SS&C Technologies Holdings, Inc.
2015 Annual Report on 10-K
SS&C: 30 Years of Technology Innovation
Dear SS&C Investor:
Welcome to our sixth shareholder letter since our 2010 IPO. The Advent acquisition was our 2015 highlight, but
there are many others.
We expanded our global presence and now have 73 offices with products and services being used by 10,000 clients.
We increased top line revenues by 37.5% -- from $768 million to $1.056 billion, at the same time delivering quality
and innovation. Our fund administration business, underpinned by our own proprietary technology, is now the
world's second largest. Our business model is resilient and we continue to focus on technology development, new
clients, and quality acquisitions. Our financial statements, which consistently have over 90% recurring revenue,
good margins and high cash flow, are bolstered by a conservative cost structure and a relentless focus on process
automation.
In 2015, we allocated $2.8 billion in capital to acquisitions. Most notably, we acquired Advent Software, Inc. for
$2.7 billion, our largest acquisition to date. Advent brings a talented workforce, over 4,200 loyal customers,
and world-class products including Geneva, Black Diamond, APX, Axys, and Moxy.
In addition to Advent, we acquired Varden Technologies and Primatics Financial. Varden brings SS&C a cloud-
based enterprise reporting solution with an intuitive user interface. Primatics Financial enhances SS&C’s loan
servicing offering with Evolv, a sophisticated loan risk and finance solution. Currently, 55 banks use Primatics’
solutions, and we believe a significant growth opportunity exists.
Most recently, in March 2016, we spent $321 million to acquire Citi’s Alternative Investor Services Business.
This former Citi business unit adds more than 1,400 employees in 13 offices. SS&C now has over one trillion in
assets under administration.
We complement our “methodically opportunistic” acquisition strategy with a relentless focus on research and
development. We developed and released Precision LM, a comprehensive commercial loan origination and
servicing system, including performance and tax optimization modules. Our real time mobility technology allows
our clients to now verify cash movements as well as review other operational details from their phones and tablets.
Additionally, during 2015 we developed a new family wealth platform. R&D is also used for continuous
automation of manual processes, making our services more accurate and efficient.
We have set ambitious goals for 2016. Foremost is to strengthen our global position in financial services software
and fund administration. As we enter our fourth decade of business, we are proud of our achievements and growth –
including our 38.4% compounded annual revenue growth rate since our founding in 1986. We recognize the
contributions of our devoted clients, employees, and shareholders who have been with us through each of these
decades. We look forward to working with all of our stakeholders as we continue to build the business.
Sincerely,
William C. Stone
Chairman and Chief Executive Officer
SS&C Technologies Holdings, Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(cid:95) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
Commission file number: 001-34675
SS&C TECHNOLOGIES HOLDINGS, INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
71-0987913
(I.R.S. Employer
Identification No.)
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:
Title of Each Class
Common Stock, $0.01 par value per share
Name of Each Exchange on Which Registered
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:95) No (cid:134)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:134) No (cid:95)
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 (cid:95) No (cid:134)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files. Yes (cid:95) No (cid:134)
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. (cid:134)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
(cid:95)
(cid:134)
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
(cid:134)
(cid:134)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:134) No (cid:95)
As of June 30, 2015, the aggregate market value of the registrant’s common stock held by non-affiliates was $5,089,406,938 based on the closing sale
price per share of the registrant’s common stock on The NASDAQ Global Select Market on such date.
There were 98,754,373 shares of the registrant’s common stock outstanding as of February 24, 2016.
Part III of this annual report on Form 10-K incorporates by reference certain information from the registrant’s definitive proxy statement for the 2016
annual meeting of stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than
120 days after the registrant’s fiscal year end of December 31, 2015. With the exception of the sections of the definitive proxy statement specifically
incorporated herein by reference, the definitive proxy statement is not deemed to be filed as part of this annual report on Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE:
SS&C TECHNOLOGIES HOLDINGS, INC.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2015
TABLE OF CONTENTS
PART I
Item 1. Business ...........................................................................................................................................................................
Item 1A. Risk Factors .....................................................................................................................................................................
Item 1B. Unresolved Staff Comments ............................................................................................................................................
Item 2. Properties .........................................................................................................................................................................
Item 3. Legal Proceedings ...........................................................................................................................................................
Item 4. Mine Safety Disclosures ..................................................................................................................................................
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ......
Item 6. Selected Financial Data ...................................................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ..........................................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ..........................................................................................
Item 8. Financial Statements and Supplementary Data ...............................................................................................................
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..........................................
Item 9A. Controls and Procedures ..................................................................................................................................................
Item 9B. Other Information ............................................................................................................................................................
PART III
Item 10. Directors, Executive Officers and Corporate Governance ..............................................................................................
Item 11. Executive Compensation .................................................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ........................
Item 13. Certain Relationships and Related Transactions, and Director Independence ................................................................
Item 14. Principal Accountant Fees and Services ..........................................................................................................................
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PART IV
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Item 15. Exhibits and Financial Statement Schedules ..................................................................................................................
Signatures .........................................................................................................................................................................................
48
Consolidated Financial Statements ...................................................................................................................................................
F-2
Exhibit Index..................................................................................................................................................................................... F-29
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FORWARD-LOOKING INFORMATION
This annual report contains forward-looking statements within the meaning of the U.S. federal securities laws. All statements
contained herein that are not statements of historical fact are forward-looking statements, including, without limitation, statements
regarding future financial performance, funding requirements and liquidity; management’s plans and strategies for future operations,
including statements relating to anticipated operating performance, cost reductions, competitive strengths or market position,
acquisitions and related synergies; growth, declines and other trends in markets we sell into; the anticipated impact of adopting new
accounting pronouncements; the anticipated outcome of outstanding claims, legal proceedings, tax audits and other contingent
liabilities; foreign currency exchange rates and fluctuations in those rates; general economic conditions; assumptions underlying any
of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the
future. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “estimates”, “projects”, “forecasts”,
“may” and “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking
statements are accompanied by such words. Forward-looking statements are not guarantees of future performance and actual results
may differ materially from those envisaged by such forward-looking statements. The factors discussed under “Item 1A. Risk Factors”,
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. You should not place undue reliance on any such forward-looking statements.
Forward-looking statements speak only as of the date of the report, document, press release, webcast, call or other communication in
which they are made. We expressly disclaim any obligation to update our forward-looking statements, whether as a result of new
information, future events or circumstances, or otherwise, except as required by law.
The following are some of our registered trademarks and/or service marks in the United States and/or in other countries:
ADVENT, ADVENT CORPORATE ACTIONS, ADVENT CUSTODIAL DATA, ADVENT ONDEMAND, ADVENT
PORTFOLIO EXCHANGE, ADVENT REVENUE CENTER, ADVISORWARE, AXYS, BENEFIX, BLACK DIAMOND, DBC,
DEAL MACROS, DEAL WORKSHEETS, FIXLINK, FUNDRUNNER, GENEVA, GLOBEOP, GLOBEOP HEDGE FUND
INDEX, GOPRICING, GOREC, GORISK, MARGINMAN, MAXIMIS, MOXY, ORDER, PACER, PAGES, PIVOT, PORTIA,
PORTPRO, PRO-JECT, RECON, SKYLINE, SYNCOVA, SYLVAN, TAMALE, TAMALE RMS, TRADETHRU, TRADEWARE,
and ZOOLOGIC. SS&C Technologies, Inc. and/or its subsidiaries in the United States and/or in other countries have trademark or
service mark rights to certain other names and marks referred to in this annual report.
SS&C Technologies Holdings, Inc., or “SS&C Holdings,” is our top-level holding company. SS&C Technologies, Inc., or
“SS&C,” is our primary operating company and a wholly-owned subsidiary of SS&C Technologies Holdings, Inc. “We,” “us,” “our”
and the “Company” mean SS&C Technologies Holdings, Inc. and its consolidated subsidiaries, including SS&C.
Unless context otherwise requires, references to our “common stock” includes both shares of our common stock and shares of
our Class A non-voting common stock.
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ITEM 1. BUSINESS
Overview
PART I
We are a leading provider of mission-critical, sophisticated software products and software-enabled services that allow financial
services providers to automate complex business processes and effectively manage their information processing requirements. Our
portfolio of software products and rapidly deployable software-enabled services allows our clients to automate and integrate front-
office functions such as trading and modeling, middle-office functions such as portfolio management and reporting, and back-office
functions such as accounting, performance measurement, reconciliation, reporting, processing and clearing. Our solutions enable our
clients to focus on core operations, better monitor and manage investment performance and risk, improve operating efficiency and
reduce operating costs. We provide our solutions globally to more than 10,000 clients, principally within the institutional asset and
wealth management, alternative investment management, financial advisory and financial institutions vertical markets. In addition, our
clients include commercial lenders, real estate investment trusts (REITs), corporate treasury groups, insurance and pension funds,
municipal finance groups and real estate property managers.
We provide the global financial services industry with a broad range of software-enabled services, which consist of software-
enabled outsourcing services and subscription-based on-demand software that are managed and hosted at our facilities, and specialized
software products, which are deployed at our clients’ facilities. Our software-enabled services, which combine the strengths of our
proprietary software with our domain expertise, enable our clients to contract with us to provide many of their mission-critical and
complex business processes. For example, we utilize our software to offer comprehensive fund administration services for alternative
investment managers, including fund manager services, transfer agency services, funds-of-funds services, tax processing and
accounting. We offer clients the flexibility to choose from multiple software delivery options, including on-premise applications and
hosted, multi-tenant or dedicated applications. Additionally, we provide certain clients with targeted, blended solutions based on a
combination of our various software and software-enabled services. We believe that our software-enabled services provide superior
client support and an attractive alternative to clients that do not wish to install, manage and maintain complicated financial software.
Our business model is characterized by substantial contractually recurring revenues, high operating margins and significant cash
flow. We generate revenues primarily through our high-value software-enabled services, which are typically sold on a long-term
subscription basis and integrated into our clients’ business processes. Our software-enabled services are generally provided under non-
cancelable contracts with initial terms of one to five years that require monthly or quarterly payments and are subject to automatic
annual renewal at the end of the initial term unless terminated by either party. We also generate revenues by licensing our software to
clients through either perpetual or term licenses and by selling maintenance services. Maintenance services are generally provided
under annually renewable contracts. As a consequence, a significant portion of our revenues consists of subscription payments and
maintenance fees and is contractually recurring in nature. Our pricing typically scales as a function of our clients’ assets under
management, the complexity of asset classes managed, the volume of transactions, and the level of service the client requires.
Our contractually recurring revenue model helps us minimize the fluctuations in revenues and cash flows typically associated
with up-front, perpetual software license revenues and enhances our ability to manage costs. Our contractually recurring revenues,
which include as our software-enabled services and maintenance and term licenses revenues, represented 92% of total revenues in the
year ended December 31, 2015. We have experienced average revenue retention rates in each of the last five years of greater than 90%
on our software-enabled services and maintenance and term licenses contracts for our core enterprise products. We believe that the
high value-added nature of our products and services has enabled us to maintain our high revenue retention rates and significant
operating margins.
We generated revenues of $1,000.3 million for the year ended December 31, 2015 as compared to revenues of $767.9 million
for the year ended December 31, 2014. In 2015, we generated 74% of our revenues from clients in North America and 26% from
clients outside North America. Our revenues are highly diversified, with our largest client in 2015 accounting for less than 5% of our
revenues. Additional financial information, including geographic information, is available in our consolidated financial statements and
Note 13 to our consolidated financial statements.
Our Industry
We serve a number of vertical markets within the financial services industry, including alternative investment funds, investment
management firms, insurance companies, registered investment advisors (RIAs), wealth managers, banks and brokerage firms. We
believe that financial services providers will increasingly turn to information technology, or IT, solutions, provided by an independent
vendor, as a result of economic challenges and heightened regulatory requirements. Financial service firms are in a search for more
risk-averse business strategies and simplified regulatory compliance. As a result, we believe the financial services industry will
continue to increase its investments in IT solutions in 2016.
4
Market Trends
The demand for our products and services comes from a number of distinct sources: new hedge fund and private equity fund
formation, new business lines and combinations of business lines at existing clients, replacement of legacy and competitor systems
and expansion of our existing client relationships. Underlying these demand drivers are several industry trends, including:
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(cid:404)
(cid:404)
(cid:404)
Asset Classes and Securities Products Growing in Volume and Complexity. Investment professionals must increasingly
track and invest in numerous asset classes that are far more complex than traditional equity and debt instruments. These
assets require more sophisticated systems to automate functions such as trading and modeling, portfolio management,
accounting, performance measurement, reconciliation, reporting, processing and clearing. Manual tracking of orders and
other transactions is not effective for these assets. In addition, as the business knowledge requirements increase, financial
services firms see increasing value in outsourcing the management of these assets to firms such as SS&C that offer
software-enabled services.
Regulatory changes. Our clients must comply with rules, regulations, directives, and standards from governmental and
self-regulating organizations. Even years after the enactment of Dodd-Frank, Form PF, AIFMD, FATCA, EMIR and other
local reforms, many of the rules are still being defined. We expect regulatory changes to increase the complexity of
compliance and the demand for our products and services and motivate clients to develop systems infrastructure and
research management processes to comply with regulatory requirements.
Technological paradigm shift. We have recently seen an increased demand for software delivery options, including cloud-
based services, social collaboration and information access through mobile devices. Cloud solutions allow firms to use a
broader range of capabilities without incurring implementation or maintenance costs, with software that can be upgraded
with limited disruption to a company’s current operations. Accessibility and demands for collaboration is also a key driver
of cloud adoption. Mobility is increasingly relevant for the investment management industry and therefore we believe
clients have increased expectations of anytime, anywhere access to portfolio and client data, as well as the ability to
communicate and collaborate.
Increased demands for transparency, efficiency, and risk management. Firms continue to focus on operational risk,
resulting from discoveries of fraud and mismanagement during the 2008-2012 U.S. financial crisis and concerns regarding
transparency and counterparty exposure. This continued focus has led investment management firms to strive to provide
investment data accurately, institutionalize investment operations, and automate their investment process. On the wealth
management and advisory sides of our business, we have seen further evolution of the relationship between the end client
and a firm, with investors demanding transparency and a customized client experience. We expect that wealth managers
will need to become familiar with their clients’ preferences for account access and communication and cater to them.
Finally, both institutional and individual investors, faced with increasingly competitive low-fee and automated options,
are pushing investment managers for greater efficiencies and lower fees.
Competitive Strengths
The following are our core strengths that we believe enable us to differentiate ourselves in the markets we serve:
Enhanced capability through software ownership.
We use our proprietary software products and infrastructure to provide our software-enabled services, strengthening our overall
operating margins and providing a competitive advantage. Because we primarily use our own proprietary software in the execution of
our software-enabled services and generally own and control our products’ source code, we can quickly identify and deploy product
improvements and respond to client feedback, enhancing the competitiveness of our software and software-enabled service offerings.
This continuous feedback process provides us with a significant advantage over many of our competitors, specifically those software
competitors that do not provide a comparable model and therefore do not have the same level of hands-on experience with their
products.
5
Global industry leader with strong market position focused on software and software-enabled services for the financial
industry.
We are a global business providing a broad portfolio of over 90 software products and software-enabled services and have 80
offices worldwide. As of December 31, 2015, we had 5,335 development, service and support professionals with significant expertise
across the industries that we serve and a deep working knowledge of our clients’ businesses. We provide highly flexible, scalable and
cost-effective solutions that enable our clients to track complex securities, better employ sophisticated investment strategies, scale
efficiently and meet evolving regulatory requirements. We believe our product and service offerings position us as a leader within the
specific verticals of the financial services software and services market in which we compete. Our products and services allow our
clients to automate and integrate their front-office, middle-office and back-office functions, thus enabling straight-through processing
that increases productivity and reduces costs.
Trusted provider to our highly diversified and growing client base.
By providing mission-critical, reliable software products and services for 30 years, we have become a trusted provider to the
financial services industry. We have developed a large and growing installed base within multiple segments of the financial services
industry. Our clients include some of the largest and most well-recognized firms in the financial services industry. We believe that our
high-quality products and superior services have led to long-term client relationships, some of which date from our earliest days of
operations. Our strong client relationships, coupled with the fact that many of our current clients use our products for a relatively small
portion of their total funds and investment vehicles under management, provide us with a significant opportunity to sell additional
solutions to our existing clients and drive future revenue growth at lower cost.
Independent fund administration services.
The third-party service providers that participate in the alternative investment market include fund managers, auditors, fund
administrators, attorneys, custodians and prime brokers. Each provider performs a valuable function with the intention of providing
transparency of the fund’s assets and the valuation of those assets. Conflicts of interest may arise when the above parties attempt to
provide more than one of these services. The industry is increasingly recognizing these conflicts and, as a result, seeking independent
fund administrators such as SS&C.
Experienced management team with strong integrating and operating track record.
We were founded in 1986 by William C. Stone, who has served as our Chairman and Chief Executive Officer since our
inception. Our senior management team has a track record of operational excellence and an average of more than 20 years of
experience in the software and financial services industries, and a proven ability to acquire and integrate complementary businesses, as
demonstrated by the 43 businesses we have acquired since 1995. By leveraging our domain expertise and knowledge, we have
developed, and continue to improve, our mission-critical software products and services to enable our clients to overcome the
complexities inherent in their businesses. Our management team is highly committed to our long-term success, and our Chief
Executive Officer is highly invested in our long-term potential, as evidenced by his beneficial ownership of 16.8% of our equity as of
February 24, 2015.
Business Strategies
Our strategy is to continue to deliver compelling solutions and value propositions to our customers in the software and software-
enabled services market. The following are key elements to our strategy for achieving this objective:
Build upon and extend our leadership position in software and software-enabled services in the financial industry.
Since our founding in 1986, we have focused on building substantial financial services domain expertise through close working
relationships with our clients. We have developed a deep knowledge base that enables us to respond to our clients’ most complex
financial, accounting, actuarial, tax and regulatory needs. We intend to maintain and enhance our technological leadership by using
our domain expertise to build valuable new software-enabled services and solutions, continuing to invest in internal development and
opportunistically acquiring products and services that address the highly specialized needs of the financial services industry.
Our internal product development team works closely with marketing and client service personnel to ensure that product
evolution reflects developments in the marketplace and trends in client requirements. In addition, we intend to continue to develop our
products in a cost-effective manner by leveraging common components across product families. We believe that we enjoy a
competitive advantage because we can address the investment and financial management needs of high-end clients by providing
industry-tested products and services, including cloud-based services and related mobility platforms that meet global market demands
6
and enable our clients to automate and integrate their front-, middle- and back-office functions for improved productivity, reduced
manual intervention and bottom-line savings. SS&C’s products for niche market players in the financial services industry to the
largest institutions in the world. Furthermore, our client base of 10,000 clients represents a fraction of the total number of financial
services providers globally. We believe there is opportunity to grow our client base over time as our products become more widely
adopted. We believe we also have an opportunity to capitalize on the increasing adoption of outsourcing mission-critical operations by
financial services providers as they continue to replace inadequate legacy solutions and custom in-house solutions that are inflexible
and costly to maintain Our software-enabled services revenues increased from $552.6 million for the year ended December 31, 2013
to $670.2 million for the year ended December 31, 2015, representing a compound annual growth rate of 10.1%.
Capitalize on longer-term secular growth trends.
With our global footprint and best-in-class product offerings, we aim to capture a significant share of the IT spend of alternative
asset, institutional asset and wealth managers through leveraging the deeply embedded service offering we provide and outdistancing
the competition. We expect regulatory changes to increase the complexity of compliance and the demand for our products and
services, as well as motivate clients to develop infrastructure and research management processes to mitigate regulatory exposure. We
plan to benefit from the growing software spend in the increasingly complex and more highly regulated financial services landscape.
Continue to capitalize on acquisitions of complementary businesses and technologies.
We intend to continue to employ a highly disciplined and focused acquisition strategy to broaden and enhance our product and
service offerings, expand our intellectual property portfolio, add new clients and supplement our internal development efforts. We
believe our acquisitions have been an extension of our research and development effort that has enabled us to purchase proven
products and remove the uncertainties associated with software development projects. We will seek to opportunistically acquire, at
reasonable valuations, businesses, products and technologies in our existing or complementary vertical markets that will enable us to
better satisfy our clients’ rigorous and evolving needs. We have a proven ability to integrate complementary businesses as
demonstrated by the 43 businesses we have acquired since 1995. Our experienced senior management team leads a rigorous
evaluation of our targets to ensure that they satisfy our product or service needs and will successfully integrate with our business while
meeting our targeted financial goals. As a result, our acquisitions have contributed marketable products or services that have added to
our revenues. Through the broad reach of our direct sales force and our large installed client base, we believe we can market these
acquired products and services to a large number of prospective clients. Additionally, we have been able to improve the operational
performance and profitability of our acquired businesses, creating significant value for our stockholders.
Strengthen our international presence.
We believe that there is a significant market opportunity to provide software and services to financial services providers outside
North America. In the year ended December 31, 2015, we generated 26% of our revenues from clients outside North America. We are
building our international operations in order to increase our sales outside North America. We plan to continue to expand our
international market presence by leveraging our existing software products and software-enabled services. For example, we believe
that the rapidly growing alternative investment management market in Europe presents a compelling growth opportunity.
Increase profitability through margin expansion.
We have a proven track record of increasing operating margins both organically and inorganically. We expect to continue to
improve margins through cost reductions, operating efficiencies, and realization of cost synergies. We also expect to drive increased
margins through delivering innovative end-to-end solutions that provide significant value to customers and warrant premium pricing.
We have significant scale with best-in-class solutions and software-enabled services across the delivery spectrum, which we believe,
combined with a diversified service offering and client base, drives stable revenues and increased operating leverage. Our operating
flexibility allows us to scale our costs based on client demands. Additionally, our low capital expenditure and working capital
requirements further drive strong cash flow conversions.
Our Acquisitions
As mentioned above, we intend to continue to employ a highly disciplined and focused acquisition strategy. Our past
acquisitions have enabled us to expand our product and service offerings into new markets or client bases within the financial services
industry. The addition of new products and services has also enabled us to market other products and services to acquired client bases.
We believe our acquisitions have been an extension of our research and development effort and have enabled us add to our product
and service offerings without incurring the uncertainties sometimes associated with software development projects.
7
Since 1995, we have acquired 43 businesses within our industry. These acquisitions have contributed marketable products and
services, which have added to our revenues and earnings. We have generally been able to improve the operating performance and
profitability of our acquired businesses. We seek to reduce the costs of the acquired businesses by consolidating sales and marketing
efforts and by eliminating redundant administrative tasks and research and development expenses. In many cases, we have also been
able to increase revenues generated by acquired products and services by leveraging our existing products and services, larger sales
capabilities and client base.
We generally seek to acquire companies that satisfy our financial metrics, including expected return on investment. Through our
acquisitions, we seek companies that:
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provide complementary products or services in the financial services industry;
possess proven technology and an established client base that will provide a source of ongoing revenue and to whom we
may be able to sell existing products and services;
expand our intellectual property portfolio to complement our business;
address a highly specialized problem or a market niche in the financial services industry;
expand our global reach into strategic geographic markets; and
have solutions that lend themselves to being delivered as software-enabled services.
We believe, based on our experience, that there are numerous solution providers addressing highly particularized financial
services needs or providing specialized services that would meet our disciplined acquisition criteria.
Acquisitions are discussed further in Liquidity and Capital Resources and in Note 11 to our consolidated financial statements,
including our agreement to acquire Citigroup’s Alternative Investor Services business. The following table provides a list of the most
substantial acquisitions we have made since 1995 (in thousands):
Acquisition Date
February 2005 ......
Acquired Business
EisnerFast
April 2005 ............
Financial Models Company
Contract Purchase
Price
$
$
25,300
159,000
October 2005 ........
Open Information Systems
$
24,000
Acquired Capabilities, Products and Services
Expanded fund administration services to the hedge fund and
private equity markets
Expanded front-, middle- and back-office products and services
to the investment management industry including Pacer, Pages,
Recon and Sylvan products
Entered money market, custody and security lending market with
Global Debt Manager, Information Manager and Money Market
Manager products
November 2009 .... TheNextRound
December 2009 .... Tradeware
December 2010 ....
TimeShareWare
June 2012 .............
May 2012 .............
Thomson Reuters’ PORTIA
Business
GlobeOp Financial Services
S.A.
November 2014 .... DST Global Solutions
July 2015 .............. Advent Software, Inc.
Varden Technologies
September 2015 ...
November 2015 ....
Primatics Financial
Products and Services
$
$
$
$
$
$
$
$
$
21,000 Expanded private equity client base with TNR Solution product
22,500 Expanded electronic trading offering in broker/dealer market
30,500
Added shared ownership property management platform to real
estate offering
Added portfolio management software and outsourcing services
for institutional managers
Expanded fund administration services in hedge fund and other
asset management sectors
170,000
834,400
95,000 Added investment management software and services
25,000
2,600,000 Expanded global investment management software and services
Added cloud-based client and advisor communication solutions
for investment firms
Added cloud-based integrated risk, compliance and finance
solution for the banking industry
116,000
Our products and services allow professionals in the financial services industry to automate complex business processes within
financial services providers and are instrumental in helping our clients manage significant information processing requirements. Our
solutions enable our clients to focus on core operations, better monitor and manage investment performance and risk, improve
operating efficiency and reduce operating costs. Our portfolio of over 90 products and software-enabled services allows our clients to
automate and integrate front-office functions such as trading and modeling, middle-office functions such as portfolio management and
reporting, and back-office functions such as accounting, performance measurement, reconciliation, reporting, processing and clearing.
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Portfolio management/accounting
Our products and services for portfolio management span most of our vertical markets and offer our clients a wide range of
investment management solutions. Some of our portfolio management products include:
Advent Portfolio Exchange. APX is a comprehensive portfolio management solution for asset managers and wealth managers
worldwide which integrates the front-office functions of prospecting, marketing, customer relationship management and internal
business management with the back office operations of portfolio accounting, performance measurement and reporting. It allows firms
to manage both high-net-worth and institutional clients through a comprehensive range of capabilities, including customized reporting,
automated report packaging, and performance analytics. APX can be deployed locally as well as the cloud.
AdvisorWare. AdvisorWare software supports hedge funds, funds-of-funds and family offices with sophisticated global
investment, trading and management concerns, and/or complex financial, tax, partnership and allocation reporting requirements. It
delivers comprehensive multicurrency investment management, financial reporting, performance fee calculations, net asset value
calculations, contact management and partnership accounting in a straight-through processing environment.
Axys. Axys is a turnkey portfolio management and reporting system for small to mid-size investment management
organizations. Axys provides investment professionals with broad portfolio accounting functionality on a variety of investment
instruments, including equities, fixed income, mutual funds and cash. By using Axys, clients have a timely decision support tool with
immediate access to portfolio holdings, asset allocation, realized and unrealized gains and losses, actual and projected income and
other data including performance measurement and flexible reporting.
CAMRA. CAMRA (Complete Asset Management, Reporting and Accounting) software supports the integrated management of
asset portfolios by investment professionals operating across a wide range of institutional investment entities. CAMRA is a 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.
Geneva. Geneva is a global portfolio management platform designed to meet the real-time needs of global asset managers,
hedge funds, prime brokers, fund administrators, private equity firms and family offices worldwide. Geneva integrates all phases of
the investment management process – portfolio management, reconciliation and light trade capture and risk capabilities. Its “main
memory” database offers more accurate and flexible reporting, and eliminates batch processing and time-consuming error corrections.
Geneva enables firms to grow into new markets, deliver greater operational efficiencies, enhance investor service, process high trade
volumes across multiple securities, improve compliance and security, and lower operating costs and risks.
Debt & Derivatives. Debt & Derivatives is a comprehensive financial application software package designed to process and
analyze all activities relating to derivative and debt portfolios, including pricing, valuation and risk analysis, derivative processing,
accounting, management reporting and regulatory reporting. Debt & Derivatives delivers real-time transaction processing to treasury
and investment professionals, including traders, operations staff, accountants and auditors.
Global Wealth Platform. A web-based service, Global Wealth Platform combines our core asset management product functions
with an innovative, easy-to-use interface. Global Wealth Platform provides an integrated suite with key components — modeling,
trading, portfolio accounting, client communications and other mission critical workflows — as an on-demand, software-enabled
service.
HiPortfolio. HiPortfolio® is an investment accounting and asset servicing solution. It provides full life cycle processing
including comprehensive investment and fund accounting capabilities, flexible transaction processing from order capture to post-trade
activity, and proven support for middle- and back-office operations.
MAXIMIS. MAXIMIS is a real-time intranet-enabled portfolio management solution for insurance companies, pension funds
and institutional asset managers. Its key product functions include portfolio analysis, investment management, trade processing, cash
processing, multi-currency accounting, regulatory reporting, operations and analysis and management reporting.
Pacer. Pacer is a portfolio management and accounting system designed to manage diversified global portfolios and meet the
unique management and accounting needs of all business streams, from institutional and pension management, to separately managed
accounts, private client portfolios, mutual funds and unit trusts.
Pages. Pages is a client communication system that generates unique individual client statements and slide presentations for
print, electronic or face-to-face meetings. Pages helps enhance customer services by producing client statements that automatically
assemble data from portfolio management, customer relationship management, performance measurement and other investment
systems.
