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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K

ý

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended December 31, 2008oro

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period
from                                  to


Commission file number: 0-26994

ADVENT SOFTWARE, INC.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

94-2901952(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)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share

The NASDAQ Stock Market LLC
(NASDAQ Global Select)


Securities
registered pursuant to Section 12(g) of the Act:None



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes o    No ý

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 (the "Exchange Act") 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 ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

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

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


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

The number of shares of the registrant's common stock outstanding as of June 30, 2008 was 26,790,664. The aggregate market value of the registrant's common
stock held by non-affiliates, based upon the closing price on June 30, 2008, as reported on the NASDAQ National Market System, was approximately $368 million. Shares of
common stock held by each officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination for other purposes. As of February 28, 2009, there were 25,154,394 shares of the registrant's common stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants definitive Proxy Statement for the Annual Meeting of Stockholders to be held May 13, 2009 are incorporated by reference into
Part III of this Annual Report on Form 10-K to the extent stated herein. Except with respect to information specifically incorporated by reference in this
Form 10-K, the Proxy Statement is not deemed to be filed as part herein.



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TABLE OF CONTENTS



PART I

3Item 1.

Business

3Item 1A.

Risk Factors

16Item 1B.

Unresolved Staff Comments

32Item 2.

Properties

32Item 3.

Legal Proceedings

32Item 4.

Submission of Matters to a Vote of Security Holders

33PART II

33Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

33Item 6.

Selected Financial Data

36Item 7.

Management's Discussion and Analysis of Financial Condition and Results of
Operations

38Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

69Item 8.

Financial Statements and Supplementary Data

71Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

117Item 9A.

Controls and Procedures

117Item 9B.

Other Information

117PART III

118Item 10.

Directors, Executive Officers and Corporate Governance

118Item 11.

Executive Compensation

118Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

118Item 13.

Certain Relationships and Related Transactions, and Director Independence

118Item 14.

Principal Accountant Fees and Services

119PART IV

119Item 15.

Exhibits and Financial Statement Schedules

119


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

You should read the following discussion in conjunction with our consolidated financial statements and related notes. 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," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" 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 regarding growth in 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, the adequacy of resources to meet future cash requirements, estimates or predictions of actions by customers, suppliers, competitors or regulatory authorities,
future client wins, future hiring and future product introductions. 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-K, 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.

PART I

Item 1.    Business

Overview

Advent Software, Inc. was founded and incorporated in 1983 in California and reincorporated in Delaware in November 1995. We
offer software and services that automate work flows and data across investment management organizations, as well as the information flows between an 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 and is tailored to meet the needs of the particular client, as determined by size, assets under management and complexity of the investment
environment.

Our
business is organized into two reportable segments, Advent Investment Management ("AIM") and MicroEdge. Advent Investment Management is our core business and derives revenues from
the development, marketing and sale of software products, data interfaces and related maintenance and services that automate, integrate and support certain mission-critical functions of investment
management organizations primarily in the United States, Europe, Middle East and Africa. In October 2008, our AIM segment acquired Tamale Software, Inc., a provider of research management
software which helps investment professionals manage their workflow and research process. MicroEdge derives
revenues from the sale of software and services for grant management, matching gifts and volunteer tracking for the grantmaking community primarily in the United States and United Kingdom. For
additional information regarding our reportable segments and geographic areas, see Note 13, "Segment, Significant Customer and Geographical Information", to our consolidated financial
statements.

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Our
principal executive offices are located at 600 Townsend Street, San Francisco, California 94103, and our telephone number is (415) 543-7696. Our internet address
iswww.advent.com. On our Investor Relations web site, which is accessible throughwww.advent.com, we
post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission: our annual reports on
Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports. All such filings on our
Investor Relations web site are available free of charge. Information contained or referenced on our website is not incorporated by reference in and does not form a part of this Annual Report
on Form 10-K. The SEC maintains an internet site atwww.sec.govthat contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The public may also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE,
Washington DC, 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Advent's
common stock (ticker symbol: ADVS) has traded on the NASDAQ Stock Market since its initial public offering on November 15, 1995. Our fiscal year ends on
December 31st.

Clients

Advent's core clients are investment management institutions that manage, advise and perform recordkeeping functions on financial
assets. Examples of these institutions include global and US-based asset managers, registered investment advisors, prime brokers, fund administrators, hedge funds, family offices and banks
and trusts. Our MicroEdge clients include corporations, foundations and non-profit organizations that provide grants to non-profit organizations. We have a diverse client base
ranging from small clients to some of the largest institutional clients in the world. In fiscal 2008, 2007 and 2006, no single customer accounted for more than 10% of our total net revenues.
Geographically, though the US continues to represent our primary market, international sales have grown and represented 14% and 12% of total net revenues in 2008 and 2007, respectively.

Our Industry

Over the past decade, the investment management industry has transformed dramatically. These changes include: the increase of assets
managed in alternative strategies; the creation of increasingly complex securities instruments used by hedge funds and in alternative strategies; significant increase in cross border flows and global
investment activity; the evolution and maturation of electronic markets; and the proliferation of research information from myriad structured and unstructured sources. All of these factors have
created opportunities over the years for our investment manager clients, but they have also resulted in substantially increased complexity in their operations and processes. We believe that investment
managers have clear needs that translate into demand for Advent solutions: portfolio accounting and analysis; trade order management and post-trade processing, research management; account
management, custodial reconciliation and ever-increasing requirements to comply with evolving industry standards and government regulations.

Recent Market Trends

Since the Fall of 2008, dislocation and decreasing confidence in the credit markets have driven all global equity indices into
significant decline with increased volatility. The impact on investment management organizations has been twofold: first, the decline in major market valuations has had an impact on the solvency, size
and buying power of some of our clients; and second, these firms face increasing pressure from regulators and investors to provide operational transparency. In addition to market trends, recent
high-profile cases of investment fraud have emphasized the importance of checks and balances between investment management companies and their investors' custodial firms. Despite

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this
challenging climate, we consistently grew quarterly revenues in 2008 and we anticipate the following trends to continue, some of which will drive demand for Advent
solutions:



In
order to operate more efficiently, investment management organizations continue to automate and integrate their mission-critical and labor-intensive functions, including:
(i) investment decision support; (ii) trade order management and compliance; (iii) portfolio accounting, performance measurement and report generation; (iv) client
relationship management; (v) straight-through-processing that includes connectivity and data integration; and (vi) research management. Investment management organizations historically
have relied on internally-developed systems, third-party systems, outsourced services or spreadsheet-based systems to manage these information flows.

The
current turmoil in the credit markets and volatility in financial markets may create pressure on our clients to decrease their information technology budgets, which could negatively
impact our business. While we are not immune to downturns in technology spending, should our customers reduce their spending, we believe we are well-positioned to maintain our competitive
position in the longer term for the following reasons:



Particularly
in difficult market conditions, we believe that the need to streamline operations increases the value of Advent's ability to offer an integrated, proven, and
cost-effective suite to clients and prospects seeking operational efficiency and an established business partner.

Seasonality

We experience seasonality in our license bookings. We believe that this seasonality results primarily from customer budgeting cycles
and the annual nature of some Assets Under Administration (AUA)

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and
Assets Under Management (AUM) contracts, and expect this seasonality to continue in the future. The fourth quarter of the year typically has more licensing activity, although the increase was less
pronounced at the end of 2008 than in 2007. This can result in term license bookings and perpetual
license fee revenue being the highest in the fourth quarter, followed by lower bookings and perpetual license revenue in the first quarter of the following year. We expect the impact of this
seasonality upon revenues will continue to decrease in the future as we move more of our licenses to a term model, under which we generally recognize revenue from term licenses ratably over the period
of the contract term which is typically three years.

We
also experience seasonality in our operating cash flows and expect this seasonality to continue in the future. We experience lower operating cash flows in the first quarter of the
year as we make payments of our year-end liabilities including payables and bonuses, commissions and payroll taxes. Conversely, we experience relatively stronger operating cash flows in
the fourth quarter of the year as we generally bill and collect for term agreements in equal installments in advance of each annual period.

For
additional information regarding factors that affect the timing of the recognition of software license revenue, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations / Critical Accounting Policies and Estimates / Revenue Recognition."

Strategy

Mission

Our mission is to strengthen and grow our business as a leading provider of mission-critical software and services for the investment
management industry.

We
plan to strengthen and grow our core business by:



Customer Focus

At December 31, 2008, we served more than 4,700 customers. Our customers, and the investment management industry as a whole,
generally face a tightening regulatory environment, growth in the volume and complexity of their trading activities, an increase in alternative investment markets, and increasing globalization of the
investment marketplace. We are committed to making the required investments in product development to continue delivering mission-critical solutions to our customers as their needs evolve.

We
are experiencing continued loyalty from our customers in the length of time they use our products and their license and maintenance renewals. Our customers use our products for an
average

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of
over 10 years. Our blended term license and perpetual maintenance renewal rate, which we report one quarter in arrears, was 88% for the third quarter of 2008.

We
believe our strategy and customer focus are driving increasing market acceptance for our products. We added 89 new APX clients and 47 new Geneva clients during fiscal 2008.

Business Model

During 2008, we continued the transition of our business to a predominately term license model. Under this model, customers purchase a
license to use our software for a fixed period of time and we recognize the license revenue ratably over the length of the contract. Conversely, under a perpetual pricing model, customers purchase a
license to use our software indefinitely and we recognize all license revenue at the time of sale. Although the term license model has the effect of lowering license revenues compared to a perpetual
model in its early periods, we believe the term license business model will increase the total potential value of our customer relationships because our customer focus, customer base and the market
acceptance of our products results in a long customer relationship. We believe that a term license business model ultimately provides more predictable revenue streams.

We
continue to be focused on growing our recurring revenues. Total recurring revenues, which we define as term license, perpetual maintenance, and other recurring revenues, have
increased from 77% of total net revenues in 2007 to 79% in 2008, and we expect them to increase in future years. These recurring revenue sources provide us with increased ability to make strategic
decisions to invest in our business while remaining confident that our operating results will be reasonably predictable.

In
2009, we plan to focus on expanding our footprint in the front-office through our Tamale RMS offering and to continue to invest in client support, product development, and sales and
marketing, as well as solidify our position as a market leader. Our investment in client support will enable us to continue to improve the services we provide to our clients in their
day-to-day use of our software and build a scalable organization to support our largest and most complex customers. Our investments in product development are designed to
enable us to develop new products as well as maintain our rapid enhancements and upgrades to our existing products.

Overall,
despite the macroeconomic headwinds and our intention to continually invest to support our growth, we plan to maintain our operating margins in 2009. In the longer term, we
believe that our market leadership position and our reasonably predictable term license revenue model will enable us to grow operating margins.

Products and Services

Advent products are intended to automate those mission-critical functions in the investment management process that will increase
operational efficiency, facilitate timely regulatory compliance, improve the accuracy of client information and enable better decision-making. Each product focuses on the specific functions of an
investment management organization and pricing, for the most part, is determined by size of the implementation and assets under management.

We
offer solutions for customers in numerous markets, which include:



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These
solutions are comprised of various combinations of Advent software products, data integration tools and professional services all aimed at meeting our clients' critical business
needs.



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Data, Data Integration Services and Outsourced Services



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Our MicroEdge segment, a leading provider of information technology solutions to the grantmaking community, provides the following
products:





Due to the mission-critical nature of our products, almost all of our perpetual license clients purchase support and maintenance (term
license clients receive support and maintenance as part of the license offering), which entitles them to technical support through Advent's Client Services group and product upgrades as they become
available. We continually upgrade and enhance our products to respond to changing market needs, evolving regulatory requirements and new technologies.

We
offer a tiered support structure to meet the diverse needs of our client base. Advent's services are scalable, which means that they adapt to meet the specific needs of a firm no
matter how large or small.



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In
February 2009, our Investment Management Group's client support organization achieved certification under the Service Capability and Performance (SCP) Support Standard for the fourth
consecutive year. We are the only company in the financial services software industry to earn this recognition.



Professional services consist of consulting, project management, implementation and integration services, custom report writing, and
training. Many of Advent's clients purchase professional services from us to support their implementations, assist in the conversion of their historical data and provide ongoing training and
education. Professional services may be required for as little as a few days or up to several months for large implementations. We believe that these services facilitate a client's early success with
our products, strengthen the client relationship and generate valuable feedback for our product development group.



Our Alliance Program is designed to benefit our clients and our partners. The program provides a means by which partners can develop,
promote, and sell their products, services, and solutions in conjunction with our solutions. Advent's Alliance Program was created to further extend our product and service offerings.

Sales and Marketing

We primarily license and sell Advent products and services through five sales groups, which are organized by product and customer type.
The sales groups include a direct sales organization (comprised of both field sales and telesales representatives) as well as product marketing and product management groups, which are responsible for
assessing market opportunities and collaborating with our product development organization on product planning and management. Product marketing coordinates our market validation process, through
which we interview existing clients and sales prospects, and gather information to define scope, features and functionality of new products and product upgrades. The sales groups are as
follows:



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We
have sales offices throughout the United States, Europe and Middle East regions, including San Francisco, New York, Boston, London, Oslo, Copenhagen, Stockholm, Amsterdam, Zurich,
Dubai and Hong Kong.

Our
corporate marketing organization is responsible for providing support to the sales organization through lead generation activities, brand support, sales training, marketing
materials, and the provision of marketing events, such as conferences and seminars.

Product Development

In fiscal 2008, 2007 and 2006, our product development expenses were $50.2 million, $41.9 million and
$34.9 million, respectively. We also capitalized $3.5 million, $3.3 million and $1.5 million of software development costs in 2008, 2007 and 2006, respectively. Our product
development organization builds product enhancements and new products, incorporates new technologies into existing products and sustains the quality of our current products. Our product development
activities include the identification and validation of product specifications as well as engineering, quality assurance and documentation.

Our
new products and product upgrades require varying degrees of development time, depending upon the complexity of the accounting requirements and securities regulations which they are
intended to
address, as well as the number and type of features incorporated. To date, we have generally relied upon internal development for our products. We have in the past acquired, and may again in the
future acquire, additional technologies or products from third parties. For example, in October 2008, we acquired Tamale Software, a provider of research management software which helps investment
professionals manage their workflow and research process and, in November 2007, we acquired a provider of a web-based platform to help companies manage their corporate community
involvement. We intend to continue to support industry standard operating environments, architectures and network protocols.

Unfilled License Orders, Deferred Revenues and Backlog

Unfilled license orders represent license orders that have been received from our customers for the license of our software products
but have not been shipped as of the end of the applicable fiscal period. We do not believe that unfilled license orders are a consistent or reliable indicator of future results. Our customers
generally do not cancel orders for our software products. Unfilled license orders as of December 31, 2008 totaled $1.5 million and $1.8 million at December 31, 2007,
respectively.

Total
deferred revenue includes deferred perpetual license, term license, maintenance and services. Deferred perpetual license revenue is recognized when a contingency, such as a future
product

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deliverable
committed in the contract, is removed. Deferred term license revenue is generally recognized over the contract length. Deferred maintenance revenue is generally recognized over the service
period, which is typically twelve months. Deferred professional services revenue is either recognized over the period the specific services are rendered, or over the related contract period when sold
in conjunction with a multi-year term license.

During
2008, we continued our transition to selling mostly term licenses. We believe that the move to a term license model increases the value over the long-term of each
customer relationship and improves the predictability of our revenues. We generally recognize revenue from term licenses ratably over the period of the contract term which varies from one to five
years but is typically three years. For these term contracts, we invoice the customer annually in advance. As a result, the first year's contract value is included in deferred revenue while subsequent
years of the contracted value are not (unless the subsequent years are prepaid by the client, which is typically not the case). During the subsequent years, annual term billing results in an increase
in deferred revenues at the commencement of each annual billing period. Total deferred revenues were $153.2 million and $120.3 million at December 31, 2008 and 2007, respectively.

We
define backlog as the value of multi-year term license, outsourcing and data service contracts which contain a binding commitment for the full contract term, less any
amounts from those contracts already invoiced. We exclude annual maintenance contracts from the backlog calculation since they contain annual renewal options (for example, annual maintenance or data
reconciliation contracts). Our total backlog was approximately $151.7 million and $99.2 million as of December 31, 2008 and 2007, respectively.

For
additional information regarding factors that affect the timing of the recognition of software license revenue, see "Management's Discussion and Analysis of Financial Condition and
Results of OperationsCritical Accounting Policies and EstimatesRevenue Recognition."

Competition

The market for investment management software is characterized by the relative size of the organizations that manage and advise on
investment portfolios. The market is competitive and highly fragmented. It is subject to rapid change and is sensitive to new product introductions and marketing efforts by industry participants.
Competitors vary in size, scope of services offered and platforms supported. Our largest single source of competition is from proprietary systems used by our existing and potential clients, some 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 such as Charles River Development, the Checkfree APL subsidiary of Fiserv, DST
International, the Eagle Investment Systems subsidiary of Bank of New York/Mellon Financial Corporation, the Eze Castle Software subsidiary of BNY ConvergEx Group, FT Interactive Data, the IBSI
division of SunGard, INDATA, the LatentZero division of Fidessa group plc, Linedata Services, the Macgregor division of Investment Technology Group, the PORTIA division of Thomson Financial,
Schwab Performance Technologies, SimCorp A/S and SS&C Technologies. Many of our largest competitors have longer operating histories and greater financial, technical, sales and marketing resources than
we do, due, in part to a wave of consolidation that has occurred in our markets. Since 2005, many of our competitors have been acquired by larger enterprises, and it is possible that even larger
competitors will be created through additional acquisitions of companies and technologies. We believe that Advent competes effectively in terms of the most predominant competitive differentiators,
which include product performance and functionality, ease of use, scalability, ability to integrate external data sources, product and company reputation, client service and price.

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Intellectual Property and Other Proprietary Rights

Our success depends significantly upon our proprietary technology. We currently rely on a combination of copyright, trademark, patent
and trade secret law, as well 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. While we do not believe we are dependent on any one of
our intellectual property rights, we do rely on the combination of intellectual property rights and other measures to protect our proprietary rights. Despite these efforts, existing intellectual
property laws may afford only limited protection. In addition, 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 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 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 attempt to copy aspects of our products or to obtain and
use information that we regard as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States. 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.

Employees

As of December 31, 2008, we had 1,068 employees, including approximately 443 in client services and support, 204 in sales and
marketing, 251 in product development and 170 in general and administration. Of these employees, 976 were located in the United States and 92 were based in Europe, Middle East and Asia. We endeavor to
maintain competitive compensation, benefits, equity participation and work environment policies in order to attract and retain qualified personnel. None of our employees are represented by a labor
union. We have not experienced any work stoppages and we believe our employee relations are good.

Executive Officers of Registrant

The following sets forth certain information regarding the executive officers of the Company as of March 1, 2009:

Name

Age

PositionStephanie G. DiMarco


51

Chief Executive Officer and Chief Financial OfficerDavid Peter F. Hess Jr.


38

PresidentLily S. Chang


60

Executive Vice President and Chief Technology OfficerJohn P. Brennan


52

Senior Vice President, Human ResourcesJames S. Cox


37

Vice President and Principal Accounting Officer


Ms. DiMarco
founded Advent in June 1983. She served as Chairman of the Board from November 1995 until December 2003. Ms. DiMarco currently serves as Chief Executive Officer
since her permanent appointment to the position in December 2003, after serving on an interim basis from May

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2003.
Ms. DiMarco also serves as Chief Financial Officer since her permanent appointment to the position in December 2008, after serving on an interim basis from July 2008. Previously, she had
served as President from June 1983 to April 1997 and again from May 2003 to December 2008, and as Chief Executive Officer from June 1983 to November 1999. She is a former member of the Board of
Trustees of the UC Berkeley Foundation, serves on the Advisory Board of the College of Engineering at the University of California, Berkeley, and is a San Francisco Foundation board member and
Chairman of its Investment Committee and former member of the Audit Committee. Ms. DiMarco holds a B.S. in Business Administration from the University of California at Berkeley.

Mr. Hess
joined Advent in 1994. He was appointed as President of Advent in December 2008. Mr. Hess is responsible for the worldwide marketing, sales and services for the
Company's Investment Management, Global Accounts, Straight-Through-Processing (STP) and Tamale Research Management groups as well as the Company's international operations. From February 2007 to
December 2008, Mr. Hess served as Executive Vice President and General Manager of Advent's Investment Management Group. From May 2004 to February 2007, Mr. Hess served as Executive Vice
President and General Manager of our Global Accounts group. In this role, Mr. Hess had global responsibility for strategy, product marketing, sales, services, and support of Advent solutions
for the asset management industry's largest firms. Mr. Hess has held a variety of other positions in the company including Vice President of Sales and Vice President of Marketing.
Mr. Hess holds a B.A. from Princeton University.

Ms. Chang
joined Advent in May 1993 as Vice President, Technology. In April 1997, Ms. Chang was promoted to Executive Vice President, Technology and was also named Chief
Technology Officer. From July 1989 to May 1993, Ms. Chang held various positions, including Vice President, Strategic Accounts and Vice President of Oracle Financial Applications, for Oracle
Corporation. Ms. Chang holds a B.S. in Biochemistry from Taiwan University.

Mr. Brennan
joined Advent in March 2004 as Vice President of Human Resources and is responsible for all aspects of Human Resources and facilities and real estate management. In
February 2009, Mr. Brennan was promoted to Senior Vice President. Prior to joining Advent, Mr. Brennan was Vice President of Human Resources from 1999 to 2004 for Wind River Systems.
Prior to Wind River,
Mr. Brennan held various positions at Visa International from 1991 to 1999. Mr. Brennan began his Human Resources career with assignments at Westinghouse Electric Company and Pacific Gas
and Electric. Mr. Brennan has a master's degree in Industrial and Labor Relations from Cornell University, and a bachelor's degree in English Literature and Music from Hamilton College.

Mr. Cox
joined Advent in June 2006 as Corporate Controller. In July 2008, Mr. Cox was promoted to Vice President and named Principal Accounting Officer. Prior to joining
Advent, Mr. Cox served as Assistant Controller of UTStarcom from 2004 to 2006. From 1994 to 2004, Mr. Cox held various positions at PricewaterhouseCoopers, LLP. Mr. Cox
holds a B.A. in Economics from Ohio University.

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 Annual Report on Form 10-K filed with the SEC, including our consolidated financial statements and related notes thereto.

Uncertain economic and financial market conditions adversely affect our business.

The market for investment management software systems has been and currently is negatively affected by a number of factors, including
reductions in capital expenditures by customers and poor performance of major financial markets. The current market downturn, dissolution and acquisitions of

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our
clients and prospects, the decline in Assets Under Administration (AUA) or Assets Under Management (AUM) as a result of significant declines in asset values of our clients and the accompanying
market uncertainty affects and will continue to affect both our ability to sell our solutions and the amount of revenue we receive from such sales. The target clients for our products include a range
of financial services organizations that manage investment portfolios. In addition, in our MicroEdge business segment, we target corporations, public funds, universities and non-profit
organizations, which also manage investment portfolios and have many of the same needs. The success of many of our clients is intrinsically linked to the health of the financial markets. The demand
for our solutions has been and currently is 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. We have recently experienced some clients and prospects delaying or cancelling additional license purchases. In addition,
some prospects and clients have gone out of business, undergone personnel reductions or turnover, or have been acquired, which we expect to continue as the financial markets face continued hardship.

Beginning
in the second half of 2007, difficulties in the mortgage and broader credit markets in the United States and elsewhere resulted in a relatively sudden and substantial decrease
in the availability of credit and a corresponding increase in funding costs. More recently, the current volatility and uncertainty in the financial markets generally has also caused large losses,
layoffs, dissolutions and acquisitions by financial institutions and other clients, which will likely result in reduced expenditures for software and related services. Additionally, the economic
downturn has also decreased our clients' AUA or AUM, which in turn causes our revenues to decrease since some pricing is based on assets under administration or management. 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, 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.

The
technology spending patterns of organizations in MicroEdge's primary markets (independent foundations, community foundations and corporations) are directly affected by economic
fluctuations as foundation budgets are largely driven by endowment income. Given that endowments often contain market-exposed components, they are significantly affected by the economy and foundation
spending typically decreases in an economic downturn. Community foundations are subject to similar influences, compounded by the fact that in many cases much of their ongoing funding and endowment
comes from active donors who may increase or reduce their giving depending on the economic climate and the related effect on their income and wealth. Corporations typically fund charitable activities
from operating budgets, and the allocation to charitable donations and supporting company charitable operations is often closely tied to a company's performance. Thus, corporate philanthropy and
spending on related technology are correlated with company and overall economic performance.

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 the market downturn and worsening
volatility and uncertainty in the financial markets and the financial services sector in recent months

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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.

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 purchase of our software products 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 the current economic environment. 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 over which we have
little or no control, including broader financial market volatility, adverse economic conditions, customers' budgeting constraints, internal selection procedures, and changes in customer personnel,
among others. Recent volatility in the US and global financial markets has further exacerbated this risk.

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, or term license sales which we
report quarterly as term license contract value (TCV) or annual term license contract value (ACV). 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. Accordingly, our perpetual license revenue or our level of TCV or ACV in any particular period is subject to significant
fluctuation. For example, during the third quarter of 2008, our perpetual license revenue was lower than expected as we licensed fewer perpetual seats and modules to our existing perpetual client
base, and during the fourth quarter of 2008, our ACV was lower compared to the fourth quarter of the previous year.

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 proportionate 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.

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

Revenues recognized from recurring contracts represented 79% and 77% of total net revenues in fiscal 2008 and 2007, respectively. We
expect to continue to derive a significant portion of our revenue from our clients' renewal of term license, perpetual maintenance and other recurring contracts and such renewals are critical to our
future success. Some factors that may affect the renewal rate of our contracts include:



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Most
of our 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. In addition, our customers may select maintenance levels less advantageous to us upon renewal, which may reduce recurring revenue from these customers. The current market
downturn has caused, and may in the future cause, some clients not to renew their maintenance or reduce their level of maintenance, which would affect our renewal rates and revenue.

As
a result of our relatively recent transition to term licensing, we only have limited experience with renewals of our term license contracts. During the third quarter of 2007, we
commenced renewing term license contracts signed in the third quarter of 2004. These were the first three-year term license contracts to be renewed by Advent since our transition to a term
pricing model began. Our customers have no obligation to renew their term license contracts and given the small number of contracts subject to renewal that were renewed in the second half of 2007 and
during 2008, we cannot yet conclude whether customers will renew in a manner consistent with our perpetual maintenance customers. Additionally, we cannot predict whether the renewals will be less
advantageous to us than the original term 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 a lower annual term license fee. Further, customers may elect to not renew their term license contracts at all. We may
incur significantly more costs in securing our term license contract renewals than we incur for our perpetual maintenance renewals. If our term license 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.

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

During fiscal 2008 and 2007, we recognized 79% and 77%, respectively, of total net revenues from recurring sources, which we define as
revenues from term license, maintenance on perpetual licenses, and other recurring revenue. 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. Additionally, a decline in renewals of term agreements, maintenance or data 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, our historical operating results on a 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 non-GAAP information, such as our quarterly term license bookings metrics
(expressed as term license contract value, "TCV", or annual term license contract value, "ACV") and maintenance renewal rates, 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, placing undue reliance upon non-GAAP or operating information is not appropriate because this
information is neither standardized across companies nor subjected to the same control activities and audit procedures that produce our GAAP financial results.

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The
current market downturn has started to cause, and may in the future cause more, clients not to renew their licenses or maintenance, which would affect our renewal rates. Also, the
significant declines in market value of our clients affect their AUA or AUM. Consequently, we may also experience a decline in the TCV and ACV of bookings 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 had 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.

Our stock price may fluctuate significantly.

Like many other companies, our stock price has been subject to wide fluctuations in recent months as part of the high market
volatility. If 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 revenues or earnings meet or exceed expectations, our stock price is subject to decline in this period 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.

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. In recent
years, 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. Any further 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 market that may develop innovative technologies or business models. Furthermore, competitors may respond to
worsening market conditions by lowering prices, offering better contractual terms and attempting to lure away our customers and prospects to 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.

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We depend heavily on our Axys®, Geneva, APX and Moxy products.

