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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 000-28430
SS&C TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1169696
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
80 LAMBERTON ROAD
WINDSOR, CT 06095
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
860-298-4500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, $.01
PAR VALUE PER SHARE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 22, 2000, the aggregate market value of the common stock held
by non-affiliates of the Registrant was approximately $51,292,905 based on the
closing sale price of $5.81 of the Registrant's Common Stock on the Nasdaq
National Market on such date.
As of March 22, 2000, 16,044,203 shares of the Registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT PART OF REPORT INTO WHICH INCORPORATED
-------- --------------------------------------
Portions of the Registrant's 1999 Annual Items 6, 7, 7A and 8 of Part II
Report to Shareholders
Portions of the Registrant's Proxy Statement Items 10, 11, 12 and 13 of Part III
for the 2000 Annual Meeting of
Shareholders
2
SS&C TECHNOLOGIES, INC.
TABLE OF CONTENTS
FORM 10-K
ITEM PAGE
- --------- -----
PART I
Item 1. Business.................................................... 2
Item 2. Properties.................................................. 11
Item 3. Legal Proceedings........................................... 11
Item 4. Submission of Matters to a Vote of Security Holders......... 11
Executive Officers of the Registrant........................ 11
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 12
Item 6. Selected Financial Data..................................... 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 12
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk........................................................ 13
Item 8. Financial Statements and Supplemental Data.................. 13
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 13
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 13
Item 11. Executive Compensation...................................... 13
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 13
Item 13. Certain Relationships and Related Transactions.............. 13
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 13
Signature Page.............................................. 15
FORWARD-LOOKING INFORMATION
This Annual Report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. For this purpose, any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," and similar expressions are
intended to identify forward-looking statements. The important factors discussed
under the caption "Certain Factors That May Affect Future Operating Results" in
the Company's 1999 Annual Report to Stockholders and incorporated herein by
reference, among others, could cause actual results to differ materially from
those indicated by forward-looking statements made herein and presented
elsewhere by management from time to time.
PTS, Macro Pricing, SKYLINE, SKYLINE II, PRO-JECT, HedgeWare and AdvisorWare are
registered trademarks, SS&C, CAMRA, CAMRA 2000, CAMRA XE, AdvisorWare 2000, LMS
2000, LMS 2000 SnapShots, Extend, PTS 2000, Total Return 2000, Antares 2000,
Antares XE, CAMRA Debt & Derivatives 2000, Mabel, REMS and Finesse 2000 are
trademarks, and SS&C Direct and Straight-Thru Processing are service marks of
either SS&C Technologies, Inc., or one of its subsidiaries. All other trademarks
or trade names referred to in this Annual Report are the property of their
respective owners.
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PART I
ITEM 1. BUSINESS
SS&C Technologies, Inc. ("SS&C" or the "Company") was organized as a Connecticut
corporation in March 1986 and reincorporated in Delaware in April 1996. The
Company is a leading provider of client/server-based financial software
solutions, and related consulting services, designed to improve the efficiency
and effectiveness of investment management, actuarial, and analytical functions
across a broad range of financial institutions. The Company has developed a
family of software products that provides a full range of mission-critical
information management and analysis, trading, accounting, reporting, and
compliance tools, to help high-level investment and actuarial professionals make
informed, real-time decisions and automate many operational functions in today's
increasingly complex and fast-moving financial markets. The Company's products
are focused on improving the effectiveness of decision-making through open,
fully integrated access to meaningful data provided on a timely basis. The
Company provides products and services to more than 5,500 organizations
worldwide and its customers include asset managers, insurance companies, banks,
corporate treasuries, hedge funds, family offices, and government agencies, as
well as real estate investment and property management.
PRODUCTS AND SERVICES
The Company offers a family of application software products designed to address
the requirements of professionals in the financial services industry for
flexible, scaleable, and secure analysis and reporting tools to support
automation of the investment process. The Company's family of software products
supports trading, accounting, reporting, and analysis requirements of a broad
range of users within financial organizations, including senior executives,
portfolio managers, actuaries, analysts, portfolio accountants, and traders.
