SS&C Technologies Holdings, Inc.
2016 Annual Report on 10-K
My Fellow Shareholders,
Our Company had another outstanding year. In 2016, we strengthened our market position through key
acquisitions and innovative product releases and hired top industry talent. Our focus is on revenue,
earnings, and cash flow. We ended 2016 with $1.481 billion in revenue, a 48.1 percent increase from
2015, and $0.64 in diluted earnings per share. Our net cash provided by operating activities was $418.4
million, an 81.4 percent increase over 2015.
SS&C closed four acquisitions in 2016. We acquired Citigroup’s Alternative Investor Services business,
Wells Fargo’s Global Fund Services business and Conifer Financial Services. These businesses
added over $500 billion in assets under administration and significantly increased our Asia-Pacific
business as well as our exposure to family office, endowments, and foundations. These
acquisitions also bolstered our private equity administration business, solidifying our standing as a top
Private Equity administrator. Our fourth acquisition was Salentica, a leading registered investment
advisor (RIA) CRM solution. Salentica is being integrated with SS&C’s Black Diamond, APX, Axys, and
Global Wealth Platform products.
SS&C invested $152.7 million in research and development. We have continued the biannual releases of
SS&C Advent products and fully revamped our research management tool, Tamale. We made major
upgrades of CAMRA, Global Wealth Platform, HiPortfolio, Portia and our Global Debt
Manager to handle increasingly complex asset classes. Additional investments in SS&C Loan Services,
including bank loan automation, Precision LM, and Evolv, will drive more customer wins.
Our success is not possible without the dedication, hard work and contribution from our greatest asset –
our people. For over 30 years, SS&C has emphasized the importance of talent recruitment, employee
retention, and management performance. We recruit and retain our people with motivating compensation
structures, stock option grants, and a challenging, ever-changing work environment. Our people
have helped us grow from $328.9 million in revenue in 2010 to $1.481 billion in 2016. Our 2016 hires –
top experts in Private Equity, Real Estate, and Institutional Sales, from New York to San Francisco to
Hong Kong – will help us meet our 2017 goals.
SS&C is a meritocracy. We recruit and train top talent. We have high expectations and expect results.
We are very focused on rewarding results. At SS&C there are no participation trophies.
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
⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
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 ⌧ No (cid:3)
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:3) No ⌧
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 ⌧ No (cid:3)
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 ⌧ No (cid:3)
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:3)
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:3)
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
(cid:3)
(cid:3)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:3) No ⌧
As of June 30, 2016, the aggregate market value of the registrant’s common stock held by non-affiliates was $4,746,522,344 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 203,135,651 shares of the registrant’s common stock outstanding as of February 17, 2017.
Part III of this annual report on Form 10-K incorporates by reference certain information from the registrant’s definitive proxy statement for the 2017
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, 2016. 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, 2016
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 ...........................................................................................................................
Page
4
15
26
26
26
26
26
28
29
41
41
41
41
42
42
42
42
42
42
PART IV
Item 15. Exhibits and Financial Statement Schedules ...................................................................................................................
Item 16. Form 10-K Summary ........................................................................................................................................................
Signatures .........................................................................................................................................................................................
Consolidated Financial Statements...................................................................................................................................................
Exhibit Index ....................................................................................................................................................................................
43
43
44
F-2
F-34
Explanatory Note
On June 24, 2016, SS&C Technologies Holdings, Inc. completed a two-for-one stock split, effected in the form of a stock
dividend. All share and per share amounts (other than for the Company’s Class A non-voting common stock which, as described
herein, had been converted to shares of our common stock prior to the two-for-one stock split) have been retroactively restated for all
periods presented to reflect the stock split.
2
FORWARD-LOOKING INFORMATION
This annual report contains forward-looking statements within the meaning of the United States (“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”, “assume”, “intend”, “will”, “continue”, “opportunity”, “predict”, “potential”, “future”, “guarantee”, “likely”,
“target”, “indicate”, “would”, “could” 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 U.S. 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,
GOREC, GORISK, MARGINMAN, MAXIMIS, MOXY, 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 U.S. 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.
3
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 11,000 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 93% of total revenues in the
year ended December 31, 2016. 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 $1,481.4 million for the year ended December 31, 2016 as compared to revenues of $1,000.3 million
for the year ended December 31, 2015. In 2016, we generated 77% of our revenues from clients in North America and 23% from
clients outside North America. Our revenues are highly diversified, with our largest client in 2016 accounting for less than 2% 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 (“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, simplified regulatory compliance, and full service solutions provided by a single vendor. As a result,
we believe the financial services industry will continue to invest in IT and outsourcing solutions in 2017.
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:
●
●
●
●
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 the U.S. Dodd-Frank Wall Street Reform and Consumer
Protection Act (“Dodd-Frank Act”), Form Private Fund, the European Union’s Alternative Investment Fund Managers
Directive (“AIFMD”), the U.S. Foreign Account Tax Compliance Act, the European Market Infrastructure Regulation 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.
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 approximately 90 software products and software-enabled services and
have 89 offices worldwide. As of December 31, 2016, we had 7,178 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.
5
Trusted provider to our highly diversified and growing client base.
By providing mission-critical, reliable software products and services for over 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.
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 47 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. All of our senior executives are compensated based upon the Company’s financial success.
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
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 are sold to niche players in the financial services industry to the largest
institutions in the world. Furthermore, our client base of 11,000 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 $592.5 million for the year ended December 31, 2014 to $956.8
million for the year ended December 31, 2016, representing a compound annual growth rate of 27.1%.
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
6
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 47 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, 2016, we generated 23% 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 to add to our product
and service offerings without incurring the uncertainties sometimes associated with software development projects.
Since 1995, we have acquired 47 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:
●
●
●
●
●
●
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.
7
Acquisitions are discussed further in Liquidity and Capital Resources and in Note 11 to our Consolidated Financial Statements.
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
October 2005 ........
Open Information Systems
November 2009 .... TheNextRound
December 2009..... Tradeware
December 2010.....
TimeShareWare
May 2012 ..............
June 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
March 2016...........
December 2016.....
December 2016.....
Citigroup's Alternative
Investor Services Business
Wells Fargo's Global Fund
Services Business
Conifer Financial Services
Products and Services
Contract Purchase
Price
Acquired Capabilities, Products and Services
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
25,300
159,000
24,000
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
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
116,000
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
Expanded fund administration services in hedge fund and private
equity sectors
Expanded fund administration services in hedge fund and private
equity sectors
Expanded fund administration services in hedge fund and other
asset management sectors
425,000
75,050
88,500
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 approximately 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.
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
8
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.
FIXLink. FIXLink is a large, multi-asset FIX connectivity network for IOIs, trades, orders, and allocations, providing a reliable
broker-neutral and platform-neutral FIX connectivity service to broker-dealers and institutions.
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. 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.
9
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.
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:
10
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”). 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.
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 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 commercial mortgage-backed securities (“CMBS”),
including complete CMBS pooling, servicing, advances, recoveries and Commercial Mortgage Securities Association reporting.
11
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 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.
Money market processing
Our money market processing products include:
Global Debt Manager. GDM is a robust browser-based application for corporate and municipal bond accounting. Fully
integrated with Money Market Manager (M3), GDM offers processing for conventional and structured debt within a secure and
flexible platform.
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, 2016, revenues from professional services represented 6% 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 11,000 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, private equity 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, 2016, our top 10 clients represented approximately 11% of total
revenues, with no single client accounting for more than 2% 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.
12
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:
●
●
●
●
●
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.
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, 2016, 2015 and 2014, our research and development expenses were $152.7
million, $110.4 million and $57.3 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 consists of independent specialized administration providers, which are generally smaller than us, and the second
includes prime brokerage and other financial services 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, 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
13
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 FIS, to
smaller providers of specialized applications and services.
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 independent and regional broker-dealers, wealth managers, trust
companies, advisory firms, and registered investment advisers. We compete with a variety of vendors, which are generally smaller
firms focused solely on the advisory market. Our competitors include Envestnet, Orion, Addepar, SEI’s wealth management platform,
and custodians such as Charles Schwab, Fidelity, and Raymond James. Our strengths in this market are our premier platforms with
flexible and on-demand delivery models, and our 90+ complementary 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 FIS 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.
14
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.
Employees
As of December 31, 2016, we had 8,001 full-time employees, consisting of:
●
●
●
●
●
1,173 employees in research and development;
5,672 employees in consulting and services;
355 employees in sales and marketing;
333 employees in client support; and
468 employees in finance and administration.
As of December 31, 2016, 4,140 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, Proxy Statements for the annual stockholder meetings and amendments
thereto that we have filed or furnished with the Securities and Exchange Commission (“SEC”), as soon as reasonably practicable after we
electronically file them with the SEC. The same information is available in print to any stockholder who submits a written request to the
Company’s Investor Relations department. 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. The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The public may also read and copy any materials we file with the SEC
at the SEC's Public Reference Room at 100 F Street, NE, Washington DC, 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.
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 SEC. 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 U.S. 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
15
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.
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:
●
●
●
●
●
●
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 Conifer Financial Services (“Conifer”) and Wells Fargo’s Global Fund Services business
(“GFS”) in December 2016, Citigroup Alternative Investor Services business (“Citigroup AIS”) in March 2016, Advent Software, Inc.
(“Advent”) in July 2015 and GlobeOp Financial Services S.A. (“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, including as a result of substantial changes in global economies, political uncertainty, stock market declines and new
regulatory initiatives. Even in the absence of such factors, the global hedge fund industry is subject to fluctuations in assets under
management that are impossible to predict or anticipate. Further, investor demand for hedge funds has experienced recent declines and
increased withdrawals as a result of poor performance relative to benchmark indices and increased negative investor sentiment on
fees. These risks and trends could significantly and adversely affect some or all of our hedge fund 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 client’s trade, which, in turn, could negatively impact our ability to access independent pricing
sources for valuing those instruments.
16
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:
●
●
●
●
●
●
●
the level of demand for our products and services;
the level of client spending for IT;
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, incurs instances of fraud, 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, physical or cyber 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, attacks or failures that could adversely affect our reputation and our
business.
Our software-enabled services maintain and process confidential data and process trades and perform other back-office
functions, including wiring funds, 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 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 IT 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,
17
cybersecurity threats have become prevalent in our industry as well as for many firms that process information. Cybersecurity threats
are evolving and our security measures, and those of our service providers, may not detect or prevent all attempts to hack our systems,
denial-of-service attacks, viruses, malicious software, attempts to gain unauthorized access to data, phishing attacks, social
engineering, security breaches or employee or contractor malfeasance and other electronic security breaches that may jeopardize the
security of information stored in or transmitted by our sites, networks and systems or that we or our third-party service providers
otherwise maintain. Such cyber security incidents could lead to disruptions in our systems, the unauthorized release or destruction of
our or our clients’ or other parties’ confidential or otherwise protected information and corruption of data. We and our service
providers may not have the resources or technical sophistication to anticipate or prevent all types of attacks, and techniques used to
obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-
party service providers. In the last few years there have been many successful advanced cyber-attacks 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 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, including confidential and personal information, 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. Although we maintain privacy, data breach and
network security liability insurance, we cannot be certain that our coverage will be adequate or cover liabilities actually incurred, or
that insurance will continue to be available to us on economically reasonable terms, or at all. 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 IT systems, our business could be harmed.