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PORTIA. PORTIA is a comprehensive middle-to-back-office software solution designed to streamline the operations of global
investment managers. PORTIA’s functionality supports a broad range of global asset types, fixed income analytics & analysis, multi-
currency transaction processing, corporate actions and presentation-quality reporting implemented with flexible deployment options.
Built on an open architecture, PORTIA enables real-time integration with other systems, applications, data providers and
counterparties to run operations more efficiently and effectively.
Recon. Recon is a transaction, position and cash reconciliation system that streamlines reconciliation by identifying exceptions
and providing effective workflow tools to resolve issues faster, thereby reducing operational risk. Recon automatically reconciles
transactions, holdings and cash from multiple sources.
SS&C Anova. SS&C Anova acts as a central data hub, consolidating and aggregating critical holding, position and transaction
data in near real time. Its robust performance and attribution engine provides a detailed breakdown of the sources of risk and return
from portfolio holdings, enabling clients to understand and react to their portfolio performance.
Sylvan. Sylvan is a performance measurement, attribution and composite management platform that is designed to streamline
the calculation and reporting of performance measurement requirements.
TNR Solution. TNR Solution is a software product for private equity, hedge funds, funds of hedge funds and family offices.
Built around Microsoft’s .NET platform, the product gives end users the flexibility to manage all aspects of their operations from
contact management, fund raising, investor relations, fund, portfolio and deal management, general ledger and reporting.
Total Return. Total Return is a portfolio management and partnership accounting system directed toward the hedge fund and
family office markets. It is a multi-currency system, designed to provide financial and tax accounting and reporting for businesses
with high transaction volumes.
Trading/treasury operations
Our comprehensive real-time trading systems offer a wide range of trade order management solutions that support both buy-side
and sell-side trading. Our full-service trade processing systems deliver comprehensive processing for global treasury and derivative
operations. Solutions are available to clients either through a license or as a software-enabled service. Some of our trading and
treasury operations products include:
Antares. Antares is a comprehensive, real-time, event-driven trading and profit and loss reporting system designed to integrate
trade modeling with trade order management. Antares enables clients to trade and report fixed-income, equities, foreign exchange,
futures, options, repos and many other instruments across different asset classes. Antares also offers an add-on option of integrating
Heatmaps’ data visualization technology to browse and navigate holdings information.
Global Debt Manager (GDM). Global Debt Manager (GDM) is a suite of industry-leading solutions, seamlessly integrated
under a common core with single-sign on. GDM enables Global Banks and Securities Firms to streamline Global Registrar and
Transfer and Paying Agency Operations, providing a full range of Corporate Trust Support, encompassing Money Market Issuance,
Long-Term Debt and Common Depository, with multi-currency and local market support world-wide. All products are built on the
same core architecture for easy integration through a single point of entry and all are 100% web based.
MarginMan. MarginMan delivers collateralized trading software to the foreign exchange marketplace. MarginMan supports
collateralized foreign exchange trading, precious metals trading and over-the-counter foreign exchange options trading.
MarketLook Information System (MLIS). MLIS allows traders anywhere in the world access to market color and size directly
from traders on the trading floor of the New York Stock Exchange.
Moxy. Moxy automates and streamlines the portfolio construction, trading and order management process for the investment
management community. Moxy also provides internet-ready electronic order routing based on the industry standard FIX messaging
protocol so that users can route trades electronically to any FIX-compliant broker, crossing networks, and various dark pools of
liquidity that supports the internet or other TCP/IP connections. Trades are executed, processed, settled and accounted for without
manual intervention.
TradeThru. TradeThru is a web-based treasury and derivatives operations service that supports multiple asset classes and
provides multi-bank, multi-entity and multi-currency integration of front-, middle- and back-office trade functions for financial
institutions. TradeThru is available either through a license or as a software-enabled service. The system delivers automated front- to
back-office functions throughout the lifecycle of a trade, from deal capture to settlement, risk management, accounting and reporting.
TradeThru also provides data to other external systems, such as middle-office analytic and risk management systems and general
ledgers. TradeThru provides one common instrument database, counterparty database, audit trail and end-of-day runs.
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Client Reporting
Pages. Pages is a powerful client communications solution for investment managers, insurance companies, and banks that
generate distinctive client statements and slide presentations for print, electronic or face-to-face meetings. Features include desktop
publishing-quality statements, personalized and multilingual capabilities, automated processes and a simplified workflow, and
complex business logic, including "if-then-else" capabilities to handle one-off situations or other special cases.
eReportal. eReportal is a comprehensive, end-to-end solution for designing, producing and distributing both online and printed
client communications content for the financial services industry. eReportal is a strategic platform that unifies and leverages the data,
workflow, and presentation content across the firm. Key reporting areas that that eReportal focuses on includes client reports,
pitchbooks, presentations, and statements, regulatory, compliance and audit reporting, and internal/investment reporting.
Financial modeling
We offer several powerful analytical software and financial modeling applications for the insurance industry. We also provide
analytical software and services to the municipal finance groups market. Some of our financial modeling products include:
DBC Product Suite. We provide analytical software and services to municipal finance groups. Our suite of DBC products
addresses a broad spectrum of municipal finance concerns, including general bond structures, revenue bonds, housing bonds, student
loans and insured revenue bonds and securitizations.
Global Markets Risk. Global Markets Risk provides a comprehensive view of risk across all asset classes for banks, hedge
funds, asset managers, insurance companies and pension funds. Risk Analytics is designed for risk managers who need better tracking,
managing and reporting of value-at-risk and ex-ante risk measures across all asset classes.
Loan management/accounting
Our loan management/accounting products include:
Precision LM. Precision LM is a single database application that provides comprehensive commercial loan management from
initial request to final disposition. It is a fully integrated system that supports both loan origination and servicing, and offers a single
point of entry that increases efficiency by eliminating redundant data, reducing errors and lowering maintenance and operating costs.
Precision LM offers a centralized loan portfolio that maintains a detailed loan history and audit trail from inception and generate
comprehensive loan portfolio reporting from a single database, giving the client ability to proactively measure and mitigate risk
through the integrated portfolio analytics. Precision LM is fully integrated with CMBS, including complete CMBS pooling, servicing,
advances, recoveries and CMSA reporting.
Evolv. Evolv automates processes, enables compliance with changing regulations, and accurate data analysis that is aimed to
improve real-time decision-making. Evolv eliminates the manual processes and spreadsheets by automating all of the loan accounting
functions (data, calculations, processes, workflows and reporting) that are not being addressed by core banking systems.
Property management
Some of our property management products include:
SKYLINE. SKYLINE is a comprehensive property management system that integrates all aspects of real estate property
management, from prospect management to lease administration, work order management, accounting and reporting. By providing a
single-source view of all real estate holdings, SKYLINE functions as an integrated lease administration system, a historical
property/portfolio knowledge base and a robust accounting and financial reporting system, enabling users to track each property
managed, including data on specific units and tenants.
TimeShareWare. TimeShareWare Enterprise incorporates a Service Oriented Architecture (SOA) and provides the tools,
structure, and performance needed to accommodate management of complex and demanding resort operations, including sales and
marketing, management, contract processing, loan servicing and property management.
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Money market processing
Our money market processing products include:
Global Debt Manager. Global Debt Manager is a robust browser-based application for corporate and municipal bond
accounting. Fully integrated with Money Market Manager (M3), Global Debt Manager offers processing for conventional and
structured debt within a secure and flexible platform.
Software-enabled services
Some of our software-enabled services include:
Black Diamond. Black Diamond offers independent advisors and wealth managers a cloud-based portfolio management
platform with aggregation, customizable reporting and rebalancing, and daily reconciliation features. As a cloud-based product
offering, advisors can access Black Diamond’s customizable portfolio management and reporting online from anywhere, anytime
without the need to maintain costly technology infrastructures. Black Diamond also provides outsourced daily reconciliation and data
management services so firms can focus their efforts on servicing clients and growing their business rather than managing complex
back office functions.
Evare. Evare is a leader in financial data acquisition, transformation and delivery services. Global managed services connect our
clients and their counterparties using each firm’s preferred method of connectivity, custom data formats, and industry standards. All
parties utilize their existing systems and protocols without having to upgrade or install software.
e-Investor. SS&C’s e-Investor provides an end-to-end investor transaction processing platform designed to automate the
delivery, completion, submission, and tracking of all investor transactions. When coupled with SS&C’s e-Fulfillment, the solution can
deliver targeted marketing material and subscription documents through a secure web interface to potential investors, with detailed
activity tracking. Once delivered, the prospect (or financial advisor) can complete the subscription document online, leveraging e-
Investor’s extensive and flexible data validation and dependency rules.
GoTrade+. GoTrade+ automates trade capture as trades occur over a real-time web-based portal that displays life cycle status,
documents, valuations, exposures, collateral and cash positions. It enables clients to trade with confidence in the knowledge that the
most complex trades are followed through by a highly experienced and expert team.
GoRisk. A cross-asset and cross strategy application, GoRisk allows portfolio and risk managers to monitor risk analytics across
their trading strategies. GoRisk provides key risk analytics across funds-of-funds and managed account platforms.
SS&C Advent OnDemand. SS&C Advent OnDemand is the SaaS delivery of SS&C Advent’s suite of asset management
solutions, which are hosted either by Advent or a third party and are offered with or without data management services. Data
management services include full account aggregation, daily portfolio reconciliation, corporate actions processing and reference data
management.
SS&C Direct. We provide comprehensive software-enabled services through our SS&C Direct operating unit for portfolio
accounting, reporting and analysis functions. Since 1997, SS&C Direct has offered ASP, business process outsourcing (BPO) and
blended outsourcing services to institutional asset managers, insurance companies, hedge funds and financial institutions. The SS&C
Direct service includes full BPO investment accounting and operations services, the hosting of a company’s application software,
automated workflow integration and quality control mechanisms, and extensive interface and connectivity services to custodian banks,
data service providers, depositories, and other external entities.
SS&C GlobeOp. We provide comprehensive on- and offshore fund administration services to hedge fund and other alternative
investment managers using our proprietary software products. SS&C GlobeOp offers fund manager services, transfer agency services,
funds-of-funds services, tax processing, compliance services and accounting processing. SS&C GlobeOp supports all fund types and
investment strategies. Market segments served include hedge funds, funds-of-funds and private equity firms.
SSCNet. SSCNet is a global trade network linking investment managers, broker-dealers, clearing agencies, custodians and
interested parties. SSCNet’s real-time trade matching utility and delivery instruction database facilitate integration of front-, middle-
and back-office functions, reducing operational risk and costs.
SVC. SVC is a single source for securities data that consolidates data from leading global sources to provide clients with the
convenience of one customized data feed. SVC provides clients with seamless, timely and accurate data for pricing, corporate actions,
dividends, interest payments, foreign exchange rates and security master for global financial instruments.
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FIXLink. FIXLink is a FIX network for IOIs, trades, orders, and allocations, providing a reliable broker-neutral and platform-
neutral FIX connectivity service to broker-dealers and institutions.
Professional services
We offer a range of professional services to assist clients. Professional services consist of consulting and implementation
services, including the initial installation of systems, conversion of historical data and ongoing training and support. Our in-house
consulting teams work closely with the client to ensure the smooth transition and operation of our systems. Our consulting teams have
a broad range of experience in the financial services industry and include certified public accountants, chartered financial analysts,
mathematicians and IT professionals from the asset management, real estate, investment, insurance, hedge fund, municipal finance
and banking industries. We believe our commitment to professional services facilitates the adoption of our software products across
our target markets. For the year ended December 31, 2015, revenues from professional services represented 5% of total revenues.
Product support
We believe a close and active service and support relationship is important to enhancing client satisfaction and furnishes an
important source of information regarding evolving client issues. We provide our larger clients with a dedicated client support team
whose primary responsibility is to answer questions and provide solutions to address ongoing needs. Direct telephone support is
provided during extended business hours, and additional hours are available during peak periods. Approximately every two weeks, we
distribute our software and services eBriefings, which are industry-specific newsletters available for key geographic regions around
the world. We supplement our service and support activities with comprehensive training. Training options include regularly hosted
classroom and online instruction, Zoologic Learning Academy, and online client seminars, or “webinars,” that address current, often
technical, issues in the financial services industry.
We periodically make maintenance releases of licensed software available to our clients, as well as regulatory updates (generally
during the fourth quarter, on a when and if available basis), to meet industry reporting obligations and other processing requirements.
Clients
We have over 10,000 clients globally in the financial services industry that require a full range of information management and
analysis, accounting, actuarial, reporting and compliance software on a timely and flexible basis. Our clients include multinational
banks, retail banks and credit unions, hedge funds, funds of funds and family offices, institutional asset managers, insurance
companies and pension funds, municipal finance groups, brokers/dealers, financial exchanges, commercial lenders, real estate lenders
and property managers. Our clients include many of the largest and most well-recognized firms in the financial services industry.
During the year ended December 31, 2015, our top 10 clients represented approximately 14% of total revenues, with no single client
accounting for more than 5% of total revenues.
Sales and Marketing
We believe a direct sales organization is essential to the successful implementation of our business strategy, given the
complexity and importance of the operations and information managed by our products, the extensive regulatory and reporting
requirements of each industry, and the unique dynamics of each vertical market. Our dedicated direct sales and support personnel are
located in various sales offices worldwide and routinely undergo product and sales training. We also use telemarketing to support sales
of our real estate property management products and work through alliance partners that sell our software-enabled services to their
correspondent banking clients.
Our marketing personnel have extensive experience in marketing to the financial services industry and are responsible for
identifying market trends, evaluating and developing marketing opportunities, generating client leads and providing sales support. Our
marketing activities focus on cost-effective means of reaching current and potential clients, including:
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content-rich, periodic software and services eBriefings targeted at clients and prospects in each of our vertical and
geographic markets,
regular product-focused webinars,
seminars and symposiums,
trade shows and conferences, and
e-marketing campaigns.
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This strategy achieves lower marketing costs, more direct contacts with actual and potential clients, increased marketing leads,
distribution of more up-to-date marketing information and an improved ability to measure marketing initiatives.
The marketing department also supports the sales force with appropriate and relevant materials, including brochures and fact
sheets, for use during the sales process.
Product Development and Engineering
We believe we must introduce new products and offer product innovation on a regular basis to maintain our competitive
advantage. To meet these goals, we use multidisciplinary teams of highly trained personnel and leverage this expertise across all
product lines. We have invested heavily in developing a comprehensive product analysis process to ensure a high degree of product
functionality and quality. Maintaining and improving the integrity, quality and functionality of existing products is the responsibility
of individual product managers. Product engineering management efforts focus on enterprise-wide strategies, implementing best-
practice technology regimens, maximizing resources and mapping out an integration plan for our entire umbrella of products as well
as third-party products. For the years ended December 31, 2013, 2014 and 2015, our research and development expenses were
$53.9 million, $57.3 million and $110.4 million, respectively. In addition, we have made significant investments in intellectual
property through our acquisitions.
Our research and development engineers work closely with our marketing and support personnel to ensure that product
evolution reflects developments in the marketplace and trends in client requirements. We have generally issued a major release of our
core products during the second or third quarter of each fiscal year, which includes both functional and technical enhancements. We
also provide an annual release in the fourth quarter to reflect evolving regulatory changes in time to meet clients’ year-end reporting
requirements.
Competition
The market for financial services software and services is competitive, rapidly evolving and highly sensitive to new product
introductions and marketing efforts by industry participants, although high conversion costs can create barriers to adoption of new
products or technologies. The market is fragmented and served by both large-scale firms with broad offerings as well as firms that
target only local markets or specific types of clients. We also face competition from information systems developed and serviced
internally by the IT departments of large financial services firms. We believe that we generally compete effectively as to the factors
identified for each market below, although some of our existing competitors and potential competitors have substantially greater
financial, technical, distribution and marketing resources than we have and may offer products with different functions or features that
are more attractive to potential customers than our offerings.
Alternative Investments: In our alternative investments market, we compete with multiple vendors that may be categorized into
two groups, the first consisting of independent specialized administration providers, which are generally smaller than us, and the
second including prime brokerage and other firms offering fund administration services. Major competitors in this market include
CITCO Group and State Street Bank. The key competitive factors in marketing software and services to the alternative investment
industry are the need for independent fund administration, features and adaptability of the software, level and quality of customer
support, level of software development expertise and total cost of ownership. Our strengths in this market are our expertise, our
independence, our transparency, and our ability to deliver functionality by multiple methods and our technology, including the
ownership of our own software.
Asset Management: In our asset management market, we compete with a variety of other vendors depending on client
characteristics such as size, type, location, computing environment and functionality requirements. Competitors in this market range
from larger providers of integrated portfolio management systems and outsourcing services, such as BNY Mellon Financial (Eagle
Investment Systems), to smaller providers of specialized applications and technologies such as StatPro, Charles River Development
and others. We also compete with internal processing and information technology departments of our clients and prospective clients.
The key competitive factors in marketing asset management solutions are the reliability, accuracy, timeliness and reporting of
processed information to internal and external customers, features and adaptability of the software, level and quality of customer
support, level of software development expertise and return on investment. Our strengths in this market are our technology, our ability
to deliver functionality by multiple delivery methods and our ability to provide cost-effective solutions for clients.
Insurance and Pension Funds: In our insurance and pension funds market, we compete with a variety of vendors depending on
client characteristics such as size, type, location, computing environment and functionality requirements. Competitors in this market
range from large providers of portfolio management systems, such as State Street Bank (Princeton Financial Systems) and SunGard, to
smaller providers of specialized applications and services.
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We also compete with outsourcers, as well as the internal processing and information technology departments of our clients and
prospective clients. The key competitive factors in marketing insurance and pension plan systems are the accuracy, timeliness and
reporting of processed information provided to internal and external clients, features and adaptability of the software, level and quality
of customer support, economies of scale and return on investment. Our strengths in this market are our years of experience, our top-
tier clients, our ability to provide solutions by multiple delivery methods, our cost-effective and customizable solutions and our
expertise.
Financial Advisor: We define the advisory market as advisory firms and registered investment advisors (RIAs). We compete
with a variety of vendors, which are generally smaller firms focused solely on the advisory market. Our competitors include
Envestnet, Orion, Addepar, and SEI’s wealth management platform. Our strengths in this market are our premier platforms with
flexible and on-demand delivery models, and our 90+ complimentary products and services.
Real Estate Property Management: In our real estate property management market, we compete with numerous software
vendors consisting of smaller specialized real estate property management solution providers and larger property management
software vendors with more dedicated resources than our real estate property management business, such as Yardi Systems. The key
competitive factors in marketing property management and timeshare systems are the features and adaptability of the software, level
of quality and customer support, degree of responsiveness and overall net cost. Our strengths in this market are the quality of our
software and our reputation with our clients.
Financial Institutions: In our financial institutions market, there are multiple software and services vendors that are either
smaller providers of specialized applications and technologies or larger providers of enterprise systems, such as SunGard and Misys.
We also compete with outsourcers as well as the internal processing and information technology departments of our clients and
prospective clients. The key competitive factors in marketing financial institution software and services include accuracy and
timeliness of processed information provided to clients, features and adaptability of the software, level and quality of customer
support, level of software development expertise, total cost of ownership and return on investment. Our strengths in this market are
our flexible technology platform and our ability to provide integrated solutions for our clients.
Commercial Lending: In our commercial lending market, we compete with a variety of other vendors depending on client
characteristics such as size, type, location and functional requirements. Competitors in this market range from large competitors whose
principal businesses are not in the loan management business, such as PNC Financial Services (Midland Loan Services), to smaller
providers of specialized applications and technologies. The key competitive factors in marketing commercial lending solutions are the
accuracy, timeliness and reporting of processed information provided to customers, level of software development expertise, level and
quality of customer support and features and adaptability of the software. Our strength in this market is our ability to provide both
broadly diversified and customizable solutions to our clients.
Financial Markets: In our financial markets, our competition falls into two categories — the internal development organizations
within financial enterprises and specialized financial vendors. The key competitive factors in marketing financial markets technology
solutions are a proven track record of delivering high quality solutions, level of responsiveness and overall net cost. Our strengths in
this market are a successful track record of delivering solutions and our reputation with our clients.
Proprietary Rights
We rely on a combination of trade secret, copyright, trademark and patent law, nondisclosure agreements and technical
measures to protect our proprietary technology. We have registered trademarks for many of our products and will continue to evaluate
the registration of additional trademarks as appropriate. We generally enter into confidentiality and/or license agreements with our
employees, distributors, clients and potential clients. We seek to protect our software, documentation and other written materials under
trade secret and copyright laws, which afford limited protection. These efforts may be insufficient to prevent third parties from
asserting intellectual property rights in our technology. Furthermore, it may be possible for unauthorized third parties to copy portions
of our products or to reverse engineer or otherwise obtain and use proprietary information, and third parties may assert ownership
rights in our proprietary technology. For additional risks relating to our proprietary technology, please see “Risk Factors — Risks
“Relating to Our Business” — If we are unable to protect our proprietary technology and other confidential information, our success
and our ability to compete will be subject to various risks, such as third-party infringement claims, unauthorized use of our
technology, disclosure of our proprietary information or inability to license technology from third parties.
Rapid technological change characterizes the software development industry. We believe factors such as the technological and
creative skills of our 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 our technology.
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Employees
As of December 31, 2015, we had 6,089 full-time employees, consisting of:
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1,118 employees in research and development;
3,890 employees in consulting and services;
334 employees in sales and marketing;
327 employees in client support; and
420 employees in finance and administration.
As of December 31, 2015, 3,225 of our employees were in our international operations. No employee is covered by any
collective bargaining agreement. We believe that we have good relations with our employees.
Additional Information
We were incorporated in Delaware in July 2005, as the successor to a corporation originally formed in Connecticut in March
1986. Our principal executive offices are located at 80 Lamberton Road, Windsor, Connecticut 06095, and the telephone number of
our principal executive offices is (860) 298-4500.
Our website address is www.ssctech.com. We make available, free of charge, on our website our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments thereto that we have filed or furnished with the Securities
and Exchange Commission, as soon as reasonably practicable after we electronically file them with the Securities and Exchange
Commission. We are not, however, including the information contained on our website, or information that may be accessed through
links on our website, as part of, or incorporating such information by reference into, this annual report on Form 10-K.
ITEM 1A. RISK FACTORS
You should carefully consider the following risk factors, in addition to other information included in this annual report on Form
10-K and the other reports we submit to the Securities and Exchange Commission. If any of the following risks occur, it could
materially affect our business, operating results, cash flows and financial condition and possibly lead to a decline in our stock price.
The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties
facing us. Our business is also subject to general risks and uncertainties that affect many other companies. Additional risks and
uncertainties not currently known to us or that we currently believe are not material may also impair our business, operating results,
cash flows and financial condition.
Risks Relating to Our Business
Our business is greatly affected by changes in the state of the general economy and the financial markets, and uncertainty in
the general economy or the financial services industry could disproportionately affect the demand for our products and services.
In recent years, the global economy has experienced a significant recession, severe disruptions in the credit markets, increased
uncertainty about economic, political and market conditions, and periods of heightened volatility in a variety of financial and other
markets, including commodity prices and currency rates, all of which have had at times a material and adverse effect on the financial
markets and the activity levels of our clients. While the United States economy may technically have come out of the recession, the
recovery is fragile and may not be sustainable for any specific period of time, and the economy could slip back into an even more
significant recession. Our clients include a range of organizations in the financial services industry whose success is linked to the
health of the economy generally and of the financial markets specifically. Unfavorable or uncertain economic conditions, economic
instability or economic downturns could: (i) cause our clients or prospective clients to cancel, reduce or delay planned expenditures
for our products and services; (ii) impair our clients’ ability to pay for products they have purchased; or (iii) cause our clients to
process fewer transactions through our software-enabled services, renegotiate their contracts with us, move their IT solutions in-house,
switch to lower-priced solutions offered by our competitors or exit the industry. Fluctuations in the value of assets under our clients’
management could also adversely affect our revenues because pricing in many of our agreements is adjusted based on assets under
management. We cannot predict the occurrence, timing or duration of any economic downturn, generally, or in the markets in which
our businesses operate. Turbulence in the U.S. and international markets, renewed concern about the strength and sustainability of a
recovery and prolonged declines in business consumer spending could materially adversely affect our business and financial
statements, and the liquidity and financial condition of our clients.
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We may not achieve the anticipated benefits from our acquisitions and may face difficulties in integrating our acquisitions.
We have acquired and intend in the future to acquire companies, products or technologies that we believe could complement or
expand our business, augment our market coverage, enhance our technical capabilities or otherwise offer growth opportunities.
However, acquisitions could subject us to contingent or unknown liabilities, and we may have to incur debt or severance liabilities or
write off investments, infrastructure costs or other assets. Our success is also dependent on our ability to complete the integration of
the operations of acquired businesses in an efficient and effective manner, which may be difficult to accomplish in the rapidly
changing financial services software and services industry. We may not realize the benefits we anticipate from acquisitions, such as
lower costs, increased revenues, synergies and growth opportunities, or we may realize such benefits more slowly than anticipated,
due to our inability to:
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combine operations, facilities and differing firm cultures;
maintain employee morale or retain the clients or employees of acquired entities;
generate market demand for new products and services;
coordinate geographically dispersed operations and successfully adapt to the complexities of international operations,
including compliance with laws, rules and regulations in multiple jurisdictions;
integrate the technical teams of acquired companies with our engineering organization; or
incorporate acquired technologies, products and services into our current and future product and service lines.
The process of integrating the operations of acquired companies could disrupt our ongoing operations, divert management from
day-to-day responsibilities, increase our expenses and harm our business or financial statements. Acquisitions may also place a
significant strain on our administrative, operational, financial and other resources. In addition, certain of our acquisitions have
generated disputes with stockholders or management of acquired companies that have required the expenditure of our resources to
address or have led to litigation; any such disputes may reduce the value we hope to realize from our acquisitions, either by increasing
our costs of the acquisition, reducing our opportunities to realize revenues from the acquisition or imposing litigation costs or adverse
judgments on us. Acquisitions may also expose us to litigation from our stockholders arising out of the acquisition, which, even if
unsuccessful, could be costly to defend and serve as a distraction to management.
Consolidations and failures in the financial services industry could adversely affect us by causing a decline in demand for our
products and services.
If banks and financial services firms fail or consolidate, there could be a decline in demand for our products and services.
Failures, mergers and consolidations of banks and financial institutions reduce the number of our clients and potential clients, which
could adversely affect our revenues even if these events do not reduce the aggregate activities of the consolidated entities. Further, if
our clients fail and/or merge with or are acquired by other entities that are not our clients, or that use fewer of our products and
services, they may discontinue or reduce their use of our products and services. It is also possible that the larger financial institutions
resulting from mergers or consolidations would have greater leverage in negotiating terms with us. In addition, these larger financial
institutions could decide to perform in-house some or all of the services that we currently provide or could provide or to consolidate
their processing on a non-SS&C system. The resulting decline in demand for our products and services could have a material adverse
effect on our business and financial statements.
Our business has become increasingly focused on the hedge fund industry, and we are subject to the variations and fluctuations
of that industry.
As a result of our acquisitions of Advent in July 2015 and GlobeOp Financial Services S.A., or GlobeOp, in May 2012, a higher
percentage of our clients are hedge funds or funds of hedge funds. These clients and our business relating to them are affected by
trends, developments and risks associated with the global hedge fund industry. The market environment for hedge funds involves risk
and has suffered significant turmoil in recent years, including as a result of substantial changes in global economies, stock market
declines, credit crises, failures of financial institutions, government bail-out plans and new regulatory initiatives. Even in the absence
of such disruptions to the global economy, the global hedge fund industry is subject to fluctuations in assets under management that
are impossible to predict or anticipate. These risks could significantly and adversely affect some or all of our clients, which could
adversely affect our business and financial statements. In addition, market forces have negatively impacted liquidity for many of the
financial instruments in which hedge fund clients trade, which, in turn, could negatively impact our ability to access independent
pricing sources for valuing those instruments.
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If we are unable to retain and attract clients, our revenues and net income would remain stagnant or decline.
If we are unable to keep existing clients satisfied, sell additional products and services to existing clients or attract new clients,
then our revenues and net income would remain stagnant or decline. A variety of factors could affect our ability to successfully retain
and attract clients, including:
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the level of demand for our products and services;
the level of client spending for information technology;
the level of competition from internal client solutions and from other vendors;
the quality of our client service and the performance of our products;
our ability to update our products and services and develop new products and services needed by clients;
our ability to understand the organization and processes of our clients; and
our ability to integrate and manage acquired businesses.
We face significant competition with respect to our products and services, which may result in price reductions, reduced gross
margins or loss of market share.
The market for financial services software and services is competitive, rapidly evolving and highly sensitive to new product and
service introductions and marketing efforts by industry participants. The market is also highly fragmented and served by numerous
firms that target only local markets or specific client types. We also face competition from information systems developed and
serviced internally by the IT departments of financial services firms.
Some of our current and potential competitors may have significantly greater financial, technical, distribution and marketing
resources, generate higher revenues and have greater name recognition. Our current or potential competitors may develop products
comparable or superior to those developed by us, or adapt more quickly to new technologies, evolving industry trends or changing
client or regulatory requirements. It is also possible that our competitors may enter into alliances with each other or other third parties,
and through such alliances, acquire increased market share. Increased competition may result in price reductions, reduced gross
margins and loss of market share. Accordingly, our business may not grow as expected and may decline.
