fully protect us from these risks. Our business will also be harmed if our customers and potential customers believe our service is unreliable.

Our outsourcing, data and other services are subject to risks that may harm our business.

Our clients rely on our outsourcing data and other services to meet their operational needs, including account aggregation and reconciliation. Our services involve the storage and transmission of customer and other information. The amount and type of client-related data hosted by Advent is substantially increasing, and we are providing outsourcing, data and other services in more jurisdictions outside the U.S. Furthermore, our business is becoming increasingly reliant on providing outsourcing, data and other services. This exposes the Company to many risks. Our security measures and those of third parties upon whom we rely could be breached, whether as part of cyber-attacks or other attempts at unauthorized access, resulting in unauthorized access to our information or our clients’ information. Furthermore, due to the complexity of our services and because we also utilize third-party data and other vendors, our services and those of our third-party vendors may have previously-undetected errors or defects, service disruptions, delays, or incomplete or incorrect data that could result in unanticipated downtime for our customers, misrouted or unauthorized access to data, failure to meet service levels and service disruptions. Such potential errors, defects, delays, disruptions, performance problems and security breaches may damage our clients’ business, harm our reputation, result in the loss of future sales, require us to undertake expensive remediation steps, cause clients to withhold payment or terminate or not renew their agreements with us, and subject us to litigation, regulatory fines and penalties, indemnity obligations, contractual obligations and liabilities and other possible liabilities.

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Security breaches, computer viruses and computer hacking attacks could harm our business and results of operations.

We collect, store and transmit customer data and other proprietary information of, or on behalf of, our customers. We take steps to protect the security, integrity and confidentiality of the information we collect, store or transmit, including our own proprietary and confidential information and that of our customers, their end users, and other third parties, but there is no guarantee that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information despite our efforts. Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry and may occur on our systems or those of our information technology vendors in the future. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, or the inadvertent transmission of computer viruses, worms or other harmful software code could result in unauthorized disclosure, misuse, or loss of information, legal claims and litigation, indemnity obligations, regulatory fines and penalties, contractual obligations and liabilities, and other liabilities. In addition, if our security measures, or those of our vendors, are breached or unauthorized access to consumer data otherwise occurs, our solutions may be perceived as not being secure and our customers may reduce the use of or stop using our solutions.

While we have security measures in place with respect to our systems, networks and SaaS solutions, these systems, networks and solutions are subject to ongoing threats and, therefore, these security measures may be breached as a result of employee error, failure to implement appropriate processes and procedures, malfeasance, third-party action, including cyber-attacks or other intentional misconduct by computer hackers or otherwise. This could result in one or more third parties obtaining unauthorized access to our customers’ data or our data, including personally identifiable information or other end user data, intellectual property and other confidential business information. Third parties may also attempt to fraudulently induce employees into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers’ data or our data, including intellectual property and other confidential business information.

Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we and our vendors may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures. Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure or otherwise to maintain the confidentiality, security, and integrity of data that we store or otherwise maintain may harm our reputation and our ability to retain existing clients and attract new clients. Additionally, we may be required to expend significant capital and other resources to protect against the threat of interruptions and security breaches or to alleviate problems they may cause. Any of these could harm our business, financial condition and results of operations.

Because our platform could be used to collect and store personal information of our customers’ employees or customers, privacy concerns could result in additional cost and liability to us or inhibit use of our platform.

Personal privacy has become a significant issue in the United States and in many other countries where we offer our solutions or may offer them in the future. The regulatory framework for privacy issues worldwide is currently evolving, is not uniform and is likely to remain uncertain for the foreseeable future. Many federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, disclosure, control, security and deletion of personal information. In the United States, these include, without limitation, laws and regulations promulgated by states, as well as rules and regulations promulgated under the authority of the Federal Trade Commission and federal financial regulatory bodies. Internationally, most of the jurisdictions in which we operate have established their own data security and privacy legal frameworks, many of which are broader in scope, more restrictive and impose greater obligations on us and our customers. Many of these obligations are updated frequently and require ongoing monitoring. In addition to government regulation, privacy advocacy and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us.