In providing our software-enabled services to our customers, we depend upon IT infrastructure that is primarily managed by our
firm, but we also depend on third-party service providers to provide some of the IT 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 2,253 employees located in India. The economy of India may differ favorably or unfavorably
from the U.S. 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.
18
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:
●
●
●
●
●
●
●
●
●
●
●
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, and 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 infringing, misappropriating, violating 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. In addition, our employees, distributors,
clients and potential clients may breach our confidentiality agreements and we may not have adequate remedies for any such breach.
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. If a third-party were to gain unauthorized access to or independently develop the
confidential or proprietary information we possess, we could suffer a loss of revenues, we could experience an adverse impact on our
competitive position, and our relationships with our clients and our reputation could be materially adversely effected.
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 in a manner that does not
infringe, misappropriate or otherwise violate our intellectual property or other proprietary rights, 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,
19
misappropriate or otherwise violate their intellectual property rights, including their patent rights. Such claims, regardless of merit,
could result in expensive and time-consuming litigation, divert the attention of our personnel, and impair our intellectual property
rights. Moreover, as a result of such claims, we may be required to redesign our products or services in a manner that is not
infringing, misappropriating or otherwise violating such third-party’s intellectual property rights, which may not be technically or
commercially feasible. We may also be required to obtain a license to such intellectual property rights, which may not be available on
commercially reasonable terms or at all. Any of the foregoing could have a material adverse effect on our business, results of
operation, and financial condition.
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. Some open source
licenses require that source code subject to the license be disclosed to third-parties, grant such third-parties the right to modify and
redistribute that source code and a requirement that the source code for any software derived from it be disclosed. If we combine our
proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to
release the source code of our proprietary software to the public. 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, misappropriate or otherwise violate 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, which may not be feasible on a
technical or commercial basis. 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 business,
results of operation and financial condition.
We could become subject to litigation regarding our or a third-party’s 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 U.S. 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, misappropriate or otherwise violate a third-party’s intellectual property
rights, including patents, trademarks, trade secrets and copyrights. From time to time, we have received notices claiming our
technology may infringe, misappropriate or otherwise violate 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 our intellectual property rights being reduced, narrowed or held unenforceable or invalid. 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. If we are found to infringe, misappropriate or otherwise violate a third-party’s intellectual property
rights, we may be required to pay the third-party substantial monetary damages and to cease the activities covered by such intellectual
property rights, unless we obtain a license to such intellectual property rights, which may not be available on commercially reasonable
terms or at all. In addition, these claims and threats could also cause us to undertake to re-engineer our products or services which
may not be technically or commercially feasible. Any of the foregoing could have a material adverse effect on our business, results of
operation and financial condition.
20
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:
●
●
●
●
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.
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 U.S. 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 U.S., 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 (“FTC”) 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
21
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, British Virgin Islands Financial Services
Commission, Centrale Bank van Curacao en Sint Maarten, Commodity Futures Trading Commission, FTC, Cayman Islands Monetary
Authority, Commission de Surveillance du Secteur Financier, Financial Industry Regulatory Authority, Financial Conduct Authority,
Central Bank of Ireland, National Futures Association, Ontario Securities Commission, SEC, Securities Commission of the Bahamas,
U.S. Treasury Department and other government entities that regulate the financial services, hedge fund and hedge fund services
industry in the U.S., the United Kingdom (“U.K.”) 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.
The European Union’s AIFMD and the U.S. Dodd-Frank 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 (“FCPA”) and anti-bribery laws in other jurisdictions, including the U.K. Bribery Act
(“Bribery Act”), generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining
or retaining business or other commercial advantage. The FCPA also imposes accounting standards and requirements on publicly
traded U.S. corporations and their foreign affiliates which are intended to prevent the diversion of corporate funds to the payment of
bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments
can be made. We and our clients operate in a number of jurisdictions that may pose a risk of potential FCPA or Bribery Act
violations. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our internal operations
might be subject or the manner in which existing laws might be administered or interpreted. While our policies mandate compliance
with these laws, there can be no assurance that we will be completely effective in ensuring our compliance with all applicable anti-
corruption laws. 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 U.S. 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 U.S.
For the years ended December 31, 2016, 2015 and 2014 international revenues accounted for 27%, 32% and 33%, respectively,
of our total revenues. We sell certain of our products, such as MarginMan and Pacer, primarily outside the U.S. On June 23, 2016, the
U.K. held a referendum in which voters approved an exit from the European Union (“E.U.”), such referendum commonly referred to
as “Brexit.” As a result of the referendum, the U.K. government has begun negotiating the terms of the U.K.’s future relationship with
the E.U. Current uncertainty over the final outcome of the negotiations between the U.K. and the E.U., may adversely affect our
operations and financial results, as we generated approximately $105.4 million in revenue from the U.K. in 2016. Our international
business is subject to a variety of risks, including:
●
●
●
●
●
●
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 FCPA and the 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.
22
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 U.S. and significant revenues are generated outside the
U.S., 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.
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, 2016, we had total indebtedness of $2,559.6
million and additional available borrowings of $56.0 million under our revolving credit facility. This indebtedness could have adverse
consequences. For example, it may:
●
●
●
●
●
●
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
$111.7 million annually. Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures
23
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.
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:
●
●
●
●
●
●
●
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 at a price of $7.50 per share on March 31, 2010, and in the
seven intervening years our common stock has traded as high as $38.60 and as low as $6.64. 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:
●
●
●
●
●
●
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;
24
●
●
●
●
●
●
announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances;
regulatory developments in any of our markets;
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 17, 2017, William C. Stone, our Chairman of the Board and Chief Executive Officer, beneficially owned
approximately 15.8% 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:
●
●
●
●
●
●
●
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.
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.
25
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 at 80 Lamberton
Road, Windsor, CT 06095. In 2013, we extended the lease term through October 2022. We utilize facilities and offices in 42 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
From time to time, the Company is subject to legal proceedings and claims. In the opinion of the Company’s management, the
Company is not involved in any litigation or proceedings that would have a material adverse effect on the Company or its business.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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:
2016
Fourth quarter............................................................................ $
Third quarter ............................................................................. $
Second quarter........................................................................... $
First quarter ............................................................................... $
2015
Fourth quarter............................................................................ $
Third quarter ............................................................................. $
Second quarter........................................................................... $
First quarter ............................................................................... $
High (1)
Low (1)
33.50 $
34.19 $
32.25 $
33.92 $
28.43
27.91
26.15
23.62
High (1)
Low (1)
38.60 $
37.75 $
32.60 $
32.50 $
32.70
30.76
27.84
26.11
(1) Amounts for 2015 and for the first and second quarter of 2016 have been restated to reflect our two-for-one stock split in the
form of a stock dividend, effective on June 24, 2016.
On February 17, 2017, the closing price reported on The NASDAQ Global Select Market of our common stock was $35.43 per
share. As of February 17, 2017, we had approximately 3,200 holders of record of our common stock.
There is no established public trading market for shares of our Class A non-voting common stock, and as of December 31, 2016
there were no shares of our Class A non-voting common stock outstanding. On March 30, 2016, William C. Stone converted
2,703,846 shares of Class A non-voting stock into 5,407,692 shares of common stock. Each share of Class A non-voting common
stock converted automatically into one share of the Company’s common stock upon the expiration of the applicable waiting period
under the HSR Act.
In 2016, we paid quarterly cash dividends of $0.0625 per share of common stock on March 15, 2016, June 15, 2016, September
15, 2016 and December 15, 2016, to stockholders of record as of the close of business on March 7, 2016, June 1, 2016, September 1,
2016 and December 1, 2016, respectively, totaling $50.1 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.
26
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.
Performance graph
This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC 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, 2011 through December 31, 2016 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
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/31/2011
12/31/2012
12/31/2013
12/31/2014
12/31/2015
12/31/2016
*
$100 invested in stock on 12/31/2011. Return calculations of indices assume the reinvestment of dividends.
12/31/2012 12/31/2013 12/31/2014 12/31/2015
128
117
114
245
165
164
325
189
175
12/31/2016
322
220
250
382
202
230
SS&C Technologies Holdings, Inc. ..............................
NASDAQ Composite-Total Returns ............................
NASDAQ Computer & Data Processing Index ............
12/31/2011
100
100
100
27
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.
2016 (5)
For the Year Ended December 31,
2014 (3)
2013 (2)
2015 (4)
2012 (1)
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) DATA
Revenues ................................................................................ $ 1,481,436 $ 1,000,285 $
164,738
Operating income...................................................................
42,862
Net income .............................................................................
0.24 $
Earnings per share - Basic...................................................... $
Earnings per share - Diluted .................................................. $
0.22 $
182,196
Weighted average shares outstanding - Basic........................
190,896
Weighted average shares outstanding - Diluted.....................
0.25 $
Cash dividends declared per common share (6) .................... $
288,695
130,996
0.65 $
0.64 $
200,252
205,793
0.25 $
767,861 $
200,372
131,127
0.79 $
0.75 $
166,628
174,662
0.0625
712,702 $
182,968
117,895
0.73 $
0.69 $
162,390
171,232
—
551,842
123,216
45,820
0.29
0.28
156,642
165,776
—
($ in thousands, except per share data)
2016 (5)
2015 (4)
2014 (3)
2013 (2)
2012 (1)
As of December 31,
CONSOLIDATED BALANCE SHEET DATA
Total assets............................................................................. $ 5,706,971 $ 5,802,242 $ 2,266,155 $ 2,275,324 $ 2,362,905
Total long-term debt, including current portion .................... 2,501,130 2,751,351
774,507 1,012,138
Stockholders’ equity .............................................................. 2,258,578 2,105,446 1,346,670 1,231,708 1,075,503
619,738
($ in thousands)
(1) 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 all of the outstanding stock of GlobeOp. On September 27, 2012, we acquired the assets and
business of Gravity Financial.
(2) On October 1, 2013, we acquired all of the outstanding stock of Prime Management Limited. See Note 11 to our Consolidated
Financial Statements.
(3) 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.
(4) On July 8, 2015, we acquired all of the outstanding stock of Advent. 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.