We derive a majority of our net revenues from the license and maintenance revenues from our Axys, Geneva, APX and Moxy products. In
addition, Moxy and many of our applications, such as Partner and various data services have been designed to provide an integrated solution with Axys, Geneva and APX. As a result, we believe that for
the next several years a majority of our net revenues will depend upon continued market acceptance of Axys, Geneva, APX, and Moxy, and upgrades to those products.

We must continue to introduce new products and product enhancements.

The market for our products is characterized by rapid technological change, changes in customer demands, evolving industry standards
and new regulatory requirements. New products based on new 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 new products or product enhancements that address the future needs of our target markets and respond to their changing standards and practices. We continue to
release numerous new products and product upgrades and we believe our future success depends on continuing such releases. Additionally, in October 2008, we acquired Tamale Software which enables us to
offer a new product in the nascent research management field. However, it is too early to know whether these products will meet anticipated sales or will be broadly accepted in the market or that we
will continue to introduce more products.

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 commencement of commercial shipments 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 may be reluctant to go through
the sometimes complex and time consuming process of migrating from our Axys to APX product, which may slow the migration of our customer base to APX. In addition, clients may delay purchases in
anticipation of new products or product enhancements. Our ability to develop new products and product enhancements is also dependent upon the products of other software vendors, including certain
system software vendors, such as Microsoft Corporation, Sun Microsystems, database vendors 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 operating results may fluctuate significantly.

As we continue our transition to a predominantly term license model, our net revenues have been and continue to be affected by the
relatively slower revenue recognition associated with the term license model, which is typically over a three-year period, and by the reduction in perpetual license revenue. While we have
largely transitioned to a predominantly term license model, we continue to see the effects of this transition. For example, under a perpetual model, customers purchase licenses to use our software
indefinitely and generally we recognize all license revenue at the time of sale; maintenance is purchased under an annual renewable contract, and recognized ratably over the contract period. Under a
term model, customers purchase a license to use our software and receive maintenance for a limited period of time and we recognize the revenue ratably over the length of the contract.

During
fiscal 2008, term license revenues comprised approximately 32% of term license, maintenance and other recurring revenues as compared to approximately 22% and 14% in fiscal 2007
and 2006, respectively. Term license contracts are comprised of both software licenses and maintenance

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services.
Individual perpetual software licenses vary significantly in value, and the value and timing of these transactions can therefore cause our quarterly perpetual license revenues to fluctuate.

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 length 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. As a result of these and other factors, our quarterly net revenues may fluctuate significantly. 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. For example, during 2008, we deferred net revenues of $9.6 million and deferred directly related expenses of $3.1 million.
The impact of these deferrals on our operating income for 2008 was approximately $6.5 million.

In
addition, we experience seasonality in our licensing. We believe that this seasonality results primarily from customer budgeting cycles and the annual nature of some AUA or AUM
contracts, and expect this seasonality to continue in the future. The fourth quarter of the year typically has more licensing activity. That can result in term license 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. This seasonality may be adversely
affected by the current market downturn and worsening economic conditions, and there is no guarantee that our fourth quarter term license bookings will be higher than previous quarters. 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. In addition, we may incur commission and bonus expenses in the period in which we enter into a license, but not recognize the associated revenue until later
periods.

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

If our relationship with Financial Times/Interactive Data is terminated or other large subscription-based relationships are terminated, our business may be harmed.

Many of our clients use our proprietary interface to electronically retrieve pricing and other data from Financial Times/Interactive
Data ("FTID"). FTID pays us a commission based on their revenues from providing this data to our clients. Our software products have been customized to be compatible with their system and this
software would need to be redesigned if their services were unavailable for any reason. Termination of our current agreement with FTID would require at least two years' notice by either us or them, or
90 days in the case of material breach. Our operating results would be adversely impacted if our relationship with FTID was terminated or their services were unavailable to our clients for any
reason. In recent years, Advent has 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, including most recently our agreement with TIAA-CREF. It is too early to know whether we will be able to continue to sign large recurring
revenue contracts of this nature, and our operating results could be adversely impacted if those agreements are not fully implemented, terminated or not renewed or if we are unable to continue to
generate similar opportunities. Some of these agreements are subject to milestones, acceptance and penalties and there is no assurance that these agreements will be fully implemented, renewed, or that
Advent will be able to enter similar or larger sized contracts in the future.

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We must retain and recruit key employees.

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 the anticipated increase in product 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 the requirements of Section 404 of the Sarbanes-Oxley Act of
2002. 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 the San Francisco Bay Area where the majority of our employees are located.

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.
Fluctuations in our stock price may make it more difficult to retain and motivate employees. The recent significant adverse volatility in our stock price has resulted in many employees' stock option
and/or stock appreciation right exercises exceeding the underlying stock's market value as well as the deterioration in the value of employees restricted stock units granted, thus lessening the
effectiveness of retaining employees through stock-based awards. Additionally, accounting regulations requiring the expensing of equity compensation impair our ability to provide these incentives
without reporting significant compensation costs.

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, or 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 international operations in which we may have limited experience or business partners.

We market and sell our products in the United States and, to a growing extent, internationally. From 2001 through 2005, we acquired the
subsidiaries of our independent distributor. In addition, we have begun to expand our sales in relatively new jurisdictions for Advent, such as the Middle East, Eastern Europe, and Asia. In 2006 we
opened a branch office of Advent Europe Ltd. in the United Arab Emirates, as well as a subsidiary of Advent Software, Inc. in Hong Kong in 2008. We cannot be certain that establishing
businesses in other countries will produce the desired levels of revenues, such as in the case of our Greek subsidiary, Advent Hellas, which produced less than satisfactory revenues and profitability
before its sale by Advent in 2005. Also, the recent worldwide decline in financial markets may disrupt our sales efforts in overseas markets. We currently have limited experience in developing
localized versions of our products and marketing and distributing our products internationally. In other instances, we may rely on the efforts and abilities of foreign business partners in such
markets. For example, we have begun to outsource certain engineering activities with a business

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partner
located in China. In addition, international operations are subject to other inherent risks, including:



The
revenues, expenses, assets and liabilities of our international subsidiaries are primarily denominated in local foreign currencies. We have not historically undertaken foreign
exchange hedging transactions to cover potential foreign currency exposure. Future fluctuations in currency exchange rates may adversely affect revenues and accounts receivable from international
sales and the US dollar value of our foreign subsidiaries' revenues, expenses, assets and liabilities. Our international service revenues and certain license revenues from our European subsidiaries
are generally denominated in local foreign currencies.

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

Periodically we seek to grow through the acquisition of additional complementary businesses. In October 2008, we completed the
acquisition of Tamale Software, Inc., which provides research management software. In November 2007, our MicroEdge subsidiary acquired Vivid Orange Limited, a United Kingdom company providing
corporate community involvement and employee charitable giving technology. In December 2006, we acquired East Circle Solutions, Inc., a developer of investment management billing solutions to
integrate their product into our software offerings. From 2001 through the middle of 2003, we made five major acquisitions, including Kinexus Corporation, Techfi Corporation and Advent Outsource Data
Management LLC, and also acquired all of the common stock of five of our European distributor's subsidiaries. In addition, we purchased our European distributor's remaining two subsidiaries in
the United Kingdom and Switzerland in May 2004.

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 Tamale acquisition reflects our entry into the research management software market, where we have no prior
experience. Integrating these acquisitions in the past has been time-consuming, expensive and disruptive to our business. This integration process has strained our managerial resources,
resulting in the diversion of these resources

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from
our core business objectives and may do so in the future. Failure to achieve the anticipated benefits of these acquisitions or to successfully integrate the operations of these entities 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 of, and relative risks, of these acquisitions
could be erroneous. For example, in the first quarter of 2003, we closed our Australian subsidiary because it failed to perform at a satisfactory profit level and similarly in the fourth quarter of
2005, we disposed of our Advent Hellas subsidiary because of less than satisfactory profitability. 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, similar to those we have experienced with our Kinexus and Advent Outsource acquisitions.

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. 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.

Impairment of investments could harm our results of operations.

We have made and may make future investments in privately held companies, many of which are considered in the start-up or
development stages. These investments, which we classify as other assets on our consolidated balance sheets, are inherently risky, as the market for the technologies or products these companies have
under development is typically in the early stages and may never materialize. The value of the investment in these companies is influenced by many factors, including the operating effectiveness of
these companies, the overall health of these companies' industries, the strength of the private equity markets and general market conditions. Due to these and other factors, we have previously
determined, and may in the future
determine, that the value of these investments is impaired, which has caused and would cause us to write down the carrying value of these investments, such as the $0.6 million
write-down of one of our investments during the second quarter of 2007. Furthermore, we cannot be sure that future investment, license, fixed asset or other asset write-downs will not
occur. If future write-downs do occur, they could harm our business and results of operations.

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 one registered patent. 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

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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 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 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 attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the
United States. 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. 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 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.

Information we provide to investors is accurate only as of the date we disseminate it.

From time to time, we may publicly disseminate forward-looking information or guidance in compliance with Regulation FD. This
information or guidance represents our outlook only as of the date we disseminate it, and we do not undertake to update such information or guidance.

Catastrophic events could adversely affect our business.

We are a highly automated business and rely on our network infrastructure and enterprise applications, internal technology systems and
our Web site 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, 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 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 of recent months, 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 national and international responses to attacks or perceived threats to national
security and other actual or potential conflicts or wars, including the ongoing crisis in the Middle East, have created many economic and political uncertainties. 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 software errors or failures found in new products may result in loss of or delay in market acceptance of our products that could seriously harm our business.

Our products may contain undetected software errors or scalability limitations at any point in their lives, but particularly when first
introduced or as new versions are released. Despite testing by us and by current and potential customers, errors may not be found in new products until after commencement of commercial shipments,
resulting in 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
international markets.

Two of our principal stockholders have an influence over our business affairs and may make business decisions with which you disagree and which may adversely affect the
value of your investment.

Our Chief Executive Officer and the Chairman of our board of directors own or control, indirectly or directly, a substantial number of
shares of our common stock (approximately 37% as of December 31, 2008). As a result, if these people act together, they will have the ability to exert significant influence on matters submitted
to our stockholders for approval, such as the election or removal of directors, amendments to our certificate of incorporation or the approval of a business combination. These actions may be taken
even if they are opposed by other stockholders or it may be difficult to approve these actions without their consent. This concentration of ownership may also have the effect of delaying or preventing
a change of control of our company or discouraging others from making tender offers for our shares, which could prevent our stockholders from receiving a premium for their shares.

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

The Sarbanes-Oxley Act ("the Act") of 2002 required changes in some of our corporate governance and securities disclosure and/or
compliance practices. As part of the Act's requirements, the SEC has enacted new rules on a variety of subjects, and the Nasdaq Stock Market has enacted new corporate governance listing requirements.
These developments have increased and may in the future increase our accounting and legal compliance costs and could also expose us to additional liability if we fail to comply with these new rules
and reporting requirements. In fiscal 2008, 2007 and 2006, we incurred approximately $0.8 million, $0.9 million and $1.3 million, respectively, in Sarbanes-Oxley related expenses
consisting of external consulting costs and auditor fees, and the Company anticipates similarly spending a significant amount for its 2009 compliance activities. In addition, such developments may
make retention and recruitment of qualified persons to serve on our board of directors, or as executive officers, more difficult. We continue to evaluate and monitor regulatory and legislative
developments and cannot reliably estimate the timing or magnitude of all costs we may incur as a result of the Act or other related legislation or regulation.

The
Sarbanes-Oxley Act ("the Act") of 2002 required changes in some of our corporate governance and securities disclosure and/or compliance practices. As part of the Act's requirements,
the

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SEC
has enacted new rules on a variety of subjects, and the Nasdaq Stock Market has enacted new corporate governance listing requirements. These developments have increased and may in the future
increase our accounting and legal compliance costs and could also expose us to additional liability if we fail to comply with these new rules and reporting requirements. In fiscal 2008, 2007 and 2006,
we
incurred approximately $0.8 million, $0.9 million and $1.3 million, respectively, in Sarbanes-Oxley related expenses consisting of external consulting costs and auditor fees, and
the Company anticipates similarly spending a significant amount for its 2009 compliance activities. In addition, such developments may make retention and recruitment of qualified persons to serve on
our board of directors, or as executive officers, more difficult. We continue to evaluate and monitor regulatory and legislative developments and cannot reliably estimate the timing or magnitude of
all costs we may incur as a result of the Act or other related legislation or regulation.

In
addition, our customers operate within a highly regulated environment. In light of the current conditions in the US financial markets and economy, Congress and regulators have
increased their focus on the regulation of the financial services industry. 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 AUM or
AUA, or diminished operations that would adversely affect our revenues and collection of receivables.

Our
customers must comply with governmental and quasi-governmental rules, regulations, directives and standards. New legislation or changes in government or quasi-governmental 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.

Changes in, or interpretations of, accounting principles could result in unfavorable accounting charges.

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America. These principles are subject to interpretation by us, the SEC and various bodies formed to interpret and create accounting principles. 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. Some of our accounting principles that
recently have been or may be affected include:



In
particular, in the first quarter of 2006, we adopted SFAS 123R which requires the measurement of all stock-based compensation to employees, including grants of employee stock
options, restricted stock units and stock appreciation rights, using a fair-value-based method and the recording of such expense in our consolidated statements of operations. The adoption
of SFAS 123R had a significant adverse effect on our results of operations. It will continue to significantly adversely affect our results of operations and has resulted in changes to our
compensation practices, such as an increased reliance

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on
using equity vehicles such as stock-settled stock appreciation rights ("SAR") and restricted stock units ("RSU").

We
also adopted FIN 48 in the first quarter of 2007. The adoption of FIN 48 resulted in an increase in both assets and liabilities in our consolidated balance sheet as of
the beginning of fiscal 2007 and may create increased volatility in our future operating results.

Additionally,
in December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141 (revised 2007), ("SFAS 141R"), "Business Combinations," which changes
the accounting for business combinations including the measurement of acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting
for pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition related restructuring
liabilities, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer's income tax valuation allowance. FAS 141R is effective for financial
statements issued for fiscal years beginning after December 15, 2008. We currently believe that the adoption of SFAS 141R will result in the recognition of certain types of expenses in
our results of operations that we currently capitalize pursuant to existing accounting standards and may also impact our financial statement in other ways. Additionally, the nature and magnitude of
the specific effects will depend upon the nature, terms and size of the acquisitions the Company consummates after the effective date.

Borrowings under our credit facility must be repaid if we fail to comply with certain covenants.

In February 2007, we entered into a senior secured facility agreement which provides us with a revolving line of credit up to an
aggregate amount of $75.0 million. We have in the past, and may in the future, borrow under the credit facility in order to fund working capital requirements, make share repurchases of our
common stock 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 or
maintenance contracts, our ability to borrow under the credit facility, or continue to meet the contractual covenants, may be compromised. Our continued ability to borrow under our credit facility is
subject to compliance with certain financial and non-financial covenants. The financial covenant is limited to a maximum ratio of senior debt to earnings before interest, taxes,
depreciation, and amortization (EBITDA), adjusted for cost capitalizations, extraordinary gains (losses) and non-cash stock compensation. 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, particularly in the current economic environment. 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. On October 30, 2008, the Board of Directors authorized a share repurchase program of up to 3.0 million shares,
and in November 2008, we borrowed $25.0 million under the credit facility to fund a portion of these repurchases, of which $15.0 million was outstanding as of February 28, 2009.

Security risks may harm our business.

Maintaining the security of computers, computer networks, hosted solutions and the transmission of confidential information over public
networks is essential to commerce and communications, particularly in the market in which Advent operates. Efforts of others to seek unauthorized access to Advent's or its clients' computers and
networks or introduce viruses, worms and other malicious software programs that disable or impair computers into our systems or those of our customers or other third parties, could disrupt or make our
systems inaccessible or allow access to proprietary information and data of Advent or its clients. Advances in computer capabilities, new discoveries in the field of cryptography or other events or
developments, also could result in compromises or breaches of

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our
security systems. Our security measures may be inadequate to prevent security breaches, exposing us to a risk of data loss, financial loss, harm to reputation, business interruption, litigation
and other possible liabilities, as well as possibly requiring us to expend significant capital and other resources to protect against the threat of security breaches or to alleviate problems caused by
such breaches.

Potential changes in securities laws and regulation governing the investment industry's use of soft dollars may reduce our revenues.

As of December 31, 2008, approximately 360 or 4% of our clients utilized trading commissions ("soft dollar arrangements") to pay
for software products and services. During fiscal 2007 and 2006, the total value of Advent products and services paid with soft dollars was approximately 4% and 5% of our total billings. Such soft
dollar arrangements could be impacted by changes in the regulations governing those arrangements.

During
the fourth quarter of 2006, we completed the wind down of the "soft dollar" business of our SEC-registered broker/dealer subsidiary, Second Street Securities, as it no
longer fits with our corporate strategy. Second Street Securities' soft dollar business offered our customers the ability to pay for Advent products and other third party products and services through
brokerage commissions and other fee-based arrangements. We will continue to allow clients to utilize soft dollar arrangements to pay for Advent software products and services through other
independent broker/dealers.

In
July 2006, the SEC published an Interpretive Release that provides guidance on money managers' use of client commissions to pay for brokerage and research services under the safe
harbor set forth in Section 28(e) of the Securities Exchange Act of 1934. The Interpretive Release clarifies that money managers may use client commissions ("soft dollars") to pay only for
eligible brokerage and research services. Among other matters, the Interpretive Release states that eligible brokerage includes those products and services that relate to the execution of the trade
from the point at which the money manager communicates with the broker-dealer for the purpose of transmitting an order for execution, through the point at which funds or securities are delivered or
credited to the advised account. In addition, for potentially "mixed-use" items (such as trade order management systems) that are partly eligible and partly ineligible, the Interpretive
Release states that money managers must make a reasonable allocation of client commissions in accordance with the eligible and ineligible uses of the items. Based on this new guidance, our customers
may change their method of paying all or a portion of certain Advent products or services from soft to hard dollars, and as a result reduce their usage of these products or services in order to avoid
increasing expenses, which could cause our revenues to decrease.

If we fail to maintain an effective system of internal control, we may not be able to accurately report our financial results 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. 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. For example, as of December 31, 2005, the Company did not maintain effective controls over the
accounting for income taxes, including the determination of deferred income tax liabilities and the related income tax provision. This control deficiency resulted in adjustments to the fourth quarter
of 2004 and 2005 financial statements and a restatement of the Company's financial statements for each of the first three quarters of fiscal 2004 and 2005.

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The
Company also did not maintain effective controls over the accuracy, presentation and disclosure of the pro forma stock-based compensation expense in conformity with generally
accepted accounting principles as of December 31, 2005. As a result of this control deficiency, the Company's disclosures of stock-based compensation expense for fiscal 2003 and 2004 and the
first three quarters of 2004 and 2005 were revised.

During
2006, we implemented controls and procedures to improve our internal control over financial reporting and address the material weaknesses identified in fiscal 2004 and 2005.
Management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2006, 2007, and 2008.

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.

Our ability to conclude that a control deficiency is not a material weakness or that an accounting error does not require a restatement can be affected by a number of
factors, including our level of pre-tax income.

Under the Sarbanes-Oxley Act of 2002, our management is required to assess the impact of control deficiencies based upon both
quantitative and qualitative factors, and depending upon that analysis we classify such identified deficiencies as either a control deficiency, significant deficiency or a material weakness.

One
element of our quantitative analysis of any control deficiency is its actual or potential financial impact, and any impact that is greater than 5% of our pre-tax income
in any quarter may be more likely to result in that deficiency being determined to be a significant deficiency or a material weakness. For example, our assessment of a control deficiency as a
significant deficiency or material weakness remains dependent in part on our level of profitability during a particular quarter. If our quarterly or fiscal year pre-tax income were to
decrease, this will make it statistically less likely for us and our independent registered public accounting firm to determine that a control deficiency is not a material weakness.

In
addition, if management or our independent registered public accountants identify errors in our interim or annual financial statements, it is statistically more likely that such
errors may meet the quantitative threshold established under Staff Accounting Bulletin No. 99, "Materiality", that could, depending upon the complete qualitative and quantitative analysis,
result in our having to restate previously issued financial statements.

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Item 1B.    Unresolved Staff Comments

None.

Item 2.    Properties

Our principal executive offices are located in San Francisco, California. The table below summarizes the principal properties that we
leased as of December 31, 2008:

Segment

Use of PropertyLocation

Approx
Square
Footage

Advent
Investment
Management

MicroEdge

Sales
and
Support

Marketing

Product
Development

AdministrativeUnited States:San Francisco, CA (3 properties)*


195,375


X





X


X


X


XNew York, NY (3 properties)*


69,897


X


X


X


X


X


XNew Rochelle, NY


5,795


X





X


XBoston, MA (2 properties)


14,829


X





X


X


X


XConcord, NH (2 properties)


7,395





X


X


X


X


XMiddlebury, CT


2,996





X


X


X


XExcelsior, MN


2,407





X


X


X





XEurope and Middle East:Copenhagen, Denmark


3,475


X





X





X


XZurich, Switzerland


1,830


X





XOslo, Norway


1,920


X





X


X


XLondon, United Kingdom (5 properties)


5,255


X


X


X


X





XStockholm, Sweden


4,489


X





X


X


X


XDubai, United Arab Emirates


300


X





XAsia:Hong Kong, People's Republic of China


234


X





X


XTotal leased square footage


316,197


---

We
continue to assess our needs with respect to office space and may, in the future, vacate or add additional facilities. We believe that our current facilities are adequate for our
needs in the immediate and foreseeable future.

Item 3.    Legal Proceedings

On March 8, 2005, certain of the former shareholders of Kinexus and the shareholders' representative filed suit against Advent
in the Delaware Chancery Court. The complaint alleges that Advent breached the Agreement and Plan of Merger dated as of December 31, 2001 pursuant to which Advent acquired all of the
outstanding shares of Kinexus due principally to the fact that no amount was paid by Advent on an earn-out of up to $115 million. The earn-out, which was payable in cash
or stock at the election of Advent, was based upon Kinexus meeting certain revenue targets in both 2002 and 2003. The complaint seeks unspecified compensatory damages, an accounting and restitution
for unjust enrichment. Advent advised the shareholders' representative in January 2003 that the earn-out terms had not been met in 2002 and accordingly no earn-out was payable
for 2002 and would not be payable for 2003. Discovery is continuing between the parties. Advent disputes the plaintiffs' claims and believes that it has meritorious defenses and intends to vigorously
defend this action. Management

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believes
that any potential loss associated with this litigation is neither probable nor reasonably estimable at this time and accordingly has not accrued any amounts for any potential loss.

From
time to time, we are involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe
that the ultimate outcome of these unresolved matters, individually or in the aggregate, is likely to have a material adverse effect on the Company's financial position or results of operations.
However, litigation is subject to inherent uncertainties and our view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material
adverse impact on our financial position and results of operations for the period in which the unfavorable outcome occurs, and potentially in future periods.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information for Common Stock

Our common stock is listed on the NASDAQ Stock Market under the symbol "ADVS." The closing price of our common stock on
February 27, 2009 was $27.24. The table below summarizes the range of high and low reported sales prices on the NASDAQ Stock Market for our common stock for the periods indicated.

Price RangeHigh

LowFiscal 2008First quarter

$
55.34

$
38.78Second quarter

$
44.61

$
35.80Third quarter

$
49.32

$
32.90Fourth quarter

$
36.13

$
17.51Fiscal 2007First quarter

$
37.82

$
32.74Second quarter

$
36.71

$
32.29Third quarter

$
48.35

$
32.41Fourth quarter

$
58.27

$
45.82


Stockholders

As of February 27, 2009, there were approximately 131 holders of record of our common stock. However, because many of our shares
of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate with any level of accuracy the total number of stockholders represented by these record
holders.

Dividends

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings to
fund development and growth of our business and to repurchase our common stock, and do not anticipate paying cash dividends in the foreseeable future.

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Recent Sales of Unregistered Securities

On October 1, 2008, we issued an aggregate 906,000 shares of our common stock in connection with the acquisition of Tamale
Software, Inc. The offer and sale of the securities were effected without registration in reliance upon the exemptions from the registration requirements of the Securities Act of 1933, as
amended, provided by Section 3(a)(10) thereof, or on Section 4(2) thereof or Regulation D promulgated thereunder.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

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 borrowings under our credit facility.

The
following table provides a month-to-month summary of the repurchase activity under the stock repurchase programs approved by the Board in May and October 2008
during the three months ended December 31, 2008 (in thousands, except per share data):

Month

Total
Number
of Shares
Repurchased

Average
Price Per
Share

Maximum Number
of Shares that May
Yet Be Purchased
Under the PlanOctober


640

$
30.41


3,000November


950

$
19.91


2,050December


381

$
21.42


1,669Total


1,971

$
23.61


1,669


In
addition to the above, we have withheld shares through net share settlements during the three months ended December 31, 2008. The following tables provides a
month-to-month summary of the repurchase activity upon the vesting of restricted stock units and the exercise of stock-settled stock appreciation rights under our equity
compensation plan to satisfy tax withholding obligations during the three months ended December 31, 2008 (in thousands, except per share data):

Month

Total
Number
of Shares
Repurchased

Average
Price Per
Share

Maximum Number
of Shares that May
Yet Be Purchased
Under the PlanOctober


1

$
30.17


November


1

$
20.58


December


1

$
24.32


Total


3

$
25.74





Securities Authorized for Issuance Under Equity Compensation Plans

Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference from our Proxy
Statement to be filed for our May 2009 Annual Meeting of Stockholders.

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Table of Contents

Performance Graph

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Advent Software, Inc., The S&P 500 Index
And The NASDAQ Computer & Data Processing Index

GRAPHIC

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Table of Contents

Item 6.    Selected Financial Data

The following selected financial data are derived from our consolidated financial statements. This data should be read in conjunction
with the consolidated financial statements and notes thereto, and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations".

Fiscal Years2008(1)(2)

2007(1)(3)

2006(1)(4)(5)

2005(6)(7)

2004(8)(in thousands, except per share data)STATEMENT OF OPERATIONSNet revenues

$
264,832

$
215,303

$
184,093

$
168,701

$
149,990Gross margin

$
174,638

$
147,413

$
125,291

$
116,904

$
97,035Income (loss) from operations

$
20,726

$
12,329

$
(282
)
$
6,336

$
(18,064
)Net income (loss)

$
18,895

$
12,631

$
82,602

$
14,135

$
(16,179
)Basic net income (loss) per share

$
0.71

$
0.48

$
2.85

$
0.46

$
(0.49
)Diluted net income (loss) per share

$
0.68

$
0.45

$
2.70

$
0.44

$
(0.49
)BALANCE SHEETCash, cash equivalents and marketable securties

$
48,351

$
49,589

$
55,068

$
163,432

$
165,529Working capital

$
(47,946
)
$
(23,166
)
$
4,904

$
115,844

$
127,886Total assets

$
419,594

$
347,675

$
335,743

$
340,575

$
354,642Long-term liabilities

$
42,530

$
17,635

$
14,838

$
6,374

$
8,066Stockholders' equity

$
195,823

$
179,846

$
209,627

$
241,979

$
265,740


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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

You should read the following discussion in conjunction with our consolidated financial statements and related notes. 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," "should," "expect," "plan" "anticipate," "believe," "estimate," "predict," "potential," "continue" 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 regarding 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, the adequacy of resources to meet future cash requirements, estimates or predictions of actions by customers,
suppliers, competitors or regulatory authorities, future client wins, future hiring and future product introductions. 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-K, 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 integrated software solutions for automating and integrating data and work flows across the investment management
organization, as well as the information flows between the investment management organization and external parties. Our products are intended to increase operational efficiency, improve the accuracy
of client information and enable better decision-making. Each solution focuses on specific mission-critical functions of the front, middle and back offices of investment management organizations and
is designed to meet the needs of the particular client, as determined by size, assets under management and complexity of the investment environment.

The
software solutions offered through our MicroEdge segment support the grant management, gifts matching and volunteer tracking processes for the grant-making community.

