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Per Share | Total | |||||||
Price to Public | $ | 17.60 | $ | 193,600,000 | ||||
Underwriting Discounts and Commissions | $ | 0.704 | $ | 7,744,000 | ||||
Proceeds to SS&C Holdings | $ | 16.896 | $ | 33,792,000 | ||||
Proceeds to Selling Stockholders | $ | 16.896 | $ | 152,064,000 | ||||
J.P. Morgan |
Morgan Stanley |
Deutsche Bank Securities |
Needham & Company, LLC |
Raymond James |
Wells Fargo Securities |
William Blair & Company |
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• Portfolio Management/Accounting | • Fund Administration Services | |
• Financial Modeling | • Loan Management/Accounting | |
• Trading/Treasury Operations | • Money Market Processing | |
• Property Management |
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• | Our business is greatly affected by changes in the state of the general economy and the financial markets, and economic uncertainty or a prolonged downturn in the general economy or the financial services industry could adversely affect demand for our products and services. |
• | We face significant competition, which may result in price reductions, reduced gross margins or loss of market share. |
• | If we cannot attract, train and retain qualified managerial, technical and sales personnel, we may not be able to provide adequate technical expertise and customer service to our clients or maintain focus on our business strategy. |
• | Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our 113/4% senior subordinated notes due 2013 and our senior credit facilities. |
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• | Carlyle capitalized SS&C Holdings with an aggregate equity contribution of $381.0 million; |
• | William C. Stone, SS&C’s Chairman of the Board and Chief Executive Officer, contributed $165.0 million of equity in the form of stock and rollover options, and certain other management and employee option holders contributed approximately $9.0 million of additional equity in the form of rollover options, to SS&C Holdings; |
• | SS&C entered into senior secured credit facilities consisting of: |
• | a $75.0 million revolving credit facility, of which $10.0 million was drawn at closing; and | |
• | a $275.0 million term loan B facility, which was fully drawn at closing and of which the equivalent of $75.0 million was drawn in Canadian dollars by one of SS&C’s Canadian subsidiaries; |
• | SS&C issued and sold $205.0 million in aggregate principal amount of 113/4% senior subordinated notes due 2013; |
• | all outstanding options to purchase shares of SS&C’s common stock became fully vested and immediately exercisable, and each outstanding option (other than options held by (1) non-employee directors, (2) certain individuals identified in a schedule to the Merger Agreement and (3) individuals who held options that were exercisable for fewer than 100 shares of SS&C’s common stock) were, subject to certain conditions, assumed by SS&C Holdings and converted into an option to acquire common stock of SS&C Holdings; and |
• | all in-the-money warrants to purchase shares of SS&C’s common stock were cancelled in exchange for cash equal to the excess of the transaction price over the exercise price of the warrants. |
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Time of | Time of | |||
Transaction | this offering | |||
Per share | $8.64 | $17.60 | ||
Aggregate | $555 million | $1,131 million | ||
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Common stock offered by SS&C Technologies Holdings, Inc. | 2,000,000 shares | |
Common stock offered by the selling stockholders | 9,000,000 shares | |
Total | 11,000,000 shares | |
Common stock to be outstanding after this offering | 75,272,612 shares (76,372,612 shares if the over-allotment option is exercised in full) | |
Over-allotment option offered by SS&C Technologies Holdings, Inc. | We have granted the underwriters a30-day option to purchase up to 1,100,000 shares of common stock. | |
Use of proceeds | We estimate that we will receive approximately $33.5 million in net proceeds from the 2,000,000 shares of common stock that we are offering based upon the public offering price of $17.60 per share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use our net proceeds of this offering to redeem a portion of our outstanding 113/4% senior subordinated notes due 2013 at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest. We will not receive any proceeds from the sale of shares by the selling stockholders, except for the aggregate exercise price of options held by certain selling stockholders. See “Use of proceeds” for additional information. | |
The NASDAQ Global Select Market symbol | “SSNC” |
• | 12,182,192 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2010 at a weighted average exercise price of $8.51 per share; |
• | 1,497,711 shares of common stock reserved as of December 31, 2010 for future issuance under our 2006 equity incentive plan; and |
• | 2,361,077 shares of common stock reserved as of December 31, 2010 for future issuance under our 2008 stock incentive plan. |
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• | no exercise of outstanding options after December 31, 2010; |
• | an8.5-for-1 stock split of our common stock that was effected on March 10, 2010; and |
• | no exercise by the underwriters of their over-allotment option. |
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Predecessor | Successor | Combined1 | Successor | ||||||||||||||||||||||||||||||||||
January 1 | November 23 | Year | Year | Year | Year | Year | |||||||||||||||||||||||||||||||
through | through | ended | ended | ended | ended | ended | Nine Months Ended | ||||||||||||||||||||||||||||||
(In thousands, | November 22, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | September 30, | September 30, | ||||||||||||||||||||||||||||
except per share data) | 2005 | 2005 | 2005 | 2006 | 2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||
Statement of operations data: | |||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||
Software licenses | $ | 20,147 | $ | 3,587 | $ | 23,734 | $ | 22,925 | $ | 27,514 | $ | 24,844 | $ | 20,661 | $ | 15,632 | $ | 17,629 | |||||||||||||||||||
Maintenance | 44,064 | 3,701 | 47,765 | 55,222 | 61,910 | 65,178 | 66,099 | 48,565 | 54,130 | ||||||||||||||||||||||||||||
Professional services | 12,565 | 2,520 | 15,085 | 19,582 | 17,491 | 24,352 | 20,889 | 14,872 | 15,384 | ||||||||||||||||||||||||||||
Software-enabled services | 67,193 | 7,857 | 75,050 | 107,740 | 141,253 | 165,632 | 163,266 | 120,801 | 155,652 | ||||||||||||||||||||||||||||
Total revenues | 143,969 | 17,665 | 161,634 | 205,469 | 248,168 | 280,006 | 270,915 | 199,870 | 242,795 | ||||||||||||||||||||||||||||
Total cost of revenues | 59,004 | 7,627 | 66,631 | 100,016 | 128,882 | 142,433 | 137,740 | 102,394 | 122,439 | ||||||||||||||||||||||||||||
Gross profit | 84,965 | 10,038 | 95,003 | 105,453 | 119,286 | 137,573 | 133,175 | 97,476 | 120,356 | ||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||
Selling, marketing, general and administrative | 25,078 | 2,504 | 27,582 | 37,964 | 44,274 | 45,686 | 39,559 | 29,912 | 38,075 | ||||||||||||||||||||||||||||
Research and development | 19,199 | 2,071 | 21,270 | 23,620 | 26,282 | 26,804 | 26,513 | 19,593 | 23,486 | ||||||||||||||||||||||||||||
Merger costs | 36,912 | — | 36,912 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total operating expenses | 81,189 | 4,575 | 85,764 | 61,584 | 70,556 | 72,490 | 66,072 | 49,505 | 61,561 | ||||||||||||||||||||||||||||
Operating income | 3,776 | 5,463 | 9,239 | 43,869 | 48,730 | 65,083 | 67,103 | 47,971 | 58,795 | ||||||||||||||||||||||||||||
Interest income | 1,031 | 30 | 1,061 | 388 | 939 | 409 | 28 | 24 | 9 | ||||||||||||||||||||||||||||
Interest expense | (2,092 | ) | (4,920 | ) | (7,012 | ) | (47,427 | ) | (45,463 | ) | (41,539 | ) | (36,891 | ) | (27,815 | ) | (23,827 | ) | |||||||||||||||||||
Other (expense) income, net | 655 | 258 | 913 | 456 | 1,911 | 1,994 | (1,418 | ) | (1,256 | ) | 653 | ||||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | — | — | — | (5,480 | ) | |||||||||||||||||||||||||||
Income (loss) before income taxes | 3,370 | 831 | 4,201 | (2,714 | ) | 6,117 | 25,947 | 28,822 | 18,924 | 30,150 | |||||||||||||||||||||||||||
Provision (benefit) for income taxes | 2,658 | — | 2,658 | (3,789 | ) | (458 | ) | 7,146 | 9,804 | 5,928 | 6,913 | ||||||||||||||||||||||||||
Net income | $ | 712 | $ | 831 | $ | 1,543 | $ | 1,075 | $ | 6,575 | $ | 18,801 | $ | 19,018 | $ | 12,996 | $ | 23,237 | |||||||||||||||||||
Earnings per share2 | |||||||||||||||||||||||||||||||||||||
Basic | $ | 0.03 | $ | 0.01 | $ | 0.02 | $ | 0.11 | $ | 0.31 | $ | 0.31 | $ | 0.22 | $ | 0.34 | |||||||||||||||||||||
Diluted | $ | 0.03 | $ | 0.01 | $ | 0.02 | $ | 0.10 | $ | 0.30 | $ | 0.30 | $ | 0.21 | $ | 0.32 | |||||||||||||||||||||
Weighted average shares outstanding2 | |||||||||||||||||||||||||||||||||||||
Basic | 23,300 | 60,138 | 60,172 | 60,245 | 60,284 | 60,381 | 60,378 | 67,919 | |||||||||||||||||||||||||||||
Diluted | 24,478 | 62,167 | 62,182 | 63,382 | 63,700 | 63,653 | 63,132 | 71,499 | |||||||||||||||||||||||||||||
Other financial data: | |||||||||||||||||||||||||||||||||||||
Recurring revenue percentage3 | 77.3% | 65.4% | 76.0% | 79.3% | 81.9% | 82.4% | 84.7% | 84.7% | 86.4% | ||||||||||||||||||||||||||||
Consolidated EBITDA4 | $ | 64,989 | $ | 8,588 | $ | 73,577 | $ | 83,998 | $ | 98,667 | $ | 115,566 | $ | 119,266 | $ | 82,979 | $ | 99,579 | |||||||||||||||||||
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As of September 30, 2010 | ||||||||
(In thousands) | Actual | As adjusted | ||||||
(unaudited) | (unaudited) | |||||||
Balance sheet data: | ||||||||
Cash and cash equivalents | $ | 86,975 | $ | 54,213 | ||||
Working capital | 71,064 | 40,415 | ||||||
Total assets | 1,245,639 | 1,213,290 | ||||||
113/4% senior subordinated notes due 2013 | 133,250 | 66,625 | ||||||
Senior credit facility, including current portion | 157,072 | 157,072 | ||||||
Total stockholders’ equity | 828,489 | 863,930 | ||||||
(1) | Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with generally accepted accounting principles (GAAP) or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. | |
(2) | Amounts for the Predecessor period are computed based upon the capital structure in existence prior to the Acquisition. Amounts for the Successor periods are computed based upon the capital structure in existence subsequent to the Acquisition. | |
(3) | Recurring revenue percentage represents software-enabled services revenues and maintenance revenues as a percentage of total revenues. We do not believe that the recurring revenue percentage for the Successor period of 2005 is meaningful because such period is only five weeks in duration and not indicative of our overall trends. | |
(4) | Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities. | |
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures. | ||
Any breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA. | ||
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year. | ||
Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including: | ||
• Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions; | ||
• Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage; | ||
• Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges; | ||
• Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and | ||
• Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business. |
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Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||||||||||||||
Predecessor | Successor | Combineda | Successor | ||||||||||||||||||||||||||||||||||||||
Period | |||||||||||||||||||||||||||||||||||||||||
Period | from | ||||||||||||||||||||||||||||||||||||||||
from | November 23, | Twelve | |||||||||||||||||||||||||||||||||||||||
January 1 | 2005 | Year | Year | Year | Year | Year | Months | ||||||||||||||||||||||||||||||||||
through | through | ended | ended | ended | ended | ended | Ended | ||||||||||||||||||||||||||||||||||
November 22, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | September 30, | ||||||||||||||||||||||||||||||||||
(In thousands) | 2005 | 2005 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010b | 2009 | 2010 | |||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||||||
Net income | $ | 712 | $ | 831 | $ | 1,543 | $ | 1,075 | $ | 6,575 | $ | 18,801 | $ | 19,018 | $ | 29,259 | $ | 12,996 | $ | 23,237 | |||||||||||||||||||||
Interest expense, netc | 1,061 | 4,890 | 5,951 | 47,039 | 44,524 | 41,130 | 36,863 | 38,370 | 27,791 | 29,298 | |||||||||||||||||||||||||||||||
Income taxes | 2,658 | — | 2,658 | (3,789 | ) | (458 | ) | 7,146 | 9,804 | 10,789 | 5,928 | 6,913 | |||||||||||||||||||||||||||||
Depreciation and amortization | 9,575 | 2,301 | 11,876 | 27,128 | 35,047 | 35,038 | 36,028 | 39,677 | 26,707 | 30,356 | |||||||||||||||||||||||||||||||
EBITDA | 14,006 | 8,022 | 22,028 | 71,453 | 85,668 | 102,115 | 101,713 | 118,095 | 73,422 | 89,804 | |||||||||||||||||||||||||||||||
Purchase accounting adjustmentsd | — | 616 | 616 | 3,017 | (296 | ) | (289 | ) | (93 | ) | (54 | ) | (163 | ) | (124 | ) | |||||||||||||||||||||||||
Merger costs | 36,912 | — | 36,912 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Capital-based taxes | — | — | — | 1,841 | 1,721 | 1,212 | 795 | 984 | 672 | 861 | |||||||||||||||||||||||||||||||
Unusual or non-recurring charges (income)e | (737 | ) | (242 | ) | (979 | ) | 1,485 | (1,718 | ) | 1,480 | 1,990 | (142 | ) | 1,683 | (449 | ) | |||||||||||||||||||||||||
Acquired EBITDA and cost savingsf | 14,808 | 85 | 14,893 | 1,147 | 135 | 2,379 | 8,053 | 2,121 | 2,025 | 192 | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 3,871 | 10,979 | 7,323 | 5,607 | 10,425 | 4,363 | 9,181 | |||||||||||||||||||||||||||||||
Otherg | — | 107 | 107 | 1,184 | 2,158 | 1,346 | 1,201 | 338 | 977 | 114 | |||||||||||||||||||||||||||||||
Consolidated EBITDA | $ | 64,989 | $ | 8,588 | $ | 73,577 | $ | 83,998 | $ | 98,667 | $ | 115,566 | $ | 119,266 | $ | 131,767 | $ | 82,979 | $ | 99,579 | |||||||||||||||||||||
(a) | Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. | |
(b) | Results for the twelve months ended September 30, 2010 are included because our senior credit facilities require the calculation of our consolidated total leverage and consolidated net interest coverage ratio for the prior four consecutive quarters. With the exception of acquired EBITDA and cost savings, our results for the twelve months ended September 30, 2010 are calculated based on our results for the year ended December 31, 2009, in addition to our results for the nine months ended September 30, 2010, less our results for the nine months ended September 30, 2009. | |
(c) | Interest expense includes any loss on extinguishment of debt shown as a separate line item on the statement of operations. | |
(d) | Purchase accounting adjustments include (1) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of the Transaction and (2) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction. | |
(e) | Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, gains and losses on the sales of marketable securities, equity earnings and losses on investments, proceeds and payments associated with legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses. | |
(f) | Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions. | |
(g) | Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense. |
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Combined1 | Successor | |||||||||||||||||||||||||||
Twelve months | Twelve months | |||||||||||||||||||||||||||
Twelve months | Twelve months | Twelve months | Twelve months | Twelve months | ended | ended | ||||||||||||||||||||||
ended | ended | ended | ended | ended | September 30, 2010 | September 30, 2010 | ||||||||||||||||||||||
(In thousands, except ratio data) | December 31, 2005 | December 31, 2006 | December 31, 2007 | December 31, 2008 | December 31, 2009 | (Actual) | (As adjusted)6 | |||||||||||||||||||||
Consolidated EBITDA2 | $ | 73,577 | $ | 83,998 | $ | 98,667 | $ | 115,566 | $ | 119,266 | $ | 131,767 | $ | 131,767 | ||||||||||||||
Consolidated total leverage to Consolidated EBITDA ratio (current maximum covenant level: 5.50)3 | 6.43 | 5.48 | 4.30 | 3.28 | 3.17 | 1.98 | 1.47 | |||||||||||||||||||||
Consolidated EBITDA to consolidated net interest coverage ratio (current minimum covenant level: 2.25)4 | 10.87 | 5 | 1.88 | 2.34 | 2.98 | 3.45 | 4.30 | 5.77 | ||||||||||||||||||||
(1) | Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. | |
(2) | We reconcile our Consolidated EBITDA for the trailing four quarters to net income for the same period using the same methods set forth above. | |
(3) | Consolidated total leverage ratio is defined in our senior credit facilities at the last day of any period of four consecutive fiscal quarters, as the ratio of (a) the principal amount of all debt at such date, minus the amount, up to a maximum amount of $30.0 million, of cash and cash equivalents to (b) Consolidated EBITDA. The current maximum consolidated total leverage ratio is 5.50. The maximum consolidated total leverage ratio for 2010 and 2009 was 5.50, for 2008 was 6.00, for 2007 was 6.75 and for 2006 was 7.50. There was no maximum consolidated total leverage ratio covenant prior to June 30, 2006. | |
(4) | Consolidated net interest coverage ratio is defined in our senior credit facilities as for any period, the ratio of (a) Consolidated EBITDA for such period to (b) total cash interest expense for such period with respect to all outstanding indebtedness minus total cash interest income for such period. The current minimum consolidated net interest coverage ratio is 2.25. The minimum consolidated net interest coverage ratio for 2010 and 2009 was 2.00, for 2008 was 1.70, for 2007 was 1.50 and for 2006 was 1.40. There was no minimum consolidated net interest coverage ratio covenant prior to June 30, 2006. | |
(5) | This ratio is not comparable because we did not incur debt under our existing senior credit facilities until November 2005 in connection with the Transaction. | |
(6) | As adjusted to give effect to the receipt by us of approximately $33.5 million in net proceeds from the sale of 2,000,000 shares of our common stock in this offering at the public offering price of $17.60 per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the use of such net proceeds and $35.1 million of our existing cash resources to redeem $66.6 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest. The as adjusted data also give effect to our receipt of the aggregate exercise price for the 480,100 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering. |
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• | cancel or reduce planned expenditures for our products and services; |
• | process fewer transactions through our software-enabled services; |
• | seek to lower their costs by renegotiating their contracts with us; |
• | move their IT solutions in-house; |
• | switch to lower-priced solutions provided by our competitors; or |
• | exit the industry. |
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• | the level of demand for our products and services; |
• | the level of client spending for information technology; |
• | the level of competition from internal client solutions and from other vendors; |
• | the quality of our client service; |
• | our ability to update our products and services and develop new products and services needed by clients; |
• | our ability to understand the organization and processes of our clients; and |
• | our ability to integrate and manage acquired businesses. |
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• | combine operations, facilities and differing firm cultures; |
• | retain the clients or employees of acquired entities; |
• | generate market demand for new products and services; |
• | coordinate geographically dispersed operations and successfully adapt to the complexities of international operations; |
• | integrate the technical teams of these companies with our engineering organization; |
• | incorporate acquired technologies and products into our current and future product lines; and |
• | integrate the products and services of these companies with our business, where we do not have distribution, marketing or support experience for these products and services. |
• | the timing of the introduction and the market acceptance of new products, product enhancements or services by us or our competitors; |
• | the lengthy and often unpredictable sales cycles of large client engagements; |
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• | the amount and timing of our operating costs and other expenses; |
• | the financial health of our clients; |
