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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
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 20, 2001, the aggregate market value of the Registrant's Common
Stock held by non-affiliates was approximately $45,752,035 based on the closing
sale price of $5.06 of the Registrant's Common Stock on the Nasdaq National
Market on such date.
As of March 20, 2001, 16,187,259 shares of the Common Stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Proxy Statement for the 2001 Annual Stockholder's
Meeting have been incorporated by reference into Items 10, 11, 12 and 13 of Part
III of this Report.
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SS&C TECHNOLOGIES, INC.
YEAR 2000 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business.................................................... 2
Item 2. Properties.................................................. 10
Item 3. Legal Proceedings........................................... 10
Item 4. Submission of Matters to a Vote of Security Holders......... 10
Executive Officers of the Registrant........................ 10
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 11
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........................................................ 18
Item 8. Financial Statements and Supplementary Data................. 19
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 19
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 19
Item 11. Executive Compensation...................................... 19
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 19
Item 13. Certain Relationships and Related Transactions.............. 19
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 20
Signatures.................................................. 45
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 factors discussed under the
caption "Certain Factors That May Affect Future Operating Results" in Item 7,
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. The Company expressly disclaims any obligation to
update or alter its forward-looking statements, whether as a result of new
information, future events or otherwise.
PTS, Macro Pricing, SKYLINE, PRO-JECT, HedgeWare, and AdvisorWare are registered
trademarks, SS&C, CAMRA, CAMRA 2000, CAMRA XE, XE for Asset Management, SKYLINE
II, AdvisorWare 2000, LMS 2000, LMS 2000 SnapShots, Extend, PTS 2000,
CapitalSuite, Total Return 2000, Antares 2000, Antares XE, SS&C Debt &
Derivatives 2000, Mabel, REMS, and Finesse 2000 are trademarks, and SS&C Direct,
ASPplus, Center of Excellence, 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. ("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, Application Service Provider/Business Process Outsourcing
("ASP/BPO"), and software-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 improve the effectiveness of decision-making by providing
open, fully integrated access to meaningful data, 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 managers and property managers.
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 and 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.
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 office managers, investment advisory
Total Return 2000(TM) firms, insurance companies, pension funds,
Mabel(TM) public funds, corporate treasuries, and banks
SS&C Debt & Derivatives 2000(TM)
AdvisorWare 2000(TM)
- --------------------------------------------------------------------------------------------
TRADE ORDER MANAGEMENT Securities traders and portfolio managers of
Antares 2000(TM) asset managers, hedge funds, family office
Antares XE(TM) (in beta release) managers, pension funds, and other financial
institutions
- --------------------------------------------------------------------------------------------
SS&C DIRECT(SM) Asset management firms, insurance companies,
pension funds, and banks
- --------------------------------------------------------------------------------------------
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 II(TM)
- --------------------------------------------------------------------------------------------
CONSULTING SERVICES Asset management firms, insurance companies,
pension funds, and banks
- --------------------------------------------------------------------------------------------
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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, Token Ring, IPX/SPX, TCP/IP,
NET BEUI, Novell Netware, Windows, Windows '95, Windows NT, Pathworks, and UNIX.
The prices of the Company's software products vary depending upon the product
features included and, in the case of CAMRA 2000 and LMS 2000, on the client's
assets under management. The Company's Antares 2000, Total Return 2000, Mabel
system, and SS&C Debt & Derivatives 2000 software are 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 continually update 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, 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
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. It 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 country), 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.
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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;
Internet connectivity via CapitalSuite(TM), the CAMRA 2000 Internet Portal;
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)
CAMRA XE is the portfolio management and accounting component of the Company's
XE for Asset Management(TM) 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 family office markets. Total Return 2000 is a
multi-currency system which, like CAMRA 2000, is designed for securities
accounting and reporting for businesses with high transaction volumes. Total
Return 2000's TR1065 module supports partnership accounting, including the
generation of tax forms 1065 and K-1. Total Return 2000 also incorporates a
comprehensive general ledger. One module supports performance measurement using
computations consistent with AIMR standards. Other modules to Total Return 2000
provide for tax reporting and trust reporting. Total Return 2000 also interfaces
with brokers, pricing services, data services, and front-end trading systems.
Mabel
Mabel is a portfolio management system from the Company's Netherlands-based
Mabel subsidiary, 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.
SS&C Debt & Derivatives 2000
SS&C Debt & Derivatives 2000 is a PC/LAN-based debt and derivative portfolio
management system. SS&C Debt & Derivatives 2000 is a modularized application
designed to process and analyze all activities related to debt and derivative
portfolios: swaps, caps, floors, collars, FRAs, FX, futures, and options, as
well as the issuance of short-, medium-, and long-term debt.
AdvisorWare 2000
AdvisorWare 2000's multiple modules process a unified flow of information,
including communications, research, portfolio management, trading, and
operations, as well as portfolio accounting, financial
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accounting and tax accounting. AdvisorWare 2000 features comprehensive report
writing capabilities across all modules; seamless integration with all Microsoft
Office products; the ability to retain multiple cost basis; 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. Antares 2000 delivers full position accounting 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. Antares 2000's open relational
database supports customized reporting through internal report writing
facilities, or through 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, or other portfolio management investment accounting systems.
Antares XE (in beta release)
Antares XE is the trade order management component to the Company's 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.
APPLICATION SERVICE PROVIDER/BUSINESS PROCESS OUTSOURCING (ASP/BPO) SERVICES
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. SS&C Direct's "ASPplus(SM)" service
includes: hosting of the Company's application software, as well as automated
workflow integration, automated quality control mechanisms, and extensive
interface and connectivity services to custodian banks, data service providers,
depositories, and other external entities. The "Outsourced Investment Accounting
Services" option includes comprehensive investment accounting and investment
operations services for sophisticated, global organizations. Clients also can
access CapitalSuite, the Company's "Web Portal" to obtain front-end trade order
management integrated with back-office accounting and operations, Internet-based
XML workflow, risk analysis, external data and news feeds, and data access and
reporting via a Web browser. As of December 31, 2000, SS&C Direct supports 46
clients with approximately $60 billion in assets for both its ASP and Outsourced
Investment Accounting Services.
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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. PTS 2000 maintains an internal architecture patterned after the
structure of insurance companies 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 based upon the profit
expectations of the client.
DYNAMIC FINANCIAL ANALYSIS
Finesse 2000
Finesse 2000 is a dynamic financial analysis tool designed and developed in
cooperation with Ernst & Young LLP, to perform the following functions:
Model operating results;
Gauge the effects of reinsurance and validate pricing;
Value business transactions such as mergers and acquisitions;
Measure the impact of new products;
Predict cash flows;
Analyze the impact of investment decisions; and
Improve strategic planning.
Finesse 2000 generates iterative, computer-simulated scenarios in response to
events that may have an impact on a client's business. The results of this
iterative process are stored in Finesse 2000's "virtual general ledger," which
mimics the financial accounting that would occur if these scenarios were to
occur. All simulated results are recorded and can be easily viewed on Finesse
2000's "graphical palette," an on-line facility that visually depicts the likely
occurrence of one or more specific events.
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
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history, appraisals, ratio, broker information, duration, convexity, average
life and discounted cash flow valuation, permitting loan recommendations to be
generated quickly, consistently, and easily.
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 and 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 in an
executive summary format. 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.
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
SKYLINE for Windows/SKYLINE II 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
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. PRO-JECT 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
their historical data, and provide clients with ongoing training and support.
The Company's team of consultants works closely with the client to ensure smooth
transition and operation of the Company's systems. The Company believes
providing 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,
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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.
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 clients with dedicated client
support, organized by industry and by function, 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 allowing clients to
log issues and questions directly over the Internet, and Webex to provide
clients with on-line diagnostics. The Company also provides periodic maintenance
releases of licensed software to its clients, including regulatory updates,
generally during the fourth quarter, to enable its clients 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(SM) 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 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.
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 third quarter of each fiscal year, including functional enhancements, as
well as an annual fourth
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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, 2000, the Company's research and development staff consisted
of 105 employees. The Company's total expenses for research and development,
excluding purchased in-process research and development, for the years ended
December 31, 1998, 1999 and 2000 were $19.2 million, $18.7 million, and $14.2
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 a particular local market or specific customer type,
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: Advent Software, Inc.,
Accenture, Capital Management Sciences, Conning and Co., Decalog, DST
International, Eagle Development, EDS, Ernst & Young, Financial Models Company,
IMS, Integrated Decision Systems, Investment Technology Group, Merrin, Princeton
Financial Systems, Security APL, Sungard Data Systems, State Street Bank,
Thomson Financial Services, Tillinghast, and UNISYS.
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 that are 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
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otherwise obtain and use 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, 2000, the Company had 416 full-time employees, consisting of
105 employees in research and development, 125 employees in consulting and
services, 66 employees in sales and marketing, 69 employees in client support,
51 employees in finance and administration. Of the total, 63 employees are in
the Company's international operations. None of the Company's 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.
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 eight locations in the United States and
Canada and also has offices in London, England; Amsterdam, Netherlands; Kuala
Lumpur, Malaysia; Singapore; and Tokyo, Japan.
ITEM 3. LEGAL PROCEEDINGS
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 45 President, Chief Executive Officer, and Chairman of
the Board of Directors
Anthony R. Guarascio 46 Senior Vice President, Chief Financial Officer
Normand A. Boulanger 39 Senior Vice President
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 LLP in Hartford, Connecticut and was Vice
President of Administration and Special Investment Services at Advest, Inc.
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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.
Normand A. Boulanger is Senior Vice President at SS&C. He joined the Company in
March of 1994. Previously, he was Vice President, SS&C Direct from 1998 to 2000,
and Vice President of Professional Services for the Americas, from 1996 to 1998.
He was Director of Consulting from 1994 to 1996. Prior to joining SS&C, he was
Director of Investment Operations for Travelers, now a member of Citigroup.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 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 2000 FISCAL 1999
PRICE RANGE PRICE RANGE
-------------- ----------------
QUARTER HIGH LOW HIGH LOW
- ------- ----- ----- ------ ------
First $7.50 $4.63 $20.00 $11.38
Second 6.06 4.00 15.63 6.50
Third 6.75 4.13 8.50 5.25
Fourth 5.63 3.94 7.69 4.13
There were 58 stockholders of record of the Company's Common Stock as of March
20, 2001. 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, 2000,
the Company has used the net offering proceeds to the Company as follows (in
thousands):
Corporate move and equipment purchases $15,018
Acquisition of other business 5,333
Repayment of indebtedness 3,538
Purchase of Common Stock for Treasury 5,700
Marketable securities 23,211
-------
Total $52,800
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.