As a result of uncertainty regarding the interpretation and application of privacy and data protection-related laws, regulations, and self-regulatory requirements, it is possible that these laws, regulations, and requirements may be interpreted and applied in a manner that is inconsistent with our existing data handling practices or the technological features of our solutions. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our solutions, which could have an adverse effect on our business. Any inability to adequately address privacy or data protection-related concerns, even if unfounded, or comply with applicable privacy or data protection-related laws, regulations and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and harm our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, standards and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our solutions. Also, privacy concerns, whether valid or not valid, may inhibit market adoption of our solutions, particularly in foreign countries.

If our large subscription-based clients or if our revenue sharing relationships are terminated, our business may be harmed.

In recent years, Advent has periodically entered into contracts relating to our subscription, data management revenue streams and outsourced services with contract values that are substantially larger than we have customarily entered into in the past. We do not know whether we will be able to continue to sign large recurring revenue contracts of this nature or if such clients will renew their contracts at similar rates and terms, if at all. For example, we renewed our agreement with TIAA-CREF in the second quarter of 2013, but at lower annual fees than the original agreement, which has resulted in a decrease in revenues associated with that agreement. In addition, some of these types of agreements are subject to milestones, acceptance and penalties and there is no assurance that these agreements will be fully implemented. We also have revenue sharing agreements with other companies that provide revenue to Advent for our clients’ use of those companies’ services and products. Our operating results could be adversely impacted if these agreements are not fully implemented, terminated or not renewed, or if we are unable to continue to generate similar opportunities and enter similar or larger sized contracts in the future.

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If our relationship with Financial Times/Interactive Data is terminated, our business may be harmed.

Many of our clients use our proprietary interface to retrieve pricing and other data electronically from Financial Times/Interactive Data (“FTID”). FTID pays us a royalty which we classify as other recurring revenues. The royalty is based on FTID’s revenues from providing this data to our clients. Our software products have been customized to be compatible with their system and our software would need to be redesigned to operate with additional alternative data vendors if FTID’s services were unavailable for any reason. Non-renewal of our current agreement with FTID would require at least two years’ prior notice by either party and the agreement may be terminated upon 90 days’ advance notice for an uncured material breach of the other party. While we have contracts with other data vendors for substantially similar financial data with which our products can be used, if our relationship with FTID was terminated or their services were unavailable to clients for any reason, we cannot be certain that we could enter into contracts with additional alternative data providers, or that other relationships would provide similar commission rates to us or if the amount of data used by our clients would remain the same, and our operating results could suffer or our resources could be constrained from the costs of redesigning our software.

We must recruit, retain and provide adequate facilities for key employees, including facilities in high cost areas such as our San Francisco-based corporate headquarters.

We believe that our future success is dependent on the continued employment of our senior management and our ability to identify, attract, motivate and retain qualified technical, sales and other personnel. Members of our executive management team have acquired specialized knowledge and skills with respect to Advent. We need technical resources such as our product development engineers to develop new products and enhance existing products; we rely upon sales personnel to sell our products and services and maintain healthy business relationships; we must recruit professional service consultants to support our implementations; we must hire client services personnel to provide technical support to our growing installed base of customers; and we must attract and retain financial and accounting personnel to comply with our public company reporting requirements. We need to identify, attract, motivate and retain such employees with the requisite education, backgrounds and industry experience. However, experienced high quality personnel in the information technology industry continue to be in high demand and competition for their talents remains intense, especially in San Francisco where the largest number of our employees is located. In addition, from time to time, we may reorganize our business or reduce our workforce, as we did in late 2012, which may result in increased difficulty in hiring and retaining qualified personnel. Furthermore, the announcement of our pending acquisition by SS&C may affect employee retention and cause some employees to depart the company. Such reorganizations, reductions or other departures may distract our management and employees and may negatively impact our near-term financial results.

We also have begun a strategy to move certain functions from high cost areas like San Francisco, New York City and Boston, to lower cost areas such as Jacksonville and Beijing to reduce our overall costs of operations. While we believe this strategy will have significant benefits, we may not be able to recruit and retain qualified personnel in such lower cost areas. Additionally, such a strategy may negatively impact our ability to retain and hire in our other office locations. Also, our operating results may be adversely impacted by changes in our lease commitments as a result of increasing real estate costs in certain markets in which we operate such as San Francisco where we intend to maintain our corporate headquarters. As a result, we may renew or enter into lease agreements at relatively higher cost, reduce our office space needs, or consolidate or exit some of our real estate locations, which in most cases require a modification of an existing lease agreement and could have a significant adverse effect on our financial results. For example, in January 2015 we renewed our San Francisco office lease for an additional 10 years at a significant increase in annual rent which will result in total operating lease payments and rent expense of approximately $71 million over the extension term.