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The following chart summarizes the Company's principal products and services and
typical users:
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PRODUCTS AND SERVICES TYPICAL USERS
- --------------------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT, INVESTMENT ACCOUNTING Portfolio managers and investment operations
CAMRA 2000(TM) personnel of asset managers, hedge funds,
CAMRA XE(TM)(in beta release) family wealth managers, investment advisory
Total Return 2000(TM) firms, insurance companies, pension funds,
Mabel(TM) public funds, corporate treasuries, and banks
CAMRA Debt & Derivatives 2000(TM)
AdvisorWare 2000(TM)
- --------------------------------------------------------------------------------------------
TRADE ORDER MANAGEMENT Securities traders and portfolio managers of
Antares 2000(TM) asset managers, hedge funds, family wealth
Antares XE(TM)(in beta release) managers, pension funds, and other financial
institutions
- --------------------------------------------------------------------------------------------
ASSET/LIABILITY MANAGEMENT Life insurance company CEOs, CFOs, product
PTS 2000(TM) managers, and actuarial professionals
- --------------------------------------------------------------------------------------------
DYNAMIC FINANCIAL ANALYSIS CEOs, CFOs, and risk managers of property and
Finesse 2000(TM) casualty insurance companies and other risk-
sensitive industries
- --------------------------------------------------------------------------------------------
LOAN MANAGEMENT Mortgage loan portfolio managers and loan
LMS 2000(TM) service businesses
- --------------------------------------------------------------------------------------------
REAL ESTATE EQUITY MANAGEMENT Real estate investment managers
PRO-JECT(R)
SKYLINE(R) for Windows and
SKYLINE II(R)(in beta release )
- --------------------------------------------------------------------------------------------
CONSULTING SERVICES Asset management firms, insurance companies,
pension funds, and banks
- --------------------------------------------------------------------------------------------
SS&C DIRECT(SM) Asset management firms, insurance companies,
pension funds, and banks
- --------------------------------------------------------------------------------------------
The Company's software applications are compatible with Intel x86 platforms (IBM
PC compatible or emulators) and a wide range of popular topologies, protocols,
and network operating systems, including Ethernet, IPX/SPX, TCP/IP, NET BEUI,
Novell Netware, Windows '95 and '98, Windows NT, and UNIX.
The prices of the Company's software products vary depending upon the
product features included and, in the case of the Company's CAMRA 2000 and LMS
2000 products, on the client's assets under management. The Company's Antares
2000, Total Return 2000, Mabel system, and CAMRA Debt and Derivatives 2000
software is available for purchase by site or based on the number of concurrent
users.
PORTFOLIO MANAGEMENT, INVESTMENT ACCOUNTING
CAMRA 2000
The Company's Complete Asset Management, Reporting and Accounting ("CAMRA 2000")
software supports the integrated management of asset portfolios by investment
professionals operating across a wide range of institutional investment
entities. CAMRA 2000 is a 32-bit, multi-user, integrated solution tailored to
support the entire portfolio management function, and includes features to
execute, account for, and report on all typical securities transactions.
CAMRA 2000 is designed to account for all the activity of the investment
operation and to continually update investment information through the
processing of day-to-day securities transactions. The product accounts for both
transactions and holdings and stores the results of most accounting calculations
in its open, relational database, thereby providing user-friendly, flexible data
access as well as supporting data warehousing. In addition to storing
transactions and holdings data on securities, cash, and foreign exchange forward
contracts, CAMRA 2000 also stores data on custodians, brokers and broker
budgets, analytical information,
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general ledger entries, alternative accounting basis, tax information, and other
aspects of the investment operation. To facilitate further automation of such
extensive stored data, the Company has developed interface capabilities for
smooth information exchange with custodian banks, data providers, and analytic
data services.
Other CAMRA 2000 features include the following:
Comprehensive Accounting and Reporting Capabilities. CAMRA 2000 supports four
distinct yet interrelated accounting bases--GAAP, statutory, management, and
tax--and has the flexibility to provide multiple alternative accrual methods,
multiple sales methods, average cost or tax lot accounting, and multiple
amortization methods.
Support of Trading Transactions. CAMRA 2000 supports a wide variety of
investment and accounting transactions, ranging from buy and sell to short and
cover, swap, put, call, redemption, return of capital, settlement, account
transfer, and portfolio transfer. All transactions are recorded on a real-time
basis, permitting immediate enterprise-wide access to the most current portfolio
information by authorized users.
Multi-currency Processing. CAMRA 2000 automatically calculates transaction and
translation values in accordance with applicable accounting and industry
conventions, supports calculation of market, accounting, and foreign exchange
gains and losses, and provides a full foreign exchange trading capability with
forward pricing, while taking into account such critical parameters as global
calendars (with weekends and holidays defined by countries), multiple-based
currencies, and required rounding techniques.
Regulatory Compliance. CAMRA 2000 includes standard reports to meet the annual
and quarterly regulatory reporting requirements of insurance organizations as
promulgated by the National Association of Insurance Commissioners (NAIC). CAMRA
2000 also supports regulatory reporting requirements of various other regulatory
agencies such as the Securities and Exchange Commission and the Office of the
Comptroller of the Currency.
Integrated Modules. CAMRA 2000 is designed to facilitate seamless integration
with its software modules. Modules to CAMRA 2000 are available for performance
measurement using computations consistent with Association for Investment
Management and Research (AIMR) standards, pre- and post-trade compliance
monitoring, net asset value computations for mutual funds, optimization of
trading in mortgage-backed securities on a to-be-announced (TBA) basis, client
fee billing, portfolio rebalancing, and interfacing with various products of
Bloomberg Trade Book, Open Bloomberg, Interactive Data Corporation, and other
analytic data services.