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ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31,
------------------------------------------------
2000 1999(1) 1998(2) 1997(3) 1996
------- -------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Revenues $60,014 $ 65,736 $73,593 $45,527 $34,625
Income (loss) before taxes 3,333 (19,191) 2,278 1,563 453
Net income (loss) 2,172 (12,648) 1,053 534 39
Net income (loss) per share
Basic earnings (loss) per share $ 0.14 $ (0.81) $ 0.07 $ 0.04 $ 0.00
Shares used in basic per share calculation 15,918 15,678 14,956 14,040 11,071
Diluted earnings (loss) per share $ 0.14 $ (0.81) $ 0.07 $ 0.04 $ 0.00
Shares used in diluted per share calculation 15,962 15,678 15,906 14,437 13,117
BALANCE SHEET DATA:
Cash and cash equivalents $20,690 $ 14,304 $13,047 $ 5,026 $36,397
Working capital 54,330 53,617 59,134 54,885 52,444
Total assets 90,858 89,717 105,314 85,997 78,301
Long-term obligations 5 11 151 300 387
Stockholders' equity 72,654 72,553 78,922 65,646 63,347
- ---------------
(1) On March 11, 1999, the Company acquired all of the outstanding stock of
HedgeWare, Inc. ("HedgeWare") for 685,683 shares of the Company's common
stock in a business combination accounted for as a pooling-of-interests.
Accordingly, the selected financial data for all periods prior to the
combination have been restated to reflect the combined operations. See Notes
2 and 13 of Notes to the Company's Consolidated Financial Statements.
(2) On March 20, 1998, the Company purchased substantially all of the assets of
Quantra Corporation for an aggregate purchase price of 546,019 shares of the
Company's Common Stock, $2.3 million in cash and the assumption of certain
liabilities of approximately $4.1 million. On April 9, 1998, the Company
purchased all the stock of Savid International Inc. and The Savid Group,
Inc. for a purchase price of $861,000. See Notes 2 and 13 of Notes to the
Company's Consolidated Financial Statements.
(3) On November 14, 1997, the Company purchased all the stock of Mabel Systems
BV for $2.5 million. On December 31, 1997, the Company purchased all the
outstanding stock of Shepro Braun Systems, Inc. for 1.0 million shares of
the Company's Common Stock in a business combination accounted for as a
pooling-of-interests. Accordingly, the selected financial data for all
periods prior to the combination have been restated to reflect the combined
operations. See Notes 2 and 13 of Notes to the Company's Consolidated
Financial Statements.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS
OVERVIEW
Years Ended December 31, 1998, 1999, and 2000
Revenues
The Company's revenues are derived from software licenses, related maintenance
and professional services, and outsourcing services provided by SS&C Direct. Net
revenues were $73.6 million, $65.7 million and $60.0 million in 1998, 1999 and
2000, respectively, representing decreases of 10.7% from 1998 to 1999 and 8.7%
from 1999 to 2000. The decrease in revenues from 1998 to 1999 of $7.9 million
was due to a decrease in license revenue offset by increases in maintenance,
professional services and outsourcing
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revenues. The decrease in revenues from 1999 to 2000 of $5.7 million was due to
a decrease in license revenues and professional services offset by increases in
maintenance and outsourcing revenues.
Software Licenses. Software license revenues decreased 46% from $34.9 million
in 1998 to $18.7 million in 1999, and decreased 11% to $16.6 million in 2000.
The decrease from 1998 to 1999 of $16.2 million was due mainly to a $17.6
million decrease in sales of CAMRA 2000, Total Return 2000, and Antares 2000
products, offset by an increase in the sales of our AdvisorWare product. The
decrease from 1999 to 2000 of $2.1 million was mainly due to a decrease in the
sales of LMS 2000, CAMRA 2000, and AdvisorWare offset by an increase in sales of
Antares 2000 and SKYLINE. Product revenue results will vary depending on the
timing, size, and nature of the Company's license transactions.
Maintenance. Maintenance revenue increased 30% from $19.8 million in 1998 to
$25.7 million in 1999, and increased 2% to $26.2 million in 2000. The increase
in maintenance revenues from 1998 to 1999 of $5.9 million was primarily due to
an increase in the Company's installed base of clients. The increase in
maintenance revenues from 1999 to 2000 of $0.5 million was primarily due to an
increase in the installed base of CAMRA clients offset by decrease in
maintenance revenue from discontinued software products.
Professional Services. Professional services revenue increased 12% from $16.6
million in 1998 to $18.6 million in 1999, and decreased 38% from 1999 to $11.5
million in 2000. The increase in the professional services revenue in 1999 was
primarily due to the increased license revenue experienced in 1998 which
resulted in an increase in demand for the Company's implementation services. The
decrease in 2000 was primarily due to decreased license revenue in 1999 and the
subsequent decrease in demand for the Company's implementation, conversion, and
training services. The professional services revenues will continue to be
affected by the overall license revenue levels.
Outsourcing. Outsourcing revenues increased 16% from $2.3 million in 1998 to
$2.7 million in 1999, and increased 108% to $5.6 million in 2000. The increases
are primarily due to increased demand by customers for outsourcing services as
an alternative to license purchases.
Cost of Revenues
The total cost of revenues increased 12% from $24.7 million in 1998 to $27.8
million in 1999, and decreased 17% to $23.0 million in 2000. The gross margin
decreased from 66% in 1998 to 58% in 1999, and increased to 62% in 2000. The
decrease in margins from 1998 to 1999 was primarily due to the decrease in the
license revenue sales. The increase in margins from 1999 to 2000 was primarily
due to the lower cost of software licenses.
Cost of Software Licenses. Cost of software license revenues consists primarily
of amortization expense of completed technology, royalties, the costs of product
media, packaging, documentation and labor involved in the distribution of the
Company's software. The cost of software license revenues increased from $3.8
million in 1998 to $4.2 million in 1999, and decreased to $1.0 million in 2000.
The cost of software license revenues as a percentage of these revenues was 11%,
22%, and 6% in 1998, 1999, and 2000, respectively. The increase in costs from
1998 to 1999 was primarily due to the amortization expense of completed
technology related to the Quantra, Savid, and Mabel acquisitions. The decrease
in 2000 was primarily due to the reduction in amortization of completed
technology. The amortization for completed technology, which was related to the
Quantra acquisition, ended in the fourth quarter of 1999.
Cost of Maintenance Revenue. Cost of maintenance revenues primarily consists of
technical customer support and the engineering costs associated with product and
regulatory updates. These costs decreased from $6.1 million in 1998 to $5.9
million in 1999, and increased to $6.5 million in 2000, representing 31%, 23%,
and 25% of maintenance, respectively. The cost of maintenance revenue decreased
3% or $0.2 million in 1999. These costs increased 10% or $0.6 million in 2000.
The dollar increase from 1999 to 2000 was primarily due to the investment in
information systems and facilities to support a larger customer base.
Cost of Professional Services. Cost of professional services revenues consists
primarily of the cost related to personnel utilized to provide implementation,
conversion, and training services to the Company's software licensees, as well
as system integration, custom programming, and actuarial consulting services.
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These costs increased from $12.1 million in 1998 to $14.1 million in 1999, and
decreased to $9.0 million in 2000, representing 73%, 76%, and 78% of
professional services revenues in those years, respectively. The increase in
1999 was primarily due to the expansion of the Company's professional services
resources, including consulting, training, and account management staff to
support increased customer demand. In 2000, the Company significantly reduced
its professional consulting organization due to the decrease in demand for the
Company's implementation services which was a result of the lower license
revenues as compared to the preceding years.
Cost of Outsourcing Revenues. Cost of outsourcing revenues consists primarily
of the cost related to personnel utilized in servicing the Company's outsourcing
clients. The cost of outsourcing revenues increased from $2.6 million in 1998 to
$3.6 million in 1999 and $6.5 million in 2000, representing 112%, 132% and 116%
of outsourcing revenues in those years, respectively. The dollar increase in
1999 and 2000 was due to the expansion of the Company's outsourcing resources,
including personnel and infrastructure costs. The Company expects that the
outsourcing costs as a percentage of the outsourcing revenue will continue to be
high as the Company invests substantial resources in this area.
Operating Expenses
Selling and Marketing. Selling and marketing expenses consist primarily of the
cost of personnel associated with the selling and marketing of the Company's
products, including salaries, commissions, and travel and entertainment. Such
expenses also include the cost of branch sales offices, advertising, trade
shows, and marketing and promotional materials. Selling and marketing expenses
increased 20% from $15.2 million in 1998 to $18.2 million in 1999, and decreased
32% to $12.3 million in 2000, representing 21%, 28%, and 21%, respectively, of
total revenues in those years. The increase in 1999 of selling and marketing
expenses was largely attributable to costs associated with the hiring of
additional sales and marketing personnel, including the expansion of
international sales and marketing operations, and higher marketing, advertising,
and promotional costs. In 2000, the Company took actions to reduce its selling
and marketing expenses. The reductions were primarily in personnel costs,
advertising, and promotional expenses.
Research and Development. Research and development expenses consist primarily
of personnel costs attributable to the development of new software products and
the enhancement of existing products. Research and development expenses
decreased 3% from $19.2 million in 1998 to $18.7 million in 1999, and decreased
24% to $14.2 million in 2000, representing 26%, 28%, and 24%, respectively, of
total revenues in those years. Research and development expenses remained
relatively comparable in absolute dollars from 1998 to 1999 but increased as a
percentage of revenue due to the 1999 reduction in license revenues. The dollar
decrease from 1999 to 2000 was mainly due to lower personnel costs as a result
of headcount reductions. The decrease was the result of the Company's
consolidation of its research and development functions and elimination of
redundant costs.
General and Administrative. General and administrative expenses consist
primarily of personnel costs related to management, accounting, human resources,
and administration and associated overhead costs, as well as fees for
professional services. General and administrative expenses increased 60% from
$8.6 million in 1998 to $13.8 million in 1999, and decreased 9% to $12.6 million
in 2000, representing 12%, 21%, and 21%, respectively, of total revenues in
those years. The expense increase in 1999 was primarily due to an increase in
bad debt expense and additions to administrative personnel. In 2000, general and
administrative expenses included acquisition performance payments of $2.0
million. These payments were based on certain revenue attainment goals related
to the 1997 acquisition of Mabel and the 1998 acquisition of Savid. The expense
decrease in 2000, after adjusting for the acquisition payments of $2.0 million
was 23% or $3.2 million. The decrease in 2000 was mainly attributable to a
reduction in the bad debt expense and lower administrative infrastructure costs
offset by increased spending related to corporate information technology.
Write-off of Purchased In-Process Research and Development. In the first
quarter of 1998, the Company expensed $5.4 million of purchased in-process
research and development associated with the Quantra
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products acquired in March 1998. In the second quarter of 1998, the Company
expensed $0.5 million of purchased in-process research and development
associated with the Savid products acquired in April 1998. Because these
products had not yet reached technological feasibility at the time of the
respective acquisitions and, in the Company's judgment, there was no alternative
use for the related research and development, such in-process research and
development was charged to expense.
For the Quantra and Savid acquisitions, the Company determined the value of the
completed technologies and in-process research and development using a
risk-adjusted, discounted cash flow approach.