• | changes in the value of assets under our clients’ management; |
• | cancellations of maintenanceand/or software-enabled services arrangements by our clients; |
• | changes in local, national and international regulatory requirements; |
• | changes in our personnel; |
• | implementation of our licensing contracts and software-enabled services arrangements; |
• | changes in economic and financial market conditions; and |
• | changes in the mix in the types of products and services we provide. |
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• | we may find it difficult or costly to update our services and software and to develop new products and services quickly enough to meet our clients’ needs; |
• | we may find it difficult or costly to make some features of our software work effectively and securely over the Internet or with new or changed operating systems; |
• | we may find it difficult or costly to update our software and services to keep pace with business, evolving industry standards, regulatory and other developments in the industries where our clients operate; and |
• | we may be exposed to liability for security breaches that allow unauthorized persons to gain access to confidential information stored on our computers or transmitted over our network. |
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• | changes in a specific country’s or region’s political or economic condition; |
• | difficulties in obtaining U.S. export licenses; |
• | potentially longer payment cycles; |
• | increased costs associated with maintaining international marketing efforts; |
• | foreign currency fluctuations; |
• | the introduction of non-tariff barriers and higher duty rates; |
• | foreign regulatory compliance; and |
• | difficulties in enforcement of third-party contractual obligations and intellectual property rights. |
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• | make it more difficult for us to satisfy our obligations with respect to our notes and our senior credit facilities; |
• | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts and other general corporate purposes; |
• | increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | expose us to the risk of increased interest rates as borrowings under our senior credit facilities are subject to variable rates of interest; |
• | place us at a competitive disadvantage compared to our competitors that have less debt; and |
• | limit our ability to borrow additional funds. |
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• | incur additional indebtedness; |
• | sell assets, including capital stock of restricted subsidiaries; |
• | agree to payment restrictions affecting SS&C’s restricted subsidiaries; |
• | pay dividends; |
• | consolidate, merge, sell or otherwise dispose of all or substantially all of SS&C’s assets; |
• | make strategic acquisitions; |
• | enter into transactions with SS&C’s affiliates; |
• | incur liens; and |
• | designate any of SS&C’s subsidiaries as unrestricted subsidiaries. |
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• | declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable; or |
• | prevent us from making payments on the notes, |
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• | fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; |
• | changes in estimates of our financial results or recommendations by securities analysts; |
• | failure of any of our products to achieve or maintain market acceptance; |
• | changes in market valuations of similar companies; |
• | success of competitive products; |
• | changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; |
• | announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances; |
• | regulatory developments in the United States, foreign countries or both; |
• | litigation involving our company, our general industry or both; |
• | additions or departures of key personnel; |
• | investors’ general perception of us; and |
• | changes in general economic, industry and market conditions. |
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• | limitations on the removal of directors; |
• | a classified board of directors so that not all members of our board are elected at one time; |
• | advance notice requirements for stockholder proposals and nominations; |
• | the inability of stockholders to call special meetings; |
• | the ability of our board of directors to make, alter or repeal our bylaws; |
• | the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used to institute a rights plan, or a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors; and |
• | a prohibition on stockholders from acting by written consent if William C. Stone, investment funds affiliated with Carlyle, and certain transferees of Carlyle cease to collectively hold a majority of our outstanding common stock. |
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• | the effect of a prolonged downturn in the general economy or the financial services industry; |
• | the effect of any further or accelerated consolidations in the financial services industry; |
• | our ability to retain and attract clients and key personnel; |
• | the integration of acquired businesses; |
• | our ability to continue to derive substantial revenues from the licensing of, or provision of software-enabled services relating to, certain of our licensed software, and the provision of maintenance and professional services in support of such licensed software; |
• | our ability to adapt to rapidly changing technology and evolving industry standards, and our ability to introduce new products and services; |
• | challenges in maintaining and expanding our international operations; |
• | the effects of war, terrorism and other catastrophic events; |
• | the risk of increased interest rates due to the variable rates of interest on certain of our indebtedness; and |
• | other risks and uncertainties, including those listed under the caption “Risk factors.” |
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High | Low | |||||||
First Quarter 2010 (beginning March 31, 2010) | $ | 16.34 | $ | 15.01 | ||||
Second Quarter 2010 | $ | 18.41 | $ | 14.45 | ||||
Third Quarter 2010 | $ | 18.36 | $ | 13.27 | ||||
Fourth Quarter 2010 | $ | 21.95 | $ | 15.65 | ||||
First Quarter 2011 (through February 3, 2011) | $ | 21.00 | $ | 17.49 | ||||
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• | on an actual basis; and |
• | on an as adjusted basis to reflect: |
(1) | the receipt by us of approximately $33.5 million in net proceeds from the sale of 2,000,000 shares of common stock that we are offering at the public offering price of $17.60 per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, the use of such net proceeds and $35.1 million of our existing cash resources to redeem $66.6 million in original principal amount of our outstanding 113/4% senior subordinated notes due 2013 at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest, a loss on extinguishment of debt of approximately $2.9 million, including a $2.0 million redemption premium and a non-cash charge of approximately $0.9 million relating to the write-off of deferred financing fees attributable to the redeemed notes and the related tax effect of the loss on extinguishment of debt; and | |
(2) | the issuance of 480,100 shares of common stock upon the exercise of options held by certain selling stockholders in connection with this offering and the receipt of the aggregate exercise price for such options and the associated tax effect of the exercises. |
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September 30, 2010 | ||||||||
(In thousands, except per share data) | Actual | As adjusted | ||||||
Cash and cash equivalents | $ | 86,975 | $ | 54,213 | ||||
Senior credit facilities | $ | 157,072 | $ | 157,072 | ||||
113/4% senior subordinated notes due 2013 | 133,250 | 66,625 | ||||||
Capital leases | 82 | 82 | ||||||
Total debt, including current portion | 290,404 | 223,779 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, par value $0.01 per share; 5,000 shares authorized and no shares issued or outstanding, actual and as adjusted | — | — | ||||||
Common stock, par value $0.01 per share; 100,000 shares authorized and 71,773 shares issued and 71,285 shares outstanding, actual; 74,253 shares issued and 73,765 shares outstanding, as adjusted | 718 | 743 | ||||||
Class A non-voting common stock, par value $0.01 per share; 5,000 shares authorized and 791 shares issued and outstanding, of which 154 are unvested, actual and as adjusted | 8 | 8 | ||||||
Additional paid-in capital | 740,302 | 777,461 | ||||||
Accumulated other comprehensive income | 23,743 | 23,743 | ||||||
Retained earnings | 69,537 | 67,794 | ||||||
Less: cost of common stock in treasury, 407 shares | 5,819 | 5,819 | ||||||
Total stockholders’ equity | 828,489 | 863,930 | ||||||
Total capitalization, including current portion of long-term debt | $ | 1,118,893 | $ | 1,087,709 | ||||
• | 12,939,329 shares of common stock issuable upon the exercise of stock options outstanding as of September 30, 2010 at a weighted average exercise price of $8.43 per share; |
• | 1,475,041 shares of common stock reserved as of September 30, 2010 for future issuance under our 2006 equity incentive plan; and |
• | 2,322,827 shares of common stock reserved as of September 30, 2010 for future issuance under our 2008 stock incentive plan. |
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Predecessor | Successor | ||||||||||||||||||||||||||||||||||||
Period from | Period from | Combined | Successor | ||||||||||||||||||||||||||||||||||
January 1, | November 23, | Year | Year | Year | Year | Year | |||||||||||||||||||||||||||||||
2005 through | 2005 through | Ended | Ended | Ended | Ended | Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
November 22, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||||||||
(In thousands, except per share and percentage data) | 2005 | 2005 | 2005 | 2006 | 2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||
Statement of operations data: | |||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||
Software licenses | $ | 20,147 | $ | 3,587 | $ | 23,734 | $ | 22,925 | $ | 27,514 | $ | 24,844 | $ | 20,661 | $ | 15,632 | $ | 17,629 | |||||||||||||||||||
Maintenance | 44,064 | 3,701 | 47,765 | 55,222 | 61,910 | 65,178 | 66,099 | 48,565 | 54,130 | ||||||||||||||||||||||||||||
Professional services | 12,565 | 2,520 | 15,085 | 19,582 | 17,491 | 24,352 | 20,889 | 14,872 | 15,384 | ||||||||||||||||||||||||||||
Software-enabled services | 67,193 | 7,857 | 75,050 | 107,740 | 141,253 | 165,632 | 163,266 | 120,801 | 155,652 | ||||||||||||||||||||||||||||
Total revenues | 143,969 | 17,665 | 161,634 | 205,469 | 248,168 | 280,006 | 270,915 | 199,870 | 242,795 | ||||||||||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||||||||||||||||
Software licenses | 2,963 | 856 | 3,819 | 9,216 | 9,616 | 9,198 | 8,499 | 6,304 | 5,754 | ||||||||||||||||||||||||||||
Maintenance | 10,393 | 1,499 | 11,892 | 20,415 | 26,038 | 26,854 | 27,559 | 20,352 | 24,305 | ||||||||||||||||||||||||||||
Professional services | 7,849 | 861 | 8,710 | 12,575 | 14,277 | 16,118 | 14,154 | 10,659 | 10,243 | ||||||||||||||||||||||||||||
Software-enabled services | 37,799 | 4,411 | 42,210 | 57,810 | 78,951 | 90,263 | 87,528 | 65,079 | 82,137 | ||||||||||||||||||||||||||||
Total cost of revenues | 59,004 | 7,627 | 66,631 | 100,016 | 128,882 | 142,433 | 137,740 | 102,394 | 122,439 | ||||||||||||||||||||||||||||
Gross profit | 84,965 | 10,038 | 95,003 | 105,453 | 119,286 | 137,573 | 133,175 | 97,476 | 120,356 | ||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||
Selling and marketing | 13,134 | 1,364 | 14,498 | 17,598 | 19,701 | 19,566 | 20,362 | 15,229 | 18,910 | ||||||||||||||||||||||||||||
Research and development | 19,199 | 2,071 | 21,270 | 23,620 | 26,282 | 26,804 | 26,513 | 19,593 | 23,486 | ||||||||||||||||||||||||||||
General and administrative | 11,944 | 1,140 | 13,084 | 20,366 | 24,573 | 26,120 | 19,197 | 14,683 | 19,165 | ||||||||||||||||||||||||||||
Merger costs | 36,912 | — | 36,912 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total operating expenses | 81,189 | 4,575 | 85,764 | 61,584 | 70,556 | 72,490 | 66,072 | 49,505 | 61,561 | ||||||||||||||||||||||||||||
Operating income | 3,776 | 5,463 | 9,239 | 43,869 | 48,730 | 65,083 | 67,103 | 47,971 | 58,795 | ||||||||||||||||||||||||||||
Interest income | 1,031 | 30 | 1,061 | 388 | 939 | 409 | 28 | 24 | 9 | ||||||||||||||||||||||||||||
Interest expense | (2,092 | ) | (4,920 | ) | (7,012 | ) | (47,427 | ) | (45,463 | ) | (41,539 | ) | (36,891 | ) | (27,815 | ) | (23,827 | ) | |||||||||||||||||||
Other (expense) income, net | 655 | 258 | 913 | 456 | 1,911 | 1,994 | (1,418 | ) | (1,256 | ) | 653 | ||||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | — | — | — | (5,480 | ) | |||||||||||||||||||||||||||
Income (loss) before income taxes | 3,370 | 831 | 4,201 | (2,714 | ) | 6,117 | 25,947 | 28,822 | 18,924 | 30,150 | |||||||||||||||||||||||||||
(Benefit) provision for income taxes | 2,658 | — | 2,658 | (3,789 | ) | (458 | ) | 7,146 | 9,804 | 5,928 | 6,913 | ||||||||||||||||||||||||||
Net income | $ | 712 | $ | 831 | $ | 1,543 | $ | 1,075 | $ | 6,575 | $ | 18,801 | $ | 19,018 | $ | 12,996 | $ | 23,237 | |||||||||||||||||||
Earnings per share1 | |||||||||||||||||||||||||||||||||||||
Basic | $ | 0.03 | $ | 0.01 | $ | 0.02 | $ | 0.11 | $ | 0.31 | $ | 0.31 | $ | 0.22 | $ | 0.34 | |||||||||||||||||||||
Diluted | $ | 0.03 | $ | 0.01 | $ | 0.02 | $ | 0.10 | $ | 0.30 | $ | 0.30 | $ | 0.21 | $ | 0.32 | |||||||||||||||||||||
Weighted average shares outstanding1 | |||||||||||||||||||||||||||||||||||||
Basic | 23,300 | 60,138 | 60,172 | 60,245 | 60,284 | 60,381 | 60,378 | 67,919 | |||||||||||||||||||||||||||||
Diluted | 24,478 | 62,167 | 62,182 | 63,382 | 63,700 | 63,653 | 63,132 | 71,499 | |||||||||||||||||||||||||||||
Pro forma earnings per share2 | |||||||||||||||||||||||||||||||||||||
Basic | $ | 0.38 | |||||||||||||||||||||||||||||||||||
Diluted | $ | 0.36 | |||||||||||||||||||||||||||||||||||
Pro forma weighted average shares outstanding2 | |||||||||||||||||||||||||||||||||||||
Basic | 70,399 | ||||||||||||||||||||||||||||||||||||
Diluted | 73,819 | ||||||||||||||||||||||||||||||||||||
Statement of cash flows data: | |||||||||||||||||||||||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||||||||||||||||||||
Operating activities | $ | 32,116 | $ | 4,915 | $ | 30,709 | $ | 57,057 | $ | 61,655 | $ | 59,852 | $ | 45,000 | $ | 47,629 | |||||||||||||||||||||
Investing activities | (110,495 | ) | (877,261 | ) | (18,626 | ) | (12,839 | ) | (24,608 | ) | (54,134 | ) | (11,562 | ) | (14,757 | ) | |||||||||||||||||||||
Financing activities | 69,161 | 868,655 | (16,427 | ) | (37,408 | ) | (25,532 | ) | (17,896 | ) | (11,960 | ) | 35,107 | ||||||||||||||||||||||||
Other financial data: | |||||||||||||||||||||||||||||||||||||
Recurring revenue percentage3 | 77.3% | 65.4% | 76.0% | 79.3% | 81.9% | 82.4% | 84.7% | 84.7% | 86.4% | ||||||||||||||||||||||||||||
Consolidated EBITDA4 | $ | 64,989 | $ | 8,588 | $ | 73,577 | $ | 83,998 | $ | 98,667 | $ | 115,566 | $ | 119,266 | $ | 82,979 | $ | 99,579 | |||||||||||||||||||
Balance sheet data (at period end): | |||||||||||||||||||||||||||||||||||||
Cash, cash equivalents and marketable securities | $ | 15,584 | $ | 11,718 | $ | 19,175 | $ | 29,299 | $ | 19,055 | $ | 52,461 | $ | 86,975 | |||||||||||||||||||||||
Working capital (deficit) | 7,283 | (1,312 | ) | 5,668 | 10,835 | (14,610 | ) | $ | 21,020 | $ | 71,064 | ||||||||||||||||||||||||||
Total assets | 1,176,371 | 1,152,521 | 1,190,495 | 1,127,353 | 1,185,641 | $ | 1,165,854 | $ | 1,245,639 | ||||||||||||||||||||||||||||
Long-term debt, net of current portion | 478,143 | 466,235 | 440,580 | 406,625 | 392,989 | $ | 400,300 | $ | 288,685 | ||||||||||||||||||||||||||||
Total stockholders’ equity | 557,133 | 563,132 | 612,593 | 587,253 | 645,987 | �� | $ | 634,818 | $ | 828,489 | |||||||||||||||||||||||||||
(1) | Amounts for the Predecessor periods are computed based upon the capital structure in existence prior to the Acquisition. Amounts for the Successor periods are computed based upon the capital structure in existence subsequent to the Acquisition. | |
(2) | Pro forma basic and diluted earnings per share for the nine months ended September 30, 2010 give effect to the issuance and sale by us of 2,000,000 shares in this offering, the net proceeds of which, along with $35.1 million of our existing cash resources, will be used to redeem $66.6 million in principal amount of the notes, for $68.6 million in cash and excludes the loss on extinguishment of debt associated with the redemption. As a result of this redemption, our aggregate interest expense for the period in respect of the notes, net of tax, will decrease by approximately $3.7 million. See “Use of proceeds.” | |
(3) | Recurring revenue percentage represents software-enabled services revenues and maintenance revenues as a percentage of total revenues. We do not believe that the recurring revenue percentage for the Successor period of 2005 is meaningful because such period is only five weeks in duration and not indicative of our overall trends. |
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(4) | Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities. | |
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures. | ||
Any breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA. | ||
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year. | ||
Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including: | ||
• Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions; | ||
• Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage; | ||
• Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges; | ||
• Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and | ||
• Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business. | ||
The following is a reconciliation of net income to Consolidated EBITDA as defined in our senior credit facilities. |
Predecessor | Successor | Combined | Successor | ||||||||||||||||||||||||||||||||||||||||||
Period | |||||||||||||||||||||||||||||||||||||||||||||
Period | from | ||||||||||||||||||||||||||||||||||||||||||||
from | November 23, | Twelve | |||||||||||||||||||||||||||||||||||||||||||
January 1 | 2005 | Year | Year | Year | Year | Year | Months | ||||||||||||||||||||||||||||||||||||||
through | through | Ended | Ended | Ended | Ended | Ended | Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
November 22, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
(In thousands) | 2005 | 2005 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010a | 2009 | 2010 | |||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 712 | $ | 831 | $ | 1,543 | $ | 1,075 | $ | 6,575 | $ | 18,801 | $ | 19,018 | $ | 29,259 | $ | 12,996 | $ | 23,237 | |||||||||||||||||||||||||
Interest expense, netb | 1,061 | 4,890 | 5,951 | 47,039 | 44,524 | 41,130 | 36,863 | 38,370 | 27,791 | 29,298 | |||||||||||||||||||||||||||||||||||
Income taxes | 2,658 | — | 2,658 | (3,789 | ) | (458 | ) | 7,146 | 9,804 | 10,789 | 5,928 | 6,913 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 9,575 | 2,301 | 11,876 | 27,128 | 35,047 | 35,038 | 36,028 | 39,677 | 26,707 | 30,356 | |||||||||||||||||||||||||||||||||||
EBITDA | 14,006 | 8,022 | 22,028 | 71,453 | 85,668 | 102,115 | 101,713 | 118,095 | 73,422 | 89,804 | |||||||||||||||||||||||||||||||||||
Purchase accounting adjustmentsc | — | 616 | 616 | 3,017 | (296 | ) | (289 | ) | (93 | ) | (54 | ) | (163 | ) | (124 | ) | |||||||||||||||||||||||||||||
Merger costs | 36,912 | — | 36,912 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Capital-based taxes | — | — | — | 1,841 | 1,721 | 1,212 | 795 | 984 | 672 | 861 | |||||||||||||||||||||||||||||||||||
Unusual or non-recurring charges (income)d | (737 | ) | (242 | ) | (979 | ) | 1,485 | (1,718 | ) | 1,480 | 1,990 | (142 | ) | 1,683 | (449 | ) | |||||||||||||||||||||||||||||
Acquired EBITDA and cost savingse | 14,808 | 85 | 14,893 | 1,147 | 135 | 2,379 | 8,053 | 2,121 | 2,025 | 192 | |||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 3,871 | 10,979 | 7,323 | 5,607 | 10,425 | 4,363 | 9,181 | |||||||||||||||||||||||||||||||||||
Otherf | — | 107 | 107 | 1,184 | 2,158 | 1,346 | 1,201 | 338 | 977 | 114 | |||||||||||||||||||||||||||||||||||
Consolidated EBITDA | $ | 64,989 | $ | 8,588 | $ | 73,577 | $ | 83,998 | $ | 98,667 | $ | 115,566 | $ | 119,266 | $ | 131,767 | $ | 82,979 | $ | 99,579 | |||||||||||||||||||||||||
(a) | Results for the twelve months ended September 30, 2010 are included because our senior credit facilities require the calculation of our consolidated total leverage and consolidated net interest coverage ratio for the prior four consecutive quarters. With the exception of acquired EBITDA and cost savings, our results for the twelve months ended |