Current Economic Environment

Since 2008, the effects of the subprime mortgage and broader credit crisis have been negatively impacting the US. Concerns about the
subprime mortgage market led to a liquidity crunch, which hampered businesses and contributed to investment depreciation and depressed earnings. Some of the most affected companies were investment
banks, as fixed-income operations were
harmed due to the value decline of structured finance products, necessitating large write-downs. Hedge funds, private equity firms, investment management firms and commercial banks were also affected
greatly by the liquidity crunch and depressed values.

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Although
global markets found temporary respite in the summer of 2008, US home prices continued to fall; foreclosures and defaults began to climb, precipitating the global economic
crisis. Going forward, the effects of the subprime mortgage and broader credit crisis, coupled with a decline in global gross domestic product ("GDP"), will continue to weigh on operating results for
investment services firms throughout at least 2009. Fears of an uncertain timeframe for economic recovery weigh on investors. The equity markets are still experiencing intense volatility and the
credit markets remain tight amid uncertainty.

We
believe that fiscal 2009 will continue to be a difficult period for the investment management industry in the United States and worldwide. We believe that some hedge funds will go out
of business and we expect that most investment managers will see their revenues decrease as a result of decreases in their assets under management.

The
current turmoil in the credit markets and volatility in financial markets may also create pressure on our clients to decrease their information technology budgets, which could
negatively impact our business. While we are not immune to downturns in technology spending, should our customers reduce their spending, we believe we are well positioned to maintain our competitive
position in the longer term for the following reasons:



Longer
term, we also believe that there will be additional regulation in the industry and that investment managers will be increasingly focused on servicing their customers. These
factors have traditionally been demand drivers for our products.

As
the current economic situation evolves, we will continue to evaluate the impact of this environment on our business and we will remain focused on delivering solutions for our
customers. Additionally, we intend to carefully manage our expenses and headcount growth.

2008 Operating Overview

In 2008, we achieved a variety of operating accomplishments, including the following:



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2008 Financial Overview

We recognized revenues of $264.8 million during 2008, compared to $215.3 million and $184.1 million in fiscal 2007
and 2006, respectively. Our existing term licenses, maintenance and other recurring revenues provide consistent, recurring revenue during the term of those agreements. We have grown net revenue
year-over-year for several reasons, including the following:



Total
recurring revenues, which we define as term license, perpetual maintenance, and other recurring revenues, increased to 79% of total net revenues during 2008, as compared to 77% and
75% during 2007 and 2006, respectively. We believe that our high proportion of recurring revenues allows us to take a long-term view in how we conduct and invest in our business.

Total
expenses, including cost of revenues, were $244.1 million in fiscal 2008, compared with $203.0 million and $184.4 million in fiscal 2007 and 2006,
respectively. Our expenses increased in 2008 over 2007 largely as a result of increased payroll, variable compensation and benefit expenses resulting from an increase in headcount as we invested in
client support, product development, professional services and sales and marketing to solidify our position as a market leader.

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Our
income from operations was $20.7 million or 8% of revenue in 2008, compared to $12.3 million or 6% of revenue in 2007.

We
earned net income of $18.9 million, resulting in diluted earnings per share of $0.68, compared to $12.6 million or $0.45, respectively, for 2007.

We
generated $77.0 million in cash from operations in 2008 compared to $62.4 million and $46.8 million, in 2007 and 2006, respectively. This
year-over-year increase of 23% in operating cash flows was primarily due to an increase in our deferred revenues which primarily reflected our continued transition to the term
license model and new term license bookings. Under the term license model, we generally bill and collect for a term agreement in equal installments in advance of each annual period. These amounts are
deferred at billing and recognized over the annual term period, which has the effect of increasing deferred revenue when compared to a perpetual license model where no license revenue is deferred.

Term License and Term License Deferral

We are continuing the process of converting the Company's license revenues from a perpetual model to a predominantly term model. Under
a perpetual pricing model, customers purchase a license to use our software indefinitely and generally we recognize all license revenue at the time of sale; maintenance is purchased under an annual
renewable contract, and recognized ratably over the contract period. Under a term pricing model, customers purchase a license to use our software and receive maintenance for a limited period of time
and we recognize all of the revenue ratably over the length of the contract. This has the effect of lowering revenues in the early stages of the transition, but increasing the total potential value of
the customer relationship. Moving new customer sales in the Advent Investment Management (AIM) segment from a perpetual to a term licensing model has had the effect of lowering our reported revenue
growth rates over the past three years and may, depending on our new term license bookings, continue to have an impact through 2009. However, because our products are used by customers for an average
of approximately ten years, we believe this change to our business model is significant for the long-term growth and value of the business as we expect total revenues from a customer to
increase over time. For example, over a ten-year period, a customer may enter into two or more contracts for the same software product and services under a term license model.

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 complete and the
remaining services are substantially complete. 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 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 length.

During
2008, we deferred net revenues of $9.6 million and directly-related expenses of $3.1 million associated with our term licensing model. The impact of these deferrals
on our operating income was approximately $6.5 million. The $9.6 million net deferral of revenue is composed of a net deferral of $6.8 million of professional services revenue and
a net deferral of $2.8 million of term license revenue. We expect that the term license component of the deferred revenue balance will increase or decrease in the future depending on the amount
of new bookings relative to the number of implementations that reach substantial completion in a particular quarter. We currently expect that the professional services component of the deferred
revenue balance will continue to increase through at least 2009.

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Amounts
of revenues and directly-related expenses deferred as of December 31, 2008 and 2007 associated with our term licensing deferral were as follows (in millions):

December 31,
2008

December 31,
2007Deferred revenuesShort-term

$
26.0

$
17.9Long-term


4.8


3.3Total

$
30.8

$
21.2Directly-related expensesShort-term

$
8.1

$
5.7Long-term


2.1


1.3Total

$
10.2

$
7.0


Deferred
net revenues and directly-related expenses are classified as "Deferred revenues" (short-term and long-term), and "Prepaid expenses and other," and "Other
assets," respectively, on the consolidated balance sheets.

The
transition to a term model also has the effect of decreasing operating cash flows in the early stages of the transition. Under perpetual pricing, the entire license fee and the first
year of maintenance is generally billed and collected at the commencement of the arrangement. Under term pricing, a typical contract term is three years. We generally bill and collect term license fee
installments in advance of each annual period. The amount of the annual term billing is less than the perpetual billing, resulting in lower cash flows in the initial annual term license period. Annual
term billing results in an increase in deferred revenues and an increase in operating cash flows at the commencement of each annual billing period.

Term License Bookings

The following table summarizes the Company's quarterly term license bookings including Advent Axys clients who migrate to Advent's APX
product in: term contract value (in thousands), associated average term and annual contract value (in thousands):

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total2008Term Contract Value(1)

$
15,673

$
21,166

$
18,087

$
34,032

$
88,958Average Term(2)


2.8


3.1


2.9


3.6


3.2Annual Contract Value(3)

$
5,510

$
6,853

$
6,188

$
9,553

$
28,1042007Term Contract Value(1)

$
11,106

$
18,456

$
20,482

$
41,016

$
91,060Average Term(2)


3.3


2.9


3.5


3.4


3.3Annual Contract Value(3)

$
3,359

$
6,274

$
5,905

$
12,061

$
27,5992006Term Contract Value(1)

$
9,569

$
16,426

$
12,676

$
21,003

$
59,674Average Term(2)


2.6


2.9


3.0


3.1


2.9Annual Contract Value(3)

$
3,615

$
5,625

$
4,286

$
6,711

$
20,237


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Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of operations are based upon our consolidated financial
statements and related notes, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We review the accounting policies used in reporting
our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent liabilities.

On
an ongoing basis, we evaluate the process we use to develop estimates. We base our estimates on historical experience and on other information that we believe is reasonable for making
judgments at the time the estimates are made. Actual results may differ from our estimates due to actual outcomes being different from those on which we based our assumptions.

We
believe the following accounting policies contain the more significant judgments and estimates used in the preparation of our consolidated financial
statements:



Revenue recognition.Our revenue recognition policies contain our most significant judgments and estimates. Our revenue policy is
further described
in Note 1, "Summary of Significant Accounting Policies", to the consolidated financial statements.

We
recognize revenue from term license, maintenance and other recurring; perpetual license fees, and professional services and other. We offer a wide variety of products and services to
a large number of financially sophisticated customers. While many of our lower-priced license transactions, maintenance contracts, subscription-based transactions and professional services projects
conform to a standard structure, many of our larger transactions are complex and may require significant review and judgment in our application of generally accepted accounting principles.

Software licenses.We recognize revenue from the licensing of software when persuasive evidence of an arrangement exists, the product
has been
delivered, the fee is fixed or determinable and collection of the resulting receivable is probable. We generally use a signed license agreement as evidence of an arrangement. Sales through our
distributors are evidenced by a master agreement governing the relationship together with binding order forms and signed contracts from the distributor's customers. Revenue is recognized once shipment
to the distributor's customer has taken place and when all other revenue recognition criteria have been met. Delivery occurs when a product is delivered to a common carrier F.O.B shipping point, or
upon confirmation that product delivered F.O.B shipping destination has been received, or upon notification that software is available for electronic download

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through
our fulfillment vendor. Some of our arrangements include acceptance provisions, and if such acceptance provisions are present, delivery is deemed to occur upon acceptance. We assess whether
the fee is fixed or determinable based on the payment terms associated with the transaction. We assess whether the collectability of the resulting receivable is probable based on a number of factors,
including the credit worthiness of the customer determined through review of credit reports, our transaction history with the customer, other available information and pertinent country risk if the
customer is located outside the United States. Our standard payment terms are due at 180 days or less, but payment terms may vary based on the country in which the agreement is executed.
Software licenses are sold with maintenance and, frequently, professional services.

We
typically license our products on a per server, per user basis with the price per customer varying based on the selection of the products licensed, the assets under administration,
the number of site installations and the number of authorized users. We have continued our transition from selling mostly perpetual licenses to selling a mix of term and perpetual licenses, and we
expect term license revenue to increase as a proportion of total recurring revenues (which we define as term license, maintenance and other recurring revenues) in the future. Term license revenue
comprised approximately 32%, 22% and 14% of total recurring revenues in 2008, 2007 and 2006, respectively. Revenue recognition for software licensed under term and perpetual license models differs
depending on which type of contract a customer signs:





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Certain
of our perpetual and term license contracts include asset-based fee structures that provide additional revenues based on the assets that the client manages using our software
("Assets Under Administration" or "AUA"). Contracts containing an AUA fee structure have a defined measurement period which requires the client to self-report actual AUA in arrears of the
specified period. AUA fees above the stated minimum fee for the same period are considered incremental fees. Because incremental fees are not determinable until the conclusion of the measurement
period, they are both earned and recognized upon completion of the measurement period, on a quarterly or annual basis. Incremental fees from perpetual AUA contracts are included in "Perpetual license
fees" on the consolidated statement of operations. Incremental fees from term AUA contracts are included in "Term license, maintenance and other recurring" revenue on the consolidated statement of
operations.

For
contracts signed prior to 2006, the Company recognizes both the minimum and incremental value of the AUA fees upon receipt of the customer's AUA report. In 2006, the Company
concluded that it gained sufficient experience in working with these types of arrangements to conclude that the minimum fees are fixed and determinable at inception of the contract instead of upon
conclusion of the
measurement period. Therefore, for contracts signed since 2006, the Company recognizes AUA contract minimum fees over the period of service and continues to recognize incremental fees in arrears once
clients contractually report the AUA to the company, because the incremental fees are not determinable until reported.

If
a customer purchased our software and chose to enter into a soft dollar arrangement through the Company's in-house broker/dealer subsidiary, Second Street Securities, the
soft dollar arrangement did not change or modify the original fixed or determinable fee in the written contract. The customer is required to pay the original fee for the Company's software within one
year. If insufficient trading volume is generated to pay the entire original fee within one year, the customer is still required to render payment within one year. In 2006, Advent completed the wind
down of its soft dollar business. However, customers may continue to enter into a soft dollar arrangement through a third-party broker/dealer to purchase Advent's software. The original payment terms
apply, regardless of the arrangement with the third-party broker/dealer. The option to soft dollar a transaction does not alter the underlying revenue recognition for the transaction; all the revenue
recognition criteria listed in the "Software licenses" section above must be assessed in determining how the revenue will be recognized.

Maintenance and other recurring revenues.We offer annual maintenance programs on perpetual licenses that provide for technical support
and updates
to our software products. Maintenance fees are bundled with perpetual license fees in the initial licensing year and charged separately for renewals of annual maintenance in subsequent years. Fair
value for maintenance is based upon either renewal rates stated in the contracts or separate sales of renewals to customers. Generally, we recognize maintenance revenue ratably over the contract term.

We
offer other recurring revenue services that are either subscription-based or transaction-based, and primarily include the provision of software interfaces to, and the capability to
download securities information from, third party data providers. We recognize revenue from recurring revenue transactions either ratably over the subscription period or as the transactions occur
based on the terms of the arrangement.

Professional services and other revenues.We offer a variety of professional services that include project management, implementation,
data
conversion, integration, custom report writing and training. We base fair value for professional services upon separate sales of these services to customers. Our professional services are generally
billed based on hourly rates together with reimbursement for travel and accommodation expenses. We recognize revenue as professional services are performed, except in the case of
multi-year term license contracts which are described in the "term licenses" section above. Certain professional services arrangements involve acceptance criteria and in these cases,
revenue and

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related
expenses are recognized upon acceptance. Professional services and other revenues also include revenue from our user conferences.

Directly related expenses.When we defer service revenues, we also defer the direct costs incurred in the delivery of those services to
the extent
those costs are recoverable through the future revenues on non-cancelable contracts as prepaid contract expense. We recognize those deferred costs as costs of professional services
revenues proportionally and over the same period that the deferred revenue is recognized as service revenue. When we defer license revenue, we defer the direct incremental costs incurred as a result
of selling the contract (i.e. sales commissions earned by the sales force as a part of their overall compensation) because those costs would not have been incurred but for the acquisition of
that contract. We recognize those costs as sales and marketing expense proportionally and over the same period as the license revenues.

Income taxes.We account for worldwide income taxes under an asset and liability approach that requires the expected future tax
consequences of
temporary differences between book and tax bases of assets and liabilities to be recognized as deferred tax assets and liabilities. Significant judgment is required to determine our worldwide income
tax provision. In the ordinary course of business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Many of these uncertainties arise as a consequence of cost
reimbursement arrangements among related entities, the process of identifying items of revenue and expense that have differing or preferential tax treatment and segregation of foreign and domestic
income and expense to the appropriate taxing jurisdictions to reasonably allocate earnings. Additionally, the projections of pre-tax income for the year by legal entity can vary
significantly from quarter-to-quarter which can have a significant impact on our projected effective tax rate. Although we believe that our judgments and estimates are
reasonable, the final outcome could be different from that which is reflected in our income tax provision and accruals.

A
valuation allowance is recorded to reduce the net deferred tax assets to an amount that will more likely than not be realized. In order for us to realize our deferred tax assets, we
must be able to
generate sufficient taxable future income in the jurisdiction where the tax asset is located. We consider forecasted earnings, future taxable income and prudent and reasonable tax planning strategies
in determining the need for a valuation allowance.

We
calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the
subsequent year. Adjustments based on filed returns are generally recorded in the period when the return is filed and the tax implication is known.

We
are subject to audits by state, federal and foreign tax authorities. Our estimates for the potential outcome of any uncertain tax matter are judgmental. We believe we have adequately
provided for any reasonably foreseeable outcome related to these matters. However, our future results may include adjustments to our estimated tax liabilities.

Stock-based compensation.We currently use the Black-Scholes option pricing model to determine the fair value of stock options, stock
appreciation
rights ("SAR") and employee stock purchase plan shares. The fair value of our restricted stock units is calculated based on the fair market value of our stock on the date of grant. The determination
of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective
variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee exercise behavior, the risk-free interest rate and
expected dividends.

We
estimate the volatility of our common stock based on an equally weighted average of historical and implied volatility of the Company's common stock. We determined that a blend of
historical and implied volatility is more reflective of the market conditions and a better indicator of expected volatility

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than
using purely historical volatility. We estimate the expected life of options and SARs granted based on historical experience of similar awards, giving consideration to the contractual terms of
the stock-based awards, vesting schedules and expectations of future employee behavior. We base the risk-free interest rate on the US Treasury yield curve in effect at the time of grant
for periods corresponding with the expected life of the option and SAR. We do not anticipate paying any cash dividends in the foreseeable future and therefore use an expected dividend yield of zero in
the option pricing model.

These
variables are sensitive and change on a daily basis. As a result, the financial result from issuing the same number of options or SARs can vary significantly over time. The
following table reflects the
change in the fair value of a hypothetical option or SAR as a result of a hypothetical change in one of the underlying assumptions:

Assumption

Base
Case

Assumption
Change

Value
Change

Assumption
Change

Value
ChangeGrant and stock price

$
25.00

+$1

$
0.40

-$1

$
(0.40
)Risk-free interest rate


2.0
%
+0.5%

$
0.14

-0.5%

$
(0.15
)Volatility


56.4
%
+5%

$
0.80

-5%

$
(0.83
)Expected life (years)


5.3

+1 year

$
0.45

-1 year

$
(0.60
)Expected dividend yield


3.0
%
+1%

$
(0.79
)
-1%

$
0.85Base Option Value

$
10.02


Our
SAR and stock option awards granted to employees cliff vest 20% after one year and monthly thereafter over the next 48 months. Our restricted stock unit ("RSU") awards cliff
vest 50% after two years and 50% after four years. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. Forfeitures are estimated based on our annual forfeiture rate. The annual forfeiture rate is based on our historical forfeiture experience over the last ten years.
Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, different assumptions and estimates could materially impact our reported financial
results. A decrease in our annual forfeiture rate assumption would increase stock-based compensation expense. The estimated impact of a hypothetical 500 basis point decrease in the annual forfeiture
rate on 2008 stock-based compensation expense would have been an increase of approximately $0.3 million.

Restructuring charges and related accruals.We have developed and implemented formalized plans for restructuring our business to better
align our
resources to market conditions and recorded significant charges. In connection with these plans, we recorded estimated expenses for severance and benefits, lease cancellations, asset
write-offs and other restructuring costs. Given the significance of, and the timing of the execution of such activities, this process is complex and involves periodic reassessments of
estimates made at the time the original decisions were made, including evaluating real estate market conditions for expected vacancy periods and sub-lease rents. We continually evaluate
the adequacy of the remaining liabilities under our restructuring initiatives. Although we believe that these estimates accurately reflect the costs of our restructuring plans, actual results may
differ, thereby requiring us to record additional provisions or reverse a portion of such provisions.

Business combinations.When we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable
intangible
assets acquired. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets
acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on historical experience and information obtained from the management of the acquired
companies. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost
savings expected to be derived from acquiring an asset. These estimates are

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inherently
uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates.

Goodwill.We review our goodwill for impairment annually during the fourth quarter of our fiscal year (as of November 1) and more
frequently
if an event or circumstance indicates that an impairment loss has occurred. We are required to test our goodwill for impairment at the reporting unit level. We have determined that we had three
reporting units as of November 1, 2008. The test for goodwill impairment is a two-step process.

The
first step compares the fair value of each reporting unit with its respective carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying
amount, goodwill of our reporting unit is considered not impaired, thus the second step of the impairment test is unnecessary.

The
second step, used to measure the amount of impairment loss, compares the implied fair value of each reporting unit's goodwill with the respective carrying amount of that goodwill. If
the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

Determining
the fair value of a reporting unit is subjective and requires judgment at many points during the test including the development of future revenue and expense forecasts used
to calculate future cash flows, the selection of risk-adjusted discount rates, and determination of market comparable entities. During the fourth quarter of 2008, we completed our annual
impairment test which did not indicate impairment for any of our reporting units.

Impairment of long-lived assets.We review our other long-lived assets
including property and equipment and other intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Determining
whether an impairment trigger has occurred is subjective and requires judgment. Our recoverability test compares the assets' carrying amount to their expected future undiscounted net cash flows. We
estimate future revenue and expense amounts to calculate future cash flows. We believe our forecast revenue and expense amounts are reasonable but forecast amounts are inherently uncertain and
unpredictable.

Legal contingencies.From time to time, Advent is involved in claims and legal proceedings that arise in the ordinary course of
business. We use our
judgment to assess both the likelihood and potential amount of a contingency. We periodically review our assessment whenever there is a change in the facts and circumstances of these proceedings.
Litigation is subject to inherent uncertainties and our view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact
on our financial position and results of operations for the period in which the unfavorable outcome occurs, and potentially in future periods.

Sales returns and accounts receivable allowances.Our standard practice is to enforce our contract terms and not allow our customers to
return
software. We have, however, allowed customers to return software on a limited case-by-case basis and have recorded sales returns provisions as offsets to revenue in the period
the sales return becomes probable. We use our judgment in estimating our sales returns. We analyze customer demand, acceptance of products and historical returns when evaluating the adequacy of the
allowance for sales returns, which are not generally provided to customers. Beginning in 2004, we implemented a methodology to supplement our judgment for calculating the value of reserves that
considered the last 18 months of experience into account. Beginning in the second quarter of 2007, we changed our methodology to include the last 12 months of return experience.

Our
ability to estimate returns is based on our long history of experience with relatively homogenous transactions and the fact that the return period is short. The estimates for returns
are adjusted periodically based upon changes in historical rates of returns and other related factors. We

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have
recorded a sales returns provision (benefit) to decrease (increase) revenue for these situations based on our historical experience of $0.2 million, $(0.1) million and $(0.8) million in
fiscal 2008, 2007 and 2006, respectively.

We
use our judgment in estimating our allowance for doubtful accounts. In order to estimate our allowance for doubtful accounts, we analyze specific accounts receivables, historical bad
debts, customer concentrations, customer credit-worthiness, current economic trends and changes in customer payment
terms. We have recorded a provision for bad debt expense of $0.6 million, $0.1 million and $1.0 million in fiscal 2008, 2007 and 2006, respectively.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation to better reflect our view of the
current business. These reclassifications do not affect total net revenues, net income, cash flows, or stockholders' equity. Please refer to Note 1, "Summary of Significant Accounting
Policies," to our consolidated financial statements for a complete description of the reclassifications.

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Results of Operations for Fiscal Years 2008, 2007 and 2006

The following table summarizes, for the periods indicated, certain items in the 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 consolidated financial statements and notes thereto.

Fiscal Years2008

2007

2006Net revenues:Term license, maintenance and other recurring


79
%

77
%

75
%Perpetual license fees


9


12


15Professional services and other


12


10


10Total net revenues


100


100


100Cost of revenues:Term license, maintenance and other recurring


18


18


18Perpetual license fees


*


*


*Professional services and other


14


13


13Amortization and impairment of developed technology


2


1


1Total cost of revenues


34


32


32Gross margin


66


68


68Operating expenses:Sales and marketing


24


26


27Product development


19


19


19General and administrative


14


16


18Amortization of other intangibles


*


1


2Acquired in-process research and development


*


*


*Restructuring charges


*


*


2Total operating expenses


58


63


68Income (loss) from operations


8


6


*Interest expense


*


(1
)

*Interest income and other, net


*


1


2Gain on sale of equity investments


1


2


*Income before income taxes


9


8


2Provision for (benefit from) income taxes


2


2


(43
)Net income


7
%

6
%

45
%


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NET REVENUES

2008

2007

2006(in thousands, except percentages)Total net revenues

$
264,832

$
215,303

$
184,093Change over prior year

$
49,529

$
31,210Percent change over prior year


23
%

17
%


Our
net revenues are made up of three components: term license, maintenance and other recurring revenue; perpetual license fees; and professional services and other revenue. The revenues
from a term license, which includes both software license and maintenance, are recorded under a time based contract. Maintenance revenues are derived from maintenance fees charged for perpetual
license arrangements and recurring revenues are derived from our subscription-based or transaction-based services. Perpetual license fee revenues are derived from the licensing of software products
under a perpetual arrangement. Professional services and other revenues include fees for consulting, training services and our client conferences. Sales returns, which we generally do not provide to
customers, are accounted for as deductions to these three revenue categories based on our historical experience.

Prior
to fiscal 2006, each of the major revenue categories varied significantly as a percentage of net revenues. Since fiscal 2006, revenues from recurring sources have grown from 75% in
2006, to 77% in 2007 and to 79% in 2008. As we continue to sign term license agreements for new customers, grow our subscription, data management and outsourced services revenues, and our customers
renew their perpetual maintenance, we expect our revenue from recurring sources to continue to increase as a percentage of net revenues and therefore we expect less variability between our major
categories of revenues.

Net
revenues increased in 2008 and 2007 due to continued customer adoption for many of our products and services, which principally includes increases in sales of our APX and Geneva
products. During 2008, we sold 89 APX licenses and added 47 new Geneva clients. The year-over-year growth in total net revenues for 2008 was due principally to substantially
higher term license, maintenance and other recurring revenues, which reflected 26% and 21% growth in term license revenues during 2008 and 2007, respectively.

International
sales, which are based on the location to which the product is shipped, also contributed to our growth in 2008, primarily from sales of our Geneva products, and were
$36.3 million, $26.6 million and $22.2 million in 2008, 2007 and 2006, respectively. The revenues from customers in any single international country did not exceed 10% of total
net revenues.

We
expect net revenues to be in the range of $280 million to $290 million for fiscal 2009.

Term License, Maintenance and Other Recurring Revenues

2008

2007

2006(in thousands, except percentages)Term license revenues

$
66,053

$
37,378

$
18,938Maintenance revenues


91,568


85,473


80,934Other recurring revenues


51,744


43,689


38,232Total term license, maintenance and other recurring revenues

$
209,365

$
166,540

$
138,104Percent of total net revenues


79
%

77
%

75
%Change over prior year

$
42,825

$
28,436Percent change over prior year


26
%

21
%


We
began our transition to a term licensing model in 2004 and have experienced growth in our term license bookings since that time. As we sell more products on a term license model, we
defer a

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greater
portion of license revenue over the term of the contract, instead of recognizing the license revenue up front. The net effect, assuming most customers renew their contracts upon expiration of
the initial term, is to build a long-term license and maintenance stream and also enhance predictability of our revenues.

Revenues
from term licenses, which include both the software license and maintenance services for term licenses, grew 77% in 2008 from 2007 and represented 32% of total term license,
maintenance and other recurring revenues in 2008, up from 22% in 2007 and 14% in 2006. The growth of term license revenues in 2008 has primarily resulted from term licenses which have been implemented
since 2007. The increases reflected the continued market acceptance of our Geneva, APX, Partner and Moxy products.

Maintenance
revenues increased by $6.1 million and $4.5 million during 2008 and 2007, respectively. These increases were attributable to the impact of price increases on
annual perpetual maintenance renewals purchased by our installed customer base, up-selling to higher value maintenance plans and, to a lesser extent, an increase in new perpetual
maintenance support contracts, partially offset by maintenance de-activations and downgrades, and perpetual license customers migrating to term licenses.

Other
recurring revenues increased $8.1 million and $5.5 million during 2008 and 2007, respectively. This was primarily due to revenue increases associated with growth in
our subscription, data management and outsourced services of $5.6 million and $4.1 million during 2008 and 2007, respectively, and higher transaction charges of $2.5 million and
$1.4 million.

As
a percentage of total net revenues, total term license, maintenance and other recurring revenues increased to 79% during 2008 from 77% and 75% in 2007 and 2006, respectively. These
increases as a percentage of total net revenues were attributable to the continued emphasis in term license sales relative to perpetual license sales.

We
expect term license, maintenance and other recurring revenues to increase in amount and as a percentage of total net revenues in 2009 as we have reached the turning point in our
transition to a term model and expect to grow term license revenues compared to 2008 due principally to the new bookings in recent years, specifically in 2008, and due to a full year of sales activity
from our Tamale sales group which we acquired in October 2008.