For the Quantra and Savid acquisitions, the Company developed revenue
projections over a five- to six-year period in three categories: license,
maintenance, and consulting. License revenue projections were based on expected
unit sales over the projected lives of the respective product lines. The other
categories of revenues were generally estimated as a percentage of total license
revenues and ranged from 15% to 20% for maintenance and from 10% to 20% for
consulting, depending on the product. Savid consulting revenues were projected
to be insignificant. Expense assumptions were based on the imposition of the
Company's cost structure on the acquired technologies and products. The discount
rates for the Quantra in-process research and development projects were 23% and
28%; the discount rate for the Savid in-process research and development
projects was 20%. The discount rates for these projects were higher than the
Company's implied weighted average cost of capital due to the inherent
uncertainties surrounding the successful development of the in-process research
and development and the related risk of realizing cash flows from products that
have not yet reached technological feasibility, among other factors.
The Company believes that the assumptions used in the forecasts were reasonable.
The Company cannot be assured, however, that the underlying assumptions used to
estimate expected product sales, development costs or profitability, or the
events associated with such projects, will transpire as estimated. Accordingly,
actual results may vary from the projected results.
Interest and Other Income, Net. Net interest income was $1.9 million, $2.3
million, and $2.9 million in 1998, 1999, and 2000, respectively. Interest
income, net consists of interest income less interest expense. The increase in
1999 was due to higher returns on investments compared to 1998 results. In 2000,
the Company moved the majority of its marketable securities to taxable
instruments from non-taxable municipal bonds in 1999, and as a result improved
the absolute dollar investment return. Included in other income, net in 2000,
was a gain of $2.4 million resulting from the sale of an equity investment.
Provision (Benefit) for Income Taxes. The Company had effective tax rates of
approximately 54%, 34%, and 35% in 1998, 1999, and 2000, respectively. The tax
rate in 1998 was higher than the expected rate of 34% due to the
non-deductibility of S corporation losses and the rate differential of foreign
operations. In 1999, the Company recorded a tax benefit of $2.3 million, or 25%,
on the $9.3 million litigation settlement costs. It was determined that a
portion of the litigation settlement costs was not tax-deductible. Excluding the
one-time litigation expense, the effective tax rate in 1999 was 43%. The Company
had $10.6 million of deferred tax assets at December 31, 2000. In future years,
the Company expects to have sufficient levels of profitability to realize the
deferred tax assets at December 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and marketable securities at December 31,
2000 were $56.5 million, increasing by $6.2 million from the $50.3 million at
December 31, 1999. The increase in marketable securities includes an unrealized
gain of $3.0 million. Included in marketable securities at December 31, 2000 is
an equity investment valued at $3.9 million that is subject to considerable
market risk due to its volatility.
The net cash provided by operating activities was $9.5 million in 2000. Cash
provided by operating activities was primarily due to earnings adjusted for
non-cash items, the receipt of income taxes receivable and an increase in
deferred revenue offset by an increase in accounts receivables.
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Investing activities provided $2.0 million in cash in 2000. This was primarily
due to the net proceeds from the sale of marketable securities of $5.7 million
offset by capital expenditures totaling $2.6 million and the issuance of a loan
of $1.0 million to WealthMetrics.com.
Financing activities used $5.0 million in cash in 2000. This was primarily due
to the Company's stock repurchase plan. In 2000, the Company purchased 1,061,000
shares of its Common Stock for treasury. This use of cash was partially offset
by the proceeds from the issuance of Common Stock under the Company's 1996
Employee Stock Purchase Plan.
As of December 31, 2000, the Company had $20.7 million in cash and $35.8 million
of highly liquid marketable securities. The Company believes that its current
cash and marketable securities balances and anticipated cash flow from
operations will be sufficient to meet its working capital and capital
expenditure requirements for at least the next twelve months.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, Accounting for Derivatives Instruments and Hedging
Activities ("SFAS 133") as amended by SFAS 137 and 138. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. As amended, this statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company does not
currently intend to use derivative instruments and therefore does not expect
that the adoption of SFAS 133 will have any impact on its financial position or
results of operations.
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
FLUCTUATIONS IN QUARTERLY PERFORMANCE. Historically, the Company's revenues and
operating results have varied substantially from quarter to quarter. The
Company's quarterly operating results may continue to fluctuate due to a number
of factors, including the timing, size and nature of the Company's individual
license transactions; the timing of the introduction and the market acceptance
of new products or product enhancements by the Company or its competitors; the
relative proportions of revenues derived from license fees, maintenance,
consulting, and other recurring revenues and professional services; changes in
the Company's operating expenses; personnel changes; and fluctuations in
economic and financial market conditions. The timing, size, and nature of
individual license transactions are important factors in the Company's quarterly
operating results. Many such license transactions involve large dollar amounts,
and the sales cycles for these transactions are often lengthy and unpredictable.
There can be no assurance that the Company will be successful in closing large
license transactions on a timely basis or at all.
DEPENDENCE ON THE FINANCIAL SERVICES INDUSTRY. The Company's clients include a
range of organizations in the financial services industry. The success of these
clients is intrinsically linked to the health of the financial markets. In
addition, because of the capital expenditures required in connection with an
investment in the Company's products, the Company believes that demand for its
products could be disproportionately affected by fluctuations, disruptions,
instability, or downturns in the financial markets, which may cause clients and
potential clients to exit the industry or delay, cancel, or reduce any planned
expenditures for investment management systems and software products. Any
resulting decline in demand for the Company's products could have a material
adverse effect on the Company's business, financial condition, and results of
operations.
BUSINESS MODEL CHANGE. The Company is in the process of modifying its business
model from one based on license fees derived from licensing proprietary software
to one based on both licensing its software and transaction fees for the use of
SS&C Direct ASP/BPO services. Due to this change in the business model, the
Company's revenues will increasingly depend on its ability to attract customers
to SS&C Direct and on its ability to grow the number and volume of users of the
Company's outsourcing services. The number of users and the volume of their
activity are largely outside of the Company's control. Thus, the Company's past
operating results may not be a meaningful indicator of its future performance.
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PRODUCT CONCENTRATION. To date, substantially all of the Company's revenues
have been attributable to the licensing of CAMRA 2000, AdvisorWare 2000,
SKYLINE, PTS 2000, Total Return 2000, and Antares 2000 software and the
provision of maintenance and consulting services in support of such software.
The Company expects that the licensing of CAMRA 2000, AdvisorWare 2000, Total
Return 2000, SKYLINE, and Antares 2000 software products will continue to
account for a significant portion of its revenues for the foreseeable future. As
a result, factors adversely affecting the pricing of or demand for such products
and services, such as competition or technological change, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
MANAGEMENT OF GROWTH. The Company's business has grown significantly in size
and complexity over the past several years. The growth in the size and
complexity of the Company's business as well as its client base has placed, and
is expected to continue to place, a significant strain on the Company's
management and operations. The Company's ability to compete effectively and to
manage future growth, if any, will depend on its ability to continue to
implement and improve operational, financial and management information systems
on a timely basis and to expand, train, motivate and manage, its work force.
There can be no assurance that the Company's personnel, systems, procedures, and
controls will be adequate to support the Company's operations. If the Company's
management is unable to manage growth effectively, the quality of the Company's
products and its business, financial condition, and results of operations could
be materially adversely affected.
COMPETITION. The market for financial services software is competitive, rapidly
evolving, and highly sensitive to new product introductions and marketing
efforts by industry participants. Although the Company believes that none of its
competitors currently competes against the Company in all of the markets served
by the Company, there can be no assurance that its competitors will not compete
against the Company in the future in additional markets. In addition, 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 the Company.
RAPID TECHNOLOGICAL CHANGE. The market for the Company's products and services
is characterized by rapidly changing technology, evolving industry standards,
and new product introductions. The Company's future success will depend in part
upon its ability to enhance its existing products and services and to develop
and introduce new products and services to meet changing client needs. The
process of developing software products such as those offered by the Company is
extremely complex and is expected to become increasingly complex and expensive
in the future due to the introduction of new platforms and technologies. There
can be no assurance that the Company will successfully complete the development
of new products in a timely fashion or that the Company's current or future
products will satisfy the needs of the financial markets.
DEPENDENCE ON DATABASE SUPPLIER. The relational database design used in many of
the Company's software products incorporates PFXplus, a "C"-based database
management system licensed to the Company by POWERflex Corporation Proprietary
Limited, an Australian vendor ("Powerflex"). If Powerflex were to increase its
fees under the license agreement, the Company's results of operations could be
materially adversely affected. Moreover, if Powerflex were to terminate the
license agreement, the Company would have to seek an alternative relational
database for its software products. Even though the Company believes that it
could migrate its products to an alternative database, there can be no assurance
that the Company would be able to license a database in a timely fashion with
similar features and on terms acceptable to the Company.
DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's success and ability to
compete is dependent in part upon its ability to protect its proprietary
technology. The Company relies on a combination of trade secret, copyright, and
trademark law, nondisclosure agreements and technical measures to protect its
proprietary technology. There can be no assurance that the steps taken by the
Company to protect its proprietary technology will be adequate to prevent
misappropriation or independent third-party development of such technology.
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PRODUCT DEFECTS AND PRODUCT LIABILITY. The Company's software products are
highly complex and sophisticated and could, from time to time, contain design
defects or software errors that are difficult to detect and correct. Errors,
bugs or viruses may result in loss of or delay in market acceptance of the
Company's software products or loss of client data. Although the Company has not
experienced material adverse effects resulting from any software defects or
errors, there can be no assurance that, despite testing by the Company and its
clients, errors will not be found in new products, which errors could result in
a delay in or an inability to achieve market acceptance and thus could have a
material adverse effect upon the Company's business, financial condition, and
results of operations.
KEY PERSONNEL. The Company's success is dependent in part upon its ability to
attract, train, and retain highly skilled technical, managerial and sales
personnel. The loss of services of one or more of the Company's key employees
could have a material adverse effect on the Company's business, financial
condition, and results of operations. Over the last 12 months, four senior vice
presidents terminated their employment with the Company. The Company continues
to hire a significant number of additional sales, service, and technical
personnel. Competition for the hiring of such personnel in the software industry
is intense. Locating candidates with the appropriate qualifications,
particularly in the desired geographic location, is difficult. Although the
Company expects to continue to attract and retain sufficient numbers of highly
skilled employees for the foreseeable future, there can be no assurance that the
Company will be able to do so.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. The Company intends to continue
to expand its international sales activity as part of its business strategy. To
accomplish such continued expansion, the Company must establish additional
foreign operations and hire additional personnel requiring significant
management attention and financial resources that could materially adversely
affect the Company's business, financial condition, or results of operations. An
increase in the value of the U.S. dollar relative to foreign currencies could
make the Company's products more expensive and, therefore, potentially less
competitive in those foreign markets. A portion of the Company's international
sales is denominated in foreign currency. The Company occasionally hedges some
of the risk associated with foreign exchange fluctuations. In addition, the
Company's international business may be subject to a variety of other risks,
including difficulties in obtaining U.S. export licenses, potentially longer
payment cycles, increased costs associated with maintaining international
marketing efforts, the introduction of non-tariff barriers and higher duty
rates, and difficulties in enforcement of third-party contractual obligations
and intellectual property rights. There can be no assurance that such factors
will not have a material adverse effect on the Company's business, financial
condition, or results of operations. Because of these and other factors, past
financial performance should not be considered an indication of future
performance. The Company's quarterly operating results may vary significantly,
depending on factors such as the timing, size, and nature of licensing
transactions and new product introductions by the Company or its competitors.