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September 30, 2010 are calculated based on our results for the year ended December 31, 2009, in addition to our results for the nine months ended September 30, 2010, less our results for the nine months ended September 30, 2009. | ||
(b) | Interest expense includes any loss on extinguishment of debt shown as a separate line item on the statement of operations. | |
(c) | Purchase accounting adjustments include (1) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of the Transaction and (2) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction. | |
(d) | Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, gains and losses on the sales of marketable securities, equity earnings and losses on investments, proceeds and payments associated with legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses. | |
(e) | Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions. | |
(f) | Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense. |
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Successor | ||||||||||||||||||||||||||||
Combined1 | Twelve Months | Twelve Months | ||||||||||||||||||||||||||
Twelve Months | Twelve Months | Twelve Months | Twelve Months | Twelve Months | Ended | Ended | ||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | September 30, | September 30, | ||||||||||||||||||||||
December 31, | December 31, | December 31, | December 31, | December 31, | 2010 | 2010 | ||||||||||||||||||||||
(In thousands, except ratio data) | 2005 | 2006 | 2007 | 2008 | 2009 | (Actual) | (As adjusted)6 | |||||||||||||||||||||
Consolidated EBITDA2 | $ | 73,577 | $ | 83,998 | $ | 98,667 | $ | 115,566 | $ | 119,266 | $ | 131,767 | $ | 131,767 | ||||||||||||||
Consolidated total leverage to Consolidated EBITDA ratio (current maximum covenant level: 5.50)3 | 6.43 | 5.48 | 4.30 | 3.28 | 3.17 | 1.98 | 1.47 | |||||||||||||||||||||
Consolidated EBITDA to consolidated net interest coverage ratio (current minimum covenant level: 2.25)4 | 10.87 | 5 | 1.88 | 2.34 | 2.98 | 3.45 | 4.30 | 5.77 | ||||||||||||||||||||
(1) | Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results. |
(2) | We reconcile our Consolidated EBITDA for the trailing four quarters to net income for the same period using the same methods set forth above. | |
(3) | Consolidated total leverage ratio is defined in our senior credit facilities at the last day of any period of four consecutive fiscal quarters, as the ratio of (a) the principal amount of all debt at such date, minus the amount, up to a maximum amount of $30.0 million of cash and cash equivalents to (b) Consolidated EBITDA. The current maximum consolidated total leverage ratio is 5.50. The maximum consolidated total leverage ratio for 2010 and 2009 was 5.50, for 2008 was 6.00, for 2007 was 6.75 and for 2006 was 7.50. There was no maximum consolidated total leverage ratio covenant prior to June 30, 2006. | |
(4) | Consolidated net interest coverage ratio is defined in our senior credit facilities as for any period, the ratio of (a) Consolidated EBITDA for such period to (b) total cash interest expense for such period with respect to all outstanding indebtedness minus total cash interest income for such period. The current minimum consolidated net interest coverage ratio is 2.25. The minimum consolidated net interest coverage ratio for 2010 and 2009 was 2.00, for 2008 was 1.70, for 2007 was 1.50 and for 2006 was 1.40. There was no minimum consolidated net interest coverage ratio covenant prior to June 30, 2006. | |
(5) | This ratio is not comparable because we did not incur debt under our existing senior credit facilities until November 2005 in connection with the Transaction. | |
(6) | As adjusted to give effect to the receipt by us of approximately $33.5 million in net proceeds from the sale of 2,000,000 shares of our common stock in this offering at the public offering price of $17.60 per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the use of such net proceeds and $35.1 million of our existing cash resources to redeem $66.6 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 102.9375% of the principal amount, plus accrued and unpaid interest. The as adjusted data also give effect to our receipt of the aggregate exercise price for the 480,100 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering. |
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financial condition and results of operations
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Acquired business | Acquisition date | Acquired capabilities, products and services | ||
TimeShareWare | December 2010 | Added shared ownership property management platform to real estate offering | ||
thinkorswim Technologies | October 2010 | Added electronic OMS/EMS offering in broker/dealer market | ||
GIPS | February 2010 | Expanded fund administration services to private equity market | ||
Tradeware | December 2009 | Added electronic trading offering in broker/ dealer market | ||
TheNextRound | November 2009 | Expanded private equity client base with TNR Solution product | ||
MAXIMIS | May 2009 | Expanded institutional footprint and provided new cross-selling opportunities | ||
Evare | March 2009 | Expanded institutional middle- and back-office outsourcing services with financial data acquisition, transformation and delivery services | ||
Micro Design Services | October 2008 | Added real-time, mission-critical order routing and execution services with ACA and MarketLook products | ||
Northport | March 2007 | Expanded fund administration services to private equity market | ||
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• | significant underperformance relative to historical or projected future operating results; |
• | significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and |
• | significant negative industry or economic trends. |
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• | the value of our business as determined at arm’s length in connection with the Transaction; |
• | significant business milestones that may have affected the value of our business subsequent to the Transaction; |
• | the risks associated with our business; |
• | the economic outlook in general and the condition and outlook of our industry; |
• | our financial condition and expected operating results; |
• | our level of outstanding indebtedness; |
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• | the market price of stocks of publicly traded corporations engaged in the same or similar lines of business; |
• | as of July 31, 2006, March 31, 2007 and March 1, 2008, analyses using a weighted average of three generally accepted valuation procedures: the income approach, the market approach—publicly traded guideline company method and the market approach—transaction method; and |
• | as of November 15, 2008, April 1, 2009 and November 30, 2009, analyses using a weighted average of two generally accepted valuation procedures: the income approach and the market approach-publicly traded guideline company method. The market approach—transaction method was not utilized due to the lack of comparable transactions in the evaluation period. |
Weighted- | ||||||||||||||||||||||||
average | ||||||||||||||||||||||||
Weighted- | fair value | Weighted-average grant date fair value of options by vesting type1: | ||||||||||||||||||||||
Shares | average | of | Change | |||||||||||||||||||||
under | exercise | underlying | in | |||||||||||||||||||||
Grant date | option | price | stock | Time | Performance | control | ||||||||||||||||||
August 2006 | 9,909,555 | $ | 8.77 | $ | 8.77 | $ | 3.66 | $ | 3.88 | $ | 2.50 | |||||||||||||
November 2006 | 89,250 | 8.77 | 8.77 | 3.62 | 3.84 | 2.50 | ||||||||||||||||||
March 2007 | 195,500 | 8.77 | 8.77 | 3.61 | 3.83 | 0.87 | ||||||||||||||||||
May 2007 | 148,750 | 11.64 | 11.64 | 4.81 | 5.10 | 1.07 | ||||||||||||||||||
June 2007 | 25,500 | 11.64 | 11.64 | 4.87 | 5.16 | 1.02 | ||||||||||||||||||
January 2009 | 255,041 | 10.08 | 10.08 | 2.86 | — | — | ||||||||||||||||||
December 2009 | 102,000 | 14.53 | 14.53 | 4.54 | — | — | ||||||||||||||||||
January 2010 | 4,250 | 14.53 | 14.53 | 4.49 | — | — | ||||||||||||||||||
February 2010 | 400,350 | 14.53 | 14.53 | 4.48 | — | — | ||||||||||||||||||
March 2010 | 1,615,085 | 14.53 | 14.53 | 4.51 | — | — | ||||||||||||||||||
April 2010 | 21,250 | 15.29 | 15.29 | 4.79 | — | — | ||||||||||||||||||
May 2010 | 50,200 | 16.49 | 16.49 | 5.64 | — | — | ||||||||||||||||||
June 2010 | 48,500 | 17.83 | 17.83 | 6.06 | — | — | ||||||||||||||||||
August 2010 | 14,500 | 16.24 | 16.24 | 5.42 | — | — | ||||||||||||||||||
(1) | The weighted-average fair value of options by vesting type represents the value at the grant date. These fair values do not reflect the re-valuation of certain options related to modifications effected in February 2009, March 2008 and April 2007, or the resolutions approved by our board and compensation committee in February 2010 relating to performance-based and superior options, as more fully described in notes 10, 16 and 17 to the consolidated financial statements included elsewhere in this prospectus. |
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Options | Intrinsic value | |||||||
Unvested | 2,988,359 | $ | 14,094,413 | |||||
Vested | 9,193,833 | $ | 96,681,257 | |||||
• | the conversion of the outstanding superior options granted under the 2006 equity incentive plan into performance-based options that vest based on our EBITDA performance in 2010 and 2011, which affected 1,680,868 outstanding options, of which 701,497 were held by our named executive officers; |
• | the elimination of pre-determined EBITDA targets from the option agreements and provision for the annual proposal of EBITDA ranges by management, subject to approval by our board, which EBITDA target range for 2010 was established by our board in a subsequent meeting described below; and |
• | the “rolling over” of performance-based options that do not vest (in whole or in part) in any given year into performance-based options for the following year, except as otherwise provided by our board of directors. Under the 2006 equity incentive plan, our board has the authority to amend the options to effect such a “rollover” and, generally, has the authority to amend, suspend or terminate any option, provided that, except with respect to specified corporate events, neither the amendment, suspension nor termination of the option shall, without the consent of the optionee, alter or impair any rights or obligations under the option. The rollover affected 689,007 outstanding unvested performance-based options, of |
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which 280,600 were held by our named executive officers, and affected 1,680,868 outstanding superior options, of which 701,497 were held by our named executive officers, that converted to performance-based options upon the closing of our IPO. |
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Percent change | ||||||||||||||||||||
Year ended December 31, | from prior period | |||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Software licenses | $ | 20,661 | $ | 24,844 | $ | 27,514 | (16.8 | )% | (9.7 | )% | ||||||||||
Maintenance | 66,099 | 65,178 | 61,910 | 1.4 | 5.3 | |||||||||||||||
Professional services | 20,889 | 24,352 | 17,491 | (14.2 | ) | 39.2 | ||||||||||||||
Software-enabled services | 163,266 | 165,632 | 141,253 | (1.4 | ) | 17.3 | ||||||||||||||
Total revenues | $ | 270,915 | $ | 280,006 | $ | 248,168 | (3.2 | ) | 12.8 | |||||||||||
Nine months ended | ||||||||||||
September 30, | % | |||||||||||
2010 | 2009 | Change | ||||||||||
Revenues: | ||||||||||||
Software licenses | $ | 17,629 | $ | 15,632 | 13 | % | ||||||
Maintenance | 54,130 | 48,565 | 11 | % | ||||||||
Professional services | 15,384 | 14,872 | 3 | % | ||||||||
Software-enabled services | 155,652 | 120,801 | 29 | % | ||||||||
Total revenues | $ | 242,795 | $ | 199,870 | 21 | % | ||||||
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Year ended December 31, | Nine months ended September 30, | |||||||||||||||||||
2009 | 2008 | 2007 | 2010 | 2009 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Software licenses | 7.6 | % | 8.9 | % | 11.1 | % | 7.3 | % | 7.8 | % | ||||||||||
Maintenance | 24.4 | 23.3 | 25.0 | 22.3 | 24.3 | |||||||||||||||
Professional services | 7.7 | 8.7 | 7.0 | 6.3 | 7.5 | |||||||||||||||
Software-enabled services | 60.3 | 59.1 | 56.9 | 64.1 | 60.4 | |||||||||||||||
Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
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Less than | More than | |||||||||||||||||||||||
Contractual obligations | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | All other | ||||||||||||||||||
Short-term and long-term debt | $ | 397,259 | $ | 4,270 | $187,989 | $ | 205,000 | $ | — | $ | — | |||||||||||||
Interest payments1 | 113,935 | 33,200 | 56,648 | 24,087 | — | — | ||||||||||||||||||
Operating lease obligations2 | 33,959 | 9,486 | 13,490 | 7,132 | 3,851 | — | ||||||||||||||||||
Purchase obligations3 | 8,322 | 5,556 | 1,879 | 770 | 117 | — | ||||||||||||||||||
Uncertain tax positions and related interest4 | 8,238 | — | — | — | — | 8,238 | ||||||||||||||||||
Total contractual obligations | $ | 561,713 | $ | 52,512 | $260,006 | $ | 236,989 | $ | 3,968 | $ | 8,238 | |||||||||||||
(1) | Reflects interest payments on our term loan facility and associated interest rate swap agreement at an assumed interest rate of three-month LIBOR of 0.26% plus 2.0% for U.S. dollar loans and CDOR of 0.38% plus 2.5% for Canadian dollar loans, and required interest payments on our senior subordinated notes of 11.75%. | |
(2) | We are obligated under noncancelable operating leases for office space and office equipment. The lease for the corporate facility in Windsor, Connecticut expires in 2016. We sublease office space under noncancelable leases. We received rental income under these leases of $1.3 million, $1.4 million and $1.5 million for the years ended December 31, 2009, 2008 and 2007, respectively. The effect of the rental income to be received in the future has not been included in the table above. | |
(3) | Purchase obligations include the minimum amounts committed under contracts for goods and services. | |
(4) | As of December 31, 2009, our liability for uncertain tax positions and related net interest payable were $7.0 million and $1.3 million, respectively. We are unable to reasonably estimate the timing of such liability and interest payments in individual years beyond twelve months due to uncertainties in the timing of the effective settlement of tax positions. |
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• | Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions; |
• | Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage; |
• | Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges; |
• | Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and |
• | Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business. |
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Nine months ended | ||||||||||||||||||||
Year ended December 31, | September 30, | |||||||||||||||||||
(In thousands) | 2009 | 2008 | 2007 | 2010 | 2009 | |||||||||||||||
Net income | $ | 19,018 | $ | 18,801 | $ | 6,575 | $ | 23,237 | $ | 12,996 | ||||||||||
Interest expense, net | 36,863 | 41,130 | 44,524 | 29,298 | 27,791 | |||||||||||||||
Income tax provision (benefit) | 9,804 | 7,146 | (458 | ) | 6,913 | 5,928 | ||||||||||||||
Depreciation and amortization | 36,028 | 35,038 | 35,047 | 30,356 | 26,707 | |||||||||||||||
EBITDA | 101,713 | 102,115 | 85,688 | 89,804 | 73,422 | |||||||||||||||
Purchase accounting adjustments1 | (93 | ) | (289 | ) | (296 | ) | (124 | ) | (163 | ) | ||||||||||
Capital-based taxes | 795 | 1,212 | 1,721 | 861 | 672 | |||||||||||||||
Unusual or non-recurring charges2 | 1,990 | 1,480 | (1,718 | ) | (449 | ) | 1,683 | |||||||||||||
Acquired EBITDA and cost savings3 | 8,053 | 2,379 | 135 | 192 | 2,025 | |||||||||||||||
Stock-based compensation | 5,607 | 7,323 | 10,979 | 9,181 | 4,363 | |||||||||||||||
Other4 | 1,201 | 1,346 | 2,158 | 114 | 977 | |||||||||||||||
Consolidated EBITDA, as defined | $ | 119,266 | $ | 115,566 | $ | 98,667 | $ | 99,579 | $ | 82,979 | ||||||||||
(1) | Purchase accounting adjustments include (a) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of acquisitions and (b) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction. | |
(2) | Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, equity earnings and losses on investments, proceeds and payments from legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses. | |
(3) | Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions. | |
(4) | Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense. |
Covenant | Actual | |||||||
requirements | ratios | |||||||
Maximum consolidated total leverage to Consolidated EBITDA Ratio | 5.50 | x | 1.98 | x | ||||
Minimum Consolidated EBITDA to consolidated net interest coverage ratio | 2.25 | x | 4.30 | x | ||||
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Treasury, | Real | |||||||||||||||||||||||||||||||
Alternative | banks & | Institutional | Insurance & | Municipal | estate | |||||||||||||||||||||||||||
investment | Financial | credit | asset | pension | Commercial | finance | property | |||||||||||||||||||||||||
Selected functionality | managers | markets | unions | managers | funds | lenders | groups | managers | ||||||||||||||||||||||||
Portfolio Management/Accounting | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||
Trading/Treasury Operations | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||
Financial Modeling | ü | ü | ü | |||||||||||||||||||||||||||||
Fund Administration Services | ü | |||||||||||||||||||||||||||||||
Loan Management/Accounting | ü | ü | ü | |||||||||||||||||||||||||||||
Money Market Processing | ü | |||||||||||||||||||||||||||||||
Property Management | ü | |||||||||||||||||||||||||||||||
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• | provide complementary products or services in the financial services industry; |
• | possess proven technology and an established client base that will provide a source of ongoing revenue and to whom we may be able to sell existing products and services; |
• | expand our intellectual property portfolio to complement our business; |
• | address a highly specialized problem or a market niche in the financial services industry; |
• | expand our global reach into strategic geographic markets; and |
• | have solutions that lend themselves to being delivered as software-enabled services. |
Acquisition | ||||||
date | Acquired business | Contract purchase price* | Acquired capabilities, products and services | |||
March 1995 | Chalke | $10,000,000 | Expanded insurance footprint with PTS actuarial product | |||
November 1997 | Mabel Systems | $850,000 and 109,224 shares | Entered Benelux market with investment accounting product | |||
December 1997 | Shepro Braun Systems | 1,500,000 shares | Entered hedge fund and family office markets with Total Return product | |||
March 1998 | Quantra | $2,269,800 and 819,028 shares | Entered the real estate property management market with SKYLINE product | |||
April 1998 | The Savid Group | $821,500 | Expanded debt and derivative product offerings |
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Acquisition | ||||||
date | Acquired business | Contract purchase price* | Acquired capabilities, products and services | |||
March 1999 | HedgeWare | 1,028,524 shares | Expanded product offerings for the hedge fund and family office markets | |||
March 1999 | Brookside | 41,400 shares | Expanded our consulting services capabilities | |||
November 2001 | Digital Visions | $1,350,000 | Entered financial institutions market with BANC Mall, PALMS and PortPro products | |||
January 2002 | Real-Time USA | $4,000,000 | Expanded financial institutions offering with Lightning and Real-Time products | |||
November 2002 | DBC | $4,500,000 | Added municipal finance structuring products for underwriters, investment banks, municipal issuers and financial advisors | |||
December 2003 | Amicorp Fund Services | $1,800,000 | Entered offshore fund administration services market | |||
January 2004 | Investment Advisory Network | $3,000,000 | Expanded wealth management capabilities with Compass and Portfolio Manager products | |||
February 2004 | NeoVision Hypersystems | $1,600,000 | Added data visualization dashboard capabilities with Heatmaps product | |||
April 2004 | OMR Systems | $19,671,000 | Added integrated, global product offering for financial institutions and hedge funds with TradeThru product | |||
February 2005 | Achievement Technologies | $470,000 | Enhanced real estate property management offering with SamTrak facilities management product | |||