(5) On March 11, 2016, we acquired the assets and business associated with Citigroup AIS. On October 20, 2016, we acquired all
of the outstanding stock of Salentica. On December 1, 2016, we acquired the assets and business associated with GFS. On
December 15, 2016, we acquired all of the outstanding stock of Conifer. See Note 11 to our Consolidated Financial
Statements.
(6) On June 24, 2016, SS&C Technologies Holdings, Inc. completed a two-for-one stock split, effected in the form of a stock
dividend. All share and per share amounts have been retroactively restated for all periods presented to reflect the stock split.
28
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 11,000 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 and expand our intellectual property portfolio or address a highly specialized
problem or a market niche. Since the beginning of 2014, we have spent approximately $3.3 billion to acquire eight businesses in the
financial services software industry, using a combination of cash on hand and debt financing (as discussed in Notes 6 and 11 to our
Consolidated Financial Statements).
The following table lists the significant businesses we have acquired since January 1, 2014:
Acquired Capabilities, Products and Services
Acquired Business
Conifer Financial Services ............
Acquisition Date
December 2016
Wells Fargo's Global Funds
Services Business ..........................
Citigroup's Alternative Investor
Services Business ..........................
Primatics Financial........................ November 2015 Added cloud-based integrated risk, compliance and finance solution for the
Expanded fund administration services in hedge fund and other asset
management sectors
Expanded fund administration services in hedge fund and private equity
sectors
Expanded fund administration services in hedge fund and private equity
sectors
December 2016
March 2016
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
Expanded global investment management software and services
banking industry
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.
Revenues. Our contractually recurring revenues, which include our maintenance and term licenses revenues and software-
enabled services revenues, were $1,371.5 million in 2016, compared to $916.6 million and $708.1 million in 2015 and 2014,
respectively. In 2016, contractually recurring revenues represented 93% of total revenues, compared to 92% in both 2015 and 2014,
respectively. 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 $400.2 million in 2016, compared to $318.0 million and
$253.1 million in 2015 and 2014, respectively.
As we have expanded our business, we have focused on increasing our contractually recurring revenues. Since 2014, 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
$592.5 million in 2014 to $956.8 million in 2016. Our maintenance and term licenses revenues increased from $115.6 million in 2014
to $414.7 million in 2016. 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.
29
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 acquisition of Citigroup’s Alternative Investor Services business (“Citigroup
AIS”).
We generated $418.4 million in cash from operating activities in 2016, compared to $230.6 million and $252.5 million in 2015
and 2014, respectively. In 2016, we used our operating cash flow, $120.0 million in proceeds received from debt financing, $39.2
million in proceeds from the exercise of stock options and existing cash to acquire Citigroup AIS, GFS and Conifer, repay
$383.4 million of debt, pay $50.1 million in dividends and invest in capital expenditures in our business.
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.
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,
2015
2014
2016
65%
28
93
1
6
7
100%
67%
25
92
3
5
8
100%
77%
15
92
4
4
8
100%
The following table sets forth revenues (dollars in thousands) and percent change in revenues for the periods indicated:
Year Ended December 31,
2015
2014
2016
Percent Change from Prior
Period
2016
2015
Revenues:
Software-enabled services ..................................................... $ 956,791 $ 670,170 $ 592,528
115,609
Maintenance and term licenses ..............................................
708,137
26,328
33,396
59,724
Total revenues........................................................................ $ 1,481,436 $ 1,000,285 $ 767,861
414,710
Total recurring revenues................................................... 1,371,501
23,960
85,975
109,935
Perpetual licenses...................................................................
Professional services..............................................................
Total non-recurring revenues ...........................................
246,422
916,592
31,467
52,226
83,693
43%
68
50
(24)
65
31
48
13%
113
29
20
56
40
30
Fiscal 2016 versus Fiscal 2015. Our revenues increased primarily due to revenues related to our acquisitions of GFS and
Conifer in the fourth quarter of 2016, Citigroup AIS in the first quarter of 2016, Primatics in the fourth quarter of 2015 and Varden
and Advent in the third quarter of 2015, which contributed $418.9 million in revenues. Additionally, organic revenues increased
$71.4 million, of which approximately $13.6 million was the result of the impact of the fair value adjustment for acquired deferred
revenue on the periods. These increases were partially offset by the unfavorable impact from foreign currency translation of $9.2
million, which resulted from the strength of the U.S. dollar relative to currencies such as the British pound and the Canadian dollar.
Maintenance and term licenses revenues and software-enabled services revenues experienced increases due to the acquisitions, which
contributed revenues of $124.6 million and $263.6 million, respectively, in 2016. Maintenance and term licenses revenues and
software-enabled services revenues reflect reductions of $29.1 million in maintenance and term license revenues and software-enabled
services revenues 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 $29.8 million
30
and $0.9 million, respectively, in 2016. Professional services revenues reflect a reduction of $13.5 million related to the fair value
adjustment of acquired deferred revenue related to Advent.
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.
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 ..........................................................
Year Ended December 31,
2015
2014
2016
57%
44
53
10
81
65
54
46
56%
46
53
10
80
54
53
47
58%
36
54
13
69
45
53
47
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,
2015
2014
2016
Percent Change from Prior
Period
2016
2015
Cost of revenues:
Cost of software-enabled services ......................................... $ 544,356 $ 373,394 $ 342,625
41,424
Cost of maintenance and term licenses..................................
384,049
Total cost of recurring revenues .......................................
3,531
Cost of perpetual licenses ......................................................
23,151
Cost of professional services .................................................
26,682
Total cost of non-recurring revenues................................
Total cost of revenues ............................................................ $ 800,489 $ 532,350 $ 410,731
113,865
487,259
3,116
41,975
45,091
184,162
728,518
2,399
69,572
71,971
46%
62
50
(23)
66
60
50
9%
175
27
(12)
81
69
30
Fiscal 2016 versus Fiscal 2015. Our total cost of revenues increased primarily due to our acquisitions of GFS, Conifer,
Citigroup AIS, Primatics, Varden and Advent, which added costs of $251.8 million. Additionally, total cost of revenues increased
$24.3 million to support revenue growth, partially offset by the favorable impact from foreign currency translation of $8.0 million,
which resulted from the strength of the U.S. dollar relative to currencies such as the British pound, the Canadian dollar and the Indian
Rupee.
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.
31
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:
Operating expenses:
Year Ended December 31,
2015
2014
2016
Selling and marketing .........................................................
Research and development..................................................
General and administrative..................................................
Total operating expenses ...............................................
8%
10
8
26%
9%
11
10
30%
6%
7
7
20%
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,
2015
2014
2016
Percent Change from Prior
Period
2016
2015
Selling and marketing....................................................... $ 117,098 $
152,689
Research and development ...............................................
122,465
General and administrative...............................................
48,592
57,287
50,879
Total operating expenses............................................. $ 392,252 $ 303,197 $ 156,758
94,950 $
110,415
97,832
23%
38
25
29
95%
93
92
93
Fiscal 2016 versus 2015. The increase in total operating expenses in 2016 was primarily due to our acquisitions of Conifer,
GFS, Citigroup AIS, Varden and Advent, which added expenses of $109.7 million. Included in those costs are charges of $8.6 million
related to the elimination of redundant positions within the acquired businesses. These increases were offset by a decrease in
professional fees of $15.5 million primarily due to the acquisition of Advent in the prior year. These increases were also partially
offset by the favorable impact from foreign currency translation of $4.7 million, which resulted from the strength of the U.S. dollar
relative to currencies such as the British pound, the Canadian dollar and the Indian Rupee.
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.
Comparison of Fiscal 2016, 2015 and 2014 for Interest, Taxes and Other
Interest income. We had interest income of $1.5 million in 2016 compared to $2.0 million in 2015 and $1.7 million in 2014. The
decrease in interest income in 2016 resulted from lower average cash balances during 2016 as compared to 2015. The increase in
interest income in 2015 and 2014 resulted from higher average cash balances during 2015 as compared to 2014.
Interest expense. We had interest expense of $129.9 million in 2016 compared to $79.3 million in 2015 and $27.2 million in
2014. The increase in interest expense in 2016 reflects the full year effect of the borrowings under the Credit Agreement and Senior
Notes in connection with our acquisition of Advent during the third quarter of 2015. 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.
Other income, net. Other income, net for 2016, 2015 and 2014 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.
32
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....................................................................
Year Ended December 31,
2016
32,620
$
20%
2015
17,980
$
30%
2014
46,527
26%
Percent Change from Prior
Period
2016
2015
81%
(61)%
Our 2016, 2015 and 2014 effective tax rates differ from the statutory rate primarily due to the effect of our foreign operations.
The decrease in the effective tax rate from 2015 to 2016 was primarily due to the absence of the unfavorable impact of nondeductible
transaction costs and taxes incurred on a one time repatriation of foreign earnings in 2015. The increase in the effective tax 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 U.K. and a reduction in domestic income before taxes. We
had $513.5 million and $580.5 million of deferred tax liabilities and $62.4 and $73.1 million of deferred tax assets at December 31,
2016 and 2015, respectively.
Our effective tax rate includes the effect of operations outside the U.S., 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 U.K., where the statutory rates were 26.5%, 34.6% and 20.0%, respectively, in 2016, 26.5%, 34.6% and 20.3%,
respectively, in 2015, and 26.5%, 34.0% and 21.5%, respectively, in 2014. 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 and capital spending for at least the
next twelve months.
In March 2016, we purchased Citigroup AIS for approximately $296.1 million, plus the costs of effecting the transaction and the
assumption of certain liabilities. In December 2016, we purchased GFS for approximately $73.2 million, plus the costs of effecting the
transaction and the assumption of certain liabilities, as well as Conifer for approximately $86.7 million, plus the costs of effecting the
transaction and the assumption of certain liabilities. We funded these purchases with cash on hand and $120.0 million in additional
borrowings under our revolving credit facility.
In 2016, we paid quarterly cash dividends of $0.0625 per share of common stock on March 15, 2016, June 15, 2016,
September 15, 2016 and December 15, 2016 to stockholders of record as of the close of business on March 7, 2016, June 1, 2016,
September 1, 2016 and December 1, 2016, respectively, totaling $50.1 million.
Our cash and cash equivalents at December 31, 2016 were $117.6 million, a decrease of $316.6 million from $434.2 million at
December 31, 2015. The decrease in cash is primarily due to cash used for acquisitions, repayments of debt, payment of dividends and
capital expenditures. These decreases were partially offset by proceeds received from our borrowings as well as cash provided by
operations, proceeds from stock option exercises and the related income tax benefits. 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 $418.4 million in 2016. Cash provided by operating activities primarily resulted
from net income of $131.0 million adjusted for non-cash items of $199.5 million and changes in our working capital accounts
(excluding the effect of acquisitions) totaling $87.9 million. The changes in our working capital accounts were driven by a change in
income taxes prepaid and payable and increases in deferred revenues and accrued expenses. These changes were partially offset by an
increase in accounts receivable. The increase in deferred revenues was primarily due to the increase in deferred term license revenue
related to Advent. The increase in accrued expenses was primarily due to the increase in accrued employee compensation associated
with the annual employee bonuses typically paid in the first quarter. The increase in accounts receivable was primarily due to an
increase in days’ sales outstanding related to receivables within recently acquired businesses.