Investors should not use historical trends to anticipate future results and
should be aware that the trading price of the Company's common stock may be
subject to wide fluctuations in response to quarterly variations in operating
results and other factors, including those discussed above.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company purchases from time to time forward contracts to attempt to minimize
the impact of exchange rate gains or losses from foreign currency transactions.
The Company generally places its marketable security investments in high credit
quality instruments, primarily U.S. Government and Federal Agency obligations,
tax-exempt municipal obligations and corporate obligations. The Company does not
expect any material loss from its marketable security investments and therefore
believes that its potential interest rate exposure is not material.
The Company invoices customers primarily in U.S. dollars and in the local
currency in those countries in which the Company has branch and subsidiary
operations. The Company is exposed to foreign exchange rate fluctuations from
when customers are invoiced in local currency until collection occurs. Through
December 31, 2000, foreign currency fluctuations have not had a material impact
on the Company's
Page 18
20
financial position or results of operations, and therefore the Company believes
that its potential foreign currency exchange rate exposure is not material.
The foregoing risk management discussion and the effect thereof are
forward-looking statements. Actual results in the future may differ materially
from these projected results due to actual developments in global financial
markets. The analytical methods used by the Company to assess and mitigate risk
discussed above should not be considered projections of future events or losses.
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 this Report and is incorporated
herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
None.
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 2001 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 Report, 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.
Page 19
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)
1. Financial Statements
The following financial statements are filed as a part of this Report:
DOCUMENT PAGE
- -------- ----
Report of Independent Accountants 20
Consolidated Financial Statements:
Balance Sheet as of December 31, 2000 and 1999 21
Statement of Operations for the years ended December 31,
2000, 1999, and 1998 22
Statements of Cash Flows for the years ended December 31,
2000, 1999, and 1998 23
Statements of Changes in Stockholders' Equity for the
years ended December 31, 2000, 1999, and 1998 24
Notes to Financial Statements 25
Signatures 41
2. Exhibits
The following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the Commission.
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 Second Amended and Restated By-Laws of the Registrant is
incorporated herein by reference to Exhibit 3.0 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2000 (File No. 000-28430).
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 Registrant's Registration
Statement on Form S-1, as amended (File No. 333-3094) (the
"Form S-1").
10.1* 1993 Stock Option Plan is incorporated herein by reference
to Exhibit 10.1 to the Form S-1
Page 20
22
EXHIBIT
NO. DESCRIPTION
- ------- -----------
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 Annex D to the Registrant's
Definitive Schedule 14A filed April 28, 2000 (File No.
000-28430)
10.4* 1998 Stock Incentive Plan, as amended, is incorporated by
reference to Annex B to the Registrant's Definitive Schedule
14A filed April 28, 2000 (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)
21 Subsidiaries of the Registrant
23 Consent of PricewaterhouseCoopers LLP
- ---------------
* 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.
(b) REPORTS ON FORM 8-K
None.
Page 21
23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
SS&C Technologies, Inc. and Subsidiaries:
In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of SS&C
Technologies, Inc. and its subsidiaries at December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 8, 2001
Page 22
24
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
----------------------
2000 1999
--------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
ASSETS
Current assets
Cash and cash equivalents $ 20,690 $ 14,304
Investments in marketable securities (Note 3) 35,840 36,034
Accounts receivable, net of allowance for doubtful
accounts of $3,800 and $4,341, respectively (Note 4) 10,509 11,079
Income taxes receivable 144 2,722
Prepaid expenses and other current assets 1,955 2,360
Deferred income taxes (Note 7) 3,391 4,271
-------- --------
Total current assets 72,529 70,770
-------- --------
Property and equipment:
Leasehold improvements 2,983 2,872
Equipment, furniture, and fixtures 16,338 14,145
-------- --------
19,321 17,017
Less accumulated depreciation (10,429) (7,105)
-------- --------
Net property and equipment 8,892 9,912
-------- --------
Accounts receivable (Note 4) -- 301
Deferred income taxes (Note 7) 7,179 7,211
Goodwill, net of accumulated amortization of $201 and
$1,838, respectively 129 296
Intangible and other assets, net of accumulated amortization
of $449 and $6,372, respectively 2,129 1,227
-------- --------
Total assets $ 90,858 $ 89,717
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt (Note 5) $ 94 $ 131
Accounts payable 1,121 1,503
Accrued employee compensation and benefits 1,071 1,695
Other accrued expenses 3,492 2,448
Deferred maintenance and other revenue 12,421 11,376
-------- --------
Total current liabilities 18,199 17,153
Long-term debt (Note 5) 5 11
-------- --------
Total liabilities 18,204 17,164
-------- --------
Commitments and contingencies (Note 8 and 14)
Stockholders' equity:
Common stock, $0.01 par value, 50,000 shares authorized;
16,195 and 16,044 shares issued and 15,134 and 16,044
shares outstanding, respectively 162 161
Additional paid in capital 88,852 88,119
Accumulated other comprehensive income 2,434 (461)
Accumulated deficit (13,094) (15,266)
-------- --------
78,354 72,553
Less: cost of common stock in treasury; 1,061 shares (Note
6) 5,700 --
-------- --------
Total stockholders' equity 72,654 72,553
-------- --------
Total liabilities and stockholders' equity $ 90,858 $ 89,717
======== ========
The accompanying notes are an integral part of these financial statements.
Page 23
25
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
---------------------------------------
2000 1999 1998
---------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Software licenses $16,633 $ 18,700 $34,878
Maintenance 26,237 25,708 19,828
Professional services 11,519 18,619 16,558
Outsourcing 5,625 2,709 2,329
------- -------- -------
Total revenues 60,014 65,736 73,593
------- -------- -------
Cost of revenues:
Software licenses 959 4,206 3,840
Maintenance 6,501 5,919 6,124
Professional services 9,031 14,067 12,150
Outsourcing 6,537 3,565 2,612
------- -------- -------
Total cost of revenues 23,028 27,757 24,726
------- -------- -------
Gross profit 36,986 37,979 48,867
------- -------- -------
Operating expenses:
Selling and marketing 12,332 18,237 15,180
Research and development 14,239 18,655 19,224
General and administrative 12,615 13,839 8,627
Write-off of purchased in-process research and development
(Note 13) -- -- 5,878
Litigation settlement costs (Note 14) -- 9,330 --
------- -------- -------
Total operating expenses 39,186 60,061 48,909
------- -------- -------
Operating loss (2,200) (22,082) (42)
------- -------- -------
Interest income, net 2,855 2,345 1,944
Other income, net (Note 15) 2,678 546 376
------- -------- -------
Income (loss) before income taxes 3,333 (19,191) 2,278
Provision (benefit) for income taxes (Note 7) 1,161 (6,543) 1,225
------- -------- -------
Net income (loss) $ 2,172 $(12,648) $ 1,053
======= ======== =======
Basic earnings (loss) per share $ 0.14 $ (0.81) $ 0.07
======= ======== =======
Basic weighted average number of common shares outstanding 15,918 15,678 14,956
======= ======== =======
Diluted earnings (loss) per share $ 0.14 $ (0.81) $ 0.07
======= ======== =======
Diluted weighted average number of common and common
equivalent shares outstanding 15,962 15,678 15,906
======= ======== =======
The accompanying notes are an integral part of these financial statements.
Page 24
26
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
(IN THOUSANDS)
Cash flow from operating activities:
Net income (loss) $ 2,172 $(12,648) $ 1,053
-------- -------- --------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization 3,932 6,998 5,038
Gain on sales of equity investments (2,433) -- --
Loss (gain) on sale of property and equipment 110 (62) --
Common stock issued for litigation settlement (Note 14) -- 1,300 --
Equity-based compensation -- 123 141
Deferred income taxes 912 (4,784) (2,722)
Income tax benefit related to exercise of stock options 11 281 482
Purchased in-process research and development -- -- 5,878
Provision for doubtful accounts 1,657 3,921 1,717
Changes in operating assets and liabilities, excluding
effects from acquisitions:
Accounts receivable (977) 9,482 (7,960)
Prepaid expenses and other current assets 405 (371) (56)
Taxes receivable 2,578 (2,722) 384
Accounts payable (382) (705) (868)
Accrued expenses 420 (2,235) 1,160
Taxes payable -- (1,059) 684
Deferred maintenance and other revenues 1,045 (1,926) 1,177
-------- -------- --------
Total adjustments 7,278 8,241 5,055
-------- -------- --------
Net cash provided by (used in) operating activities 9,450 (4,407) 6,108
-------- -------- --------
Cash flow from investing activities
Additions to property and equipment (2,559) (5,611) (4,723)
Proceeds from sale of property and equipment 11 485 --
Cash paid for business acquisitions (Note 13) -- -- (3,021)
Proceeds from note receivable (Note 15) -- 2,250 --
Issuance of convertible note receivable (1,000) (250) --
Additions to capitalized software and other intangibles (208) (71) (797)
Cash paid for Caminus acquisition -- -- (2,226)
Purchases of marketable securities (36,806) (24,903) (89,127)
Sales of marketable securities 42,518 31,009 100,581
-------- -------- --------
Net cash provided by investing activities 1,956 2,909 687
-------- -------- --------
Cash flow from financing activities:
Repayment of debt (43) (354) (1,175)
Proceeds from note payable -- -- 673
Issuance of common stock 517 896 651
Exercise of options 206 983 2,307
Purchase of common stock for treasury (5,700) -- --
Transfer of cash from restricted cash equivalents -- 1,230 (1,230)
-------- -------- --------
Net cash provided by (used in) financing activities (5,020) 2,755 1,226
-------- -------- --------
Net increase in cash and cash equivalents 6,386 1,257 8,021
Cash and cash equivalents, beginning of period 14,304 13,047 5,026
-------- -------- --------
Cash and cash equivalents, end of period $ 20,690 $ 14,304 $ 13,047
======== ======== ========
Supplemental disclosure of cash flow information
Cash paid (received) for
Interest expense $ 18 $ 3 $ 9
Income taxes $ (2,682) $ 1,726 $ 2,013
Page 25
27
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES
As more fully described in Note 13, effective March 11, 1999, the Company
acquired all the outstanding stock of HedgeWare, Inc. for 685,683 shares of the
Company's common stock.
As more fully described in Note 13, effective March 20, 1998, the Company
purchased substantially all the assets of Quantra Corporation for $15.3 million.
As more fully described in Note 13, effective April 9, 1998, the Company
purchased all the stock of Savid International Inc. and The Savid Group, Inc.
for $0.9 million.