CAMRA XE (in beta release)
SS&C's CAMRA XE is the portfolio management and accounting component of the
Company's recently introduced XE for Asset Management platform. This platform
incorporates Microsoft's DNAfs architecture and development strategy, and uses
XML-based messaging and workflow technology for processing trade order and
allocation data from outside sources as well as within the SS&C application
environment.
Total Return 2000
Total Return 2000 is a portfolio management and partnership accounting system
oriented toward the hedge fund and private wealth markets. It is a
multi-currency system which, like CAMRA 2000, is designed to provide securities
accounting and reporting for businesses with high transaction volumes.
Partnership accounting, including the generation of tax forms 1065 and K-1, are
provided through Total Return 2000's TR1065 module. Total Return 2000 also
incorporates a comprehensive general ledger. Performance measurement using
computations consistent with AIMR standards is also provided through a module to
the system. Other modules to Total Return 2000 provide for tax reporting and
trust reporting. Total Return 2000 also has interfaces with brokers, pricing
services, data services, and front-end trading systems.
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Mabel
Mabel is a portfolio management system from the Company's Netherlands-based
Mabel subsidiary that is used by clients throughout Europe and the Caribbean.
Mabel's functionality includes accounting and reporting, performance measurement
consistent with AIMR standards, net asset value calculations for mutual funds,
and support for stock brokering and custodial services. The Mabel system is
designed to automatically map data to and from messages in the S.W.I.F.T.
(Society for Worldwide Interbank Financial Communications) format.
CAMRA Debt & Derivatives 2000
CAMRA Debt & Derivatives 2000 is a PC/LAN-based debt and derivative portfolio
management system. CAMRA Debt & Derivatives 2000 is a modularized application
designed to process and analyze all activities related to debt and derivative
portfolios: swaps, caps, floors, collars, forward rate announcements (FRAs),
foreign exchange (FX), futures, and options, as well as the issuance of short-,
medium-, and long-term debt.
AdvisorWare 2000
AdvisorWare 2000 provides for multiple modules that process a unified flow of
information, including communications, research, portfolio management, trading
and operations, as well as portfolio accounting, financial accounting and tax
accounting. AdvisorWare 2000 features complete report writing capabilities
across all modules; seamless integration with all Microsoft Office products, the
ability to retain multiple cost bases; an extensive user security system; and
multi-user, client/server, Windows '95 or Windows NT operating systems.
TRADE ORDER MANAGEMENT
Antares 2000
Antares 2000 is a comprehensive, real-time, event-driven trading and profit and
loss reporting system designed to integrate trade modeling with trade order
management. Antares 2000 also offers pre-trade compliance, "what-if" analysis,
and FIX connectivity. Modeling scenarios, including trader-defined formulas, can
be customized and stored in a familiar spreadsheet environment. Antares 2000 is
designed to transfer data seamlessly from modeling scenarios to trade orders. In
Antares 2000, trades can be managed in the multiple steps of trade ordering,
filling the order, and approving the trade, or recorded in a single step.
Antares 2000 can also allocate trades across accounts at any step in the
process.
Trade blotters in Antares 2000 can be customized depending on client,
product type, or trader. Full position accounting is provided across all types
of securities. Antares 2000 also accepts real-time pricing updates and can
display real-time positions and profit and loss statements. Portfolio
rebalancing can be set to occur automatically. As Antares 2000 uses an open
relational database, customized reporting is supported through its own report
writing facilities, or through other third-party reporting tools. Antares 2000
also includes functionality to automate the processing of options, futures, and
forward currency contracts.
For some financial institutions, the Antares 2000 trading system may serve
as a comprehensive, stand-alone investment management system. For financial
institutions with more accounting and historical reporting requirements, Antares
2000 may serve as the front-end trading system connected to CAMRA 2000, Total
Return 2000, AdvisorWare 2000 or other portfolio management investment
accounting systems.
Antares XE (in beta release)
Antares XE is the trade order management component to the Company's recently
released XE for Asset Management platform. This platform incorporates
Microsoft's DNAfs architecture and development strategy, and uses XML-based
messaging and workflow technology for processing trade order and allocation data
from outside sources as well as within the SS&C application environment.
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ASSET/LIABILITY MANAGEMENT
PTS 2000
PTS 2000 provides an economic model of insurance assets and liabilities,
generating option-adjusted cash flows to reflect the complex sets of options and
covenants frequently encountered in insurance contracts or comparable
agreements. PTS 2000 includes the following features:
Large-Scale Corporate Simulation Models. The Company and certain significant
clients have implemented a number of complex models of whole-company financial
performance. Unlike simpler systems, PTS 2000 maintains an internal architecture
patterned after the structure of insurance companies themselves, making
full-scale corporate models practical. Such corporate models are used to
facilitate capital structure decisions, revealing and measuring overall
financial performance, and guiding overall risk management practice.
Option Pricing. The PTS 2000 option-pricing model provides option-adjusted
valuation of assets and liabilities under a consistent conceptual framework. The
PTS 2000 option pricing model explicitly considers interest-sensitive embedded
options, providing valid interest rate risk analysis, using price behavior
curves that graphically depict asset/liability performance over shifts in the
interest rate term structure.