Investing activities used net cash of $495.3 million in 2016, primarily related to cash paid of $457.5 million for the acquisitions
of Citigroup AIS, GFS and Conifer in the first and fourth quarters of 2016, $27.9 million in capital expenditures and $9.6 million in
capitalized software.
Financing activities used net cash of $236.1 million in 2016, representing repayments of debt totaling $383.4 million, $50.1
million in quarterly dividends, $7.4 million in withholding taxes related to equity award net share settlements and the payment of $0.5
million in fees related to refinancing activities. These payments were partially offset by $120.0 million received from debt borrowings,
$39.2 million from stock option exercises and related income tax windfall benefits of $46.2 million.
33
We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive
operating cash flows. At December 31, 2016, we held approximately $76.8 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,
2016, we held approximately $64.9 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, 2016, we held approximately $19.9 million in cash at our Indian
operations that if repatriated to our foreign debt holder would incur distribution taxes of approximately $3.4 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, 2016 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...................................... $2,559,625 $ 126,144 $ 83,038 $ 201,788 $2,148,655 $
102,874
Interest payments (1) ....................................................
195,766
Operating lease obligations (2) .....................................
—
Purchase obligations (3) ...............................................
Uncertain tax positions and related interest (4) ............
—
Total contractual obligations ........................................ $3,632,358 $ 292,886 $ 380,560 $ 469,284 $2,447,295 $
637,639 116,989 214,994 202,782
64,688
383,063
26
9,698
—
42,333
41,209
8,544
—
81,400
1,128
—
More than
5 Years
Less than
1 Year
1-3 Years
3-5
Years
All
Other
—
—
—
—
42,333
42,333
(1) Reflects interest payments on our Credit Agreement at an assumed interest rate of one-month LIBOR of 0.77% plus 2.75% for
U.S. dollar loans on our Term A-1 and A-2 facilities, one-month LIBOR of 0.77% plus 3.25% on our Term B-1 and B-2
facilities, one-month LIBOR of 0.77% plus 2.75% on the revolving credit facility 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, 2016, 2015 and 2014, we received rental income under these leases of $1.3 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.
Purchase obligations include the minimum amounts committed under contracts for goods and services.
(3)
(4) As of December 31, 2016, our liability for uncertain tax positions and related interest and penalties payable was $39.2 million
and $3.1 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 available commitments, or the Revolving Credit Facility, of which $94.0 million was drawn as of December 31, 2016.
No amount was drawn on the Revolving Credit Facility as of December 31, 2015. The Revolving Credit Facility also contains a $25
million letter of credit sub-facility, of which $0.6 million was drawn as of December 31, 2016. No amount was drawn on the letter of
credit sub-facility as of December 31, 2015.
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.
34
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 Financial
Accounting Standards Board (“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, 2016, there was $91.9 million in principal amount outstanding under the term A-1 facility, $142.5 million
in principal amount outstanding under the term A-2 facility, $1,480.2 million in principal amount outstanding under the term B-1
facility, $151.1 million in principal amount outstanding under the term B-2 facility and $94.0 million in principal amount outstanding
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. In addition, under the Credit Agreement, certain defaults
under agreements governing other material indebtedness could result in an event of default under the Credit Agreement, in which case
the lenders could elect to accelerate payments under the Credit Agreement and terminate any commitments they have to provide future
borrowings. As of December 31, 2016, 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.
On April 20, 2016, the Company commenced an offer to exchange for the Senior Notes, new notes identical in all material
respects to the Senior Notes, except that the new notes have been registered under the Securities Act of 1933. The exchange offer
expired on May 18, 2016 and 100% of the Senior Notes were exchanged for the new notes.
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 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.
35
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, 2016, 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 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.
Consolidated EBITDA is not a recognized measurement under GAAP and investors should not consider Consolidated EBITDA
as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income,
operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA
differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies.
Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly
comparable GAAP financial measure, including:
●
●
●
●
●
Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions;
Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;
Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital
expenditures through depreciation and amortization charges;
Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option
awards; and
Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are
normal expenses for the operation of a business.
36
The following is a reconciliation of net income to Consolidated EBITDA as defined in our senior credit facility.
2016
Year Ended December 31,
2015
(In thousands)
2014
Net income ................................................................................. $
Interest expense, net...................................................................
Provision for income taxes.........................................................
Depreciation and amortization...................................................
EBITDA ...............................................................................
Purchase accounting adjustments (1).........................................
Capital-based taxes ....................................................................
Unusual or non-recurring charges (2) ........................................
Loss on extinguishment of debt .................................................
Acquired EBITDA (3) ...............................................................
Stock-based compensation.........................................................
Other (4).....................................................................................
Consolidated EBITDA, as defined ....................................... $
130,996 $
128,454
32,620
228,683
520,753
31,619
1,482
5,891
—
9,094
50,564
2,198
621,601 $
42,862 $ 131,127
25,472
77,357
46,527
17,980
99,831
150,834
302,957
289,033
476
49,927
828
6
4,876
26,148
—
30,417
11,405
109,492
11,483
44,079
315
1,529
551,453 $ 331,518
(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 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.
Our covenant requirement for net senior secured leverage ratio and the actual ratio for the year ended December 31, 2016 are as
follows:
Maximum consolidated net senior secured leverage to
Consolidated EBITDA ratio (1) ...............................................
5.25x
2.96x
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.
37
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.
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, 2016.
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:
●
●
●
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.
38
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, 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 cost savings method or 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, 2016, 2015 and 2014 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
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 (Loss). 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, 2016, we had $39.2 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 January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Goodwill and Other (Topic 350) –
Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2
of the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to
determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities)
following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business
combination. As a result of ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of a
reporting unit with its carrying amount and then recognize an impairment charge, as necessary, for the amount by which the carrying
amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-
04 is effective for fiscal years and interim periods within those years beginning after December 15, 2019, and early adoption is
permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We expect to adopt ASU 2017-04 for our
goodwill impairment tests in 2017.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15
addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230,
Statement of Cash flow, and other Topics. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows:
Restricted Cash. This ASU provides guidance on the classification of restricted cash in the statement of cash flows. Both ASU 2016-
15 and ASU 2016-18 are effective for the Company for its first quarter of fiscal 2018. The impact of the Company’s adoption of ASU
2016-15 and ASU 2016-18 to the Company’s Consolidated Financial Statements will be to include the changes in restricted cash with
the changes in cash and cash equivalents in the Company’s Consolidated Statement of Cash Flows. These ASU’s are not expected to
have a material impact on the Company’s financial position, results of operations or cash flows.
39
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires
companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a
broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for the Company
for its first quarter of fiscal 2020 and earlier adoption is permitted beginning in the first quarter of fiscal 2019. Application of the ASU
is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the
impact of the pending adoption of ASU 2016-13 on the Company’s Consolidated Financial Statements. This ASU is not expected to
have a material impact on the Company’s financial position, results of operations or cash flows.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. This ASU is intended to simplify several aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the
statement of cash flows. ASU 2016-13 is effective for the Company for its first quarter of fiscal 2017. The impact of the Company’s
adoption of ASU 2016-09 to the Company’s Consolidated Financial Statements will be to recognize certain tax benefits or tax
shortfalls upon a restricted-stock award vesting or stock option exercise event relative to the deferred tax asset position established in
the provision for income taxes line of the Consolidated Statement of Comprehensive Income (Loss) instead of to additional paid-in
capital within stockholders’ equity in the Consolidated Balance Sheet. The Company is planning to apply this guidance prospectively
as of January 1, 2017 and, accordingly, data for the prior years ended December 31, 2016 and 2015 will not be adjusted. Excess tax
benefits will be prospectively reported as an operating activity in the Company’s Consolidated Statements of Cash Flows. As the
Company will be applying this guidance prospectively as of January 1, 2017, excess tax benefits for the years ended December 31,
2016 and December 31, 2015 will not be adjusted and continue to be reported in financing activities in the Consolidated Statements of
Cash Flows.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU would require lessees to recognize the
following for all leases (with the exception of short-term leases) at the commencement date; (i) a lease liability, which is a lessee’s
obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset
that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely
unchanged under the amendments of this ASU. Additional disclosures will be required to allow the user to assess the amount, timing
and uncertainty of cash flows arising from leasing activities. A modified retrospective transition approach is required for leases
existing at the time of adoption. ASU 2016-02 is effective for the Company for its first quarter of fiscal 2019 and earlier adoption is
permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2016-02 on the Company’s Consolidated
Financial Statements. The impact of the Company’s adoption of ASU 2016-02 to the Company’s Consolidated Financial Statements
will be to recognize the majority of the Company’s operating lease commitments as operating lease liabilities and right-of-use assets
upon adoption, which will result in a material increase in the assets and liabilities recorded on the Company’s Consolidated Balance
Sheet. The Company is continuing its assessment, which may identify additional impacts this ASU will have on the Company’s
Consolidated Financial Statements and related disclosures and internal controls over financial reporting.
In August 2014, the FASB issued ASU 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 guidance is effective for annual periods ending
after December 15, 2016 and for interim periods thereafter. The adoption of this guidance did not have a material effect on our
Consolidated Financial Statements during the year ended December 31, 2016.
In May 2014, the FASB issued ASU 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. On August 12, 2015, the FASB issued ASU 2015-14, deferring the
effective date by one year for ASU 2014-09. ASU 2014-09 is effective for the Company for its first quarter of 2018, with early
adoption permitted for annual periods beginning after December 15, 2016. The new standard is required to be applied retrospectively
to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of
initial application.
Subsequent to the issuance of ASU 2014-09, the FASB has issued the following updates: ASU 2016-08, Revenue from
Contracts with Customers (Topic 606) – Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU 2016-
10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing; and ASU 2016-
12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients. The amendments
in these updates affect the guidance contained within ASU 2014-09.
The new revenue standard is expected to change the revenue recognition practices for our perpetual and term software license
arrangements. More specifically, we do not expect that the license component of our term license arrangements will be recognized
ratably over the contractual term. We continue to evaluate the implications of the standard change. We intend to adopt the new
revenue standard effective January 1, 2018 using the modified retrospective approach.
40
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, 2016, we had total debt of $2,559.6 million, including $1,959.6 million of variable interest rate debt. As of
December 31, 2016, a 1% change in interest rates would result in a change in interest expense of approximately $19.6 million per
year.