As more fully described in Note 15, the Company sold its investment in Caminus
Corporation for a $2.3 million note receivable.
The accompanying notes are an integral part of these financial statements.
Page 26
28
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1999, AND 2000
COMMON STOCK ACCUMULATED
------------------ OTHER TOTAL
NUMBER OF ADDITIONAL ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT PAID-IN CAPITAL DEFICIT INCOME (LOSS) TREASURY STOCK EQUITY
--------- ------ --------------- ----------- ------------- -------------- -------------
(IN THOUSANDS)
Balance at December 31,
1997 14,245 $142 $69,150 $ (3,648) $ -- $ -- $ 65,644
Exercise of options 428 4 2,444 -- -- -- 2,448
Issuance of common stock 613 7 9,409 -- -- -- 9,416
Income tax benefit
related to exercise of
stock options -- -- 482 -- -- -- 482
Comprehensive income:
Net income -- -- -- 1,053 -- -- 1,053
Foreign exchange
translation
adjustment -- -- -- -- (121) -- (121)
------ ---- ------- -------- ------ ------- --------
Balance at December 31,
1998 15,286 153 81,485 (2,595) (121) -- 78,922
Exercise of options 195 2 1,104 -- -- -- 1,106
Issuance of common stock 325 4 3,951 -- -- -- 3,955
Issuance of common stock
for the litigation
settlement 211 2 1,298 -- -- -- 1,300
Income tax benefit
related to exercise of
stock options -- -- 281 -- -- -- 281
Other 27 -- -- (23) -- -- (23)
Comprehensive income:
Net loss -- -- -- (12,648) -- -- (12,648)
Foreign exchange
translation
adjustment -- -- -- -- (217) -- (217)
Change in unrealized
loss on investments -- -- -- -- (123) -- (123)
------ ---- ------- -------- ------ ------- --------
Balance, at December 31,
1999 16,044 161 88,119 (15,266) (461) -- 72,553
Exercise of options 40 -- 206 -- -- -- 206
Issuance of common stock 111 1 516 -- -- -- 517
Purchase of common stock -- -- -- -- -- (5,700) (5,700)
Income tax benefit
related to exercise of
stock options -- -- 11 -- -- -- 11
Comprehensive income:
Net income -- -- -- 2,172 -- -- 2,172
Foreign exchange
translation
adjustment -- -- -- -- (190) -- (190)
Change in unrealized
gain on investments -- -- -- -- 3,085 -- 3,085
------ ---- ------- -------- ------ ------- --------
Balance, at December 31,
2000 16,195 $162 $88,852 $(13,094) $2,434 $(5,700) $ 72,654
====== ==== ======= ======== ====== ======= ========
The accompanying notes are an integral part of the financial statements.
Page 27
29
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
SS&C Technologies, Inc. and Subsidiaries ("SS&C" or the "Company") develops,
manufactures and markets client/server based software solutions for the
financial services industry. The Company also offers consulting, training,
support, and outsourcing services in support of its customers' use of its
software products. The Company's clients include a range of organizations that
manage investment portfolios, including asset managers, insurance companies,
banks, mutual funds, public and private pension funds, hedge funds, corporate
treasuries, property managers, real estate investment trusts and government
agencies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All intercompany transactions and balances among the companies
have been eliminated.
Revenue Recognition
The Company follows the guidelines of Statement of Position (SOP) No. 97-2,
"Software Revenue Recognition" ("SOP 97-2"), which provides guidance on applying
generally accepted accounting principles in recognizing revenue on software
transactions. SOP 97-2 requires that revenue recognized from software
transactions be allocated to each element of the transaction based on the
relative fair values of the elements, such as software products, specific
upgrades, enhancements, post contract customer support, installation, or
training. The determination of fair value is based upon vendor-specific
objective evidence. Under SOP 97-2, the Company recognizes software license
revenue allocated to software products, specified upgrades, and enhancements
generally upon delivery of each of the related products, upgrades, or
enhancements.
License Revenue
The Company generally recognizes revenue from sales of software or products
including proprietary software upon product shipment and upon receipt of a
signed contract, provided that collection is probable and all other revenue
recognition criteria of SOP 97-2 are met. The Company's products generally do
not require significant modification or customization of software. Installation
of the products is generally routine and is not essential to the functionality
of the product.
The Company occasionally enters into license agreements requiring significant
customization of the Company's software. The Company accounts for these
agreements on the percentage of completion basis. This method requires estimates
to be made for costs to complete the agreement utilizing an estimate of
development man-hours remaining. Due to uncertainties inherent in the estimation
process, it is at least reasonably possible that completion costs may be
revised. Such revisions are recognized in the period in which the revisions are
determined. Provisions for estimated losses on uncompleted contracts are
determined on a contract-by-contract basis, and are made in the period in which
such losses are first estimated or determined.
Page 28
30
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Maintenance Agreements
Maintenance agreements generally require the Company to provide technical
support and software updates to its customers. Maintenance revenue is recognized
ratably over the term of the maintenance agreement.
Professional and Outsourcing Services
The Company provides consulting, training, and outsourcing services to its
customers. Revenue for such services are generally recognized over the period
during which the applicable services are performed.
The Company records an allowance for doubtful accounts based on individual
customer analyses. Write-offs of accounts receivable were $2,196,000,
$2,991,000, and $558,000 for the years ended December 31, 2000, 1999, and 1998,
respectively.
Recent Accounting Pronouncements
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivatives Instruments and
Hedging Activities" as amended by Statement No. 137 and No. 138. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. As amended, this statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company does not
currently intend to use derivative instruments and therefore does not expect
that the adoption of Statement of Accounting Standards No. 133, as amended will
have any impact on its financial position or results of operations.
Impairment of Long-Lived Assets
The Company evaluates the recoverability of its long-lived assets in accordance
with Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of." The Company assesses
potential impairments to its long-lived assets when there is evidence that
events or changes in circumstances have made recovery of the assets' carrying
value unlikely. An impairment loss would be recognized when the sum of the
expected future undiscounted net cash flows is less than the carrying amount of
the asset. The Company has identified no such impairment losses. Substantially
all of the Company's long-lived assets are located in the United States.
Research and Development
Research and development costs associated with computer software are charged to
expense as incurred. In accordance with Statement of Financial Accounting
Standards No. 86 "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed," capitalization of internally developed computer
software costs begins upon the establishment of technological feasibility based
on a working model. Capitalized software costs of $814,000, and $806,000 are
included in the December 31, 2000 and 1999 balance sheets, respectively, under
"Intangible and other assets."
The Company's policy is to amortize these costs upon a product's general release
to the customer. Amortization of capitalized software costs is calculated by the
greater of (a) the ratio that current gross revenues for a product bear to the
total of current and anticipated future gross revenues for that product or (b)
the straight-line method over the remaining estimated economic life of the
product including the period being reported on, typically two to six years. It
is reasonably possible that those estimates of anticipated future gross
revenues, the remaining estimated economic life of the product, or both could be
reduced significantly due to competitive pressures. Amortization expense related
to capitalized software for 2000, 1999, and 1998, was $201,000, $193,000, and
$36,000, respectively.
Page 29
31
SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash and Cash Equivalents and Marketable Securities
The Company considers all highly liquid marketable securities with original
maturities of three months or less at the date of acquisition to be cash
equivalents. Debt securities with original maturities of more than three months
at the date of acquisition are classified as marketable securities. The Company
classifies its entire investment portfolio, consisting of debt securities issued
by state and local governments of the United States, debt securities issued by
corporations and equities, as available for sale securities. The cost basis,
using the specific identification method, approximates fair market value and an
unrealized gain or loss is recognized.
Property and Equipment
Property and equipment are stated at cost. Depreciation of property and
equipment is calculated using a combination of straight-line and accelerated
methods over the estimated useful lives of the assets as follows:
DESCRIPTION USEFUL LIFE
- ----------- -----------
Equipment 3-5 years
Furniture and fixtures 7-10 years
Leasehold improvements Shorter of lease term or estimated useful life
Maintenance and repairs are expensed as incurred. The costs of sold or retired
assets are removed from the related asset and accumulated depreciation accounts
and any gain or loss is included in operations.
Goodwill and Intangible Assets
Goodwill resulting from acquisitions is amortized on a straight-line basis over
its estimated life of five years. The carrying amount of goodwill is evaluated
for future recoverability on a periodic basis, relying on a number of factors,
including the estimated life of the customer base under the annual maintenance
agreements, operating results for each division, business plans, budgets, and
economic projections and undiscounted cash flows. In addition, the Company's
evaluation considers non-financial data such as market trends, product
development cycles, and changes in management's market emphasis. Amortization
expense associated with goodwill was $168,000, $426,000, and $412,000 for the
years ended December 31, 2000, 1999, and 1998, respectively.
Other intangible assets, excluding completed technology, are being amortized on
a straight-line basis over their estimated lives of two to three years.
Completed technology is amortized over approximately two to four years based on
the ratio that current gross revenues of the product bear to the total of
current and anticipated future gross revenues of the product or on a
straight-line method, whichever is shorter. Amortization expense associated with
completed technology for the years ended December 31, 2000, 1999, and 1998 was
$96,000, $3,299,000, and $2,974,000, respectively.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash, cash equivalents, marketable
securities, and trade receivables. The Company has cash investment policies that
limit investments to investment grade securities. Concentrations of credit risk,
with respect to trade receivables, are limited due to the fact that the
Company's customer base is highly diversified. As of December 31, 2000 and 1999,
the Company had no significant concentrations of credit risk and the carrying
value of these assets approximates fair value.
Page 30
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS 109, an asset and liability approach
is used to recognize deferred tax assets and liabilities for the future tax
consequences of items that have already been recognized in its financial
statements and tax returns. A valuation allowance is established against net
deferred tax assets if, based on the weight of available evidence, it is more
likely than not that some or all of the net deferred tax assets will not be
realized.
International Operations and Foreign Currency
The functional currency of each foreign subsidiary is the local currency.
Accordingly, assets and liabilities of foreign subsidiaries are translated to
U.S. dollars at period-end exchange rates, and capital stock accounts are
translated at historical rates. Revenues and expenses are translated using the
average rates during the period. The resulting translation adjustments are
excluded from net earnings and accumulated as a separate component of
stockholders' equity. Foreign currency transaction gains and losses are included
in the results of operations in the periods in which they occur and are
immaterial for all periods presented.
Basic and Diluted Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted
average number of shares outstanding during the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
common shares and common equivalent shares outstanding. Common equivalent shares
consist of stock options using the "treasury stock" method and are excluded if
their effect is dilutive.
The following table sets forth the computation of basic and diluted earnings per
share (in thousands):
2000 1999 1998
------ ------ ------
Weighted average common shares outstanding 15,918 15,678 14,956
Weighted average common stock equivalents--options 44 -- 950
------ ------ ------
Weighted average common and common equivalent shares
outstanding 15,962 15,678 15,906
====== ====== ======
Options to purchase 2,809,180, 2,920,180, and 297,500 shares were outstanding at
December 31, 2000, 1999, and 1998, respectively, but were not included in the
computation of diluted earnings per share because the effect of including the
options would be antidilutive.