Macro Pricing. The Company's proprietary Macro-Pricing algorithm recognizes the
complex relationships within contemporary financial intermediaries and provides
a matrix of possible product and production quota options in conformity with the
profit expectations of the client.
DYNAMIC FINANCIAL ANALYSIS
Finesse 2000
The Company's Finesse 2000 system is a forecasting application that brings the
principles of Dynamic Financial Analysis (DFA) to the complex environment of the
property/casualty insurance industry. A financial simulation tool designed to
balance the dynamics of financial accounting, economic value, and risk, Finesse
2000 is unique in its ability to express forecasts in real-world terms: ROE,
EPS, GAAP earnings, Capital Ratios, and the like--performance metrics used on a
daily basis in the executive suite.
Finesse 2000 was conceived as a business simulation platform fully
integrating the asset and liability sides of the balance sheet. Because Finesse
2000 handles the complex interactions between asset and liability cash flows,
Finesse 2000 functions as a superior forecasting tool, generating 5-year pro
forma balance sheets, income and cash flow statements. By integrating capital
market effects onto both asset and liability cash flows, results remain
"in-sync" as they cascade through the Finesse 2000 Corporate Model.
Finesse 2000 is a simulation tool with the primary goal of projecting
financial results--hundreds or even thousands of times.
By projecting financials many times over, clients can cover the likely
range of events, whether they are interest rate movements, loss ratios,
production levels, or any other item of variability. Using Finesse 2000's unique
presentation methods, clients can distill a wide range of results into
actionable language.
LOAN MANAGEMENT
LMS 2000
LMS 2000 enables mortgage professionals to process, analyze, and report on a
comprehensive basis, information regarding their mortgage loan portfolios. LMS
2000 is a 32-bit, multi-user, integrated solution operating on a client/server
platform, which eliminates the need for separate, independent systems within the
mortgage loan area. LMS 2000, which can be integrated with data stored in the
Company's CAMRA 2000 and PTS 2000 products, provides the following features:
Application and Commitment Processing. LMS 2000 supports the processing of
commercial and residential mortgage loans, providing on-line access to critical
evaluative information, including credit history, appraisals, ratio, broker
information, duration, convexity, average life and discounted cash flow
valuation, permitting loan recommendations to be generated quickly,
consistently, and easily.
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Accounting and Servicing Support. LMS 2000 supports accurate and consistent
servicing of loans, including general ledger entries at the sub-portfolio level,
with a direct interface to the corporate general ledger. LMS 2000 also maintains
appraisals and operating statements at the proper level to support loan and
portfolio management.
Comprehensive Reports. LMS 2000 generates and supports a wide range of
accounting, servicing, and management reports. All reports can be viewed
on-line, downloaded or printed.
REO. LMS 2000 provides a smooth transition from a loan to an equity asset,
establishes/monitors budgets, maintains depreciation records, and processes
REO-specific transactions.
Executive Summary. LMS 2000 SnapShots captures a complete overview of a
selected portfolio, making essential information immediately available. LMS 2000
SnapShots also exports into Microsoft Excel or Lotus.
Interested Party Directory. LMS 2000's Interested Party Directory serves as a
common source for all business entities, providing comprehensive borrower
financial exposure analysis, relationship tracking and business functionality
exposure.
Extend. LMS 2000's unique Extend utility allows users to customize their
database by creating screens and database fields to enter, review, and report
information. It attaches to more than 25 areas of the system.
Imaging and Mapping. LMS 2000 enables users to attach image files to multiple
areas of the system for document and collateral imaging and tracking, and plots
properties onto on-line geographic maps, facilitating analyses at both a general
and a property-specific detailed level.
REAL ESTATE EQUITY MANAGEMENT
SKYLINE for Windows/SKYLINE II (in beta release) is property management software
that manages all aspects of office/industrial, residential, and retail
properties, even those which are decentralized geographically. SKYLINE also
features detailed, informative reports.
PRO-JECT for Windows is property valuation software that calculates the
value of any combination of office, industrial, retail, apartment and mixed-use
property types. It can perform sophisticated sensitivity analysis on property
assumptions, and produce detailed reports such as present value and consolidated
cash flow reports.
CONSULTING SERVICES
Building upon the capability and flexibility of its software products, the
Company offers a range of professional services to assist clients in
implementing the Company's software products and meeting their portfolio
management needs. To facilitate successful product implementation, the Company's
consultants assist clients with initial installation of a system, conversion of
the client's historical data, and ongoing training and support. The Company's
team works closely with the client to ensure smooth transition and operation of
the Company's systems. The Company believes its commitment of dedicated
professionals to facilitate the transition process strengthens its relationship
with the client, provides the Company with valuable information regarding client
requirements, and offers the opportunity for sales of additional Company
products and services to the client. The Company's consultants have a broad
range of experience in the financial services industry and include certified
public accountants, chartered financial analysts, mathematicians, and
professionals from the asset management, real estate, investment, insurance, and
banking industries. The Company believes its commitment to professional services
facilitates the adoption of the Company's software products across its target
markets.