Perpetual License Fees

2008

2007

2006(in thousands, except percentages)AUA fees

$
8,417

$
8,562

$
7,697Other perpetual license fees


14,310


17,942


19,401Total perpetual license fees

$
22,727

$
26,504

$
27,098Percent of total net revenues


9
%

12
%

15
%Change over prior year

$
(3,777
)
$
(594
)Percent change over prior year


(14
)%

(2
)%


Total
perpetual license fees decreased $3.8 million or 14% in 2008 compared to 2007 and decreased $0.6 million or 2% in 2007 compared to 2006. As a percent of total net
revenues, perpetual license fees decreased to 9% in 2008, from 12% and 15% in 2007 and 2006, respectively. Incremental AUA fees from perpetual licenses included in the "Perpetual license fees" caption
were $8.4 million, $8.6 million and $7.7 million in 2008, 2007 and 2006, respectively, representing a decrease of 2% during 2008, and an increase of 11% during 2007. Consistent
with our transition to term licensing, other perpetual license fees continue to account for a smaller percentage of total net revenues. Our MicroEdge subsidiary, which continues to sell a majority of
its products under a perpetual license

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model,
recorded perpetual license fees of $7.2 million, a decrease of $0.2 million or 3% compared to 2007. Additionally, we licensed fewer perpetual seats and modules to our existing
perpetual client base.

We
expect perpetual license fees will decrease in 2009 as compared to 2008, due to increased attrition primarily due to market conditions and our continued emphasis on term licenses.

Professional Services and Other Revenues

2008

2007

2006(in thousands, except percentages)Professional services and other revenues

$
32,740

$
22,259

$
18,891Percent of total net revenues


12
%

10
%

10
%Change over prior year

$
10,481

$
3,368Percent change over prior year


47
%

18
%


Professional
services and other revenues include consulting, project management, custom integration, training and our client conference. 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 a four- to
nine-month implementation period.

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

Change From
2007 to 2008

Change From
2006 to 2007Increased consulting services

$
6,393

$
5,565(Increased) decreased term license implementation deferral


2,941


(4,011
)Increased reimbursable travel revenue


847


446Increased client conference


113


776Increased (decreased) third party soft dollar revenue


(80
)

570Various other items


267


22Total change

$
10,481

$
3,368


We
recognized professional services revenue of $32.7 million in 2008, a 47% increase over 2007. This increase represented growth in our consulting, project management, data
conversion and custom reporting revenues of $6.4 million due to more revenue generating professional services headcount utilized and third party service providers hired in 2008 associated with
implementations of our APX and Geneva products.

We
also deferred less professional services revenue during 2008 for services performed on term license implementations which contributed to $2.9 million of the overall revenue
increase. When services are performed with term license implementations, service revenue is deferred until the implementation services are substantially complete. 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 length. We have experienced an increase in implementation services after the launch of our APX
product and the sales success of our Geneva product, which are both sold under a term license model. We deferred professional services revenue of $6.8 million in 2008, which was
$2.9 million less than the revenue deferral of $9.7 million in 2007. Additionally, we deferred professional services revenue of $5.7 million in 2006.

Despite
our decision to cancel our 2009 Advent client conference, we expect professional services and other revenue will remain relatively flat in 2009.

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Revenues by Segment

2008

2007

2006(in thousands)Advent Investment Management

$
237,884

$
191,490

$
162,609MicroEdge


26,948


23,733


21,182Other





80


302Total

$
264,832

$
215,303

$
184,093


We
have two reportable segments: Advent Investment Management ("AIM") and MicroEdge. AIM derives revenues from the development, marketing and sale of software products, data interfaces
and related maintenance and services that automate, integrate and support certain mission-critical functions of investment management organizations. MicroEdge derives revenues from the sale of
software and services for grant management, matching gifts and volunteer tracking for the grant-making community. See Note 13, "Segment, Significant Customer and Geographical Information", to
our consolidated financial statements.

The
24% and 18% increases in AIM's revenues in fiscal 2008 and 2007, respectively, reflected the continued market acceptance of our Axys, APX, Moxy, Partner and Geneva products as well
as increased international sales. The key driver behind the increase in AIM revenue was the continued growth in term revenues as described in the "Term, Maintenance and Other Recurring Revenue"
section above. Term revenues increased $28.7 million in 2008, and accounted for 62% of the growth in AIM revenue.

The
14% and 12% increases in MicroEdge revenues in fiscal 2008 and 2007, respectively, primarily reflected an increase in perpetual license sales in MicroEdge's core product, GIFTS, and
to a lesser extent an increase in maintenance revenues due to price increases and continued strong customer retention. The technology spending patterns of organizations in MicroEdge's primary markets
(independent foundations, community foundations and corporations) are directly affected by economic fluctuations as foundation budgets are largely driven by endowment income. Given that endowments
often contain market-exposed components, they are significantly affected by the economy and foundation spending typically decreases in an economic downturn. Community foundations are subject to
similar influences, compounded by the fact that in many cases much of their ongoing funding and endowment comes from active donors who may increase or reduce their giving depending on the economic
climate and the related effect on their income and wealth. Corporations typically fund charitable activities from operating budgets, and the allocation to charitable donations and supporting company
charitable operations is often closely tied to a company's performance. Thus, corporate philanthropy and spending on related technology are correlated with company and overall economic performance.

The
elimination of revenue in our "Other" segment in fiscal 2008 and the revenue decrease in fiscal 2007 and 2006 resulted from the wind down of the "soft dollar" business of our
SEC-registered broker/dealer subsidiary, Second Street Securities, as it no longer fit our corporate strategy.

COST OF REVENUES

2008

2007

2006(in thousands, except percentages)Total cost of revenues

$
90,194

$
67,890

$
58,802Percent of total net revenues


34
%

32
%

32
%Change over prior year

$
22,304

$
9,088Percent change over prior year


33
%

15
%


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Our
cost of revenues is made up of four components: cost of term license, maintenance and other revenues; cost of perpetual license fees; cost of professional services and other; and
amortization and impairment of developed technology. The increase in total cost of revenues in absolute dollars was due principally to headcount additions in our client support and services groups to
support our increased new term license bookings and associated increase in client implementation projects as well as 21 heads added through our Tamale acquisition. To a lesser extent, increased
amortization and impairment charges associated with our developed technology also contributed to the overall increase. The decrease in gross margin percentage in 2008 resulted principally from our
shift in revenue mix and the 187% increase in amortization and impairment of developed technology. Professional services and other revenue comprised a greater percentage of total revenues in 2008 and
2007 due to growth of 47% and 18%, respectively. We are currently experiencing negative gross margins on professional services revenues as we defer revenues and direct costs associated with services
performed on term license
implementations. Indirect costs such as management and other overhead expenses are recognized in the period in which they are incurred, with no revenue to offset them.

Cost of Term License, Maintenance and Other Recurring

2008

2007

2006(in thousands, except percentages)Cost of term license, maintenance and other recurring

$
47,343

$
38,008

$
32,968Percent of total term license, maintenance and other recurring revenues


23
%

23
%

24
%Change over prior year

$
9,335

$
5,040Percent change over prior year


25
%

15
%


Cost
of term 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. Cost of maintenance and other recurring revenues is primarily comprised of the direct costs of providing
technical support services under maintenance agreements and other services for recurring revenues, and royalties paid to third party subscription-based and transaction-based vendors.

Cost
of term license, maintenance and other recurring fluctuated due to the following (in thousands):

Change From 2007 to 2008

Change From 2006 to 2007Increased payroll and related

$
5,737

$
4,487Increased allocation of infrastructure expenses


911


98Increased (decreased) royalties


808


(257
)Increased depreciation


556


40Increased outside services


451


87Increased travel and entertainment


305


133Increased computers and telecom


247


162Various other items


320


290Total change

$
9,335

$
5,040


The
increases in 2008 and 2007 were due primarily to an increase in compensation and related costs resulting from increases in salary costs and headcount which enables us to deliver the
services we provide to our growing number of clients in their day-to-day use of our software. Headcount has grown to 298 employees (21 heads from Tamale acquisition) at
December 31, 2008 from 248 employees at December 31, 2007 and 206 employees at December 31, 2006, respectively, which has also contributed to increased allocation of corporate
(facility and IT) costs. Consistent with our growth in term license

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revenues,
royalties paid to third party subscription-based and transaction based vendors also increased in 2008.

Cost of Perpetual License Fees

2008

2007

2006(in thousands, except percentages)Cost of perpetual license fees

$
915

$
851

$
817Percent of total perpetual license revenues


4
%

3
%

3
%Change over prior year

$
64

$
34Percent change over prior year


8
%

4
%


Cost
of 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. The cost of perpetual license fees has remained relatively consistent with the prior years. We expect
these fees to decrease slightly in 2009 as a result of our continuing transition away from perpetual licensing.

Cost of Professional Services and Other

2008

2007

2006(in thousands, except percentages)Cost of professional services and other

$
37,439

$
27,464

$
23,817Percent of total professional services revenues


114
%

123
%

126
%Change over prior year

$
9,975

$
3,647Percent change over prior year


36
%

15
%


Cost
of professional services and other revenue consists primarily of personnel related costs associated with the client services organization in providing consulting, custom report
writing and conversions of data from clients' previous systems. Also included are direct costs associated with third-party consultants and travel expenses. Additionally, we defer direct professional
services costs until we have completed the term license implementation services.

Cost
of professional services and other fluctuated due to the following (in thousands):

Change From
2007 to 2008

Change From
2006 to 2007Increased payroll and related

$
6,109

$
3,016Increased outside services


2,588


710Increased travel and entertainment


893


573(Increased) decreased service cost deferral related to term implementations


931


(1,505
)Increased (decreased) recruiting


(515
)

333Increased (decreased) marketing


(278
)

294Various other items


247


226Total change

$
9,975

$
3,647


The
increases in 2008 and 2007 primarily reflects the higher costs from payroll and related expenses and higher utilization of outside services, such as third parties to assist in our
professional services projects. Travel and entertainment expenses increased in 2008 and 2007 due to a general increase in demand for consulting and training services resulting from higher term license
contract sales. Payroll and related costs increased during the year due to an increase in headcount and the increased use of external consultants. During the latter half of 2007, we hired a
significant number of

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consultants
resulting in the increased payroll costs in 2007 and 2008. Headcount in our consulting group increased to 143 at December 31, 2008, from 140 at December 31, 2007 and 125 at
December 31, 2006, respectively. Recruiting and marketing activity in our consulting group decreased in 2008 compared to 2007, resulting in lower recruiting and marketing expenses for the year.

We
have experienced an increase in implementation services with the launch of our APX product and sales of our Geneva product, which are both sold under the term license model. A larger
number of implementation projects were completed in 2008 relative to 2007, resulting in a smaller amount of deferred professional services costs during 2008 compared to 2007. We deferred net
professional service costs of $2.9 million during 2008 compared to $3.8 million and $2.3 million during 2007 and 2006, respectively.

Professional
services' gross margins for 2008 and 2007 improved but continue to be negative as a result of the significant deferral of professional services revenues and costs associated
with our term license implementation. We defer only the direct costs associated with services performed on these arrangements. Indirect costs such as management and other overhead expenses are
recognized in the period in which they are incurred, with no revenue to offset them. As the deferred professional services revenue and expense associated with our term licenses continue to flow back
into our operating results, we believe the margin will continue to improve over time. In addition, headcount in our consulting group has increased during 2007, and to a lesser degree, in 2008. Since
these new employees undergo a training period, typically of six months, before becoming fully billable, their associated costs have a near-term negative impact on gross margins.

We
expect cost of professional services and other in 2009 to decrease in dollar amount and as a percentage of revenue as compared to 2008, as we expect to decrease our billable headcount
but increase our utilization, and decrease conference expenses due to the cancellation of our 2009 Advent client conference.

Amortization and Impairment of Developed Technology

2008

2007

2006(in thousands, except percentages)Amortization and impairment of developed techology

$
4,497

$
1,567

$
1,200Percent of total net revenues


2
%

1
%

1
%Change over prior year

$
2,930

$
367Percent change over prior year


187
%

31
%


Amortization
and impairment of developed technology represents amortization of acquisition-related intangibles, amortization of capitalized software development costs previously
capitalized under SFAS 86, and impairment of technology. The increase in 2008 primarily reflects an impairment charge of $0.8 million resulting from our MicroEdge segment's decision to
sunset one of its products and amortization from technology-related intangibles acquired through our Tamale acquisition in October 2008. Also contributing to the increase, but to a lesser extent, is
amortization from software development costs previously capitalized under SFAS 86 and amortization from technology related intangibles acquired through the Vivid Orange Limited acquisition,
which our MicroEdge segment acquired in November 2007.

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We expect amortization of developed technology to increase to approximately $6 million in 2009 due to additional amortization expense from capitalized
software developments costs and the full year amortization of Tamale intangible assets acquired in October 2008.

OPERATING EXPENSES

Sales and Marketing

2008

2007

2006(in thousands, except percentages)Sales and marketing

$
63,539

$
55,422

$
50,177Percent of total net revenues


24
%

26
%

27
%Change over prior year

$
8,117

$
5,245Percent change over prior year


15
%

10
%


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 fluctuated due to the following (in thousands):

Change From 2007 to 2008

Change From 2006 to 2007Increased payroll and related

$
5,679

$
3,986Increased travel and entertainment


682


1,212Increased (decreased) bad debt and broker fees


572


(1,479
)Increased outside services


475


462Increased allocation of infrastructure expenses


470


462Increased (decreased) marketing


(102
)

551Various other items


341


51Total change

$
8,117

$
5,245


The
increase in expense in absolute dollars for 2008 and 2007 reflected the growth of our business, while the decrease of expense as a percentage of revenue during 2008 and 2007
reflected our achievement of improved efficiencies of scale associated with increased revenue growth. The increases in payroll and related expense were a result of an increase in headcount to 204 at
December 31, 2008 from 172 and 162 at December 31, 2007 and 2006, respectively, and increases in variable compensation paid to these individuals as a result of higher bookings. We
believe this investment in personnel will accelerate the momentum in our Geneva and APX product sales and increase customer satisfaction for all of our products. Increases in headcount also
contributed to additional costs incurred by our sales and marketing group from allocated infrastructure expense (information technology and facilities) in 2008 and 2007. Travel expenses increased
during the past two years due to more employees attending the Advent client conference in 2008 and 2007 resulting in higher travel and lodging costs. The increase in outside services during 2008
reflects a $0.4 million cancellation fee for the 2009 Advent client conference which we decided, in the fourth quarter of 2008, to suspend. During 2008, we referred more accounts to collections
which resulted in our increased provision for bad debt compared to 2007. The fluctuations in broker fees during fiscal 2007 were primarily associated with the winding down of our soft dollar business
in fiscal 2006. Marketing expenses decreased in 2008 compared to 2007 due to advertising initiatives to market our significant number of product releases in 2007.

In
2009, we expect sales and marketing expenses to increase in dollar amount but remain relatively flat as a percentage of total net revenues compared with 2008, as we increase our
marketing activities

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in
support of planned product launches and the full year impact of the Tamale sales force which was added in October 2008.

Product Development

2008

2007

2006(in thousands, except percentages)Product development

$
50,154

$
41,869

$
34,859Percent of total net revenues


19
%

19
%

19
%Change over prior year

$
8,285

$
7,010Percent change over prior year


20
%

20
%


Product
development expenses consist 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. We account for product development costs in accordance with SFAS 2, "Accounting for Research and Development Costs", and
SFAS 86, "Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise Marketed", which specifies that costs incurred to develop computer software products should be charged to
expense as incurred until technological feasibility is reached for the products. Once technological feasibility is reached, all software costs should be capitalized until the product is made available
for general release to customers. The capitalized costs will be amortized using the greater of the ratio of the product's current gross revenues to the total of current expected gross revenues or on a
straight-line basis over the software's estimated economic life of approximately three years.

Product
development expenses fluctuated due to the following (in thousands):

Change From
2007 to 2008

Change From
2006 to 2007Increased payroll and related

$
6,843

$
7,039Increased outside services


1,154


557Increased allocation of infrastructure expenses


311


601Increased computers and telecommunications


146


170Increased travel and entertainment


70


214Increased capitalization of product development


(196
)

(1,798
)Increased (decreased) recruiting


(183
)

144Various other items


140


83Total change

$
8,285

$
7,010


The
increase in product development expense during fiscal 2008 and 2007 was primarily due to increases in payroll and other related costs resulting from the increase in headcount (23
employees as a result of the Tamale acquisition) and utilization of outside services, primarily a vendor located in China, to help us continue to enhance our existing product suite including new
versions of Geneva, APX, Moxy, Advent Partner, and Advent Revenue Center. Headcount increased to 251 at December 31, 2008 from 224 and 191 at December 31, 2007 and 2006, respectively. As
a result of the increase in headcount, our product development group incurred additional costs from allocated infrastructure expense (information technology and facilities). However, as the headcount
growth in 2008 was primarily due to headcount added from the Tamale acquisition, our external recruiting fees decreased in 2008 resulting from less hiring activity compared to 2007. We invested 19% of
our revenues in product development during 2008, 2007 and 2006, respectively.

We
expect product development expenses to increase in dollar amount in 2009 but to remain relatively flat as a percentage of revenues.

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General and Administrative

2008

2007

2006(in thousands, except percentages)General and administrative

$
38,144

$
34,799

$
32,936Percent of total net revenues


14
%

16
%

18
%Change over prior year

$
3,345

$
1,863Percent change over prior year


10
%

6
%


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 expenses fluctuated due to the following (in thousands):

Change From
2007 to 2008

Change From
2006 to 2007Increased payroll and related

$
2,752

$
5,609Increased (decreased) depreciation


1,067


(246
)Increased (decreased) facilities


1,037


(2,243
)Increased (decreased) outside services


63


(1,500
)Increased (decreased) loss on disposal of assets


(600
)

416Increased (decreased) recruiting


(463
)

538Various other items


(511
)

(711
)Total change

$
3,345

$
1,863


The
increase in expenses during 2008 is primarily due to payroll and other related costs being higher as a result of an increase in headcount and annual merit increases. Headcount
increased to 170 at December 31, 2008 from 158 at December 31, 2007. Additionally, depreciation was higher in 2008 as a result of accelerated depreciation associated with the exit of our
data center facility at 303 2nd Street in November 2008 instead of our previous commitment date of May 2012. Facility expenses increased primarily due to higher rent expense from
the leasing of additional space at our San Francisco headquarters facility during 2008. These cost increases were partially offset by lower outside service costs as fewer external consultants were
used during the current year and lower recruiting fees from a lower volume of external recruiting activities, as well as a lower loss on disposal of assets as we wrote-off
construction-in-progress assets at our 303 2nd Street facility in San Francisco, California, as a result of our decision to cease improvement on the
facility and relocate this data center facility in 2007.

The
increase in expenses during 2007 is primarily due to payroll and other related costs being higher as a result of an increase in headcount and annual merit increases, while the
decrease of expense as a percentage of revenue during 2008 and 2007 reflected our achievement of improved efficiencies of scale associated with increased revenue growth. The headcount increase to 158
at December 31, 2007 from 135 at December 31, 2006 reflected our investment in information technology infrastructure to assist in automating key business processes to support the
Company's growth. As a result of the increase in headcount, general and administrative incurred additional costs from recruiting costs. Additionally, our loss on disposal of assets during 2007
increased due to the aforementioned write-off of construction-in-progress assets at our 303 Second Street facility in San Francisco, California. These increases in
expense were offset by a decrease in facilities and depreciation expense as we are no longer incurring rent and depreciation expenses related to our prior San Francisco headquarters facility located
at 301 Brannan Street, which we exited in October 2006. We entered into a definitive lease agreement in January 2006 for our new headquarters facility located at 600 Townsend Street in San Francisco,
California resulting in rent expense at both 600 Townsend and our prior

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headquarters
facility causing higher rent expense for the first nine months of 2006. Outside service costs decreased by $1.5 million in 2007 as fewer external consultants were used.

We
expect general and administrative expenses to increase in dollar amount and to stay relatively flat as a percentage of total net revenues in 2009 compared with 2008.

Amortization of Other Intangibles

2008

2007

2006(in thousands, except percentages)Amortization of other intangibles

$
1,315

$
1,879

$
3,866Percent of total net revenues


0
%

1
%

2
%Change over prior year

$
(564
)
$
(1,987
)Percent change over prior year


(30
)%

(51
)%


Other
intangibles represent non-technology related intangible assets. The decreases in amortization of other intangibles in the 2008 and 2007 periods were attributed to
assets from prior acquisitions becoming fully amortized during fiscal 2007 and 2008, partially offset by amortization from intangible assets acquired through the Tamale acquisition in October 2008.

We
expect amortization of other intangibles to increase to approximately $2 million in 2009 due to the full year amortization of Tamale non-technology related
intangible assets acquired in October 2008.

Acquired In-Process Research and Development ("IPR&D")

2008

2007

2006(in thousands, except percentages)Acquired in-process research and development

$
400

$
150

$
Percent of total net revenues


0
%

0
%

0
%Change over prior year

$
250

$
150


During
2008, we expensed acquired IPR&D costs of $400,000 in connection with our Tamale acquisition. During 2007, we expensed acquired IPR&D costs of $150,000 in connection with our
acquisition of Vivid Orange Limited based in the United Kingdom. IPR&D was expensed because the acquired technology had not reached technological feasibility and had no alternative uses. Technological
feasibility is defined as being equivalent to completion of a beta-phase working prototype in which there is no remaining risk relating to the development.

We
do not expect to incur any IPR&D costs in 2009.

Restructuring Charges

2008

2007

2006(in thousands, except percentages)Restructuring charges

$
360

$
965

$
3,735Percent of total net revenues


0
%

0
%

2
%Change over prior year

$
(605
)
$
(2,770
)Percent change over prior year


(63
)%

(74
)%


Restructuring
initiatives have been implemented in our AIM and MicroEdge operating segments to reduce costs and improve operating efficiencies by better aligning our resources to
near-term revenue opportunities. These initiatives have resulted in restructuring charges comprised primarily of costs

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related
to properties abandoned in connection with facilities consolidation, related write-down of leasehold improvements, severance and associated employee termination costs related to
headcount reductions. Our restructuring charges included accruals for estimated losses on facility costs based on our contractual obligations net of estimated sublease income. We reassess this
liability periodically based on market conditions.

During
2008, we recorded aggregate restructuring charges of $0.4 million primarily in our MicroEdge segment. In the fourth quarter of 2008, we initiated a restructuring program in
order to reduce our operating costs and focus our resources on key strategic priorities impacting a total of 13 full time positions mainly in the United States. In connection with this restructuring
plan, we recorded restructuring charges totaling $0.4 million related to termination benefits for the elimination of these 13 positions. As of December 31, 2008, $0.1 million was
paid. The remaining accrual associated with these termination benefits is expected to be paid during the first quarter of 2009. We also recorded additional restructuring charges which related to a
partial lease surrender fee of $0.2 million to exit the data center portion of our facility space located at 303 2nd Street in San Francisco, California. These
restructuring charges were partially offset by adjustments to our other facility exit assumptions.

During
2007, we recorded aggregate restructuring charges of $965,000 in our AIM segment which related to the modification of certain sub-lease assumptions for our prior San
Francisco headquarters facility located at 301 Brannan Street, and to the accretion of interest on our existing obligations.

In
2006, we recorded total restructuring charges of $3.7 million which primarily related to facility and exit costs associated with the relocation of our corporate headquarters
facility in San Francisco during the fourth quarter of 2006. Restructuring charges in 2006 also included costs associated with exiting a portion of our facility in New Rochelle, New York, and our
entire facility in Summit, New Jersey, and adjustments to original estimates for facilities in San Francisco, California and New York, New York.

For
additional analysis of the components of the payments and charges made against the restructuring accrual in fiscal 2008, 2007 and 2006, see Note 6, "Restructuring Charges" to
our consolidated financial statements.

At
December 31, 2008, we accrued $2.0 million of which $0.8 million and $1.2 million are included in accrued liabilities and other long-term
liabilities, respectively. The accrued excess facility costs of $1.7 million are stated at estimated fair value, net of estimated sub-lease income of $3.8 million. We expect
to pay the remaining obligations in connection with vacated facilities over the remaining lease terms, which will expire on various dates through 2012.

Operating Income (Loss) by Segment

2008

2007

2006(in thousands)Advent Investment Management

$
38,790

$
23,610

$
14,921MicroEdge


4,976


5,631


5,361Other





80


(1,902
)Unallocated corporate operating costs and expenses:Stock-based compensation


(16,828
)

(13,396
)

(13,596
)Amortization and impairment of developed technology


(4,497
)

(1,567
)

(1,200
)Amortization of other intangibles


(1,315
)

(1,879
)

(3,866
)Acquired in-process research and development


(400
)

(150
)

Total

$
20,726

$
12,329

$
(282
)


62

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Table of Contents

Our
AIM segment improved its operating income by $15.2 million to $38.8 million in 2008. This improvement reflects an increase in AIM revenue of $46.4 million or
24%, partially offset by an increase in expenses of $31.2 million or 19% during 2008. The increase in expense was due principally to costs associated with the increase in AIM headcount to 966
employees at December 31, 2008 from 837 employees at December 31, 2007. Our AIM segment improved its operating income by $8.7 million to $23.6 million in 2007. This
improvement reflects an increase in AIM revenue of $28.9 million or 18%
partially offset by an increase in expenses of $20.2 million or 14% during 2007. The increase in expense was due to the higher payroll expenses associated with the increase in AIM headcount to
837 employees at December 31, 2007 from 735 employees at December 31, 2006.

MicroEdge's
operating income decreased by $0.7 million in 2008 primarily due to the restructuring program we initiated in 2008 in order to reduce our operating costs and focus our
resources on key strategic priorities. MicroEdge's operating income increased by $0.3 million in 2007 primarily due to sales of its GIFTS products.

The
fluctuations in operating income (loss) for our Other segment were due to the winding down of our soft dollar component in 2006.

See
Note 13, "Segment, Significant Customer and Geographical Information", to our consolidated financial statements for additional information regarding our segments.

Interest Expense

2008

2007

2006(in thousands, except percentages)Interest expense

$
(584
)
$
(1,181
)
$
(90
)Percent of total net revenues


(0
)%

(1
)%

0
%Change over prior year

$
597

$
(1,091
)Percent change over prior year


(51
)%

1,212
%


The
decrease of interest expense of $0.6 million during 2008 reflects the impact of debt being outstanding for a smaller portion of the year in 2008 versus 2007. In 2008, we drew
down $25.0 million on our credit facility in November 2008, all of which remained outstanding as of December 31, 2008.

The
increase in interest expense of $1.1 million during 2007 resulted from the drawdown of $25.0 million on our credit facility in June 2007, which was fully repaid in
December 2007.

Interest Income and Other, net

2008

2007

2006(in thousands, except percentages)Interest income and other, net

$
314

$
1,966

$
3,943Percent of total net revenues


0
%

1
%

2
%Change over prior year

$
(1,652
)
$
(1,977
)Percent change over prior year


(84
)%

(50
)%


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

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

Change From 2007 to 2008

Change From 2006 to 2007Decrease in interest income

$
(859
)
$
(2,059
)Increase in foreign currency losses


(796
)

(153
)Various other items


3


235Total change

$
(1,652
)
$
(1,977
)


The
declining market interest rates, smaller cash balances and more conservative investment portfolio all contributed to the decrease in interest income during 2008. The decrease in
interest income during 2007 was due to our lower level of cash, cash equivalents and marketable securities balances, as we liquidated part of our portfolio to fund our significant stock repurchases in
fiscal 2006 and the first half of 2007.

Foreign
exchanges losses increased during 2008 and 2007 as the US dollar strengthened against foreign currencies in 2008 and 2007.

Gain on Sale of Equity Investments, net

2008

2007

2006(in thousands, except percentages)Gain on sale of equity investments, net

$
3,393

$
3,680

$
Percent of total net revenues


1
%

2
%

0
%Change over prior year

$
(287
)
$
3,680


Gain
on sale of equity investments includes realized gains on sale and impairment losses of our investments in privately held companies. The gain in 2008 reflects the initial deferred
contingent payment of $3.4 million that we received in April 2008 as a result of the Company's sale of its ownership in LatentZero Limited ("LatentZero") to royalblue group plc. in April
2007. The gain in 2007 reflects an aggregate gain of $4.2 million from the sale of two private equity investments, including our investment in LatentZero Limited, partially offset by an
impairment loss of $585,000 for a third private equity investment.

In
2009, we expect to record a gain on sale of approximately $2 million related to the final deferred contingent payment to be received from the sale of our ownership in
LatentZero.