Comprehensive Income
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," requires that items defined as comprehensive income, such as foreign
currency translation adjustments, and unrealized gains (losses) on marketable
securities, be separately classified in the financial statements and that the
accumulated balance of other comprehensive income be reported separately from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. Total comprehensive income is comprised of net income and other
accumulated comprehensive income disclosed in the equity section of the balance
sheet.
Page 31
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the components of comprehensive income (in
thousands):
2000 1999 1998
------ -------- ------
Net income (loss) $2,172 $(12,648) $1,053
Foreign currency translation (losses) (190) (217) (121)
Unrealized gains (losses) on marketable securities 3,085 (123) --
------ -------- ------
Total comprehensive income (loss) $5,067 $(12,988) $ 932
====== ======== ======
Reclassification
Certain amounts in the 1998 and 1999 consolidated financial statements have been
reclassified to be comparable with the 2000 presentation. These classifications
have had no effect on net income, working capital, or net equity.
3. MARKETABLE SECURITIES
At December 31, 2000 and 1999, the cost basis, fair value, and unrealized gains
and losses by major security type, were as follows (in thousands):
GROSS
UNREALIZED FAIR
COST GAINS (LOSSES) VALUE
December 31, 2000: ------- -------------- -------
State, municipal and county government bonds $ 8,054 $ (1) $ 8,053
US government securities 13,768 148 13,916
Corporate bonds 9,979 36 10,015
Equities 1,077 2,779 3,856
------- ------ -------
Total $32,878 $2,962 $35,840
------- ------ -------
GROSS
UNREALIZED FAIR
COST LOSSES VALUE
December 31, 1999: ------- ---------- -------
State, municipal and county government bonds $26,141 $ (58) $26,083
US government securities 2,642 (30) 2,612
Corporate bonds 3,374 (19) 3,355
Floating rate notes 4,000 (16) 3,984
Total $36,157 $(123) $36,034
------- ----- -------
The following table summarizes the maturities of marketable securities at
December 31 (in thousands):
2000 1999
------- -------
Less than one year $32,751 $29,321
Due in 1-2 years 3,089 6,713
------- -------
Total $35,840 $36,034
======= =======
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. ACCOUNTS RECEIVABLE
Accounts receivable are as follows (in thousands):
DECEMBER 31,
------------------
2000 1999
CURRENT ------- -------
Accounts receivable, net of allowance for doubtful accounts
of $3,649 and $3,862, respectively $ 7,354 $ 7,741
Unbilled accounts receivable, net of allowance for doubtful
accounts of $151 and $479, respectively 3,155 3,338
------- -------
Total current accounts receivable 10,509 11,079
NONCURRENT
Unbilled accounts receivable -- 301
------- -------
Total accounts receivable $10,509 $11,380
======= =======
The Company records an allowance for doubtful accounts based on individual
customer analyses. Write-offs of accounts receivable were $2,196,000,
$2,991,000, and $558,000 for the years ended December 31, 2000, 1999, and 1998,
respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
DECEMBER 31,
-------------
2000 1999
---- -----
Note payable to former Mabel shareholders $ 88 $ 125
Capitalized lease obligations for office equipment, through
September 2002 11 17
---- -----
99 142
---- -----
Less current portion (94) (131)
---- -----
Long-term debt $ 5 $ 11
==== =====
The note payable to former Mabel shareholders was issued in connection with the
Company's acquisition of Mabel Systems BV ("Mabel") (See Note 13). The terms of
the purchase agreement are for the Company to pay $375,000 in three equal
installments of $125,000 on the first, second, and third anniversaries of the
closing date of the acquisition. Each payment was conditional on the continued
employment of the former shareholders with the Company as of the date of the
payment. The December 31, 2000 balance of $88,000 due the former Mabel
shareholders was paid in January 2001.
6. COMMON STOCK
At December 31, 2000, 50,000,000 shares were authorized and 15,133,965 shares
were outstanding. At December 31, 1999, 25,000,000 shares of common stock were
authorized and 16,044,203 shares were outstanding.
On March 11, 1999, the Company issued 685,683 shares of the Company's common
stock in connection with the Company's acquisition of HedgeWare, Inc. On March
31, 1999, the Company issued 27,500 shares of the Company's common stock in
connection with the acquisition of the Brookside Corporation.
The Company's Board of Directors has approved the repurchase of up to $20
million of its common stock. Pursuant to the repurchase program, the Company
purchased 1,061,119 of the Company's common stock for approximately $5.7 million
in the year ended December 31, 2000.
Page 33
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
The sources of income (loss) before income taxes were as follows (in thousands):
YEAR ENDED DECEMBER 31,
----------------------------
2000 1999 1998
------ -------- ------
U.S. $3,696 $(18,884) $ 150
Foreign (363) (307) 2,128
------ -------- ------
Income (loss) from consolidated companies before taxes $3,333 $(19,191) $2,278
====== ======== ======
The income tax provision (benefit) for the years ended December 31, 2000, 1999,
and 1998 consists of the following (in thousands):
YEAR ENDED DECEMBER 31,
----------------------------
2000 1999 1998
------ ------- -------
Current:
Federal $ (28) $(1,955) $ 2,192
Foreign 443 101 1,026
State (166) 95 729
Deferred:
Federal 1,032 (3,826) (2,161)
State (120) (958) (561)
------ ------- -------
Total $1,161 $(6,543) $ 1,225
====== ======= =======
The effective tax rates were 34.8%, 34.1%, and 53.8% for the years ended
December 31, 2000, 1999, and 1998, respectively. The reconciliation between the
effective tax rates and the expected tax expense is computed by applying the US
federal corporate income tax rate of 34% to income before income taxes as
follows (in thousands):
YEAR ENDED DECEMBER 31,
---------------------------
2000 1999 1998
------ ------- ------
Computed "expected" tax expense (benefit) $1,133 $(6,525) $ 775
Increase (decrease) in income taxes resulting from:
State income taxes (net of federal income tax benefit) (189) (570) 103
Tax-exempt interest income (215) (369) (680)
Foreign operations rate differential 350 206 324
Litigation settlement -- 1,086 --
Meals and entertainment 59 84 75
Research and development credit (419) (200) --
Non-deductible acquisition payment 447 -- --
S Corporation (earnings) loss not (taxable) beneficial
to the Company -- (88) 614
Other (5) (167) 14
------ ------- ------
Income tax expense $1,161 $(6,543) $1,225
====== ======= ======
Page 34
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the net deferred tax assets at December 31, 2000 and 1999 are
as follows (in thousands):
DECEMBER 31,
-----------------
2000 1999
------- -------
Deferred tax assets $12,628 $12,911
Deferred tax liabilities (1,469) (1,040)
Valuation allowance (589) (389)
------- -------
Net deferred tax assets $10,570 $11,482
======= =======
The components of deferred income taxes at December 31, 2000 and 1999 are as
follows (in thousands):
DECEMBER 31,
--------------------------------------------------
2000 1999
----------------------- -----------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX TAX TAX TAX
ASSETS LIABILITIES ASSETS LIABILITIES
-------- ----------- -------- -----------
Purchased in-process research and
development $ 4,615 $ -- $ 4,571 $ --
Net operating loss carryforwards 2,762 -- 3,440 --
Acquired technology 2,203 -- 2,287 --
Accounts receivable 1,142 191 1,270 386
Tax credit carryforwards 1,404 -- 821 --
Accrued expenses 401 -- 298 --
Accounting method change--advance payments -- -- 144 --
Fixed assets -- 951 -- --
Capitalized software -- 327 -- 315
Other 101 -- 80 339
------- ------ ------- ------
Total $12,628 $1,469 $12,911 $1,040
======= ====== ======= ======
At December 31, 2000, the Company had available federal net operating loss
carryforwards of $4,763,000 that expire in 2019 and state net operating loss
carryforwards of $8,962,000 that expire between 2004 through 2019. The foreign
net operating loss carryforwards other than Japan of $1,453,000 are available to
offset foreign income on an indefinite carryforward basis. Japan's net operating
loss of $437,000 expires in 2005.
Alternative minimum tax credits of $404,000 are available to offset U.S. federal
taxable income on an indefinite carryforward basis. The company also has
research and development credits of $940,000 and foreign tax credits of $242,000
that will expire at various dates through 2020.
8. LEASES
The Company is obligated under noncancelable operating leases for office space
and office equipment. Total rental expense for the years ended December 31,
2000, 1999, and 1998 was $3,366,000, $3,046,000, and $2,155,000, respectively.
The lease for the corporate facility in Windsor, Connecticut expires in 2008
Page 35
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and the Company has the right to extend the lease for an additional term of five
years. Future minimum lease payments under these operating leases are as follows
(in thousands):
YEAR ENDING DECEMBER 31,
------------------------
2001 $ 3,036
2002 2,231
2003 1,987
2004 1,864
2005 1,453
Thereafter 2,324
-------
$12,895
-------
The Company subleases office space under noncancelable leases. The Company
received rental income under these leases of $620,000, $479,000, and $212,000
for the years ended December 31, 2000, 1999, and 1998, respectively. Minimum
future lease receipts under these leases are as follows (in thousands):
YEAR ENDING DECEMBER 31,
------------------------
2001 $498
2002 61
----
$559
----
9. RELOCATION EXPENSES
In 1997, the Company announced plans to relocate its corporate facilities. In
connection with the relocation, and in accordance with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" and EITF No. 94-3, the
Company recognized in general and administrative expense an impairment loss on
the building and furniture it previously occupied and used of $0.5 million for
the year ended December 31, 1997. In 1999, the Company sold its previous
corporate facility in Bloomfield, Connecticut.
10. LICENSE AND ROYALTY AGREEMENTS
The Company has non-exclusive rights to integrate certain third-party software
into certain of the Company's products. Under the terms of the agreement, the
licenser of the software is paid minimum monthly royalties and additional
royalties based on a percentage of the related license fee revenues collected by
the Company. Under this agreement, the Company is obligated to pay on a
cumulative basis at least $25,000 per quarter. The total royalty expense under
these agreements for the years ended December 31, 2000, 1999, and 1998 was
$476,000, $487,000, and $527,000, respectively.
In connection with the Savid acquisition, the Company has agreed to pay 10% of
license fees with respect to sales and/or licensing of the Savid system during
the period commencing on April 15, 1998 and ending on April 14, 2003. Royalty
expense for the years ended December 31, 2000, 1999, and 1998 was $37,380,
$93,250, and $44,650, respectively.
In connection with the Quantra acquisition in 1998, the Company is party to
three royalty agreements as a result of utilities that interface with the
Company's SKYLINE II product. The royalties are paid based on either annual
guaranteed total unit sales of the product at a rate of $15 per user, or as a
percentage of the utility list price, which is typically 33.33%. Royalty expense
for the periods ended December 31, 2000, 1999, and 1998 was $3,643, $100,196,
and $19,166, respectively.