SS&C DIRECT
For those clients seeking an Application Service Provider/Business Process
Outsourcing (ASP/BPO) solution for portfolio accounting, reporting and analysis
functions, the Company also provides comprehensive ASP/BPO services through its
SS&C Direct operating unit. The Company's consultants initially work with a
client to research and evaluate data sources, implement custodian and pricing
interfaces and determine
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reporting requirements and timing. The Company provides its clients with
accurate, processed data via Internet or direct, real-time connections, enabling
investment professionals to spend their time analyzing data and making
investment decisions rather than managing the back-office investment operations.
The features of the Company's ASP/BPO services include: (i) customized access
rights to provide on-line, real-time access on a per-client basis; (ii) regular
holdings reports, also available on-line, and complete regulatory support; (iii)
disk mirroring, daily back-up of the system and other data protection measures;
and (iv) disaster recovery hot site services.
PRODUCT SUPPORT
The Company believes its high level of service and support is critical to its
success, and an important competitive advantage. Further, the Company believes a
close and active service and support relationship is important to client
satisfaction, and provides the Company with important information regarding
evolving client requirements. The Company provides each of its significant
clients with a dedicated client support team, organized by industry and by
function, whose primary responsibility is to resolve questions and concerns. In
addition, the Company provides direct telephone support during extended business
hours. Additional hours are available during peak periods, and the Company uses
the Internet, electronic bulletin boards and other forms of electronic data
distribution that provide clients with the latest information regarding its
products. The Company uses Applix technology to log and track issues and
questions, and Webex for on-line diagnostics. The Company also provides periodic
maintenance releases of licensed software to its clients, as well as regulatory
updates (generally during the fourth quarter), to enable them to meet industry
reporting obligations and other processing requirements as they evolve. The
Company's service and support activities are supplemented by comprehensive
training, including a comprehensive Center of Excellence client certification
program, which provides certification classes in the Company's products.
CLIENTS
The Company's clients include a wide range of financial institutions and other
organizations that require a full range of information management and analysis,
accounting, actuarial, reporting, and compliance software on a timely and
flexible basis, and include asset managers, insurance companies, banks,
corporate treasuries, hedge funds, family offices, real estate asset managers,
and government agencies. The Company provides products and services to more than
5,500 organizations worldwide.
SALES AND MARKETING
The Company believes a direct sales organization is essential to the successful
implementation of its business strategy, given the complexity and importance of
the operations and information the Company's products are designed to manage,
and the extensive regulatory and reporting requirements of its clients. The
Company's dedicated direct sales and support staff, which is supplemented by
extensive ongoing product and sales training, is organized by business unit and
situated in the Company's various sales offices. The Company also uses
telemarketing to support sales of its real estate equity products.
The Company's marketing personnel are responsible for evaluating and
developing market opportunities and providing sales support. The Company's
marketing activities include generation of client leads, targeted direct mail
campaigns, Internet marketing, seminars, advertising, trade shows, conferences,
and public relations efforts. The marketing department also supports the sales
force with appropriate documentation or electronic materials for use during the
sales process.
PRODUCT DEVELOPMENT; RESEARCH AND DEVELOPMENT; BACKLOG
The Company believes it must introduce new products and features into the market
on a regular basis to maintain its competitive advantage. To meet these goals,
the Company uses multidisciplinary teams of highly trained finance, accounting,
mathematical, actuarial, software, and investment personnel, and has invested
heavily in developing a comprehensive product analysis process to meet rigorous
requirements for product functionality and quality across its target markets.
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The Company's research and development engineers work closely with the
Company's marketing and support personnel to assure product evolution reflects
developments in the marketplace and trends in client requirements. Historically,
the Company has issued a major functional release of its core products during
the second or third quarter of each fiscal year, including functional
enhancements, as well as an annual fourth quarter release to reflect evolving
regulatory changes in time to meet clients' year-end reporting requirements.
Although the Company historically has met its scheduled dates for product
releases and enhancements, software development is characterized by
unanticipated delays, and there can be no assurance that the Company will be
able to maintain future scheduled release dates as planned. Further, there can
be no assurance that the Company's new product releases and product enhancements
will adequately address the needs of the marketplace or will not contain "bugs"
which could cause delays in product introduction or shipments or, if discovered
in the future, require modification of the Company's products.
As of December 31, 1999, the Company's research and development staff
consisted of 169 employees. The Company's total expenses for research and
development, excluding purchased in-process research and development, for the
years ended December 31, 1997, 1998, and 1999 were $12.0 million, $20.1 million,
and $20.7 million, respectively.
Backlog is not a significant factor in the Company's business.