We have relied on our ability to grant equity compensation as one mechanism for recruiting and retaining such highly skilled personnel. In making employment decisions, particularly in the high-technology industries and San Francisco Bay Area, job candidates often consider the value of the equity awards they are to receive in connection with their employment and market downturns may result in our equity incentives becoming less valuable.

We may also choose to create additional performance and retention incentives in order to retain our employees, including the granting of additional stock options, restricted stock, restricted stock units, stock appreciation rights, performance shares or performance units to employees or issuing incentive cash bonuses. Such incentives may either dilute our existing stockholder base or result in unforeseen operating expenses, which may have a material adverse effect on our operating results, could result in our stock price falling or may not be valued as highly by our employees which may create retention issues.

We face challenges in expanding our operations outside the United States.

We market and sell our products in the United States and, to a growing extent, outside the U.S. Revenues derived from sales outside the U.S. comprised 19%, 18% and 17% of our total revenues in 2014 and fiscal years 2013 and 2012, respectively. We have international subsidiaries in Canada, China, Denmark, England, Hong Kong, Ireland, Netherlands, Norway, Singapore, Sweden, Switzerland and the United Arab Emirates.

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We cannot be certain that establishing businesses or seeking sales in other countries will produce the desired levels of revenues. If we are not successful in international market expansion, our overall future growth prospects may be limited. Also, worldwide and regional political instability and volatility in financial markets may disrupt our sales efforts in overseas markets. We have relatively limited experience in developing localized versions of our products and marketing and distributing our products outside the U.S. In other instances, we may rely on the efforts and abilities of business partners in such markets. For example, we previously outsourced certain engineering activities to a business partner located in China until we transitioned those contract developers to become employees of our Beijing office. In addition, our operations are subject to other inherent risks, including:

· The impact of recessions and market fluctuations in economies both within and outside the United States;

· Adverse changes in foreign currency exchange rates;

· Greater difficulty in accounts receivable collection and longer collection periods;

· Difficulty of enforcement of contractual provisions in local jurisdictions;

· Compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;

· Trade and intellectual property protection measures and export and import requirements;

· Difficulties in successfully adapting our products to language, regulatory and technology standards;

· Cultural resistance to expansion into other countries and difficulties establishing local partnerships or engaging local resources;

· Difficulties in and costs of staffing and managing geographically dispersed operations;

· Different or lesser levels of intellectual property right protections;

· Sovereign debt issues;

· Tax structures and potentially adverse tax consequences; and

· Political and economic instability.

The revenues, expenses, assets and liabilities of our subsidiaries outside the United States are primarily denominated in their respective local currencies. Future fluctuations in currency exchange rates may adversely affect revenues and accounts receivable recognized by these subsidiaries and the U.S. dollar value of related revenues, expenses, assets and liabilities reported by Advent. Our service revenues and certain license revenues from our European subsidiaries are generally denominated in their respective local currencies.

Difficulties in integrating our acquisitions and expanding into new business areas have impacted and could continue to impact our business adversely and we face risks associated with potential acquisitions, investments, divestitures and expansion.

Periodically we seek to grow through the acquisition of additional complementary businesses. For example, in February 2011, we acquired Syncova Solutions, Ltd., a United Kingdom-based company that provides margin management and debt finance reconciliation and optimization software and in June 2011, we acquired Black Diamond, a Florida-based company that provides web-based, outsourced portfolio management and reporting platforms for independent advisors.