February 2005 | Eisnerfast | $25,300,000 | Expanded fund administration services to the hedge fund and private equity markets | |||
April 2005 | Financial Models Company | $159,000,000 | Expanded front-, middle- and back-office products and services to the investment management industry including Pacer, Pages, Recon and Sylvan products |
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Acquisition | ||||||
date | Acquired business | Contract purchase price* | Acquired capabilities, products and services | |||
June 2005 | Financial Interactive | 358,424 shares and warrants to purchase 50,000 shares | Expanded alternative investment fund offerings with FundRunner CRM product | |||
August 2005 | MarginMan | $5,600,000 | Expanded depth in foreign currency exchange market with MarginMan product | |||
October 2005 | Open Information Systems | $24,000,000 | Entered money market, custody and security lending market with Global Debt Manager, Information Manager and Money Market Manager products | |||
March 2006 | Cogent Management | $12,250,000 | Expanded fund administration services to hedge fund and private equity markets | |||
August 2006 | Zoologic | $3,000,000 | Added education and training courseware offerings for financial institutions | |||
March 2007 | Northport | $5,000,000 | Expanded fund administration services to private equity market | |||
October 2008 | Micro Design Services | $17,200,000 | Added real-time, mission-critical order routing and execution services with ACA and MarketLook products | |||
March 2009 | Evare | $3,514,500 | Expanded institutional middle- and back-office outsourcing services with financial data acquisition, transformation and delivery services | |||
May 2009 | MAXIMIS | $7,700,000 | Expanded institutional footprint and provided new cross-selling opportunities | |||
November 2009 | TheNextRound | $21,000,000 | Expanded private equity client base with TNR Solution product | |||
December 2009 | Tradeware | $22,500,000 | Added electronic trading offering in broker/dealer market | |||
February 2010 | GIPS | $12,000,000 | Expanded fund administration services to private equity market | |||
October 2010 | thinkorswim Technologies | $5,000,000 | Added electronic OMS/EMS offering in broker/dealer market | |||
December 2010 | TimeShareWare | $30,500,000 | Added shared ownership property management platform to real estate offering | |||
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Products | Typical users | Vertical markets served | ||||
Portfolio Management/Accounting | ||||||
AdvisorWare | Portfolio managers | Alternative investment managers | ||||
Altair | Asset managers | Financial markets | ||||
CAMRA | Fund administrators | Institutional asset managers | ||||
Debt & Derivatives | Investment advisors | Insurance & pension funds | ||||
FundRunnerMarathon | Auditors | Treasury, banks & credit unions | ||||
Global Wealth Platform | Alternative investment managers | |||||
Lightning | Broker/dealers | |||||
MAXIMIS | ||||||
Pacer | ||||||
Pages | ||||||
PALMS | ||||||
PortPro | ||||||
Recon | ||||||
Sylvan | ||||||
TNR Solution | ||||||
Total Return | ||||||
Trading/Treasury Operations | ||||||
Antares | Securities traders | Alternative investment managers | ||||
Antares Trader | Financial institutions | Financial markets | ||||
MarginMan | Asset managers | Treasury, banks & credit unions | ||||
MarketLook Information System | Brokers/dealers | Corporate treasuries | ||||
TradeDesk | Financial exchanges | |||||
TradeThru | ||||||
Tradeware MarketCenter | ||||||
Financial Modeling | ||||||
DBC | CEO/CFOs | Insurance & pension funds | ||||
PTS | Risk managers | Municipal finance groups | ||||
Risk Analytics | Actuarial professionals | Treasury, banks & credit unions | ||||
Bank asset/liability managers | Asset managers | |||||
Investment bankers | Hedge funds | |||||
State/local treasury staff | ||||||
Financial advisors | ||||||
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Products | Typical users | Vertical markets served | ||||
Loan Management/Accounting | ||||||
BANC Mall | Mortgage originators | Commercial lenders | ||||
LMS Loan Suite | Commercial lenders | Insurance & pension funds | ||||
LMS Originator | Mortgage loan servicers | Treasury, banks & credit unions | ||||
LMS Servicer | Mortgage loan portfolio managers | |||||
Real estate investment managers | ||||||
Bank/credit union loan officers | ||||||
Property Management | ||||||
CondotelWare | Real estate investment managers | Real estate leasing/property | ||||
SKYLINE | Real estate leasing agents | managers | ||||
TimeShareWare | Real estate property managers | |||||
Facility managers | ||||||
Condo managers | ||||||
Time share resort managers | ||||||
Money Market Processing | ||||||
Information Manager | Financial Institutions | Treasury, banks & credit unions | ||||
Money Market Manager | Custodians | |||||
Global Debt Manager | Security lenders | |||||
Cash managers | ||||||
Training | ||||||
Zoologic Learning Solutions | Financial institutions | All verticals | ||||
Asset managers | ||||||
Hedge fund managers | ||||||
Investment bankers | ||||||
Services | Typical users | Vertical markets served | ||||
Advanced Component | Portfolio managers | Alternative investment managers | ||||
Architecture | Asset managers | Financial markets | ||||
Custom Mobility | Financial exchanges | Institutional asset managers | ||||
Evare | Fund administrators | Insurance & pension funds | ||||
GlobalX | Investment advisors | Treasury, banks & credit unions | ||||
SS&C Direct | Alternative investment managers | |||||
SS&C Fund Services | Securities traders | |||||
SS&C PEI Solutions | Broker/dealers | |||||
SSCNet | Private equity | |||||
SVC | ||||||
Tradeware FIXLink | ||||||
Tradeware OATS Consolidator | ||||||
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• | general bond structures, |
• | revenue bonds, |
• | housing bonds, |
• | student loans, and |
• | Federal Housing Administration – insured revenue bonds and securitizations. |
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• commercial | • retirement communities | |
• residential | • universities | |
• retail | • hospitals |
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• | full BPO investment accounting and investment operations services, |
• | hosting of a company’s application software, |
• | automated workflow integration, |
• | automated quality control mechanisms, and |
• | extensive interface and connectivity services to custodian banks, data service providers, depositories and other external entities. |
• hedge fund managers | • investment managers | |
• funds of funds managers | • commodity pool operators | |
• commodity trading advisors | • proprietary traders | |
• family offices | • private equity groups | |
• private wealth groups | • separate managed accounts |
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• | content-rich, periodic software and serviceseBriefingstargeted at clients and prospects in each of our vertical and geographic markets, |
• | regular product-focused webinars, |
• | seminars and symposiums, |
• | trade shows and conferences, and |
• | e-marketing campaigns. |
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• | 242 employees in research and development, |
• | 826 employees in consulting and services, |
• | 90 employees in sales and marketing, |
• | 127 employees in client support, and |
• | 114 employees in finance and administration. |
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Name | Age | Position | ||||
William C. Stone | 55 | Chairman of the Board and Chief Executive Officer | ||||
Normand A. Boulanger | 48 | President, Chief Operating Officer and Director | ||||
Patrick J. Pedonti | 59 | Senior Vice President and Chief Financial Officer | ||||
Stephen V.R. Whitman | 63 | Senior Vice President, General Counsel and Secretary | ||||
Campbell (Cam) R. Dyer(1) | 37 | Director | ||||
William A. Etherington(1)(2) | 69 | Director | ||||
Allan M. Holt(2)(3) | 58 | Director | ||||
Claudius (Bud) E. Watts IV(2)(3) | 49 | Director | ||||
Jonathan E. Michael(1) | 56 | Director | ||||
(1) | Member of our Audit Committee. | |
(2) | Member of our Compensation Committee. | |
(3) | Member of our Nominating Committee. |
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• | appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; |
• | overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from our independent registered public accounting firm; |
• | reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures; |
• | coordinating our board of directors’ oversight of internal control over financial reporting, disclosure controls and procedures and our code of business conduct and ethics; |
• | establishing procedures for the receipt and retention of accounting related complaints and concerns; |
• | approving any related person transactions; and |
• | preparing the audit committee report required by the rules of the Securities and Exchange Commission. |
• | reviewing and approving, or making recommendations to our board of directors with respect to, the compensation of our chief executive officer and our other executive officers; |
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• | overseeing and administering our cash and equity incentive plans; |
• | reviewing and making recommendations to our board with respect to director compensation; and |
• | preparing the compensation committee report required by Securities and Exchange Commission rules. |
• | identifying individuals qualified to become members of our board of directors; and |
• | recommending to our board of directors the persons to be nominated for election as directors and to each of the board’s committees. |
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• | attract, retain and motivate the best possible executive talent; |
• | reward successful performance by the named executive officers and the company; and |
• | align the interests of the named executive officers with those of our stockholders by providing long-term equity compensation. |
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• | base salary; |
• | discretionary annual cash bonuses; |
• | stock option awards; |
• | perquisites; and |
• | severance andchange-of-control benefits. |
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• | 40% of the options are “time-based” options that vested as to 25% of the number of shares underlying the option on November 23, 2006 and as to1/36 of the number of shares underlying the option each month thereafter until fully vested on November 23, 2009; |
• | 40% of the options are “performance-based” options that vest based on the determination by our board of directors or compensation committee as to whether our EBITDA for each fiscal year 2006 through 2010 falls within the targeted EBITDA range for such year. If our EBITDA for a particular year is at the low end of the targeted EBITDA range, 50% of the performance-based option for that year vests, and if our EBITDA is at or above the high end of the targeted EBITDA range, 100% of the performance-based option for that year vests. If our EBITDA is below the targeted EBITDA range, the performance-based option does not vest, and if our EBITDA is within the targeted EBITDA range, between 50% and 100% of the performance-based option vests, based on linear interpolation. A certain percentage of performance-based options will also vest immediately prior to the effective date of a liquidity event if proceeds from the liquidity event equal or exceed specified returns on investments in SS&C Holdings made by investment funds affiliated with Carlyle; and |
• | 20% of the options were initially “superior” options, which upon the closing of our IPO became performance-based options, as described below. |
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• | the conversion of the outstanding superior options granted under the 2006 equity incentive plan into performance-based options that vest based on our EBITDA performance in 2010 and 2011, which affected 1,680,868 outstanding options, of which 701,497 were held by our named executive officers; |
• | the elimination of pre-determined EBITDA ranges from the option agreements and provision for the annual proposal of EBITDA ranges by management, subject to approval by our board, which EBITDA target range for 2010 was established by our board in a subsequent meeting described below; and |
• | the “rolling over” of performance-based options that do not vest (in whole or in part) in any given year into performance-based options for the following year, except as otherwise provided by our board of directors. Under our 2006 equity incentive plan, our board has the authority to amend the options to effect such a “rollover” and, generally, has the authority to amend, suspend or terminate any option, provided that, except with respect to specified corporate events, neither the amendment, suspension nor termination of the option shall, without the consent of the optionee, alter or impair any rights or obligations under the option. The rollover affected 689,007 outstanding unvested performance-based options, of which 280,600 were held by our named executive officers, and affected 1,680,868 outstanding superior options, of which 701,497 were held by our named executive officers, that converted to performance-based options upon the closing of our IPO. |
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Name and | Stock | Option | All other | |||||||||||||||||||||||||
principal position | Year | Salary($) | Bonus($)1 | awards($)2 | awards($)2 | compensation($) | Total($) | |||||||||||||||||||||
William C. Stone | 2010 | $ | 750,000 | $ | — | $ | 2,235,382 | 1,614,867 | $ | 4,032 | 3 | $ | 4,604,281 | |||||||||||||||
Chief Executive Officer | 2009 | 750,000 | 1,750,000 | 3,552 | 2,503,552 | |||||||||||||||||||||||
2008 | 737,500 | 1,500,000 | 3,552 | 2,241,052 | ||||||||||||||||||||||||
Normand A. Boulanger | 2010 | 450,000 | — | 1,163,531 | 3,375 | 4 | 1,616,906 | |||||||||||||||||||||
Chief Operating Officer | 2009 | 450,000 | 800,000 | 3,360 | 1,253,360 | |||||||||||||||||||||||
2008 | 445,833 | 750,000 | 3,360 | 1,199,193 | ||||||||||||||||||||||||
Patrick J. Pedonti | 2010 | 260,000 | — | 677,010 | 4,032 | 5 | 941,042 | |||||||||||||||||||||
Chief Financial Officer | 2009 | 260,000 | 340,000 | 4,032 | 604,032 | |||||||||||||||||||||||
2008 | 257,083 | 300,000 | 4,011 | 561,094 | ||||||||||||||||||||||||
Stephen V.R. Whitman | 2010 | 225,000 | — | 399,166 | 4,386 | 6 | 628,552 | |||||||||||||||||||||
General Counsel | 2009 | 225,000 | 225,000 | 4,386 | 454,386 | |||||||||||||||||||||||
2008 | 223,333 | 200,000 | 4,360 | 427,693 | ||||||||||||||||||||||||
(1) | Amounts reflected for the year 2008 reflect bonuses earned in 2008 and paid in 2009. Amounts reflected for the year 2009 reflect bonuses earned in 2009 and paid in 2010. Bonus amounts payable for 2010 have not yet been determined. The determination of whether and to what extent bonuses will be payable for 2010 will be made by the compensation committee. Bonuses paid for 2010 are expected to be determined in February 2011 and paid in March 2011. | |
(2) | The amounts in these columns reflect the aggregate accounting grant date fair value of awards to our named executive officers as well as the incremental fair value of superior options that were converted to performance-based options upon the closing of our IPO, in each case computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standard Codification Topic 718. The assumptions used by us in the valuation of the equity awards are set forth in Note 10 of the notes to our annual consolidated financial statements included elsewhere in this prospectus. | |
(3) | Consists of our contribution of $3,000 to Mr. Stone’s account under the SS&C 401(k) savings plan and our payment of $1,032 of group term life premiums for the benefit of Mr. Stone. | |
(4) | Consists of our contribution of $3,000 to Mr. Boulanger’s account under the SS&C 401(k) savings plan and our payment of $375 of group term life premiums for the benefit of Mr. Boulanger. | |
(5) | Consists of our contribution of $3,000 to Mr. Pedonti’s account under the SS&C 401(k) savings plan and our payment of $1,032 of group term life premiums for the benefit of Mr. Pedonti. | |
(6) | Consists of our contribution of $3,000 to Mr. Whitman’s account under the SS&C 401(k) savings plan and our payment of $1,386 of group term life premiums for the benefit of Mr. Whitman. |
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• | The employment of Mr. Stone as the chief executive officer of SS&C Holdings and SS&C; |
• | An initial term through March 11, 2013 with automatic one-year renewals until terminated either by Mr. Stone or us; |
• | An annual base salary of at least $750,000; |
• | An opportunity to receive an annual bonus in an amount to be established by our board of directors based on achieving individual and company performance goals as determined by our compensation committee. If Mr. Stone is employed at the end of any calendar year, his annual bonus will not be less than $500,000 for that year; |
• | A grant of 153,846 shares of our restricted Class Anon-voting common stock that vests over a period of three years from March 25, 2010; |
• | Certain severance payments and benefits. If we terminate Mr. Stone’s employment without cause, if Mr. Stone resigns for good reason (including, under certain circumstances, following a change of control as defined in the employment agreement) prior to the end of the term of the employment agreement, or if Mr. Stone receives a notice of non-renewal of the employment term by us, Mr. Stone will be entitled to receive (1) an amount equal to 200% of his base salary and 200% of his minimum annual bonus, (2) vesting acceleration with respect to 50% of his then unvested options and 100% of his shares of restricted stock, and (3) three years of coverage under SS&C’s medical, dental and vision benefit plans. In the event of Mr. Stone’s death or a termination of Mr. Stone’s employment due to any disability that renders Mr. Stone unable to perform his duties under the agreement for six consecutive months, Mr. Stone or his representative or heirs, as applicable, will be entitled to receive (1) vesting acceleration with respect to 50% of his then unvested options and 100% of his shares of restricted stock, and (2) a pro-rated amount of his most recent annual bonus. In the event payments to Mr. Stone under his employment agreement (or the management agreement entered into in connection with the Transaction) cause Mr. Stone to incur a 20% excise tax under Section 4999 of the Internal Revenue Code, Mr. Stone will be entitled to an additional payment sufficient to cover such excise tax and any taxes associated with such payments; and |
• | Certain restrictive covenants, including a non-competition covenant pursuant to which Mr. Stone will be prohibited from competing with SS&C and its affiliates during his employment and for a period equal to the later of (1) four years following the March 2010 amendment and restatement of the agreement, in the case of a termination by us for cause or a resignation by Mr. Stone without good reason, and (2) two years following Mr. Stone’s termination of employment for any reason. |
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• | the then-outstanding shares of our common stock or the common stock of SS&C, or | |
• | the combined voting power of our then-outstanding voting securities or the then-outstanding voting securities of SS&C entitled to vote generally in the election of directors (in each case, other than any acquisition by us, Carlyle Partners IV, L.P. (an investment fund affiliated with Carlyle), Mr. Stone, any employee or group of employees of ours, or affiliates of any of the foregoing, or by any employee benefit plan (or related trust) sponsored or maintained by us or any of our affiliates); or |
• | individuals whose election, or nomination for election by our stockholders, was approved by at least a majority of the directors comprising the board of directors on the effective date of Mr. Stone’s employment agreement and any individuals subsequently elected to our board of directors pursuant to the stockholders agreement or | |
• | individuals nominated or designated for election by Carlyle Partners IV, L.P. |
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All other | ||||||||||||||||||||
option awards: | Exercise | Grant date fair | ||||||||||||||||||
All other | number of | price of | value of stock | |||||||||||||||||
stock awards: | securities | option | and option | |||||||||||||||||
Grant | number of | underlying | awards | awards | ||||||||||||||||
Name | date1 | shares of stock (#) | options (#) | ($/share) | ($)2 | |||||||||||||||