Our role as a fund administrator has in the past, and may in the future, expose us to claims and litigation from clients, their
investors, regulators or other third parties.
As a service provider, we have been, and may in the future be, subject to claims and lawsuits from investors, regulators,
liquidators, other third parties and our clients, some of which pursue high-risk investment strategies and all of which are subject to
substantial market risk, in the event that the underlying fund suffers investment losses, becomes insolvent, files for bankruptcy or
otherwise becomes defunct. Even if we are not ultimately found to be liable, defending such claims or lawsuits could be time-
consuming, divert management resources, harm our reputation and cause us to incur significant expenses. These claims or lawsuits
could have an adverse effect on our business and financial statements.
Catastrophic events may adversely affect our business.
A war, terrorist attack, natural disaster, pandemic or other catastrophe may adversely affect our business. A catastrophic event
could have a direct negative impact on us or an indirect impact on us by, for example, affecting our clients, the financial markets or
the overall economy and reducing our ability to provide, our clients’ ability to use, and the demand for, our products and services. The
potential for a direct effect on our business operations is due primarily to our significant investment in infrastructure. Although we
maintain redundant facilities and have contingency plans in place to protect against both man-made and natural threats, it is impossible
to fully anticipate and protect against all potential catastrophes. A computer virus, security breach, criminal act, military action, power
or communication failure, flood, severe storm or the like could lead to service interruptions and data losses for clients, disruptions to
our operations, or damage to important facilities. In addition, such an event may cause clients to cancel their agreements with us for
our products or services. Any of these events could adversely affect our business and financial statements.
Our software-enabled services may be subject to disruptions or failures that could adversely affect our reputation and our
business.
Our software-enabled services maintain and process confidential data on behalf of our clients, some of which is critical to their
business operations. For example, our trading systems maintain account and trading information for our clients and their customers.
Our internal technology infrastructure on which our software-enabled services depend may be subject to disruptions or may otherwise
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fail to operate properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially
beyond our control and that could adversely affect our ability to process transactions, provide services or otherwise appropriately
conduct our business activities. Such events include information technology attacks or failures, threats to physical security, sudden
increases in transaction volumes, electrical or telecommunications outages, damaging weather or other acts of nature, or employee or
contractor error or malfeasance. In particular, cybersecurity threats have become prevalent in our industry as well as for many firms
that process information. Cybersecurity threats are evolving and include, but are not limited to, malicious software, attempts to gain
unauthorized access to data, information security breaches or employee or contractor error or malfeasance and other electronic
security breaches that could lead to disruptions in systems, unauthorized release or destruction of our or our clients’ or other parties’
confidential or otherwise protected information and corruption of data. In the last few years there have been many successful advanced
pervasive threats that have damaged several prominent companies in spite of strong information security measures, and we expect that
the risks associated with cyber-attacks and the costs of preventing such attacks will continue to increase in the future. We and our
clients are regularly the target of attempted cyber-attacks, including denial-of-service attacks, and we must continuously monitor and
develop our systems to protect our technology infrastructure and data from misappropriation or corruption. Although we expend
significant resources and oversight efforts in an attempt to ensure that we maintain appropriate safeguards with respect to cyber-
attacks, there is no guarantee that our systems and procedures are adequate to protect against all security breaches.
If our software-enabled services are disrupted or fail for any reason, or if our systems or facilities are infiltrated or damaged by
unauthorized persons, we and our clients could experience data loss, financial loss, harm to their reputation and significant business
interruption. If that happens, we may be exposed to significant liability, our reputation may be harmed, our clients may be dissatisfied
and we may lose business. Given the unpredictability of the timing, nature and scope of such failures or disruptions, we could
potentially experience significant costs and exposures, including production downtimes, operational delays, other detrimental impacts
on our operations or ability to provide services to our customers, the compromising of confidential or otherwise protected information,
misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our systems or networks,
financial losses from remedial actions, loss of business, potential liability, regulatory inquiries, enforcements, actions and fines and/or
damage to our reputation, any of which could have a material adverse effect on our business and financial statements.
If third party service providers on which we rely, or other third parties with which we do business or which facilitate our
business activities, suffer disruptions to their information technology systems, our business could be harmed.
In providing our software-enabled services to our customers, we depend upon information technology infrastructure that is
primarily managed by our firm, but we also depend on third party service providers to provide some of the information technology
infrastructure on which we rely. Although we seek to ensure that appropriate security and other standards are maintained by these
third parties, these third parties are also subject to the risks discussed in the preceding risk factor, and there is no guarantee that they
will maintain systems and procedures sufficient to protect against system failures and security breaches, including as a result of cyber-
attacks.
In addition, the third parties with which we do business or which facilitate our business activities, including financial
intermediaries, are susceptible to the risks described in the preceding risk factor (including regarding the third parties with which they
are similarly interconnected), and our or their business operations and activities may therefore be adversely affected, perhaps
materially, by failures, terminations, errors or malfeasance by, or attacks or constraints on, one or more financial, technology or
infrastructure institutions or intermediaries with whom they are interconnected or conduct business.
We have substantial operations and a significant number of employees in India and we are therefore subject to regulatory,
economic and political uncertainties in India.
We currently have approximately 1,800 employees located in India. The economy of India may differ favorably or unfavorably
from the United States economy and our business may be adversely affected by the general economic conditions and economic and
fiscal policy in India, including changes in exchange rates and controls, interest rates and taxation policies. In particular, in recent
years, India’s government has adopted policies that are designed to promote foreign investment, including significant tax incentives,
relaxation of regulatory restrictions, liberalized import and export duties and preferential rules on foreign investment and repatriations.
These policies may not continue. In addition, we are subject to risks relating to social stability, political, economic or diplomatic
developments affecting India in the future.
India faces major challenges in the years ahead sustaining the economic growth that it has experienced over the past several
years. These challenges include the need for substantial infrastructure development and improving access to healthcare and education.
Our ability to recruit, train and retain qualified employees and develop and operate our facilities in India could be adversely affected if
India does not successfully meet these challenges.
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We expect that our operating results, including our profit margins and profitability, may fluctuate over time.
Historically, our revenues, profit margins and other operating results have fluctuated from period to period and over time
primarily due to the timing, size and nature of our license and service transactions. See “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for further discussion on fluctuations in revenues, profit margins and other operating
results. Additional factors that may lead to such fluctuation include:
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the timing of the introduction and the market acceptance of new products, product enhancements or services by us or our
competitors;
the lengthy and often unpredictable sales cycles of large client engagements;
the amount and timing of our operating costs and other expenses;
the financial health of our clients;
changes in the volume of assets under our clients’ management;
cancellations of maintenance and/or software-enabled services arrangements by our clients;
changes in local, national and international regulatory requirements;
acquisitions during the relevant period;
implementation of our licensing contracts and software-enabled services arrangements;
changes in economic and financial market conditions; and
changes in the types of products and services we provide.
We are dependent on our senior management and their continued performance and productivity.
We are dependent on the continued efforts of the members of our senior management. The loss of any of the members of our
senior management may cause a significant disruption in our business, jeopardize existing customer relationships, impair our
compliance efforts as a public company, and have a material adverse effect on our business objectives. We do not maintain key man
life insurance policies for any senior officer or manager.
If we cannot attract, train and retain qualified employees, we may not be able to provide adequate technical expertise and
customer service to our clients.
We believe that our success is due in part to our ability to attract, train and retain highly skilled employees. Competition for
qualified personnel in the software and hedge fund industries is intense, and we have, at times, found it difficult to attract and retain
skilled personnel for our operations. Our failure to attract and retain a sufficient number of highly skilled employees could prevent us
from developing and servicing our products at the same levels as our competitors; therefore, we may lose potential clients and suffer a
decline in revenues.
If we are unable to protect our proprietary technology and other confidential information, our success and our ability to
compete will be subject to various risks, such as third-party infringement claims, unauthorized use of our technology, disclosure
of our proprietary information or inability to license technology from third parties.
Our success and ability to compete depends in part upon our ability to protect our proprietary technology and other confidential
information. We rely on a combination of patent, trade secret, copyright and trademark law, nondisclosure agreements, license
agreements and technical measures to protect our proprietary technology and other confidential information. We have registered
trademarks for some of our products and will continue to evaluate the registration of additional trademarks as appropriate. We
generally enter into confidentiality agreements with our employees, distributors, clients and potential clients. However, these efforts
may be insufficient to prevent those parties or others from misappropriating or asserting rights in our intellectual property, confidential
information or other technology and our proprietary technology and confidential information may be subject to embezzlement, theft,
or other similar illegal behavior by our employees or third parties. Furthermore, it may be possible for unauthorized third parties to
copy portions of our products or to reverse engineer or otherwise obtain and use our proprietary information. Additionally, if there
was a disclosure of confidential or proprietary information, or if a third party were to gain unauthorized access to the confidential
information we possess, we could suffer a loss of revenues, we could experience an adverse impact on our competitive position, our
relationships with our clients and our reputation could be harmed.
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Existing patent and copyright laws afford only limited protection. Third parties may develop substantially equivalent or
superseding proprietary technology or may offer equivalent products in competition with our products, thereby substantially reducing
the value of our proprietary rights. A number of third parties hold patents and other intellectual property rights with application in the
financial services field. Consequently, we are subject to the risk that such third parties will claim that our products infringe their
intellectual property rights, including their patent rights. Such claims, if successful, could result in expensive and time-consuming
litigation and impair our intellectual property rights.
We incorporate open source software into a limited number of our software products. We monitor our use of open source
software in an effort to avoid subjecting our products to unfavorable conditions or conditions we do not intend. Although we believe
that we have complied with our obligations under the applicable licenses for open source software that we use, there is little or no
legal precedent governing the interpretation of many of the terms of certain of these licenses. As a result, the potential impact of these
terms is uncertain and may result in unanticipated obligations or restrictions regarding those of our products, technologies or solutions
affected.
We have acquired and may acquire important technology rights through our acquisitions and have often incorporated and may
incorporate features of these technologies across many of our products and services. As a result, we are subject to the above risks and
the additional risk that the seller of the technology rights may not have appropriately protected the intellectual property rights we
acquired. Indemnification and other rights under applicable acquisition documents are limited in term and scope and therefore provide
us with only limited protection.
In addition, we rely on third-party software in providing some of our products and services. If we lose our licenses to use such
software or if such licenses are found to infringe upon the rights of others, we will need to seek alternative means of obtaining the
licensed software to continue to provide our products or services. Our inability to replace such software, or to replace such software in
a timely manner, could significantly disrupt our business and our ability to deliver products and services to our clients, and adversely
affect our financial results.
We could become subject to litigation regarding intellectual property rights or other confidential or proprietary information,
which could seriously harm our business and require us to incur significant costs.
In recent years, there has been a high incidence of litigation in the United States involving patents and other intellectual property
rights. We are from time to time a party to litigation to enforce our intellectual property rights or to protect our confidential or
proprietary information, or as a result of an allegation that we infringe a third party’s intellectual property rights, including patents,
trademarks and copyrights. From time to time, we have received notices claiming our technology may infringe third-party intellectual
property rights or otherwise threatening to assert intellectual property rights. These claims and any resulting lawsuit, if successful,
could subject us to significant liability for damages and invalidation of our proprietary rights. These lawsuits, regardless of their
success, could be time-consuming and expensive to resolve, adversely affect our revenues, profitability and prospects, and divert
management time and attention. These claims and threats could also cause us to undertake to re-engineer our products or services or
obtain a license of third-party technologies on unfavorable terms.
We may be unable to adapt to rapidly changing technology and evolving industry standards and regulatory requirements.
Rapidly changing technology, evolving industry standards and regulatory requirements and new product and service
introductions characterize the market for our products and services. Our future success will depend in part upon our ability to enhance
our existing products and services and to develop and introduce new products and services to keep pace with such changes and
developments and to meet changing client needs. The process of developing our software products is complex and is expected to
become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems and
technologies. Current areas of significant technological change include mobility, cloud-based computing and the processing and
analyzing of large amounts of data. Our ability to keep up with technology and business and regulatory changes is subject to a number
of risks, including that:
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we may find it difficult or costly to update our services and software and to develop new products and services quickly
enough to meet our clients’ needs;
we may find it difficult or costly to make some features of our software work effectively and securely over the Internet or
with new or changed operating systems;
we may find it difficult or costly to update our software and services to keep pace with business, evolving industry
standards, regulatory requirements and other developments in the industries in which our clients operate; and
we may be exposed to liability for security breaches that allow unauthorized persons to gain access to confidential
information stored on our computers or transmitted over our network.
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Our failure to enhance our existing products and services and to develop and introduce new products and services to promptly
address the needs of our clients and a changing marketplace could adversely affect our business and financial statements.
Undetected software design defects, errors or failures, or employee errors, may result in defects, delays, loss of our clients’ data,
litigation against us and harm to our reputation and business.
Our software products are highly complex and sophisticated and could contain design defects or software errors that are difficult
to detect and correct. Errors or bugs in our software may affect the ability of our products to work with other hardware or software
products, delay the development or release of new products or new versions of products, result in the loss of client data, damage our
reputation, affect market acceptance of our products or result in the rejection of our products by the market, cause loss of revenues,
divert development resources, increase product liability and warranty claims, and increase service and support costs. We cannot be
certain that, despite testing by us and our clients, errors will not be found in new products or new versions of products. Moreover, our
clients engage in complex trading activities and this complexity increases the likelihood that our employees may make errors.
Employee errors, poor employee performance or misconduct may be difficult to detect and deter. These product defects or errors in
the product operations, or employee errors, poor performance or misconduct, could cause damages to our clients for which they may
assert claims or lawsuits against us. The cost of defending such a lawsuit, regardless of its merit, could be substantial and could divert
management’s attention and result in reputational harm. In addition, if our business liability insurance coverage proves inadequate
with respect to a claim or future coverage is unavailable on acceptable terms or at all, we may be liable for payment of substantial
damages. Any or all of these potential consequences could have an adverse impact on our business and financial statements.
Because our platform could be used to collect and store personal information of our customers’ employees or customers,
privacy concerns could result in additional cost and liability to us or inhibit use of our platform.
Personal privacy has become a significant issue in the United States and in many other countries where we offer our solutions or
may offer them in the future. The regulatory framework for privacy issues worldwide is currently evolving, is not uniform and is
likely to remain uncertain for the foreseeable future. Many federal, state and foreign government bodies and agencies have adopted or
are considering adopting laws and regulations regarding the collection, use, disclosure, control, security and deletion of personal
information. In the United States, these include, without limitation, laws and regulations promulgated by states, as well as rules and
regulations promulgated under the authority of the Federal Trade Commission and federal financial regulatory bodies. Internationally,
most of the jurisdictions in which we operate have established their own data security and privacy legal frameworks, many of which
are broader in scope, more restrictive and impose greater obligations on us and our customers. Many of these obligations are updated
frequently and require ongoing monitoring. In addition to government regulation, privacy advocacy and industry groups may propose
new and different self-regulatory standards that either legally or contractually apply to us.
As a result of uncertainty regarding the interpretation and application of privacy and data protection-related laws, regulations,
and self-regulatory requirements, it is possible that these laws, regulations, and requirements may be interpreted and applied in a
manner that is inconsistent with our existing data handling practices or the technological features of our solutions. If so, in addition to
the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices
or modify our solutions, which could have an adverse effect on our business. Any inability to adequately address privacy or data
protection-related concerns, even if unfounded, or comply with applicable privacy or data protection-related laws, regulations and
policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and harm our business. Furthermore, the
costs of compliance with, and other burdens imposed by, the laws, regulations, standards and policies that are applicable to the
businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our solutions. Also, privacy
concerns, whether valid or not valid, may inhibit market adoption of our solutions, particularly in foreign countries.
Our business is subject to evolving regulations and increased scrutiny from regulators.
Our business is subject to evolving and increasing regulation, and our relationships with our clients may subject us to increased
scrutiny from a number of regulators, including the Bermuda Monetary Authority (BMA), British Virgin Islands Financial Services
Commission (BVIFSC), Centrale Bank van Curacao en Sint Maarten, Commodity Futures Trading Commission (CFTC), Federal
Trade Commission (FTC), Cayman Islands Monetary Authority (CIMA), Commission de Surveillance du Secteur Financier (CSSF),
Financial Industry Regulatory Authority (FINRA), Financial Conduct Authority (FCA), Central Bank of Ireland (CBI), National
Futures Association (NFA), Ontario Securities Commission (OSC), the Securities and Exchange Commission (SEC), Securities
Commission of the Bahamas (SCB), U.S. Treasury Department and other government entities that regulate the financial services,
hedge fund and hedge fund services industry in the United States, the United Kingdom and the other jurisdictions in which we operate.
These regulations may limit or curtail our activities, including activities that might be profitable, and changes to existing regulations
may affect our ability to continue to offer our existing products and services, or to offer products and services we may wish to offer in
the future. As a result of the changes in the global economy and the turmoil in global financial markets in recent years, the risk of
additional government regulation has increased.
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The European Union’s Alternative Investment Fund Managers Directive (AIFMD) and the United States’ Dodd-Frank Wall
Street Reform and Consumer Protection Act, among other initiatives, pose significant changes to the regulatory environment in which
we and our clients operate. The impact of these regulatory changes remains uncertain. If we fail to comply with any applicable laws,
rules or regulations, we may be subject to censure, fines or other sanctions, including revocation of our licenses and/or registrations
with various regulatory agencies, criminal penalties and civil lawsuits.
The U.S. Foreign Corrupt Practices Act and anti-bribery laws in other jurisdictions, including the U.K. Bribery Act, generally
prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or
other commercial advantage. While our policies mandate compliance with these anti-bribery laws, reckless or other inappropriate acts
committed by our affiliates, employees or agents that violate anti-bribery laws could result in severe criminal or civil sanctions.
A failure to comply with these laws, rules or regulations, or allegations of such noncompliance, could adversely affect our
business, reputation and financial statements.
Additional tax expense or additional tax exposures could affect our future profitability.
We are subject to income taxes in the United States and various international jurisdictions. Changes in tax laws and regulations,
as well as changes in related interpretations and other tax guidance could materially impact our tax receivables and liabilities and our
deferred tax assets and deferred tax liabilities. Additionally, in the ordinary course of business we are subject to examinations by
various authorities, including tax authorities. In addition to ongoing investigations, there could be additional investigations launched in
the future by governmental authorities in various jurisdictions, and existing investigations could be expanded. The global and diverse
nature of our operations means that these risks will continue to exist and additional investigations, proceedings and contingencies will
arise from time to time. Our business and financial statements may be affected by the outcome of investigations, proceedings and
other contingencies that cannot be predicted with certainty.
A substantial portion of our revenues are derived, and a substantial portion of our operations are conducted, outside the United
States.
For the years ended December 31, 2013, 2014 and 2015, international revenues accounted for 35%, 33% and 32%, respectively,
of our total revenues. We sell certain of our products, such as MarginMan and Pacer, primarily outside the United States. Our
international business is subject to a variety of risks, including:
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potential changes in a specific country’s or region’s political or economic climate;
the need to comply with a variety of local regulations and laws, U.S. export controls, the U.S. Foreign Corrupt Practices
Act and the UK Bribery Act;
fluctuations in foreign currency exchange rates;
application of discriminatory fiscal policies;
potential changes in tax laws and the interpretation of such laws; and
potential difficulty enforcing third-party contractual obligations and intellectual property rights.
Such factors could adversely affect our business and financial statements.
We are exposed to fluctuations in currency exchange rates that could negatively impact our operating results and financial
condition.
Because a significant portion of our business is conducted outside the United States and significant revenues are generated
outside the United States, we face exposure to adverse movements in foreign currency exchange rates. Fluctuations in currencies
relative to currencies in which our earnings are generated also make it more difficult to perform period-to-period comparisons of our
reported results of operations. Because our consolidated financial statements are reported in U.S. dollars, translation of sales or
earnings generated in other currencies into U.S. dollars can result in a significant increase or decrease in the reported amount of those
sales or earnings. In addition, we incur currency transaction risk whenever we enter into either a purchase or a sales transaction using a
currency other than the local currency of the transacting entity. Given the volatility of exchange rates, we cannot be assured we will be
able to effectively manage our currency translation or transaction risk, and significant changes in the value of foreign currencies
relative to the U.S. dollar could adversely affect our financial statements. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” for further discussion on the foreign currency translation impact on operating results and
financial condition.
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We do not currently engage in hedging activities. Changes in economic or political conditions globally and in any of the
countries in which we operate could result in exchange rate movements, new currency or exchange controls or other restrictions being
imposed on our operations.
A material weakness in our internal controls could have a material adverse effect on us.
Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to
effectively prevent fraud. If we cannot do so, our reputation and operating results could be harmed. A material weakness in our
internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information. Even
effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial
statements. In addition, controls can be circumvented by individual acts of some persons, by collusion of two or more people, or by
management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in
the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected. If we are unable to report financial information timely and
accurately or to maintain effective disclosure controls and procedures, our stock price could be negatively impacted and we could be
subject to, among other things, regulatory or enforcement actions by the SEC, which could have a material adverse effect on our
business and financial statements.
Risks Relating to Our Indebtedness
Our substantial indebtedness could adversely affect our financial health and operations.
We currently have a substantial amount of indebtedness. As of December 31, 2015, we had total indebtedness of $2,820.0
million and additional available borrowings of $150.0 million under our revolving credit facility. To fund our acquisition of Advent
and to refinance our existing indebtedness and Advent’s existing indebtedness, we incurred substantial indebtedness under a senior
secured credit facility and senior unsecured notes. This indebtedness could have adverse consequences. For example, it may:
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby
reducing the availability of our cash flow to fund acquisitions, working capital, capital expenditures, research and
development efforts and other general corporate purposes;
increase our vulnerability to and limit our flexibility in planning for, or reacting to, change in our business and the
industry in which we operate;
restrict our ability to make certain distributions with respect to our capital stock due to restricted payment and other
financial covenants in our credit facilities and other financing agreements;
expose us to the risk of increased interest rates as borrowings under our senior credit facility are subject to variable rates
of interest;
place us at a competitive disadvantage compared to our competitors that have less debt; and
limit our ability to borrow additional funds.
In addition, the agreement governing our senior credit facility contains financial and other restrictive covenants that limit our
ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an
event of default which, if not cured or waived, could result in the acceleration of all of our debts.
To service our indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors
beyond our control.
We are currently obligated to make periodic interest payments on our senior credit facility and senior notes of approximately
$124.0 million annually. In connection with the Advent acquisition, debt interest payments increased substantially. Our ability to
make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate
cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.
If our business fails to generate sufficient cash flow from operations and future borrowings are not available to us, we may not
be able to pay our indebtedness or fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or
before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot
service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital
expenditures, strategic acquisitions, investments and joint ventures. We may not be able to effect such actions, if necessary, on
commercially reasonable terms or at all.
24
Restrictive covenants in the agreements governing our indebtedness may restrict our ability to pursue our business strategies.
The agreements governing our senior credit facility and senior notes will limit our ability, among other things, to:
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
incur additional indebtedness;
make certain investments;
sell assets, including capital stock of certain subsidiaries;
declare or pay dividends, repurchase or redeem stock or make other distributions to stockholders;
consolidate, merge, liquidate or dissolve;
enter into transactions with our affiliates; and
incur liens.
In addition, the agreement governing our senior credit facility also requires us to maintain compliance with specified leverage
ratios. Our ability to comply with these provisions may be affected by events beyond our control, and these provisions could limit our
ability to plan for or react to market conditions, meet capital needs or otherwise conduct our business activities and plans.
Our inability to comply with any of these provisions could result in a default under one or more of the agreements governing our
indebtedness. If such a default occurs under one such agreement, the creditors under another debt agreement may elect to declare all
borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable. In addition, the lenders
under our senior credit facility would have the right to terminate any commitments they have to provide further borrowings.
If we are unable to repay outstanding borrowings when due, the lenders under our senior credit facility also have the right to
proceed against the collateral, including our available cash and substantially all of our domestic assets and the assets of our domestic
subsidiaries, granted to them to secure the indebtedness under that facility. If the indebtedness under our senior credit facility were to
be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness and our other indebtedness.
Risks Relating to Ownership of Our Common Stock
If equity research analysts do not publish or cease publishing research or reports about our business or if they issue
unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline.
The trading market for our common stock is influenced by the research and reports that equity research analysts publish about us
and our business. We do not control these analysts. The price of our stock or trading volume in our stock could decline if one or more
equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing regular reports about
us or our business.
The market price of our common stock may be volatile, which could result in substantial losses for investors in our common
stock.
Shares of our common stock were sold in our initial public offering, or IPO, at a price of $15.00 per share on March 31, 2010,
and in the six intervening years our common stock has traded as high as $77.19 and as low as $13.27. An active, liquid and orderly
market for our common stock may not be sustained, which could depress the trading price of our common stock. In addition, the
market price of our common stock may fluctuate significantly. Some of the factors that may cause the market price of our common
stock to fluctuate include:
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
changes in estimates of our financial results or recommendations by securities analysts;
failure of any of our products to achieve or maintain market acceptance;
changes in market valuations of similar companies;
success of competitive products;
changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances;
regulatory developments in any of our markets;
25
(cid:404)
(cid:404)
(cid:404)
(cid:404)
litigation involving our company, our general industry or both;
additions or departures of key personnel;
investors’ general perception of us; and
changes in general economic, industry and market conditions.
In addition, if the market for technology stocks, financial services stocks or the stock market in general experiences a loss of
investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or
results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits
that, even if unsuccessful, could be costly to defend and a distraction to management.
William C. Stone, our Chairman of the Board and Chief Executive Officer, exerts significant control over our company.
As of February 24, 2016, William C. Stone, our Chairman of the Board and Chief Executive Officer, beneficially owned
approximately 16.8% of the outstanding shares of our common stock. We are party to a stockholders’ agreement with Mr. Stone,
pursuant to which Mr. Stone has the right to nominate two members of our board of directors, one of which will be Mr. Stone for so
long as he is our Chief Executive Officer. As a result, Mr. Stone has significant influence over our policy and affairs and matters
requiring stockholder approval.
SS&C Holdings is a holding company with no operations or assets of its own and its ability to pay dividends is limited or
otherwise restricted.
SS&C Holdings has no direct operations and no significant assets other than the stock of SS&C. The ability of SS&C Holdings
to pay dividends is limited by its status as a holding company and by the terms of the agreement governing our senior credit facility.
See “Risk factors — Risks relating to our indebtedness — Restrictive covenants in the agreement governing our senior credit facility
may restrict our ability to pursue our business strategies.” Moreover, none of the subsidiaries of SS&C Holdings is obligated to make
funds available to SS&C Holdings for the payment of dividends or otherwise. In addition, Delaware law imposes requirements that
may restrict the ability of our subsidiaries, including SS&C, to pay dividends to SS&C Holdings. These limitations could reduce our
attractiveness to investors.
Our management has broad discretion in the use of our existing cash resources and may not use such funds effectively.
Our management has broad discretion in the application of our cash resources. Accordingly, our stockholders will have to rely
upon the judgment of our management with respect to our existing cash resources, with only limited information concerning
management’s specific intentions. Our management may spend our cash resources in ways that our stockholders may not desire or that
may not yield a favorable return. The failure by our management to apply these funds effectively could harm our business.
Provisions in our certificate of incorporation and bylaws might discourage, delay or prevent a change of control of our
company or changes in our management and, therefore, depress the trading price of our common stock.
Provisions of our certificate of incorporation and bylaws and Delaware law may discourage, delay or prevent a merger,
acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might
otherwise receive a premium for their shares of our common stock. These provisions may also prevent or frustrate attempts by our
stockholders to replace or remove our management. These provisions include:
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
limitations on the removal of directors;
a classified board of directors so that not all members of our board are elected at one time;
advance notice requirements for stockholder proposals and nominations;
the inability of stockholders to call special meetings;
the ability of our board of directors to make, alter or repeal our bylaws;
the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder
approval, which could be used to institute a rights plan, or a poison pill, that would work to dilute the stock ownership of a
potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors; and
a prohibition on stockholders from acting by written consent.
26
The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay
in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the
likelihood that our stockholders could receive a premium for their shares of common stock in an acquisition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We lease our corporate offices, which consist of approximately 93,500 square feet of office space located in 80 Lamberton
Road, Windsor, CT 06095. In 2013, we extended the lease term through October 2022. We utilize facilities and offices in thirty-eight
other locations in the United States and have offices in North America, Europe, Asia, Australia and Africa. We lease all of our
facilities and offices except for our offices in Yorktown, New York, and Harrison, New York, which we own. We believe that our
facilities are in good condition and generally suitable to meet our needs for the foreseeable future; however, we will continue to seek
additional space as needed to satisfy our growth.
ITEM 3. LEGAL PROCEEDINGS
Millennium Actions
Several actions (the “Millennium Actions”) were filed in various jurisdictions against the Company’s subsidiaries, GlobeOp
Financial Services Ltd and GlobeOp Financial Services LLC (“GlobeOp”), alleging claims and damages with respect to a valuation
agent services agreement performed by GlobeOp for the Millennium Global Emerging Credit Fund, Ltd. and Millennium Global
Emerging Credit Master Fund Ltd. All substantive claims related to the Millennium Actions have been settled or resolved in favor of
GlobeOp. The only remaining issue involves the allocation of attorneys’ fees and costs in an arbitration proceeding that was
conducted in the United Kingdom, which issue is currently pending before the arbitration tribunal.