COMPETITION
The market for financial services software is competitive, rapidly evolving, and
highly sensitive to new product introductions and marketing efforts by industry
participants. The market is also highly fragmented and served by numerous firms,
many of which serve only their respective local markets or specific customer
types, and much of the Company's competition stems from information systems or
timesharing services developed and serviced internally by the MIS departments of
financial services firms. The Company currently faces direct competition in
various segments of the financial services industry from Thomson Financial,
SunGard Data Systems, Inc., Princeton Financial Systems (a subsidiary of State
Street Bank and Trust Company), Financial Models Company Inc., DST Systems,
Inc., McCracken Financial Software, Tillinghast-Towers Perrin, and Advent
Software, Inc. The Company believes none of its competitors currently competes
against it in all of its target industry segments, although there can be no
assurance that one or more may not compete against the Company in the future in
additional industry segments. Many of the Company's current and potential future
competitors have significantly greater financial, technical, and marketing
resources, generate higher revenues, and have greater name recognition than does
the Company. There can be no assurance that the Company's current or potential
competitors will not develop products comparable or superior to those developed
by the Company or adapt more quickly than the Company to new technologies,
evolving industry trends, or changing client requirements. It is also possible
that alliances among competitors may emerge and rapidly acquire significant
market share. Increased competition may result in price reductions, reduced
gross margins, and loss of market share, any of which would materially adversely
affect the Company's business, financial condition, and results of operations.
The Company believes the principal competitive factors in its industry
include product performance and functionality, ease of use, scalability, ability
to integrate external data sources and processing systems, product and company
reputation, client service and support, and price. Although the Company believes
it currently competes effectively with respect to such factors, there can be no
assurance that the Company will be able to maintain its competitive position
against current and potential competitors.
PROPRIETARY RIGHTS
The Company primarily relies on a combination of copyright, trademark, and trade
secret laws and license agreements to establish and protect proprietary rights
of its products. The source code for the Company's products is protected as both
a trade secret and an unpublished copyrighted work. In addition, the Company
generally enters into confidentiality and/or license agreements with its
employees, distributors, clients, and potential clients and limits access to,
and distribution of, its software, documentation, and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use
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the Company's products or technology without authorization or to develop similar
technology independently. In addition, effective copyright and trade protection
may be unavailable or limited in certain foreign countries. In January 1996, the
Company licensed the use of certain of its source code to General American Life
Insurance Company and Conning Asset Management Company, affiliates of certain
stockholders of the Company.
Because the software development industry is characterized by rapid
technological change, the Company believes factors such as technological and
creative skills of its personnel, new product developments, frequent product
enhancements, name recognition, and reliable service and support are more
important to establishing and maintaining a leadership position than legal
protections of its technology.
EMPLOYEES
As of December 31, 1999, the Company had 551 full-time employees, consisting of
169 employees in research and development, 165 employees in consulting and
services, 89 employees in sales and marketing, 82 employees in client support
and 46 employees in finance and administration. Of the total, 98 employees are
in the Company's international operations. None of these employees is covered by
any collective bargaining agreements. The Company believes its relationship with
its employees is good. The future success of the Company will depend upon its
ability to attract and retain qualified personnel. Competition for such
personnel is often intense, and there can be no assurance that the Company will
be able to attract and retain adequate numbers of qualified personnel in the
future.
Page 10
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ITEM 2. PROPERTIES
The Company leases its corporate offices, consisting of 73,000 square feet of
office space, in Windsor, Connecticut. The initial lease term expires in 2008,
and the Company has the right to extend the lease for one additional term of
five years. In support of direct sales and support operations, the Company
utilizes facilities and offices in thirteen locations in the United States and
Canada and also has offices in London, England; Amsterdam, Netherlands; Kuala
Lumpur, Malaysia; and Tokyo, Japan.
ITEM 3. LEGAL PROCEEDINGS
On May 7, 1999, the Company announced that it had entered into an agreement that
provides for the settlement of the consolidated securities class action lawsuit
pending against the Company. The settlement provides that all claims against the
Company, certain of its officers and directors and underwriters will be
dismissed. Under the terms of the settlement, in exchange for the dismissal and
release of all claims, the Company paid to the class $7.5 million in cash,
together with shares of Common Stock of the Company valued at $1.3 million. The
Company recorded a charge of $9.3 million, including legal fees, in the quarter
ended June 30, 1999.
From time to time, the Company is subject to certain legal proceedings and
claims that arise in the normal course of its business. In the opinion of
management, the Company is not party to any litigation that it believes could
have a material effect on the Company or its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
NAME AGE POSITION
- ---- --- --------
William C. Stone 44 President, Chief Executive Officer and Chairman of the
Board of Directors
Anthony R. Guarascio 46 Senior Vice President, Chief Financial Officer
Steven M. Helmbrecht 36 Senior Vice President, International
William C. Stone founded the Company in 1986 and has served as Chairman of
the Board of Directors and Chief Executive Officer since the Company's
inception. He has also served as the Company's President from inception through
April 1997 and since March 1999. Prior to founding the Company, he directed the
financial services consulting practice of KPMG Peat Marwick LLP in Hartford,
Connecticut and was Vice President of Administration and Special Investment
Services at Advest, Inc.