Provision For (Benefit From) Income Taxes

2008

2007

2006(in thousands, except percentages)Provision for (benefit from) income taxes

$
4,954

$
4,163

$
(79,031
)Effective tax rate


21
%

25
%

(2,213
)%


In
the fourth quarter of 2006, we determined that $83.6 million of our deferred tax assets, including $1.1 million related to goodwill, that had previously been offset with
a valuation allowance, would more likely than not be realized in the foreseeable future. The $82.5 million reduction to our valuation allowance that generated an income tax benefit was
partially offset by income tax accruals of $3.5 million and resulted in a net benefit from income taxes of $79.0 million in 2006.

Our
2007 and 2008 effective tax rates differ from the statutory rate primarily due to the favorable effects of federal and state research credits and the release of valuation allowances
relating to capital

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loss
carryovers that were utilized to offset unanticipated capital gains in those years. Additionally, our 2008 effective tax rate also includes the favorable cumulative effect of the recognition of
California enterprise zone credits for the years 2003 through 2008. These favorable effects were partially offset in both years by the unfavorable impact of stock compensation expense relating to
incentive stock options and the Company's employee stock purchase plan.

We
continue to maintain a valuation allowance against deferred tax assets relating to capital loss carryovers and investment reserves and assorted state net operating losses because the
likelihood of their realization is not more likely than not. We expect our effective tax rate for fiscal 2009 to be in the range of 30% to 35% of profit before taxes. However, we expect our cash
payments for income taxes remain nominal over the next few years as we have significant net operating losses, capital losses and tax credit carryforwards to utilize against current income taxes.

Liquidity and Capital Resources

Our aggregate cash and cash equivalents at December 31, 2008 were $48.4 million, compared with $49.6 million at
December 31, 2007. 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.

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

Fiscal Years2008

2007

2006Net cash provided by operating activities

$
76,987

$
62,376

$
46,776Net cash provided by (used in) investing activities

$
(50,206
)
$
16,024

$
46,021Net cash used in financing activities

$
(27,274
)
$
(59,281
)
$
(133,712
)




Our cash flows from operating activities 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) and cost of revenues. Our cash provided by operating activities generally follows the trend in our net revenues and operating results.

Cash
provided by operating activities of $77.0 million during fiscal 2008 was primarily the result of our net income and non-cash charges including stock-based
compensation of $16.8 million, depreciation and amortization of $14.4 million, partially offset by a gain from our equity investment activity of $3.4 million. Cash flows resulting
from changes in assets and liabilities included increases in deferred revenue and accounts payable. The increase in deferred revenue primarily reflected our continued transition to the term license
model. Under the term model, we generally bill and collect for a term agreement in equal installments in advance of each annual period. These amounts are deferred at billing and recognized over the
annual term period. This has the effect of increasing deferred revenue when compared to a perpetual license model where no license revenue is deferred. See further discussion of the effects of our
transition to a term model in the "Overview" section. Other changes in assets and liabilities include a decrease in accrued liabilities, which reflects a decrease in accrued commissions and
restructuring expenses.

Cash
provided by operating activities of $62.4 million during fiscal 2007 was primarily the result of our net income of $12.6 million, increase in deferred revenues of
$35.0 million, and non-cash expenses including stock-based compensation of $13.4 million and depreciation and amortization of
$11.2 million, partially offset by a net gain from equity investment activity of $3.7 million. The increase in deferred revenue primarily reflected our continued transition to the term
license model.

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Cash
provided by operating activities of $46.8 million during fiscal 2006 primarily consisted of our income before tax of $3.6 million and adjustments to reconcile net
income to cash flow from operating activities driven by non-cash charges including stock-based compensation of $13.6 million, and depreciation and amortization of
$12.8 million. Cash flows resulting from changes in assets and liabilities included increases in deferred revenue of $20.2 million, accrued liabilities of $8.8 million and income
taxes payable of $2.2 million. The increase in accrued liabilities primarily reflected increases in accrued bonuses and restructuring expenses relating to the relocation of our corporate
headquarters. Other adjustments to cash flows resulting from changes in assets and liabilities included an increase in deferred taxes of $83.4 million primarily due to the release of a
valuation allowance in the fourth quarter of 2006.

We
expect that cash provided by operating activities 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 that increase deferred revenue, collection of accounts receivable, and timing of payments.

We
expect operating cash flow to be between $77 million to $82 million for fiscal 2009.



Net cash used in investing activities in 2008 of $50.2 million reflects cash used for the acquisition of Tamale totaling
$27.8 million, capital expenditures of $23.2 million primarily related to the build-out of additional space at our San Francisco headquarters, and capitalized software
development costs of $2.4 million, partially offset by the receipt of $3.4 million for the initial deferred contingent consideration of our sale of our ownership to LatentZero.

Net
cash provided by investing activities in 2007 of $16.0 million is primarily from proceeds of $24.9 million from the sale of short term investments and from the proceeds
of $11.6 million from the sale of two private equity investments, including our stake in LatentZero Limited. This was partially offset by capital expenditures of $8.9 million, cash used
for the acquisitions of Vivid Orange and East Circle Solutions totaling $8.2 million, capitalized software development costs of $3.0 million and a change
in restricted cash of $0.4 million to increase the bank letter of credit associated with lease amendments for our headquarters facility in San Francisco, California. In the event we default
under the terms of this agreement, the letter of credit may be drawn upon by Toda. Also, see Note 3, "Acquisitions", to our consolidated financial statements for additional information
regarding the Company's acquisitions.

Net
cash provided by investing activities in 2006 of $46.0 million consisted primarily of net sales and maturities of marketable securities of $67.9 million. We liquidated
investments to provide the cash required to repurchase our common stock. These cash proceeds were offset by capital expenditures of $19.2 million primarily relating to the completion of our new
corporate headquarters facility build-out, an increase in restricted cash of $1.3 million to secure a bank line of credit associated with the lease of our headquarters facility, and
capitalized software development costs of $1.4 million.

We
expect capital expenditures to be in the range of $12 million to $14 million for fiscal 2009.



Net cash used in financing activities in 2008 of $27.3 million reflected the repurchase of 2.3 million shares of our
common stock for $61.6 million and withholding taxes paid of $2.1 million associated with the exercise of stock-settled stock appreciation rights and vesting of restricted stock units,
offset by the draw-down of $25.0 million against our credit facility, proceeds of $5.0 million from the issuance of common stock under the employee stock purchase plan and
$6.1 million received from the exercise of employee stock options.

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Net
cash used in financing activities in 2007 of $59.3 million reflected the repurchase of 2.6 million shares of our common stock for $91.2 million and the repayment
of $25.0 million on our credit facility. These cash outlays were partially offset by the draw-down of $25.0 million against our credit facility and proceeds from the issuance
of our common stock of $31.3 million under our employee stock option and purchase plans.

Net
cash used in financing activities in 2006 of $133.7 million reflected the repurchase of 4.7 million shares of our common stock for $148.6 million, partially
offset by proceeds received from the issuance of common stock of $14.5 million.

Our
liquidity and capital resources in any period could 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.

At
December 31, 2008, we had negative working capital of $(47.9) million, down from negative working capital of $(23.2) million at December 31, 2007, primarily as a result
of our common stock repurchases totaling $61.6 million during 2008, and to a lesser extent, deferred revenue growth as we continue to transition the substantial majority of our license
agreements to term.



In February 2007, Advent and certain of our domestic subsidiaries entered into a senior secured credit facility agreement (the "Credit
Facility") with Wells Fargo Foothill, Inc. (the "Lender"). Under the Credit Facility, the Lender will provide the Company with a revolving line of credit up to an aggregate amount of
$75 million, subject to a borrowing base formula, to provide backup liquidity for general corporate purposes, including stock repurchases, or investment opportunities for a period of three
years. At December 31, 2008, we had a debt balance of $25.0 million and were in compliance with all associated covenants. In January 2009, we repaid $10.0 million of the debt
under the Credit Facility resulting in a $15.0 million balance as of February 28, 2009. The remaining outstanding debt is due at the end of the Credit Facility term in February 2010.

We
expect that for the next year, our operating expenses will continue to constitute a significant use of cash flow. In addition, we may use cash to fund other acquisitions, repurchase
additional common stock, or invest in other businesses, when opportunities arise. Based upon the predominance of our revenues from recurring sources, term license bookings performance and current
expectations, we believe that our cash and cash equivalents, cash generated from operations and availability under our Credit Facility will be sufficient to satisfy our working capital needs, capital
expenditures, investment requirements, stock repurchases and financing activities for the next year. However, if we identify opportunities that exceed our current expectation, we may choose to seek
additional capital resources through equity or debt financing. However, such financing may not be available at all particularly in the current economic environment, or if available may not be
obtainable on terms favorable to us and could be dilutive.

Common Stock Repurchases

Advent's Board has approved common stock repurchase programs authorizing management to repurchase shares of the Company's common stock.
The timing and actual number of shares subject to repurchase are at the discretion of Advent's management and are contingent on a number of factors and limitations, including the price of Advent's
stock, corporate and regulatory requirements, alternative investment opportunities and other market conditions. The stock repurchase programs specify a maximum number of shares subject to repurchase,
do not have an expiration date and may be

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limited
or terminated at any time without prior notice. Repurchased shares are returned to the status of authorized and unissued shares of common stock. The purchases are funded from available working
capital.

The
purchase price for the shares of our common stock repurchased was reflected as a reduction to stockholders' equity. In accordance with Accounting Principles Board Opinion
No. 6, "Status of Accounting Research Bulletins," we are required to allocate the purchase price of the repurchased shares as (i) an increase to accumulated deficit and (ii) a
reduction of common stock and additional paid-in capital. Issuance of common stock and the tax benefit related to employee stock option plans are recorded as an increase to common stock
and additional paid-in capital. As a result of future repurchases, we may continue to report an accumulated deficit included in stockholders' equity in our consolidated balance sheets.

The
following is a summary of the repurchase programs authorized by the Board since fiscal 2006 (in thousands):

Date of Authorization

Number
of Shares
AuthorizedApril 2006


2,300July 2006


1,500February 2007


2,250May 2008


1,000October 2008


3,000Total


10,050


The
following is a summary of the Company's repurchase activity since fiscal 2006 (in thousands, except per share data):

Fiscal Year

Total
Number
of Shares
Repurchased

Cost

Average
Price
Paid Per
Share2006


4,692

$
148,602

$
31.682007


2,580

$
91,157

$
35.332008


2,331

$
61,572

$
26.42Total


9,603

$
301,331

$
31.38


At
December 31, 2008, there remained 1,669,000 shares authorized by the Board for repurchase

Off-Balance Sheet Arrangements and Contractual Obligations

The following table summarizes our contractual cash obligations as of December 31, 2008 (in thousands):

Fiscal Years2009

2010

2011

2012

2013

Thereafter

TotalOperating lease obligations, net of sub-lease income

$
7,134

$
6,480

$
6,019

$
5,384

$
4,783

$
17,818

$
47,618Debt





25,000














25,000Total

$
7,134

$
31,480

$
6,019

$
5,384

$
4,783

$
17,818

$
72,618


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As of December 31, 2008, the principal outstanding under our credit facility agreement was $25.0 million which is due in full no
later than February 14, 2010. Interest associated with this agreement cannot be estimated with certainty by period throughout the term since it is based on a fluctuating interest rate
calculation.

At
December 31, 2008 and December 31, 2007, we had a gross liability of $6.9 million and $5.9 million, respectively, for uncertain tax positions associated
with the adoption of FIN 48. If recognized, the impact on our statement of operations would be to decrease our income tax expense and increase our net income by $5.8 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. Additionally, with the exception of California discussed below, our cash payments for income taxes will continue to be nominal until at least 2011 as we have significant net
operating losses, capital losses and tax credit carryforwards to utilize. On September 27, 2008, California enacted tax law changes that suspended the utilization of California net operating
losses and limited the utilization of California tax credits to 50% of our tax liability for the 2008 and 2009 tax periods. As a result, we expect to pay cash income taxes in California related to
fiscal 2008 and 2009 but do not expect the amount to exceed $750,000 for either year.

At
December 31, 2008 and 2007, 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.

Recent Accounting Pronouncements

Refer to Note 1, "Summary of Significant Accounting Policies", to our consolidated financial statements for a discussion of
recent accounting standards and pronouncements.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, including changes in foreign currency exchange rates and interest rates. Historically, much
of our revenues and capital spending was transacted in US dollars. However, since the acquisitions of Advent Denmark, Advent Norway, Advent Sweden, Advent Netherlands, and Advent Europe's remaining
distributors in the United Kingdom and Switzerland, whose service and certain license revenues and capital spending, are transacted in local country currencies, we have greater exposure to foreign
currency fluctuations. Additionally as of December 31, 2008, $40.7 million and $1.8 million of goodwill and intangibles from the acquisition of these entities are denominated in
foreign currency. Therefore a hypothetical change of 10% could
increase or decrease our assets and equity by $4 million and could increase or decrease our consolidated results of operations or cash flows by approximately $0.5 million.

Our
interest rate risk relates primarily to our investment portfolio, which consisted of $48.4 million in cash and cash equivalents as of December 31, 2008. Cash equivalent
securities were comprised of overnight US government and treasury obligation money market mutual funds which would not be materially affected by an immediate sharp increase or decrease in interest
rates.

Effective
November 2008, we also have interest rate risk relating to debt under our credit facility which is indexed to the Wells Fargo Prime rate. As of December 31, 2008, we had
$25.0 million borrowed against the facility.

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We
have also invested in several privately-held companies. These non-marketable investments are classified as other assets on our consolidated balance sheets. Our
investments in privately-held companies could be affected by an adverse movement in the financial markets for publicly-traded equity securities, although the impact cannot be directly
quantified. These investments are inherently risky as the market for the technologies or products these privately-held companies have under development are typically in the early stages
and may never materialize. It is our policy to review investments in privately held companies on a regular basis to evaluate the carrying amount and economic viability of these companies. This policy
includes, but is not limited to, reviewing each of the companies' cash position, financing needs, earnings/revenue outlook, operational performance, management/ownership changes and competition. The
evaluation process is based on information that we request from these privately held companies. This information is not subject to the same disclosure regulations as US publicly traded companies, and
as such, the basis for these evaluations is subject to timing and the accuracy of the data received from these companies.

Our
investments in privately held companies are assessed for impairment when a review of the investee's operations indicates that a decline in value of the investment is other than
temporary. Such indicators include, but are not limited to, limited capital resources, limited prospects of receiving additional financing, and prospects for liquidity of the related securities.
Impaired investments in privately held companies are written down to estimated fair value. We estimate fair value using a variety of valuation methodologies. Such methodologies include comparing the
private company with publicly traded companies in similar lines of business, applying revenue and price/earnings multiples to estimated future operating results for the private company and estimating
discounted cash flows for that company. We could lose our entire investment in these companies. During the second quarter of 2008, we received the initial deferred contingent payment as a result of
the sale of our investment in April 2007 in LatentZero Limited. At December 31, 2008, our net investments in
privately-held companies totaled $0.5 million. See Note 4, "Balance Sheet Detail", to our consolidated financial statements for further discussion.

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Table of Contents

Item 8.    Financial Statements and Supplementary Data

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The
Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal ControlIntegrated
Framework. Based on management's assessment using the COSO criteria, management has concluded that the Company maintained effective internal control over financial reporting as
of December 31, 2008.

The
effectiveness of the Company's internal control over financial reporting as of December 31, 2008 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in its report which is included herein.

|                                                                                                                                                              |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|/s/ STEPHANIE G. DIMARCO Stephanie G. DiMarco
Chief Executive Officer and Chief Financial Officer
Principal Executive Officer and
Principal Financial Officer |  | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of Advent Software, Inc.:

In
our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Advent
Software, Inc. and its subsidiaries at December 31, 2008 and December 31, 2007, and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 15(a)(2)3 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial
statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal
ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control
over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting
based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.

As
discussed in Note 14 to the consolidated financial statements, the Company adopted new fair value measurement and disclosure accounting principles during the year ended
December 31, 2008. In addition, as discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for uncertainty in income taxes in
2007.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/
PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
March 12, 2009

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ADVENT SOFTWARE, INC.        CONSOLIDATED BALANCE SHEETS        (In thousands, except per share amounts)

December 312008

2007ASSETSCurrent assets:Cash and cash equivalents

$
48,351

$
49,589Accounts receivable, net of allowance for doubtful accounts of $347 and $181, respectively


51,670


47,574Deferred taxes, current


13,121


10,288Prepaid expenses and other


20,153


19,577Total current assets


133,295


127,028Property and equipment, net


41,240


27,779Goodwill


149,609


106,520Other intangibles, net


29,110


9,376Deferred taxes, long-term


54,786


66,327Other assets


11,554


10,645Total assets

$
419,594

$
347,675LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
5,625

$
4,382Accrued liabilities


27,924


29,328Deferred revenues


146,714


115,398Income taxes payable


978


1,086Total current liabilities


181,241


150,194Deferred income taxes


286


998Long-term debt


25,000


Deferred revenues, long-term


6,449


4,939Other long-term liabilities


10,795


11,698Total liabilities


223,771


167,829Commitments and contingencies (See Note 9)Stockholders' equity:Preferred stock; $0.01 par value: 2,000 shares authorized; none issued





Common stock; $0.01 par value: 120,000 shares authorized; 25,728 and 26,497 shares issued and outstanding


257


265Additional paid-in capital


365,351


326,964Accumulated deficit


(176,484
)

(161,685
)Accumulated other comprehensive income


6,699


14,302Total stockholders' equity


195,823


179,846Total liabilities and stockholders' equity

$
419,594

$
347,675


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

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ADVENT SOFTWARE, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousands, except per share data)

Years Ended December 312008

2007

2006Net revenues:Term license, maintenance and other recurring

$
209,365

$
166,540

$
138,104Perpetual license fees


22,727


26,504


27,098Professional services and other


32,740


22,259


18,891Total net revenues


264,832


215,303


184,093Cost of revenues:Term license, maintenance and other recurring


47,343


38,008


32,968Perpetual license fees


915


851


817Professional services and other


37,439


27,464


23,817Amortization and impairment of developed technology


4,497


1,567


1,200Total cost of revenues


90,194


67,890


58,802Gross margin


174,638


147,413


125,291Operating expenses:Sales and marketing


63,539


55,422


50,177Product development


50,154


41,869


34,859General and administrative


38,144


34,799


32,936Amortization of other intangibles


1,315


1,879


3,866Acquired in-process research and development


400


150


Restructuring charges


360


965


3,735Total operating expenses


153,912


135,084


125,573Income (loss) from operations


20,726


12,329


(282
)Interest expense


(584
)

(1,181
)

(90
)Interest income and other, net


314


1,966


3,943Gain on sale of equity investments, net


3,393


3,680


Income before income taxes


23,849


16,794


3,571Provision for (benefit from) income taxes


4,954


4,163


(79,031
)Net income

$
18,895

$
12,631

$
82,602Net income per share:Basic

$
0.71

$
0.48

$
2.85Diluted

$
0.68

$
0.45

$
2.70Weighted average shares used to compute basic and diluted net income per shareBasic


26,640


26,495


29,003Diluted


27,893


28,067


30,537


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

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ADVENT SOFTWARE, INC.        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME        (In thousands)

Common Stock





Accumulated
Other
Comprehensive
IncomeComprehensive
Income

Additional
Paid-In
Capital

Accumulated
Deficit

Total
Stockholders'
EquityShares

AmountBalances, December 31, 2005





31,147

$
311

$
331,530

$
(95,828
)
$
5,966

$
241,979Exercise of stock options

$



665


7


11,505








11,512Common stock repurchased and retired





(4,692
)

(47
)

(50,394
)

(98,161
)




(148,602
)Common stock issued under employee stock purchase plan





111


1


3,020








3,021Stock-based compensation











13,768








13,768Tax benefit from exercise of stock options











564








564Net income


82,602











82,602





82,602Unrealized gain on marketable securities


578














578


578Foreign currency translation adjustments


4,205














4,205


4,205Comprehensive income for fiscal 2006

$
87,385Balances, December 31, 2006





27,231

$
272

$
309,993

$
(111,387
)
$
10,749

$
209,627Stock-based award activity

$



1,719


18


27,338








27,356Common stock repurchased and retired





(2,580
)

(26
)

(28,202
)

(62,929
)




(91,157
)Common stock issued under employee stock purchase plan





127


1


3,912








3,913Stock-based compensation











13,765








13,765Tax benefit from exercise of stock options











158








158Net income


12,631











12,631





12,631Unrealized gain on marketable securities


8














8


8Foreign currency translation adjustments


3,545














3,545


3,545Comprehensive income for fiscal 2007

$
16,184Balances, December 31, 2007





26,497

$
265

$
326,964

$
(161,685
)
$
14,302

$
179,846Common stock issued for Tamale acquisition

$



906


9


39,895








39,904Stock-based award activity





457


4


4,013








4,017Common stock repurchased and retired





(2,331
)

(23
)

(27,855
)

(33,694
)




(61,572
)Common stock issued under employee stock purchase plan





199


2


5,016








5,018Stock-based compensation











17,141








17,141Tax benefit from exercise of stock options











177








177Net income


18,895











18,895





18,895Foreign currency translation adjustments


(7,603
)













(7,603
)

(7,603
)Comprehensive income for fiscal 2008

$
11,292Balances, December 31, 2008





25,728

$
257

$
365,351

$
(176,484
)
$
6,699

$
195,823


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

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ADVENT SOFTWARE, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

Years Ended December 312008

2007

2006Cash flows from operating activities:Net income

$
18,895

$
12,631

$
82,602Adjustments to reconcile net income to net cash provided by operating activities:Stock-based compensation


16,828


13,396


13,596Depreciation and amortization


14,431


11,185


12,764Acquired in-process research and development


400


150


Provision for doubtful accounts


611


79


988Provision for (reduction of) sales returns


219


(135
)

(776
)Loss on disposition of fixed assets


5


651


205(Gain) loss on investments


(3,393
)

(4,265
)

219Other than temporary loss on private equity investment





585


Non-cash impairment loss


815





Deferred income taxes


3,509


3,035


(79,475
)Other


458


494


(146
)Changes in operating assets and liabilities, net of effect of acquisitions:Accounts receivable


(3,990
)

(6,280
)

(8,782
)Prepaid and other assets


(491
)

(10,019
)

(1,809
)Accounts payable


1,045


189


63Accrued liabilities


(3,453
)

6,156


8,847Deferred revenues


31,440


35,038


20,197Income taxes payable


(342
)

(514
)

(1,717
)Net cash provided by operating activities


76,987


62,376


46,776Cash flows from investing activities:Cash used in acquisitions, net of cash acquired


(27,775
)

(8,211
)

(97
)Purchases of property and equipment


(23,206
)

(8,902
)

(19,155
)Capitalized software development costs


(2,370
)

(3,033
)

(1,352
)Proceeds from sales of investments


3,393


11,621


Purchases of marketable securities








(47,882
)Sales and maturities of marketable securities





24,921


115,763Change in restricted cash


(248
)

(372
)

(1,256
)Net cash provided by (used in) investing activities


(50,206
)

16,024


46,021Cash flows from financing activities:Proceeds from exercises of stock options


6,095


27,475


11,512Withholding taxes related to equity award net share settlement


(2,078
)

(119
)

Common stock repurchased and retired


(61,572
)

(91,157
)

(148,602
)Proceeds from common stock issued under the employee stock purchase plan


5,018


3,913


3,021Proceeds from long-term borrowing


25,000


25,000


Repayment of long-term borrowing





(25,000
)

Excess tax benefits from stock-based compensation


263


607


357Net cash used in financing activities


(27,274
)

(59,281
)

(133,712
)Effect of exchange rate changes on cash and cash equivalents


(745
)

283


161Net increase (decrease) in cash and cash equivalents


(1,238
)

19,402


(40,754
)Cash and cash equivalents at beginning of period


49,589


30,187


70,941Cash and cash equivalents at end of period

$
48,351

$
49,589

$
30,187Supplemental disclosure of cash flow information:Cash paid for income taxes, net of refunds

$
1,077

$
779

$
1,932Cash paid for interest

$
299

$
920

$
88


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

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ADVENT SOFTWARE, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1Summary of Significant Accounting Policies

Business description:Advent Software, Inc. ("Advent" or "the Company") provides stand-alone and client/server software products,
data and
data interfaces and related maintenance and services that automate, integrate and support certain mission-critical functions of the front, middle and back offices of investment management
organizations. Advent's clients vary significantly in size and assets under management and include investment advisors, brokerage firms, banks, hedge funds, corporations, public funds, foundations,
universities and non-profit organizations.

Basis of presentation:The consolidated financial statements include the accounts of Advent and its wholly-owned subsidiaries after
elimination of
all intercompany transactions and amounts. We have prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America and pursuant to the rules and regulations of the SEC.

Year End:Advent's fiscal year ends on December 31st.

Foreign currency translation:The functional currencies of the Company's foreign subsidiaries are their local currencies. All assets
and liabilities
denominated in foreign functional currencies are translated into US dollars at the exchange rate on the balance sheet date. Revenues, costs and expenses in foreign functional currencies are translated
at the average rate of exchange during the period.

Foreign currency measurement:Asset and liabilities denominated in currencies other than the functional
currencies are re-measured into the functional currency with gains or losses recorded in "interest income and other, net" on the consolidated statement of operations.

Use of estimates:The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements. Actual results
could differ from those estimates. Advent believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial
statements: Business Combinations; Goodwill; Revenue Recognition; Income Taxes; Restructuring Charges and Related Accruals; Impairment of Long-Lived Assets; Legal Contingencies; Sales
Returns and Accounts Receivable Allowances; and Stock-Based Compensation.

Cash and cash equivalents: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.

Marketable securities:All of Advent's marketable securities are classified as available-for-sale and are carried at fair
value. The unrealized gains and losses, net of any related tax effect, are reported in accumulated comprehensive income in stockholders' equity in the accompanying consolidated financial statements,
with the exception of Advent's broker/dealer subsidiary, which reports unrealized gains and losses in "interest income and other, net" on the consolidated statement of operations. Realized gains and
losses and declines in value judged to be other-than-temporary on available-for-sale securities are also included in "interest income and other, net".

Investments:Investments are recorded at cost and reviewed for impairment. Investments are included in "other assets" on the
consolidated balance
sheets and consist of non-marketable

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

investments
in privately held companies, most of which can be considered in the start-up or development stages. It is Advent's policy to review investments in privately held companies on a
regular basis to evaluate the carrying amount and economic viability of these companies. This policy
includes, but is not limited to, reviewing each of the companies cash position, financing needs, earnings/revenue outlook, operational performance, management/ownership changes and competition. The
evaluation process is based on information that Advent requests from these privately held companies. This information is not subject to the same disclosure regulations as US publicly traded companies,
and as such, the basis for these evaluations is subject to timing and the accuracy of the data received from these companies.

The
Company's investments in privately held companies are assessed for impairment when a review of the investee's operations indicate that there exists a decline in value of the
investment and the decline is other than temporary. Such indicators include, but are not limited to, limited capital resources, limited prospects of receiving additional financing, and prospects for
liquidity of the related securities. Impaired investments in privately held companies are written down to estimated fair value. The Company estimates fair value using a variety of valuation
methodologies. Such methodologies include comparing the private company with publicly traded companies in similar lines of business, applying revenue multiples to estimated future operating results
for the private company and estimating discounted cash flows for that company.

Product development:Product development expenses consist primarily of salary, benefits and stock-based compensation for the Company's
development
and technical support staff, contractors' fees and other costs associated with the enhancements of existing products and services and development of new products and services. Costs incurred for
software development prior to technological feasibility are expensed as product development costs in the period incurred. Once the point of technological feasibility is reached, which is generally the
completion of a working prototype that has no critical bugs and is a release candidate, development costs are capitalized until the product is ready for general release and are classified "other
intangibles, net" on the consolidated balance sheets. The Company amortizes capitalized software development costs using the greater of the ratio of the products' current gross revenues to the total
of current expected gross revenues or on a straight-line basis over the estimated economic life of the related product, which is typically three years.