During 2016, approximately 27% of our revenues were from clients located outside the United States. A portion of the revenues
from clients located outside the U.S. 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, 2016. 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, 2016. 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, 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, 2016, 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
41
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, 2016. In March 2016, we acquired the assets of Citigroup AIS and in December 2016, we acquired the assets of GFS
and Conifer. Management has excluded Citigroup AIS, GFS and Conifer from its assessment of internal control over financial
reporting as of December 31, 2016 because they were acquired by us in a purchase business combination during 2016. Citigroup AIS,
GFS and Conifer, and their related entities are our wholly-owned subsidiaries whose total assets and total revenues represent 1% and
12%, respectively, of the Consolidated Financial Statement amounts as of and for the year ended December 31, 2016.
The effectiveness of our internal control over financial reporting as of December 31, 2016 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, 2016, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. OTHER INFORMATION
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference from the information in the Company’s proxy statement for the 2017 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 2017 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 2017 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 2017 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 2017 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.
42
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(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, 2016 and 2015..................................................................................................
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014 .................
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014................................................
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2016, 2015 and 2014..............
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.
Item 16.
FORM 10-K SUMMARY
None.
43
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.
/s/ William C. Stone
By
:
William C. Stone
Chairman of the Board and Chief Executive Offic
er
Date: February 28, 2017
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.
Date
February 28, 2017
February 28, 2017
February 28, 2017
February 28, 2017
February 28, 2017
February 28, 2017
February 28, 2017
February 28, 2017
February 28, 2017
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
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
44
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of SS&C Technologies Holdings, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income
(loss), of changes in stockholders’ equity, and of cash flows present fairly, in all material respects, the financial position of SS&C
Technologies Holdings, Inc. and its subsidiaries at December 31, 2016 and 2015, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2016 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, 2016, 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.
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 Citigroup
Alternative Investor Services (Citigroup AIS), Wells Fargo’s Global Fund Services (GFS), and Conifer Financial Services (Conifer)
from its assessment of internal control over financial reporting as of December 31, 2016 because they were acquired by the Company
in a purchase business combination during 2016. We have also excluded Citigroup AIS, GFS, and Conifer from our audit of internal
control over financial reporting. Citigroup AIS, GFS, Conifer and their related entities are wholly owned subsidiaries of the Company
whose total assets and total revenues represent 1% and 12%, respectively, of the related consolidated financial statement amounts as
of and for the year ended December 31, 2016.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
February 28, 2017
F-1
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Current assets:
ASSETS
Cash and cash equivalents .................................................................................................................................
Accounts receivable, net of allowance for doubtful accounts of $5,944 and $2,957,
respectively (Note 3) ......................................................................................................................................
Prepaid expenses and other current assets.........................................................................................................
Prepaid 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 (Note 2) ....................................................................................................................................................
Intangible and other assets, net of accumulated amortization of $730,234 and $536,929,
respectively (Note 2) .............................................................................................................................................
Total assets ...............................................................................................................................................................
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt (Note 6) .......................................................................................................
Accounts payable...............................................................................................................................................
Income taxes payable ........................................................................................................................................
Accrued employee compensation and benefits .................................................................................................
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 (Note 4):
Common stock:
Class A non-voting common stock, $0.01 par value per share, 5,000,000 shares authorized;
0 and 2,703,846 shares issued and outstanding, respectively.........................................................................
Common stock, $0.01 par value per share, 400,000,000 shares authorized; 204,616,054 shares
and 193,104,452 shares issued, respectively, and 203,042,715 shares and 191,531,574 shares
outstanding, respectively, of which 11,252 and 24,876 are unvested, respectively.......................................
Additional paid-in capital ..................................................................................................................................
Accumulated other comprehensive loss ............................................................................................................
Retained earnings ..............................................................................................................................................
Less: cost of common stock in treasury, 1,573,339 and 1,572,878 shares, respectively............................
Total stockholders’ equity ........................................................................................................................................
Total liabilities and stockholders’ equity .................................................................................................................
$
December 31,
2016
December 31,
2015
(In thousands, except per share data)
$
117,558
$
241,307
31,119
23,012
2,116
415,112
2,655
42,749
120,011
165,415
(85,020)
80,395
2,410
3,652,733
1,556,321
5,706,971
126,144
16,490
3,473
104,118
21,470
53,708
235,222
560,625
2,374,986
59,227
453,555
3,448,393
$
$
$
$
434,159
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
—
27
2,046
1,921,256
(139,073)
492,349
2,276,578
(18,000)
2,258,578
5,706,971
$
1,932
1,793,149
(83,170)
411,493
2,123,431
(17,985)
2,105,446
5,802,242
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 INCOME (LOSS)
2016
Year Ended December 31,
2015
(In thousands, except per share data)
2014
Revenues:
Software-enabled services ............................................................................ $
Maintenance and term licenses.....................................................................
Total recurring revenues....................................................................
Perpetual licenses .........................................................................................
Professional services ....................................................................................
Total non-recurring revenues ............................................................
Total revenues ...................................................................................
956,791 $
414,710
1,371,501
23,960
85,975
109,935
1,481,436
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 income (loss)............................................................................ $
544,356
184,162
728,518
2,399
69,572
71,971
800,489
680,947
117,098
152,689
122,465
392,252
288,695
1,488
(129,942)
3,375
—
163,616
32,620
130,996 $
0.65 $
200,252
0.64 $
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 $
0.24 $
182,196
0.22 $
205,793
130,996 $
190,896
42,862 $
(55,903)
(55,903)
75,093 $
(68,049)
(68,049)
(25,187) $
The accompanying notes are an integral part of these Consolidated Financial Statements.
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
0.79
166,628
0.75
174,662
131,127
(45,495)
(45,495)
85,632
F-3
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Cash flow from operating activities:
Net income................................................................................................................. $
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:
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 ........................................................................
Purchase of long-term investment .......................................................................
Net changes in restricted cash .............................................................................
Net cash used in investing activities..............................................................
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 (used in) provided by financing activities ......................................
Effect of exchange rate changes on cash and cash equivalents .................................
Net (decrease) increase in cash and cash equivalents......................................................
Cash and cash equivalents, beginning of period..............................................................
Cash and cash equivalents, end of period.................................................................... $
2016
Year Ended December 31,
2015
2014
130,996 $
42,862 $
131,127
228,683
50,564
(46,207)
10,680
—
162
(47,836)
3,486
(10,850)
(2,844)
(1,300)
20,679
65,117
17,077
418,407
(27,926)
71
(457,511)
(9,621)
(1,000)
700
(495,287)
120,000
(383,436)
39,239
(7,430)
—
46,207
—
(15)
(519)
(50,140)
(236,094)
(3,627)
(316,601)
434,159
117,558 $
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
(13,600)
64
(2,730,956)
(4,273)
—
453
(2,748,312)
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
Supplemental disclosure of cash paid for:
Interest ................................................................................................................. $
Income taxes, net of refunds................................................................................ $
126,693 $
8,809 $
42,221 $
42,210 $
21,330
33,414
Supplemental disclosure of non-cash investing activities:
See Note 11 for a discussion of acquisitions.
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, 2016, 2015 AND 2014
Class A
Common Stock
Common Stock
Number
of
Issued
Shares Amount Shares Amount
Number
of
Issued
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Total
Treasury Stockholders’
Stock
Equity
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 -
$0.0625 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 -
$0.25 per share (Note 4) ...... —
Issuance of common stock ..... —
Balance, at December 31, 2015 ... 2,704 $
Net income ............................. —
Foreign exchange translation
adjustment ........................... —
Stock-based compensation
expense ................................ —
Exercise of options, net of
withholding taxes ................ —
Conversion of Class A
common stock...................... (2,704)
Income tax benefit related to
exercise of stock options ..... —
Cash dividends declared -
$0.25 per share (Note 4) ...... —
Purchase of common stock..... —
27 160,956 $ 1,608 $
— —
—
913,012 $ 293,449 $
— 131,127
(In thousands)
30,374 $ (6,762) $ 1,231,708
131,127
—
—
—
— —
—
—
(45,495)
—
(45,495)
—
—
— —
36
3,580
11,483
24,074
—
—
—
—
—
—
11,483
24,110
—
— —
15,454
—
—
—
15,454
— —
—
—
— —
27 164,536 $ 1,644 $
— —
—
—
—
(10,494)
—
964,023 $ 414,082 $
42,862
—
—
—
— (11,223)
(10,494)
(11,223)
(15,121) $ (17,985) $ 1,346,670
42,862
—
—
—
— —
—
—
(68,049)
—
(68,049)
—
— —
43,746
—
—
—
43,746
—
4,414
44
23,109
—
—
—
23,153
—
— —
11,753
—
—
—
11,753
—
— —
32,960
—
—
—
32,960
— —
244
(45,451)
—
— 24,154
—
27 193,104 $ 1,932 $ 1,793,149 $ 411,493 $
— 130,996
—
—
717,558
— —
—
—
(45,451)
717,802
(83,170) $ (17,985) $ 2,105,446
130,996
—
—
—
—
—
— —
—
—
(55,903)
—
(55,903)
—
— —
50,178
—
—
—
50,178
—
6,104
60
31,749
—
—
—
31,809
(27)
5,408
54
(27)
—
—
—
—
—
— —
46,207
—
—
—
46,207
(50,140)
—
—
—
Balance, at December 31, 2016 ... — $ — 204,616 $ 2,046 $ 1,921,256 $ 492,349 $
— —
— —
—
—
—
—
(50,140)
(15)
(139,073) $ (18,000) $ 2,258,578
—
(15)
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 approximately 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.
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 billings or 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.
F-6
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 the Company’s 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, vendor-specific objective evidence (“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
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 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.
F-7
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 $8.8 million and $4.7 million are included in the December 31, 2016 and 2015 Consolidated 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 $3.5 million, $2.4 million, and $1.8 million for
each of the years ended December 31, 2016, 2015, and 2014, 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
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.
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 did not hold any cash equivalents at December 31, 2016. The Company held $303.1
million in cash equivalents at December 31, 2015.
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 Sheets. Additionally, movements of restricted cash are included in other investing activities on the
Consolidated Statements of Cash Flows.
F-8
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 .....................................
Equipment and software ............................................
Furniture and fixtures.................................................
Leasehold improvements ...........................................
Useful Life
—
40 years
3-5 years
7-10 years
Shorter of lease term or estimated useful life
Depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $23.7 million, $18.9 million and $14.3
million, respectively.
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, 2016 or 2015. The first step of the impairment analysis, which is based on the Company’s reporting unit structure,
indicated that the fair value significantly exceeded the carrying value at December 31, 2016. There were no other indefinite-lived
intangible assets as of December 31, 2016 or 2015.
The following table summarizes changes in goodwill (in thousands):
Balance at December 31, 2014 ..................................................... $
2015 acquisitions........................................................................
Adjustments to prior acquisitions...............................................
Effect of foreign currency translation ........................................