Anthony R. Guarascio is Senior Vice President, Chief Financial Officer of
the Company. Mr. Guarascio joined the Company in October 1998, after serving as
Vice President, Finance and Administration and Chief Financial Officer for
Executone Information Systems, Inc., a company specializing in integrated voice
and data communications, from January 1994 to September 1998. Prior thereto he
was Vice President and Corporate Controller since January 1990.
Steven M. Helmbrecht is Senior Vice President, International of the
Company. From October 1997 to March 1999, Mr. Helmbrecht served as Senior Vice
President, Europe, the Middle East and Africa of the Company. From November 1996
to October 1997, Mr. Helmbrecht served as Vice President, International of the
Company. From July 1993 to November 1996, Mr. Helmbrecht served as a sales
representative for the Company.
Page 11
13
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
The Company's Common Stock has been trading on the Nasdaq National Market under
the symbol "SSNC" since the Company's initial public offering on May 31, 1996.
The following table sets forth, for the fiscal periods indicated, the high and
low sales prices per share of Common Stock as reported on the Nasdaq National
Market:
FISCAL 1999 FISCAL 1998
PRICE RANGE PRICE RANGE
---------------- ----------------
QUARTER HIGH LOW HIGH LOW
- ------- ------ ------ ------ ------
First $20.00 $11.38 $19.25 $ 9.50
Second 15.63 6.50 24.25 14.25
Third 8.50 5.25 23.75 10.88
Fourth 7.69 4.13 14.75 8.75
There were 62 stockholders of record of the Company's Common Stock as of
March 22, 2000. The number of stockholders of record may not be representative
of the number of beneficial owners because many shares are held by depositories,
brokers or other nominees.
The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain earnings, if any, to support its
growth strategy and does not anticipate paying cash dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various factors,
including the Company's financial condition, operating results, current and
anticipated cash needs, and plans for expansion.
The following information relates to the use of proceeds from the Company's
initial public offering of Common Stock (the "Offering").
The effective date of the Company's Registration Statement on Form S-1
(File No. 333-3094) (the "Registration Statement") relating to the Offering, for
which the following use of proceeds information is being disclosed, was May 30,
1996.
From the effective date of the Registration Statement through December 31,
1999, the Company has used the net offering proceeds to the Company as follows:
Corporate move and equipment purchases $12,460,000
Acquisition of other business 5,333,000
Repayment of indebtedness 3,495,000
Working capital 4,576,000
Marketable securities 26,936,000
All of the above-listed payments were direct or indirect payments to
persons other than: directors, officers, general partners of the Company or
their associates; persons owning ten percent or more of any class of equity
securities of the Company; or affiliates of the Company.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is contained under the caption "Selected
Financial Data" appearing in the Company's 1999 Annual Report to Stockholders
(the "1999 Annual Report") and is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is contained under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing in the 1999 Annual Report and is incorporated herein by
this reference.
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14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is contained under the caption "Market
Risks" appearing in the 1999 Annual Report and is incorporated herein by this
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is contained in the Consolidated Financial
Statements and related footnotes appearing in the 1999 Annual Report and is
incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this Item 10 is set forth in the proxy statement to be
provided to stockholders in connection with the Company's 2000 Annual Meeting of
Stockholders (the "Proxy Statement") under the headings "Directors and Nominees
for Director" and "Section 16(a) Beneficial Ownership Reporting Compliance,"
which information is incorporated herein by reference. The name, age, and
position of each executive officer of the Company is set forth under the heading
"Executive Officers of the Registrant" in Part I of this Annual Report on Form
10-K, which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item 11 is set forth in the Proxy Statement under
the headings "Compensation of Executive Officers" and "Director Compensation,"
which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item 12 is set forth in the Proxy Statement under
the heading "Security Ownership of Certain Beneficial Owners and Management,"
which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item 13 is set forth in the Proxy Statement under
the heading "Compensation of Executive Officers--Employment Agreements," which
information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents Filed as a Part of this Form 10-K:
1. Financial Statements. The Consolidated Financial Statements are
included in the 1999 Annual Report, portions of which are filed as an
exhibit to this Annual Report on Form 10-K. The Consolidated Financial
Statements include: Consolidated Balance Sheets, Consolidated Statements
of Operations, Consolidated Statements of Cash Flows, Consolidated
Statements of Changes in Stockholder's Equity, and Notes to Consolidated
Financial Statements.
2. Exhibits. The Exhibits listed in the Exhibit Index immediately
preceding such Exhibits are filed as part of this Annual Report on Form
10-K.
Page 13
15
(b) Reports on Form 8-K: On November 2, 1999, the Company filed a Current Report
on Form 8-K/A, dated March 11, 1999, for the purpose of filing financial
statements of HedgeWare, Inc. and pro forma financial statements of the Company
under item 7 (Financial Statements, Pro Forma Financial Information and
Exhibits).
Page 14
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SS&C Technologies, Inc.