Capitalization of internal use software:Certain costs related to computer software developed or obtained for internal use are
capitalized in
accordance with American Institute of Certified Public Accountants Statement of Position No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use." The Company amortizes internal use software costs over their estimated useful lives, which typically range from two to five years.

Property and equipment:Property and equipment are stated at cost, less accumulated depreciation and amortization. Advent calculates
depreciation and
amortization using the straight-line method over the assets' estimated useful lives. Amortization of leasehold improvements is computed using the straight-line method over the
shorter of the estimated useful life of the assets or the remaining lease term. The cost and related accumulated depreciation applicable to property and equipment sold or no

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

longer
in service are eliminated from the accounts and any gains or losses are generally included in operating expenses. Useful lives by principal classifications are as follows:

Computer equipment and software

3 to 5 yearsLeasehold improvements

End of lease termFurniture and fixtures

3 to 5 yearsTelephone system

3 to 5 years


Repairs
and maintenance expenditures, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred.

Goodwill:Advent reviews goodwill for impairment annually during the fourth quarter of the fiscal year (as of November 1) and more
frequently
if an event or circumstance indicates that an impairment loss has occurred. Advent is required to test goodwill for impairment at the reporting unit level. Advent has determined that its operations
were organized into three reporting units as of November 1, 2008. The test for goodwill impairment is a two-step process:

The
first step compares the fair value of each reporting unit with its respective carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying
amount, goodwill of the reporting unit is considered not impaired, thus the second step of the impairment test is unnecessary.

The
second step, used to measure the amount of impairment loss, compares the implied fair value of each reporting unit's goodwill with the respective carrying amount of that goodwill. If
the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

The
process for evaluating the potential impairment of goodwill is subjective and requires judgment at many points during the test including future revenue forecasts, discount rates and
various reporting unit allocations. During the fourth quarter of 2008, Advent completed the first step of its annual impairment test which did not indicate impairment. Therefore, the second step of
the impairment test was not necessary to perform.

Accounting for long-lived assets:Advent also reviews its other long-lived assets including property and equipment and other
intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

Recoverability
is measured by a comparison of the assets' carrying amount to their expected future undiscounted net cash flows. If such assets are considered to be impaired, the
impairment to be recognized is measured based on the amount by which the carrying amount of the asset exceeds its fair value.

Other
intangible assets mainly represent completed technology, distributor licenses, customer lists, trademark/tradenames and non-compete agreements acquired in business
combinations. Acquired identifiable intangibles are amortized on a straight line basis over their estimated useful lives as follows:

Purchased technology

4 to 5 yearsCustomer relationships

4 to 8 yearsOther intangibles

2 to 7 years


Revenue recognition:Advent recognizes revenue from term license, maintenance, other recurring; perpetual license fees; and
professional services and
other. Advent offers a wide variety of products and

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

services
to a large number of financially sophisticated customers. While many of the Company's lower-priced license transactions, maintenance contracts, subscription-based transactions and
professional services projects conform to a standard structure, many of Advent's larger transactions are complex and may require significant review and judgment in Advent's application of generally
accepted accounting principles.

Software license fees.Advent recognizes revenue from the licensing of software when persuasive evidence of an arrangement exists, the
product has
been delivered, the fee is fixed or determinable and collection of the resulting receivable is probable. Advent generally uses a signed license agreement as evidence of an arrangement. Revenue is
recognized once shipment to the distributor's customer has taken place and when all other revenue recognition criteria have been met. Delivery occurs when a product is delivered to a common carrier
F.O.B shipping point, or upon confirmation that product delivered F.O.B shipping destination has been received, or upon notification that software is available for electronic download through the
Company's fulfillment vendor. Some of Advent's arrangements include acceptance provisions, and if such acceptance provisions are present, delivery is deemed to occur upon acceptance. Advent assesses
whether the fee is fixed or determinable based on the payment terms associated with the transaction. The Company assesses whether the collectability of the resulting receivable is probable based on a
number of factors, including the credit worthiness of the customer determined through review of credit reports, Advent's transaction history with the customer, other available information and
pertinent country risk if the customer is located outside the United States. Advent's standard payment terms are due at 180 days or less but payment terms may vary based on the country in which
the agreement is executed. Software licenses are sold with maintenance and, frequently, professional services.

Advent
typically licenses its products on a per server, per user basis with the price per customer varying based on the selection of the products licensed, the assets under
administration, the number of site installations and the number of authorized users. Advent has continued its transition from selling mostly perpetual licenses to selling a mix of term and perpetual
licenses, and the Company expects
term license revenue to increase as a proportion of total recurring revenues (which Advent defines as term license, maintenance and other recurring revenues) in the future. Term license revenue
comprised approximately 32%, 22%, and 14% of total recurring revenues in 2008, 2007, and 2006, respectively. Revenue recognition for software licensed under term and perpetual license models differs
depending on which type of contract a customer signs:





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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Certain
of Advent's perpetual and term license contracts include asset-based fee structures that provide additional revenues based on the assets that the client manages using the
Company's software ("Assets Under Administration" or "AUA"). Contracts containing an AUA fee structure have a defined measurement period which requires the client to self-report actual AUA
in arrears of the specified period. AUA fees above the stated minimum fee for the same period are considered incremental fees. Because incremental fees are not determinable until the conclusion of the
measurement period, they are both earned and recognized upon completion of the measurement period, on a quarterly or annual basis. Incremental fees from perpetual AUA contracts are included in
"Perpetual license fees" on the consolidated statement of operations. Incremental fees from term AUA contracts are included in "Term license, maintenance and other recurring" revenue on the
consolidated statement of operations.

For
contracts signed prior to 2006, the Company recognizes both the minimum and incremental value of the AUA fees upon receipt of the customer's AUA report. In 2006, the Company
concluded that it gained sufficient experience in working with these types of arrangements to conclude that the minimum fees are fixed and determinable at inception of the contract instead of upon
conclusion of the measurement period. Therefore, for contracts signed since 2006, the Company recognizes AUA contract minimum fees over the period of service and continues to recognize incremental
fees in arrears once clients contractually report the AUA to the company, because the incremental fees are not determinable until reported.

If
a customer purchased Advent's software and chose to enter into a soft dollar arrangement through the Company's in-house broker/dealer subsidiary, Second Street Securities,
the soft dollar arrangement did not change or modify the original fixed or determinable fee in the written contract. The customer is required to pay the original fee for the Company's software within
one year. If insufficient trading volume is generated to pay the entire original fee within one year, the customer is still required to render payment within one year. In 2006, Advent completed the
wind down of its soft dollar business. However, customers may continue to enter into a soft dollar arrangement through a third-party broker/dealer to purchase Advent's software. The original payment
terms apply, regardless of the arrangement with the third-party broker/dealer. The option to soft dollar a transaction does not alter the underlying revenue recognition for the transaction; all the
revenue recognition criteria listed in

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

the
"Software licenses" section above must be assessed in determining how the revenue will be recognized.

Maintenance and other recurring revenues.Advent offers annual maintenance programs on perpetual licenses that provide for technical
support and
updates to the Company's software products. Maintenance fees are bundled with perpetual license fees in the initial licensing year and charged separately for renewals of annual maintenance in
subsequent years. Fair value for maintenance is based upon either renewal rates stated in the contracts or separate sales of renewals to customers. Generally, Advent recognizes maintenance revenue
ratably over the contract term.

Advent
offers other recurring revenue services that are either subscription-based or transaction-based, and primarily include the provision of software interfaces to, and the capability
to download securities information from, third party data providers. The Company recognizes revenue from recurring revenue transactions either ratably over the subscription period or as the
transactions occur based on the terms of the arrangement.

Professional services and other revenues.Advent offers a variety of professional services that include project management,
implementation, data
conversion, integration, custom report writing and training. Fair value for professional services is based upon separate sales of these services by the Company to customers. Advent's professional
services are generally billed based on hourly rates together with reimbursement for travel and accommodation expenses. Advent generally recognizes revenue as these professional services are performed,
except when sold with multi-year term license contracts which are described in the "term licenses" section above. Certain professional services arrangements involve acceptance criteria. In
these cases, revenue and related expenses are recognized upon acceptance. Advent's professional services and other revenue also include revenue from the Company's annual user conferences.

Commission
revenues received from "soft dollar" transactions for products and services not related to the Company's products and services are recorded as other revenues on a net basis as
Advent is not the primary obligor in these transactions. Revenues from these "soft dollar" transactions are recognized on a trade-date basis as securities transactions occur.

Directly related expenses.When Advent defers service revenues, it also defers the direct costs incurred in the delivery of those
services to the
extent those costs are recoverable through the future revenues on non-cancellable contracts as prepaid contract expense. Advent recognizes those deferred costs as costs of professional
services revenues proportionally and over the same period that the deferred revenue is recognized as service revenue. When Advent defers license revenue, the Company defers the direct incremental
costs incurred as a result of selling the contract (i.e. sales commissions earned by the sales force as a part of their overall compensation) because those costs would not have been incurred
but for the acquisition of that contract. Advent recognizes those costs as sales and marketing expense proportionally and over the same period as the license revenues.

Allowance for doubtful accounts and sales returns:Advent analyzes specific accounts receivable, historical bad debts, customer
concentrations,
customer credit-worthiness, current economic trends and changes in its customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. Advent has recorded a provision for
bad debt of $0.6 million, $0.1 million and $1.0 million in fiscal 2008, 2007 and 2006, respectively.

Advent
also analyzes customer demand and acceptance of product and historical returns when evaluating the adequacy of the allowance for sales returns, which are not generally provided to

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

customers.
Allowances for sales returns are accounted for as deductions to net revenues and increases to reserves within deferred revenues. Advent's standard practice is to enforce its contract terms
and not allow its customers to return software. The Company has, however, allowed customers to return software on a limited case-by-case basis. There are two situations where
it provides a contractual limited right of return to end-user customers only: in shrink-wrap license agreements for Advent products, and certain MicroEdge products. The
shrink-wrap license agreement for Advent products provides for a right of return within seven days of delivery of the software. Certain MicroEdge software license agreements allow for
either a thirty-day money back guarantee or a seven-day right of return.

Advent
has the ability to estimate returns based on a long history of experience with relatively homogenous transactions and the fact that the return period is short. The Company has
recorded sales returns provisions as offsets to revenue in the period the sales return becomes probable, in accordance with FASB Statement No. 48, "Revenue Recognition when Right of Return
Exists". The estimates for returns are adjusted periodically based upon historical rates of returns and other related factors. Advent has a methodology for calculating the value of reserves that takes
the previous 12 months of experience into account. Advent has recorded a sales returns provision (benefit) to decrease (increase) revenue for these situations based on the Company's historical
experience of $0.2 million, $(0.1) million and $(0.8) million in fiscal 2008, 2007 and 2006, respectively.

Advertising costs:The Company expenses advertising costs as incurred and classifies these costs under sales and marketing expense.
Total advertising
expenses were $0.9 million, $0.9 million, and $0.7 million for fiscal 2008, 2007 and 2006, respectively.

Stock-based compensation:Stock-based compensation cost is measured at the grant date based on the
fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period.

Advent
uses the Black-Scholes option pricing model to determine the fair value of stock options, stock appreciation rights ("SAR") and employee stock purchase plan shares. The fair value
of the Company's restricted stock units is calculated based on the fair market value of Advent's stock on the date of grant. The determination of the fair value of stock-based payment awards on the
date of grant using an option-pricing model is affected by Advent's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include Advent's expected
stock price volatility over the term of the awards, actual and projected employee exercise behaviors, risk-free interest rate and expected dividends.

As
the stock-based compensation expense recognized on the consolidated statements of operations for fiscal 2008, 2007 and 2006 is based on awards ultimately expected to vest, such amount
has been reduced for estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ
from those estimates. Forfeitures were estimated based on the Company's historical experience over the last ten years. Previously, under SFAS 123, the Company recorded forfeitures as they
occurred.

Advent
makes quarterly assessments of the adequacy of the Company's tax credit pool to determine if there are any deficiencies which require recognition in the Company's consolidated
statements of operations.

Restructuring charges and related accruals:Advent has developed and implemented formalized plans for restructuring the business to
better align its
resources to market conditions and recorded significant charges in its Advent Investment Management and MicroEdge operating segments. In connection with these plans, Advent has recorded estimated
expenses for severance and benefits, lease

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

cancellations,
asset write-offs and other restructuring costs. Given the significance of, and the timing of the execution of such activities, this process is complex and involves periodic
reassessments of estimates made at the time the original decisions were made, including evaluating real estate market conditions for expected vacancy periods and sub-lease rental income.
Advent continually evaluates the adequacy of the remaining liabilities under its restructuring initiatives. Although the Company believes that these estimates accurately reflect the costs of its
restructuring plans, actual results may differ, thereby requiring Advent to record additional provisions or reverse a portion of such provisions.

Income taxes:Advent accounts for worldwide income taxes under an asset and liability approach that requires the expected future tax
consequences of
temporary differences between book and tax bases of assets and liabilities be recognized as deferred tax assets and liabilities. A valuation allowance is recorded to reduce the net deferred tax assets
to an amount that is more likely than not to be realized.

The
Company has elected to use the "with and without" approach as described in EITF Topic No. D-32 in determining the order in which tax attributes are utilized. As a
result, the Company will only recognize a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other tax attributes
currently available to the Company have been utilized. In addition, the Company has elected to account for the impact of stock-based awards on other tax attributes, such as the research tax credit,
through the consolidated statement of operations.

During
the fourth quarter of 2006, Advent determined that there was sufficient positive evidence to support a significant decrease in the Company's valuation allowance. As a result of
this release of a majority of its valuation allowance and recognition of deferred tax assets, Advent's financial statements for fiscal 2006 reflect an increase in assets on its balance sheet, a
decrease in goodwill relating to the recognition of acquired deferred tax assets that were offset by a valuation allowance in purchase accounting and a tax benefit to the Company's statement of
operations in the amount of the reversal.

Net income per share:Basic net income per share is computed by dividing net income by the weighted average number of common shares
outstanding for
that period. Diluted net income per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential shares consist of incremental
common shares issuable upon exercise of stock options and stock appreciation rights, vesting of restricted stock units and conversion of preferred stock (none outstanding) for all periods, except in
situations where inclusion is anti-dilutive.

Comprehensive income:Comprehensive income consists of net income, net unrealized foreign currency translation adjustments and net
unrealized gains
or losses on available-for-sale marketable securities and is presented in the consolidated statements of stockholders' equity and comprehensive income.

Segment information:The Company has determined that it has the following two reportable segments: 1) Advent Investment Management,
 and
2) MicroEdge. Advent Investment Management derives revenues from the development, marketing and sale of software products, data interfaces and related maintenance and services that automate,
integrate and support certain mission-critical functions of
investment management organizations. MicroEdge derives revenues from the sale of software and services for grant management, matching gifts and volunteer tracking for the grantmaking community.

International
sales, which are based on the location to which the product is shipped or services are delivered, represented 14%, 12%, and 12% of the Company's net revenues for fiscal
2008, 2007 and

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2006,
respectively. No single customer accounted for more than 10% of net revenues for fiscal 2008, 2007 or 2006.

Certain risks and concentrations:Product revenues are concentrated in the investment management software industry, which is highly
competitive and
rapidly changing. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies could adversely affect
operating results. Additionally, Advent derives a significant portion of its revenues from its Axys, Geneva and Advent Portfolio Exchange applications and ancillary products and services, and
therefore their market acceptance is essential to the Company's success.

Financial
instruments that potentially subject the Company to concentrations of credit risks comprise, principally, cash, cash equivalents, and trade accounts receivable. Advent invests
excess cash through banks, mutual funds, and brokerage houses primarily in highly liquid securities and has investment policies and procedures that attempt to minimize credit risk. Advent's marketable
securities consist of diversified investment grade securities traded in the United States of America. The Company believes no significant concentration of credit risk exists with respect to these
securities.

With
respect to accounts receivable, Advent performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential
credit losses on customer accounts when deemed necessary. At December 31, 2008 and 2007, no single customer accounted for more than 10% of accounts receivable.

Common Stock Repurchases:Advent accounts for common stock repurchases by allocating the cash paid in excess of par value to additional
paid-in capital and accumulated deficit. The Company calculates the average additional paid-in capital per outstanding share at the beginning of each monthly period in which
stock was repurchased and records the difference between the repurchase price per share and the sum of the par value and average paid-in capital per share as an increase to accumulated
deficit.

Reclassifications:Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications do
not affect
total net revenues, net income or stockholders' equity. When Advent adopted FIN 48 on January 1, 2007, the Company presented its reserve for uncertain tax positions balance as a
component of "other long-term liabilities" on the consolidated balance sheets. In 2008, the Company reclassified the portion of this balance relating to tax credits that had not been
utilized on a tax return as reductions to the associated deferred tax assets. Prior period amounts have been reclassified to conform to the current presentation as follows:

December 31, 2007As Previously
Reported

Reclassification
Adjustment

As ReclassifiedDeferred taxes, long term

$
70,981

$
(4,654
)
$
66,327Total assets

$
352,329

$
(4,654
)
$
347,675Other long term liabilities

$
16,352

$
(4,654
)
$
11,698Total liabilities

$
172,483

$
(4,654
)
$
167,829Total liabilities and stockholders' equity

$
352,329

$
(4,654
)
$
347,675


Recent Accounting Pronouncements:In December 2007, the FASB issued SFAS No. 141 (revised 2007) ("SFAS 141R"), "Business
Combinations".
SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures, in its financial statements, the identifiable

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

assets
acquired, the liabilities assumed, and any non-controlling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the
business combination and determines what information to disclose to enable users of the financial statement to evaluate the nature and financial effects of the business combination. SFAS 141R
is effective for financial statements issued for fiscal years beginning after December 15, 2008. Advent is
still assessing the impact of SFAS 141R on its future consolidated financial statements. The Company expects SFAS 141R will have an impact on its consolidated financial statements when
effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions the Company consummates after the effective date.

In
April 2008, the FASB issued FASB Staff Position ("FSP") No. 142-3, "Determination of the Useful Life of Intangible Assets". FSP 142-3 amends the factors
an entity should consider in developing renewal or extension of assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, "Goodwill and Other
Intangible Assets". This new guidance applies prospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. FSP
142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early adoption is prohibited. The Company is currently
evaluating the impact, if any, that FSP 142-3 will have on its consolidated financial statements.

In
May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the
United States. This statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present
Fairly in Conformity with Generally Accepted Accounting Principles." The Company does not expect SFAS 162 to have a material impact on its consolidated financial statements.

Note 2Cash Equivalents and Marketable Securities

At December 31, 2008, cash and cash equivalents were primarily comprised of US government and treasury obligation money market
mutual funds.

At
December 31, 2007, marketable securities, which were all included in cash equivalents, were summarized as follows (in thousands):

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Aggregate
Fair ValueU.S. government debt securities

$
37,289

$


$


$
37,289


As
of December 31, 2007, there were no unrealized losses associated with the Company's marketable securities.

Advent's
marketable securities are classified as available-for-sale. Management has the ability and intent, if necessary, to liquidate any of these investments in
order to meet the Company's liquidity needs within the normal operating cycle. Accordingly, all marketable securities are classified as current assets.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The following table summarizes gross realized gains and losses related to the Company's investments (in thousands):

Fiscal Years2008

2007

2006Gross realized gains

$


$
22

$
239Gross realized losses





(4
)

(458
)Net realized gains (losses)

$


$
18

$
(219
)


Note 3Acquisitions

Fiscal 2008 Acquisition

On October 1, 2008, Advent completed the acquisition of Tamale Software, Inc. ("Tamale"). Tamale provides software
solutions designed specifically to help investment professionals manage their investment ideas more effectively and easily access all of the firm's research. The total preliminary purchase price of
approximately $68 million includes cash of $28 million and 906,000 shares of common stock valued at approximately $40 million. The value of the equity consideration was calculated
using the average closing stock price on the two days before and after, as well as the date of, the announcement date of the acquisition. The per share value was calculated to be $44.06.

Preliminary Purchase Price Allocation

In accordance with SFAS No. 141, the total purchase price was allocated to net tangible and intangible assets based on their
estimated fair values as of October 1, 2008. The excess purchase price over the value of the net tangible and identifiable assets was recorded as goodwill. The allocation of the purchase price
is preliminary because Tamale's final tax filings are not yet complete. A final determination of required purchase accounting adjustments will be made during 2009. The allocation of the preliminary
purchase price and the estimated useful lives associated with certain assets is as follows:

Estimated
Useful Life
(Years)

Purchase Price
Allocation
(in thousands)Identifiable intangible assets:Existing technology


5

$
12,100Core technology


5


2,500Customer relationships


8


7,100Trademark/tradenames


5


900Non-competition agreements


2


300In-process research and development





400Goodwill





49,703Deferred tax asset





4,738Deferred tax liability





(9,402
)Net tangible assets





85Total preliminary purchase price




$
68,424


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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
purchase price of $68 million was paid during the fourth quarter of 2008. Of the issuable shares, 226,098 shares of the Company's common stock were held in escrow and are
expected to be released in the fourth quarter of 2009.

Tangible assets and current liabilities

Tamale's tangible assets and liabilities as of October 1, 2008 were reviewed and adjusted to their fair value as necessary.
Current assets include accounts receivable, inventory and other current assets. Non-current assets are primarily comprised of facility deposits and fixed assets. Current liabilities were
fair valued and include accrued liabilities, direct costs associated with the acquisition and deferred revenues. In connection with the acquisition of Tamale, Advent assumed Tamale's contractual
obligations related to its deferred revenue. Tamale's deferred revenue was derived primarily from subscription services. As a result, Advent recorded an adjustment to reduce the carrying value of
deferred revenue to represent the Company's estimate of the fair value of the contractual obligations assumed.

Identifiable intangible assets

Existing technology relates to Tamale's Research Management Solution (RMS) product modules that have reached technological feasibility.
Core technology represents a combination of Tamale's processes, technology and trade secrets that are the building blocks for current and planned new versions of existing products. Advent is
amortizing the fair value of these assets to cost of revenues in the consolidated statement of operations on a straight-line basis over their estimated lives of 5 years.

Customer
relationships represent existing contracts and the underlying customer relationships. Advent is amortizing the fair value of these assets to operating expenses in the
consolidated statement of operations on a straight-line basis over an estimated life of 8 years.

Tradename/trademarks
related to the Tamale product names and Tamale pepper logo that will continue to be used. Advent is amortizing the fair values of these assets to operating expenses
in the consolidated statement of operations on a straight-line basis over an estimated life of 5 years.

Non-competition
agreements represent agreements which allow Advent to operate without competition from specified Tamale employees. Advent is amortizing the fair value of this
asset to operating expenses in the consolidated statement of operations on a straight-line basis over an estimated life of 2 years.

Goodwill

Approximately $49.7 million of the purchase price has been allocated to goodwill. Goodwill represents the excess of the purchase
price over the fair value of the underlying net tangible and intangible assets. The goodwill was attributed to the premium paid for the opportunity to better leverage Tamale's technology utilizing
Advent's broader market reach in order to achieve greater long-term growth opportunities.

In
accordance with SFAS No. 142, goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators are present as
part of the Advent Investment Management segment. In the event that management determines that the fair value of goodwill has become impaired, the Company would incur an accounting charge for the
amount of impairment during the fiscal quarter in which the determination is made.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

In-process research and development ("IPR&D")

During fiscal 2008, Advent wrote-off acquired IPR&D of $400,000 in connection with its acquisition of Tamale. The IPR&D was
written off because the acquired technologies had not reached technological feasibility and had no alternative uses. Technological feasibility is defined as being equivalent to completion of a working
prototype in which there is no remaining risk relating to the development. At the time of the acquisition, Tamale was developing a new module, Tamale Central, which qualified as IPR&D. At the time of
acquisition, it was estimated that these IPR&D efforts would be completed over the following 3 months at an estimated total cost of $109,000.

The
value assigned to IPR&D was determined by estimating costs to develop the purchased IPR&D into commercially viable products, estimating the resulting net cash flow from the projects
when completed, and discounting the net cash flows to their present value. The revenue estimates used in the cash flow forecasts were based on estimates of relevant market sizes and growth factors,
expected trends in technology, and the nature and expected timing of new product introductions by Tamale and its competitors.

The
rate utilized to discount the net cash flows to their present value was based on Tamale's weighted average cost of capital. The weighted average cost of capital was adjusted to
reflect the difficulties and uncertainties in completing each project and thereby achieving technological feasibility, the percentage of completion of each project, anticipated market acceptance and
penetration, market growth rates, and risks related to the impact of potential changes in future target markets. Based on these factors, a discount rate of 21% was deemed appropriate for valuing the
IPR&D.

The
estimates used in valuing IPR&D were based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable. Assumptions may be incomplete or
inaccurate, and unanticipated events and circumstances may occur.

Pro forma results

The following supplemental unaudited pro forma information presents selected financial information as though the purchase of Tamale had
been completed at the beginning of each period presented after giving effect to purchase accounting adjustments. The pro forma financial information is presented for informational purposes only and is
not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2007 or of results that may occur in the future. The pro forma
consolidated net income and net income per share amounts include certain pro forma adjustments, primarily the amortization of identifiable intangible
assets and the elimination of interest income on cash used in the acquisition (in thousands, except per share data):

Fiscal Year
2008

Fiscal Year
2007Net revenues

$
272,542

$
222,033Net income

$
15,420

$
7,138Net income per share:Basic

$
0.56

$
0.26Diluted

$
0.54

$
0.25


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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Fiscal 2007 Acquisition

On November 23, 2007, the Company's MicroEdge subsidiary acquired the entire share capital of United Kingdom-based Vivid Orange
Limited ("Vivid Orange"), which provides hosted solutions for the corporate marketplace in the areas of corporate giving and social responsibility.

Purchase price allocation

In accordance with SFAS No. 141, the total purchase price was allocated to net tangible and intangible assets based on their
estimated fair values as of November 23, 2007. The excess purchase price over the value of the net tangible and identifiable assets was recorded as goodwill. The following represents the
preliminary allocation of the purchase price to the acquired net assets of Advent and the associated estimated useful lives:

Estimated
Useful Life
(Years)

Purchase Price
Allocation
(in thousands)Identifiable intangible assets:Existing technology


5

$
2,430Core Technology


5


640Customer relationships


7


120Trademark


7


100Goodwill





4,891In-process research and development





150Deferred tax asset





322Tangible assets





56Current liabilities





(599
)Deferred tax liability





(921
)Total purchase price, net of cash acquired




$
7,189


The
preliminary purchase price of $7.2 million was paid in November 2007. The original purchase agreement provided that the purchase price may increase if certain sales targets
are met. In March 2009, the former owners of Vivid Orange and MicroEdge agreed that no additional consideration would be paid resulting in a final purchase price of $7.2 million.

Tangible assets and current liabilities

Vivid Orange's tangible assets and liabilities as of November 23, 2007 were reviewed and adjusted to their fair value as
necessary. Current liabilities include accounts payable of $111,000, accrued liabilities of $367,000 and deferred revenues of $121,000. In connection with the acquisition of Vivid Orange, Advent
assumed Vivid Orange's contractual obligations related to its deferred revenue. Vivid Orange's deferred revenue was derived from hosting, subscription, and consulting services. As a result, Advent
recorded an adjustment to reduce the carrying value of deferred revenue by $41,000 to $120,000, which represents the Company's estimate of the fair value of the contractual obligations assumed.

Identifiable intangible assets

Existing technology relates to Vivid Orange's SmartChange product modules that have reached technological feasibility. Core technology
represent a combination of Vivid Orange's processes and

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

trade
secrets developed through years of experience in design and development of their products. Advent is amortizing the fair value of these assets to cost of revenues on a straight-line
basis over their estimated lives of 5 years.

Customer
relationships represent existing contracts and the underlying customer relationships. Advent is amortizing the fair value of these assets to operating expenses in the
consolidated statement of operations on a straight-line basis over an average estimated life of 7 years.

Trademarks
related to the SmartChange product names that will continue in use. Advent is amortizing the fair values of these assets to operating expenses in the consolidated statement of
operations on a straight-line basis over an estimated life of 7 years.