Balance at December 31, 2015 ..................................................... $
2016 acquisitions........................................................................
Adjustments to prior acquisitions...............................................
Effect of foreign currency translation ........................................
Balance at December 31, 2016 ..................................................... $
1,573,227
2,031,451
(67)
(55,399)
3,549,212
148,235
(4,787)
(39,927)
3,652,733
Customer relationships, completed technology, trade names 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 $201.5 million, $129.5 million and $83.7 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
A summary of the components of intangible assets is as follows (in thousands):
Customer relationships...................................................... $
Completed technology ......................................................
Trade names ......................................................................
Other..................................................................................
Total intangible assets ....................................................
Less: accumulated amortization........................................
Total intangible assets, net ............................................. $
December 31,
2016
1,645,515 $
545,273
60,128
2,709
2,253,625
(720,930)
1,532,695 $
2015
1,459,550
497,030
61,573
2,680
2,020,833
(530,792)
1,490,041
F-9
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total estimated amortization expense, related to intangible assets, for each of the next five years, as of December 31, 2016, is
expected to approximate (in thousands):
Year Ending December 31,
2017 ............................................................................................... $
2018 ...............................................................................................
2019 ...............................................................................................
2020 ...............................................................................................
2021 ...............................................................................................
Total ............................................................................................ $
204,812
208,746
191,072
172,427
133,792
910,849
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, 2016 and 2015.
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, 2016 and 2015, 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 Consolidated Statements of Comprehensive Income (Loss) in the periods in which they
occur.
Comprehensive Income (Loss)
Items defined as comprehensive income (loss), such as foreign currency translation adjustments, are separately classified in the
Consolidated Financial Statements. The accumulated balance of other comprehensive income (loss) is reported separately from
retained earnings and additional paid-in capital in the equity section of the Consolidated Balance Sheets. Total comprehensive income
(loss) consists of net income (loss) and other accumulated comprehensive income (loss) disclosed in the equity section of the
Consolidated Balance Sheets.
Treasury Stock
Treasury stock purchases are accounted for under the cost method and are included as a deduction from equity in the
Stockholders’ Equity section of the Consolidated Balance Sheets. Under the cost method, the price paid for the stock is charged to the
treasury stock account.
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.
F-10
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth the computation of basic and diluted EPS (in thousands, except per share amounts):
Year Ended December 31,
2015
2014
2016
Net income.............................................................................................. $ 130,996 $ 42,862 $ 131,127
Shares:
Weighted average common shares outstanding — used in calculation
of basic EPS............................................................................................ 200,252 182,196 166,628
Weighted average common stock equivalents — options and
restricted shares ......................................................................................
Weighted average common and common equivalent shares
outstanding — used in calculation of diluted EPS ................................. 205,793 190,896 174,662
0.79
Earnings per share - Basic ...................................................................... $
0.75
Earnings per share - Diluted ................................................................... $
0.24 $
0.22 $
0.65 $
0.64 $
8,700
5,541
8,034
Weighted average stock options, SARs, RSUs and RSAs representing 14,094,402, 7,001,656 and 3,683,680 shares were
outstanding for the years ended December 31, 2016, 2015 and 2014, respectively, but were not included in the computation of diluted
EPS because the effect of including them would be anti-dilutive.
Recent Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04,
Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent
measurement of goodwill by eliminating Step 2 of the goodwill impairment test. In computing the implied fair value of goodwill
under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities
(including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets
acquired and liabilities assumed in a business combination. As a result of ASU 2017-04, an entity should perform its goodwill
impairment test by comparing the fair value of a reporting unit with its carrying amount and then recognize an impairment charge, as
necessary, for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of
goodwill allocated to that reporting unit. ASU 2017-04 is effective for fiscal years and interim periods within those years beginning
after December 15, 2019, and early adoption is permitted for interim or annual goodwill impairment tests performed after January 1,
2017. The Company expects to adopt ASU 2017-04 for the Company’s goodwill impairment tests in 2017.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15
addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230,
Statement of Cash flow, and other Topics. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows:
Restricted Cash. This ASU provides guidance on the classification of restricted cash in the statement of cash flows. Both ASU 2016-
15 and ASU 2016-18 are effective for the Company for its first quarter of fiscal 2018. The impact of the Company’s adoption of ASU
2016-15 and ASU 2016-18 to the Company’s Consolidated Financial Statements will be to include the changes in restricted cash with
the changes in cash and cash equivalents in the Company’s Consolidated Statement of Cash Flows. These ASU’s are not expected to
have a material impact on the Company’s financial position, results of operations or cash flows.
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires
companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a
broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for the Company
for its first quarter of fiscal 2020 and earlier adoption is permitted beginning in the first quarter of fiscal 2019. Application of the ASU
is through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the
impact of the pending adoption of ASU 2016-13 on the Company’s Consolidated Financial Statements. This ASU is not expected to
have a material impact on the Company’s financial position, results of operations or cash flows.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. This ASU is intended to simplify several aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the
statement of cash flows. ASU 2016-13 is effective for the Company for its first quarter of fiscal 2017. The impact of the Company’s
adoption of ASU 2016-09 to the Company’s Consolidated Financial Statements will be to recognize certain tax benefits or tax
shortfalls upon a restricted-stock award vesting or stock option exercise event relative to the deferred tax asset position established in
the provision for income taxes line of the Consolidated Statement of Comprehensive Income (Loss) instead of to additional paid-in
F-11
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
capital within stockholders’ equity in the Consolidated Balance Sheet. The Company is planning to apply this guidance prospectively
as of January 1, 2017 and, accordingly, data for the prior years ended December 31, 2016 and 2015 will not be adjusted. Excess tax
benefits will be prospectively reported as an operating activity in the Company’s Consolidated Statements of Cash Flows. As the
Company will be applying this guidance prospectively as of January 1, 2017, excess tax benefits for the years ended December 31,
2016 and December 31, 2015 will not be adjusted and continue to be reported in financing activities in the Consolidated Statements of
Cash Flows.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU would require lessees to recognize the
following for all leases (with the exception of short-term leases) at the commencement date; (i) a lease liability, which is a lessee’s
obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset
that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely
unchanged under the amendments of this ASU. Additional disclosures will be required to allow the user to assess the amount, timing
and uncertainty of cash flows arising from leasing activities. A modified retrospective transition approach is required for leases
existing at the time of adoption. ASU 2016-02 is effective for the Company for its first quarter of fiscal 2019 and earlier adoption is
permitted. The Company is currently evaluating the impact of the pending adoption of ASU 2016-02 on the Company’s Consolidated
Financial Statements. The impact of the Company’s adoption of ASU 2016-02 to the Company’s Consolidated Financial Statements
will be to recognize the majority of the Company’s operating lease commitments as operating lease liabilities and right-of-use assets
upon adoption, which will result in a material increase in the assets and liabilities recorded on the Company’s Consolidated Balance
Sheet. The Company is continuing its assessment, which may identify additional impacts this ASU will have on the Company’s
Consolidated Financial Statements and related disclosures and internal controls over financial reporting.
In August 2014, the FASB issued ASU 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 guidance is effective for annual periods ending
after December 15, 2016 and for interim periods thereafter. The adoption of this guidance did not have a material effect on the
Company’s Consolidated Financial Statements during the year ended December 31, 2016.
In May 2014, the FASB issued ASU 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. On August 12, 2015, the FASB issued ASU 2015-14, deferring the
effective date by one year for ASU 2014-09. ASU 2014-09 is effective for the Company for its first quarter of 2018, with early
adoption permitted for annual periods beginning after December 15, 2016. The new standard is required to be applied retrospectively
to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of
initial application.
Subsequent to the issuance of ASU 2014-09, the FASB has issued the following updates: ASU 2016-08, Revenue from
Contracts with Customers (Topic 606) – Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU 2016-
10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing; and ASU 2016-
12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients. The amendments
in these updates affect the guidance contained within ASU 2014-09.
The new revenue standard is expected to change the revenue recognition practices for the Company’s perpetual and term
software license arrangements. More specifically, the Company does not expect that the license component of the Company’s term
license arrangements will be recognized ratably over the contractual term. The Company continues to evaluate the implications of the
standard change. The Company intends to adopt the new revenue standard effective January 1, 2018 using the modified retrospective
approach.
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,
2016
172,642 $
74,609
(5,944)
241,307 $
2015
130,394
42,514
(2,957)
169,951
F-12
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table represents the activity for the allowance for doubtful accounts during the years ended December 31, 2016,
2015 and 2014 (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,
2015
2014
2016
2,957 $
3,486
(390)
(109)
5,944 $
2,241 $
1,137
(273)
(148)
2,957 $
2,500
610
(785)
(84)
2,241
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
Two-for-one Stock Split. On May 25, 2016, the Company’s Board of Directors approved a two-for-one stock split to be effected
in the form of a stock dividend. The record date for the stock split was June 7, 2016 and the payment date was June 24, 2016. All
share and per share amounts (other than for the Company’s Class A non-voting common stock) have been retroactively restated for all
periods presented to reflect the stock split.
Conversion of Class A Common Stock. On March 30, 2016, William C. Stone converted 2,703,846 shares of Class A non-
voting stock into 5,407,692 shares of common stock. Each share of Class A non-voting common stock converted automatically into
one share of the Company’s common stock upon the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Public offering. In June 2015, the Company completed a public offering of its common stock. The offering included 24,150,000
newly issued shares of common stock sold by the Company (including 3,150,000 shares of common stock sold pursuant to the
underwriters’ option to purchase additional shares) at an offering price of $30.75 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 200,000,000 shares to 400,000,000 shares.
Dividends. In 2016, the Company paid quarterly cash dividends of $0.0625 per share of common stock on March 15, 2016, June
15, 2016, September 15, 2016 and December 15, 2016 to stockholders of record as of the close of business on March 7, 2016, June 1,
2016, September 1, 2016 and December 1, 2016, respectively, totaling $50.1 million. In 2015, the Company paid quarterly cash
dividends of $0.0625 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 549,452 shares for approximately $11.2 million during the year ended December 31,
2014. There were no repurchases in 2015 under the repurchase program, which expired in November 2015.
Note 5—Income Taxes
The sources of income before income taxes were as follows (in thousands):
U.S............................................................................................. $
Foreign ......................................................................................
Income before income taxes ..................................................... $
68,222 $
95,394
163,616 $
15,897 $
44,945
60,842 $
Year Ended December 31,
2015
2016
2014
124,032
53,622
177,654
F-13
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The income tax provision consists of the following (in thousands):
Year Ended December 31,
2015
2014
2016
Current:
Federal .................................................................................... $
Foreign....................................................................................
State ........................................................................................
Total ..................................................................................
Deferred:
Federal ....................................................................................
Foreign....................................................................................
State ........................................................................................
Total ..................................................................................