William C. Stone | 2/4/2010 | 127,500 | 3 | $ | 14.53 | $ | 571,468 | |||||||||||||
3/25/2010 | 153,846 | 4 | $ | 2,235,382 | ||||||||||||||||
Normand A. Boulanger | 2/4/2010 | 85,000 | 3 | $ | 14.53 | $ | 380,979 | |||||||||||||
Patrick J. Pedonti | 2/4/2010 | 63,750 | 3 | $ | 14.53 | $ | 285,734 | |||||||||||||
Stephen V.R. Whitman | 2/4/2010 | 42,500 | 3 | $ | 14.53 | $ | 190,489 | |||||||||||||
(1) | Awarded under the 2006 equity incentive plan. | |
(2) | The amounts in this column reflect the aggregate accounting grant date fair value of awards to our named executive officers, computed in accordance with FASB Accounting Standards Codification Topic 718. The assumptions used by us in the valuation of the equity awards are set forth in Note 10 of the notes to our annual consolidated financial statements included elsewhere in this prospectus. | |
(3) | This option is a time-based option that vests as to 25% of the number of shares underlying the option on February 4, 2011 and as to1/36 of the number of shares underlying the option each month thereafter until fully vested on February 4, 2014, subject to acceleration of vesting in connection with a liquidity event. | |
(4) | Represents restricted shares of our Class A non-voting common stock granted under the 2006 equity incentive plan. The restricted shares vest over a period of three years from March 11, 2010, with one-third of the shares vesting on March 11, 2011 and the remaining two-thirds of the shares vesting in eight equal quarterly installments over the remaining two years. |
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• | to prescribe, amend and rescind rules and regulations relating to our 2006 equity incentive plan; |
• | to determine the type or types of awards to be granted under our 2006 equity incentive plan; |
• | to select the persons to whom awards may be granted under our 2006 equity incentive plan; |
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• | to grant awards and to determine the terms and conditions of such awards; |
• | to construe and interpret our 2006 equity incentive plan; and |
• | to amend, suspend or terminate our 2006 equity incentive plan. |
• | each option will vest, depending on the classification of the option as a time option, performance option or superior option, as follows: |
• | Time options will vest as to 25% of the number of shares underlying the option on a date certain (November 23, 2006 for the first tranche of options awarded under the plan in August 2006, but generally the first anniversary of either the date of grant or the start date for a new employee) and will continue to vest as to 1/36 of the number of shares underlying the option on the day of the month of the date of grant each month thereafter until such options are fully vested. Time options will become fully vested and exercisable immediately prior to the effective date of a liquidity event as defined in the stock option agreement. | |
• | A certain percentage of the performance options will vest based on the administrator’s determination as to whether our EBITDA for each fiscal year 2006 through 2010 (2007 through 2011 for options awarded in 2007) falls within the targeted EBITDA range for such year. If our EBITDA is at or above the high end of the targeted EBITDA range, 100% of the performance-based option for that year vests. If our EBITDA is below the targeted EBITDA range, the performance-based option does not vest, and if our EBITDA is within the targeted EBITDA range, between 50% and 100% of the performance-based option vests, based on linear interpolation. In February 2009, our board of directors approved the immediate vesting of the 2006, 2007 and 2008 performance-based options that did not otherwise vest during 2006, 2007 or 2008. A certain percentage of performance options will also vest immediately prior to the effective date of a liquidity event if proceeds from the liquidity event equal or exceed a certain target. | |
• | The superior options became performance-based options upon the closing of our IPO that vest based on our EBITDA performance in 2010 and 2011. |
• | any portion of an option that is unvested at the time of a participant’s termination of service with us will be forfeited to us; and |
• | any portion of an option that is vested but unexercised at the time of a participant’s termination of service with us may not be exercised after the first to occur of the following: |
• | the expiration date of the option, which will be no later than ten years from the date of grant; | |
• | 90 days following the date of the termination of service for any reason other than cause, death or disability; |
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• | the date of the termination of service for cause; and | |
• | twelve months following the termination of service by reason of the participant’s death or disability. |
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• | to adopt, amend and repeal rules and regulations relating to our 2008 stock incentive plan; |
• | to determine the type or types of awards to be granted under our 2008 stock incentive plan; |
• | to select the persons to whom awards may be granted under our 2008 stock incentive plan; |
• | to grant awards and to determine the terms and conditions of such awards; |
• | to delegate to one or more of our officers the power to grant awards under our 2008 stock incentive plan to our employees or officers (other than executive officers); |
• | to construe and interpret our 2008 stock incentive plan; and |
• | to amend, suspend or terminate our 2008 stock incentive plan, subject in certain instances to stockholder approval. |
• | each option will vest as to 25% of the number of shares underlying the option on the first anniversary of the date of grant and will continue to vest as to an additional 1/36 of the remaining number of shares underlying the option on the day of the month of the date of grant each month thereafter until the fourth anniversary of the date of grant; |
• | options will become fully vested and exercisable immediately prior to the effective date of a change in control as defined in the stock option agreement; |
• | any portion of an option that is unvested at the time of a participant’s termination of service with us will be forfeited to us; and |
• | any portion of an option that is vested but unexercised at the time of a participant’s termination of service with us may not be exercised after the first to occur of the following: |
• | the expiration date of the option, which will be no later than ten years from the date of grant, |
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• | 90 days following the date of the termination of service for any reason other than cause, death or disability, | |
• | the date of the termination of service for cause, and | |
• | twelve months following the termination of service by reason of the participant’s death or disability. |
• | provide that awards shall be assumed, or substantially equivalent awards shall be distributed, by the acquiring or succeeding corporation; |
• | upon written notice to a participant, provide that the participant’s unexercised awards will terminate immediately prior to the consummation of such corporate event unless exercised by the participant within a specified period following the date of notice; |
• | provide that outstanding awards shall become exercisable, realizable or deliverable, or restrictions applicable to an award shall lapse, in whole or in part prior to or upon such corporate event; |
• | in the event of a corporate event under the terms of which holders of our common stock will receive a cash payment for each share surrendered in connection with the corporate event, make or provide for a cash payment to participants in exchange for the termination of all such awards; |
• | provide that, in connection with our liquidation or dissolution, awards shall convert into the right to receive liquidation proceedings (net of any applicable exercise price or tax withholdings); and |
• | any combination of the foregoing. |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||
Plan Awards: | ||||||||||||||||||||||||||||
Number of | ||||||||||||||||||||||||||||
Number of | Number of | Securities | Number of | Market Value | ||||||||||||||||||||||||
Securities | Securities | Underlying | Shares or | of Shares | ||||||||||||||||||||||||
Underlying | Underlying | Unexercised | Units of | or Unit | ||||||||||||||||||||||||
Unexercised | Unexercised | Unearned | Option | Option | Stock that | of Stock | ||||||||||||||||||||||
Options (#) | Options (#) | Options | Exercise | Expiration | have not | that have not | ||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | Price($) | Date | Vested(#) | Vested($) | |||||||||||||||||||||
William C. Stone | 637,500 | 1 | — | — | 0.78 | 5/31/2011 | 153,846 | 2 | $ | 3,155,381 | 3 | |||||||||||||||||
1,275,000 | 1 | — | — | 1.89 | 4/8/2013 | — | — | |||||||||||||||||||||
603,439 | 4 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
603,439 | 5 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
150,860 | 6 | — | 150,859 | 6 | 8.77 | 8/9/2016 | — | — | ||||||||||||||||||||
127,500 | 7 | — | 14.53 | 2/4/2020 | — | — | ||||||||||||||||||||||
Normand A. Boulanger | 212,500 | 1 | — | — | 4.20 | 10/18/2014 | — | — | ||||||||||||||||||||
49,572 | 1 | — | — | 1.77 | 2/6/2013 | — | — | |||||||||||||||||||||
452,581 | 4 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
452,581 | 5 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
113,145 | 6 | — | 113,145 | 6 | 8.77 | 8/9/2016 | — | — | ||||||||||||||||||||
85,000 | 7 | — | 14.53 | 2/4/2020 | — | — | ||||||||||||||||||||||
Patrick J. Pedonti | 63,741 | 1 | — | — | 1.95 | 8/1/2012 | — | — | ||||||||||||||||||||
226,290 | 4 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
226,290 | 5 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
56,573 | 6 | — | 56,572 | 6 | 8.77 | 8/9/2016 | — | — | ||||||||||||||||||||
63,750 | 7 | — | 14.53 | 2/4/2020 | — | — | ||||||||||||||||||||||
Stephen V.R. Whitman | 7,293 | 1 | — | — | 1.77 | 2/6/2013 | — | — | ||||||||||||||||||||
120,686 | 4 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
120,686 | 5 | — | — | 8.77 | 8/9/2016 | — | — | |||||||||||||||||||||
30,172 | 6 | — | 30,171 | 6 | 8.77 | 8/9/2016 | — | — | ||||||||||||||||||||
42,500 | 7 | — | 14.53 | 2/4/2020 | — | — | ||||||||||||||||||||||
(1) | This option was granted under our 1998 stock incentive plan and is fully vested. | |
(2) | Represents restricted shares of our Class A non-voting common stock granted under the 2006 equity incentive plan on March 25, 2010. The restricted shares vest over a period of three years from March 11, 2010, with one-third of the shares vesting on March 11, 2011 and the remaining two-thirds of the shares vesting in eight equal quarterly installments over the remaining two years. | |
(3) | Based upon the vesting of 153,846 unvested shares of our Class A non-voting common stock at $20.51 per share (the closing price of our common stock as reported on The NASDAQ Global Select Market on December 31, 2010). | |
(4) | This option is a time-based option awarded under our 2006 equity incentive plan and is fully vested | |
(5) | This option is a performance-based option awarded under our 2006 equity incentive plan that vests based on the determination by our board of directors or compensation committee as to whether our EBITDA for each fiscal year 2006 through 2010 falls within the targeted EBITDA range for such year. If our EBITDA for a particular year is at the low end of the targeted EBITDA |
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range, 50% of the performance-based option for that year vests, and if our EBITDA is at or above the high end of the targeted EBITDA range, 100% of the performance-based option for that year vests. If our EBITDA is below the targeted EBITDA range, the performance-based option does not vest, and if our EBITDA is within the targeted EBITDA range, between 50% and 100% of the performance-based option vests, based on linear interpolation. In February 2009, our board of directors approved the immediate vesting of the 2006, 2007 and 2008 performance-based options that did not otherwise vest during 2006, 2007 or 2008. In addition, a certain percentage of this option will vest immediately prior to the effective date of a liquidity event if proceeds from the liquidity event equal or exceed specified returns on investments in us made by investment funds affiliated with Carlyle. We currently anticipate that our EBITDA for fiscal year 2010 will be at or above the targeted range. Accordingly, we have treated this option as though 100% of the performance-based option for 2010 vests. | ||
(6) | This option was a superior option at the time of grant and became a performance-based option that vests based on the determination by our board of directors or compensation committee as to whether our EBITDA for fiscal years 2010 and 2011 falls within the targeted EBITDA ranges for such years. We currently anticipate that our EBITDA for fiscal year 2010 will be at or above the targeted range. Accordingly, we have treated this option as though 100% of the performance-based option for 2010 vests. | |
(7) | This option is a time-based option that vests as to 25% of the number of shares underlying the option on February 4, 2011 and as to1/36 of the number of shares underlying the option each month thereafter until fully vested on February 4, 2014, subject to acceleration of vesting in connection with a liquidity event. |
Option exercises | ||||||||
Number of | ||||||||
shares acquired | Value realized on | |||||||
Name | on exercise(#) | exercise($) | ||||||
William C. Stone | 637,500 | 1 | $ | 8,708,2502 | ||||
Normand A. Boulanger | 269,178 | 3,561,2253 | ||||||
Patrick J. Pedonti | 63,750 | 831,9383 | ||||||
Stephen V.R. Whitman | 56,125 | 742,5343 | ||||||
(1) | Represents shares of our Class A non-voting common stock. | |
(2) | The dollar value realized on exercise represents the difference between $14.53 per share (which our board of directors determined was equal to the estimated fair value of our common stock on the date of exercise) and the per-share exercise price of the option. | |
(3) | The dollar value realized on exercise represents the difference between our initial public offering price of $15.00 per share (which was the date of exercise) and the respective per-share exercise price of the options. |
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Without cause, for | ||||||||||||||||||||
good reason | ||||||||||||||||||||
(including certain | ||||||||||||||||||||
Payments to | changes of | |||||||||||||||||||
William C. Stone | control) or | For cause or | ||||||||||||||||||
upon termination | upon notice of | without | Liquidity | |||||||||||||||||
or liquidity event | non-renewal1 | good reason2 | event3 | Disability | Death | |||||||||||||||
Base salary | $ | 1,500,000 | 4 | $ | — | $ | — | $ | — | $ | — | |||||||||
Annual bonus | 1,000,000 | 5 | — | — | 500,000 | 6 | 500,000 | 6 | ||||||||||||
Stock options | 1,266,767 | 7 | — | 2,533,535 | 8 | 1,266,767 | 7 | 1,266,767 | 7 | |||||||||||
Restricted stock | 3,155,381 | 9 | — | — | 3,155,381 | 9 | 3,155,381 | 9 | ||||||||||||
Health and welfare benefits | 41,692 | 10 | — | — | — | — | ||||||||||||||
Tax gross up payment | 3,294,569 | 11 | — | — | — | — | ||||||||||||||
Disability benefits | — | — | — | — | — | |||||||||||||||
Life insurance proceeds | — | — | — | — | ||||||||||||||||
Total | 10,258,409 | $ | — | 2,533,535 | 4,922,148 | 4,922,148 | ||||||||||||||
(1) | The definition of good reason in Mr. Stone’s employment agreement includes the occurrence of a change in control (as defined in Mr. Stone’s employment agreement) where (a) Carlyle exercises itsbring-along rights in accordance with the stockholders agreement, and (b) Mr. Stone votes against the transaction in his capacity as a stockholder. | |
(2) | In the event that Mr. Stone’s employment is terminated for cause or without good reason, he will be entitled to unpaid base salary through the date of the termination, payment of any annual bonus earned with respect to a completed fiscal year of SS&C that is unpaid as of the date of termination and any benefits due to him under any employee benefit plan, policy, program, arrangement or agreement. | |
(3) | Liquidity event is defined in Mr. Stone’s option agreements governing options granted under our 2006 equity incentive plan. The consummation of this offering will not constitute a liquidity event under this definition. Time-based options will become fully vested and exercisable immediately prior to the effective date of a liquidity event. Performance-based options will vest in whole or in part immediately prior to the effective date of a liquidity event if proceeds from the liquidity event equal or exceed a certain target. The payments in this column assume the liquidity event will generate sufficient proceeds to accelerate in full the performance-based options. | |
(4) | Consists of 200% of 2010 base salary payable promptly upon termination. | |
(5) | Consists of 200% of $500,000, the minimum annual bonus specified for Mr. Stone in his employment agreement. | |
(6) | Consists of a cash payment equal to the amount of Mr. Stone’s annual bonus for 2010, payable within 60 business days of termination. The amount of Mr. Stone’s 2010 annual bonus has not yet been determined. The figure used for the 2010 annual bonus is $500,000, the minimum annual bonus specified for Mr. Stone in his employment agreement. | |
(7) | Vesting acceleration with respect to unvested options to purchase an aggregate of 139,179 shares of our common stock, which is equal to 50% of all unvested options held by Mr. Stone on December 31, 2010, calculated based on the difference between the respective exercise price of the options and $20.51 (the closing price of our common stock on The Nasdaq Global Select Market on December 31, 2010). | |
(8) | Vesting acceleration with respect to unvested options to purchase an aggregate of 278,359 shares of our common stock, which is equal to 100% of all unvested options held by Mr. Stone on December 31, 2010, calculated based on the difference between the respective exercise price of the options and $20.51 (the closing price of our common stock on The Nasdaq Global Select Market on December 31, 2010). |
(9) | Based on the vesting of 153,846 unvested shares of our Class A non-voting common stock at $20.51 per share (the closing price of our common stock as reported by The Nasdaq Global Select Market on December 31, 2010). | |
(10) | Represents three years of coverage under SS&C’s medical, dental and vision benefit plans. | |
(11) | In the event that the severance and other benefits provided for in Mr. Stone’s employment agreement or otherwise payable to him in connection with a change in control constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and will be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, then Mr. Stone shall receive (a) a payment from us sufficient to pay such excise tax, and (b) an additional payment from us sufficient to pay the excise tax and U.S. federal and state income taxes arising from the payments made by us to Mr. Stone pursuant to this sentence. |
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Number of shares | ||||||||
underlying | Value of unvested | |||||||
Name | unvested options (#) | options1 | ||||||
Normand A. Boulanger | 198,156 | $ | 1,836,742 | |||||
Patrick J. Pedonti | 120,328 | 1,045,446 | ||||||
Stephen V.R. Whitman | 72,675 | 608,400 | ||||||
(1) | The value of unvested options was calculated by multiplying the number of shares underlying unvested options by $20.51 (the closing price of our common stock as reported on The NASDAQ Global Select Market on December 31, 2010) and then deducting the aggregate exercise price for these options. |
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Fees Earned | ||||||||||||
or Paid in | ||||||||||||
Name | Cash | Options Awards | Total | |||||||||
William Etherington | $ | 37,500 | 1 | — | 2 | $ | 37,500 | |||||
Jonathan E. Michael | 32,500 | 3 | 101,788 | 4 | 134,288 | |||||||
(1) | For his service as a director, Mr. Etherington receives an annual retainer fee of $25,000 and $2,500 for each board meeting attended in person. Mr. Etherington was paid an aggregate of $35,000 for his service as a director in 2010, including $5,000 for board meetings that Mr. Etherington attended in person in 2009. Mr. Etherington earned $2,500 for attending a meeting in person in 2010 that will be paid in 2011. | |
(2) | Upon his election to the board of directors in 2006, Mr. Etherington was granted an option to purchase 21,250 shares of our common stock at an exercise price per share of $8.77. Such option was 100% vested on the date of grant. | |