In addition to the foregoing legal proceedings, from time to time, the Company is subject to other legal proceedings and claims.
In the opinion of the Company’s management, the Company is not involved in any other such litigation or proceedings with third
parties that management believes would have a material adverse effect on the Company or its business.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
27
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock trades on The NASDAQ Global Select Market under the symbol “SSNC”. The following table sets forth, for
the periods indicated, the high and low sales prices of our common stock as reported by The NASDAQ Global Select Market:
2015
Fourth quarter .......................................................................... $
Third quarter ............................................................................ $
Second quarter ......................................................................... $
First quarter .............................................................................. $
2014
Fourth quarter .......................................................................... $
Third quarter ............................................................................ $
Second quarter ......................................................................... $
First quarter .............................................................................. $
High
Low
77.19 $
75.50 $
65.19 $
64.99 $
65.40
61.52
55.67
52.21
High
Low
59.76 $
46.58 $
46.22 $
46.61 $
41.67
41.51
35.47
37.17
On February 24, 2016, the closing price reported on The NASDAQ Global Select Market of our common stock was $58.44 per
share. As of February 24, 2016, we had approximately 16 holders of record of our common stock.
There is no established public trading market for shares of our Class A non-voting common stock. As of February 24, 2016,
William C. Stone, our Chairman and Chief Executive Officer, was the only holder of record of our Class A non-voting common stock.
Each share of Class A non-voting common stock automatically converts into one share of our common stock upon (i) the expiration,
with respect to a holder of Class A non-voting common stock, of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or the HSR Act, such that such holder could acquire shares of common stock issuable upon
conversion of such holder’s shares of Class A non-voting common stock in compliance with the HSR Act, (ii) any other event, the
occurrence of which results in the ability of a holder of Class A non-voting Common Stock to acquire the shares of common stock
issuable upon conversion of the Class A non-voting common stock pursuant in compliance with the HSR Act or (iii) the sale of such
share of Class A non-voting common stock to a person or entity (x) that would not be required to make a filing under the HSR Act to
acquire an equal number of shares of common stock or (y) for which the waiting period under the HSR Act applicable to such person
acquiring an equal number of shares of common stock has expired.
In 2015, we paid quarterly cash dividends of $0.125 per share of common stock on March 16, 2015, June 15, 2015, September
15, 2015 and December 15, 2015, to stockholders of record as of the close of business on March 2, 2015, June 1, 2015, September 1,
2015 and December 1, 2015, respectively, totaling $45.5 million. Our ability to pay dividends is limited by our status as a holding
company and by the terms of the agreement governing our senior credit facility, insofar as we may seek to pay dividends out of funds
made available to us by our subsidiaries, because our debt instruments directly or indirectly impose certain limitations on our
subsidiaries’ ability to pay dividends or make loans to us. Any future determination as to the declaration and payment of dividends
will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition,
operating results, contractual restrictions, capital requirements, current and anticipated cash needs, plans for expansion, and other
factors our Board of Directors may deem relevant.
Our equity plan information required by this item is incorporated by reference to the information in Part III, Item 12 of this
annual report on Form 10-K.
28
Performance graph
This performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the
liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of SS&C Technologies Holdings,
Inc. under the Exchange Act.
The following graph shows a comparison from December 31, 2010 through December 31, 2015 of cumulative total return for
our common stock, the NASDAQ Composite Index and the NASDAQ Computer and Data Processing Index. Such returns are based
on historical results and are not intended to suggest future performance. Data for the NASDAQ Composite Index and the NASDAQ
Computer and Data Processing Index assume reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN*
Among SS&C Technologies Holdings, Inc., the NASDAQ Composite Index
And the NASDAQ Computer and Data Processing Index
SS&C Technologies Holdings, Inc.
NASDAQ Composite-Total Returns
NASDAQ Computer and Data Processing
Index
S
R
A
L
L
O
D
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/31/2010
12/31/2011
12/31/2012
12/31/2013
12/31/2014
12/31/2015
*
$100 invested in stock on 12/31/2010. Return calculations of indices assume the reinvestment of dividends.
SS&C Technologies Holdings, Inc. .............................
NASDAQ Composite-Total Returns ............................
NASDAQ Computer & Data Processing Index ...........
12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015
336
113
200
116
223
110
216
163
159
100
100
100
286
187
170
88
99
97
29
ITEM 6. SELECTED FINANCIAL DATA
The five-year selected financial data set forth below should be read in conjunction with our consolidated financial statements
and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere
in this annual report on Form 10-K.
2015(5)
2014(4)
2013(3)
(In thousands, except per share data)
2012(2)
2011(1)
767,861 $
200,372
131,127
STATEMENT OF COMPREHENSIVE INCOME
Revenues .................................................................................... $ 1,000,285 $
164,738
Operating income .......................................................................
42,862
Net income .................................................................................
Earnings per share
Basic ........................................................................................... $
Diluted ....................................................................................... $
Weighted average shares outstanding
Basic ...........................................................................................
Diluted .......................................................................................
Cash dividends declared per share ............................................. $
BALANCE SHEET
Total assets ................................................................................. $ 5,802,242 $ 2,266,155 $ 2,275,324 $ 2,362,905 $1,207,608
100,000
Total long-term debt, including current portion ......................... 2,751,351
774,507 1,012,138
980,103
Stockholders’ equity .................................................................. 2,105,446 1,346,670 1,231,708 1,075,503
712,702 $ 551,842 $ 370,828
93,777
182,968 123,216
51,021
45,820
117,895
81,195
85,616
—
91,098
95,448
0.50 $
78,321
82,888
—
83,314
87,331
0.125
76,482
80,709
—
1.45 $
1.38 $
0.59 $
0.55 $
1.57 $
1.50 $
0.47 $
0.45 $
0.67
0.63
619,738
(1) On March 10, 2011, we acquired all of the outstanding stock of BenefitsXML, Inc. On September 8, 2011, we acquired all of
the outstanding stock of BDO Simpson Xavier Fund Administration Services Limited, a division of BDO.
(2) On May 9, 2012, we acquired the assets and business associated with Thomson Reuter’s PORTIA Business. In the second
quarter of 2012, we acquired of all of the outstanding stock of GlobeOp Financial Services, S.A. On September 27, 2012, we
acquired the assets and business of Gravity Financial.
(3) On October 1, 2013, we acquired all of the outstanding stock of Prime Management Limited. See Note 11 to our consolidated
financial statements.
(4) On November 30, 2014, we acquired all of the outstanding stock of DST Global Solutions Ltd. and the assets and business of
DST Global Solutions LLC, together DSTGS, subsidiaries of DST Systems, Inc. See Note 11 to our consolidated financial
statements.
(5) On July 8, 2015, we acquired all of the outstanding stock of Advent Software, Inc. On September 1, 2015, we acquired the
assets and business of Varden Technologies. On November 16, 2015, we acquired all of the outstanding stock of Primatics
Financial. See Note 11 to our consolidated financial statements.
30
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
Business. We are a leading provider of mission-critical, sophisticated software products and software-enabled services that
allow financial services providers to automate complex business processes and effectively manage their information processing
requirements. Our portfolio of software products and rapidly deployable software-enabled services allows our clients to automate and
integrate front-office functions such as trading and modeling, middle-office functions such as portfolio management and reporting,
and back-office functions such as accounting, performance measurement, reconciliation, reporting, processing and clearing. Our
solutions enable our clients to focus on core operations, better monitor and manage investment performance and risk, improve
operating efficiency and reduce operating costs. We provide our solutions globally to more than 10,000 clients, principally within the
institutional asset and wealth management, alternative investment management, financial advisory and financial institutions vertical
markets. In addition, our clients include commercial lenders, real estate investment trusts (REITs), corporate treasury groups,
insurance and pension funds, municipal finance groups and real estate property managers.
Acquisitions. To supplement our growth, we evaluate and execute acquisitions that provide complementary products or services,
add proven technology and an established client base, expand our intellectual property portfolio or address a highly specialized
problem or a market niche. Since the beginning of 2013, we have spent approximately $2.8 billion to acquire five businesses in the
financial services software industry, using a combination of cash and debt financing (as discussed in Notes 6 and 11 to our
consolidated financial statements).
The following table lists the businesses we have acquired since January 1, 2013:
Acquired Business
Primatics Financial ....................... November 2015 Added cloud-based integrated risk, compliance and finance solution in the
banking industry
Acquired Capabilities, Products and Services
Acquisition Date
Varden Technologies ................... September 2015 Added cloud-based client and advisor communication solutions for
investment firms
Advent Software, Inc. .................. July 2015
DST Global Solutions .................. November 2014 Added investment management software and services
Prime Management Limited ......... October 2013
Expanded global investment management software and services
Expanded fund administration services in the insurance linked securities
market
The discussion in this Part II, Item 7 of this Annual Report on Form 10-K includes the operations of the business listed in the
table above for the respective time periods each was owned by SS&C.
In August 2015, we announced the acquisition of Citigroup’s Alternative Investor Services business, or Pending Citi
Acquisition, which includes Hedge Fund Services and Private Equity Fund Services, for $425 million, subject to certain
adjustments. The transaction, which is subject to approvals by relevant regulatory authorities and other customary closing conditions,
is expected to close in the first quarter of 2016 (as discussed in Liquidity and Capital Resources and Note 11 to our consolidated
financial statements).
Revenues. Our contractually recurring revenues, which includes our maintenance and term licenses revenues and software-
enabled services revenues, were $916.6 million in 2015, compared to $708.1 million and $665.5 million in 2014 and 2013,
respectively. In both 2015 and 2014, contractually recurring revenues represented 92% of total revenues, compared to 93% in 2013.
We believe our high level of contractually recurring revenues provides us with the ability to better manage our costs and capital
investments. Our revenues from sales outside the United States were $318.0 million in 2015, compared to $253.1 million and
$246.0 million in 2014 and 2013, respectively.
31
As we have expanded our business, we have focused on increasing our contractually recurring revenues. Since 2013, we have
seen increased demand in the financial services industry for our software-enabled services from existing and new customers. We have
taken a number of steps to support that demand, such as automating our software-enabled services delivery methods, expanded our
service offerings and providing our employees with sales incentives. We have also acquired businesses that offer software-enabled
services or have a large base of term license or maintenance clients. Our software-enabled services revenues increased from
$552.6 million in 2013 to $670.2 million in 2015. Our maintenance and term licenses revenues increased from $112.9 million in 2013
to $246.4 million in 2015. Maintenance customer retention rates have continued to be in excess of 90% for our core enterprise
products, and we have maintained both pricing levels for new contracts and annual price increases for existing contracts. To support
the growth in our software-enabled services revenues and maintain our level of customer service, we have added personnel, expanded
our facilities and invested in information technology. These investments and automation improvements in our software-enabled
services have served to improve gross margins.
Liquidity. In connection with the acquisition of Advent in the third quarter of 2015, we entered into a new credit agreement, or
Credit Agreement, and issued $600 million aggregate principal amount of 5.875% Senior Notes due 2023, or Senior Notes, each of
which is described in Contractual Obligations, to fund a portion of the purchase price, refinance amounts outstanding under our prior
credit facility, Prior Facility, and raise cash for the Pending Citi Acquisition.
We generated $230.6 million in cash from operating activities in 2015, compared to $252.5 million and $208.3 million in 2014
and 2013, respectively. In 2015, we used our operating cash flow, $3.1 billion in proceeds received from debt financing, $717.8
million in proceeds from common stock issuance and existing cash to acquire Advent, Varden Technologies and Primatics Financial,
repay $903.4 million of debt, pay $45.5 million in dividends and invest in capital expenditures in our business. The cash from
operating activities was affected by $66.4 million of costs related to the financing and acquisition of Advent.
Results of Operations
Revenues
We derive our revenue from two sources: recurring revenues and, to a lesser degree, non-recurring revenues. Recurring revenues
consist of software-enabled services and maintenance and term licenses. As a general matter, fluctuations in our software-enabled
services revenues are attributable to the number of new software-enabled services clients as well as total assets under management in
our clients’ portfolios and the number of outsourced transactions provided to our existing clients. Maintenance revenues vary based on
customer retention, the number of perpetual licenses and on the annual increases in fees, which are generally tied to the consumer
price index, while term license revenues vary based on the rate by which we add or lose clients over time. Non-recurring revenues
consist of professional services and perpetual license fees and tend to fluctuate based on the number of new licensing clients and
demand for consulting services. See Reclassifications in Note 2 to our Consolidated Financial Statements for discussion of the change
in revenue presentation compared to prior periods.
The following table sets forth the percentage of our total revenues represented by each of the following sources of revenues for
the periods indicated:
Revenues:
Software-enabled services .......................................................
Maintenance and term licenses ................................................
Total recurring revenues.....................................................
Perpetual licenses ....................................................................
Professional services ................................................................
Total non-recurring revenues .............................................
Total revenues .........................................................................
Year Ended December 31,
2014
2013
2015
67%
25
92
3
5
8
100%
77 %
15
92
4
(cid:3)(cid:3)
4
(cid:3)(cid:3)
8
100 % (cid:3)(cid:3)
77%
16
93
3
4
7
100%
32
The following table sets forth revenues (dollars in thousands) and percent change in revenues for the periods indicated:
Year Ended December 31,
2014
2015
Percent
Change from
Prior
Period
2013
2015
2014
Revenues:
Software-enabled services ........................................................... $
Maintenance and term licenses ...................................................
Total recurring revenues ........................................................
Perpetual licenses ........................................................................
Professional services ...................................................................
Total non-recurring revenues .................................................
670,170 $
246,422
916,592
31,467
52,226
83,693
Total revenues ............................................................................. $ 1,000,285 $
592,528 $
115,609
708,137
26,328
33,396
59,724
767,861 $
552,565
112,889
665,454
19,207
28,041
47,248
712,702
13%
113
29
20
56
40
30
7%
2
6
37
19
26
8
Fiscal 2015 versus Fiscal 2014. Our revenues increased primarily due to revenues related to our acquisitions of Primatics in the
fourth quarter of 2015, Varden and Advent in the third quarter of 2015 and DSTGS in the fourth quarter of 2014, as well as a
continued increase in demand for our fund administration services from alternative investment managers. These increases were
partially offset by the unfavorable impact from foreign currency translation of $13.9 million, which resulted from the strength of the
U.S. dollar relative to currencies such as the Canadian dollar, the Euro and the British pound. Maintenance and term licenses revenues
and software-enabled services revenues experienced increases due to the acquisitions, which contributed revenues of $131.7 million
and $59.9 million, respectively, in 2015. These amounts reflect reductions of $49.8 million in maintenance and term license revenues
and software-enabled services related to the fair value adjustment of acquired deferred revenue for these acquisitions. Professional
services revenues and perpetual license revenues experienced increases due to the acquisitions, which contributed revenues of $20.8
million and $8.7 million, respectively, in 2015. Professional services revenues reflect a reduction of $6.4 million related to the fair
value adjustment of acquired deferred revenue related to Advent.
Fiscal 2014 versus Fiscal 2013. Our revenues increased in 2014 as compared to 2013 primarily due to a continued increase in
demand for our fund administration services from alternative investment managers as well as revenues related to our acquisitions of
DSTGS and Prime Management Limited, or Prime, for which revenues increased $13.8 million. These increases were partially offset
by the unfavorable impact from foreign currency translation of $3.2 million, which resulted from the strength of the U.S. dollar
relative to currencies such as the Canadian dollar and the Australian dollar. Our perpetual licenses revenues increased primarily due to
the impact of a significant perpetual license in the period and increased demand for our Institutional software products. Additionally,
professional services revenues increased due to a rise in the number of product implementation projects in 2014.
Cost of Revenues
Cost of recurring revenues consists primarily of costs related to personnel utilized in servicing our software-enabled services
and maintenance contracts and amortization of intangible assets. Cost of non-recurring revenues consists primarily of the cost related
to personnel utilized to provide implementation, conversion and training services to our software licensees, as well as system
integration and custom programming consulting services and amortization of intangible assets.
The following tables set forth each of the following cost of revenues as a percentage of their respective revenue source for the
periods indicated:
Cost of revenues:
Cost of software-enabled services ...........................................
Cost of maintenance and term licenses ....................................
Total cost of recurring revenues .........................................
Cost of perpetual licenses ........................................................
Cost of professional services ...................................................
Total cost of non-recurring revenues ..................................
Total cost of revenues ..............................................................
Gross margin percentage .........................................................
33
Year Ended December 31,
2014
2013
2015
56%
46
53
10
80
54
53
47
58 %
36
54
13
69
45
53
47
58%
37
55
27
70
53
55
45
The following table sets forth cost of revenues (dollars in thousands) and percent change in cost of revenues for the periods
indicated:
Year Ended December 31,
2014
2015
Percent
Change from
Prior
Period
2013
2015
2014
Cost of revenues:
Cost of software-enabled services ............................................... $
Cost of maintenance and term licenses .......................................
Total cost of recurring revenues ............................................
Cost of perpetual licenses ...........................................................
Cost of professional services .......................................................
Total cost of non-recurring revenues .....................................
Total cost of revenues ................................................................. $
373,394 $
113,865
487,259
3,116
41,975
45,091
532,350 $
342,625 $
41,424
384,049
3,531
23,151
26,682
410,731 $
322,719
41,215
363,934
5,133
19,733
24,866
388,800
9%
175
27
(12)
81
69
30
6%
1
6
(31)
17
7
6
Fiscal 2015 versus Fiscal 2014. Our total cost of revenues increased primarily due to our acquisitions of Primatics, Varden,
Advent and DSTGS, which added costs of $113.2 million. Included in those costs are charges of $2.9 million in 2015 related to the
elimination of redundant positions within the acquired businesses and an increase in stock-based compensation expense of $2.6
million. These increases were partially offset by the favorable impact from foreign currency translation of $10.8 million, which
resulted from the strength of the U.S. dollar relative to currencies such as the Canadian dollar, the Euro and the British pound.
Fiscal 2014 versus Fiscal 2013. Our total gross margins increased in 2014 primarily due to cost reduction synergies with respect
to the businesses acquired since 2012. Our total cost of revenues increased in 2014 primarily as a result of an increase in cost of
software-enabled services revenues to support the increased demand for our fund administration services for alternative investment
managers, as well as a result of costs associated with acquired businesses. The decrease in cost of perpetual licenses was primarily due
to a decrease in amortization expense due to the accelerated amortization methods utilized for our intangible assets.
Operating Expenses
Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our
products, including salaries, commissions and travel and entertainment. Such expenses also include amortization of intangible assets,
the cost of branch sales offices, trade shows and marketing and promotional materials. Research and development expenses consist
primarily of personnel costs attributable to the enhancement of existing products and the development of new software products.
General and administrative expenses consist primarily of personnel costs related to management, accounting and finance, information
management, human resources and administration and associated overhead costs, as well as fees for professional services.
The following table sets forth the percentage of our total revenues represented by each of the following operating expenses for
the periods indicated:
Year Ended December 31,
2014
2013
2015
Operating expenses:
Selling and marketing ........................................................
Research and development .................................................
General and administrative .................................................
Total operating expenses ..............................................
9%
11
10
30
6 %
7
7
20
6%
8
6
20
34
The following table sets forth operating expenses (dollars in thousands) and percent change in operating expenses for the
periods indicated:
Operating expenses:
Year Ended December 31,
2014
2015
Percent Change
from Prior
Period
2013
2015
2014
Selling and marketing ........................................................... $
Research and development ...................................................
General and administrative ...................................................
Total operating expenses ................................................. $
94,950 $
110,415
97,832
303,197 $
48,592 $
57,287
50,879
156,758 $
41,885
53,862
45,187
140,934
95%
93
92
93
16%
6
13
11
Fiscal 2015 versus 2014. The increase in total operating expenses in 2015 was primarily due to our acquisitions of Primatics,
Advent, Varden and DSTGS, which added expenses of $127.2 million in the period. Included in those costs are charges of $19.8
million related to the elimination of redundant positions within the acquired businesses and an increase in stock-based compensation
expense of $25.2 million. (See Note 10 to our Consolidated Financial Statements for further discussion of stock-based compensation.)
Included in general and administrative expenses in 2015 are professional fees of $13.5 million associated with our acquisition of
Advent. These increases were partially offset by the favorable impact from foreign currency translation of $4.3 million, which resulted
from the strength of the U.S. dollar relative to currencies such as the Canadian dollar, the Euro and the British pound.
Fiscal 2014 versus 2013. The increase in total operating expenses in 2014 was primarily due an increase in selling and
marketing expenses increased as we expanded the size of our sales force. Additionally, general and administrative expenses as a result
of legal expenses related to an IP infringement lawsuit, which was settled during the second quarter of 2014, costs related to DSTGS
and Prime and expenses associated with office consolidations.
Comparison of Fiscal 2015, 2014 and 2013 for Interest, Taxes and Other
Interest income. We had interest income of $2.0 million in 2015 compared to $1.7 million in 2014 and $1.1 million in 2013. The
increase in interest income in 2015 and 2014 resulted from higher average cash balances.
Interest expense. We had interest expense of $79.3 million in 2015 compared to $27.2 million in 2014 and $42.4 million in
2013. The increase in interest expense in 2015 reflects incremental borrowings under the Credit Agreement and Senior Notes in
connection with our acquisition of Advent during the third quarter of 2015, which resulted in a higher debt balance. The decrease in
interest expense in 2014 reflects the lower average debt balance resulting from repayments of the credit facility and a decrease in
average interest rates resulting from the 2013 and 2014 repricings.
Other income, net. Other income, net for 2015, 2014 and 2013 consisted primarily of foreign currency transaction gains.
Loss on extinguishment of debt. We recorded a $30.4 million loss on extinguishment of debt in 2015 in connection with the
repayment and termination of our Prior Facility. The loss on early extinguishment of debt includes the write-off of a portion of the
unamortized capitalized financing costs and the unamortized original issue discounts related to the Prior Facility for amounts
accounted for as a debt extinguishment, as well as a portion of the financing costs related to the Credit Agreement for amounts
accounted for as a debt modification.
Provision for Income Taxes. The following table sets forth the provision for income taxes (dollars in thousands) and effective
tax rates for the periods indicated:
Provision for income taxes ..................................................... $
Effective tax rate .....................................................................
17,980 $
30%
46,527 $
26 % (cid:3)(cid:3)
27,292
19%
Year Ended December 31,
2014
2013
2015
Our 2015, 2014 and 2013 effective tax rates differ from the statutory rate primarily due to the effect of our foreign operations.
The increase in rate from 2014 to 2015 was primarily due to nondeductible transaction costs and taxes incurred on a one time
repatriation of foreign earnings, partially offset by the beneficial impact of an enacted rate change in the United Kingdom and a
reduction in domestic income before taxes. The increase in effective rate from 2013 to 2014 was primarily due to an increase in
domestic earnings from the prior year, the unfavorable impact of enacted tax law changes in New York, a decrease in benefits from
35
research and development credits, and the absence of favorable items recorded in 2013, most notably the release of an uncertain tax
position, and an enacted tax law change in the United Kingdom, partially offset by a decrease in expense attributable to deferred taxes
recorded on foreign unremitted earnings. We had $580.5 million of deferred tax liabilities and $73.1 million of deferred tax assets at
December 31, 2015.
Our effective tax rate includes the effect of operations outside the United States, which historically have been taxed at rates
lower than the U.S. statutory rate. While we have income from multiple foreign sources, the majority of our non-U.S. operations are in
Canada, India and the United Kingdom, where the statutory rates were 26.5%, 34.6% and 20.3%, respectively, in 2015, 26.5%, 34.0%
and 21.5%, respectively, in 2014, and 26.5%, 34.0% and 23.3%, respectively, in 2013. A future proportionate change in the
composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.
Liquidity and Capital Resources
Our principal cash requirements are to finance the costs of our operations pending the billing and collection of client
receivables, to fund payments with respect to our indebtedness, to invest in research and development and to acquire complementary
businesses or assets. We expect our cash on hand, cash flows from operations, and cash available under the Credit Agreement to
provide sufficient liquidity to fund our current obligations, projected working capital requirements, fund the Pending Citi Acquisition,
and capital spending for at least the next twelve months.
In July 2015, we purchased all of the outstanding stock of Advent for approximately $2.6 billion in cash, equating to $44.25 per
share plus the costs, fees and expenses associated with the transaction. We funded the acquisition and refinancing of existing debt with
$3.1 billion of debt financing, cash on hand and approximately $400.0 million of proceeds from the issuance and sale of our common
stock in June 2015.
In 2015, we paid quarterly cash dividends of $0.125 per share of common stock on March 16, 2015, June 15, 2015,
September 15, 2015 and December 15, 2015 to stockholders of record as of the close of business on March 2, 2015, June 1, 2015,
September 1, 2015 and December 1, 2015, respectively, totaling $45.5 million.
Our cash and cash equivalents at December 31, 2015 were $434.2 million, an increase of $324.6 million from $109.6 million at
December 31, 2014. The increase in cash is primarily due to proceeds received from our borrowings and common stock offering as
well as cash provided by operations, proceeds from stock option exercises and the related income tax benefits. These increases were
partially offset by cash used for acquisitions, repayments of debt, payment of dividends and capital expenditures. See Notes 4, 6 and
11 to our consolidated financial statements for further discussion of equity, debt and acquisitions, respectively.
Net cash provided by operating activities was $230.6 million in 2015. Cash provided by operating activities primarily resulted
from net income of $42.9 million adjusted for non-cash items of $135.7 million and changes in our working capital accounts
(excluding the effect of acquisitions) totaling $52.0 million. The changes in our working capital accounts were driven by an increase
in deferred revenues and accrued expenses and a change in income taxes prepaid and payable. These changes were partially offset by
increases in accounts receivable and prepaid expenses and other assets and a decrease in accounts payable. The increase in deferred
revenues was primarily due to an increase in term license contracts as a result of our acquisition of Advent. In total, cash provided by
operating activities was negatively affected by payments totaling $66.4 million related to the financing and Advent acquisition, as well
as $4.2 million in payments related to the elimination of redundant positions with the acquired businesses. The increase in accounts
receivable was primarily due to an increase in revenue and an increase in days’ sales outstanding to 47 days at December 31, 2015
from 42 days at December 31, 2014. The majority of Advent’s term license clients are billed on an annual cycle, rather than monthly,
resulting in a slightly longer collection cycle and corresponding increase in days’ sales outstanding.
Investing activities used net cash of $2,748.3 million in 2015, primarily related to cash paid of $2,723.1 million for the
acquisitions of Advent, Varden and Primatics in the third and fourth quarters of 2015, $13.6 million in capital expenditures, $7.9
million for the working capital adjustment associated with the acquisition of DSTGS and $4.3 million in capitalized software.
Financing activities provided net cash of $2,847.1 million in 2015, representing net cash of $3,068.1 million received from debt
borrowings, net proceeds of $717.8 million from common stock issuance, $30.1 million from stock option exercises and related
income tax windfall benefits of $33.0 million. These proceeds were partially offset by repayments of debt totaling $903.4 million, the
payment of $46.0 million in fees related to refinancing activities, $45.5 million in quarterly dividends and $7.0 million in withholding
taxes related to equity award net share settlements. Repayments of debt excludes $1.6 million related to the repayment of original
issue discount associated with the Prior Facility, which is reflected as an outflow from operating cash flow.
36
In August 2015, we announced the Pending Citi Acquisition for $425 million, subject to certain adjustments. The transaction,
which is subject to approvals by relevant regulatory authorities and other customary closing conditions, is expected to close in the first
quarter of 2016 (as discussed in Note 11 to our consolidated financial statements).
We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive
operating cash flows. At December 31, 2015, we held approximately $68.9 million in cash and cash equivalents at non-U.S.
subsidiaries where we had made such a determination and in turn no provision for U.S. income taxes had been made. At December 31,
2015, we held approximately $40.0 million in cash that was available to our foreign borrowers under our credit facility and will be
used to facilitate debt servicing of those entities. At December 31, 2015, we held approximately $27.7 million in cash at our Indian
operations that if repatriated to our foreign debt holder would incur distribution taxes of approximately $4.7 million.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2015 that require us to make future cash
payments (in thousands):
Payments Due by Period
Contractual Obligations and
Other Commitments
Total
Short-term and long-term debt ..................................... $2,820,000 $ 32,281 $ 80,186 $ 233,312 $ 2,474,221 $
833,703 135,936 242,470 234,955 220,342
Interest payments(1) .....................................................
65,413
54,171
194,697
Operating lease obligations(2) .....................................
—
666
6,795
Purchase obligations(3) ................................................
Uncertain tax positions and related interest(4) .............
—
—
34,682
Total contractual obligations ........................................ $3,889,877 $ 204,756 $ 377,493 $ 512,970 $ 2,759,976 $
44,643
60
—
30,470
6,069
—
More than
5 Years
1-3 Years
3-5
Years
Less
than
1 Year
All
Other
—
—
—
—
34,682
34,682
(1) Reflects interest payments on our Credit Agreement at an assumed interest rate of one-month LIBOR of 0.61% plus 2.75% for
U.S. dollar loans on our Term A-1 and A-2 facilities, one-month LIBOR of 0.61% plus 3.25% on our Term B-1 and B-2
facilities and 5.875% on our Senior Notes.