Total .......................................................................................... $
47,588 $
18,953
13,915
80,456
(38,571)
(4,148)
(5,117)
(47,836)
32,620 $
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
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,
2015
2014
2016
57,265 $
21,295 $
62,179
5,674
(33,614)
—
2,076
6,515
(3,748)
—
(1,548)
32,620 $
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
The components of deferred income taxes at December 31, 2016 and 2015 are as follows (in thousands):
2016
2015
Deferred
Deferred
Deferred
Deferred
Tax
Assets
Tax
Liabilities
Tax
Assets
Tax
Liabilities
Net operating loss carryforwards............................................. $
Deferred compensation............................................................
Tax credit carryforwards .........................................................
Accrued expenses ....................................................................
Other ........................................................................................
Impaired investment interest ...................................................
Customer relationships ............................................................
Acquired technology ...............................................................
Other intangible assets.............................................................
Trade names.............................................................................
Unremitted foreign earnings....................................................
Deferred revenue .....................................................................
Property and equipment...........................................................
Total.........................................................................................
Valuation allowance ................................................................
Total......................................................................................... $
34,666 $
26,196
21,905
8,478
1,699
810
—
—
—
—
—
—
—
93,754
(31,362)
62,392 $
— $
—
—
—
—
—
351,448
100,691
38,728
10,404
6,111
3,166
2,989
513,537
—
513,537 $
23,249 $
23,625
31,257
9,589
773
846
—
—
—
—
—
—
1,766
91,105
(18,020)
73,085 $
—
—
—
—
—
—
390,348
125,022
26,520
12,379
5,502
20,689
—
580,460
—
580,460
F-14
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2016 and 2015, the Company had accrued a deferred income tax liability of $6.1 million and $5.5 million,
respectively, on unremitted earnings of its Canadian subsidiary. At December 31, 2016, the Company had not accrued a deferred
income tax liability of approximately $2.9 million on unremitted earnings of $77.6 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 $2.9 million
tax liability due to complexities surrounding the foreign tax credit.
At December 31, 2016, the Company had domestic state net operating loss carryforwards of $57.6 million, which will begin to
expire in 2020. At December 31, 2016, the Company had foreign net operating loss carryforwards of $123.0 million, of which $122.2
million can be carried forward indefinitely. The remaining $0.8 million will begin to expire in 2017.
At December 31, 2016, the Company had tax credit carryforwards of $21.9 million relating to domestic and foreign
jurisdictions, of which $19.4 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 $1.2 million
relate to minimum alternative tax credit carryforwards at the Company’s India operations, of which $1.1 million are expected to be
utilized before they begin to expire in 2020.
The Company has recorded valuation allowances of $31.4 million at December 31, 2016 related to certain foreign net operating
loss carryforwards and tax credit carryforwards and $18.0 million at December 31, 2015 related to certain foreign net operating loss
carryforwards and tax credit carryforwards. Of the $31.4 million valuation allowance recorded at December 31, 2016, $29.8 million
relates to foreign net operating losses that do not expire. The change in the valuation allowance from 2015 to 2016 is primarily due to
a valuation allowance recorded on foreign net operating losses generated in 2016.
The following table summarizes the activity related to the Company’s unrecognized tax benefits for the years ended December
31, 2016 and 2015 (in thousands):
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 .....................................................
Increases related to current year tax positions............................
Increases related to prior tax positions .......................................
Increases related to acquired tax positions .................................
Lapse in statute of limitation ......................................................
Foreign exchange translation adjustment ...................................
Balance at December 31, 2016 ..................................................... $
15,657
4,880
1,179
37,456
(2,883)
(60)
(489)
55,740
7,567
4,896
453
(5,629)
(39)
62,988
The Company accrued potential penalties and interest on the unrecognized tax benefits of $(0.3) million and $0.8 million during
2016 and 2015, respectively, and has recorded a total liability for potential penalties and interest, including penalties and interest
related to acquired unrecognized tax benefits, of $3.1 million and $3.5 million at December 31, 2016 and 2015, 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 increased from 2015 to 2016 due to increases related to current and prior tax
positions, offset partially by a lapse in the statute of limitations for certain domestic tax filings. The Company believes it is reasonably
possible that the amount of unrecognized tax benefits could decrease by $2.7 million due to the closure of tax statutes within the next
12 months. The Company’s unrecognized tax benefits as of December 31, 2016 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, 2016.
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, 2012, 2013, 2014, 2001, 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.
F-15
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6—Debt
At December 31, 2016 and 2015, debt consisted of the following (in thousands):
December 31,
2016
2015
Senior secured credit facilities, weighted-average interest rate
of 3.94% and 3.94%, respectively .......................................... $ 1,865,625 $ 2,220,000
5.875% senior notes due 2023 ...................................................
600,000
Senior secured credit facilities revolving portion, weighted-
average interest rate of 3.50%.................................................
Unamortized original issue discount and debt issuance costs ...
—
(68,649)
2,751,351
32,281
Long-term debt........................................................................ $ 2,374,986 $ 2,719,070
Less current portion of long-term debt ......................................
94,000
(58,495)
2,501,130
126,144
600,000
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
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 available commitments (“Revolving Credit Facility”), of which $94.0 million was drawn as of December 31, 2016. No
amount was drawn on the Revolving Credit Facility as of December 31, 2015. The Revolving Credit Facility also contains a $25
million letter of credit sub-facility, of which $0.6 million was drawn as of December 31, 2016. No amount was drawn on the letter of
credit sub-facility as of December 31, 2015.
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
F-16
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. In addition, under
the Credit Agreement, certain defaults under agreements governing other material indebtedness could result in an event of default
under the Credit Agreement, in which case the lenders could elect to accelerate payments under the Credit Agreement and terminate
any commitments they have to provide future borrowings. As of December 31, 2016, the Company was in compliance with the
financial and non-financial covenants.
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.
On April 20, 2016, the Company commenced an offer to exchange for the Senior Notes, new notes identical in all material
respects to the Senior Notes, except that the new notes have been registered under the Securities Act of 1933. The exchange offer
expired on May 18, 2016 and 100% of the Senior Notes were exchanged for the new notes.
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, 2016, 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 $8.5 million, $6.4 million and $4.4 million were amortized to interest expense in the
years ended December 31, 2016, 2015 and 2014, respectively, and the Company amortized to interest expense $2.2 million, $1.8
million and $1.4 million of the original issue discount associated with the Credit Agreement and Prior Facility for the years ended
December 31, 2016, 2015 and 2014, respectively. The unamortized balance of capitalized financing costs is included in long-term debt
in the Company’s Consolidated Balance Sheets.
F-17
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Future maturities of debt
At December 31, 2016, annual maturities of long-term debt during the next five years and thereafter are as follows (in
thousands):
Year ending December 31,
2017 ............................................................................................... $
2018 ...............................................................................................
2019 ...............................................................................................
2020 ...............................................................................................
2021 and thereafter ........................................................................
Total ............................................................................................ $
126,144
41,519
41,519
185,269
2,165,174
2,559,625
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.
●
●
●
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, 2016 and 2015, 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, 2016
and 2015.
Fair value of debt
The carrying amounts and fair values of financial instruments are as follows (in thousands):
Financial liabilities:
December 31, 2016
December 31, 2015
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Senior secured credit facilities ........................................... $ 1,865,625 $ 1,887,043 $ 2,220,000 $ 2,202,105
616,500
5.875% senior notes due 2023 ...........................................
—
Senior secured credit facilities, revolving portion .............
600,000
—
619,500
93,883
600,000
94,000
F-18
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Note 8—Leases
The Company is obligated under noncancelable operating leases for office space and office equipment. Total rental expense was
$33.3 million, $24.4 million and $16.7 million for the years ended December 31, 2016, 2015 and 2014, 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, 2016, are as follows (in thousands):
Year Ending December 31,
2017 ............................................................................................... $
2018 ...............................................................................................
2019 ...............................................................................................
2020 ...............................................................................................
2021 and thereafter ........................................................................
Total ............................................................................................ $
41,209
45,443
35,957
33,029
227,425
383,063
The Company subleases office space to other parties under noncancelable leases. The Company received rental income under
these leases of $1.3 million, $0.2 million and $0.2 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Future minimum lease receipts under these leases as of December 31, 2016 are as follows (in thousands):
Year Ending December 31,
2017 ............................................................................................... $
2018 ...............................................................................................
2019 ...............................................................................................
2020 ...............................................................................................
2021 and thereafter ........................................................................
Total ............................................................................................ $
5,438
5,478
5,092
5,217
19,965
41,190
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. Company matching contributions are subject to a four year graduated vesting schedule. 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, 2016, 2015 and 2014, the Company incurred $9.2 million, $5.8 million and $4.1 million,
respectively, of matching contribution expenses related to the Plan.
Note 10—Stock-based Compensation
In February 2016, the Company’s Board of Directors adopted the Amended and Restated 2014 Stock Incentive Plan (the
“Amended 2014 Plan”), which amends and restates our 2014 Stock Option Plan (the “the 2014 Plan”). The primary changes to the
Amended 2014 Plan, which became effective in May 2016 upon stockholder approval, are to (i) increase the shares available for
equity awards by 24 million shares and (ii) add flexibility to use this plan as the Company’s only equity plan by authorizing the
issuance of full-value awards (that is, RSAs and RSUs) and expanding the class of participants to include non-employee directors.
Following the approval of the 2014 Amended Plan, the Company will no longer make grants under the Company’s 2008 Stock
Incentive Plan or the Company’s 2006 Equity Incentive Plan.
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 6,000,000 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.
F-19
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 21,829,934 shares of the Company’s common stock, which is
calculated based on an initial authorization of 2,833,322 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) 2,833,322 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.
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 22,347,638 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 RSUs, RSAs, SARs and stock option exercises with newly issued common shares.
Restricted stock units. The Company did not grant any RSUs during the year ended December 31, 2016. During the year ended
December 31, 2015, the Company granted 20,790 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, 2016 and 2015, there was approximately $5.7 million and $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 approximately 1.5 and 3.5 years, respectively.
Restricted stock awards. The Company did not grant any RSAs during the years ended December 31, 2016 and 2014. During
the year ended December 31, 2015, the Company granted 3,000 RSAs of its common stock 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. At December 31, 2016 and 2015, there was approximately
$0.2 million and $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 approximately 13 and 22 months, respectively.
Time-based options and SARs. Time-based options and SARs granted under the 2006 Plan, the 2008 Plan, the 2014 Plan or the
Amended 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 and SARs vest upon a change in control, subject to certain conditions.