(3) | For his service as a director, Mr. Michael receives an annual retainer fee of $25,000 and $2,500 for each board meeting attended in person. Mr. Michael was paid an aggregate of $30,000 for his service as a director in 2010. Mr. Michael earned $2,500 for attending a meeting in person in 2010 that will be paid in 2011. | |
(4) | Upon his election to the board of directors in 2010, Mr. Michael was granted an option to purchase 21,250 shares of our common stock at an exercise price per share of $15.29. Such option was 100% vested on the date of grant. The amount in this column reflect the aggregate grant date fair value of the option, computed in accordance with FASB Accounting Standards Topic 718. The assumptions used by us in the valuation of the option are set forth in Note 10 of the notes to our annual consolidated financial statements included elsewhere in this prospectus. |
• | any breach of the director’s duty of loyalty to us or our stockholders; |
• | any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
• | voting or assenting to any unlawful payments related to dividends or unlawful stock repurchases, redemptions or other distributions; or |
• | any transaction from which the director derived an improper personal benefit. |
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• | we will indemnify our directors and officers to the fullest extent permitted by law; |
• | we may indemnify our other employees and other agents to the same extent that we indemnify our officers and directors, unless otherwise determined by the board of directors; and |
• | we will advance expenses to our directors and executive officers in connection with legal proceedings in connection with a legal proceeding to the fullest extent permitted by law. |
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• | the related person’s interest in the related person transaction; |
• | the approximate dollar value of the amount involved in the related person transaction; |
• | the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss; |
• | whether the transaction was undertaken in the ordinary course of our business; |
• | whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party; |
• | the purpose of, and the potential benefits to us of, the transaction; and |
• | any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. |
• | interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity and (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, and (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction; and |
• | a transaction that is specifically contemplated by provisions of our charter or bylaws. |
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• | each person we know to be the beneficial owner of more than 5% of the outstanding shares of common stock; |
• | each of our directors and named executive officers; |
• | all of our directors and executive officers as a group; and |
• | each of our other selling stockholders. |
Shares beneficially | Shares beneficially | |||||||||||||||||||
owned prior to the | owned after the | |||||||||||||||||||
offering | Shares | offering | ||||||||||||||||||
Number | Percent | Offered | Number | Percent | ||||||||||||||||
Beneficial Owner | ||||||||||||||||||||
5% Stockholders: | ||||||||||||||||||||
TCG Holdings, L.L.C.(1) | 43,469,799 | 59.8% | 8,000,000 | 35,469,799 | 47.1% | |||||||||||||||
William C. Stone(2) | 18,827,927 | 24.6% | 519,900 | 18,308,027 | 23.3% |
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Shares beneficially | Shares beneficially | |||||||||||||||||||
owned prior to the | owned after the | |||||||||||||||||||
offering | Shares | offering | ||||||||||||||||||
Number | Percent | Offered | Number | Percent | ||||||||||||||||
Other Directors and Named Executive Officers: | ||||||||||||||||||||
Normand A. Boulanger(3) | 1,301,617 | 1.8% | 256,000 | 1,045,617 | 1.4% | |||||||||||||||
William A. Etherington(4) | 31,250 | * | — | 31,250 | * | |||||||||||||||
Allan M. Holt(5) | — | — | — | — | — | |||||||||||||||
Campbell R. Dyer(5) | — | — | — | — | — | |||||||||||||||
Claudius (Bud) E. Watts IV(5) | — | — | — | — | — | |||||||||||||||
Patrick J. Pedonti(6) | 588,825 | * | 110,000 | 478,825 | * | |||||||||||||||
Stephen V. R. Whitman(7) | 289,456 | * | 55,800 | 233,656 | * | |||||||||||||||
Jonathan E. Michael(8) | 31,250 | * | — | 31,250 | * | |||||||||||||||
All directors and executive officers as a group (9 persons)(9) | 21,070,325 | 26.8% | 941,700 | 20,128,625 | 24.9% | |||||||||||||||
Other Selling Stockholders: | ||||||||||||||||||||
Rahul Kanwar(10) | 191,518 | * | 38,300 | 153,218 | * | |||||||||||||||
Matthew Moffat(11) | 57,374 | * | 11,000 | 46,374 | * | |||||||||||||||
Walid Nassereddine(12) | 45,049 | * | 9,000 | 36,049 | * |
* | Represents less than one percent of the outstanding shares of common stock. |
(1) | TC Group IV, L.P. is the sole general partner of Carlyle Partners IV, L.P. and CP IV Coinvestment, L.P., the record holders of 41,782,345 and 1,687,454 shares of our common stock, respectively. TC Group IV Managing GP, L.L.C. is the sole general partner of TC Group IV, L.P. TC Group, L.L.C. is the sole managing member of TC Group IV Managing GP, L.L.C. TCG Holdings, L.L.C. is the sole managing member of TC Group, L.L.C. Accordingly, TC Group IV, L.P., TC Group IV Managing GP, L.L.C., TC Group, L.L.C. and TCG Holdings, L.L.C. each may be deemed owners of shares of our common stock owned of record by each of Carlyle Partners IV, L.P. and CP IV Coinvestment, L.P. William E. Conway, Jr., Daniel A. D’Aniello and David M. Rubenstein are managing members of TCG Holdings, L.L.C. and, in such capacity, may be deemed to share beneficial ownership of shares of our common stock beneficially owned by TCG Holdings, L.L.C. Such individuals expressly disclaim any such beneficial ownership. The principal address and principal offices of TCG Holdings, L.L.C. and certain affiliates isc/o The Carlyle Group, 1001 Pennsylvania Avenue, N.W., Suite 220 South, Washington, D.C.20004-2505. | |
(2) | Includes 3,302,092 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010, and 153,846 unvested shares of our Class A non-voting common stock. | |
(3) | Consists of 1,301,617 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. | |
(4) | Includes 21,250 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. | |
(5) | Does not include 43,469,799 shares of our common stock held by investment funds associated with or designated by Carlyle. Messrs. Holt, Watts and Dyer are executives of Carlyle. They disclaim beneficial ownership of the shares held by investment funds associated with or designated by Carlyle. | |
(6) | Consists of 588,825 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. | |
(7) | Consists of 289,456 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. | |
(8) | Includes 21,250 shares of our common stock subject to outstanding options exercisable on or within the60-day period following December 31, 2010. | |
(9) | Includes 5,524,490 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. | |
(10) | Consists of 191,518 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. Mr. Kanwar is one of our employees. | |
(11) | Consists of 57,374 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. Mr. Moffat is one of our employees. | |
(12) | Consists of 45,049 shares of our common stock subject to outstanding stock options exercisable on or within the60-day period following December 31, 2010. Mr. Nassereddine is one of our employees. |
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• | liens; |
• | sale-leaseback transactions; |
• | debt; |
• | dividends and other restricted payments; |
• | redemptions and stock repurchases; |
• | consolidations, mergers and acquisitions; |
• | asset dispositions; |
• | investments, loans and advances; |
• | changes in line of business; |
• | changes in fiscal year; |
• | restrictive agreements with subsidiaries; |
• | transactions with affiliates; |
• | amendments or prepayments of subordinated indebtedness; and |
• | speculative hedging agreements. |
• | delivery of financial and other information to the administrative agent; |
• | notice to the administrative agent upon the occurrence of certain events of default, litigation and other material events; |
• | conduct of business and maintenance of existence; |
• | payment of material taxes and other governmental charges; |
• | maintenance of properties, licenses and insurance; |
• | access to books and records by the lenders; |
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• | compliance with applicable laws and regulations; and |
• | further assurances and maintenance of collateral. |
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Redemption Period | Price | |||
2009 | 105.8750% | |||
2010 | 102.9375% | |||
2011 and thereafter | 100.0% | |||
• | incur additional indebtedness; |
• | sell assets, including capital stock of restricted subsidiaries; |
• | agree to payment restrictions affecting SS&C’s restricted subsidiaries; |
• | pay dividends; |
• | make certain investments; |
• | consolidate, merge, sell or otherwise dispose of all or substantially all of SS&C’s assets; |
• | enter into transactions with SS&C’s affiliates; |
• | incur liens; and |
• | designate any of SS&C’s subsidiaries as unrestricted subsidiaries. |
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• | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock; or |
• | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock, |
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• | 1% of the number of shares of our common stock then outstanding, which will equal approximately 752,726 shares immediately after this offering; or |
• | the average weekly trading volume in our common stock on the NASDAQ Global Select Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
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• | insurance companies; |
• | tax-exempt organizations; |
• | financial institutions; |
• | brokers or dealers in securities; |
• | regulated investment companies; |
• | pension plans; |
• | controlled foreign corporations; |
• | passive foreign investment companies; |
• | owners that hold our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment; and |
• | certain U.S. expatriates. |
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• | the gain is effectively connected with a U.S. trade or business and, if an applicable income tax treaty so provides, is attributable to a permanent establishment or a fixed base maintained by suchnon-U.S. holder, in which case thenon-U.S. holder generally will be taxed at the graduated U.S. federal income tax rates applicable to U.S. persons (as defined in the Internal Revenue Code) and, if thenon-U.S. holder is a foreign corporation, the branch profits tax described above in “Distributions on our common stock” also may apply; |
• | thenon-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, in which case thenon-U.S. holder will be subject to a 30% tax (or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder’s country of residence) on the net gain derived from the disposition, which may be offset by U.S. source capital losses of thenon-U.S. holder, if any; or |
• | we are or have been, at any time during the five-year period preceding such disposition (or thenon-U.S. holder’s holding period, if shorter), a “U.S. real property holding corporation” unless our common stock is regularly traded on an established securities market and thenon-U.S. holder holds no more than 5% of our outstanding common stock, directly or indirectly, during the shorter of thefive-year period ending on the date of the disposition or the period that thenon-U.S. holder held our common stock. If we are determined to be a U.S. real property holding corporation and the foregoing exception does not apply, then a purchaser will generally withhold 10% of the proceeds payable to anon-U.S. holder from a sale of our common stock and thenon-U.S. holder generally will be taxed on its net gain derived from the disposition at the graduated U.S. federal income tax rates applicable to U.S. persons (as defined in the Internal Revenue Code). Generally, a corporation is a U.S. real property holding corporation only if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Although there can be no assurance, we do not believe that we are, or have been, a U.S. real property holding corporation, or that we are likely to become one in the future. No assurance can be provided that our common stock will be regularly traded on an established securities market for purposes of the rules described above. |
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Number of | ||||
Name | shares | |||
J.P. Morgan Securities LLC | 3,960,000 | |||
Morgan Stanley & Co. Incorporated | 2,420,000 | |||
Deutsche Bank Securities Inc. | 2,420,000 | |||
Needham & Company, LLC | 550,000 | |||
Raymond James & Associates, Inc. | 550,000 | |||
Wells Fargo Securities, LLC | 550,000 | |||
William Blair & Company, L.L.C. | 550,000 | |||
Total | 11,000,000 | |||
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Total | ||||||||||||
Per share | No exercise | Full exercise | ||||||||||
Public offering price | $ | 17.60 | $ | 193,600,000 | $ | 212,960,000 | ||||||
Underwriting discounts and commissions to be paid by: | ||||||||||||
Us | $ | 0.704 | $ | 1,408,000 | $ | 2,182,400 | ||||||
The selling stockholders | $ | 0.704 | $ | 6,336,000 | $ | 6,336,000 | ||||||
Proceeds, before expenses, to us | $ | 16.896 | $ | 33,792,000 | $ | 52,377,600 | ||||||
Proceeds, before expenses, to selling stockholders | $ | 16.896 | $ | 152,064,000 | $ | 152,064,000 | ||||||
• | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock; or |
• | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock, |
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• | the sale of shares to the underwriters; |
• | transactions by any person other than us relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares; |
• | transfers of shares of common stock or any security convertible into our common stock as a bona fide gift; |
• | transfers to family members or to trusts for the benefit of the stockholder or family members of the stockholder, in each case, for estate planning purposes; |
• | distributions of shares of common stock or any security convertible into or exercisable for common stock to partners, members or equityholders of the stockholder; |
• | a stockholder’s entry into, or amendment of, a written trading plan designed to comply with Rule 10b5-1 under the Exchange Act, provided that no sales are made pursuant to such trading plan during the restricted period and that the establishment of such plan will not result in any public filing or other public announcement of such plan by the locked-up party or us during the restricted period; or |
• | the exercise of an option to purchase shares of common stock granted under a stock incentive plan or stock purchase plan described in this prospectus or the acceptance of restricted stock awards from us and the disposition of shares of restricted stock to us pursuant to the terms of such plan. |
• | during the last 17 days of the90-day restricted period we issue an earnings release or a material news event relating to us occurs; or |
• | prior to the expiration of the90-day restricted period, we announce that we will release earnings results during the16-day period beginning on the last day of the90-day restricted period, |
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• | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
• | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; |
• | to fewer than 100 natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive) subject to obtaining the prior consent of the book-runningmanager(s) for any such offer; or |
• | in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
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Condensed consolidated financial statements of SS&C Technologies Holdings, Inc. | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
Consolidated financial statements of SS&C Technologies Holdings, Inc. | ||||
F-15 | ||||
F-16 | ||||
F-17 | ||||
F-18 | ||||
F-19 | ||||
F-20 | ||||
F-54 |
F-1
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Condensed consolidated balance sheets
(unaudited)
September 30, | December 31, | |||||||
(in thousands, except per share data) | 2010 | 2009 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 86,975 | $ | 19,055 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,981 and $1,425, respectively | 44,834 | 41,600 | ||||||
Prepaid expenses and other current assets | 5,950 | 6,164 | ||||||
Prepaid income taxes | 6,282 | 669 | ||||||
Deferred income taxes | 1,467 | 1,780 | ||||||
Total current assets | 145,508 | 69,268 | ||||||
Property and equipment: | ||||||||
Leasehold improvements | 5,363 | 5,358 | ||||||
Equipment, furniture, and fixtures | 28,754 | 25,915 | ||||||
34,117 | 31,273 | |||||||
Less accumulated depreciation | (20,953 | ) | (17,237 | ) | ||||
Net property and equipment | 13,164 | 14,036 | ||||||
Deferred income taxes | 649 | 499 | ||||||
Goodwill (Note 10) | 895,182 | 885,517 | ||||||
Intangible and other assets, net of accumulated amortization of $143,291 and $116,670, respectively | 191,136 | 216,321 | ||||||
Total assets | $ | 1,245,639 | $ | 1,185,641 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt (Note 6) | $ | 1,719 | $ | 4,270 | ||||
Accounts payable | 2,666 | 4,804 | ||||||
Income taxes payable | — | 703 | ||||||
Accrued employee compensation and benefits | 12,654 | 14,693 | ||||||
Other accrued expenses | 10,530 | 16,938 | ||||||
Interest payable | 5,219 | 2,070 | ||||||
Deferred maintenance and other revenue | 41,656 | 40,400 | ||||||
Total current liabilities | 74,444 | 83,878 | ||||||
Long-term debt, net of current portion (Note 6) | 288,685 | 392,989 | ||||||
Other long-term liabilities | 13,570 | 12,779 | ||||||
Deferred income taxes | 40,451 | 50,008 | ||||||
Total liabilities | 417,150 | 539,654 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Stockholders’ equity (Notes 3 and 4): | ||||||||
Common stock: | ||||||||
Class A non-voting common stock, $0.01 par value, 5,000 shares authorized; 791 shares issued and outstanding, of which 154 are unvested | 8 | — | ||||||
Common stock, $0.01 par value, 100,000 shares authorized; 71,773 shares and 60,807 shares issued, respectively, and 71,285 shares and 60,400 shares outstanding, respectively | 718 | 608 | ||||||
Additional paid-in capital | 740,302 | 587,293 | ||||||
Accumulated other comprehensive income | 23,743 | 16,436 | ||||||
Retained earnings | 69,537 | 46,300 | ||||||
834,308 | 650,637 | |||||||
Less: cost of common stock in treasury, 488 shares and 407 shares, respectively | (5,819 | ) | (4,650 | ) | ||||
Total stockholders’ equity | 828,489 | 645,987 | ||||||
Total liabilities and stockholders’ equity | $ | 1,245,639 | $ | 1,185,641 | ||||
F-2
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Condensed consolidated statements of operations
(unaudited)
Nine months ended | ||||||||
September 30, | September 30, | |||||||
(in thousands, except per share data) | 2010 | 2009 | ||||||
Revenues: | ||||||||
Software licenses | $ | 17,629 | $ | 15,632 | ||||
Maintenance | 54,130 | 48,565 | ||||||
Professional services | 15,384 | 14,872 | ||||||
Software-enabled services | 155,652 | 120,801 | ||||||
Total revenues | 242,795 | 199,870 | ||||||
Cost of revenues: | ||||||||
Software licenses | 5,754 | 6,304 | ||||||
Maintenance | 24,305 | 20,352 | ||||||
Professional services | 10,243 | 10,659 | ||||||
Software-enabled services | 82,137 | 65,079 | ||||||
Total cost of revenues | 122,439 | 102,394 | ||||||
Gross profit | 120,356 | 97,476 | ||||||
Operating expenses: | ||||||||
Selling and marketing | 18,910 | 15,229 | ||||||
Research and development | 23,486 | 19,593 | ||||||
General and administrative | 19,165 | 14,683 | ||||||
Total operating expenses | 61,561 | 49,505 | ||||||
Operating income | 58,795 | 47,971 | ||||||
Interest expense, net | (23,818 | ) | (27,791 | ) | ||||
Other income (expense), net | 653 | (1,256 | ) | |||||
Loss on extinguishment of debt | (5,480 | ) | — | |||||
Income before income taxes | 30,150 | 18,924 | ||||||
Provision for income taxes | 6,913 | 5,928 | ||||||
Net income | $ | 23,237 | $ | 12,996 | ||||
Basic earnings per share | $ | 0.34 | $ | 0.22 | ||||
Basic weighted average number of common shares outstanding | 67,919 | 60,378 | ||||||
Diluted earnings per share | $ | 0.32 | $ | 0.21 | ||||
Diluted weighted average number of common and common equivalent shares outstanding | 71,499 | 63,132 | ||||||
F-3
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Condensed consolidated statements of cash flows
(unaudited)