Goodwill

Approximately $4.9 million of the purchase price has been allocated to goodwill. Goodwill represents the excess of the purchase
price over the fair value of the underlying net tangible and intangible assets. The goodwill was attributed to the premium paid for the opportunity to better serve the current MicroEdge market and
achieve greater long-term growth opportunities.

In
accordance with SFAS No. 142, goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators are present.
In the event that management determines that the fair value of goodwill has become impaired, the Company would incur an accounting charge for the amount of impairment during the fiscal quarter in
which the determination is made.

In-process research and development ("IPR&D")

During fiscal 2007, Advent wrote-off acquired IPR&D of $150,000 in connection with its acquisition of Vivid Orange. The
IPR&D was written off because the acquired technologies had not reached technological feasibility and had no alternative uses. Technological feasibility is defined as being equivalent to completion of
a working prototype in which there is no remaining risk relating to the development. At the time of the acquisition, Vivid Orange was developing a new module, SmartWorld, which qualified as IPR&D. At
the time of acquisition, it was estimated that these IPR&D efforts would be completed over the following 6 months at an estimated total cost of $64,000.

The
value assigned to IPR&D was determined by estimating costs to develop the purchased IPR&D into commercially viable products, estimating the resulting net cash flow from the projects
when completed, and discounting the net cash flows to their present value. The revenue estimates used in the cash flow forecasts were based on estimates of relevant market sizes and growth factors,
expected trends in technology, and the nature and expected timing of new product introductions by Vivid Orange and its competitors.

The
rate utilized to discount the net cash flows to their present value was based on Vivid Orange's weighted average cost of capital. The weighted average cost of capital was adjusted to
reflect the difficulties and uncertainties in completing each project and thereby achieving technological feasibility, the percentage of completion of each project, anticipated market acceptance and
penetration, market growth rates, and risks related to the impact of potential changes in future target markets. Based on these factors, a discount rate of 25% was deemed appropriate for valuing the
IPR&D.

The
estimates used in valuing IPR&D were based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable. Assumptions may be incomplete or
inaccurate, and unanticipated events and circumstances may occur.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Pro forma results

The following supplemental unaudited pro forma information presents selected financial information as though the purchase of Vivid
Orange had been completed at the beginning of each period presented after giving effect to purchase accounting adjustments. The pro forma financial information is presented for informational purposes
only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2006 or of results that may occur in the future. The pro
forma consolidated net income and net income per share amounts include certain pro forma adjustments, primarily the amortization of identifiable intangible assets and the elimination of interest
income on cash used in the acquisition (in thousands, except per share data):

Fiscal Year
2007

Fiscal Year
2006Net revenues

$
216,114

$
184,804Net income

$
11,679

$
81,653Net income per share:Basic

$
0.44

$
2.82Diluted

$
0.42

$
2.67


Note 4Balance Sheet Detail

Prepaid expenses and other

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

December 312008

2007Prepaid commission

$
6,019

$
5,364Prepaid royalty


1,744


2,624Prepaid contract expense


7,473


5,353Other


4,917


6,236Total prepaid expenses and other

$
20,153

$
19,577


Property and equipment, net

The following is a summary of property and equipment (in thousands):

December 312008

2007Computer equipment and software

$
38,062

$
35,948Leasehold improvements


29,310


20,374Furniture and fixtures


6,653


4,921Telephone system


906


778Construction in process


6,856


1,310Property and equipment, gross

$
81,787

$
63,331Accumulated depreciation


(40,547
)

(35,552
)Property and equipment, net

$
41,240

$
27,779


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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Depreciation expense was $9.4 million, $7.7 million and $7.7 million for fiscal 2008, 2007 and 2006, respectively. Costs of
$4.7 million, $2.2 million and $2.8 million related to the development of internal use software were capitalized in 2008, 2007 and 2006, respectively, and are included in
"property and equipment, net" on the consolidated balance sheets.

Goodwill

The changes in the carrying value of goodwill by segment for fiscal 2008 and 2007 were as follows (in thousands):

Advent
Investment
Management

MicroEdge

TotalBalance at December 31, 2006

$
95,246

$
3,136

$
98,382Additions


22


4,891


4,913Translation adjustments


3,412


(187
)

3,225Balance at December 31, 2007

$
98,680

$
7,840

$
106,520Additions


49,703





49,703Translation adjustments


(5,340
)

(1,274
)

(6,614
)Balance at December 31, 2008

$
143,043

$
6,566

$
149,609


Additions
to goodwill by the Advent Investment Management segment of $49.7 million in 2008 related to the acquisition of Tamale in October 2008. Foreign currency translation
adjustments totaling $6.6 million reflect the general strengthening of the US dollar versus European currencies during fiscal 2008.

Additions
to goodwill by the MicroEdge segment of $4.9 million in 2007 related to the acquisition of Vivid Orange in November 2007. Additions to goodwill by the Advent Investment
Management segment of $22,000 in 2007 reflected an additional payment related to the acquisition of East Circle. Foreign currency translation adjustments totaling $3.2 million in 2007 reflect
the general weakening of the US dollar versus European currencies during fiscal 2007.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Other intangibles, net

The following is a summary of intangible assets (in thousands, except weighted average amortization period):

Weighted
Average
Amortization
Period
(Years)

Other
Intangibles,
Gross

Accumulated
Amortization

Other
Intangibles,
NetPurchased technologies


4.9

$
30,337

$
(14,361
)
$
15,976Product development costs


3.0


8,823


(4,272
)

4,551Developed technology sub-total





39,160


(18,633
)

20,527Customer relationships


6.1


30,023


(22,618
)

7,405Other intangibles


4.0


1,578


(400
)

1,178Other intangibles sub-total





31,601


(23,018
)

8,583Balance at December 31, 2008




$
70,761

$
(41,651
)
$
29,110




Weighted
Average
Amortization
Period
(Years)

Other
Intangibles,
Gross

Accumulated
Amortization

Other
Intangibles,
NetPurchased technologies


4.9

$
16,529

$
(13,001
)
$
3,528Product development costs


3.0


6,290


(2,081
)

4,209Developed technology sub-total





22,819


(15,082
)

7,737Customer relationships


5.5


22,673


(21,130
)

1,543Other intangibles


3.6


404


(308
)

96Other intangibles sub-total





23,077


(21,438
)

1,639Balance at December 31, 2007




$
45,896

$
(36,520
)
$
9,376


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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
changes in the carrying value of intangible assets for fiscal 2008 and 2007 were as follows (in thousands):

Gross

Accumulated
Amortization

NetBalance at December 31, 2006

$
39,039

$
(32,745
)
$
6,294Additions


6,323





6,323Stock-based compensation additions


256


(64
)

192Amortization





(3,382
)

(3,382
)Translation adjustments


278


(329
)

(51
)Balance at December 31, 2007

$
45,896

$
(36,520
)
$
9,376Additions


25,269





25,269Stock-based compensation additions


163


(148
)

15Amortization





(4,849
)

(4,849
)Translation adjustments


(567
)

(134
)

(701
)Balance at December 31, 2008

$
70,761

$
(41,651
)
$
29,110


Additions
to intangible assets of $25.3 million in 2008 include capitalized product development costs of approximately $2.4 million and intangible asset additions of
$22.9 million from the acquisition of Tamale.

Additions
to intangible assets of $6.3 million in 2007 include capitalized product development costs of approximately $3.0 million and intangible asset additions of
$3.3 million from the acquisition of Vivid Orange. Net stock-based compensation additions of $0.2 million in 2007 reflected capitalized costs related to software development, partially
offset by amortization.

Net
translation adjustments of $0.7 million and $0.1 million in fiscal 2008 and 2007, respectively, represent translation adjustments as the US dollar strengthened relative
to certain European currencies during 2008 and 2007, respectively.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
following is a summary of amortization and impairment of the Company's developed technology and other intangible assets for the periods presented (in thousands):

Fiscal Years2008

2007

2006Developed technology:Amortizationpurchased technologies

$
1,490

$
334

$
497Amortizationproduct development costs


2,192


1,233


703Amortization of developed technology


3,682


1,567


1,200Other intangibles:Amortizationcustomer relationships


1,219


1,852


3,789Amortizationother intangibles


96


27


77Amortization other intangibles


1,315


1,879


3,866Total amortization


4,997


3,446


5,066Impairment of technology


815





Total amortization and impairment

$
5,812

$
3,446

$
5,066


Based
on the carrying amount of intangible assets as of December 31, 2008, the estimated future amortization is as follows (in thousands):

Fiscal YearsEstimated future amortization of:

2009

2010

2011

2012

2013

Thereafter

TotalDeveloped technology

$
5,743

$
5,210

$
4,000

$
3,375

$
2,199

$


$
20,527Other intangibles


1,688


1,210


1,090


1,090


1,045


2,460


8,583Total

$
7,431

$
6,420

$
5,090

$
4,465

$
3,244

$
2,460

$
29,110


Other assets

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

December 312008

2007Long-term investments

$
500

$
500Long-term prepaid commissions


4,915


5,368Deposits


3,255


2,628Prepaid contract expense, long-term


2,859


1,838Other


25


311Total other assets

$
11,554

$
10,645


Long-term
investments include equity investments in several privately held companies. On April 30, 2007, the Company, together with other LatentZero Limited
("LatentZero") shareholders, sold their ownership in LatentZero to royalblue group plc. The maximum possible consideration due to the Company from the sale of its ownership interest in
LatentZero is approximately $17 million, which is comprised of initial consideration of $10 million, paid at completion of the sale transaction and up to an aggregate $7 million
of deferred contingent consideration for fiscal years 2007 and 2008.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Consideration
is denominated in Pounds Sterling (GBP) and the actual amounts of consideration in US dollars to be received by the Company may differ depending on foreign exchange rates at the time of
payment. During the second quarter of 2008, the Company received the first deferred contingent payment of $3.4 million for fiscal 2007 and recorded it within "gain on sale of equity
investments, net" for 2008 on the consolidated statement of operations.

On
June 30, 2008, the Company, together with other LatentZero shareholders, executed a Deed of Amendment to fix the deferred contingent consideration for fiscal 2008 at
approximately $2 million payable in March 2009. The Company will record this contingent gain when realized.

Another
privately held company, Investment Scorecard Inc. ("Scorecard"), was sold during the second quarter of 2007. Advent received proceeds of $1.6 million from the sale
of its interest in Scorecard, resulting in a gain of $0.9 million. Additionally, Advent determined that the carrying value of its investment in another privately held company was fully
impaired, resulting in an impairment loss of $585,000 during the second quarter of 2007. The Company's review of this investee's operations during
the second quarter of 2007 indicated a decline in value that is other-than-temporary.

Accrued liabilities

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

December 312008

2007Salaries and benefits payable

$
18,492

$
18,696Accrued restructuring, current portion


823


2,531Other


8,609


8,101Total accrued liabilities

$
27,924

$
29,328


Other long-term liabilities

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

December 312008

2007Deferred rent

$
8,444

$
8,902Accrued restructuring, long-term portion


1,195


1,734Other


1,156


1,062Total other long-term liabilities

$
10,795

$
11,698


Note 5Accumulated Other Comprehensive Income

As of December 31, 2008 and 2007, accumulated other comprehensive income is comprised entirely of accumulated foreign currency
translation adjustments of $6.7 million and $14.3 million, respectively.

Note 6Restructuring Charges

During 2008, Advent recorded aggregate restructuring charges of $0.4 million primarily in the Company's MicroEdge segment. In
the fourth quarter of 2008, the Company initiated a restructuring

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

program
in order to reduce its operating costs and focus resources on key strategic priorities impacting a total of 13 full time positions mainly in the United States. In connection with this
restructuring plan, Advent recorded restructuring charges totaling $0.4 million related to termination benefits for the elimination of these 13 positions. As of December 31, 2008,
$0.1 million was paid. The remaining accrual associated with these termination benefits is expected to be paid during the first quarter of 2009. The Company also recorded additional
restructuring charges which related to a partial lease surrender fee of $0.2 million to exit the data center portion of our facility space located at 303 2nd Street in San
Francisco, California. These restructuring charges were partially offset by adjustments to other facility exit assumptions.

During
2007, Advent recorded aggregate restructuring charges of $1.0 million which primarily related to the modification of certain sub-lease assumptions for its prior
San Francisco headquarters facility located at 301 Brannan Street, which the Company exited in October 2006.

For
fiscal 2006, Advent recorded total restructuring charges of $3.7 million which primarily related to facility and exit costs associated with the relocation of its corporate
headquarters facility in San Francisco during the fourth quarter of 2006. Restructuring charges in 2006 also included costs associated with exiting a portion of the Company's facility in New Rochelle,
New York, and an entire facility in Summit, New Jersey, and adjustments to original estimates for facilities in San Francisco, California and New York, New York.

The
following table sets forth an analysis of the components of the restructuring charges and the payments and non-cash charges made against the accrual during fiscal 2006,
2007 and 2008 (in thousands):

Facility Exit
Costs

Severance and
Benefits

TotalBalance of restructuring accrual at December 31, 2005

$
4,553

$
7

$
4,560Restructuring charges


3,549





3,549Reversal of deferred rent related to facilities exited


666





666Cash payments


(2,370
)




(2,370
)Adjustment of prior restructuring costs


189


(3
)

186Balance of restructuring accrual at December 31, 2006

$
6,587

$
4

$
6,591Restructuring charges


687





687Cash payments


(3,287
)

(4
)

(3,291
)Adjustment of prior restructuring costs


278





278Balance of restructuring accrual at December 31, 2007

$
4,265

$


$
4,265Restructuring charges


(183
)

403


220Reversal of deferred rent related to facilities exited


111





111Cash payments


(2,598
)

(120
)

(2,718
)Adjustment of prior restructuring costs


140





140Balance of restructuring accrual at December 31, 2008

$
1,735

$
283

$
2,018


Of
the remaining restructuring accrual of $2.0 million at December 31, 2008, $0.8 million and $1.2 million are included in accrued liabilities and other
long-term liabilities, respectively, on the accompanying consolidated balance sheet. The accrued excess facility costs of $1.7 million are stated at estimated fair value, net of
estimated sub-lease income of $3.8 million. Advent expects to pay the

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

remaining
obligations in connection with vacated facilities over the remaining lease terms, which will expire on various dates through 2012.

Note 7Debt

On February 14, 2007, Advent and certain of its subsidiaries entered into a senior secured credit facility agreement (the
"Credit Facility") with Wells Fargo Foothill, Inc. (the "Lender") for a term of three years. Under the Credit Facility, the Lender will provide the Company with a revolving line of credit up to
an aggregate amount of $75.0 million to fund the repurchase of outstanding common stock, capital expenditures and general corporate requirements. The Company has the option of selecting an
interest rate for any drawdown under the Credit Facility equal to either: (a) the Base Rate (Wells Fargo prime rate); or (b) the then applicable LIBOR Rate plus 1.50% per annum. The loan
is secured by the Company's property and assets and is subject to a financial covenant. The financial covenant in the Credit Facility is limited to a maximum ratio of senior debt to earnings before
interest, taxes, depreciation, and amortization (EBITDA), adjusted for cost capitalizations, extraordinary gains (losses) and non-cash stock-based employee compensation. Covenant testing
will commence upon either the occurrence of an event of default or when excess availability, defined as the Credit Facility line of $75.0 million less amounts drawn, plus qualified cash and
cash equivalents is less than $50.0 million.

In
June 2007, the Company drew down $25.0 million against this Facility which bore interest at an aggregate rate of 6.86%, consisting of a three month LIBOR contract rate of 5.36%
and an applicable margin of 1.5%. In September 2007, the LIBOR contract expired and the Company paid down the credit facility by $5.0 million. Advent re-entered into another LIBOR
rate contract on the remaining $20.0 million which bore a three-month LIBOR contract rate of 5.58% and an applicable margin of 1.5% for an aggregate rate of 7.08%. In December 2007, the LIBOR
contract expired and the Company paid down the Credit Facility by $20.0 million resulting in a zero balance as of December 31, 2007. As of December 31, 2007, Advent was in
compliance with all associated covenants.

In
November 2008, the Company drew down another $25.0 million against its Credit Facility which bore interest at the Wells Fargo prime rate of 4.0%. As of December 31,
2008, the outstanding debt balance was $25.0 million and Advent was in compliance with all associated covenants.

Note 8Income Taxes

The components of income (loss) before income taxes were as follows (in thousands):

Fiscal Years2008

2007

2006U.S.

$
24,921

$
16,887

$
5,906Foreign


(1,072
)

(93
)

(2,335
)Total

$
23,849

$
16,794

$
3,571


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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
components of the provision for (benefit from) income taxes included (in thousands):

Fiscal Years2008

2007

2006Current:Federal

$
805

$
845

$
2,314State


1,080


731


1,569Foreign


563


556


380Deferred:Federal


5,382


2,624


(68,187
)State


(2,346
)

(266
)

(14,296
)Foreign


(530
)

(327
)

(811
)Total

$
4,954

$
4,163

$
(79,031
)


The
effective income tax rate on earnings differed from the United States statutory tax rate as follows:

Fiscal Years2008

2007

2006Statutory federal rate


35.0
%

35.0
%

35.0
%State taxes


5.8


8.5


4.6Stock compensation relating to incentive stock options and employee stock purchase plans


4.9


4.4


75.1Research and other state tax credits


(20.3
)

(17.7
)

(61.4
)Change in valuation allowance


(5.8
)

(8.9
)

(2,248.1
)California audit adjustment








(14.6
)Reserve adjustment due to statute closing


(0.8
)




(17.8
)Foreign taxes


1.7


1.5


10.8Other, net


0.3


2.0


3.3Total


20.8
%

24.8
%

(2,213.1
)%


During
the fourth quarter of 2006, management determined that $83.6 million of deferred tax assets that had previously been offset by a valuation allowance would more likely than
not be realized in future periods. This assessment was based on the Company's consistently positive financial results over the previous eight quarters and a positive income outlook that is supported
by recurring revenue streams. Therefore, the valuation allowance was decreased by $83.6 million in the fourth quarter of 2006.

As
of December 31, 2008, Advent made no provision for a cumulative total of $5.4 million of undistributed earnings for certain non-US subsidiaries, which are
deemed to be permanently reinvested.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands):

December 312008

2007Current deferred tax assets:Deferred revenue

$
2,663

$
2,034Other accrued liabilities and reserves


3,751


4,374Stock compensation


6,383


3,656Other


1,492


224Valuation allowance


(1,168
)

Total current


13,121


10,288Non-current deferred tax assets (liabilities):Depreciation and amortization


(1,059
)

13,699Net operating losses, capital losses and credit carryforwards


57,812


54,243Other


3,726


4,422Valuation allowance


(5,693
)

(6,037
)Total non-current


54,786


66,327Deferred tax assets


67,907


76,615Deferred tax liabilities


(286
)

(998
)Net deferred tax assets

$
67,621

$
75,617


The
Company maintains a valuation allowance against its deferred tax assets relating to capital losses and investment reserves of $6.2 million and certain state net operating
losses of $687,000 as it believes that based upon the available evidence, it is more likely than not that these assets will not be realized. The capital loss carryforwards expire between 2009 and
2011. If it is determined in the future that it is more likely than not that these deferred tax assets will be realized, the valuation allowance will be further reduced.

At
December 31, 2008, Advent had federal net operating loss carryforwards of approximately $117 million, which includes stock-based compensation deductions of
$62 million. Utilization of these loss carryforwards, including losses obtained from acquisitions, is subject to certain limitations under the federal income tax laws. These net operating loss
carryforwards expire between 2021 and 2027. Also at December 31, 2008, Advent had state net operating loss carryforwards in various states in which it files tax returns.

Advent
had federal research credits of $17.3 million which expire between 2012 and 2028. Advent also had California research credits of $13.7 million and California
enterprise zone credits of $5.1 million which do not expire.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
following table summarizes the activity relating to the Company's unrecognized tax benefits during 2008 and 2007 (in thousands):

TotalBalance at January 1, 2007

$
4,930Gross increases related to tax positions in prior period


66Gross increases related to current period tax positions


926Settlements with taxing authorities


(23
)Balance at December 31, 2007

$
5,899Gross increases related to tax positions in prior period


370Gross increases related to current period tax positions


832Statute expirations


(197
)Balance at December 31, 2008

$
6,904


If
recognized, the portion of unrecognized tax benefits at December 31, 2008 that would decrease Advent's tax provision and increase net income is $5.8 million. The impact
on net income reflects the liabilities for unrecognized tax benefits net of the federal tax benefit of state income tax items. Advent recognizes interest and penalties accrued on unrecognized tax
benefits as well as interest received from favorable settlements within "Provision for (benefit from) income taxes" on the consolidated statement of operations. As of December 31, 2008, Advent
has not accrued any interest or penalties as part of its FIN 48 reserve as any reversal of uncertain tax positions would not result in the assessment of penalties or interest due to the
Company's surplus of deferred tax assets that would offset any additional tax.

Advent
is subject to taxation in the US and various states and foreign jurisdictions. Advent is not under examination in any income tax jurisdiction at the present time and does not
anticipate the total amount of its unrecognized tax benefits to significantly change over the next 12 months. The material jurisdictions that are subject to examination by tax authorities
include California for tax years after 2003 and the US and New York for tax years after 2004.

Note 9Commitments and Contingencies

Lease Obligations

Advent leases office space and equipment under non-cancelable operating lease agreements, which expire at various dates
through December 2018. Some operating leases contain escalation provisions for adjustments in the consumer price index. Advent is responsible for maintenance, insurance, and property taxes. In January
2006, Advent entered into a lease agreement for the Company's facilities located at 600 Townsend in San Francisco, California, and in October 2006, Advent extended its lease agreement for its
facilities located at 619 West 54th Street in New York, New York. During 2007, the Company executed several amendments to the lease agreement for its 600 Townsend facility whereby
the Company will lease additional facility space of 50,000 square feet.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Future minimum payments and receipts under the non-cancelable operating leases consisted of the following at December 31, 2008 (in thousands):

FutureLease Payments

Sub-lease Income

Net Lease Payments2009

$
9,081

$
1,947

$
7,1342010


7,835


1,354


6,4812011


6,819


801


6,0182012


5,694


310


5,3842013


4,783





4,783Thereafter


17,818





17,818Total

$
52,030

$
4,412

$
47,618


Rent
expense for fiscal 2008, 2007 and 2006 was $6.1 million, $5.6 million, and $7.4 million, respectively, net of sub-lease income from
non-restructured facilities of $128,000, $123,000, and $108,000 in fiscal 2008, 2007 and 2006, respectively.

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

On March 8, 2005, certain of the former shareholders of Kinexus and the shareholders' representative filed suit against Advent
in the Delaware Chancery Court. The complaint alleges that Advent breached the Agreement and Plan of Merger dated as of December 31, 2001 pursuant to which Advent acquired all of the
outstanding shares of Kinexus due principally to the fact that no amount was paid by Advent on an earn-out of up to $115 million. The earn-out, which was payable in cash
or stock at the election of Advent, was based upon Kinexus meeting certain revenue targets in both 2002 and 2003. The complaint seeks unspecified compensatory damages, an accounting and restitution
for unjust enrichment. Advent advised the shareholders' representative in January 2003 that the earn-out terms had not been met in 2002 and accordingly no earn-out was payable
for 2002 and would not be payable for 2003. Discovery is continuing between the parties. Advent disputes the plaintiffs' claims and believes that it has meritorious defenses and intends to vigorously
defend this action. Management believes that any potential loss associated with this litigation is neither probable nor reasonably estimable at this time and accordingly has not accrued any amounts
for any potential loss.

From
time to time, Advent is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe
that the

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

ultimate
outcome of these unresolved matters, individually and in the aggregate, is likely to have a material adverse effect on Advent's financial position or results of operations. However,
litigation is subject to inherent uncertainties and Advent's view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse
impact on Advent's financial position and results of operations for the period in which the unfavorable outcome occurs, and potentially in future periods.

Note 10Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options, SARs, ESPP and RSUs was recognized on Advent's consolidated statement of
operations for fiscal 2008, 2007 and 2006 as follows (in thousands):

Fiscal Years2008

2007

2006Options,
SARs
ESPP(1)

RSUs

Total

Options,
SARs
ESPP(1)

RSUs

Total

Options,
SARs
ESPP(1)

RSUs

TotalStatement of operations classificationCost of term license, maintenance and other recurring revenues

$
693

$
594

$
1,287

$
810

$
346

$
1,156

$
919

$
63

$
982Cost of professional services and other revenues


712


386


1,098


499


270


769


746


42


788Total cost of revenues


1,405


980


2,385


1,309


616


1,925


1,665


105


1,770Sales and marketing


3,509


1,260


4,769


3,250


905


4,155


4,605


187


4,792Product development


2,237


1,793


4,030


2,122


1,074


3,196


2,906


152


3,058General and administrative


4,570


1,074


5,644


3,411


709


4,120


3,824


152


3,976Total operating expenses


10,316


4,127


14,443


8,783


2,688


11,471


11,335


491


11,826Total stock-based employee compensation expense

$
11,721

$
5,107

$
16,828

$
10,092

$
3,304

$
13,396

$
13,000

$
596

$
13,596Tax effect on stock-based employee compensation


(3,890
)

(2,084
)

(5,974
)

(3,650
)

(1,437
)

(5,087
)

(2,298
)

(236
)

(2,534
)Net effect on net income

$
7,831

$
3,023

$
10,854

$
6,442

$
1,867

$
8,309

$
10,702

$
360

$
11,062


---

Advent capitalized stock-based compensation expense of $313,000, $369,000 and $172,000 during fiscal 2008, 2007 and 2006, respectively, associated
with the Company's software development, internal-use software and professional services implementation projects.

As
of December 31, 2008, total unrecognized compensation cost related to unvested awards not yet recognized under all equity compensation plans, adjusted for estimated
forfeitures, was $29.5 million and is expected to be recognized through the remaining vesting period of each grant. As of December 31, 2008, the weighted average remaining period was
3.0 years.

Valuation Assumptions

Advent uses the Black-Scholes option pricing model to determine the fair value of equity compensation awards (stock options, restricted
stock units ("RSUs") and stock appreciation rights

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

("SARs")
and employee stock purchase plan shares, consistent with the provisions of SFAS 123R and SEC Staff Accounting Bulletin No. 107 ("SAB 107"), as extended by SEC Staff
Accounting Bulletin No. 110 ("SAB 110").

The
fair value of each equity award grant is estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the
following assumptions:

Fiscal Years2008

2007

2006Stock Options / Stock Appreciation RightsRisk-free interest rate

2.0%  3.9%

3.7%  5.2%

4.3%  5.1%Volatility

41.8%  56.4%

32.9%  39.7%

42.7%  48.5%Expected life

4  6 years

4  5 years

5 yearsExpected dividends

None

None

NoneEmployee Stock Purchase Plan*Risk-free interest rate

0.4%  3.4%

3.4%  5.0%

3.7%  4.2%Volatility

43.8%  72.8%

35.5%  43.8%

34.4%  36.5%Expected life

6 months

6 months

6 monthsExpected dividends

None

None

None


---

Prior
to the adoption of SFAS 123R, the Company used historical volatility in deriving its expected volatility assumption. The expected stock price volatility for fiscal 2008,
2007 and 2006 was determined based on an equally weighted average of historical and implied volatility of the Company's common stock. Advent determined that a blend of implied volatility and
historical volatility is more reflective of the market conditions and a better indicator of expected volatility than using purely historical volatility. The expected life for fiscal 2008, 2007 and
2006 was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee
behavior. The risk-free interest rate is based on the US Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option or SAR. The
dividend yield assumption is based on the Company's history of not paying dividends and the resultant future expectation of zero dividend payouts.

The
fair value of RSUs on the date of grant is the Advent closing share price.