The process of integrating our acquisitions has required and will continue to require significant resources, particularly in light of our relative inexperience in integrating acquisitions, potential regulatory requirements and operational demands. In particular, our 2008 acquisition of Tamale Software, Inc. was an entry into the research management software market, where we had no prior experience. Integrating these acquisitions in the past has been time-consuming, expensive and disruptive to our business. We have faced difficulties in integrating new personnel and in maintaining relationships with customers and partners of acquired businesses, as well as in incorporating acquired technology and rights into our solutions and maintaining quality standards consistent with our brand. Integration also has required us to implement additional controls, policies, and procedures. This integration process has strained our managerial resources, resulting in the diversion of these resources from our core business objectives, and may do so in the future. Failure to achieve the anticipated benefits of these acquisitions or to integrate the operations of these entities successfully has harmed and could potentially harm our business, results of operations and cash flows in future periods. The assumptions we made in determining the value and relative risks of these acquisitions could be erroneous. In addition, as we have expanded into new business areas and built new offerings through strategic alliances and internal development, as well as acquisitions, some of this expansion has required significant management time and resources without generating required revenues. We have had difficulty and may continue to have difficulty creating demand for such offerings. Furthermore, we may face other unanticipated costs from our acquisitions, such as disputes involving earn-out and incentive compensation amounts.

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We may make additional acquisitions of complementary companies, products or technologies in the future. In addition, we periodically evaluate the performance of all our products and services and may sell or discontinue current products, product lines or services, particularly as we focus on ways to streamline our operations. Failure to achieve the anticipated benefits of any acquisition or divestiture could harm our business, results of operations and cash flows. Furthermore, we may have to incur debt, write-off investments, infrastructure costs or other assets, incur severance liabilities, write-off impaired goodwill or other intangible assets or issue equity securities to pay for any future acquisitions. Sufficient financing may not be available to us on sufficiently advantageous terms, or at all, and if our existing credit facility is inadequate to meet our needs, its existence may make it significantly more difficult to acquire any additional debt. The issuance of equity securities could dilute our existing stockholders’ ownership. Finally, we may not identify suitable businesses to acquire or negotiate acceptable terms for future acquisitions.

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, trademark, patent and trade secret law, as well as confidentiality procedures and contractual provisions to protect our proprietary rights. We have registered trademarks and copyrights for many of our products and services and will continue to evaluate the registration of additional trademarks and copyrights as appropriate. We generally enter into confidentiality agreements with our employees, customers, resellers, vendors and others. We seek to protect our software, documentation and other written materials under trade secret and copyright laws. We also have seven issued patents. Despite our efforts, existing intellectual property laws may afford only limited protection. 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. In addition, we cannot be certain that others will not develop or acquire substantially equivalent or superseding proprietary technology, equivalent or better products will not be marketed in competition with our products, or others may not design around any patent that we have or that may be issued to us or other intellectual property rights of ours, thereby substantially reducing the value of our proprietary rights. We cannot be sure that we will develop proprietary products or technologies that are patentable, that any patent, if issued, would operate to cover the differentiating features of our products and services, 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. Despite our efforts to protect our proprietary rights, unauthorized parties may copy aspects of our products or to obtain and use information that we regard as proprietary and we may not have any effective practical remedy against such parties. In addition, the laws of some countries do not protect proprietary rights to as great an extent as do the laws of the United States and so our expansion into markets outside the U.S. may expose our proprietary rights to increased risks. Litigation may be necessary to protect our proprietary technology which may be time-consuming and expensive, with no assurance of success. As a result, we cannot be sure that our means of protecting our proprietary rights will be adequate.

If we infringe the intellectual property rights of others, we may incur additional costs or be prevented from selling our products and services.

We cannot be certain that our products or services do not infringe the intellectual property rights of others, and from time to time we receive notices alleging infringement or other intellectual property-related claims. As a result, we may be subject to litigation and claims, including claims of misappropriation of trade secrets or infringement of patents, copyrights and other intellectual property rights of third parties that would be time-consuming and costly to resolve and may lead to unfavorable judgments or settlements. If such infringement or misappropriation claims are made against our customers because of our products and services, we may also be contractually required to indemnify such customers from and against such claims and resulting liabilities. If we discovered that our products or services violated the intellectual property rights of third parties, we may have to make substantial changes to our products or services or obtain licenses from such third parties. We might not be able to obtain such licenses on favorable terms or at all, and we may be unable to change our products successfully or in a timely or cost-effective manner. Failure to resolve an infringement matter successfully or in a timely manner would damage our reputation and force us to incur significant costs, including payment of damages, redevelopment costs, diversion of management’s attention and satisfaction of indemnification obligations that we have with our clients, as well as prevent us from selling certain products or services.

Catastrophic events could adversely affect our business.