Nine months ended September 30, | ||||||||
(in thousands) | 2010 | 2009 | ||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 23,237 | $ | 12,996 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 30,356 | 26,707 | ||||||
Amortization of loan origination costs | 2,896 | 1,724 | ||||||
(Gain) loss on sale or disposition of property and equipment | (1 | ) | 13 | |||||
Deferred income taxes | (12,467 | ) | (8,727 | ) | ||||
Stock-based compensation expense | 9,181 | 4,363 | ||||||
Provision for doubtful accounts | 580 | 300 | ||||||
Changes in operating assets and liabilities, excluding effects from acquisitions: | ||||||||
Accounts receivable | (2,009 | ) | 2,594 | |||||
Prepaid expenses and other assets | 80 | 132 | ||||||
Accounts payable | (2,151 | ) | (184 | ) | ||||
Accrued expenses and other liabilities | 90 | 3,491 | ||||||
Income taxes prepaid and payable | (2,392 | ) | (2,224 | ) | ||||
Deferred maintenance and other revenues | 229 | 3,815 | ||||||
Net cash provided by operating activities | 47,629 | 45,000 | ||||||
Cash flow from investing activities: | ||||||||
Additions to property and equipment | (3,265 | ) | (1,192 | ) | ||||
Proceeds from sale of property and equipment | 51 | 3 | ||||||
Cash paid for business acquisitions, net of cash acquired | (11,372 | ) | (10,327 | ) | ||||
Additions to capitalized software and other intangibles | (171 | ) | (46 | ) | ||||
Net cash used in investing activities | (14,757 | ) | (11,562 | ) | ||||
Cash flow from financing activities: | ||||||||
Repayment of debt | (107,670 | ) | (11,735 | ) | ||||
Proceeds from common stock issuance, net of issuance costs | 134,613 | — | ||||||
Proceeds from the exercise of stock options | 5,880 | 1,991 | ||||||
Purchase of common stock for treasury | (1,169 | ) | (2,216 | ) | ||||
Income tax benefit related to exercise of stock options | 3,453 | — | ||||||
Net cash provided by (used in) financing activities | 35,107 | (11,960 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (59 | ) | 1,684 | |||||
Net increase in cash and cash equivalents | 67,920 | 23,162 | ||||||
Cash and cash equivalents, beginning of period | 19,055 | 29,299 | ||||||
Cash and cash equivalents, end of period | $ | 86,975 | $ | 52,461 | ||||
Supplemental disclosure of cash paid for: | ||||||||
Interest | $ | 19,187 | $ | 19,861 | ||||
Income taxes, net | $ | 15,679 | $ | 16,689 | ||||
Supplemental disclosure of non-cash investing activities: | ||||||||
See Note 9 for a discussion of acquisitions |
F-4
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)
1. | Basis of presentation |
2. | The Transaction |
3. | Equity and stock-based compensation |
F-5
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
F-6
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
Nine months ended September 30, | ||||||||
Statements of operations classification | 2010 | 2009 | ||||||
Cost of maintenance | $ | 231 | $ | 89 | ||||
Cost of professional services | 332 | 163 | ||||||
Cost of software-enabled services | 1,924 | 875 | ||||||
Total cost of revenues | 2,487 | 1,127 | ||||||
Selling and marketing | 1,359 | 754 | ||||||
Research and development | 924 | 467 | ||||||
General and administrative | 4,411 | 2,015 | ||||||
Total operating expenses | 6,694 | 3,236 | ||||||
Total stock-based compensation expense | $ | 9,181 | $ | 4,363 | ||||
Shares of | ||||
underlying options | ||||
Outstanding at January 1, 2010 | 12,737,559 | |||
Granted | 2,154,135 | |||
Cancelled/forfeited | (182,330 | ) | ||
Exercised | (1,770,035 | ) | ||
Outstanding at September 30, 2010 | 12,939,329 | |||
4. | Comprehensive income |
F-7
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
Nine Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Net income | $ | 23,237 | $ | 12,996 | ||||
Foreign currency translation gains | 5,536 | 29,410 | ||||||
Change in unrealized loss on interest rate swaps, net of tax | 1,771 | 1,021 | ||||||
Total comprehensive income | $ | 30,544 | $ | 43,427 | ||||
5. | Basic and diluted earnings per share |
Nine months ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Weighted average common shares outstanding | 67,919 | 60,378 | ||||||
Weighted average common stock equivalents—options | 3,580 | 2,754 | ||||||
Weighted average common and common equivalent shares outstanding | 71,499 | 63,132 | ||||||
F-8
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
6. | Debt |
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
Senior credit facility, revolving portion | $ | — | $ | 2,000 | ||||
Senior credit facility, term loan portion, weighted-average interest rate of 2.52% and 2.39%, respectively | 157,072 | 190,032 | ||||||
113/4% senior subordinated notes due 2013 | 133,250 | 205,000 | ||||||
Capital leases | 82 | 227 | ||||||
290,404 | 397,259 | |||||||
Short-term borrowings and current portion of long-term debt | (1,719 | ) | (4,270 | ) | ||||
Long-term debt | $ | 288,685 | $ | 392,989 | ||||
7. | Derivatives and Hedging Activities |
Nine months ended September 30, | ||||||||
2010 | 2009 | |||||||
Interest rate swap | $ | 3,352 | $ | 2,815 | ||||
F-9
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
Nine months ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Amount of gain recognized in AOCI, net of tax | $ | 1,771 | $ | 1,021 | ||||
F-10
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
8. | Commitments and contingencies |
9. | Acquisitions |
Accounts receivable | $ | 1,680 | ||
Tangible assets acquired, net of cash received | 32 | |||
Acquired customer relationships and contracts | 2,500 | |||
Goodwill | 8,404 | |||
Deferred revenue | (1,126 | ) | ||
Other liabilities assumed | (118 | ) | ||
Consideration paid, net of cash received | $ | 11,372 | ||
F-11
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
Nine months ended September 30, | ||||||||
2010 | 2009 | |||||||
Revenues | $ | 243,451 | $ | 229,581 | ||||
Net income | $ | 23,313 | $ | 15,067 | ||||
Basic earnings per share | $ | 0.34 | $ | 0.25 | ||||
Basic weighted average number of common shares outstanding | 67,919 | 60,378 | ||||||
Diluted earnings per share | $ | 0.33 | $ | 0.24 | ||||
Diluted weighted average number of common and common equivalent shares outstanding | 71,499 | 63,132 | ||||||
10. | Goodwill |
Balance at December 31, 2009 | $ | 885,517 | ||
2010 acquisition | 8,404 | |||
Adjustments to previous acquisitions | (352 | ) | ||
Income tax benefit on rollover options exercised | (3,873 | ) | ||
Effect of foreign currency translation | 5,486 | |||
Balance at September 30, 2010 | $ | 895,182 | ||
11. | Product and geographic sales information |
F-12
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
Nine months ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
United States | $ | 164,791 | $ | 127,213 | ||||
Canada | 36,697 | 30,437 | ||||||
Americas excluding | 4,962 | 5,924 | ||||||
United States and Canada | ||||||||
Europe | 30,597 | 30,723 | ||||||
Asia Pacific and Japan | 5,748 | 5,573 | ||||||
$ | 242,795 | $ | 199,870 | |||||
Nine months ended September 30, | ||||||||
2010 | 2009 | |||||||
Portfolio management/accounting | $ | 194,388 | $ | 163,716 | ||||
Trading/treasury operations | 29,810 | 17,455 | ||||||
Financial modeling | 6,905 | 6,592 | ||||||
Loan management/accounting | 3,263 | 3,271 | ||||||
Property management | 3,451 | 3,818 | ||||||
Money market processing | 3,100 | 2,894 | ||||||
Training | 1,878 | 2,124 | ||||||
$ | 242,795 | $ | 199,870 | |||||
12. | Selected quarterly financial data (unaudited) |
First | Second | Third | ||||||||||
(in thousands) | quarter | quarter | quarter | |||||||||
2010 | ||||||||||||
Revenue | $ | 78,174 | $ | 81,618 | $ | 83,003 | ||||||
Gross profit | 39,012 | 40,678 | 40,666 | |||||||||
Operating income | 19,421 | 19,789 | 19,585 | |||||||||
Net income | 9,021 | 4,362 | 9,854 | |||||||||
Basic earnings per share | $ | 0.15 | $ | 0.06 | $ | 0.14 | ||||||
Diluted earnings per share | $ | 0.14 | $ | 0.06 | $ | 0.13 | ||||||
F-13
Table of Contents
Notes to condensed consolidated financial statements
(unaudited)—(continued)
13. | Recent accounting pronouncements |
14. | Subsequent events |
F-14
Table of Contents
F-15
Table of Contents
Consolidated balance sheets
December 31, | December 31, | |||||||
(in thousands, except per share data) | 2009 | 2008 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 19,055 | $ | 29,299 | ||||
Accounts receivable, net of allowance for doubtful accounts of $1,425 and $1,444, respectively (Note 3) | 41,600 | 38,318 | ||||||
Prepaid expenses and other current assets | 6,164 | 4,327 | ||||||
Income taxes receivable | 669 | — | ||||||
Deferred income taxes | 1,780 | 3,777 | ||||||
Total current assets | 69,268 | 75,721 | ||||||
Property and equipment: | ||||||||
Leasehold improvements | 5,358 | 4,852 | ||||||
Equipment, furniture, and fixtures | 25,915 | 20,978 | ||||||
31,273 | 25,830 | |||||||
Less accumulated depreciation | (17,237 | ) | (11,800 | ) | ||||
Net property and equipment | 14,036 | 14,030 | ||||||
Deferred income taxes | 499 | — | ||||||
Goodwill | 885,517 | 822,409 | ||||||
Intangible and other assets, net of accumulated amortization of $116,670 and $82,520, respectively | 216,321 | 215,193 | ||||||
Total assets | $ | 1,185,641 | $ | 1,127,353 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt (Note 6) | $ | 4,270 | $ | 2,101 | ||||
Accounts payable | 4,804 | 1,821 | ||||||
Income taxes payable | 703 | 4,898 | ||||||
Accrued employee compensation and benefits | 14,693 | 13,640 | ||||||
Other accrued expenses | 16,938 | 9,575 | ||||||
Interest payable | 2,070 | 2,007 | ||||||
Deferred maintenance and other revenue | 40,400 | 30,844 | ||||||
Total current liabilities | 83,878 | 64,886 | ||||||
Long-term debt, net of current portion (Note 6) | 392,989 | 406,625 | ||||||
Other long-term liabilities | 10,764 | 11,977 | ||||||
Deferred income taxes (Note 5) | 52,023 | 56,612 | ||||||
Total liabilities | 539,654 | 540,100 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Stockholders’ equity (Notes 4 and 10): | ||||||||
Common stock, $0.01 par value, 100,000 shares authorized; 60,807 shares and 60,545 shares issued, respectively and 60,400 shares and 60,350 shares outstanding, respectively | 608 | 605 | ||||||
Additional paid-in capital | 587,293 | 579,691 | ||||||
Accumulated other comprehensive income (loss) | 16,436 | (17,890 | ) | |||||
Retained earnings | 46,300 | 27,282 | ||||||
650,637 | 589,688 | |||||||
Less: cost of common stock in treasury, 407 shares and 195 shares, respectively | (4,650 | ) | (2,435 | ) | ||||
Total stockholders’ equity | 645,987 | 587,253 | ||||||
Total liabilities and stockholders’ equity | $ | 1,185,641 | $ | 1,127,353 | ||||
F-16
Table of Contents
Consolidated statements of operations
Year ended December 31, | ||||||||||||
(in thousands) | 2009 | 2008 | 2007 | |||||||||
Revenues: | ||||||||||||
Software licenses | $ | 20,661 | $ | 24,844 | $ | 27,514 | ||||||
Maintenance | 66,099 | 65,178 | 61,910 | |||||||||
Professional services | 20,889 | 24,352 | 17,491 | |||||||||
Software-enabled services | 163,266 | 165,632 | 141,253 | |||||||||
Total revenues | 270,915 | 280,006 | 248,168 | |||||||||
Cost of revenues: | ||||||||||||
Software licenses | 8,499 | 9,198 | 9,616 | |||||||||
Maintenance | 27,559 | 26,854 | 26,038 | |||||||||
Professional services | 14,154 | 16,118 | 14,277 | |||||||||
Software-enabled services | 87,528 | 90,263 | 78,951 | |||||||||
Total cost of revenues | 137,740 | 142,433 | 128,882 | |||||||||
Gross profit | 133,175 | 137,573 | 119,286 | |||||||||
Operating expenses: | ||||||||||||
Selling and marketing | 20,362 | 19,566 | 19,701 | |||||||||
Research and development | 26,513 | 26,804 | 26,282 | |||||||||
General and administrative | 19,197 | 26,120 | 24,573 | |||||||||
Total operating expenses | 66,072 | 72,490 | 70,556 | |||||||||
Operating income | 67,103 | 65,083 | 48,730 | |||||||||
Interest income | 28 | 409 | 939 | |||||||||
Interest expense | (36,891 | ) | (41,539 | ) | (45,463 | ) | ||||||
Other (expense) income, net | (1,418 | ) | 1,994 | 1,911 | ||||||||
Income before income taxes | 28,822 | 25,947 | 6,117 | |||||||||
Provision (benefit) for income taxes (Note 5) | 9,804 | 7,146 | (458 | ) | ||||||||
Net income | $ | 19,018 | $ | 18,801 | $ | 6,575 | ||||||
Basic earnings per share | $ | 0.31 | $ | 0.31 | $ | 0.11 | ||||||
Basic weighted average number of common shares outstanding | 60,381 | 60,284 | 60,245 | |||||||||
Diluted earnings per share | $ | 0.30 | $ | 0.30 | $ | 0.10 | ||||||
Diluted weighted average number of common and common equivalent shares outstanding | 63,653 | 63,700 | 63,382 | |||||||||
F-17
Table of Contents
Consolidated statements of cash flows
Year ended December 31, | ||||||||||||
(in thousands) | 2009 | 2008 | 2007 | |||||||||
Cash flow from operating activities: | ||||||||||||
Net income | $ | 19,018 | $ | 18,801 | $ | 6,575 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 36,028 | 35,038 | 35,047 | |||||||||
Stock compensation expense | 5,607 | 7,323 | 10,979 | |||||||||
Foreign exchange gains on debt | — | — | (768 | ) | ||||||||
Amortization of loan origination costs | 2,306 | 2,328 | 2,317 | |||||||||
Equity losses in long-term investment | — | 2,098 | 187 | |||||||||
Loss on sale or disposition of property and equipment | 13 | 1 | 105 | |||||||||
Deferred income taxes | (8,861 | ) | (7,368 | ) | (6,115 | ) | ||||||
Provision for doubtful accounts | 213 | 865 | 336 | |||||||||
Changes in operating assets and liabilities, excluding effects from acquisitions: | ||||||||||||
Accounts receivable | 3,360 | (1,301 | ) | (6,635 | ) | |||||||
Prepaid expenses and other assets | (284 | ) | (2,742 | ) | (1,723 | ) | ||||||
Income taxes receivable and payable | (5,236 | ) | 2,552 | 2,790 | ||||||||
Accounts payable | 1,549 | (494 | ) | 101 | ||||||||
Accrued expenses | 1,646 | 1,581 | 10,745 | |||||||||
Deferred maintenance and other revenue | 4,493 | 2,973 | 3,116 | |||||||||
Net cash provided by operating activities | 59,852 | 61,655 | 57,057 | |||||||||
Cash flow from investing activities: | ||||||||||||
Additions to property and equipment | (2,559 | ) | (6,746 | ) | (7,717 | ) | ||||||
Proceeds from sale of property and equipment | 3 | 2 | 8 | |||||||||
Cash paid for business acquisitions, net of cash acquired (Note 11) | (51,477 | ) | (17,864 | ) | (5,130 | ) | ||||||
Additions to capitalized software | (101 | ) | — | — | ||||||||
Net cash used in investing activities | (54,134 | ) | (24,608 | ) | (12,839 | ) | ||||||
Cash flow from financing activities: | ||||||||||||
Cash received from other borrowings | 2,000 | — | 5,200 | |||||||||
Repayment of debt | (19,679 | ) | (25,574 | ) | (42,688 | ) | ||||||
Exercise of stock options | 1,998 | 2,398 | 1 | |||||||||
Income tax benefit related to exercise of stock options | — | — | 89 | |||||||||
Purchase of common stock for treasury | (2,215 | ) | (2,357 | ) | (10 | ) | ||||||
Net cash used in financing activities | (17,896 | ) | (25,532 | ) | (37,408 | ) | ||||||
Effect of exchange rate changes on cash | 1,934 | (1,391 | ) | 647 | ||||||||
Net increase (decrease) in cash and cash equivalents | (10,244 | ) | 10,124 | 7,457 | ||||||||
Cash and cash equivalents, beginning of period | 29,299 | 19,175 | 11,718 | |||||||||
Cash and cash equivalents, end of period | $ | 19,055 | $ | 29,299 | $ | 19,175 | ||||||
Supplemental disclosure of cash paid (refunded) for: | ||||||||||||
Interest | $ | 34,061 | $ | 38,505 | $ | 43,451 | ||||||
Income taxes, net | $ | 23,512 | $ | 12,472 | $ | (1,627 | ) | |||||
Supplemental disclosure of non-cash investing activities: | ||||||||||||
See Note 11 for a discussion of acquisitions |
F-18
Table of Contents
Consolidated statements of changes in stockholders’ equity
For the years ended December 31, 2009, 2008 and 2007
Common Stock | Accumulated | |||||||||||||||||||||||||||||||
Number | Additional | Other | Total | Total | ||||||||||||||||||||||||||||
of Issued | Paid-in | Retained | Comprehensive | Treasury | Stockholders’ | Comprehensive | ||||||||||||||||||||||||||
(in thousands) | Shares | Amount | Capital | Earnings | Income (loss) | Stock | Equity | Income (Loss) | ||||||||||||||||||||||||
Balance, at December 31, 2006 | 60,252 | $ | 603 | $ | 558,992 | $ | 1,906 | $ | 1,699 | $ | (68 | ) | $ | 563,132 | ||||||||||||||||||
Net income | — | — | — | 6,575 | — | — | 6,575 | $ | 6,575 | |||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | 34,490 | — | 34,490 | 34,490 | ||||||||||||||||||||||||
Change in unrealized loss on interest rate swaps, net of tax | — | — | — | — | (2,574 | ) | — | (2,574 | ) | (2,574 | ) | |||||||||||||||||||||
Total comprehensive income | $ | 38,491 | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 10,979 | — | — | — | 10,979 | |||||||||||||||||||||||||
Exercise of options | 2 | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||
Purchase of common stock | — | — | — | — | — | (10 | ) | (10 | ) | |||||||||||||||||||||||
Balance, at December 31, 2007 | 60,254 | 603 | 569,972 | 8,481 | 33,615 | (78 | ) | 612,593 | ||||||||||||||||||||||||
Net income | — | — | — | 18,801 | — | — | 18,801 | $ | 18,801 | |||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | (49,078 | ) | — | (49,078 | ) | (49,078 | ) | |||||||||||||||||||||
Change in unrealized loss on interest rate swaps, net of tax | — | — | — | — | (2,427 | ) | — | (2,427 | ) | (2,427 | ) | |||||||||||||||||||||
Total comprehensive loss | $ | (32,704 | ) | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 7,323 | — | — | — | 7,323 | |||||||||||||||||||||||||
Exercise of options | 291 | 2 | 2,396 | — | — | — | 2,398 | |||||||||||||||||||||||||
Purchase of common stock | — | — | — | — | — | (2,357 | ) | (2,357 | ) | |||||||||||||||||||||||
Balance, at December 31, 2008 | 60,545 | 605 | 579,691 | 27,282 | (17,890 | ) | (2,435 | ) | 587,253 | |||||||||||||||||||||||
Net income | — | — | — | 19,018 | — | — | 19,018 | $ | 19,018 | |||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | 32,879 | — | 32,879 | 32,879 | ||||||||||||||||||||||||
Change in unrealized loss on interest rate swaps, net of tax | — | — | — | — | 1,447 | — | 1,447 | 1,447 | ||||||||||||||||||||||||
Total comprehensive income | $ | 53,344 | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 5,607 | — | — | — | 5,607 | |||||||||||||||||||||||||
Exercise of options | 262 | 3 | 1,995 | — | — | — | 1,998 | |||||||||||||||||||||||||
Purchase of common stock | — | — | — | — | — | (2,215 | ) | (2,215 | ) | |||||||||||||||||||||||
Balance, at December 31, 2009 | 60,807 | $ | 608 | $ | 587,293 | $ | 46,300 | $ | 16,436 | $ | (4,650 | ) | $ | 645,987 | ||||||||||||||||||
F-19
Table of Contents
Notes to consolidated financial statements
1. | Organization |
2. | Summary of significant accounting policies |
F-20
Table of Contents
Notes to consolidated financial statements—(continued)
F-21
Table of Contents
Notes to consolidated financial statements—(continued)
F-22
Table of Contents
Notes to consolidated financial statements—(continued)
F-23
Table of Contents
Notes to consolidated financial statements—(continued)
F-24
Table of Contents
Notes to consolidated financial statements—(continued)
Description | Useful life | |
Equipment | 3-5 years | |
Furniture and fixtures | 7-10 years | |
Leasehold improvements | Shorter of lease term or estimated useful life | |
F-25
Table of Contents
Notes to consolidated financial statements—(continued)
Balance at December 31, 2007 | $ | 860,690 | ||
2008 acquisition | 8,937 | |||
Adjustments to previous acquisitions | 2 | |||
Income tax benefit on Rollover options exercised | (578 | ) | ||
Effect of foreign currency translation | (46,642 | ) | ||
Balance at December 31, 2008 | 822,409 | |||
2009 acquisitions | 30,123 | |||
Adjustments to previous acquisitions | (147 | ) | ||
Income tax benefit on Rollover options exercised | (118 | ) | ||
Effect of foreign currency translation | 33,250 | |||
Balance at December 31, 2009 | $ | 885,517 | ||
December 31, | ||||||||
2009 | 2008 | |||||||
Customer relationships | $ | 233,505 | $ | 207,757 | ||||
Completed technology | 68,166 | 58,046 | ||||||
Trade names | 18,276 | 17,391 | ||||||
Other | 2,299 | 2,016 | ||||||
322,246 | 285,210 | |||||||
Less: accumulated amortization | (116,245 | ) | (82,236 | ) | ||||
$ | 206,001 | $ | 202,974 | |||||
F-26
Table of Contents
Notes to consolidated financial statements—(continued)
Year ending December 31, | ||||
2010 | $ | 34,123 | ||
2011 | 32,345 | |||
2012 | 29,877 | |||
2013 | 27,263 | |||
2014 | 24,792 | |||
$ | 148,400 | |||
F-27
Table of Contents
Notes to consolidated financial statements—(continued)
F-28
Table of Contents
Notes to consolidated financial statements—(continued)
F-29
Table of Contents
Notes to consolidated financial statements—(continued)
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Weighted average common shares outstanding—used in calculation of basic earnings per share | 60,381 | 60,284 | 60,245 | |||||||||