(2) We are obligated under noncancelable operating leases for office space and office equipment. The lease for the corporate facility
in Windsor, Connecticut expires in 2022. We sublease office space under noncancelable leases. For the years ended December
31, 2013, 2014 and 2015, we received rental income under these leases of $1.2 million, $0.2 million and $0.2 million,
respectively. The effect of the rental income to be received in the future has not been included in the table above.
(3) Purchase obligations include the minimum amounts committed under contracts for goods and services.
(4) As of December 31, 2015, our liability for uncertain tax positions and related net interest payable was $31.2 million and
$3.5 million, respectively. We are unable to reasonably estimate the timing of such liability and interest payments in individual
years beyond 12 months due to uncertainties in the timing of the effective settlement of tax positions.
Senior Secured Credit Facilities
On July 8, 2015, in connection with our acquisition of Advent, we entered into a Credit Agreement with SS&C, SS&C
European Holdings S.A.R.L., an indirect wholly-owned subsidiary of SS&C, or SS&C Sarl, and SS&C Technologies Holdings
Europe S.A.R.L., an indirect wholly-owned subsidiary of SS&C, or SS&C Tech Sarl as the borrowers. The Credit Agreement has four
tranches of term loans, or together the Term Loans: (i) a $98 million term A-1 facility with a five year term for borrowings by SS&C
Sarl, or Term A-1 Loan; (ii) a $152 million term A-2 facility with a five year term for borrowings by SS&C Tech Sarl, or Term A-2
Loan; (iii) a $1.82 billion term B-1 facility with a seven year term for borrowings by SS&C, or Term B-1 Loan; and (iv) a $410
million term B-2 facility with a seven year term for borrowings by SS&C Sarl, or Term B-2 Loan.
In addition, the Credit Agreement has a revolving credit facility with a five year term available for borrowings by SS&C with
$150 million in commitments, or the Revolving Credit Facility. The Revolving Credit Facility contains a $25 million letter of credit
sub-facility.
37
The Term Loans and Revolving Credit Facility bear interest, at the election of the borrowers, at the base rate (as defined in the
Credit Agreement) or LIBOR, plus the applicable interest rate margin for the credit facility. The Term A-1 Loan, Term A-2 Loan and
the Revolving Credit Facility initially bear interest at either LIBOR plus 2.75% or at the base rate plus 1.75%, and are subject to a
step-down at any time SS&C’s consolidated net senior secured leverage ratio is less than 3.0 times, to 2.50% in the case of the LIBOR
margin and 1.50% in the case of the base rate margin. The Term B-1 Loan and Term B-2 Loan initially bear interest at either LIBOR
plus 3.25%, with LIBOR subject to a 0.75% floor, or at the base rate plus 2.25%, and are subject to a step-down at any time SS&C’s
consolidated net leverage ratio is less than 4.0 times, to 3.00% in the case of the LIBOR margin and 2.00% in the case of the base rate
margin.
A portion of the initial proceeds from the Term Loans was used to satisfy the consideration required to fund the acquisition of
Advent and to repay all amounts outstanding under our then-existing credit facility, or Prior Facility, which was subsequently
terminated. At the time of the termination of the Prior Facility, all liens and other security interests that SS&C had granted to the
lenders under the Prior Facility were released. The refinancing of the Prior Facility was evaluated in accordance with FASB
Accounting Standards Codification 470-50, Debt-Modifications and Extinguishments, for modification and extinguishment
accounting. We accounted for the refinancing as a debt modification with respect to amounts that remained obligations of the same
lender in the syndicate with minor changes in cash flows and as a debt extinguishment with respect to amounts that were obligations
of lenders that exited the syndicate or remained in the syndicate but experienced a change in cash flows of greater than 10%. See Note
6 to our Consolidated Financial Statements for further discussion of debt.
As of December 31, 2015, there was $96.8 million in principal amount outstanding under the term A-1 facility, $150.1 million
in principal amount outstanding under the term A-2 facility, $1,720.0 million in principal amount outstanding under the term B-1
facility and $253.1 million in principal amount outstanding under the term B-2 facility. As of December 31, 2015, there was no
principal amount drawn under the Revolving Credit Facility.
We are required to make scheduled quarterly payments of 0.25% of the original principal amount of the Term B-1 Loan and
Term B-2 Loan, with the balance due and payable on the seventh anniversary of its incurrence. We are required to make scheduled
quarterly payments of 1.25% of the original principal amount of the Term A-1 Loan and Term A-2 Loan until September 30, 2017 and
quarterly payments of 2.50% of the original principal amount of the Term A-1 Loan and Term A-2 Loan from December 31, 2017
until June 30, 2020 with the balance due and payable on the fifth anniversary of the incurrence thereof. No amortization is required
under the Revolving Credit Facility.
Our obligations under the Term Loans are guaranteed by (i) Holdings and each of our existing and future U.S. wholly-owned
restricted subsidiaries, in the case of the Term B-1 Loan and the Revolving Credit Facility and (ii) Holdings, SS&C and each of our
existing and future wholly-owned restricted subsidiaries, in the case of the Term A-1 Loan, the Term A-2 Loan and the Term B-2
Loan.
The obligations of the U.S. loan parties under the Credit Agreement are secured by substantially all of the assets of such persons
(subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-
owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain
foreign restricted subsidiaries of such persons (with customary exceptions and limitations). All obligations of the non-U.S. loan parties
under the Credit Agreement are secured by substantially all of Holdings’ and the other guarantors’ assets (subject to customary
exceptions and limitations), including a pledge of all of the capital stock of substantially all of Holdings’ wholly-owned restricted
subsidiaries (with customary exceptions and limitations).
The Credit Agreement includes negative covenants that, among other things and subject to certain thresholds and exceptions,
limit our ability and the ability of our restricted subsidiaries to incur debt or liens, make investments (including in the form of loans
and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of our subsidiaries, pay dividends on
our capital stock or redeem, repurchase or retire our capital stock, alter the business we conduct, amend, prepay, redeem or purchase
subordinated debt, or engage in transactions with our affiliates. In addition, the Credit Agreement contains a financial covenant
requiring us to maintain a consolidated net senior secured leverage ratio. As of December 31, 2015, we were in compliance with the
financial and non-financial covenants.
Senior Notes
On July 8, 2015, in connection with the acquisition of Advent, we issued $600.0 million aggregate principal amount of 5.875%
Senior Notes due 2023. The Senior Notes are guaranteed by SS&C and each of our wholly-owned domestic subsidiaries that borrows
or guarantees obligations under the Credit Agreement. The guarantees are full and unconditional and joint and several. The Senior
Notes are unsecured senior obligations that are equal in right of payments to all existing and future senior debt, including the Credit
Agreement.
38
We are required to use commercially reasonable efforts to file with the SEC an exchange offer registration statement pursuant to
which we will offer in exchange for the Senior Notes, new notes identical in all material respects to the Senior Notes, and cause the
exchange offer registration statement to be declared effective within 365 days following the issuance of the Senior Notes. If we are not
able to complete the exchange offer registration statement in the period stated or at all (or a shelf registration statement with the SEC
to cover resales of the Senior Notes is not declared effective), the interest rate on the notes will increase 0.25% per year. The amount
of additional interest will increase an additional 0.25% per year for any subsequent 90-day period in which we have not yet completed
and have declared effective a registration statement, up to a maximum additional interest rate of 1.00% per year.
At any time after July 15, 2018, we may redeem some or all of the Senior Notes, in whole or in part, at the redemption prices set
forth in the indenture governing the Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or before
July 15, 2018, we may to redeem up to 35% of the aggregate principal amount of the Senior Notes at a redemption price equal to
105.875% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or
more equity offerings.
The indenture governing the Senior Notes contains a number of covenants that restrict, subject to certain thresholds and
exceptions, our ability and the ability of our restricted subsidiaries to incur debt or liens, make certain investments, pay dividends,
dispose of certain assets, engage in mergers or acquisitions or engage in transactions with our affiliates.
As of December 31, 2015, there were $600.0 million in principal amount of Senior Notes outstanding.
Covenant Compliance
Under the Credit Agreement, we are required to satisfy and maintain a specified financial ratio. Our financial ratio becomes
effective beginning with the period ended December 31, 2015. Our continued ability to meet this financial ratio can be affected by
events beyond our control, and we cannot assure you that we will continue to meet this ratio. Any breach of these covenants could
result in an event of default under the Credit Agreement. Upon the occurrence of any event of default under the Credit Agreement, the
lenders could elect to declare all amounts outstanding under the Credit Agreement to be immediately due and payable and terminate
all commitments to extend further credit.
Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in the Credit Agreement,
which is a material facility supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined
as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other
adjustments permitted in calculating covenant compliance under the Credit Agreement. We believe that the inclusion of
supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information
to investors to demonstrate compliance with the specified financial ratio and other financial condition tests contained in the Credit
Agreement.
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial
statements are unavailable. Management further believes that providing this information allows our investors greater transparency and
a better understanding of our ability to meet our debt service obligations and make capital expenditures.
Any breach of covenants in the Credit Agreement that are tied to ratios based on Consolidated EBITDA could result in an event
of default under that agreement, in which case the lenders could elect to declare all amounts borrowed immediately due and payable
and to terminate any commitments they have to provide further borrowings. Any default and subsequent acceleration of payments
under the Credit Agreement would have a material adverse effect on our results of operations, financial position and cash flows.
Additionally, under the Credit Agreement, our ability to engage in activities such as incurring additional indebtedness, making
investments and paying dividends is also tied to ratios based on Consolidated EBITDA.
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by generally
accepted accounting principles, or GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.
Further, the Credit Agreement requires that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result,
the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the
measure for any subsequent four-quarter period or any complete fiscal year.
39
Consolidated EBITDA is not a recognized measurement under GAAP and investors should not consider Consolidated EBITDA
as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income,
operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA
differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies.
Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly
comparable GAAP financial measure, including:
(cid:404)
(cid:404)
(cid:404)
(cid:404)
(cid:404)
Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions;
Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;
Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital
expenditures through depreciation and amortization charges;
Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option
awards; and
Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are
normal expenses for the operation of a business.
The following is a reconciliation of net income to Consolidated EBITDA as defined in our senior credit facility.
2015
Year Ended December 31,
2014
(In thousands)
2013
Net income .......................................................... $
Interest expense, net ...........................................
Income tax provision ..........................................
Depreciation and amortization ............................
EBITDA ........................................................
Purchase accounting adjustments(1) ...................
Capital-based taxes .............................................
Unusual or non-recurring charges (gains)(2) ......
Loss on extinguishment of debt ..........................
Acquired EBITDA(3) .........................................
Stock-based compensation..................................
Other(4) ..............................................................
Consolidated EBITDA, as defined ................ $
42,862 $
77,357
17,980
150,834
289,033
49,927
828
26,148
30,417
109,492
44,079
1,529
551,453 $
131,127 $
25,472
46,527
99,831
302,957
476
6
4,876
—
11,405
11,483
315
331,518 $
117,895
41,279
27,292
99,780
286,246
(52)
182
(3,121)
—
890
8,386
235
292,766
(1) Purchase accounting adjustments include (a) an adjustment to increase revenues by the amount that would have been recognized
if deferred revenue were not adjusted to fair value at the date of acquisitions, (b) an adjustment to increase personnel and
commissions expense by the amount that would have been recognized if prepaid commissions and deferred personnel costs were
not adjusted to fair value at the date of the acquisitions and (c) an adjustment to increase rent expense by the amount that would
have been recognized if lease obligations were not adjusted to fair value at the date of acquisitions.
(2) Unusual or non-recurring charges include foreign currency gains and losses, proceeds from legal and other settlements,
severance expenses, transaction costs, losses on currency contracts and other one-time expenses, such as expenses associated
with the facilities consolidations, acquisitions and the sale of fixed assets.
(3) Acquired EBITDA reflects the EBITDA impact of significant businesses that were acquired during the period as if the
acquisition occurred at the beginning of the period, as well as cost savings enacted in connection with acquisitions.
(4) Other includes the non-cash portion of straight-line rent expense.
40
Our covenant requirement for net senior secured leverage ratio and the actual ratio for the year ended December 31, 2015 are as
follows:
Maximum consolidated net senior secured leverage to
Consolidated EBITDA ratio(1).................................................
5.50x
3.24x
Covenant
Requirement
Actual
Ratio
(1) Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, to Consolidated
EBITDA, as defined by the Credit Agreement, for the period of four consecutive fiscal quarters ended on the measurement date.
Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred
purchase price obligations and capital lease obligations, all of which is secured by liens on our property.
Critical Accounting Estimates
A number of our accounting policies require the application of significant judgment by our management, and such judgments
are reflected in the amounts reported in our consolidated financial statements. In applying these policies, our management uses its
judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our
historical experience, terms of existing contracts, management’s observation of trends in the industry, information provided by our
clients and information available from other outside sources, as appropriate. On an ongoing basis, we evaluate our estimates and
judgments, including those related to revenue recognition, goodwill and other intangible assets and other contingent liabilities. Actual
results may differ significantly from the estimates contained in our consolidated financial statements. We believe that the following
are our critical accounting policies.
Revenue Recognition
Our revenues consist primarily of software-enabled services and maintenance and term license revenues, and, to a lesser degree,
perpetual license and professional services revenues.
Software-enabled services revenues, which are based on a monthly fee or are transaction-based, are recognized as the services
are performed. Software-enabled services are generally provided under non-cancelable contracts with initial terms of one to five years
that require monthly or quarterly payments, and are subject to automatic annual renewal at the end of the initial term unless terminated
by either party.
We recognize software-enabled services revenues on a monthly basis as the software-enabled services are provided and when
persuasive evidence of an arrangement exists, the price is fixed or determinable and collectability is reasonably assured. We do not
recognize any revenues before services are performed. Certain contracts contain additional fees for increases in market value, pricing
and trading activity. Revenues related to these additional fees are recognized in the month in which the activity occurs based upon our
summarization of account information and trading volume.
We recognize revenues from the sale of perpetual licenses when persuasive evidence of an arrangement exists, the product has
been delivered, the fee is fixed or determinable and collection of the resulting receivable is reasonably assured. Our products generally
do not require significant modification or customization of the underlying software and, accordingly, the implementation services we
provide are not considered essential to the functionality of the software.
We use a signed license agreement as evidence of an arrangement for the majority of our transactions. Delivery generally occurs
when the product is delivered to a common carrier F.O.B. shipping point, or if delivered electronically, when the client has been
provided with access codes that allow for immediate possession via a download. Although our arrangements generally do not have
acceptance provisions, if such provisions are included in the arrangement, then delivery occurs at acceptance, unless such acceptance
is deemed perfunctory. At the time of the transaction, we assess whether the fee is fixed or determinable based on the payment terms.
Collection is assessed based on several factors, including past transaction history with the client and the creditworthiness of the client.
The arrangements for perpetual software licenses are generally sold with maintenance and professional services. We allocate revenue
to the delivered components, normally the license component, using the residual value method based on vendor-specific objective
evidence, or VSOE, of the fair value of the undelivered elements. The total contract value is attributed first to the maintenance and
customer support arrangement based on the fair value, which is derived from substantive renewal rates. Fair value of the professional
services is based upon stand-alone sales of those services. Professional services are generally billed at an hourly rate plus out-of-
pocket expenses. Professional services revenues are recognized as the services are performed. Maintenance agreements generally
require us to provide technical support and software updates to our clients (on a when-and-if-available basis). We generally provide
maintenance services under one-year renewable contracts. Maintenance revenues are recognized ratably over the term of the contract.
41
The Company also sells term licenses ranging from one to seven years, many of which include bundled maintenance services.
For those arrangements with bundled maintenance services, VSOE does not exist for the maintenance element and therefore the total
fee is recognized ratably over the contractual term of the arrangement.
We occasionally enter into perpetual license agreements requiring significant customization or fixed-fee professional service
arrangements. We account for these arrangements in accordance with the percentage-of-completion method based on the ratio of hours
incurred to expected total hours; accordingly we must estimate the costs to complete the arrangement utilizing an estimate of 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. Due to the complexity of some perpetual
license agreements, we routinely apply judgments to the application of software revenue recognition accounting principles to specific
agreements and transactions. Different judgments or different contract structures could have led to different accounting conclusions,
which could have a material effect on our reported results of operations.
Long-lived Assets, Intangible Assets and Goodwill
We must test goodwill annually for impairment (and in interim periods if certain events occur indicating that the carrying value
of goodwill or indefinite-lived intangible assets may be impaired). Historically, we have tested the recoverability of goodwill based on
our reporting unit structure by comparing fair value to carrying value. To the extent that we do not achieve our revenue or operating
cash flow plans or other measures of fair value decline, including external valuation assumptions, our current goodwill carrying value
could be impaired. Additionally, since fair value is also based in part on the market approach, if our stock price declines, it is possible
we could be required to perform the second step of the goodwill impairment test and impairment could result. The first step of the
impairment analysis indicated that the fair value significantly exceeded the carrying value at December 31, 2015.
We assess the impairment of identifiable intangibles, long-lived assets and goodwill whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an
impairment review include the following:
(cid:404)
(cid:404)
(cid:404)
significant underperformance relative to historical or projected future operating results;
significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and
significant negative industry or economic trends.
When we determine that the carrying value of intangibles and long-lived assets may not be recoverable based upon the existence
of one or more of the above indicators of potential impairment, we assess whether an impairment has occurred based on whether net
book value of the assets exceeds related projected undiscounted cash flows from these assets. We consider a number of factors,
including past operating results, budgets, economic projections, market trends and product development cycles in estimating future
cash flows. Differing estimates and assumptions as to any of the factors described above could result in a materially different
impairment charge, if any, and thus materially different results of operations.
Acquisition Accounting
In connection with our acquisitions, we allocate the purchase price to the assets and liabilities we acquire, such as net tangible
assets, completed technology, in-process research and development, customer relationships, other identifiable intangible assets,
deferred revenue and goodwill. We applied significant judgments and estimates in determining the fair market value of the assets
acquired and their useful lives. For example, we have determined the fair value of existing client contracts based on the discounted
estimated net future cash flows from such client contracts existing at the date of acquisition and the fair value of the completed
technology based on the relief-from-royalties method on estimated future revenues of such completed technology and assumed
obsolescence factors. While actual results during the years ended December 31, 2015, 2014 and 2013 were consistent with our
estimated cash flows and we did not incur any impairment charges during those years, different estimates and assumptions in valuing
acquired assets could yield materially different results.
Stock-based Compensation
Using the fair value recognition provisions of relevant accounting literature, stock-based compensation cost is measured at the
grant date based on the value of the award and is recognized as expense over the appropriate service period. Determining the fair value
of stock-based awards requires considerable judgment, including estimating the expected term of stock options, expected volatility of
our stock price, and the number of awards expected to be forfeited. In addition, for stock-based awards where vesting is dependent
upon achieving certain operating performance goals, we estimate the likelihood of achieving the performance goals. Differences
between actual results and these estimates could have a material effect on our financial results. A deferred income tax asset is recorded
42
over the vesting period as stock compensation expense is recorded for non-qualified stock options. The realizability of the deferred tax
asset is ultimately based on the actual value of the stock-based award upon exercise. If the actual value is lower than the fair value
determined on the date of grant, then there could be an income tax expense for the portion of the deferred tax asset that is not
realizable.
Income Taxes
The carrying value of our deferred tax assets assumes that we will be able to generate sufficient future taxable income in certain
tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, we may be
required to record additional valuation allowances against our deferred tax assets resulting in additional income tax expense in our
Consolidated Statements of Comprehensive Income. On a quarterly basis, we evaluate whether deferred tax assets are realizable and
assess whether there is a need for additional valuation allowances. The carrying value of our deferred tax assets and liabilities is
recorded based on the statutory rates that we expect our deferred tax assets and liabilities to reverse into income. We estimate the state
rate at which our deferred tax assets and liabilities will reverse based on estimates of state income apportionment for future years.
Each of these estimates requires significant judgment on the part of our management. In addition, we evaluate the need to provide
additional tax provisions for adjustments proposed by taxing authorities.
As of December 31, 2015, we had $31.2 million in liabilities associated with unrecognized tax benefits. All of the unrecognized
tax benefits, if recognized, would decrease our effective tax rate and increase our net income. Additionally, we recognize accrued
interest and penalties relating to unrecognized tax benefits as a component of the income tax provision.
Recent Accounting Pronouncements
In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-
17, Income Taxes: Balance Sheet Classification of Deferred Taxes. This ASU eliminates the requirement to present deferred tax assets
and liabilities as current and noncurrent on the balance sheet. Instead, all deferred tax assets and liabilities are now classified as
noncurrent. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted. In connection
with our early adoption of this standard in the period ended December 31, 2015, we have classified all deferred taxes as non-current.
For the period ended December 31, 2014, future income tax benefits and payables are presented as current and non-current. For both
periods, future income tax benefits and payables within the same tax paying component of a particular jurisdiction are offset for
presentation in the Consolidated Balance Sheet.
In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The
amendments in this ASU require that an acquirer recognize adjustments to provisional amounts that are identified during the
measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require
that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or
other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at
the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years beginning after
December 15, 2015, including interim periods within those fiscal years with early adoption permitted. In connection with our early
adoption of this standard in the period ended December 31, 2015, we made certain immaterial measurement period adjustments related
to acquisitions during the year ended December 31, 2015. The impact of the adoption did not have a material impact on our financial
statements.
In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. This ASU more closely
aligns the treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct
deduction from the carrying amount of the related debt. The amendments in this ASU are effective for financial statements issued for
fiscal years beginning after December 15, 2015 and interim periods within those fiscal years, and retrospective application is required
once adopted. In connection with our early adoption in the third quarter of 2015, we reclassified $19.2 million of deferred financing
fees from intangible and other assets to a reduction in long-term debt, net of current portion in our Condensed Consolidated Balance
Sheet as of December 31, 2014. In addition, we recorded deferred financing fees of $55.8 million as a reduction in long-term debt, net
of current portion, in our Condensed Consolidated Balance Sheet as of September 30, 2015. The change did not impact the results of
operations or cash flows.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a
Going Concern. This ASU establishes specific guidance to an organization’s management on their responsibility to evaluate whether
there is substantial doubt about the organization’s ability to continue as a going concern. The provisions of ASU 2014-15 are effective
for interim and annual periods beginning after December 15, 2016. This ASU is not expected to have an impact on our financial
position, results of operations or cash flows.
43
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The objective of ASU
2014-09 is to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in revenue requirements;
providing a more robust framework for addressing revenue issues; improving comparability of revenue recognition practices across
entities, industries, jurisdictions and capital markets; and providing more useful information to users of financial statements through
improved revenue disclosure requirements. The guidance was initially effective January 1, 2017 and early adoption was not permitted.
In July 2015, the FASB approved a one-year deferral of the effective date to January 1, 2018, with an option of applying the standard
on the original effective date. As a result, the provisions of this ASU are now effective for interim and annual periods beginning after
December 15, 2017. We are currently evaluating the impact of this standard on our financial position, results of operations and cash
flows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We do not use derivative financial instruments for trading or speculative purposes. We have invested our available cash in short-
term, highly liquid financial instruments, having initial maturities of three months or less. When necessary, we have borrowed to fund
acquisitions.
At December 31, 2015, we had total debt of $2,820.0 million, including $2,220.0 million of variable interest rate debt. As of
December 31, 2015, a 1% change in interest rates would result in a change in interest expense of approximately $19.6 million per
year.
During 2015, approximately 32% of our revenues were from clients located outside the United States. A portion of the revenues
from clients located outside the United States is denominated in foreign currencies, primarily the Canadian dollar. While revenues and
expenses of our foreign operations are primarily denominated in their respective local currencies, some subsidiaries do enter into
certain transactions in currencies that are different from their local currency. These transactions consist primarily of cross-currency
intercompany balances and trade receivables and payables. As a result of these transactions, we have exposure to changes in foreign
currency exchange rates that result in foreign currency transaction gains and losses, which we report in other income (expense). These
outstanding amounts were not material for the year ended December 31, 2015. The amount of these balances can fluctuate in the
future as we bill customers and buy products or services in currencies other than our functional currency, which could increase our
exposure to foreign currency exchange rates. We continue to monitor our exposure to foreign exchange rates as a result of our
acquisitions and changes in our operations. We do not enter into any market risk sensitive instruments for trading purposes.
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 us to assess and minimize risk discussed above should not be considered projections of future events or losses.
Item 8.
Financial Statements and Supplementary Data
Information required by this item is contained in our consolidated financial statements, related footnotes and the report of
PricewaterhouseCoopers LLP, which information follows the signature page to this annual report and is incorporated herein by
reference.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer (our principal executive officer
and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31,
2015. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended, or Exchange Act, means controls and other procedures of a company that are designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the
company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions
regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated,
44
can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating
the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as
of December 31, 2015, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls
and procedures were effective at the reasonable assurance level.
Report of Management on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. Internal control over financial reporting includes policies and procedures that: 1) pertain to maintaining records
that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets; 2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures are made in accordance with management and board of director authorization;
and 3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of
company assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of
December 31, 2015. Management has excluded Advent Software, Inc., or Advent, from its assessment of internal control over
financial reporting as of December 31, 2015 because it was acquired by us in a purchase business combination during 2015. Advent,
and its related entities are our wholly-owned subsidiaries whose total assets and total revenues represent 2% and 16%, respectively, of
the consolidated financial statement amounts as of and for the year ended December 31, 2015.
The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2015, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
45
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Incorporated by reference from the information in the Company’s proxy statement for the 2016 annual meeting of stockholders,
which the Company intends to file within 120 days after the end of the fiscal year to which this annual report on Form 10-K relates.
Item 11. Executive Compensation
Incorporated by reference from the information in the Company’s proxy statement for the 2016 annual meeting of stockholders,
which the Company intends to file within 120 days after the end of the fiscal year to which this annual report on Form 10-K relates.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Incorporated by reference from the information in the Company’s proxy statement for the 2016 annual meeting of stockholders,
which the Company intends to file within 120 days after the end of the fiscal year to which this annual report on Form 10-K relates.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference from the information in the Company’s proxy statement for the 2016 annual meeting of stockholders,
which the Company intends to file within 120 days after the end of the fiscal year to which this annual report on Form 10-K relates.
Item 14. Principal Accountant Fees and Services
Incorporated by reference from the information in the Company’s proxy statement for the 2016 annual meeting of stockholders,
which the Company intends to file within 120 days after the end of the fiscal year to which this annual report on Form 10-K relates.
46
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)
1.
Financial Statements
The following financial statements are filed as part of this annual report:
Document
Report of Independent Registered Public Accounting Firm ........................................................................................................
Consolidated Balance Sheets as of December 31, 2015 and 2014 ...............................................................................................
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2015, 2014 and 2013 ...............
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 .............................................
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2015, 2014 and 2013 ...........
Notes to Consolidated Financial Statements ................................................................................................................................
Page
F-1
F-2
F-3
F-4
F-5
F-6
2.
Financial Statement Schedules
Financial statement schedules are not submitted because they are not applicable, not required or the information is included in
our consolidated financial statements.
3.
Exhibits
The attached list of exhibits in the “Exhibit Index” immediately preceding the exhibits to this annual report is incorporated
herein by reference in response to this item.
47
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.
SIGNATURES
SS&C TECHNOLOGIES HOLDINGS, INC.
By: /s/ William C. Stone
William C. Stone
Chairman of the Board and Chief Executive Officer
Date: February 26, 2016
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.
Signatures
/s/ William C. Stone
William C. Stone
/s/ Patrick J. Pedonti
Patrick J. Pedonti
/s/ Normand A. Boulanger
Normand A. Boulanger
/s/ William A. Etherington
William A. Etherington
/s/ Smita Conjeevaram
Smita Conjeevaram
/s/ Michael E. Daniels
Michael E. Daniels
/s/ Jonathan E. Michael
Jonathan E. Michael
/s/ David A. Varsano
David A. Varsano
/s/ Michael J. Zamkow
Michael J. Zamkow
Title
Date
Chairman of the Board and Chief
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
February 26, 2016
Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of SS&C Technologies Holdings, Inc.:
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material
respects, the financial position of SS&C Technologies Holdings, Inc. and its subsidiaries at December 31, 2015 and 2014, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with
accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of
Management on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on
these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it presents debt issuance
costs in the consolidated balance sheets in 2015.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in the Report of Management on Internal Control Over Financial Reporting, management has excluded Advent Software,
Inc. (Advent) from its assessment of internal control over financial reporting as of December 31, 2015 because they were acquired by
the Company in a purchase business combination during 2015. We have also excluded Advent from our audit of internal control over
financial reporting. Advent, and its related entities are wholly owned subsidiaries of the Company whose total assets and total
revenues represent 2% and 16%, respectively, of the consolidated financial statement amounts as of and for the year ended December
31, 2015.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 26, 2016
F-1
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2015
December 31,
2014
(In thousands, except share and per share data)
Current assets:
ASSETS
Cash and cash equivalents ........................................................................................................... $
Accounts receivable, net of allowance for doubtful accounts of $2,957 and $2,241,
respectively (Note 3) .................................................................................................................