We are a highly automated business and rely on our network infrastructure and enterprise applications, internal and outsourced technology systems and our website for our development, marketing, operational, support, and sales activities. A disruption or failure of these systems in the event of major earthquake, fire, telecommunications failure, cyber-attack, terrorist attack, misconduct or other catastrophic event could cause system interruptions, reputational harm, delays in our product development and loss of critical data and could affect our ability to sell and deliver products and services and other critical functions of our business. Our corporate headquarters, a significant portion of our research and development activities, our data centers and certain other critical business operations are located in the San Francisco Bay Area, which is a region of seismic activity. We have developed certain disaster recovery plans and certain backup systems to reduce the potentially adverse effect of such events, but a catastrophic event that results in the destruction or disruption of any of our data centers or our critical business or information technology systems, or any data centers or systems of our vendors used to support our business, could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected. Further, such disruptions could cause further instability in the financial markets or the spending of our clients and prospects upon which we depend.

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In addition to the severe market conditions in recent years, other catastrophic events such as abrupt political change, terrorist acts, conflicts or wars may cause damage or disruption to the economy, financial markets and our customers. The potential for future attacks, the responses to attacks or perceived threats to national security and other actual or potential conflicts, wars or political unrest have created many economic and political uncertainties in various countries and regions in which we operate. Although it is impossible to predict the occurrences or consequences of any such events, they could unsettle the financial markets or result in a decline in information technology spending, which could have a material adverse effect on our revenues.

Undetected errors or failures found in our products and services may result in loss of or delay in market acceptance of our products and services that could seriously harm our business.

Our products and services may contain undetected errors or scalability limitations at any point in their lives, but particularly when first introduced or as new versions are released. We frequently release new versions of our products, such as during 2014, when we released new versions of APX, Axys, Geneva, Moxy, Syncova and Tamale RMS, Advent Direct Investor Management among others. We also recently introduced Advent Direct, our new cloud platform and different aspects of the platform and related solutions are in various stages of development. Despite testing by us and by current and potential customers, errors may not be found in new products and services until after commencement of commercial availability or use, resulting in a loss of or a delay in market acceptance, damage to our reputation, customer dissatisfaction and reductions in revenues and margins, any of which could seriously harm our business. Additionally, our agreements with customers that attempt to limit our exposure to liability claims may not be enforceable in jurisdictions where we operate, particularly as we expand into new markets outside the U.S.

Borrowings under our credit agreement could limit our available working capital, adversely affect our financial results and ability to operate our business and must be repaid in full if we fail to comply with certain covenants.

In June 2013, we entered into the Restated Credit Agreement which provides us (i) a $225 million term loan facility and (ii) a $200 million revolving credit facility, with a $25 million letter of credit sublimit and a $10 million swingline loan sublimit. We have in the past, and may in the future, borrow under the Restated Credit Agreement in order to fund working capital requirements, make share repurchases of our common stock, pay dividends or fund acquisitions. In addition, if our anticipated cash flow from our recurring sources of revenue is materially impaired due to customer defaults or failure to renew term licenses, other recurring agreements or maintenance contracts, our ability to meet our debt service payment obligations or continue to meet the contractual covenants may be impaired, and our ability to make further borrowings may be compromised.

In order to fund the special dividend paid in July 2013 and to repurchase Advent common stock, we incurred substantial debt and at December 31, 2013 we had total debt outstanding of $305 million and a stockholders’ deficit of $(111.8) million. As of March 31, 2015, approximately $205 million of debt was outstanding and stockholders’ deficit was $(50.1) million. As a result of our debt borrowing, we are obligated to make periodic principal and interest payments on the debt of approximately $26 million annually. This amount will fluctuate due to changes in interest rates, future borrowings and repayments. Our ability to make payments on our indebtedness and to fund planned working capital requirements will depend on our ability to generate cash flow in the future. In addition, the existence of this indebtedness could have adverse consequences. For example, it could:

· Require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts and other general corporate purposes;

· Increase our vulnerability to and limit our flexibility in planning for, or reacting to, change in our business and the industry in which we operate;

· Expose us to the risk of increased interest rates as borrowings under our Restated Credit Agreement are subject to variable rates of interest;

· Place us at a competitive disadvantage compared to our competitors that have less debt; and

· Limit our ability to borrow additional funds.