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Equity Award Activity

A summary of the status of the Company's stock option, SAR and warrant activity for the period presented is as follows (in thousands
except weighted average exercise price):

2008

2007

2006Number of
Shares

Weighted
Average
Exercise
Price

Number of
Shares

Weighted
Average
Exercise
Price

Number of
Shares

Weighted
Average
Exercise
PriceOutstanding at beginning of year


3,818

$
24.61


5,292

$
20.08


5,489

$
19.26Options and SARs granted


926

$
41.68


731

$
37.79


877

$
29.00Options and SARs exercised


(420
)
$
18.15


(1,735
)
$
16.19


(665
)
$
17.31Options, SARs and warrants canceled


(231
)
$
40.09


(470
)
$
25.16


(409
)
$
32.67Outstanding at end of year


4,093

$
28.26


3,818

$
24.61


5,292

$
20.08Exercisable at end of year


2,416

$
23.92


2,044

$
21.19


2,990

$
18.22


The
aggregate intrinsic value of options and SARs outstanding and exercisable as of December 31, 2008 was $2.8 million and $2.3 million, respectively. The intrinsic
value is calculated as the difference between the Company's closing stock price of $19.97 as of December 31, 2008 and the exercise price of the underlying awards for options or SARs that were
in-the-money as of that date.

The
weighted average grant date fair value of options and SARs granted (as determined under SFAS 123R), total intrinsic value of options and SARS exercised and cash received from
option exercises during fiscal 2008, 2007 and 2006 were as follows (in thousands, except weighted average grant date fair value):

2008

2007

2006Options and SARsWeighted average grant date fair value

$
18.04

$
13.49

$
13.96Total intrinsic value of awards exercised

$
9,341

$
43,825

$
10,183OptionsCash received from exercises

$
6,095

$
27,475

$
11,512


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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
options and SARs outstanding and currently exercisable by exercise price at December 31, 2008 were as follows:

Options and SARs Outstanding

Options and SARs ExercisableExercise Price

Number
of Shares
(in thousands)

Weighted
Average
Remaining
Contractual
Life (in years)

Weighted
Average
Exercise Price

Number
Exercisable
(in thousands)

Weighted
Average
Exercise
Price$13.92  $17.95


614


5.56

$
17.48


450

$
17.39$18.06  $18.25


463


5.56

$
18.18


397

$
18.18$18.70  $18.96


430


3.33

$
18.88


422

$
18.88$19.76  $25.56


452


4.15

$
21.58


385

$
21.52$27.46  $28.18


473


6.95

$
27.82


244

$
27.85$28.31  $35.00


459


8.11

$
32.91


202

$
31.99$36.65  $39.13


414


6.99

$
37.50


191

$
37.92$39.45  $41.76


467


8.95

$
41.54


3

$
39.45$43.79  $56.88


320


6.77

$
48.11


121

$
48.17$60.375  $60.38


1


1.87

$
60.38


1

$
60.38As of December 31, 2008


4,093


6.24

$
28.26


2,416

$
23.92Expected to vest at December 31, 2008


3,768


6.05

$
27.52


The
aggregate intrinsic value of options and SARs expected to vest at December 31, 2008 was $2.8 million.

The
equity awards available for grant for the periods presented were as follows (in thousands):

Fiscal Years2008

2007

2006Beginning balance


1,507


2,138


3,068Awards authorized


944





Options and SARs granted


(926
)

(730
)

(877
)Options and SARs canceled


231


467


409Options expired





(80
)

(4
)SARs exercised, settled for taxes or proceeds, and returned to plan


24


17


RSUs granted


(280
)

(356
)

(279
)RSUs vested, settled for taxes and returned to plan





1


RSUs canceled


33


50


13RSU adjustment(1)


(172
)




Warrants expired








(192
)Ending balance


1,361


1,507


2,138






107

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



During
fiscal 2008, 2007 and 2006, the Company granted RSUs under its 2002 Stock Plan. A summary of RSU activity during 2008, 2007 and 2006 is as follows:

2008

2007

2006Number of
Shares
(in thousands)

Weighted
Average
Grant Date
Fair Value

Number of
Shares
(in thousands)

Weighted
Average
Grant Date
Fair Value

Number of
Shares
(in thousands)

Weighted
Average
Grant Date
Fair ValueOutstanding and unvested at beginning of period


571

$
34.62


266

$
29.81




$
RSUs granted


280

$
41.17


356

$
37.92


279

$
29.81RSUs vested


(118
)
$
29.83


(1
)
$
28.18




$
RSUs canceled


(33
)
$
37.92


(50
)
$
32.78


(13
)
$
29.75Outstanding and unvested at end of period


700

$
37.89


571

$
34.62


266

$
29.81


The
weighted average grant date fair value was determined based on the closing market price of the Company's common stock on the date of the award. Aggregate intrinsic value of RSUs
outstanding at December 31, 2008 was $14.0 million, based on the closing price of $19.97 per share as of December 31, 2008.

Description of Plans



Advent has equity awards outstanding under three stock option plans, the 2002 Stock Plan (the "Plan"), the 1998
Non-statutory Stock Option Plan (the "Non-statutory Plan") and the 1995 Director Option Plan (the "Director Plan").

The Plan.On May 7, 2008 the Company's stockholders approved the amendment and restatement of Advent's 2002 Stock Plan, originally
approved by
the Board of Directors (the "Board") and stockholders in February and May, respectively, of 2002. Under the Plan, the Company may grant options to purchase common stock to employees, consultants and
directors. Options granted may be incentive stock options or non-statutory stock options and shall be granted at a price not less than fair market value on the date of grant. Fair market
value (as defined in the Plan) and the vesting of these options shall be determined by the Board. The options generally vest over 5 years and expire no later than 10 years from the date
of grant. The Company settles employee stock option exercises with newly issued common shares. The Plan permits the award of restricted stock, RSUs, SARs, performance shares, and performance units
under the Plan.

During
2008, 2007 and 2006, Advent granted RSUs and stock-settled SARs. The RSUs are awards of restricted stock units that generally vest over four years in two equal installments on the
second and fourth anniversaries of the date of grant. Upon vesting, the RSUs will convert into an equivalent number of shares of common stock. The value of the RSUs is based on the closing market
price of the Company's common stock on the date of grant and is amortized on a straight-line basis over the four-year requisite service period. A SAR is the right to receive
the appreciation in fair market value of common stock between the exercise date and the date of grant and generally vests over 5 years. Upon exercise, SARs will be settled in shares of Advent
common stock. Unvested RSUs and SARs are canceled on termination of employment and returned to the Plan.

108

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Non-employee directors were eligible to receive option grants under the Director Plan, which terminated in November 2005. Effective April 1,
2005, each non-employee director became eligible to receive the following awards under the 2002 Plan:

Initial option grant upon joining the Board(1)

30,000 sharesAnnual option grant upon re-election to the Board(2)

12,000 shares






On
February 26, 2007, the Board, upon recommendation by the Corporate Governance and Nominating Committee, approved the form and amount of revised equity awards automatically
granted to non-employee directors. Effective February 26, 2007, each non-employee director became eligible to receive the following awards of SARs and restricted stock
units RSUs under the 2002 Plan:

Initial SAR grant upon joining the Board(1)

21,000 sharesInitial RSU grant upon joining the Board(2)

4,500 sharesAnnual SAR grant upon re-election to the Board(3)

8,400 sharesAnnual RSU grant upon re-election to the Board(3)

1,800 shares






In
the event of a merger with or into another corporation, or other change in control, each non-employee director shall fully vest in and have the right to exercise all of
his or her outstanding equity compensation (including outstanding stock options, SARs, RSUs, or performance shares). Upon a director's retirement from the Board, the director's unvested options, SARs
and RSUs are canceled and returned to the Plan.

Non-Statutory Plan.In November 1998, the Board approved the 1998 Non-statutory Stock Option Plan and reserved 300,000 shares
of common stock for issuance thereunder. Under the Company's 1998 Non-statutory Plan, Advent may grant options to purchase common stock to employees and consultants, excluding persons who
are executive
officers and directors. Options granted are non-statutory stock options and shall be granted at a price not less than fair market value on the date of grant. Fair market value (as defined
in the Non-statutory Plan) and the vesting of these options shall be determined by the Board. The options generally vest over 5 years and expire no later than 10 years from
the date of grant. Unvested options on termination of employment are canceled and returned to the Non-statutory Plan. On February 26, 2007, the Board terminated the
Non-statutory Plan.

Director Plan.Advent's Director Plan, which expired on November 16, 2005, provided for the grant of non-statutory stock options
to the Company's non-employee directors ("outside directors"). As noted above, effective April 1, 2005, option grants to outside directors are issued under the 2002 Stock Plan.

109

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



All individuals employed by Advent are eligible to participate in the ESPP if Advent employs them for at least 20 hours per week
and at least five months per year. The ESPP permits eligible employees to purchase Advent common stock through payroll deductions at a price equal to 85% of the lower of the closing sale price for the
Company's common stock reported on the NASDAQ National Market at the beginning or the end of each six-month offering period. In any calendar year, eligible employees can withhold up to 10%
of their salary and certain variable compensation.



On May 18, 2005, Advent's shareholders approved the 2005 ESPP with 2,000,000 shares of common stock reserved for issuance. The
following table summarizes the Company's issuance of common stock under the 2005 ESPP:

Fiscal Years2008

2007

2006Common shares issued


199,381


126,978


110,932Average price

$
25.17

$
30.81

$
27.18


As
of December 31, 2008, common shares of 1,490,692 were reserved for future issuance under the 2005 ESPP.



Advent sponsors a 401(k) Plan to provide retirement benefits for its US employees. This Plan provides for tax-deferred
salary deductions for eligible employees. Employees may contribute between 1% and 70% of their compensation to this Plan, limited by an annual maximum amount as determined by the Internal Revenue
Service. The Company also makes a 50% matching contribution of up to 6% of employee compensation. The Company's matching contributions to this plan totaled $3.1 million, $2.6 million,
and $1.8 million for fiscal 2008, 2007 and 2006, respectively. In addition to the employer matching contribution, Advent may make profit sharing contributions at the discretion of the Board of
Directors. Advent did not make any profit sharing contributions in fiscal 2008, 2007 or 2006.

110

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Note 11Net Income per Share

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

Fiscal Years2008

2007

2006Numerator:Net income

$
18,895

$
12,631

$
82,602Denominator:Denominator for basic net income per shareweighted average shares outstanding


26,640


26,495


29,003Dilutive common equivalent shares:Employee stock options and other


1,253


1,572


1,534Denominator for diluted net income per shareweighted average shares outstanding, assuming exercise of potential dilutive common shares


27,893


28,067


30,537Basic net income per share

$
0.71

$
0.48

$
2.85Diluted net income per share

$
0.68

$
0.45

$
2.70


Weighted
average stock options, SARs and RSUs of approximately 1.6 million, 0.7 million and 1.0 million were excluded from the computation of diluted net income per
share for fiscal 2008, 2007 and 2006, respectively, because their inclusion would have been anti-dilutive.

Note 12Common Stock Repurchase Programs

Advent's Board has approved common stock repurchase programs authorizing management to repurchase shares of the Company's common stock.
The timing and actual number of shares subject to repurchase have been made at the discretion of Advent's management and are contingent on a number of factors and limitations, including the price of
Advent's stock, corporate and regulatory requirements, alternative investment opportunities and other market conditions. The stock repurchase programs specify a maximum number of shares subject to
repurchase, do not have an
expiration date and may be limited or terminated at any time without prior notice. Repurchased shares are returned to the status of authorized and un-issued shares of common stock.

The
following is a summary of the repurchase programs authorized by Advent's Board since fiscal 2006 (in thousands):

Date of Authorization

Number
of Shares
AuthorizedApril 2006


2,300July 2006


1,500February 2007


2,250May 2008


1,000October 2008


3,000Total


10,050


111

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

The
following is a summary of the Company's repurchase activity by year since fiscal 2006 (in thousands, except per share data):

Fiscal Year

Total
Number
of Shares
Repurchased

Cost

Average
Price
Paid Per
Share2006


4,692

$
148,602

$
31.682007


2,580

$
91,157

$
35.332008


2,331

$
61,572

$
26.42Total


9,603

$
301,331

$
31.38


At
December 31, 2008, there remained 1,669,100 shares authorized by the Board for repurchase.

In
addition to the above, Advent has withheld shares through net share settlements upon the vesting of restricted stock units and the exercise of stock-settled stock appreciation rights
under its equity compensation plan to satisfy tax withholding obligations.

Note 13Segment, Significant Customer and Geographical Information



Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated
regularly by the chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. Advent's CODM is the Chief Executive Officer.

Advent's
organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but are not limited to, customer
base, homogeneity of products and technology. Advent's operating segments are based on this organizational structure and information reviewed by Advent's CODM to evaluate the operating segment
results. Advent has determined that its operations are organized into two reportable segments: 1) Advent Investment Management; and 2) MicroEdge. Future changes to this organizational
structure may result in changes to the business segments disclosed.

Advent
Investment Management is the Company's core business and derives revenues from the development, marketing and sale of software products, data interfaces and related maintenance
and services that automate, integrate and support certain mission-critical functions of investment management organizations. MicroEdge derives revenues from the sale of software and services for grant
management, matching gifts and volunteer tracking for the grant-making community.



The results of the operating segments are derived directly from Advent's internal management reporting system. The accounting policies
used to derive operating segment results are substantially the same as those used by the consolidated company. Management measures the performance of each operating segment based on several metrics,
including income (loss) from operations. These results are used, in part, to evaluate the performance of, and to assign resources to, each of the operating segments. Certain operating expenses,
including stock-based compensation and amortization and impairment of developed technology and other intangibles, which Advent manages separately at the

112

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

corporate
level, are not allocated to the operating segments. Advent does not separately accumulate and review asset information by segment.

Segment
information for the periods presented is as follows (in thousands):

Fiscal Years2008

2007

2006Net revenues:Advent Investment Management

$
237,884

$
191,490

$
162,609MicroEdge


26,948


23,733


21,182Other





80


302Total net revenues

$
264,832

$
215,303

$
184,093Income (loss) from operations:Advent Investment Management

$
38,790

$
23,610

$
14,921MicroEdge


4,976


5,631


5,361Other





80


(1,902
)Unallocated corporate operating costs and expenses:Stock-based compensation


(16,828
)

(13,396
)

(13,596
)Amortization and impairment of developed technology


(4,497
)

(1,567
)

(1,200
)Amortization of other intangibles


(1,315
)

(1,879
)

(3,866
)Acquired in-process research and development


(400
)

(150
)

Total income (loss) from operations

$
20,726

$
12,329

$
(282
)Depreciation expense:Advent Investment Management

$
8,435

$
7,171

$
7,026MicroEdge


999


568


637Other








35Total depreciation expense

$
9,434

$
7,739

$
7,698




No single customer represented 10% or more of Advent's total net revenues in any fiscal year presented.



Geographical information as of and for the periods presented is as follows (in thousands):

December 312008

2007Long-lived assets(1):United States

$
51,053

$
36,428International


1,242


1,496Total long-lived assets

$
52,295

$
37,924


113

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Table of Contents

ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Fiscal Years2008

2007

2006Geographic net sales(2):United States

$
228,540

$
188,680

$
161,861International


36,292


26,623


22,232Total net sales

$
264,832

$
215,303

$
184,093






Note 14Fair Value Measurements

Effective January 1, 2008, Advent implemented SFAS No. 157, "Fair Value Measurement", for the Company's financial assets
and liabilities that are measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value
at least annually. In accordance with the provisions of FSP No. FAS 157-2, "Effective Date of FASB Statement No. 157", the Company has elected to defer implementation of
FAS 157 as it relates to non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the financial statements on a nonrecurring
basis until January 1, 2009. Advent is evaluating the impact, if any; this will have on the Company's non-financial assets and liabilities.

The
adoption of SFAS 157 to Advent's financial assets and liabilities and non-financial assets and liabilities that are measured and reported at fair value at least
annually did not have an impact on the Company's financial results.

SFAS
No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a
basis for considering such assumptions, SFAS No. 157 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level Input

Input DefinitionLevel I

Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.Level II

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

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


This
hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining inputs and determining fair value. The
Company measures certain financial assets and liabilities at fair value on a recurring basis and the fair

114

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

value
of these certain financial assets was determined using the following inputs as of December 31, 2008 (in thousands):

Fair Value Measurements at Reporting Date UsingTotal

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)AssetsMoney Market Funds(1)

$
2,801

$
2,801

$


$



---

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 US government and treasury
obligation money market mutual funds. The fair value of these securities is determined through market, observable and corroborated sources.

SFAS
No. 159, "The Fair Value of Option for Financial Assets and Financial Liabilities" ("SFAS 159") became effective on January 1, 2008. SFAS 159 provides
companies with an option to irrevocably elect to measure certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis with the
resulting changes in fair value recorded in earnings. The objective of SFAS 159 is to reduce both the complexity in accounting for financial instruments and the volatility in earnings caused by
using different measurement attributes for financial assets or financial liabilities. As of January 1, 2008 and for the year ended December 31, 2008, the Company has elected not to apply
the fair value option to any of its financial assets or liabilities on-hand, which were not already measured at fair value, because the Company does not believe the application of
SFAS 159's fair value option is appropriate, given the nature of its business operations.

The
carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value based on the short-term maturities of
these instruments. In accordance with SFAS No. 107, "Disclosures About Fair Value Instruments" at December 31, 2008, the fair value of the Company's debt was estimated at
$24 million, using quoted market prices and yields for the same or similar type of borrowings, taking into account the underlying terms of the debt instruments. At December 31, 2008, the
carrying value exceeded the estimated fair value of the debt by $1 million.

Non-marketable
investments, which totaled $0.5 million at December 31, 2008, represent the Company's investments in a privately held company.
Non-marketable investments are priced at the lower of cost and reviewed for impairment due to an absence of market activity and market data, and are not reported in the above table of
assets measured at fair value as of December 31, 2008.

Note 15Subsequent Events

From January 1, 2009 through February 28, 2009, the Company repurchased 0.7 million shares of common stock, under
the repurchase program that was approved by the Board of Directors on October 30, 2008, at an average price of $21.51.

In
January 2009, the Company repaid $10.0 million of the debt under its Credit Facility resulting in a $15.0 million balance as of January 31, 2009. During February
2009, Advent elected to move from the

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ADVENT SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

Wells
Fargo prime rate into a monthly LIBOR rate contract on the remaining $15.0 million which bears a rate of 0.45% plus an applicable margin of 1.50% for an all-in rate of 1.95%.

Supplementary Quarterly Financial Data (Unaudited)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter(in thousands, except per share data)2008(1)(2):Net revenues

$
61,473

$
64,027

$
64,920

$
74,412Gross margin

$
41,774

$
43,173

$
40,964

$
48,727Income from operations

$
3,724

$
5,066

$
4,726

$
7,210Net income

$
2,635

$
7,355

$
2,712

$
6,193Net income per sharebasic

$
0.10

$
0.28

$
0.10

$
0.23Net income per sharediluted

$
0.09

$
0.26

$
0.10

$
0.232007(3)(4):Net revenues

$
47,979

$
52,376

$
55,549

$
59,399Gross margin

$
32,515

$
36,372

$
37,580

$
40,946Income (loss) from operations

$
(50
)
$
3,041

$
5,795

$
3,543Net income

$
439

$
5,095

$
3,296

$
3,801Net income per sharebasic

$
0.02

$
0.19

$
0.13

$
0.14Net income per sharediluted

$
0.02

$
0.18

$
0.12

$
0.13


---

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Table of Contents



Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.    Controls and Procedures

Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are designed to ensure that information required to be disclosed in the Company's reports under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the
Company's Principal Executive and Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company's management evaluated, with the participation of the
Principal Executive and Financial Officer, the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this Annual Report on
Form 10-K. Based on this evaluation, the Principal Executive and Financial Officer has concluded that our disclosure controls and procedures were effective as of December 31,
2008.

Management's annual report on internal control over financial reporting

See "Management's Report on Internal Control over Financial Reporting" on page 71.

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(e) of the Exchange Act that occurred during the fourth quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially
affect, Advent's internal control over financial reporting.

Item 9B.    Other Information

None.

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Table of Contents



PART III



Item 10.    Directors, Executive Officers and Corporate Governance

The information on Directors appearing under the heading "Corporate Governance" and "Proposal No. 1: Election of Directors" in
the Notice of the 2009 Annual Meeting of Stockholders and 2009 Proxy Statement, to be filed pursuant to Rule 14a-6(b) under the Securities and Exchange Act of 1934 (the "Exchange
Act"), in connection with the Company's 2009 Annual Meeting of Stockholders (the "2009 Proxy Statement"), is incorporated by reference in this Annual Report on Form 10-K.
Information required by this Item related to the executive officers can be found in the section captioned "Executive Officers of the Registrant" under Part I, "Item 1. Business" of this
Annual Report on Form 10-K, and is also incorporated herein by reference. Information required by this Item regarding any material changes to the process by which security holders
may recommend nominees to the Board of Directors appears under the heading "Procedural Matters" in our 2009 Proxy Statement and is incorporated herein by reference.

The
information contained under the heading "Section 16(A) Beneficial Ownership Reporting Compliance" in the 2009 Proxy Statement are incorporated by reference in this Annual
Report on Form 10-K.

The
current members of the audit committee are Robert A. Ettl, James D. Kirsner and Wendell Van Auken (Chair), each of whom is "independent" as defined by current Nasdaq listing
standards. The Board has determined that all members of the audit committee are financial experts as defined by Item 401(h) of Regulation S-K of the Exchange Act.

The
Company has a code of business ethics and conduct that applies to all of the Company's employees, including its Principal Executive and Financial Officer, Principal Accounting
Officer and its Board of Directors. A copy of this code, "Code of Business Ethics and Conduct", is available on the
Company's website athttp://investor.advent.com/phoenix.zhtml?c=96626&p=irol-govHighlights.

The
Company intends to disclose any changes in or waivers from its code of ethics by posting such information on its website.

Item 11.    Executive Compensation

Information required by this Item is incorporated by reference to our Proxy Statement for our 2009 Annual Meeting of Stockholders,
where it is included under the caption "Compensation Committee Matters."

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this Item is incorporated by reference to our Proxy Statement for our 2009 Annual Meeting of Stockholders,
where it is included under the captions "Beneficial Security Ownership of Management and Certain Beneficial Owners," and "Equity Compensation Plan Information."

Item 13.    Certain Relationships and Related Transactions, and Director Independence

Information required by this Item is incorporated by reference to our Proxy Statement for our 2009 Annual Meeting of Stockholders,
where it is included under the caption "Certain Relationships and Related Transactions" and "Corporate Governance."

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Table of Contents

Item 14.    Principal Accountant Fees and Services

Information required by this Item is incorporated by reference to our Proxy Statement for our 2009 Annual Meeting of Stockholders,
where it is included under the caption "Fees to Independent Registered Public Accounting Firm."

PART IV



Item 15.    Exhibits and Financial Statement Schedules





PageManagement's Report on Internal Control Over Financial Reporting

71Report of Independent Registered Public Accounting Firm

72Consolidated Balance Sheets as of December 31, 2008 and 2007

73Consolidated Statements of Operations for the years ended December 31, 2008, 2007, and
2006

74Consolidated Statements of Stockholders' Equity and Comprehensive Income for the years ended
December 31, 2008, 2007, and 2006

75Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007, and
2006

76Notes to Consolidated Financial Statements

77


119

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Table of Contents



The following financial statement schedule for the years ended December 31, 2008, 2007 and 2006 should be read in conjunction with the consolidated
financial statements of Advent Software, Inc. filed as part of this Annual Report on Form 10-K:

Schedule II
ADVENT SOFTWARE, INC
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 2008, 2007 and 2006

Balance at
Beginning
of Period

Additions
(Reductions)
Charged
to Expense

Write-offs /
Adjustments

Balance at
End
of Period(in thousands)Allowance for doubtful accounts:2006

$
146

$
988

$
864

$
2702007

$
270

$
79

$
168

$
1812008

$
181

$
327

$
161

$
347Allowance for sales returns:2006

$
3,053

$
(776
)
$
142

$
2,1352007

$
2,135

$
118

$
168

$
2,0852008

$
2,085

$
219

$


$
2,304Deferred tax asset valuation allowance:2006

$
103,726

$
(92,150
)
$


$
11,5762007

$
11,576

$
(3,065
)
$
2,474

$
6,0372008

$
6,037

$
(344
)
$
(1,168
)(1)
$
6,861


---

Schedules
other than those listed above have been omitted since they are either not required, not applicable, or because the information required is included in the consolidated
financial statements or the notes thereto.

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Table of Contents



The following exhibits are filed as a part of, or incorporated by reference into this Form 10-K:

Incorporated by ReferenceExhibit
Number



Filed
HerewithExhibit Description

Form

Date

Number2.1

Agreement and Plan of Merger by and among Advent Software, Inc. ("Advent"), Kayak Acquisition Corp., and Kinexus Corporation dated as of December 31, 2001

8-K

3/1/2002

2.12.2

Agreement and Plan of Reorganization by and among the Registrant, Tamale Software, Inc., Tenor Corporation and Tenor LLC dated as of September 4, 2008

8-K

9/5/2008

2.13.1

Second Amended and Restated Certificate of Incorporation of Registrant

10-K

3/12/2001

3.13.2

Amended and Restated Bylaws of Registrant

8-K

11/8/2007

3.14.1

Specimen Common Stock Certificate of Registrant

SB-2

11/15/1995

***10.1

Form of Indemnification Agreement for Executive Officers and Directors *

SB-2

11/15/1995

***10.2

1992 Stock Plan, as amended *

S-8

5/28/1999

4.110.3

1993 Profit Sharing & Employee Savings Plan, as amended *

SB-2

11/15/1995

***10.4

1995 Employee Stock Purchase Plan *

SB-2

11/15/1995

***10.5

1995 Director Option Plan *

S-8

8/11/2000

4.110.6

2002 Stock Option Plan, as amended *

DEF 14A

4/22/2005

Appendix B10.7

Office Lease dated August 1, 1998, between SOMA Partners, L.P. and Advent for facilities located at 301 Brannan in San Francisco, California

10-K

3/26/1999

10.1410.8

Office Lease dated July 22, 1999, between 405 Lexington, L.L.C. and Advent for facilities located at 666 Third Avenue in New York, New York

10-K

3/17/2000

10.1510.9

2005 Employee Stock Purchase Plan *

DEF 14A

4/22/2005

Appendix A10.10

Office Lease dated January 6, 2006, between Toda Development, Inc. and Advent for facilities located at 600 Townsend Street in San Francisco, California.

8-K

1/12/2006

10.110.11

Executive Severance Plan dated March 14, 2006*

10-K

3/31/2006

10.13


121

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Table of Contents

Incorporated by ReferenceExhibit
Number



Filed
HerewithExhibit Description

Form

Date

Number10.12

Credit Facility

10-K

3/16/2007

10.1410.13

Summary of Plan Terms for 2008 Executive Short-Term Incentive Plan *

8-K

2/5/2008

10.110.14

2002 Stock Plan, as amended

DEF 14A

4/4/2008

Appendix A10.15

Separation Agreement and Release between Advent and Craig B. Collins dated July 28, 2008*

10-Q

8/7/2008

10.210.16

Summary of Plan Terms for 2009 Executive Short-Term Incentive Plan *

8-K

1/26/2009

10.121.1

Subsidiaries of Advent







X23.1

Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm







X24.1

Power of Attorney (included on page 124 of this Form 10-K)







X31.1

Certification of Principal Executive and Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002







X32.1

Certification of Principal Executive and Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002







X


---

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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on this 12th day of March, 2009.

ADVENT SOFTWARE, INC.By:

/s/ STEPHANIE G. DIMARCO Stephanie G. DiMarco Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer)


123

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Table of Contents

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephanie G. DiMarco and
James S. Cox his or her attorney-in-fact, with full power of substitution, for him in any and all capacities, to sign any amendments to this Report on
Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature

Title

Date/s/ STEPHANIE G. DIMARCO Stephanie G. DiMarco

Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer)

March 12, 2009/s/ JAMES S. COX James S. Cox

Vice President and Corporate Controller
(Principal Accounting Officer)

March 12, 2009/s/ A. GEORGE BATTLE A. George Battle

Director

March 12, 2009/s/ ROBERT A. ETTL Robert A. Ettl

Director

March 12, 2009/s/ JAMES D. KIRSNER James D. Kirsner

Director

March 12, 2009/s/ JAMES P. ROEMER James P. Roemer

Director

March 12, 2009/s/ JOHN H. SCULLY John H. Scully

Chairman of the Board

March 12, 2009/s/ WENDELL G. VAN AUKEN Wendell G. Van Auken

Director

March 12, 2009


124

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