Prepaid expenses and other current assets ...................................................................................
Prepaid income taxes ...................................................................................................................
Deferred income taxes .................................................................................................................
Restricted cash .............................................................................................................................
Total current assets ............................................................................................................................
Property, plant and equipment:
Land .............................................................................................................................................
Building and improvements .........................................................................................................
Equipment, furniture, and fixtures ...............................................................................................
Less: accumulated depreciation ...................................................................................................
Net property, plant and equipment ...............................................................................................
Deferred income taxes .......................................................................................................................
Goodwill ............................................................................................................................................
Intangible and other assets, net of accumulated amortization of $536,929 and $416,708,
respectively (Note 2) .......................................................................................................................
Total assets ........................................................................................................................................ $
Current liabilities:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt (Note 6) .................................................................................. $
Accounts payable .........................................................................................................................
Income taxes payable ...................................................................................................................
Accrued employee compensation and benefits ............................................................................
Deferred income taxes .................................................................................................................
Interest payable ............................................................................................................................
Other accrued expenses ...............................................................................................................
Deferred revenue .........................................................................................................................
Total current liabilities .......................................................................................................................
Long-term debt, net of current portion (Note 6) ................................................................................
Other long-term liabilities ..................................................................................................................
Deferred income taxes .......................................................................................................................
Total liabilities ...................................................................................................................................
Commitments and contingencies (Note 12)
Stockholders’ equity (Notes 2 and 4):
Common stock:
Class A non-voting common stock, $0.01 par value per share, 5,000,000 shares
authorized; 2,703,846 shares issued and outstanding ................................................................
Common stock, $0.01 par value per share, 200,000,000 shares and 100,000,000 shares
authorized, respectively; 96,552,226 shares and 82,268,722 shares issued,
respectively, and 95,765,787 shares and 81,482,283 shares outstanding, respectively,
of which 12,438 and 17,188 are unvested, respectively ............................................................
Additional paid-in capital ............................................................................................................
Accumulated other comprehensive income .................................................................................
Retained earnings.........................................................................................................................
Less: cost of common stock in treasury, 786,439 shares .......................................................
Total stockholders’ equity .................................................................................................................
Total liabilities and stockholders’ equity ........................................................................................... $
434,159
$
109,577
169,951
27,511
40,627
—
2,818
675,066
2,655
37,855
97,274
137,784
(70,641 )
67,143
2,199
3,549,212
1,508,622
5,802,242
32,281
11,957
1,428
83,894
—
28,903
36,231
222,024
416,718
2,719,070
51,434
509,574
3,696,796
$
$
94,359
14,927
11,857
2,975
1,477
235,172
2,655
28,521
79,564
110,740
(56,463)
54,277
1,135
1,573,227
402,344
2,266,155
20,470
12,004
1,116
53,975
110
—
30,666
73,254
191,595
599,268
26,446
102,176
919,485
27
27
966
1,794,115
(83,170 )
411,493
2,123,431
(17,985 )
2,105,446
5,802,242
$
822
964,845
(15,121)
414,082
1,364,655
(17,985)
1,346,670
2,266,155
The accompanying notes are an integral part of these consolidated financial statements.
F-2
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
2015
Year Ended December 31,
2014
(In thousands, except per share data)
2013
Revenues:
Software-enabled services ........................................................................... $
Maintenance and term licenses ....................................................................
Total recurring revenues ...................................................................
Perpetual licenses ........................................................................................
Professional services ....................................................................................
Total non-recurring revenues ............................................................
Total revenues ...................................................................................
670,170 $
246,422
916,592
31,467
52,226
83,693
1,000,285
Cost of revenues:
Software-enabled services ...........................................................................
Maintenance and term licenses ....................................................................
Total recurring cost of revenues .......................................................
Perpetual licenses ........................................................................................
Professional services ....................................................................................
Total non-recurring cost of revenues ................................................
Total cost of revenues .......................................................................
Gross profit .......................................................................................................
Operating expenses:
Selling and marketing ..................................................................................
Research and development ..........................................................................
General and administrative ..........................................................................
Total operating expenses ..................................................................
Operating income ..............................................................................................
Interest income ..................................................................................................
Interest expense .................................................................................................
Other income, net ..............................................................................................
Loss on extinguishment of debt ........................................................................
Income before income taxes..............................................................................
Provision for income taxes (Note 5) .................................................................
Net income ........................................................................................................ $
Basic earnings per share .................................................................................... $
Basic weighted average number of common shares outstanding ......................
Diluted earnings per share ................................................................................. $
Diluted weighted average number of common and common equivalent
shares outstanding ..........................................................................................
Net income ........................................................................................................ $
Other comprehensive loss, net of tax:
Foreign currency exchange translation adjustment ................................
Total comprehensive loss, net of tax .................................................................
Comprehensive (loss) income ........................................................................... $
592,528 $
115,609
708,137
26,328
33,396
59,724
767,861
342,625
41,424
384,049
3,531
23,151
26,682
410,731
357,130
48,592
57,287
50,879
156,758
200,372
1,705
(27,177)
2,754
—
177,654
46,527
131,127 $
1.57 $
83,314
1.50 $
373,394
113,865
487,259
3,116
41,975
45,091
532,350
467,935
94,950
110,415
97,832
303,197
164,738
1,976
(79,333)
3,878
(30,417)
60,842
17,980
42,862 $
0.47 $
91,098
0.45 $
95,448
42,862 $
87,331
131,127 $
(68,049)
(68,049)
(25,187) $
(45,495)
(45,495)
85,632 $
552,565
112,889
665,454
19,207
28,041
47,248
712,702
322,719
41,215
363,934
5,133
19,733
24,866
388,800
323,902
41,885
53,862
45,187
140,934
182,968
1,116
(42,395)
3,498
—
145,187
27,292
117,895
1.45
81,195
1.38
85,616
117,895
(21,144)
(21,144)
96,751
The accompanying notes are an integral part of these consolidated financial statements.
F-3
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flow from operating activities:
Net income ............................................................................................................... $
42,862 $
131,127 $
117,895
2015
Year Ended December 31,
2014
(In thousands)
2013
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization .................................................................................
Stock-based compensation expense .........................................................................
Income tax benefit related to exercise of stock options ...........................................
Amortization and write-offs of loan origination costs .............................................
Loss on extinguishment of debt ...............................................................................
Loss on sale or disposition of property and equipment ............................................
Deferred income taxes .............................................................................................
Provision for doubtful accounts ...............................................................................
Changes in operating assets and liabilities, excluding effects from acquisitions:
Accounts receivable ...........................................................................................
Prepaid expenses and other current assets .........................................................
Accounts payable ...............................................................................................
Accrued expenses ..............................................................................................
Income taxes prepaid and payable .....................................................................
Deferred revenue ...............................................................................................
Net cash provided by operating activities ................................................................
Cash flow from investing activities:
150,834
44,079
(32,960)
8,126
3,954
336
(39,806)
1,137
(12,160)
(6,019)
(5,586)
4,073
11,514
60,240
230,624
Additions to property and equipment.......................................................................
Proceeds from sale of property and equipment ........................................................
Cash paid for business acquisitions, net of cash acquired (Note 11) ........................
Additions to capitalized software .............................................................................
Net changes in restricted cash ..................................................................................
Net cash used in investing activities ........................................................................
(13,600)
64
(2,730,956)
(4,273)
453
(2,748,312)
Cash flow from financing activities:
Cash received from debt borrowings, net of original issue discount ........................
Repayments of debt .................................................................................................
Proceeds from exercise of stock options ..................................................................
Withholding taxes related to equity award net share settlement ..............................
Payment of contingent consideration .......................................................................
Income tax benefit related to exercise of stock options ...........................................
Proceeds from common stock issuance, net .............................................................
Purchase of common stock for treasury ...................................................................
Payment of fees related to refinancing activities .....................................................
Dividends paid on common stock ............................................................................
Net cash provided by (used in) financing activities .................................................
Effect of exchange rate changes on cash and cash equivalents ......................................
Net increase in cash and cash equivalents ......................................................................
Cash and cash equivalents, beginning of period ............................................................
Cash and cash equivalents, end of period ...................................................................... $
Supplemental disclosure of cash paid for:
Interest ........................................................................................................................... $
Income taxes, net of refunds .......................................................................................... $
Supplemental disclosure of non-cash investing activities:
See Note 11 for a discussion of acquisitions.
3,068,075
(903,448)
30,092
(6,939)
-
32,960
717,802
-
(46,025)
(45,451)
2,847,066
(4,796)
324,582
109,577
434,159 $
99,831
11,483
(15,454)
5,839
—
687
(13,583)
610
3,902
(6,419)
1,525
10,140
21,560
1,284
252,532
(15,040)
42
(86,911)
(3,517)
983
(104,443)
75,000
(212,000)
24,110
—
(500)
15,454
—
(11,223)
(512)
(10,494)
(120,165)
(2,817)
25,107
84,470
109,577 $
99,780
8,386
(24,194)
5,830
—
317
(11,069)
666
814
(4,695)
(4,032)
1,695
18,060
(1,184)
208,269
(11,921)
67
(3,657)
(2,399)
—
(17,910)
—
(239,000)
27,817
—
—
24,194
—
(943)
(1,917)
—
(189,849)
(2,200)
(1,690)
86,160
84,470
42,221 $
42,210 $
21,330 $
33,414 $
36,551
21,584
The accompanying notes are an integral part of these consolidated financial statements.
F-4
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013
Class A
(cid:3)(cid:3) (cid:3)(cid:3) (cid:3)(cid:3)
Common Stock
Common Stock
Number
Number
Additional
of
of
Issued
Paid-in
Issued
Shares Amount Shares Amount Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Total
Treasury Stockholders’
Stock
Equity
Balance, at December 31,
2012 ....................................... 1,429 $
Net income ................................ —
Foreign exchange translation
adjustment .............................. —
Stock-based compensation
expense .................................. —
Exercise of options ................... 1,275
Income tax benefit related to
exercise of stock options ........ —
Issuance of common stock ........ —
Purchase of common stock ....... —
Balance, at December 31,
2013 ....................................... 2,704 $
Net income ................................ —
Foreign exchange translation
adjustment .............................. —
Stock-based compensation
expense .................................. —
Exercise of options ................... —
Income tax benefit related to
exercise of stock options ........ —
Cash dividends declared -
$0.125 per share (Note 4) ...... —
Purchase of common stock ....... —
Balance, at December 31,
2014 ....................................... 2,704 $
Net income ................................ —
Foreign exchange translation
adjustment .............................. —
Stock-based compensation
expense .................................. —
Exercise of options, net of
withholding taxes ................... —
Non-cash purchase price
consideration (Note 11) ......... —
Income tax benefit related to
exercise of stock options ........ —
Cash dividends declared - $0.50
per share (Note 4) .................. —
Issuance of common stock ........ —
Balance, at December 31,
2015 ....................................... 2,704 $
(In thousands)
14 78,141 $
781 $
— — —
853,455 $ 175,554 $
— 117,895
51,518 $ (5,819) $ 1,075,503
117,895
—
—
— — —
—
—
(21,144 )
—
(21,144)
— — —
23
13 2,312
8,386
27,781
— — —
—
25 —
— — —
24,194
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(943)
8,386
27,817
24,194
—
(943)
804 $
27 80,478 $
— — —
913,816 $ 293,449 $
— 131,127
30,374 $ (6,762) $ 1,231,708
131,127
—
—
— — —
—
—
(45,495 )
—
(45,495)
— — —
18
— 1,790
11,483
24,092
—
—
—
—
—
—
11,483
24,110
— — —
15,454
—
—
—
15,454
— — —
— — —
— (10,494)
—
—
—
—
— (11,223)
(10,494)
(11,223)
27 82,268 $
822 $
— — —
964,845 $ 414,082 $
— 42,862
(15,121 ) $ (17,985) $ 1,346,670
42,862
—
—
— — —
—
—
(68,049 )
—
(68,049)
— — —
43,746
—
—
—
43,746
— 2,207
22
23,131
—
—
—
23,153
— — —
11,753
—
—
—
11,753
— — —
32,960
—
—
—
32,960
— — —
122
— 12,077
— (45,451)
—
717,680
—
—
—
—
(45,451)
717,802
27 96,552 $
966 $ 1,794,115 $ 411,493 $
(83,170 ) $ (17,985) $ 2,105,446
The accompanying notes are an integral part of these consolidated financial statements.
F-5
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SS&C Technologies Holdings, Inc., or “Holdings”, is our top-level holding company. SS&C Technologies, Inc., or “SS&C,” is
our primary operating company and a wholly-owned subsidiary of SS&C Technologies Holdings, Inc. The “Company” means SS&C
Technologies Holdings, Inc. and its consolidated subsidiaries, including SS&C.
Note 1—Organization
The Company provides software products and software-enabled services to the financial services industry, primarily in North
America. The Company also has operations in Europe, Asia, Australia and Africa. The Company’s portfolio of over 90 products and
software-enabled services allows its clients to automate and integrate front-office functions such as trading and modeling, middle-
office functions such as portfolio management and reporting, and back-office functions such as accounting, performance
measurement, reconciliation, reporting, processing and clearing. The Company provides its products and related services in eight
vertical markets in the financial services industry:
1.
2.
3.
4.
5.
6.
Alternative investments;
Insurance and pension funds;
Asset and wealth management;
Financial institutions;
Commercial lenders;
Real estate property management;
7. Municipal finance; and
8.
Financial markets.
Note 2—Summary of Significant Accounting Policies
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”)
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. Estimates are used for, but not limited to, collectability of accounts receivable, costs to complete certain contracts,
valuation of acquired assets and liabilities, valuation of stock options, income tax accruals and the value of deferred tax assets.
Estimates are also used to determine the remaining economic lives and carrying value of fixed assets, goodwill and intangible assets.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant accounts,
transactions and profits between the consolidated companies have been eliminated in consolidation. Unconsolidated investments in
entities over which the Company does not have control but has the ability to exercise influence over operating and financial policies, if
any, are accounted for under the equity method of accounting. Earnings and losses from such investments are recorded on a pre-tax
basis, if any.
Reclassifications
In connection with the acquisition of Advent and the related increase in term license revenues, the Company condensed its
presentation of revenues on its Consolidated Statements of Comprehensive Income to illustrate its two types of revenue streams:
recurring revenues and non-recurring revenues. Recurring revenues consist of software-enabled services and maintenance and term
licenses. Non-recurring revenues consist of professional services and perpetual licenses.
The Company’s prior presentation required that revenues from term license agreements be allocated between license revenue
and maintenance revenue, with the license portion being reported together with revenue from perpetual license agreements as
“Software licenses”, and the maintenance portion being reported together with maintenance revenue related to perpetual licenses as
“Maintenance”. The Company reclassified $10.0 million and $9.5 million from “Software licenses” to “Maintenance and term
F-6
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
licenses” for the years ended December 31, 2014 and 2013, respectively. In connection with the reclassification of revenues, the
Company reclassified the related costs of revenues, which were immaterial. The revised presentation better illustrates the nature of the
Company’s revenues and costs of revenues by indicating the recurring nature of the license portion of revenue from maintenance and
term license agreements. The Company has not changed its accounting methods for revenue recognition.
Revenue Recognition
The Company’s payment terms for software licenses typically require that the total fee be paid upon signing of the contract.
Maintenance services are typically due in full at the beginning of the maintenance period. Professional services and software-enabled
services are typically due and payable monthly in arrears. Normally, the Company’s arrangements do not provide for any refund
rights, and payments are not contingent on specific milestones or customer acceptance conditions. For arrangements that do contain
such provisions, the Company defers revenue until the rights or conditions have expired or have been met.
Unbilled accounts receivable primarily relates to professional services and software-enabled services revenue that has been
earned as of month end but is not invoiced until the subsequent month, and to software license revenue that has been earned and is
realizable but not invoiced to clients until future dates specified in the client contract.
Deferred revenue consists of payments received related to product delivery, maintenance and other services, which have been
paid by customers prior to the recognition of revenue. Deferred revenue relates primarily to cash received for maintenance contracts in
advance of services being performed over the contractual term.
Software-enabled Services Revenue
The Company primarily offers software-enabled outsourcing services in which the Company utilizes its own software to offer
comprehensive fund administration services for alternative investment managers, including fund manager services, transfer agency
services, funds-of-funds services, tax processing and accounting. The Company also offers subscription-based on-demand software
applications that are managed and hosted at our facilities. The software-enabled services arrangements provide an alternative for
clients who do not wish to install, run and maintain complicated financial software. Under these arrangements, the client does not have
the right to take possession of the software, rather, the Company agrees to provide access to its applications, remote use of its
equipment to process transactions, access to client’s data stored on its equipment, and connectivity between its environment and the
client’s computing systems.
Software-enabled services are generally provided under non-cancelable contracts with initial terms of one to five years that
require monthly or quarterly payments, and are subject to automatic annual renewal at the end of the initial term unless terminated by
either party.
The Company recognizes software-enabled services revenues on a monthly basis as the software-enabled services are provided
and when pervasive evidence of an arrangement exists, the price is fixed or determinable and collectability is reasonably assured. The
Company does not recognize any revenue before services are performed. Certain contracts contain additional fees for increases in
market value, pricing and trading activity. Revenues related to these additional fees are recognized in the month in which the activity
occurs based upon the Company’s summarization of account information and trading volume.
Maintenance and Term Licenses Revenue Agreements
Maintenance agreements generally require the Company to provide technical support and software updates (on a when-and-if-
available basis) to its clients. Such services are generally provided under one-year renewable contracts. Maintenance revenues are
recognized ratably over the term of the maintenance agreement.
The Company also sells term licenses ranging from one to seven years, many of which include bundled maintenance services.
For those arrangements with bundled maintenance services, VSOE does not exist for the maintenance element and therefore the total
fee is recognized ratably over the contractual term of the arrangement.
Perpetual Licenses Revenue
The Company follows the principles of accounting standards relating to software revenue recognition, which provide guidance
on applying GAAP in recognizing revenue on software transactions. Accounting standards require that revenue recognized from
F-7
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
software transactions be allocated to each element of the transaction based on the relative fair values of the elements, such as software
products, specified upgrades, enhancements, post-contract client support, installation or training. The determination of fair value is
based upon vendor-specific objective evidence (“VSOE”). The Company recognizes perpetual licenses revenues allocated to software
products and enhancements generally upon delivery of each of the related products or enhancements, assuming all other revenue
recognition criteria are met. In the rare occasion that a perpetual license agreement includes the right to a specified upgrade or product,
the Company defers all revenues under the arrangement until the specified upgrade or product is delivered, since typically VSOE does
not exist to support the fair value of the specified upgrade or product.
The Company generally recognizes revenue from sales of software or products including proprietary software upon product
shipment and receipt of a signed contract, provided that collection is probable and all other revenue recognition criteria are met. The
Company sells perpetual software licenses in conjunction with professional services for installation and maintenance. For these
arrangements, the total contract value is attributed first to the maintenance arrangement based on its fair value, which is derived from
stated renewal rates. The contract value is then attributed to professional services based on estimated fair value, which is derived from
the rates charged for similar services provided on a stand-alone basis. The Company’s software license agreements generally do not
require significant modification or customization of the underlying software, and, accordingly, implementation services provided by
the Company are not considered essential to the functionality of the software. The remainder of the total contract value is then
attributed to the software license based on the residual method.
The Company occasionally enters into license agreements requiring significant customization of the Company’s software. The
Company accounts for the license fees under 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. Revenue is recognized
each period based on the hours incurred to date compared to the total hours expected to complete the project. 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.
Professional Services Revenue
The Company provides consulting and training services to its clients. Revenues for such services are generally recognized over
the period during which the services are performed. The Company typically charges for professional services on a time-and-materials
basis. However, some contracts are for a fixed fee. For the fixed-fee arrangements, an estimate is made of the total hours expected to
be incurred to complete the project. 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. Revenues are
recognized each period based on the hours incurred to date compared to the total hours expected to complete the project.
Research and Development
Research and development costs associated with computer software are charged to expense as incurred. Capitalization of
internally developed computer software costs begins upon the establishment of technological feasibility based on a working model.
Net capitalized software costs of $4.7 million and $4.2 million are included in the December 31, 2015 and 2014 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 client. 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 five 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 development costs was $2.4 million, $1.8 million, and $1.0 million for
each of the years ended December 31, 2015, 2014, and 2013, respectively.
Stock-based Compensation
Using the fair value recognition provisions of relevant accounting literature, stock-based compensation cost is measured at the
grant date based on the estimated fair value of the award and is recognized as expense over the appropriate service period.
Determining the fair value of stock-based awards requires considerable judgment, including estimating the expected term of stock
options, expected volatility of the Company’s stock price, and the number of awards expected to be forfeited. Differences between
F-8
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
actual results and these estimates could have a material effect on the Company’s financial results. A deferred income tax asset is
recorded over the vesting period as stock compensation expense is recorded for non-qualified option awards. The realizability of the
deferred tax asset is ultimately based on the actual value of the stock-based award upon exercise. If the actual value is lower than the
fair value determined on the date of grant, then there could be an income tax expense for the portion of the deferred tax asset that is
not realizable.
Other Income, Net
Other income, net for 2015 consists primarily of foreign currency transaction gains of $3.4 million and the liquidation of an
investment. Other income, net for 2014 consists primarily of foreign currency transaction gains of $2.9 million. The gains were
partially offset by an increase of $0.4 million to the contingent consideration liability for the acquisition of Prime Management
Limited (“Prime”). Other income, net for 2013 consists primarily of foreign currency transaction gains of $3.4 million.
Income Taxes
The Company accounts for income taxes in accordance with the relevant accounting literature. An asset and liability approach is
used to recognize deferred tax assets and liabilities for the future tax consequences of items that are recognized in the Company’s
financial statements and tax returns in different years. 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.
The Company accounts for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on
audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest
amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when
evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately
forecast actual outcomes.
Cash and Cash Equivalents
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. The Company held $303.1 million in cash equivalents at December 31, 2015 and did not hold any
cash equivalents at December 31, 2014.
Restricted Cash
Restricted cash includes monies held by a bank as security for letters of credit issued due to lease requirements for office space.
The letters of credit are expected to be renewed within the next twelve months, and as such, the restricted cash is classified as a current
asset on the Consolidated Balance Sheet. Additionally, movements of restricted cash are included in other investing activities on the
Consolidated Statement of Cash Flows.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated using a
combination of straight-line and accelerated methods over the estimated useful lives of the assets as follows:
Description
Land ..................................................... —
Buildings and improvements................ 40 years
Equipment and software ....................... 3-5 years
Furniture and fixtures ........................... 7-10 years
Leasehold improvements .....................
Useful Life
Shorter of lease term or estimated
useful life
Depreciation expense for the years ended December 31, 2015, 2014 and 2013 was $18.9 million, $14.3 million and $14.7
million, respectively.
F-9
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 other income (expense), net.
Goodwill and Intangible Assets
The Company tests goodwill annually for impairment as of December 31st (and in interim periods if certain events occur or
circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount). The
Company has completed the required impairment tests for goodwill and has determined that no impairment existed as of
December 31, 2015 or 2014. The first step of the impairment analysis, which is based on our reporting unit structure, indicated that the
fair value significantly exceeded the carrying value at December 31, 2015. There were no other indefinite-lived intangible assets as of
December 31, 2015 or 2014.
The following table summarizes changes in goodwill (in thousands):
Balance at December 31, 2013................................................... $
2014 acquisition ...........................................................................
Effect of foreign currency translation ..........................................
Balance at December 31, 2014...................................................
2015 acquisitions ..........................................................................
Adjustments to prior acquisitions .................................................
Effect of foreign currency translation ..........................................
Balance at December 31, 2015................................................... $
1,541,386
66,511
(34,670 )
1,573,227
2,031,451
(67 )
(55,399 )
3,549,212
Customer relationships, completed technology and other identifiable intangible assets are amortized over lives ranging from
three to 17 years based on the ratio that current cash flows for the intangible asset bear to the total of current and expected future cash
flows for the intangible asset. Amortization expense associated with customer relationships, completed technology and other
amortizable intangible assets was $129.5 million, $83.7 million and $84.1 million for the years ended December 31, 2015, 2014 and
2013, respectively.
A summary of the components of intangible assets is as follows (in thousands):
December 31,
2015
Customer relationships............................................................... $ 1,459,550 $
497,030
Completed technology ...............................................................
61,573
Trade names ...............................................................................
2,680
Other ..........................................................................................
2,020,833
(530,792)
$ 1,490,041 $
Less: accumulated amortization .................................................
2014
604,638
154,043
39,876
2,774
801,331
(412,897 )
388,434
Total estimated amortization expense, related to intangible assets, for each of the next five years, as of December 31, 2015, is
expected to approximate (in thousands):
Year Ending December 31,
2016.............................................................................................. $
2017..............................................................................................
2018..............................................................................................
2019..............................................................................................
2020..............................................................................................
$
192,618
185,093
180,220
164,541
154,122
876,594
F-10
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impairment of Long-Lived Assets
The Company evaluates the recoverability of 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 in the years ended December 31, 2015 and 2014.
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 client base is highly diversified. As of December 31, 2015 and 2014, the Company had no significant concentrations of
credit.
International Operations and Foreign Currency
The functional currency of each foreign subsidiary is generally 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 within other income (expense) in the results of operations in the periods in which they occur.
Comprehensive Income
Items defined as comprehensive income, such as foreign currency translation adjustments, are separately classified in the
financial statements. The accumulated balance of other comprehensive income is reported separately from retained earnings and
additional paid-in capital in the equity section of the Consolidated Balance Sheet. Total comprehensive income consists of net income
and other accumulated comprehensive income disclosed in the equity section of the Consolidated Balance Sheet.
Recent Accounting Pronouncements
In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-
17, Income Taxes: Balance Sheet Classification of Deferred Taxes. This ASU eliminates the requirement to present deferred tax assets
and liabilities as current and noncurrent on the balance sheet. Instead, all deferred tax assets and liabilities are now classified as
noncurrent. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted. In connection
with the Company’s early adoption of this standard in the period ended December 31, 2015, the Company has classified all deferred
taxes as non-current. For the period ended December 31, 2014, future income tax benefits and payables are presented as current and
non-current. For both periods, future income tax benefits and payables within the same tax paying component of a particular
jurisdiction are offset for presentation in the Consolidated Balance Sheet.
In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The
amendments in this ASU require that an acquirer recognize adjustments to provisional amounts that are identified during the
measurement period in the reporting period in which the adjustment amounts are determined. The amendments in ASU 2015-16
require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation,
amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had
been completed at the acquisition date. For public business entities, the amendments in this ASU are effective for fiscal years
beginning after December 15, 2015, including interim periods within those fiscal years with early adoption permitted. In connection
with the Company’s early adoption of this standard in the period ended December 31, 2015, the Company made certain immaterial
measurement period adjustments related to acquisitions during the year ended December 31, 2015. The impact of the adoption did not
have a material impact on its financial statements.
In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. This ASU more closely
aligns the treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct
deduction from the carrying amount of the related debt. The amendments in this ASU are effective for financial statements issued for
fiscal years beginning after December 15, 2015 and interim periods within those fiscal years with early adoption permitted.
Retrospective application is required once adopted. In connection with the Company’s early adoption of this standard in the third
F-11
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
quarter of 2015, the Company reclassified $19.2 million of deferred financing fees from intangible and other assets to a reduction in
long-term debt, net of current portion in its Condensed Consolidated Balance Sheet as of December 31, 2014. In addition, the
Company recorded deferred financing fees of $55.8 million as a reduction in long-term debt, net of current portion, in its Condensed
Consolidated Balance Sheet as of September 30, 2015. The change did not impact the results of operations or cash flows.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a
Going Concern. This ASU establishes specific guidance to an organization’s management on their responsibility to evaluate whether
there is substantial doubt about the organization’s ability to continue as a going concern. The provisions of ASU 2014-15 are effective
for interim and annual periods beginning after December 15, 2016. This ASU is not expected to have an impact on the Company’s
financial position, results of operations or cash flows.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The objective of ASU
2014-09 is to clarify the principles for recognizing revenue by removing inconsistencies and weaknesses in revenue requirements;
providing a more robust framework for addressing revenue issues; improving comparability of revenue recognition practices across
entities, industries, jurisdictions and capital markets; and providing more useful information to users of financial statements through
improved revenue disclosure requirements. The guidance was initially effective January 1, 2017 and early adoption was not permitted.
In July 2015, the FASB approved a one-year deferral of the effective date to January 1, 2018, with an option of applying the standard
on the original effective date. As a result, the provisions of this ASU are now effective for interim and annual periods beginning after
December 15, 2017. The Company is currently evaluating the impact of this standard on its financial position, results of operations
and cash flows.
Basic and Diluted Earnings per Share
Earnings per share (“EPS”) is calculated in accordance with the relevant standards. Basic EPS includes no dilution and is
computed by dividing income available to the Company’s common stockholders by the weighted average number of common shares
outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, stock appreciation
rights (“SARs”) and restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) using the treasury stock method. Common
equivalent shares are excluded from the computation of diluted earnings per share if the effect of including such common equivalent
shares is anti-dilutive because their total assumed proceeds exceed the average fair value of common stock for the period. The
Company has two classes of common stock, each with identical participation rights to earnings and liquidation preferences, and
therefore the calculation of EPS as described above is identical to the calculation under the two-class method.