Page 36
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. DEFINED CONTRIBUTION PLANS
The Company has a 401(k) Retirement Plan (the "Plan"), which covers
substantially all employees. Each employee may elect to contribute to the Plan,
through payroll deductions, up to 20% of his or her salary, subject to certain
limitations. The Plan provides for a Company match of employees' contributions
in an amount equal to 50% of an employee's contributions up to $2,000.
In connection with the acquisition of HedgeWare (Note 13), the Company assumed
the pre-existing deferred compensation plan for HedgeWare employees, which was
established in January 1994. Since the March 1999 acquisition, HedgeWare
employees may elect to contribute to the SS&C plan. The HedgeWare plan has been
frozen for any additional contributions.
During the years ended December 31, 2000, 1999, and 1998, the Company incurred
$568,000, $371,000, and $286,000, respectively, of expenses related to these
plans.
12. STOCK OPTION AND PURCHASE PLANS
During 1994, the Board of Directors approved a new plan ("1994 Plan"), effective
January 1, 1995, for which 1,000,000 shares of common stock were reserved. The
1994 Plan was amended in October 1995 and April 1996 to reserve additional
shares of common stock for issuance under the plan, bringing the total shares of
common stock reserved for issuance to 3,000,000. Options under the 1994 Plan
generally vest ratably over four years and expire ten years subsequent to the
grant. The Board of Directors, as of April 30, 1998, decided that no further
options shall be granted under the 1994 plan. There were options to purchase
1,253,876, 1,704,223, and 2,110,719 shares of common stock outstanding as of
December 31, 2000, 1999, and 1998, respectively. Options to purchase 784,020,
896,714, and 856,709 shares of common stock were exercisable as of December 31,
2000, 1999, and 1998, respectively.
The Company's 1996 Director Stock Option Plan provides for non-employee
directors to receive options to purchase common stock of the Company at an
exercise price equal to the fair market value of the common stock at the date of
grant. Each option granted under the 1996 Plan is fully vested immediately upon
the option grant date and expires ten years from the grant date. On May 23,
2000, the plan was amended to increase the number of reserved shares to 300,000.
At December 31, 2000, 1999, and 1998, there were 160,000, 70,000, and 90,000
shares, respectively, available for director option grants. There were options
to purchase 125,000, 65,000, and 45,000 shares of common stock outstanding as of
December 31, 2000, 1999, and 1998, respectively. All options outstanding were
exercisable as of December 31, 2000, 1999, and 1998, respectively.
During 1998, the Board of Directors approved the 1998 Stock Incentive Plan
("1998 Plan"), which has 1,500,000 shares of common stock reserved for issuance.
On May 23, 2000, the number of reserved shares was increased by 500,000 for a
total of 2,000,000 shares. Generally, options under the 1998 Plan vest ratably
over four years and expire ten years subsequent to the grant. Shares available
for option grants under the 1998 Plan were 1,134,070, 554,043 and 1,204,542 at
December 31, 2000, 1999, and 1998, respectively. There were options to purchase
859,680, 945,957, and 295,458 shares of common stock outstanding at December 31,
2000, 1999, and 1998, respectively, of which options to purchase 294,206, 81,561
and 1,583 shares were exercisable.
In 1999, the Board of Directors approved the Company's 1999 Non-Officer Employee
Stock Incentive Plan ("1999 Plan") and reserved 1,250,000 shares of Common Stock
for issuance under the 1999 Plan. All the Company's employees, consultants, and
advisors other than the Company's executive officers and directors are eligible
to participate in the 1999 Plan. Only non-statutory stock options, restricted
stock awards, and other stock-based awards may be granted under the 1999 Plan.
Shares available for option grants under the 1999 Plan were 217,266 and
1,045,000 at December 31, 2000 and 1999, respectively.
Page 37
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
There were options to purchase 999,400 and 205,000 shares of common stock
outstanding at December 31, 2000 and 1999, respectively, of which options to
purchase 67,917 and 66,667 shares were exercisable.
The following table summarizes stock option transactions for the years ended
December 31, 2000, 1999, and 1998.
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
---------- ----------------
Outstanding at December 31, 1997 2,287,200 $ 7.37
Granted 1,360,500 14.30
Canceled (768,077) 8.96
Exercised (428,446) 4.87
---------- ------
Outstanding at December 31, 1998 2,451,177 $10.97
Granted 1,259,965 $12.23
Cancelled (410,381) 12.36
Exercised (380,581) 11.07
---------- ------
Outstanding at December 31, 1999 2,920,180 $11.32
Granted 1,542,750 $ 5.37
Cancelled (1,185,390) 9.33
Exercised (39,584) 5.20
---------- ------
Outstanding at December 31, 2000 3,237,956 $ 9.28
========== ======
The following table summarizes information about stock options outstanding at
December 31, 2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------- -------------------------
WEIGHTED AVERAGE WEIGHTED
RANGE OF NUMBER REMAINING WEIGHTED NUMBER AVERAGE
EXERCISE OUTSTANDING AT CONTRACTUAL LIFE AVERAGE EXERCISABLE AT EXERCISE
PRICE 12/31/00 (YEARS) EXERCISE PRICE 12/31/00 PRICE
- --------------- -------------- ---------------- -------------- -------------- --------
$ 3.94 - $ 5.75 1,545,713 8.5 $ 5.19 359,827 $ 4.63
6.00 - 9.00 230,582 6.8 6.93 160,760 7.15
9.38 - 13.50 588,350 7.3 10.57 412,082 10.39
14.58 - 18.13 758,145 4.4 15.22 256,341 15.64
22.75 - 23.63 115,166 7.3 23.21 82,133 23.15
The exercise price for each of the above grants was determined by the Board of
Directors of the Company to be equal to the fair market value of the Company's
common stock on the date of grant
The Company's 1996 Employee Stock Purchase Plan which permits employees of the
Company to purchase shares of common stock pursuant to payroll deductions at a
price equal to 85% of the fair market value of the Company's common stock on
either the first or last day of the purchase period, whichever is lower. The
Company has adopted semiannual purchase periods of October through March and
April through September. As of December 31, 2000, employees had deposited with
the Company, through payroll deductions, approximately $100,000 to purchase
shares through the stock purchase plan at March 31, 2001. In May 2000, the Plan
was further amended to increase the reserved shares from 400,000 to 600,000.
At December 31, 2000, 1999, and 1998, 4,968,000, 4,839,000, and 3,990,000
shares, respectively, were reserved for the stock option and Employee Stock
Purchase plans.
Page 38
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock-Based Compensation
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations in accounting for its stock options. Under APB 25, because the
exercise price of employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recorded.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the stock option plans and employee stock purchase plan. Had
compensation cost for the Company's stock option plans and employee stock
purchase plan been determined consistent with SFAS No. 123, the Company's net
income (loss) and earnings (loss) per share would have been adjusted to the pro
forma amounts indicated in the table below for the periods ending December 31
(in thousands except per share):
2000 1999 1998
------- -------- -------
Net income (loss), as reported $ 2,172 $(12,648) $ 1,053
Net income (loss), pro forma (2,073) (17,690) (3,444)
Basic earnings (loss) per share, as reported 0.14 (0.81) 0.07
Basic earnings (loss) per share, pro forma (0.13) (1.13) (0.23)
Diluted earnings (loss)per share, as reported 0.14 (0.81) 0.07
Diluted earnings (loss) per share, pro forma (0.13) (1.13) (0.23)
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2000, 1999, and 1998, respectively: dividend
yield of 0%; expected volatility of 65%, 70%, and 70%; risk-free interest rate
of 6.6%, 5.2%, and 5.4%; and expected lives of 5 years for 2000 and 1998 and
4.26 years for 1999. The weighted-average fair value of options granted using
this option-pricing model in 2000, 1999, and 1998 was $3.26, $6.04, and $8.65,
respectively.
The fair value of each estimated stock grant under the employee stock purchase
plan is based on the price of the stock at the beginning of the offering period
using the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 2000, 1999, and 1998, respectively: dividend
yield of 0%; expected volatility of 65%, 70%, and 70%; risk-free interest rate
of 5.53%, 4.96%, and 4.81%, and expected lives of six months.
13. ACQUISITIONS
On November 14, 1997, the Company acquired all of the outstanding stock of Mabel
for $2.5 million, which included $100,000 of direct costs associated with the
acquisition. The purchase was paid in the form of cash for $475,000, 72,816
shares of common stock of the Company valued at $750,000, $375,000 due in three
equal annual installments of $125,000 on the anniversary date of the
transaction, $286,000 of notes payable to the former Mabel shareholders, and the
assumption of liabilities of $623,000. The agreement also calls for a contingent
payment to be made in 2001. The payment is contingent on the continued
employment of the former Mabel shareholders and is based on the revenues
generated by the Mabel division. As of December 31, 2000, upon achieving certain
milestones, the Company recorded a liability of $1.3 million associated with
this contingent payment. The payment is expected to be made in the first quarter
of 2001.
The acquisition was accounted for as a purchase and, accordingly, the net assets
and results of operations of Mabel have been included in the consolidated
financial statements from the acquisition date. The purchase price was first
allocated to tangible assets based on their net realizable value or fair market
value
Page 39
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
on the date of the acquisition. The remaining portion of the purchase price was
allocated to identified intangible assets, goodwill, and in-process research and
development.
In 1998, the Company acquired substantially all of the assets of Quantra
Corporation ("Quantra") pursuant to an Asset Purchase Agreement, among the
Company, Quantra, and AEGON USA Realty Advisors, Inc., the sole stockholder of
Quantra. The purchase price for the Quantra acquisition consisted of 546,019
shares of the Company's common stock valued at $8.8 million, $2.3 million in
cash and the assumption of certain liabilities of Quantra of approximately $4.1
million, plus the costs of effecting the transaction. The Company and Quantra
also entered into an Escrow Agreement pursuant to which an additional $1.2
million was held in escrow to reimburse the Company in connection with certain
acquisition costs and breaches of representations, warranties, and covenants, if
any, by Quantra. The escrow agreement expired on March 20, 1999 and all the
escrowed monies were returned to the Company.
The acquisition was accounted for as a purchase and, accordingly, the net assets
and results of operations of Quantra have been included in the consolidated
financial statements from the acquisition date. The purchase price was allocated
to tangible and intangible assets and liabilities based on their fair market
value on the date of the acquisition.
Also in 1998, the Company completed its acquisition (the "Savid Acquisition") of
the outstanding shares of Savid International Inc. and The Savid Group, Inc.
(together, "Savid") pursuant to a Stock Purchase Agreement between the Company,
Savid and the sole stockholder ("Stockholder") of Savid. The purchase price of
the Savid acquisition consisted of $739,000 in cash, net of cash received of
$82,500, and the assumption of certain liabilities of Savid of $118,000, plus
the costs of effecting the transaction. The acquisition was accounted for as a
purchase and, accordingly, the net assets and results of operations of Savid
have been included in the consolidated financial statements from the acquisition
date. The purchase price was allocated to tangible and intangible assets,
liabilities, and in-process research and development based on their fair market
value on the date of the acquisition. Under the agreement, an additional
consideration of $750,000 was to be provided if revenues of $3,000,000 were
attained since April 15, 1998. This level of revenue was attained in the third
quarter of 2000. In addition, the Company shall pay to the stockholder an
aggregate of 10% of the license fees with respect to sales and/or licensing of
the Savid product during the period commencing on April 15, 1998 and ending on
April 14, 2003.