Weighted average common stock equivalents—options | 3,272 | 3,416 | 3,137 | |||||||||
Weighted average common and common equivalent shares outstanding—used in calculation of diluted earnings per share | 63,653 | 63,700 | 63,382 | |||||||||
3. | Accounts receivable |
December 31, | ||||||||
2009 | 2008 | |||||||
Accounts receivable | $ | 30,838 | $ | 28,785 | ||||
Unbilled accounts receivable | 12,187 | 10,977 | ||||||
Allowance for doubtful accounts | (1,425 | ) | (1,444 | ) | ||||
Total accounts receivable | $ | 41,600 | $ | 38,318 | ||||
F-30
Table of Contents
Notes to consolidated financial statements—(continued)
Year ended December 31, | ||||||||||||
Allowance for doubtful accounts: | 2009 | 2008 | 2007 | |||||||||
Balance at beginning of period | $ | 1,444 | $ | 1,223 | $ | 1,638 | ||||||
Charge to costs and expenses | 213 | 865 | 336 | |||||||||
Write-offs, net of recoveries | (313 | ) | (524 | ) | (812 | ) | ||||||
Other adjustments | 81 | (120 | ) | 61 | ||||||||
Balance at end of period | $ | 1,425 | $ | 1,444 | $ | 1,223 | ||||||
4. | Stockholders’ equity |
5. | Income taxes |
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
U.S. | $ | 9,749 | $ | 6,671 | $ | (11,417 | ) | |||||
Foreign | 19,073 | 19,276 | 17,534 | |||||||||
Income before income taxes | $ | 28,822 | $ | 25,947 | $ | 6,117 | ||||||
F-31
Table of Contents
Notes to consolidated financial statements—(continued)
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Current: | ||||||||||||
Federal | $ | 8,334 | $ | 6,580 | $ | 460 | ||||||
Foreign | 8,727 | 7,746 | 4,406 | |||||||||
State | 1,559 | 94 | 99 | |||||||||
Total | 18,620 | 14,420 | 4,965 | |||||||||
Deferred: | ||||||||||||
Federal | (8,063 | ) | (7,129 | ) | (6,262 | ) | ||||||
Foreign | (1,902 | ) | (1,602 | ) | 441 | |||||||
State | 1,149 | 1,457 | 398 | |||||||||
Total | (8,816 | ) | (7,274 | ) | (5,423 | ) | ||||||
Total | $ | 9,804 | $ | 7,146 | $ | (458 | ) | |||||
Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Computed “expected” tax expense | $ | 10,087 | $ | 9,081 | $ | 2,141 | ||||||
Increase (decrease) in income tax expense resulting from: | ||||||||||||
State income taxes (net of federal income tax benefit) | 1,775 | 1,008 | 321 | |||||||||
Foreign operations | (2,258 | ) | (2,333 | ) | (1,883 | ) | ||||||
Rate change impact on tax liabilities | — | (581 | ) | (1,536 | ) | |||||||
Uncertain tax positions | 466 | 702 | 646 | |||||||||
Other | (266 | ) | (731 | ) | (147 | ) | ||||||
Provision (benefit) for income taxes | $ | 9,804 | $ | 7,146 | $ | (458 | ) | |||||
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Notes to consolidated financial statements—(continued)
2009 | 2008 | |||||||||||||||
Deferred | Deferred | Deferred | Deferred | |||||||||||||
tax | tax | tax | tax | |||||||||||||
assets | liabilities | assets | liabilities | |||||||||||||
Deferred compensation | $ | 9,186 | $ | — | $ | 6,327 | $ | — | ||||||||
Interest rate swap | 1,736 | — | 2,382 | — | ||||||||||||
Accrued expenses | 1,720 | — | 898 | — | ||||||||||||
Net operating loss carryforwards | 1,449 | — | 5,512 | — | ||||||||||||
Tax credit carryforwards | 1,333 | — | 237 | — | ||||||||||||
Purchased in-process research and development | 1,002 | — | 1,251 | — | ||||||||||||
Impaired investment interest | 860 | — | 738 | — | ||||||||||||
Other | 454 | — | — | 345 | ||||||||||||
Acquired technology | 126 | — | — | 691 | ||||||||||||
Property and equipment | — | 932 | — | 468 | ||||||||||||
Trade names | — | 5,004 | — | 4,750 | ||||||||||||
Other intangible assets | — | 6,316 | — | 8,122 | ||||||||||||
Customer relationships | — | 54,156 | — | 51,232 | ||||||||||||
Total | 17,866 | 66,408 | 17,345 | 65,608 | ||||||||||||
Valuation allowance | (1,202 | ) | — | (4,572 | ) | — | ||||||||||
Total | $ | 16,664 | $ | 66,408 | $ | 12,773 | $ | 65,608 | ||||||||
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Table of Contents
Notes to consolidated financial statements—(continued)
Balance at January 1, 2008 | $ | 6,457 | ||
Increases related to current year tax positions | 375 | |||
Lapse of statute of limitation | (19 | ) | ||
Foreign exchange translation adjustment | (1,020 | ) | ||
Balance at December 31, 2008 | 5,793 | |||
Increases related to current year tax positions | 759 | |||
Settlements with tax authorities | (262 | ) | ||
Lapse of statute of limitation | (30 | ) | ||
Foreign exchange translation adjustment | 723 | |||
Balance at December 31, 2009 | $ | 6,983 | ||
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Notes to consolidated financial statements—(continued)
6. | Debt, derivative instruments, and capital leases |
2009 | 2008 | |||||||
Senior credit facility, revolving portion(A) | $ | 2,000 | $ | — | ||||
Senior credit facility, term loan portion, weighted-average interest rate of 2.39% and 3.54%, respectively(A) | 190,032 | 203,726 | ||||||
113/4% senior subordinated notes due 2013(B) | 205,000 | 205,000 | ||||||
Capital leases | 227 | — | ||||||
397,259 | 408,726 | |||||||
Short-term borrowings and current portion of long-term debt | (4,270 | ) | (2,101 | ) | ||||
Long-term debt | $ | 392,989 | $ | 406,625 | ||||
(A) | Senior credit facilities |
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Notes to consolidated financial statements—(continued)
F-36
Table of Contents
Notes to consolidated financial statements—(continued)
(B) | 113/4% Senior subordinated notes due 2013 |
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Table of Contents
Notes to consolidated financial statements—(continued)
Year ending December 31, | ||||
2010 | $ | 4,270 | ||
2011 | 2,022 | |||
2012 | 185,967 | |||
2013 | 205,000 | |||
$ | 397,259 | |||
7. | Fair value measurements |
Fair values at December 31, 2009 | Level 1 | Level 2 | Level 3 | |||||||||
Assets | $ | — | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative financial instrument | $ | — | $ | 4,159 | $ | — | ||||||
Contingent consideration | — | — | 1,000 | |||||||||
Total liabilities | $ | — | $ | 4,159 | $ | 1,000 | ||||||
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Notes to consolidated financial statements—(continued)
Fair values at December 31, 2008 | Level 1 | Level 2 | Level 3 | |||||||||
Assets | $ | — | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative financial instrument | $ | — | $ | 6,644 | $ | — | ||||||
2009 | 2008 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
amount | value | amount | value | |||||||||||||
Financial liabilities: | ||||||||||||||||
Senior credit facility | $ | 192,032 | $ | 192,032 | $ | 203,726 | $ | 203,726 | ||||||||
113/4% Senior subordinated notes due 2013 | 205,000 | 217,300 | 205,000 | 180,154 | ||||||||||||
8. | Leases |
F-39
Table of Contents
Notes to consolidated financial statements—(continued)
Year ending December 31, | ||||
2010 | $ | 9,486 | ||
2011 | 7,482 | |||
2012 | 6,008 | |||
2013 | 4,537 | |||
2014 | 2,595 | |||
2015 and thereafter | 3,851 | |||
$ | 33,959 | |||
Year ending December 31, | ||||
2010 | $ | 1,257 | ||
2011 | 1,257 | |||
2012 | 1,257 | |||
2013 | 1,257 | |||
2014 | 210 | |||
$ | 5,238 | |||
9. | Defined contribution plans |
F-40
Table of Contents
Notes to consolidated financial statements—(continued)
10. | Stock Option and Purchase Plans |
F-41
Table of Contents
Notes to consolidated financial statements—(continued)
F-42
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Notes to consolidated financial statements—(continued)
Performance-based | ||||||||||||
Time-based awards | awards | |||||||||||
2009 | 2007 | 2007 | ||||||||||
Expected term to exercise (years) | 4.0 | 4.0 | 4.5 | |||||||||
Expected volatility | 34.24% | 45.85% | 45.85% | |||||||||
Risk-free interest rate | 1.89% | 4.57% | 4.57% | |||||||||
Expected dividend yield | 0% | 0% | 0% | |||||||||
F-43
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Notes to consolidated financial statements—(continued)
Statement of operations classification | 2009 | 2008 | 2007 | |||||||||
Cost of maintenance | $ | 114 | $ | 142 | $ | 257 | ||||||
Cost of professional services | 208 | 240 | 343 | |||||||||
Cost of software-enabled services | 1,133 | 1,621 | 2,452 | |||||||||
Total cost of revenues | 1,455 | 2,003 | 3,052 | |||||||||
Selling and marketing | 954 | 1,184 | 1,803 | |||||||||
Research and development | 600 | 777 | 1,146 | |||||||||
General and administrative | 2,598 | 3,359 | 4,978 | |||||||||
Total operating expenses | 4,152 | 5,320 | 7,927 | |||||||||
Total stock-based compensation expense | $ | 5,607 | $ | 7,323 | $ | 10,979 | ||||||
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Notes to consolidated financial statements—(continued)
Weighted average | ||||||||
Shares | exercise price | |||||||
Outstanding at December 31, 2006 | 13,714,251 | $ | 6.76 | |||||
Granted | 369,750 | 10.12 | ||||||
Cancelled/forfeited | (306,425 | ) | 8.70 | |||||
Exercised | (1,912 | ) | 0.87 | |||||
Outstanding at December 31, 2007 | 13,775,664 | 6.80 | ||||||
Granted | — | — | ||||||
Cancelled/forfeited | (622,360 | ) | 8.88 | |||||
Exercised | (291,184 | ) | 8.24 | |||||
Outstanding at December 31, 2008 | 12,862,120 | 6.67 | ||||||
Granted | 357,041 | 11.35 | ||||||
Cancelled/forfeited | (219,010 | ) | 8.91 | |||||
Exercised | (262,592 | ) | 7.62 | |||||
Outstanding at December 31, 2009 | 12,737,559 | 6.74 | ||||||
Outstanding, vested options currently exercisable | Outstanding options expected to vest | |||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||
average | average | |||||||||||||||||||||||||||
Weighted | Aggregate | remaining | Weighted | Aggregate | remaining | |||||||||||||||||||||||
average | intrinsic | contractual | average | intrinsic | contractual | |||||||||||||||||||||||
Shares | exercise price | value | term (years) | Shares | exercise price | value | term (years) | |||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||
10,055,482 | $ | 6.10 | $ | 84,741 | 5.0 | 312,202 | $ | 11.54 | $ | 934 | 9.1 | |||||||||||||||||
11. | Acquisitions |
F-45
Table of Contents
Notes to consolidated financial statements—(continued)
F-46
Table of Contents
Notes to consolidated financial statements—(continued)
F-47
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Notes to consolidated financial statements—(continued)
F-48
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Notes to consolidated financial statements—(continued)
TheNext | Micro | |||||||||||||||||||||||
Tradeware | Round | MAXIMIS | Evare | Design | Northport | |||||||||||||||||||
Tangible assets acquired, net of cash received | $ | 1,795 | $ | 1,155 | $ | 143 | $ | 1,090 | $ | 1,216 | $ | 708 | ||||||||||||
Accounts receivable | 1,212 | 3,362 | — | 928 | — | — | ||||||||||||||||||
Completed technology | 2,700 | 3,200 | 1,485 | — | 2,300 | — | ||||||||||||||||||
Trade names | 300 | 200 | 110 | 150 | 155 | — | ||||||||||||||||||
Acquired client relationships and contracts | 8,300 | 4,800 | 5,420 | 1,720 | 5,370 | 1,500 | ||||||||||||||||||
Non-compete agreements | — | 100 | — | — | — | — | ||||||||||||||||||
Goodwill | 15,727 | 13,075 | 821 | 500 | 8,790 | 3,303 | ||||||||||||||||||
Deferred revenue | (2 | ) | (3,172 | ) | (965 | ) | (28 | ) | (114 | ) | (350 | ) | ||||||||||||
Deferred taxes | (3,344 | ) | — | — | — | — | — | |||||||||||||||||
Other liabilities assumed | (4,259 | ) | (3,999 | ) | (108 | ) | (810 | ) | (18 | ) | (31 | ) | ||||||||||||
Consideration paid, net of cash acquired | $ | 22,429 | $ | 18,721 | $ | 6,906 | $ | 3,550 | $ | 17,699 | $ | 5,130 | ||||||||||||
2009 | 2008 | |||||||
Revenues | $ | 300,269 | $ | 331,161 | ||||
Net income | 23,913 | 27,208 | ||||||
12. | Related party transactions |
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Table of Contents
Notes to consolidated financial statements—(continued)
13. | Commitments and contingencies |
14. | Product and geographic sales information |
2009 | 2008 | 2007 | ||||||||||
United States | $ | 172,323 | $ | 169,749 | $ | 147,104 | ||||||
Canada | 41,708 | 44,112 | 40,892 | |||||||||
Americas, excluding United States and Canada | 7,393 | 4,448 | 4,672 | |||||||||
Europe | 42,152 | 53,860 | 49,612 | |||||||||
Asia-Pacific and Japan | 7,339 | 7,837 | 5,888 | |||||||||
$ | 270,915 | $ | 280,006 | $ | 248,168 | |||||||
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Table of Contents
Notes to consolidated financial statements—(continued)
2009 | 2008 | |||||||
United States | $ | 18,146 | $ | 20,107 | ||||
Canada | 4,906 | 5,132 | ||||||
Americas, excluding United States and Canada | 100 | 141 | ||||||
Europe | 460 | 300 | ||||||
Asia-Pacific and Japan | 650 | 444 | ||||||
$ | 24,262 | $ | 26,124 | |||||
2009 | 2008 | 2007 | ||||||||||
Portfolio management/accounting | $ | 222,208 | $ | 225,567 | $ | 193,858 | ||||||
Trading/treasury operations | 22,952 | 27,664 | 28,100 | |||||||||
Financial modeling | 8,475 | 8,685 | 8,919 | |||||||||
Loan management/accounting | 4,608 | 5,189 | 5,120 | |||||||||
Property management | 5,343 | 5,874 | 5,514 | |||||||||
Money market processing | 4,514 | 4,032 | 4,498 | |||||||||
Training | 2,815 | 2,995 | 2,159 | |||||||||
$ | 270,915 | $ | 280,006 | $ | 248,168 | |||||||
15. | Selected quarterly financial data (unaudited) |
First | Second | Third | Fourth | |||||||||||||
(in thousands) | quarter | quarter | quarter | quarter | ||||||||||||
2009 | ||||||||||||||||
Revenue | $ | 63,722 | $ | 67,251 | $ | 68,897 | $ | 71,045 | ||||||||
Gross profit | 30,650 | 32,730 | 34,096 | 35,699 | ||||||||||||
Operating income | 14,473 | 15,835 | 17,663 | 19,132 | ||||||||||||
Net income | 3,898 | 3,491 | 5,607 | 6,022 | ||||||||||||
First | Second | Third | Fourth | |||||||||||||
(In thousands) | quarter | quarter | quarter | quarter | ||||||||||||
2008 | ||||||||||||||||
Revenue | $ | 68,523 | $ | 72,195 | $ | 71,001 | $ | 68,287 | ||||||||
Gross profit | 33,600 | 35,779 | 35,029 | 33,165 | ||||||||||||
Operating income | 15,822 | 17,276 | 15,579 | 16,406 | ||||||||||||
Net income | 3,736 | 3,786 | 4,810 | 6,469 | ||||||||||||
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Table of Contents
Notes to consolidated financial statements—(continued)
16. | Subsequent events |
• | the conversion of the outstanding superior options granted under the 2006 equity incentive plan into performance-based options that vest based on EBITDA performance in 2010 and 2011, which affects 1,680,868 outstanding options; |
• | the elimination of pre-determined EBITDA ranges from the option agreements and provision for the annual proposal of EBITDA ranges by management, subject to approval by the Company’s board of directors, which EBITDA target range for 2010 was established by the Company’s board in a subsequent meeting described below; and |
• | the “rolling over” of performance-based options that do not vest (in whole or in part) in any given year into performance-based options for the following year, except as otherwise provided by the Company’s board of directors, which affects 689,007 unvested performance-based options outstanding, and would affect 1,680,868 outstanding superior options, of which 701,497 are held by the Company’s named executive officers, that will be converted to performance-based options upon the closing of this offering. |
F-52
Table of Contents
Notes to consolidated financial statements—(continued)
17. | Subsequent events |
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SS&C Technologies Holdings, Inc.
Parent company balance sheets
December 31, | ||||||||
(in thousands, except per share data) | 2009 | 2008 | ||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | — | $ | — | ||||
Investments in subsidiaries | 645,987 | 587,253 | ||||||
Total assets | $ | 645,987 | $ | 587,253 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value, 100,000 shares authorized; 60,807 shares and 60,545 shares issued, respectively, and 60,400 and 60,350 shares outstanding, respectively | 608 | 605 | ||||||
Additional paid-in capital | 587,293 | 579,691 | ||||||
Accumulated other comprehensive income | 16,436 | (17,890 | ) | |||||
Retained earnings | 46,300 | 27,282 | ||||||
650,637 | 589,688 | |||||||
Less: cost of common stock in treasury, 407 shares and 195 shares, respectively | (4,650 | ) | (2,435 | ) | ||||
Total stockholders’ equity | 645,987 | 587,253 | ||||||
Total liabilities and stockholders’ equity | $ | 645,987 | $ | 587,253 | ||||
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Parent company statements of operations
Year ended December 31, | ||||||||||||
(in thousands) | 2009 | 2008 | 2007 | |||||||||
Revenues | $ | — | $ | — | $ | — | ||||||
Operating costs and expenses | — | — | — | |||||||||
Equity in net income of subsidiaries, net of tax | 19,018 | 18,801 | 6,575 | |||||||||
Net income | $ | 19,018 | $ | 18,801 | $ | 6,575 | ||||||
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Parent company statements of cash flows
Year ended December 31, | ||||||||||||
(in thousands) | 2009 | 2008 | 2007 | |||||||||
Cash flow from operating activities: | ||||||||||||
Net income | $ | 19,018 | $ | 18,801 | $ | 6,575 | ||||||
Equity in net income of subsidiaries, net of tax | (19,018 | ) | (18,801 | ) | (6,575 | ) | ||||||
Net cash provided by operating activities | — | — | — | |||||||||
Net (decrease) increase in cash and cash equivalents | — | — | — | |||||||||
Cash and cash equivalents, beginning of period | — | — | — | |||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | ||||||
Supplemental disclosure of cash paid for: | ||||||||||||
Interest paid | $ | — | $ | — | $ | — | ||||||
Income tax refunds, net of payments | $ | — | $ | — | $ | — | ||||||
Income taxes paid, net of refunds | $ | — | $ | — | $ | — |
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Table of Contents
Parent company statements of changes in stockholders’ equity
For the years ended December 31, 2007, 2008 and 2009
Common Stock | Accumulated | |||||||||||||||||||||||||||||||
Number | Additional | Other | Total | Total | ||||||||||||||||||||||||||||
of Issued | Paid-in | Retained | Comprehensive | Treasury | Stockholders’ | Comprehensive | ||||||||||||||||||||||||||
(in thousands) | Shares | Amount | Capital | Earnings | Income (loss) | Stock | Equity | Income (Loss) | ||||||||||||||||||||||||
Balance, at December 31, 2006 | 60,252 | $ | 603 | $ | 558,992 | $ | 1,906 | $ | 1,699 | $ | (68 | ) | $ | 563,132 | ||||||||||||||||||
Net income | — | — | — | 6,575 | — | — | 6,575 | $ | 6,575 | |||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | 34,490 | — | 34,490 | 34,490 | ||||||||||||||||||||||||
Change in unrealized loss on interest rate swaps, net of tax | — | — | — | — | (2,574 | ) | — | (2,574 | ) | (2,574 | ) | |||||||||||||||||||||
Total comprehensive income | $ | 38,491 | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 10,979 | — | — | — | 10,979 | |||||||||||||||||||||||||
Exercise of options | 2 | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||
Purchase of common stock | — | — | — | — | — | (10 | ) | (10 | ) | |||||||||||||||||||||||
Balance, at December 31, 2007 | 60,254 | 603 | 569,972 | 8,481 | 33,615 | (78 | ) | 612,593 | ||||||||||||||||||||||||
Net income | — | — | — | 18,801 | — | — | 18,801 | $ | 18,801 | |||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | (49,078 | ) | — | (49,078 | ) | (49,078 | ) | |||||||||||||||||||||
Change in unrealized loss on interest rate swaps, net of tax | — | — | — | — | (2,427 | ) | — | (2,427 | ) | (2,427 | ) | |||||||||||||||||||||
Total comprehensive loss | $ | (32,704 | ) | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 7,323 | — | — | — | 7,323 | |||||||||||||||||||||||||
Exercise of options | 291 | 2 | 2,396 | — | — | — | 2,398 | |||||||||||||||||||||||||
Purchase of common stock | — | — | — | — | — | (2,357 | ) | (2,357 | ) | |||||||||||||||||||||||
Balance, at December 31, 2008 | 60,545 | 605 | 579,691 | 27,282 | (17,890 | ) | (2,435 | ) | 587,253 | |||||||||||||||||||||||
Net income | — | — | — | 19,018 | — | — | 19,018 | $ | 19,018 | |||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | 32,879 | — | 32,879 | 32,879 | ||||||||||||||||||||||||
Change in unrealized loss on interest rate swaps, net of tax | — | — | — | — | 1,447 | — | 1,447 | 1,447 | ||||||||||||||||||||||||
Total comprehensive income | $ | 53,344 | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 5,607 | — | — | — | 5,607 | |||||||||||||||||||||||||
Exercise of options | 262 | 3 | 1,995 | — | — | — | 1,998 | |||||||||||||||||||||||||
Purchase of common stock | — | — | — | — | — | (2,215 | ) | (2,215 | ) | |||||||||||||||||||||||
Balance, at December 31, 2009 | 60,807 | $ | 608 | $ | 587,293 | $ | 46,300 | $ | 16,436 | $ | (4,650 | ) | $ | 645,987 | ||||||||||||||||||
F-57
Table of Contents
Notes to parent company financial statements
1. | Background and basis of presentation |
2. | Debt |
3. | Commitments and contingencies |
F-58