The following table sets forth the weighted average common shares used in the computation of basic and diluted EPS (in
thousands):
Weighted average common shares outstanding — used in
calculation of basic EPS ........................................................
Weighted average common stock equivalents ..........................
Weighted average common and common equivalent shares
outstanding — used in calculation of diluted EPS .................
Year Ended December 31,
2014
2013
2015
91,098
4,350
83,314
4,017
81,195
4,421
95,448
87,331
85,616
Weighted average stock options, SARs, RSUs and RSAs representing 3,500,828, 1,841,840 and 133,598 shares were
outstanding for the years ended December 31, 2015, 2014 and 2013, respectively, but were not included in the computation of diluted
EPS because the effect of including them would be anti-dilutive.
F-12
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3—Accounts Receivable, net
Accounts receivable are as follows (in thousands):
Accounts receivable ................................................................... $
Unbilled accounts receivable .....................................................
Allowance for doubtful accounts ...............................................
Total accounts receivable, net .................................................... $
December 31,
2015
130,394 $
42,514
(2,957)
169,951 $
2014
58,223
38,377
(2,241 )
94,359
The following table represents the activity for the allowance for doubtful accounts during the years ended December 31, 2015, 2014
and 2013 (in thousands):
Allowance for Doubtful Accounts:
Balance at beginning of period ................................................. $
Charge to costs and expenses ...................................................
Write-offs, net of recoveries .....................................................
Other adjustments .....................................................................
Balance at end of period ........................................................... $
Year Ended December 31,
2014
2013
2015
2,241 $
1,137
(273)
(148)
2,957 $
2,500 $
610
(785 )
(84 )
2,241 $
2,359
666
(510)
(15)
2,500
Management establishes the allowance for doubtful accounts based on historical bad debt experience. In addition, management
analyzes client accounts, client concentrations, client creditworthiness, current economic trends and changes in the client’s payment
terms when evaluating the adequacy of the allowance for doubtful accounts.
Note 4—Stockholders’ Equity
Public offering. In June 2015, the Company completed a public offering of its common stock. The offering included 12,075,000 newly
issued shares of common stock sold by the Company (including 1,575,000 shares of common stock sold pursuant to the underwriters’
option to purchase additional shares) at an offering price of $61.50 per share for which the Company received total net proceeds of
approximately $717.8 million.
Authorized shares. In March 2015, the Company’s stockholders approved an increase in the number of authorized shares of the
Company’s common stock from 100,000,000 shares to 200,000,000 shares.
Dividends. In 2015, the Company paid quarterly cash dividends of $0.125 per share of common stock on March 16, 2015, June 15,
2015 and September 15, 2015 and December 15, 2015 to stockholders of record as of the close of business on March 2, 2015, June 1,
2015, September 1, 2015 and December 1, 2015, respectively, totaling $45.5 million.
Stock repurchase program. In November 2014, the Company’s Board of Directors authorized the continued repurchase of up to $200
million of the Company’s common stock on the open market or in privately negotiated transactions. Under the repurchase programs,
the Company purchased a total of 274,726 shares for approximately $11.2 million during the year ended December 31, 2014 and a
total of 23,900 shares for approximately $0.9 million during the year ended December 31, 2013. There were no repurchases in 2015.
The Company uses the cost method to account for treasury stock purchases. Under the cost method, the price paid for the stock is
charged to the treasury stock account.
F-13
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about quarterly share repurchases:
Quarter
First ...........................................................................................
Second ......................................................................................
Third .........................................................................................
Fourth .......................................................................................
Total ....................................................................................
Shares
90,226 $
95,800
88,700
—
274,726
Fiscal 2014
Price Range
High
39.99 $
44.48
43.95
—
44.48
Low
38.06
39.04
42.72
—
38.06
Note 5—Income Taxes
The sources of income before income taxes were as follows (in thousands):
U.S. ........................................................................................... $
Foreign ......................................................................................
Income before income taxes ..................................................... $
The income tax provision consists of the following (in thousands):
2015
Year Ended December 31,
2014
124,032 $
53,622
177,654 $
15,897 $
44,945
60,842 $
2013
90,332
54,855
145,187
Current:
Federal ...................................................................................... $
Foreign ......................................................................................
State ..........................................................................................
Total ....................................................................................
Deferred:
Federal ......................................................................................
Foreign ......................................................................................
State ..........................................................................................
Total ....................................................................................
Total .......................................................................................... $
Year Ended December 31,
2014
2013
2015
36,345 $
15,204
6,237
57,786
(25,083)
(9,367)
(5,356)
(39,806)
17,980 $
36,205 $
13,603
10,302
60,110
(9,697 )
(5,318 )
1,432
(13,583 )
46,527 $
24,604
6,339
6,532
37,475
(6,986)
(987)
(2,210)
(10,183)
27,292
The reconciliation between the expected tax expense and the actual tax provision is computed by applying the U.S. federal corporate
income tax rate of 35% to income before income taxes as follows (in thousands):
Computed “expected” tax expense ........................................... $
Increase (decrease) in income tax expense resulting from:
State income taxes (net of federal income tax benefit) .............
Foreign operations ....................................................................
Rate change impact on tax liabilities ........................................
Effect of valuation allowance ...................................................
Uncertain tax positions .............................................................
Tax credits ................................................................................
Non-deductible transaction costs ..............................................
Other .........................................................................................
Provision for income taxes ....................................................... $
Year Ended December 31,
2014
2013
2015
21,295 $
62,179 $
50,816
2,656
(11,281)
(1,021)
3,242
3,903
(3,493)
2,354
325
17,980 $
7,217
(26,232 )
—
1,351
3,933
(993 )
—
(928 )
46,527 $
2,621
(17,942)
(2,679)
785
(2,661)
(3,325)
—
(323)
27,292
F-14
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of deferred income taxes at December 31, 2015 and 2014 are as follows (in thousands):
2015
Deferred
Deferred
Deferred
Tax
Assets
Tax
Liabilities
Tax
Assets
2014
Deferred
Tax
Liabilities
Tax credit carryforwards ........................................................ $
Deferred compensation...........................................................
Net operating loss carryforwards............................................
Accrued expenses ...................................................................
Property and equipment..........................................................
Impaired investment interest ..................................................
Other .......................................................................................
Customer relationships ...........................................................
Acquired technology ..............................................................
Other intangible assets............................................................
Deferred revenue ....................................................................
Trade names ...........................................................................
Unremitted foreign earnings ...................................................
Total .......................................................................................
Valuation allowance ...............................................................
Total ....................................................................................... $
31,257 $
23,625
23,249
9,589
1,766
846
773
—
—
—
—
—
—
91,105
(18,020)
73,085 $
— $
—
—
—
—
—
—
390,348
125,022
26,520
20,689
12,379
5,502
580,460
—
580,460 $
4,771 $
13,956
11,788
4,236
—
842
—
—
—
—
—
—
—
35,593
(12,619 )
22,974 $
—
—
—
—
3,031
—
209
71,557
5,295
29,403
174
5,772
5,709
121,150
—
121,150
At December 31, 2015 and 2014, the Company had accrued a deferred income tax liability of $5.5 million and $5.7 million,
respectively, on unremitted earnings of its Canadian subsidiary. At December 31, 2015, the Company had not accrued a deferred
income tax liability of approximately $3.3 million on unremitted earnings of $50.2 million that are permanently reinvested in its other
foreign subsidiaries. It is not practicable to estimate the amount of foreign tax credits that would be available to offset the $3.3 million
tax liability due to complexities surrounding the foreign tax credit.
At December 31, 2015, the Company had domestic federal net operating loss carryforwards of $0.6 million, which expire in 2034 and
domestic state net operating loss carryforwards of $83.8 million, which will begin to expire in 2019. At December 31, 2015, the
Company had foreign net operating loss carryforwards of $66.1 million, of which $63.6 million can be carried forward indefinitely.
The remaining $2.5 million will begin to expire in 2016.
At December 31, 2015, the Company had tax credit carryforwards of $31.3 million relating to domestic and foreign jurisdictions, of
which $29.1 million relate to domestic tax credits that are expected to be utilized before they begin to expire in 2017, $1.3 million
relate to domestic tax credits that are not expected to be utilized before they begin to expire in 2022 and $0.9 million relate to
minimum alternative tax credit carryforwards at the Company’s India operations that are expected to be utilized before they begin to
expire in 2021. The Company recorded $36.0 million of domestic tax credit carryforwards related to acquisitions during 2015.
The Company has recorded valuation allowances of $18.0 million at December 31, 2015 related to certain foreign net operating loss
carryforwards and tax credit carryforwards and $12.6 million at December 31, 2014 related to certain foreign net operating loss
carryforwards. Of the $18.0 million valuation allowance recorded at December 31, 2015, $16.2 million relates to foreign net
operating losses that do not expire. The change in the valuation allowance from 2014 to 2015 is primarily due to a valuation allowance
recorded on domestic tax credit carryforwards and foreign net operating losses generated in 2015.
The Company operates under tax holidays in some foreign jurisdictions, which begin to expire in 2017. The availability of the tax
holidays are subject to fulfillment of certain conditions. The impact of the tax holidays decreased foreign taxes by $0.7 million, which
had a benefit of $0.01 per share (diluted) for the year ended December 31, 2015.
F-15
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the activity related to the Company’s unrecognized tax benefits for the years ended December 31,
2015 and 2014 (in thousands):
Balance at January 1, 2014........................................................ $
Increases related to current year tax positions ..............................
Decreases related to prior tax positions ........................................
Increases related to acquired tax positions ...................................
Lapse in statute of limitation ........................................................
Foreign exchange translation adjustment .....................................
Balance at December 31, 2014...................................................
Increases related to current year tax positions ..............................
Increases related to prior tax positions .........................................
Increases related to acquired tax positions ...................................
Settlements ...................................................................................
Lapse in statute of limitation ........................................................
Foreign exchange translation adjustment .....................................
Balance at December 31, 2015................................................... $
7,640
3,668
(68 )
4,606
—
(189 )
15,657
4,880
1,179
37,456
(2,883 )
(60 )
(489 )
55,740
The Company accrued potential penalties and interest on the unrecognized tax benefits of $0.8 million and $0.3 million during 2015
and 2014, respectively, and has recorded a total liability for potential penalties and interest, including penalties and interest related to
acquired unrecognized tax benefits, of $3.5 million and $2.9 million at December 31, 2015 and 2014, respectively. The Company’s
unrecognized tax benefits increased significantly from 2014 to 2015 due to positions taken on tax returns of acquired companies. The
Company’s unrecognized tax benefits as of December 31, 2015 relate to domestic and foreign taxing jurisdictions and are recorded in
other long-term liabilities on the Company’s Consolidated Balance Sheet at December 31, 2015.
The Company is subject to examination by tax authorities throughout the world, including such major jurisdictions as the U.S.,
Canada, United Kingdom, India, California, Connecticut and New York. In these major jurisdictions, the Company is no longer
subject to examination by tax authorities prior to tax years ending 2009, 2011, 2012, 2012, 2000, 2012 and 2011, respectively. The
Company’s U.S. federal income tax returns are currently under audit for the tax periods ended December 31, 2009 through 2013. The
Company’s California state income tax returns are currently under audit for the tax periods ended December 31, 2001 through 2007
and December 31, 2012 through 2013. The Company’s New York state income tax returns are currently under audit for the tax periods
ended December 31, 2011 through 2014.
Note 6—Debt
At December 31, 2015 and 2014, debt consisted of the following (in thousands):
December 31,
2015
2014
Senior secured credit facilities, weighted-average interest rate
of 3.94% .................................................................................. $ 2,220,000 $
600,000
5.875% senior notes due 2023 ...................................................
Prior facility, weighted-average interest rate of 2.93% ..............
—
(68,649)
Unamortized original issue discount and debt issuance costs ....
2,751,351
32,281
Less current portion of long-term debt.......................................
Long-term debt .......................................................................... $ 2,719,070 $
—
—
645,000
(25,262 )
619,738
20,470
599,268
Senior Secured Credit Facilities
On July 8, 2015, in connection with its acquisition of Advent Software, Inc. (“Advent”), the Company entered into a credit agreement
with SS&C, SS&C European Holdings S.A.R.L., an indirect wholly-owned subsidiary of SS&C (“SS&C Sarl”) and SS&C
Technologies Holdings Europe S.A.R.L., an indirect wholly-owned subsidiary of SS&C (“SS&C Tech Sarl”) as the borrowers
(“Credit Agreement”). The Credit Agreement has four tranches of term loans (together the “Term Loans”): (i) a $98 million term A-1
F-16
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
facility with a five year term for borrowings by SS&C Sarl (“Term A-1 Loan”); (ii) a $152 million term A-2 facility with a five year
term for borrowings by SS&C Tech Sarl (“Term A-2 Loan”); (iii) a $1.82 billion term B-1 facility with a seven year term for
borrowings by SS&C (“Term B-1 Loan”); and (iv) a $410 million term B-2 facility with a seven year term for borrowings by SS&C
Sarl (“Term B-2 Loan”).
In addition, the Credit Agreement has a revolving credit facility with a five year term available for borrowings by SS&C with $150
million in commitments (“Revolving Credit Facility”). The Revolving Credit Facility contains a $25 million letter of credit sub-
facility, of which $0 has been drawn.
The Term Loans and Revolving Credit Facility bear interest, at the election of the borrowers, at the base rate (as defined in the Credit
Agreement) or LIBOR, plus the applicable interest rate margin for the credit facility. The Term A-1 Loan, Term A-2 Loan and the
Revolving Credit Facility initially bear interest at either LIBOR plus 2.75% or at the base rate plus 1.75%, and are subject to a step-
down at any time SS&C’s consolidated net senior secured leverage ratio is less than 3.0 times, to 2.50% in the case of the LIBOR
margin and 1.50% in the case of the base rate margin. The Term B-1 Loan and Term B-2 Loan initially bear interest at either LIBOR
plus 3.25%, with LIBOR subject to a 0.75% floor, or at the base rate plus 2.25%, and are subject to a step-down at any time SS&C’s
consolidated net leverage ratio is less than 4.0 times, to 3.00% in the case of the LIBOR margin and 2.00% in the case of the base rate
margin.
A portion of the initial proceeds from the Term Loans was used to satisfy the consideration required to fund the acquisition of Advent
and to repay all amounts outstanding under the Company’s then-existing credit facility (“Prior Facility”), which was subsequently
terminated. At the time of the termination of the Prior Facility, all liens and other security interests that SS&C had granted to the
lenders under the Prior Facility were released. The refinancing of the Prior Facility was evaluated in accordance with FASB
Accounting Standards Codification 470-50, Debt-Modifications and Extinguishments, for modification and extinguishment
accounting. The Company accounted for the refinancing as a debt modification with respect to amounts that remained obligations of
the same lender in the syndicate with minor changes in cash flows and as a debt extinguishment with respect to amounts that were
obligations of lenders that exited the syndicate or remained in the syndicate but experienced a change in cash flows of greater than
10%. See Loss on extinguishment of debt section below.
The Company is required to make scheduled quarterly payments of 0.25% of the original principal amount of the Term B-1 Loan and
Term B-2 Loan, with the balance due and payable on the seventh anniversary of its incurrence. The Company is required to make
scheduled quarterly payments of 1.25% of the original principal amount of the Term A-1 Loan and Term A-2 Loan until September
30, 2017 and quarterly payments of 2.50% of the original principal amount of the Term A-1 Loan and Term A-2 Loan from December
31, 2017 until June 30, 2020 with the balance due and payable on the fifth anniversary of the incurrence thereof. No amortization is
required under the Revolving Credit Facility.
The Company’s obligations under the Term Loans are guaranteed by (i) Holdings and each of its existing and future U.S. wholly-
owned restricted subsidiaries, in the case of the Term B-1 Loan and the Revolving Credit Facility and (ii) Holdings, SS&C and each of
its existing and future wholly-owned restricted subsidiaries, in the case of the Term A-1 Loan, the Term A-2 Loan and the Term B-2
Loan.
The obligations of the U.S. loan parties under the Credit Agreement are secured by substantially all of the assets of such persons
(subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-
owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain
foreign restricted subsidiaries of such persons (with customary exceptions and limitations). All obligations of the non-U.S. loan parties
under the Credit Agreement are secured by substantially all of Holdings’ and the other guarantors’ assets (subject to customary
exceptions and limitations), including a pledge of all of the capital stock of substantially all of Holdings’ wholly-owned restricted
subsidiaries (with customary exceptions and limitations).
The Credit Agreement includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit the
Company’s ability and the ability of its restricted subsidiaries to incur debt or liens, make investments (including in the form of loans
and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of its subsidiaries, pay dividends on its
capital stock or redeem, repurchase or retire its capital stock, alter the business the Company conducts, amend, prepay, redeem or
purchase subordinated debt, or engage in transactions with its affiliates. The Credit Agreement also contains customary
representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions. In
addition, the Credit Agreement contains a financial covenant for the benefit of the Revolving Credit Facility as well as the Term A-1
Loan and the Term A-2 Loan, requiring the Company to maintain a consolidated net senior secured leverage ratio. As of December
31, 2015, the Company was in compliance with the financial and non-financial covenants.
F-17
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Senior Notes
On July 8, 2015, in connection with the acquisition of Advent, the Company issued $600.0 million aggregate principal amount of
5.875% Senior Notes due 2023 (“Senior Notes”). The Senior Notes are guaranteed by SS&C and each of the Company’s wholly-
owned domestic subsidiaries that borrows or guarantees obligations under the Credit Agreement. The guarantees are full and
unconditional and joint and several. The Senior Notes are unsecured senior obligations that are equal in right of payments to all
existing and future senior debt, including the Credit Agreement.
The Company is required to use commercially reasonable efforts to file with the SEC an exchange offer registration statement
pursuant to which the Company will offer in exchange for the Senior Notes, new notes identical in all material respects to the Senior
Notes, and cause the exchange offer registration statement to be declared effective within 365 days following the issuance of the
Senior Notes. If the Company is not able to complete the exchange offer registration statement in the period stated or at all (or a shelf
registration statement with the SEC to cover resales of the Senior Notes is not declared effective), the interest rate on the notes will
increase 0.25% per year. The amount of additional interest will increase an additional 0.25% per year for any subsequent 90-day
period in which the Company has not yet completed and have declared effective a registration statement, up to a maximum additional
interest rate of 1.00% per year.
At any time after July 15, 2018, the Company may redeem some or all of the Senior Notes, in whole or in part, at the redemption
prices set forth in the indenture governing the Senior Notes plus accrued and unpaid interest to the redemption date. At any time on or
before July 15, 2018, the Company may to redeem up to 35% of the aggregate principal amount of the Senior Notes at a redemption
price equal to 105.875% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net
proceeds of one or more equity offerings.
The indenture governing the Senior Notes contains a number of covenants that restrict, subject to certain thresholds and exceptions,
the Company’s ability and the ability of its restricted subsidiaries to incur debt or liens, make certain investments, pay dividends,
repurchase or redeem subordinated debt, dispose of certain assets, engage in mergers or acquisitions or engage in transactions with its
affiliates. Any event of default under the Credit Agreement that leads to an acceleration of those amounts due also results in a default
under the indenture governing the Senior Notes.
As of December 31, 2015, there were $600.0 million in principal amount of Senior Notes outstanding.
Debt issuance costs
In connection with the Credit Agreement and the Senior Notes, the Company capitalized an aggregate of $45.8 million in financing
costs. Capitalized financing costs of $6.4 million, $4.4 million and $4.4 million were amortized to interest expense in the years ended
December 31, 2015, 2014 and 2013, respectively, and the Company amortized to interest expense $1.8 million, $1.4 million and $1.4
million of the original issue discount associated with the Credit Agreement and Prior Facility for the years ended December 31, 2015,
2014 and 2013, respectively. The unamortized balance of capitalized financing costs is included in intangible and other assets in the
Company’s Consolidated Balance Sheet.
Loss on extinguishment of debt
The Company recorded a $30.4 million loss on extinguishment of debt in 2015 in connection with the repayment and termination of
its Prior Facility. The loss on early extinguishment of debt includes the write-off of a portion of the unamortized capitalized financing
costs and the unamortized original issue discounts related to the Prior Facility for amounts accounted for as a debt extinguishment, as
well as a portion of the financing costs related to the Credit Agreement for amounts accounted for as a debt modification.
F-18
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Future maturities of debt
At December 31, 2015, annual maturities of long-term debt during the next five years and thereafter are as follows (in thousands):
Year ending December 31,
2016.............................................................................................. $
2017..............................................................................................
2018..............................................................................................
2019..............................................................................................
2020 and thereafter .......................................................................
$
32,281
35,405
44,781
44,781
2,662,752
2,820,000
Note 7—Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the
measurement date.
The authoritative guidance relating to fair value measurements and disclosure establishes a valuation hierarchy for disclosure of the
inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows.
(cid:404)
(cid:404)
(cid:404)
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including
interest rates, yield curves and credit risks, or inputs that are derived principally from or corroborated by observable
market data through correlation.
Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at
fair value.
A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to
the fair value measurement.
As of December 31, 2015 and 2014, the Company did not have any significant nonfinancial assets and nonfinancial liabilities that are
measured at fair value on a non-recurring basis.
Recurring Fair Value Measurements
The Company did not have any material financial assets or liabilities that were measured at fair value as of December 31, 2015 and
2014.
Fair value of debt
The carrying amounts and fair values of financial instruments are as follows (in thousands):
Financial liabilities:
Senior secured credit facilities .......................................... $ 2,220,000 $ 2,202,105 $
616,500
5.875% senior notes due 2023 ..........................................
—
Prior facility ......................................................................
600,000
—
— $
—
645,000
—
—
641,141
December 31, 2015
December 31, 2014
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
The above fair values, which are Level 2 liabilities, were computed based on comparable quoted market prices. The fair values of
cash, accounts receivable, net, short-term borrowings, and accounts payable approximate the carrying amounts due to the short-term
maturities of these instruments.
F-19
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8—Leases
The Company is obligated under noncancelable operating leases for office space and office equipment. Total rental expense was
$24.4 million, $16.7 million and $17.7 million for the years ended December 31, 2015, 2014 and 2013, respectively. The lease for the
corporate facility in Windsor, Connecticut expires in 2022. Future minimum lease payments under the Company’s operating leases,
excluding future sublease income, as of December 31, 2015, are as follows (in thousands):
Year Ending December 31,
2016.............................................................................................. $
2017..............................................................................................
2018..............................................................................................
2019..............................................................................................
2020 and thereafter .......................................................................
$
30,470
28,446
25,725
22,254
87,802
194,697
The Company subleases office space to other parties under noncancelable leases. The Company received rental income under these
leases of $0.2 million, $0.2 million and $1.2 million for the years ended December 31, 2015, 2014 and 2013 respectively. Future
minimum lease receipts under these leases as of December 31, 2015 are as follows (in thousands):
Year Ending December 31,
2016.............................................................................................. $
2017..............................................................................................
2018..............................................................................................
2019..............................................................................................
2020 and thereafter .......................................................................
$
1,798
1,828
1,764
1,273
1,632
8,295
Note 9—Defined Contribution Plans
The Company has a 401(k) Retirement Plan (the “Plan”) that covers substantially all domestic employees. Each employee may elect to
contribute to the Plan, through payroll deductions, up to 50% of his or her cash compensation, 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 $4,000
per year. The Company offers employees a selection of various public mutual funds and several other investment options through a
brokerage account but does not include Company common stock as an investment option in its Plan.
During the years ended December 31, 2015, 2014 and 2013, the Company incurred $5.8 million, $4.1 million and $3.9 million,
respectively, of matching contribution expenses related to the Plan.
Note 10—Stock-based Compensation
In February 2014, the Company’s Board of Directors adopted an equity-based incentive plan (“the 2014 Plan”), which authorizes
stock options to be granted for up to 3,000,000 shares of the Company’s common stock, Under the 2014 Plan, which became effective
in May 2014 upon stockholder approval, the exercise price of stock options is set on the grant date and may not be less than the fair
market value per share on such date. Generally, stock options expire ten years from the date of grant. The Company has granted time-
based stock options under the 2014 Plan.
In April 2008, the Company’s Board of Directors adopted, and its stockholders approved, an equity-based incentive plan (“the 2008
Plan”), which authorizes equity awards to be granted for up to 10,914,967 shares of the Company’s common stock, which is
calculated based on an initial authorization of 1,416,661 shares of the Company’s common stock and an annual increase to be added
on the first day of each of the Company’s fiscal years during the term of the 2008 Plan beginning in fiscal 2009 equal to the lesser of
(i) 1,416,661 shares of common stock, (ii) 2% of the outstanding shares on such date or (iii) an amount determined by the Company’s
board of directors. Under the 2008 Plan, which became effective in July 2008, the exercise price of awards is set on the grant date and
may not be less than the fair market value per share on such date. Generally, awards expire ten years from the date of grant. The
Company has granted time-based options and RSUs under the 2008 Plan.
F-20
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In August 2006, the Company’s Board of Directors adopted an equity-based incentive plan (“the 2006 Plan”), which authorizes equity
awards to be granted for up to 11,173,819 shares of the Company’s common stock. Under the 2006 Plan, the exercise price of awards
is set on the grant date and may not be less than the fair market value per share on such date. Generally, awards expire ten years from
the date of grant. The Company has granted RSAs of its common stock and both time-based and performance-based options under the
2006 Plan.
The Company generally settles stock option exercises with newly issued common shares.
Restricted stock units. During the year ended December 31, 2015, the Company granted 10,395 RSUs under the 2008 Plan, which
vest 25% on the first anniversary of the grant date and continue to vest 1/12th of the remaining balance each quarter thereafter for
three years. The RSUs vest in full upon a change in control, subject to certain conditions. At December 31, 2015, there was
approximately $17.8 million of unearned non-cash stock-based compensation related to the RSUs that the Company expects to
recognize as expense over a remaining period of 3.5 years.
Restricted stock awards. During the years ended December 31, 2015 and 2013, the Company granted 1,500 and 25,000 RSAs of its
common stock, respectively, under the 2006 Plan, which vest 25% on the first anniversary of the grant date and continue to vest 1/12th
of the remaining balance each quarter thereafter for three years. The RSAs vest in full upon a change in control, subject to certain
conditions. During 2014, there were no RSAs granted. At December 31, 2015, there was approximately $0.4 million of unearned
non-cash stock-based compensation related to the RSAs that the Company expects to recognize as expense over a remaining period of
22 months. At December 31, 2014, there was approximately $0.6 million of unearned non-cash stock-based compensation related to
the RSAs that the Company expects to recognize as expense over a remaining period of 32 months.
Time-based options. Time-based options granted under the 2006 Plan, the 2008 Plan or the 2014 Plan generally vest 25% on the first
anniversary of the grant date and 1/36th of the remaining balance each month thereafter for 36 months. All outstanding time-based
options vest upon a change in control, subject to certain conditions. Time-based options granted during 2015, 2014 and 2013 have a
weighted-average grant date fair value of $14.57, $12.77 and $9.86 per share, respectively, based on the Black-Scholes option pricing
model. Compensation expense is recorded on a straight-line basis over the requisite service period. The fair value of time-based
options vested during the years ended December 31, 2015, 2014 and 2013 was approximately $43.5 million, $11.3 million and
$8.2 million, respectively. At December 31, 2015, there was approximately $109.6 million of unearned non-cash stock-based
compensation related to time-based options that the Company expects to recognize as expense over a weighted average remaining
period of approximately three years.
For the time-based options valued using the Black-Scholes option-pricing model, the Company used the following weighted-average
assumptions:
Expected term to exercise (years) ............................................
Expected volatility ...................................................................
Risk-free interest rate ...............................................................
Expected dividend yield ..........................................................
2015
Time-Based awards
2014
2013
4.0
26.63%
1.42%
0.74%
4.0
29.04 %
1.36 %
0.84 %
4.0
28.04%
1.16%
0%
Expected volatility prior to March 2014 was based on a combination of the Company’s historical volatility as a public company and
historical volatility of the Company’s peer group. Beginning in March 2014 on the four-year anniversary of the Company’s initial
public offering, expected volatility is based on the Company’s historical volatility as a public company. Expected term to exercise is
based on the Company’s historical stock option exercise experience.
F-21
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total stock options, SARs, RSUs and RSAs. The amount of stock-based compensation expense recognized in the Company’s
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013 was as follows (in
thousands):
2015
2014 (1)
(cid:3)(cid:3)
2013 (1)
RSUs
RSAs Total
Options,
SARs
RSAs Total
Options,
SARs RSAs Total
372 $
17 $ 6,849 $ 3,940 $ — $ 3,940 $ 2,925 $ — $ 2,925
(cid:3)(cid:3)
Options,
SARs
(cid:3)
Statement of Comprehensive
Income Classification
Cost of software-enabled
services .................................... $ 6,460 $
Cost of maintenance and term
licenses ..................................... 1,022
Cost of recurring revenues .......... 7,482
Cost of professional services ....... 1,166
Cost of non-recurring revenues ... 1,166
Total cost of revenues ........... 8,648
1,388
273
366 —
8,237 4,222 — 4,222 3,198 — 3,198
738
17
1,388
338
222 —
338
1,388
222 —
9,625 4,665 — 4,665 3,536 — 3,536
17
960
90 1,475
Selling and marketing (2) ............ 10,637 3,806
Research and development.......... 5,676 2,912 —
901
General and administrative ......... 8,270 2,931 — 11,201 3,388 — 3,388 2,331 143 2,474
222 6,818 4,617 233 4,850
Total operating expenses ....... 24,583 9,649
8,588 1,165 — 1,165
443 —
443 —
338 —
338 —
222 34,454 6,596
222 14,665 2,043
222 2,265 1,385
443
443
282 —
901 —
273 —
282
Total stock-based compensation
expense .................................... $ 33,231 $ 10,609 $ 239 $ 44,079 $ 11,261 $ 222 $ 11,483 $ 8,153 $ 233 $ 8,386
(1) There was no stock-based compensation expense associated with RSUs in 2014 and 2013.