Our continued ability to borrow under our credit agreement is subject to compliance with certain financial and non-financial covenants. The financial covenants require us to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio. Our failure to comply with such covenants could cause default under the agreement, and we may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or be available only on unfavorable terms. In the event of a default which is not remedied within the prescribed timeframe, the assets of the Company (subject to the amount borrowed) may be attached or seized by the lender.

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Changes in securities laws and regulations may increase our costs or may harm demand.

Most of our customers operate within a highly regulated environment. Congress and regulators have increased their focus on the regulation of the financial services industry in recent years. The information provided by, or resident in, the software or services we provide to our customers could be deemed relevant to a regulatory investigation or other governmental or private legal proceeding involving our customers, which could result in requests for information from us that could be expensive and time consuming for us. In addition, clients subject to investigations or legal proceedings may be adversely impacted, possibly leading to their liquidation, bankruptcy, receivership, reductions in Assets Under Management or Assets Under Administration, or diminished operations that would adversely affect our revenues and collection of receivables.

Our customers must comply with governmental, self-regulatory organization and other rules, regulations, directives and standards. New legislation or changes in such rules, regulations, directives or standards may reduce demand for our services or increase our expenses. We develop, configure and market products and services to assist customers in meeting these requirements. New legislation, or a significant change in rules, regulations, directives or standards, could cause our services to become obsolete, reduce demand for our services or increase our expenses in order to continue providing services to clients.

The Dodd-Frank Wall Street Reform and Protection Act of 2010 (“Dodd-Frank Act”) represents a comprehensive overhaul of the financial services industry within the United States, established the new federal Consumer Financial Protection Bureau (the “CFPB”), and required the CFPB and other federal agencies to implement many new rules. While the general framework of the reforms is set forth in the Dodd-Frank Act, it provides for numerous studies and reports and the adoption and implementation of rules and regulations by regulatory agencies, which are ongoing.

We believe that it is too early to know the precise long-term impact on our business of the increased regulation of financial institutions. While it could lead to increased demand for Advent’s products and services, demand could be negatively impacted by the deferral of purchase decisions by our customers until the new regulations have been fully adopted and the full impact and expense of the new regulatory environment is more clearly understood. The Dodd-Frank Act contains numerous other provisions affecting financial institutions of all types, many of which may have an impact on our operating environment in substantial and unpredictable ways.

Additionally, as a publicly-traded company, we are subject to significant regulations including those under the Dodd-Frank Act and the Sarbanes-Oxley Act of 2002 (“the Sarbanes-Oxley Act”). These regulations increase our accounting, operating and legal compliance costs and could also expose us to additional liability if we fail to comply with these or other new rules and reporting requirements. There are also significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas, which may further increase our costs.

Changes in, or interpretations of, accounting principles could significantly impact our reported financial information and operational processes.

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). These principles are subject to interpretation by us, the SEC and various bodies formed to interpret and create accounting principles and guidance. A change in these principles or a change in the interpretations of these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, proposed accounting standards could have a significant impact on our operational processes, revenues and expenses, and could cause unexpected financial reporting fluctuations. Some of our accounting principles that have been or may be affected include:

· Software revenue recognition;

· Accounting for stock-based compensation;

· Accounting for income taxes; and

· Accounting for business combinations and related goodwill.

For example, the U.S.-based Financial Accounting Standards Board (“FASB”) is currently working together with the International Accounting Standards Board (“IASB”) on several projects intended to further align accounting principles and facilitate more comparable financial reporting between companies who are required to follow GAAP under SEC regulations and those who are required to follow International Financial Reporting Standards (“IFRS”). These efforts by the FASB and IASB may result in different accounting principles under GAAP that may result in different financial results for us in areas including, but not limited to, principles for recognizing revenue, lease accounting and financial statement presentation. A change in accounting principles may have a material impact on our financial statements and may retroactively adversely affect previously reported transactions.

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In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which is a new revenue recognition model that requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. On April 1, 2015, the Financial Accounting Standards Board (FASB) proposed a one year deferral of the effective date to December 15, 2017 and early application would be permitted, but not before the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the standard. We are evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements, which could materially change the timing of revenue recognition.

Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

We are a U.S.-based multinational company subject to tax in multiple U.S. and non-U.S. tax jurisdictions. Changes in our tax rates could adversely affect our future results of operations. Our future effective tax rates could be unfavorably affected by changes in, or interpretation of, tax rules and regulations in the jurisdictions in which we do business, by unanticipated decreases in the amount of revenue or earnings in countries with low statutory tax rates, by changes in state apportionment, by lapses of the availability of the U.S. research and development tax credit, or by changes in the valuation of our deferred tax assets and liabilities.