In 1999, the Company acquired all of the outstanding stock of HedgeWare, Inc.
("HedgeWare"), a provider of portfolio, financial, partnership, and tax
accounting software and service support to hedge fund managers and traders, for
685,683 shares of Common Stock of the Company in a business combination
accounted for as a pooling-of-interests. Accordingly, the financial statements
for all periods prior to the combination have been restated to reflect the
combined operations. The Company, HedgeWare and the former stockholders of
HedgeWare have entered into an Escrow Agreement providing, among other things,
that 89,139 shares of Common Stock will be held in escrow to reimburse the
Company in connection with breaches of representations, warranties or covenants,
if any, as well as potential rental obligations and sales tax liabilities of
HedgeWare. To date, there have been no claims against the escrow and, therefore,
the escrow shares were released in the first quarter of 2001. The results of
operations presented below for the years ended December 31, 1998 and 1999
present the Company and HedgeWare as stand-alone entities. There were no
intercompany transactions and no adjustments to net assets of the combining
companies to adopt the same accounting practices.
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TOTAL
COMPANY HEDGEWARE COMPANY
-------- --------- --------
(IN THOUSANDS)
1998
Revenues $ 69,413 $ 4,180 $ 73,593
Net income (loss) $ 2,862 $(1,809) $ 1,053
-------- ------- --------
1999
Revenues $ 63,067 $ 2,669 $ 65,736
Net income (loss) (14,044) 1,396 (12,648)
HedgeWare had elected to be treated as a Subchapter S Corporation for income tax
purposes and, as such, income taxes are provided from March 11, 1999 for
HedgeWare's results of operations. During the quarter ended March 31, 1999, the
Company issued stock valued at $3.1 million in satisfaction of certain
shareholder and employee-related accrued expenses of HedgeWare that existed as
of the effective date of the merger.
Also in 1999, the Company acquired all of the outstanding stock of The Brookside
Corporation. Pursuant to the Purchase Agreement, all of the outstanding shares
of common stock of Brookside held by the stockholder were exchanged for an
aggregate of 27,600 shares of Common Stock of the Company. The consolidated
results of operations for the year ended December 31, 1999 include the results
of operations of Brookside from the beginning of the year. The consolidated
financial statements for prior periods have not been restated since the impact
of such restatement would not be material.
For the Mabel, Quantra, and Savid acquisitions, the allocation to completed
technology is based on future risk-adjusted discounted cash flows. Completed
technology has been capitalized and included within Intangible and Other Assets.
Amortization expense associated with completed technology for the Mabel,
Quantra, and Savid acquisitions for the years ended December 31, 1998, 1999, and
2000 were $2,973,000, $3,299,000, and $96,000, respectively.
The Company believes that the amounts recorded as in-process research and
development (IPR&D) charges at the dates of the acquisitions of Quantra and
Savid were measured in a manner consistent with widely recognized appraisal
practices that were being utilized at the time of the acquisitions. Subsequent
to the acquisitions, in a letter dated September 15, 1998 to the American
Institute of Certified Public Accountants, the Chief Accountant of the
Securities and Exchange Commission (SEC) expressed views of the SEC staff that
took issue with certain appraisal practices employed in the determination of the
fair value of IPR&D that was the basis of the Company's measurement of its IPR&D
charge. Accordingly, the Company has resolved to adjust the amount originally
allocated to acquired IPR&D in a manner to reflect the SEC staff's. This revised
allocation was completed March 24, 1999. The effect of this revised allocation
was to increase the allocation of the purchase price to completed technology and
decreased the allocation of the purchase price to purchased in-process
technology as reported in the table below (in thousands).
AS AS
REPORTED RESTATED
-------- --------
Tangible net assets $ 4,667 $ 4,667
Purchased in-process research and development 7,980 5,878
Purchased completed technology 3,505 5,607
------- -------
$16,152 $16,152
======= =======
Other factors considered in the allocation of the purchase price to in-process
research and development include the estimated net cash flows generated from
such projects, discounting the net cash flows back to
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
their present values, and adjusting values to reflect the contribution of
completed and core technologies. For the Quantra and Savid acquisitions, the
Company developed revenue projections over a five to six year period in three
categories: license, maintenance, and consulting. License revenue projections
were based on expected unit sales over the projected lives of the respective
product lines. The other categories of revenue were generally estimated as a
percentage of total license revenues and ranged from 15% to 20% for maintenance
and from 10% to 30% for consulting, depending on the product. Savid consulting
revenues were projected to be insignificant. Expense assumptions were based on
the imposition of the Company's cost structure on the acquired technologies and
products. The discount rates for the Quantra in-process research and development
projects were 23% and 28%; the discount rate for the Savid in-process research
and development projects was 20%.
For the Mabel acquisition, the Company developed revenue projections based on
unit sales estimates over the projected lives of the Mabel product lines.
Expense assumptions were based on Mabel's past experience and had not been
adjusted for expected cost synergies with SS&C. The discount rate for the Mabel
in-process research and development was 22%.
The following summarizes the allocation of the purchase price for the Quantra
and Savid acquisitions (in thousands):
1998
-------
Accounts receivable $ 1,481
Unbilled accounts receivable 2,694
Other assets 63
Equipment and furniture 429
Completed technology 5,607
Incomplete technology 5,878
-------
$16,152
=======
The unaudited pro forma condensed consolidated results of operations presented
below for the year ended December 31, 1998 assumes the Quantra and Savid
acquisitions occurred at the beginning of 1998. The unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
1998 excludes the $5.9 million write-off of purchased in-process research and
development related to the Quantra and Savid acquisitions (in thousands, except
per share data):
1998
-------
Total revenues $76,299
Operating income 2,618
Net income 1,571
Basic earnings per share 0.11
Diluted earnings per share 0.10
These pro forma results are not necessarily indicative of results of operations
that would have actually occurred had the acquisition taken place at the
beginning of each period, or of future operations of the combined companies.
14. COMMITMENTS AND CONTINGENCIES
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
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 for
the settlement of approximately $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 a party to any other litigation that it believes
could have a material effect on the Company or its business.
15. RELATED PARTY TRANSACTIONS
The Company has a liability with the former Mabel shareholders. (see Note 5)
On May 1, 1998, the Company invested approximately $2.2 million in cash in
exchange for a 24% ownership interest in Caminus Corporation, a services and
software company serving the power and gas trading business. The Company also
entered into an exclusive distribution agreement which allows Caminus to sell
the Company's software products within energy-related markets over a five-year
period based on certain terms and conditions. Under this agreement, Caminus
purchased $750,000 in 1998, $1,250,000 in 1999 and $750,000 in 2000 of software.
In the fourth quarter of 1998, the Company sold its interest in Caminus for
$2,250,000 and obtained a warrant to purchase 4.5% of Caminus. In January 2000,
the Company exercised the warrant to purchase 277,052 shares of Caminus for $1.8
million. During 2000, the Company sold 111,205 shares and realized a gain of
$2.3 million.
Aegon USA Realty Advisors, Inc. ("Aegon") is the parent company of QSC Holding
Inc. (formerly known as Quantra Corporation), which sold substantially all of
its assets to the Company in March 1998. David L. Blankenship, the president of
Aegon, relinquished his seat on the board of directors of the Company as of May
23, 2000. During the quarter ended March 31, 1999, Aegon purchased a license for
certain of the Company's products for $1.68 million. This amount was paid in
full during the quarter ended March 31, 1999.
16. INTERNATIONAL SALES AND GEOGRAPHIC INFORMATION
During fiscal 1999, the Company adopted SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. There were no sales to any individual
customers during the years in the three-year period ended 2000 that represented
10% or more of net sales. The Company attributes net sales to an individual
country based upon location of the customer.
The Company manages its business primarily on a geographic basis. The Company's
reportable segments are comprised of the Americas and Europe. The Americas
segment includes both North and South America. The European segment includes
European countries as well as the Middle East and Africa. Other operating
segments include Asia Pacific and Japan.
Revenues by geography for the years ended December 31, were (in thousands):
2000 1999 1998
------- ------- -------
Americas $49,974 $53,471 $63,661
Europe 6,850 11,557 9,127
Other segments 3,190 708 805
------- ------- -------
$60,014 $65,736 $73,593
======= ======= =======
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SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Long-lived assets by geography for the years ended December 31, were (in
thousands):
2000 1999
------- -------
Americas $10,533 $10,547
Europe 424 720
Other segments 193 168
------- -------
$11,150 $11,435
======= =======
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2000
Revenue $15,120 $ 15,403 $15,312 $14,179
Gross profit 8,955 9,549 9,876 8,606
Operating income (loss) (1,290) 87 89 (1,086)
Net income 11 609 634 918
Basic earnings per share -- .04 .04 .06
Diluted earnings per share -- .04 .04 .06
1999
Revenue $19,447 $ 16,621 $15,228 $14,440
Gross profit 12,831 9,143 8,165 7,591
Operating income (loss) 1,126 (13,299) (4,948) (4,961)
Net income (loss) 1,481 (11,838) (2,113) (178)
Basic earnings (loss) per share 0.10 (0.76) (0.14) (0.01)
Diluted earnings (loss) per share 0.09 (0.76) (0.14) (0.01)
The fourth quarter of 2000 includes a $2.0 million gain related to the sale of
additional Caminus shares. The second quarter of 1999 includes the $9.3 million
settlement of the lawsuit related to the Company's initial public offering.
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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 on March 30, 2001.
SS&C Technologies, Inc.
By: /s/ WILLIAM C. STONE
------------------------------------
William C. Stone
President, Chief Executive Officer
and
Chairman of the Board of Directors
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, 2001
- --------------------------------------------------- Officer, and Chairman of the
William C. Stone Board of Directors (Principal
Executive Officer)
/s/ ANTHONY R. GUARASCIO Senior Vice President, Chief March 30, 2001
- --------------------------------------------------- Financial Officer (Principal
Anthony R. Guarascio Financial and Accounting Officer)
/s/ DAVID W. CLARK, JR. Director March 30, 2001
- ---------------------------------------------------
David W. Clark, Jr.
/s/ JOSEPH H. FISHER Director March 30, 2001
- ---------------------------------------------------
Joseph H. Fisher
/s/ JONATHAN M. SCHOFIELD Director March 30, 2001
- ---------------------------------------------------
Jonathan M. Schofield
/s/ WILLIAM W. WYMAN Director March 30, 2001
- ---------------------------------------------------
William W. Wyman
/s/ PATRICK J. MCDONNELL Director March 30, 2001
- ---------------------------------------------------
Patrick J. McDonnell
Page 45