(2) For the year ended December 31, 2013, includes stock-based compensation expense of $0.1 million associated with restricted
Class A stock. At December 31, 2013, there was no unearned non-cash stock based compensation related to the RSAs.
The associated future income tax benefit recognized was $20.7 million, $3.8 million and $2.7 million for the years ended December
31, 2015, 2014 and 2013, respectively.
For the year ended December 31, 2015, the amount of cash received from the exercise of stock options was $30.1 million, with an
associated tax benefit realized of $44.2 million. The intrinsic value of options exercised during the year ended December 31, 2015 was
approximately $120.9 million. For the year ended December 31, 2014, the amount of cash received from the exercise of stock options
was $24.1 million, with an associated tax benefit realized of $18.8 million. The intrinsic value of options exercised during the year
ended December 31, 2014 was approximately $56.1 million. For the year ended December 31, 2013, the amount of cash received from
the exercise of stock options was $27.8 million, with an associated tax benefit realized of $31.8 million. The intrinsic value of options
exercised during the year ended December 31, 2013 was approximately $87.8 million.
In connection with its acquisition of Advent, the Company assumed Advent’s outstanding unvested equity awards which were
converted into 2.5 million unvested stock options and SARs and 0.7 million unvested RSUs. The awards were converted into rights to
receive SS&C common stock. All other terms and conditions of the awards remained unchanged. During the year ended December 31,
2015, the Company recognized stock-based compensation expense of $26.3 million related to these assumed awards, of which $11.5
million related to one-time charges for the accelerated vesting of certain awards.
F-22
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes stock option and SAR activity as of and for the years ended December 31, 2015, 2014 and 2013:
Weighted
Average
Exercise
Price
Shares
Outstanding at December 31, 2012 ............................................ 13,411,130 $
Granted(1) .................................................................................. 2,024,170
(332,327)
Cancelled/forfeited .....................................................................
Exercised .................................................................................... (3,587,331)
Outstanding at December 31, 2013 ............................................ 11,515,642
Granted(2) .................................................................................. 2,198,825
(203,586)
Cancelled/forfeited .....................................................................
Exercised .................................................................................... (1,790,233)
Outstanding at December 31, 2014 ............................................ 11,720,648
Equity awards assumed from Advent ........................................ 2,480,953
Granted(3) .................................................................................. 3,818,295
Cancelled/forfeited .....................................................................
(630,844)
Exercised .................................................................................... (2,249,870)
Outstanding at December 31, 2015 ............................................ 15,139,182
12.47
40.81
20.27
7.75
18.70
55.74
30.51
13.47
26.24
50.27
67.91
50.50
15.45
41.28
(1) Of the grants during 2013, 1,798,420 were granted under the 2008 Plan and 225,750 were granted under the 2006 Plan.
(2) Of the grants during 2014, 450,000 were granted under the 2014 Plan, 1,632,825 were granted under the 2008 Plan and 116,000
were granted under the 2006 Plan.
(3) Of the grants during 2015, 515,000 were granted under the 2014 Plan, 2,739,845 were granted under the 2008 Plan and 563,450
were granted under the 2006 Plan.
The following table summarizes RSU activity as of and for the year ended December 31, 2015 is as follows (in thousands):
Outstanding at January 1, 2015 ...................................................
Equity awards assumed from Advent ....................................
Granted ..................................................................................
Cancelled/forfeited ................................................................
Vested ....................................................................................
Outstanding at December 31, 2015 .............................................
Number of Shares(cid:3)(cid:3)(cid:3)
—
660,017
10,395
(69,194 )
(122,492 )
478,726
The following table summarizes information about stock options outstanding that are expected to vest and stock options outstanding
that are exercisable at December 31, 2015:
Outstanding, Vested Options Currently Exercisable
Outstanding Options Expected to Vest
Weighted
Average
Exercise
Price
Shares
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contractual
(cid:3)(cid:3)
(In thousands)
Term
(Years)
Shares
Weighted
Average
Exercise
Price
(cid:3)(cid:3)
Weighted
Average
Remaining
Contractual
Term
(Years)
9.12
Aggregate
Intrinsic
Value
(In thousands)
89,728
21.20 $
319,682
4.66
8,350,270 $
57.61 $
(cid:3)(cid:3) (cid:3)(cid:3)
6,788,912 $
Note 11—Acquisitions
Primatics Financial
On November 16, 2015, SS&C purchased all of the outstanding stock of Primatics for approximately $127.6 million, plus the costs of
effecting the transaction and the assumption of certain liabilities. Primatics provides cloud-based integrated risk, compliance and
financing solution for the banking industry.
F-23
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net assets and results of operations of Primatics have been included in the Company’s consolidated financial statements from
November 16, 2015. The fair value of the intangible assets, consisting of customer relationships, completed technology and trade
name, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for the completed
technology and trade name and the excess earnings method was utilized for the customer relationships. The intangible assets are
amortized each year based on the ratio that the projected cash flows for the intangible assets bear to the total of current and expected
future cash flows for the intangible assets. The completed technology is amortized over approximately ten years, customer
relationships are amortized over approximately one to 15 years and trade name are amortized over approximately ten years, in each
case the estimated lives of the assets. The remainder of the purchase price was allocated to goodwill and is not tax deductible.
There are $6.5 million in revenues from Primatics operations included in the Consolidated Statement of Comprehensive Income for
the year ended December 31, 2015.
Varden Technologies
On September 1, 2015, SS&C purchased the assets of Varden for approximately $25.3 million, plus the costs of effecting the
transaction and the assumption of certain liabilities. Varden provides cloud-based client and advisor communication solutions for
investment firms.
The net assets and results of operations of Varden have been included in the Company’s consolidated financial statements from
September 1, 2015. The fair value of the intangible assets, consisting of customer relationships, completed technology, trade name and
a non-compete agreement, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for
the completed technology and trade name, the excess earnings method was utilized for the customer relationships and the lost profits
method was utilized for the non-compete agreement. The intangible assets are amortized each year based on the ratio that the
projected cash flows for the intangible assets bear to the total of current and expected future cash flows for the intangible assets. The
completed technology is amortized over approximately eight years, customer relationships and trade name are amortized over
approximately ten years and the non-compete agreement is amortized over approximately three years, in each case the estimated lives
of the assets. The remainder of the purchase price was allocated to goodwill and is tax deductible.
There are $2.5 million in revenues from Varden operations included in the Consolidated Statement of Comprehensive Income for the
year ended December 31, 2015.
Advent Software, Inc.
On July 8, 2015, the Company purchased all of the outstanding stock of Advent for approximately $2.6 billion in cash, equating to
$44.25 per share plus the costs, fees and expenses associated with the transaction, in part, using the equity and debt financing
discussed in Notes 4 and 6. Advent provides software and services for the global investment management industry.
The net assets and results of operations of Advent have been included in the Company’s consolidated financial statements from July 8,
2015. The fair value of the intangible assets, consisting of customer relationships, completed technology and trade name, was
determined using the income approach. Specifically, the relief-from-royalty method was utilized for the completed technology and
trade name, and the excess earnings method was utilized for the customer relationships. The intangible assets are amortized each year
based on the ratio that the projected cash flows for the intangible assets bear to the total of current and expected future cash flows for
the intangible assets. The completed technology is amortized over approximately twelve years, customer relationships are amortized
over approximately twelve years and trade name is amortized over approximately ten years, in each case the estimated lives of the
assets. The remainder of the purchase price was allocated to goodwill and is not tax deductible.
There are $155.8 million in revenues from Advent operations included in the Consolidated Statement of Comprehensive Income for
the year ended December 31, 2015.
DST Global Solutions
On November 30, 2014, SS&C purchased the assets of DSTGS for approximately $95.0 million, plus the costs of effecting the
transaction and the assumption of certain liabilities. DSTGS provides investment management software and services.
F-24
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net assets and results of operations of DSTGS have been included in the Company’s consolidated financial statements from
December 1, 2014. The purchase price was allocated to tangible and intangible assets based on their fair value at the date of
acquisition. The fair value of the intangible assets, consisting of completed technology, customer relationships and trade name, was
determined using the income approach. Specifically, the discounted cash flows method was utilized for customer relationships, and the
relief-from-royalty method was utilized for the completed technology and trade name. The completed technology is amortized over
approximately seven and eight years, customer relationships are amortized over approximately 10 to 15 years and trade names are
amortized over approximately 10 years, in each case the estimated lives of the assets. The remainder of the purchase price was
allocated to goodwill and is primarily not tax deductible.
The following summarizes the allocation of the purchase price for the acquisitions of Primatics, Varden, Advent and DSTGS (in
thousands):
Primatics
Varden
Advent
DSTGS
Accounts receivable ............................................................... $
Fixed assets ............................................................................
Other assets ............................................................................
Acquired client relationships and contracts ............................
Completed technology ............................................................
Trade names ...........................................................................
Non-compete agreements .......................................................
Goodwill .................................................................................
Deferred revenue ....................................................................
Deferred income taxes ............................................................
Other liabilities assumed ........................................................
Consideration paid, net of cash acquired ................................ $
9,337 $
2,956
3,439
36,980
33,900
4,100
—
61,685
(5,330)
(24,943)
(6,943)
115,181 $
1,186 $
26
—
9,000
3,700
300
100
57,326 $
15,898
20,510
823,000
311,000
18,000
—
12,925 1,956,841
(90,126 )
(835)
(424,489 )
—
(3,268)
(91,428 )
23,134 $ 2,596,532 $
8,866
2,074
3,392
17,200
34,200
4,300
—
66,444
(10,185)
(11,626)
(19,703)
94,962
Additionally, the Company acquired Prime in October 2013 for approximately $4.0 million.
The consideration paid, net of cash acquired for Advent above includes $11.8 million of non-cash consideration related to the fair
value of unvested acquired equity awards with a pre-acquisition service period. This amount is excluded from “Cash paid for business
acquisitions, net of cash acquired” for the year ended December 31, 2015 on the Company’s Consolidated Statement of Cash Flows.
The consideration paid, net of cash acquired above for DSTGS includes a working capital adjustment of $7.9 million, which was paid
in the second quarter of 2015. This amount is included in “Cash paid for business acquisitions, net of cash acquired” for the year
ended December 31, 2015 on the Company’s Consolidated Statement of Cash Flows.
The fair value of acquired accounts receivable balances approximates the contractual amounts due from acquired customers, except
for approximately $0.4 million, $2.6 million and $0.5 million of contractual amounts that are not expected to be collected as of the
acquisition date and that were also reserved by the companies acquired – Primatics, Advent and DSTGS, respectively.
The goodwill associated with each of the transactions above is a result of expected synergies from combining the operations of
businesses acquired with the Company and intangible assets that do not qualify for separate recognition, such as an assembled
workforce.
F-25
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes only and
assume that the acquisitions of Primatics, Varden and Advent occurred on January 1, 2014 and DSTGS occurred on January 1, 2013.
This unaudited pro forma information (in thousands, except per share data) should not be relied upon as being indicative of the
historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be
obtained in the future.
2015
2014
Revenues .................................................................................... $ 1,303,843 $ 1,208,148
(49,718 )
Net income (loss) ....................................................................... $
Basic EPS ................................................................................... $
(0.60 )
Basic weighted average number of common shares
outstanding ..............................................................................
Diluted EPS................................................................................ $
Diluted weighted average number of common and common
equivalent shares outstanding .................................................
91,098
0.46 $
43,772 $
0.48 $
83,314
(0.60 )
83,314
95,448 (cid:3)
Pending acquisitions
On August 18, 2015, the Company announced the acquisition of Citigroup’s Alternative Investor Services business, which includes
Hedge Fund Services and Private Equity Fund Services, for $425 million, subject to certain adjustments. The transaction is subject to
approvals by relevant regulatory authorities and other customary closing conditions. The transaction is expected to close in the first
quarter of 2016.
Note 12—Commitments and Contingencies
Millennium Actions
Several actions (the “Millennium Actions”) were filed in various jurisdictions against the Company’s subsidiaries, GlobeOp Financial
Services Ltd and GlobeOp Financial Services LLC (“GlobeOp”), alleging claims and damages with respect to a valuation agent
services agreement performed by GlobeOp for the Millennium Global Emerging Credit Fund, Ltd. and Millennium Global Emerging
Credit Master Fund Ltd. All substantive claims related to the Millennium Actions have been settled or resolved in favor of GlobeOp.
The only remaining issue involves the allocation of attorneys’ fees and costs in an arbitration proceeding that was conducted in the
United Kingdom, which issue is currently pending before the arbitration tribunal.
In addition to the foregoing legal proceedings, from time to time, the Company is subject to other legal proceedings and claims. In the
opinion of the Company’s management, the Company is not involved in any other such litigation or proceedings with third parties that
management believes would have a material adverse effect on the Company or its business.
Note 13—Product and Geographic Sales Information
The Company operates in one reportable segment. There were no sales to any individual clients during the periods in the three-year
period ended December 31, 2015 that represented 10% or more of net sales. The Company attributes net sales to an individual country
based upon location of the client.
The Company manages its business primarily on a geographic basis. The Company’s reportable regions consist of the United States,
Canada, Americas excluding the United States and Canada, Europe and Asia Pacific and Japan. The European region includes
European countries as well as the Middle East and Africa.
F-26
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenues by geography for the years ended December 31, were (in thousands):
United States ............................................................................. $
Canada ......................................................................................
Americas, excluding United States and Canada .......................
United Kingdom .......................................................................
Europe, excluding United Kingdom .........................................
Asia-Pacific and Japan ..............................................................
2015
682,293 $
55,562
22,186
107,081
68,347
64,816
$ 1,000,285 $
2014
514,803 $
63,037
15,745
99,163
49,929
25,184
767,861 $
2013
466,670
60,980
16,760
97,079
51,561
19,652
712,702
Long-lived assets as of December 31, were (in thousands):
United States ............................................................................. $
Canada ......................................................................................
Americas, excluding United States and Canada .......................
Europe ......................................................................................
Asia-Pacific and Japan ..............................................................
$
64,141 $
5,493
1,301
4,336
5,715
80,986 $
60,373 $
6,376
1,499
10,204
4,738
83,190 $
62,577
6,881
66
9,426
5,078
84,028
2015
2014
2013
Revenues by product group for the years ended December 31, were (in thousands):
Portfolio management/accounting ............................................ $
Trading/treasury operations ......................................................
Financial modeling ...................................................................
Loan management/accounting ..................................................
Property management ...............................................................
Money market processing .........................................................
Training ....................................................................................
2015
918,888 $
31,992
9,078
14,205
16,176
8,677
1,269
$ 1,000,285 $
2014
691,915 $
32,705
8,664
8,382
15,217
9,421
1,557
767,861 $
2013
640,075
32,949
8,366
6,683
14,622
8,279
1,728
712,702
Note 14—Selected Quarterly Financial Data (Unaudited)
Unaudited quarterly results for 2015 and 2014 were:
2015
Revenue ..................................................................................... $
Gross profit ................................................................................
Operating income ......................................................................
Net income (loss) ......................................................................
Basic earnings (loss) per share .................................................. $
Diluted earnings (loss) per share ............................................... $
First
Quarter
Second
Quarter
Third
Fourth
Quarter (1)
Quarter
(In thousands, except per share data)
205,735 $
93,428
43,133
26,246
0.31 $
0.30 $
212,768 $
103,265
58,351
39,128
0.46 $
0.44 $
280,894 $300,888
129,030 142,212
14,952 48,302
(34,610) 12,098
0.12
0.12
(0.36) $
(0.36) $
F-27
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) During the third quarter of 2015, the Company recognized a loss on extinguishment of debt of $30.4 million and professional
fees of $13.5 million associated with the Company’s acquisition of Advent, both of which decreased net income for the period.
2014
Revenue ..................................................................................... $
Gross profit ................................................................................
Operating income ......................................................................
Net income ................................................................................
Basic earnings per share ............................................................ $
Diluted earnings per share ......................................................... $
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In thousands, except per share data)
185,810 $
84,311
47,025
26,448
0.32 $
0.30 $
188,722 $
86,489
45,389
27,245
0.33 $
0.31 $
192,598 $200,731
91,215 95,115
54,363 53,595
40,827 36,607
0.44
0.42
0.49 $
0.47 $
Note 15—Subsequent Event
Dividend declared. On February 24, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.125 per share
of common stock payable on March 15, 2016 to stockholders of record as of the close of business on March 7, 2016.
F-28
Exhibit
Number
2.3†
2.4†
2.5
3.1
EXHIBIT INDEX
Description of Exhibit
Asset Purchase Agreement, dated February 28, 2012, by and between Thomson Reuters (Markets) LLC and SS&C
Technologies, Inc. is incorporated herein by reference to Exhibit 1.1 to SS&C Technologies Holdings, Inc.’s Current
Report on Form 8-K, filed on February 29, 2012 (File No. 001-34675)
Agreement and Plan of Merger, dated as of February 2, 2015, by and among Advent Software, Inc., the Registrant and
Arbor Acquisition Company, Inc. is incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on
Form 8-K, filed on February 3, 2015 (File No. 001-34675)
Voting and Support Agreement, dated as of February 2, 2015, by and among the Registrant, Arbor Acquisition Company,
Inc., Stephanie G. DiMarco, James Harleen, DiMarco/Harleen Revocable Living Trust and DiMarco/Harleen 1996
Charitable Trust is incorporated herein by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K, filed on
February 3, 2015 (File No. 001-34675)
Restated Certificate of Incorporation of the Registrant is incorporated herein by reference to Exhibit 3.3 to the Registrant’s
Registration Statement on Form S-1, as amended (File No. 333-164043) (the “2010 Form S-1”)
3.2
Amended and Restated Bylaws of the Registrant are incorporated herein by reference to Exhibit 3.4 to the 2010 Form S-1
4.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Indenture, dated as of July 8, 2015, by and among SS&C Technologies Holdings, Inc., certain of SS&C’s subsidiaries and
Wilmington Trust, National Association is incorporated by reference to Exhibit 4.1of the Registrants Current Report on
Form 8-K, filed on July 8, 2015 (File No. 001-34675)
Credit Agreement, dated as of July 8, 2015, by and among SS&C Technologies Holdings, Inc., SS&C Technologies, Inc.,
SS&C European Holdings S.a R.L, SS&C Technologies Holdings Europe S.a R.L., certain of SS&C’s subsidiaries,
Deutsche Bank AG New York Branch and certain Lenders and L/C Issuers party thereto is incorporated by reference to
Exhibit 10.2 of the Registrants Current Report on Form 8-K, filed on July 8, 2015 (File No. 001-34675)
Registration Rights Agreement, dated as of July 8, 2015, by and among SS&C Technologies Holdings, Inc., certain of
SS&C’s subsidiaries and the representatives of the initial purchasers named therei is incorporated by reference to Exhibit
10.1 of the Registrants Current Report on Form 8-K, filed on July 8, 2015 (File No. 001-34675)
Stockholders Agreement, dated as of November 23, 2005, by and among the Registrant, Carlyle Partners IV, L.P., CP IV
Coinvestment, L.P., William C. Stone and Other Executive Stockholders (as defined therein) is incorporated herein by
reference to Exhibit 10.5 to SS&C Technologies, Inc’s Registration Statement on Form S-4, as amended (File No. 333-
135139) (the “Form S-4”)
Amendment No. 1, dated April 22, 2008, to the Stockholders Agreement dated as of November 23, 2005, by and among
the Registrant, Carlyle Partners IV, L.P., CP IV Coinvestment, L.P. and William C. Stone is incorporated herein by
reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-143719) (the
“2008 Form S-1”)
Amendment No. 2, dated March 2, 2010, to the Stockholders Agreement dated as of November 23, 2005, as amended by
Amendment No. 1 to the Stockholders Agreement dated April 22, 2008, by and among the Registrant, Carlyle Partners IV,
L.P., CP IV Coinvestment, L.P. and William C. Stone is incorporated herein by reference to Exhibit 10.1 to SS&C
Technologies, Inc.’s Current Report on Form 8-K, filed on March 2, 2010 (File No. 000-28430) (the “March 2, 2010 8-K”)
Amendment No. 3, dated March 10, 2011, to the Stockholders Agreement dated as of November 23, 2005, as amended by
Amendment No. 1 to the Stockholders Agreement dated April 22, 2008, and Amendment No. 2 to the Stockholders
Agreement dated March 2, 2010, by and among the Registrant, Carlyle Partners IV, L.P., CP IV Coinvestment, L.P. and
William C. Stone is incorporated herein by reference to Exhibit 10.35 to SS&C Technologies, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2010 (File No. 000-28430)
Registration Rights Agreement, dated as of November 23, 2005, by and among the Registrant, Carlyle Partners IV, L.P.,
CP IV Coinvestment, L.P., William C. Stone and Other Executive Investors (as defined therein) is incorporated herein by
reference to Exhibit 10.6 to the Form S-4
2006 Equity Incentive Plan is incorporated herein by reference to Exhibit 10.1 to SS&C Technologies, Inc.’s Current
Report on Form 8-K, filed on August 15, 2006 (File No. 000-28430) (the “August 15, 2006 8-K”)
F-29
Exhibit
Number
10.9*
Description of Exhibit
Forms of 2006 Equity Incentive Plan Amended and Restated Stock Option Grant Notice and Amended and Restated Stock
Option Agreement are incorporated herein by reference to Exhibit 10.2 to the March 2, 2010 8-K
10.10*
Form of Stock Award Agreement is incorporated herein by reference to Exhibit 10.4 to the August 15, 2006 8-K
10.11
2008 Stock Incentive Plan is incorporated herein by reference to Exhibit 10.26 to the 2008 Form S-1
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
Form of 2008 Stock Incentive Plan Stock Option Grant Notice and Stock Option Agreement is incorporated herein by
reference to Exhibit 10.26 to the 2010 Form S-1
Employment Agreement, dated as of March 11, 2010, by and among William C. Stone, the Registrant and SS&C
Technologies, Inc. is incorporated herein by reference to Exhibit 10.27 to the 2010 Form S-1
First Amended and Restated Employment Agreement, dated as of March 31, 2015, between SS&C Technologies Holdings,
Inc. and William C. Stone is incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-
K, filed on April 1, 2015 (File No. 001-34675)
Lease Agreement, dated September 23, 1997, by and between SS&C Technologies, Inc. and Monarch Life Insurance
Company, as amended by First Amendment to Lease dated as of November 18, 1997, is incorporated herein by reference
to Exhibit 10.15 to SS&C Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1997 (File
No. 000-28430)
Second Amendment to Lease, dated as of April 1999, between SS&C Technologies, Inc. and New Boston Lamberton
Limited Partnership is incorporated herein by reference to Exhibit 10.12 to SS&C Technologies, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2004 (File No. 000-28430) (the “2004 10-K”)
Third Amendment to Lease, effective as of July 1, 1999, between SS&C Technologies, Inc. and New Boston Lamberton
Limited Partnership is incorporated herein by reference to Exhibit 10.13 to the 2004 10-K
Fourth Amendment to Lease, effective as of June 7, 2005, between SS&C Technologies, Inc. and New Boston Lamberton
Limited Partnership, is incorporated herein by reference to Exhibit 10.5 to SS&C Technologies, Inc.’s Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2005 (File No. 000-28430) (the “Q2 2005 10-Q”)
Fifth Amendment to Lease, dated as of November 1, 2006, by and between SS&C Technologies, Inc. and New Boston
Lamberton Limited Partnership is incorporated herein by reference to Exhibit 10.25 to the 2008 Form S-1
Lease Agreement, dated January 6, 1998, by and between Financial Models Company Inc. and Polaris Realty (Canada)
Limited, as amended by First Amendment of Lease, dated as of June 24, 1998, and as amended by Second Lease Amending
Agreement, dated as of November 13, 1998, is incorporated herein by reference to Exhibit 10.6 to the Q2 2005 10-Q
Amended and Restated Stock Option Agreement, dated February 16, 2010, between the Registrant and William C. Stone is
incorporated herein by reference to Exhibit 10.33 to SS&C Technologies, Inc.’s Annual Report on Form 10-K, filed on
February 26, 2010 (File No. 000-28430)
10.22
Form of Director Indemnification Agreement is incorporated herein by reference to Exhibit 10.35 to the 2010 Form S-1
10.23
10.24
10.25
10.26
10.27*
10.28*
Restricted Stock Agreement, dated as of January 21, 2011, between the Registrant and William C. Stone is incorporated by
reference to Exhibit 10.34 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-171673)
Amended and Restated Stock Option Agreement, dated May 24, 2011, between the Registrant and William C. Stone is
incorporated herein by reference to the Registrant’s Current Report on Form 8-K, filed on May 27, 2011 (File No. 001-34675)
Amended and Restated Stock Option Agreement, dated March 10, 2013, between the Registrant and William C. Stone is
incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 12, 2013
(File No. 001-34675)
Form of Restricted Stock Award Agreement under 2006 Equity Incentive Plan is incorporated herein by reference to
Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2013 (File No. 001-34675)
SS&C Technologies Holdings, Inc. 2014 Stock Option Plan is incorporated herein by reference to Appendix A to the
Company’s definitive proxy statement on Schedule 14A, filed on April 16, 2014 (File No. 001-34675)
SS&C Technologies Holdings, Inc. Executive Bonus Plan is incorporated herein by reference to Appendix B to the
Company’s definitive proxy statement on Schedule 14A, filed on April 16, 2014 (File No. 001-34675)
F-30
Exhibit
Number
10.29*
21
23.1
31.1
31.2
32
2014 Stock Option Plan Form of Stock Option Agreement is incorporated herein by reference to Exhibit 10.3 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (File No. 001-34675)
Description of Exhibit
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP
Certifications of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certifications of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Registrant’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1351,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished and not filed for purposes of sections 11
or 12 of the Securities Act and section 18 of the Exchange Act)
101.INS XBRL Instance Document.**
101.SCH XBRL Taxonomy Extension Schema Document.**
101.CAL XBRL Taxonomy Calculation Linkbase Document.**
101.LAB XBRL Taxonomy Label Linkbase Document.**
101.PRE XBRL Taxonomy Presentation Linkbase Document.**
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.**
101.REF XBRL Taxonomy Reference Linkbase Document.**
* Management contract or compensatory plan or arrangement filed herewith in response to Item 15(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.
submitted electronically herewith
†
**
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language):
(i) Consolidated Balance Sheets at December 31, 2015 and 2014, (ii) Consolidated Statements of Comprehensive Income for the years
ended December 31, 2015, 2014 and 2013, (iii) Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014
and 2013, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2015, 2014 and 2013
and (v) Notes to Condensed Consolidated Financial Statements.
F-31
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EXECUTIVE OFFICERS
ANNUAL MEETING
The Annual Meeting of Stockholders will be held on
Wednesday, May 25, 2016 at 9:00 a.m. local time at:
SS&C Technologies, Inc.,
80 Lamberton Road
Windsor, CT 06095
phone: 800-234-0556
INVESTOR INFORMATION
For information on SS&C products and services, please call
800-234-0556. You may also obtain product information by
accessing our website at www.ssctech.com.
STOCK LISTING INFORMATION
Symbol: SSNC on The Nasdaq Global Select Market
AUDITORS
PricewaterhouseCoopers LLP
TRANSFER AGENT
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
William C. Stone
Chairman of the Board and Chief Executive Officer
Normand A. Boulanger
President and Chief Operating Officer
Patrick J. Pedonti
Senior Vice President and Chief Financial Officer
Paul G. Igoe
Senior Vice President, General Counsel and Secretary
Rahul Kanwar
Senior Vice President and Managing Director of Alternative
Assets
DIRECTORS
William C. Stone
Chairman of the Board and Chief Executive Officer
SS&C Technologies Holdings, Inc.
Normand A. Boulanger
President and Chief Operating Officer
SS&C Technologies Holdings, Inc.
Smita Conjeevaram
Retired, Deputy Chief Financial Officer – Credit Hedge Funds
and Chief Financial Officer – Credit Funds
Fortress Investment Group LLC
Michael E. Daniels
Retired, Senior Vice President and Group Executive
IBM Global Services
William A. Etherington
Retired, Senior Vice President and Group Executive
IBM Corporation
Jonathan E. Michael
Chairman and Chief Executive Officer
RLI Corp
David A. Varsano
Chairman and Chief Executive Officer
Pacific Packaging Products
Michael J. Zamkow
Retired, Partner
Goldman Sachs
SS&C Technologies Holdings, Inc.
80 Lamberton Road
Windsor, Connecticut 06095
860-298-4500 fax: 860-298-4987
www.ssctech.com
email: InvestorRelations@sscinc.com