In addition, we could be subject to examination of our income tax returns by state tax authorities, the U.S. Internal Revenue Service and other tax authorities outside the U.S. For example, we are currently undergoing a State of California franchise tax examination for the 2006 and 2007 tax years and a state of New York examination for 2011, 2012 and 2013 tax years. Examinations generally focus on areas where considerable judgment is exercised by the Company. We regularly assess the likelihood of outcomes resulting from an examination to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from an examination. We believe such estimates to be reasonable; however, there can be no assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position.

If we fail to maintain an effective system of internal control, we may not be able to report our financial results accurately or our filings may not be timely. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

Effective internal control is necessary for us to provide reliable financial reports. If we cannot provide reliable financial reports, our business and operating results could be harmed. Although we have not historically discovered any material weaknesses, we have in the past discovered, and may in the future discover, areas of our internal control that need improvement including control deficiencies that may constitute material weaknesses.

We do not expect that our internal control over financial reporting will prevent all errors or fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Any failure to implement or maintain improvements in our internal control over financial reporting, or difficulties encountered in the implementation of these improvements in our controls, could cause significant deficiencies or material weaknesses in our internal controls and consequently cause us to fail to meet our reporting obligations. Any failure to implement or maintain required new or improved internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Our Board of Directors (the “Board”) has approved common stock repurchase programs authorizing management to repurchase shares of the Company’s common stock in the open market. The timing and actual number of shares subject to repurchase are at the discretion of management and are contingent on a number of factors, including the price of our stock, general market conditions and alternative investment opportunities. The purchases are funded from available working capital or debt. At March 31, 2015 there were approximately 0.9 million shares previously authorized by the Board available for repurchase, however in the Merger Agreement with SS&C, signed on February 2, 2015, the Company is prohibited from repurchasing shares of its common stock during the pendency of the agreement.

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We withheld shares through net share settlements (a feature where the Company provides the award holder shares equivalent to the gains, net of tax, on the awards that have vested or are exercised) during the three months ended March 31, 2015. The following table provides a month-to-month summary of the purchase activity upon the employee vesting of restricted stock units and the exercise of stock-settled stock appreciation rights under our equity compensation plan to satisfy tax and exercise withholding obligations during the three months ended March 31, 2015 (in thousands, except per share data):

	Total			Maximum Number
	Number	Average		of Shares that May
	of Shares	Price Per		Yet Be Purchased
Month	Purchased (1)	Share		Under the Plan

January	13	$	35.35	—
February	4	$	44.18	—
March	4	$	44.17	—

Total	21	$	38.52	—

(1) These purchases represent shares cancelled when surrendered in lieu of cash payments for tax and exercise obligations due from employees. These shares were not purchased as part of a publicly announced program to purchase shares.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Index to exhibits

Exhibit		Incorporated by Reference			Filed
Number	Exhibit Description	Form	Date	Number	Herewith

2.1	Agreement and Plan of Merger, dated as of February 2, 2015, by and among SS&C Technologies Holdings, Inc., Arbor Acquisition Company, Inc. and Advent Software, Inc.	8-K	2/3/2015	2.1
3.1	Amended and Restated Bylaws of Registrant	8-K	2/3/2015	3.1
10.1	Lease amendment dated January 28, 2015 between Toda America, Inc. and Advent Software, Inc. for facilities located at 600 Townsend Street in San Francisco, California	8-K	2/2/2015	10.1
31.1	Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1	Certification of Principal Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002				X
32.2	Certification of Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002				X
101. INS	XBRL Instance				X
101.SCH	XBRL Taxonomy Extension Schema				X
101.CAL	XBRL Taxonomy Extension Calculation				X
101. LAB	XBRL Taxonomy Extension Labels				X
101.PRE	XBRL Extension Presentation				X
101.DEF	XBRL Taxonomy Extension Definition				X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ADVENT SOFTWARE, INC.


Dated: May 7, 2015	By:	/s/ James S. Cox
		James S. Cox Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

ADVENT SOFTWARE INC /DE/ - FORM 10-Q - May 7, 2015

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ADVENT SOFTWARE INC /DE/ Reports