By: /s/ WILLIAM C. STONE
------------------------------------
William C. Stone
President, Chief Executive Officer
and Chairman of the Board of
Directors
Date: March 30, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ WILLIAM C. STONE President, Chief Executive March 30, 2000
- --------------------------------------------------- Officer and Chairman of the Board
William C. Stone of Directors (Principal Executive
Officer)
/s/ ANTHONY R. GUARASCIO Senior Vice President, Chief March 30, 2000
- --------------------------------------------------- Financial Officer (Principal
Anthony R. Guarascio Financial and Accounting Officer)
/s/ DAVID L. BLANKENSHIP Director March 30, 2000
- ---------------------------------------------------
David L. Blankenship
/s/ DAVID W. CLARK, JR. Director March 30, 2000
- ---------------------------------------------------
David W. Clark, Jr.
/s/ JOSEPH H. FISHER Director March 30, 2000
- ---------------------------------------------------
Joseph H. Fisher
/s/ STEPHEN P. REYNOLDS Director March 30, 2000
- ---------------------------------------------------
Stephen P. Reynolds
/s/ JONATHAN M. SCHOFIELD Director March 30, 2000
- ---------------------------------------------------
Jonathan M. Schofield
/s/ WILLIAM W. WYMAN Director March 30, 2000
- ---------------------------------------------------
William W. Wyman
Page 15
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
2.1+ Asset Purchase Agreement, dated as of March 20, 1998, by and
among the Registrant, AEGON USA Realty Advisors, Inc. and
Quantra Corporation is incorporated herein by reference to
Exhibit 2 to the Registrant's Current Report on Form 8-K,
dated March 20, 1998 (File No. 000-28430)
2.2+ Stock Purchase Agreement, dated as of April 9, 1998, by and
among the Registrant, Savid International, Inc., The Savid
Group, Inc. and Diane Cossin, is incorporated herein by
reference to Exhibit 2 to the Registrant's Current Report on
Form 8-K, dated April 9, 1998 (File No. 000-28430)
2.3+ Agreement and Plan of Merger, dated March 11, 1999, by and
among the Registrant, HedgeWare, Inc., Asset Management
Acquisition Corp. and the Sellers named herein, is
incorporated herein by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K dated March 11, 1999
(File No. 000-28430)
2.4+ Stock Purchase Agreement dated March 31, 1999, by and among
the Registrant, The Brookside Corporation and John M. Boyle
is incorporated herein by reference to exhibit 2 to the
Registrant's Current Report on form 8-K, dated March 31,
1999 (File No. 000-28430)
3.1 Amended and Restated Certificate of Incorporation of the
Registrant is incorporated herein by reference to Exhibit
3.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1999 (File No.
000-28430)
3.2 Amended and Restated By-Laws of the Registrant is
incorporated herein by reference to Exhibit 3.4 to the
Registrant's Registration Statement on Form S-1, as amended
(File No. 333-3094) (the "Form S-1")
4 Specimen Certificate for shares of Common Stock, $.01 par
value per share, of the Registrant is incorporated herein by
reference to Exhibit 4 to the Form S-1
10.1* 1993 Stock Option Plan is incorporated herein by reference
to Exhibit 10.1 to the Form S-1
10.2* 1994 Stock Option Plan, as amended, is incorporated herein
by reference to Exhibit 10.2 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996
(File No. 000-28430)
10.3* 1996 Director Stock Option Plan, as amended, is incorporated
herein by reference to Exhibit 10 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999 (File No. 000-28430)
10.4* 1998 Stock Incentive Plan is incorporated be reference to
Annex A to the Registrant's Definitive Schedule 14A filed
April 6, 1998 (File No. 000-28430)
10.5* Employment Agreement between the Registrant and William C.
Stone, dated March 28, 1996, is incorporated herein by
reference to Exhibit 10.5 to the Form S-1
10.6 Reseller Agreement between the Registrant and PFX(USA),
Inc., dated June 22, 1993, is incorporated herein by
reference to Exhibit 10.16 to the Form S-1
10.7 Lease Agreement, dated September 23, 1997, by and between
the Registrant and Monarch Life Insurance Company, as
amended, is incorporated herein by reference to Exhibit
10.15 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1997 (File No. 000-28430)
10.8* Amendment No. 1 to 1998 Stock Incentive Plan
13 Portions of the Registrant's 1999 Annual Report to
Stockholders (which is not deemed to be "filed" except to
the extent that portions thereof are expressly incorporated
by reference in this Annual Report on Form 10-K)
21 Subsidiaries of the Registrant
23 Consent of PricewaterhouseCoopers LLP
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EXHIBIT
NO. DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule for the year ended December 31, 1999
27.2 Restated Financial Data Schedule for the year ended December
31, 1998
- ---------------
* Management contract or compensatory plan or arrangement filed herewith in
response to Item 14(a)(3) of the Instructions to the Annual Report on Form
10-K.
+ The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedules to this agreement to the Securities and Exchange Commission upon its
request.
Page 17