Time-based options and SARs granted during 2016, 2015 and 2014 have a weighted-average grant date fair value of $6.62, $7.29 and
$6.39 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 and SARs vested during the years ended December 31,
2016, 2015 and 2014 was approximately $41.4 million, $43.5 million and $11.3 million, respectively. At December 31, 2016 and
2015, there was approximately $74.9 million and $109.6 million of unearned non-cash stock-based compensation related to time-
based options and SARs that the Company expects to recognize as expense over a weighted average remaining period of
approximately 2.6 and 3.0 years, respectively.
For the time-based options and SARs 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 ...........................................................
4.0
27.64%
1.30%
0.82%
4.0
26.63%
1.42%
0.74%
4.0
29.04%
1.36%
0.84%
2016
Time-Based awards
2015
2014
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-20
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 (Loss) for the years ended December 31, 2016, 2015 and 2014 was as follows (in
thousands):
2016
2015
Options,
Options,
SARs RSUs RSAs Total
SARs RSUs RSAs Total
Cost of professional services ............................... 1,859
Cost of non-recurring revenues...................... 1,859
Consolidated Statements of Comprehensive
Income (Loss) Classification
Cost of software-enabled services ....................... $10,120 $
127 $ 23 $10,270 $ 6,460 $
Cost of maintenance and term licenses ................ 1,622 1,073 — 2,695 1,022
Cost of recurring revenues............................. 11,742 1,200 23 12,965 7,482
385 — 2,244 1,166
385 — 2,244 1,166
Total cost of revenues ................................. 13,601 1,585 23 15,209 8,648
372 $ 17 $ 6,849 $ 3,940 $ — $ 3,940
282
366 — 1,388
738 17 8,237 4,222 — 4,222
443
222 — 1,388
222 — 1,388
443
960 17 9,625 4,665 — 4,665
Selling and marketing .......................................... 8,860 2,384 223 11,467 10,637 3,806 222 14,665 2,043 222 2,265
Research and development .................................. 5,972 2,372 — 8,344 5,676 2,912 — 8,588 1,165 — 1,165
General and administrative .................................. 11,300 4,244 — 15,544 8,270 2,931 — 11,201 3,388 — 3,388
Total operating expenses ............................ 26,132 9,000 223 35,355 24,583 9,649 222 34,454 6,596 222 6,818
Total stock-based compensation expense ............ $39,733 $10,585 $ 246 $50,564 $33,231 $10,609 $ 239 $44,079 $11,261 $ 222 $11,483
443 —
443 —
282 —
2014 (1)
Options,
SARs RSAs Total
(1)
There was no stock-based compensation expense associated with RSUs in 2014.
The associated future income tax benefit recognized was $18.4 million, $20.7 million and $3.8 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
For the year ended December 31, 2016, the amount of cash received from the exercise of stock options was $39.2 million, with
an associated tax benefit from stock awards realized of $62.1 million. The intrinsic value of options and SARs exercised during the
year ended December 31, 2016 was approximately $141.2 million. 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 from stock awards realized of
$44.2 million. The intrinsic value of options and SARs 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 from stock awards realized of $18.8 million. The intrinsic value of options and SARs exercised during
the year ended December 31, 2014 was approximately $56.1 million.
In connection with its acquisition of Advent, the Company assumed Advent’s outstanding unvested equity awards which were
converted into 5.0 million unvested stock options and SARs and 1.3 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-21
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, 2016, 2015 and
2014:
Outstanding at December 31, 2013 .................................
Granted (1)....................................................................
Cancelled/forfeited .......................................................
Exercised.......................................................................
Outstanding at December 31, 2014 .................................
Equity awards assumed from Advent ...........................
Granted (2)....................................................................
Cancelled/forfeited .......................................................
Exercised.......................................................................
Outstanding at December 31, 2015 .................................
Granted (3)....................................................................
Cancelled/forfeited .......................................................
Exercised.......................................................................
Outstanding at December 31, 2016 .................................
Shares
23,031,284
4,397,650
(407,172)
(3,580,466)
23,441,296
4,961,906
7,636,590
(1,261,688)
(4,499,740)
30,278,364
2,386,300
(1,621,260)
(6,015,304)
25,028,100
Weighted
Average
Exercise
Price
9.35
27.87
15.26
6.74
13.12
25.14
33.96
25.25
7.73
20.64
30.39
31.15
7.53
24.04
(1) Of the grants during 2014, 900,000 were granted under the 2014 Plan, 3,265,650 were granted under the 2008 Plan and 232,000
were granted under the 2006 Plan.
(2) Of the grants during 2015, 1,030,000 were granted under the 2014 Plan, 5,479,690 were granted under the 2008 Plan and
1,126,900 were granted under the 2006 Plan.
(3) Of the grants during 2016, 950,000 were granted under the Amended 2014 Plan, 1,436,300 were granted under the 2008 Plan.
The following table summarizes RSU activity as of and for the years ended December 31, 2016 and 2015:
Outstanding at January 1, 2015..............................................
Equity awards assumed from Advent .................................
Granted................................................................................
Cancelled/forfeited ..............................................................
Vested..................................................................................
Outstanding at December 31, 2015........................................
Granted................................................................................
Cancelled/forfeited ..............................................................
Vested..................................................................................
Outstanding at December 31, 2016........................................
Shares
—
1,320,034
20,790
(138,388)
(244,984)
957,452
-
(72,584)
(527,576)
357,292
The following table summarizes information about vested stock options and SARs outstanding that are currently exercisable and
stock options and SARs outstanding that are expected to vest at December 31, 2016:
Outstanding, Vested Stock Options and SARs Currently Exercisable
Weighted
Average
Remaining
Contractual
Term
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Shares
Outstanding Stock Options and SARs Expected to Vest
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Shares
Weighted
Average
Remaining
Contractual
Term
13,697,958 $
18.56 $
149,782
6.46 25,028,100
$
24.04 $
159,457
7.44
(In thousands)
(Years)
(In thousands)
(Years)
F-22
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11—Acquisitions
2016 Acquisitions
Conifer Financial Services LLC
On December 15, 2016, the Company purchased all of the outstanding stock of Conifer Financial Services LLC ("Conifer") for
approximately $86.5 million, plus the costs of effecting the transaction and the assumption of certain liabilities. Conifer provides
independent asset services to pensions, endowments, foundations, family offices, registered investment advisers, traditional asset
managers, private equity and hedge funds.
The net assets and results of operations of Conifer have been included in the Company’s Consolidated Financial Statements
from December 15, 2016. The fair value of the intangible assets, consisting of customer relationships, was determined using the
income approach. Specifically, 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 customer relationships are being amortized over approximately 15 years, the estimated
life of the assets. The remainder of the purchase price was allocated to goodwill and is tax deductible.
There are $1.5 million in revenues from Conifer operations included in the Consolidated Statement of Comprehensive Income
(Loss) for the year ended December 31, 2016.
Wells Fargo's Global Fund Services Business
On December 1, 2016, the Company purchased all of the outstanding stock of Wells Fargo's Global Fund Services business
("GFS") for approximately $73.0 million, plus the costs of effecting the transaction and the assumption of certain liabilities. GFS is a
leading provider of comprehensive administration, middle-office, operations, and cash/collateral management services.
The net assets and results of operations of GFS have been included in the Company’s Consolidated Financial Statements from
December 1, 2016. The fair value of the intangible assets, consisting of customer relationships and completed technology, was
determined using the income approach and cost savings method, respectively. Specifically, the excess earnings method was utilized
for the customer relationships, and the cost savings method was utilized for the completed technology. The customer relationships 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. Completed technology is amortized based on a straight-line basis. The customer
relationships are amortized over approximately fourteen years and the completed technology is amortized over approximately two
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 $3.5 million in revenues from GFS operations included in the Consolidated Statement of Comprehensive Income
(Loss) for the year ended December 31, 2016.
Citigroup’s Alternative Investor Services Business
On March 11, 2016, the Company purchased all of the outstanding stock of Citigroup’s Alternative Investor Services business,
which includes Hedge Fund Services and Private Equity Fund Services (“Citigroup AIS”), for approximately $296.4 million, plus the
costs of effecting the transaction and the assumption of certain liabilities. Citigroup AIS is a leading provider of hedge fund and
private equity fund administration services.
The net assets and results of operations of Citigroup AIS have been included in the Company’s Consolidated Financial
Statements from March 11, 2016. The fair value of the intangible assets, consisting of customer relationships and completed
technology, was determined using the income approach and cost savings method. Specifically, the excess earnings method was
utilized for the customer relationships and the cost savings method was utilized for the completed technology. The customer
relationships 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. Completed technology is amortized based on a straight-line basis. The
customer relationships are amortized over approximately thirteen years and completed technology is amortized over approximately
four 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 $171.7 million in revenues from Citigroup AIS operations included in the Consolidated Statement of Comprehensive
Income (Loss) for the year ended December 31, 2016.
F-23
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2015 Acquisitions
Primatics Financial
On November 16, 2015, the Company purchased all of the outstanding stock of Primatics for approximately $115.2 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.
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.
Varden Technologies
On September 1, 2015, the Company purchased the assets of Varden for approximately $23.1 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.
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.
F-24
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summarizes the preliminary allocation of the purchase price for the 2016 acquisitions of Conifer, GFS and
Citigroup AIS and the final allocation of the purchase price for the 2015 acquisitions of Primatics, Varden and Advent (in thousands):
Citigroup
AIS
Conifer GFS
Primatics Varden Advent
57,326
9,337 $ 1,186 $
Accounts receivable........................................................... $ 3,995 $ 6,169 $ 58,366 $
15,898
26
2,956
103
Fixed assets........................................................................ 3,049
20,510
Other assets........................................................................ 1,364
—
3,439
1,985
823,000
Acquired client relationships and contracts....................... 40,500 37,700 124,600 36,980 9,000
311,000
— 8,700 44,600 33,900 3,700
Completed technology.......................................................
18,000
300
—
—
Trade names.......................................................................
Non-compete agreements ..................................................
—
100
—
—
Goodwill ............................................................................ 43,100 23,514 78,904 61,685 12,925 1,956,841
—
Deferred revenue ...............................................................
(90,126)
(424,489)
Deferred income taxes .......................................................
—
(91,428)
Other liabilities assumed ................................................... (5,367) (3,948)
Consideration paid, net of cash acquired ........................ $86,538 $72,956 $296,420 $115,181 $23,134 $2,596,532
(835)
—
(6,943) (3,268)
(5,330)
— (24,943)
4,100
—
(103)
—
356
465
—
—
(3,910)
(8,228)
Additionally, the Company acquired Salentica in October 2016 for approximately $2.0 million.
The consideration paid, net of cash acquired for Citigroup AIS includes purchase price adjustments totaling $20.8 million,
which was received during the third and fourth quarters of 2016. This amount is reflected in “Cash paid for business acquisitions, net
of cash acquired” for the year ended December 31, 2016 on the Company’s Consolidated Statement of Cash Flows.
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 fair value of acquired accounts receivable balances approximates the contractual amounts due from acquired customers,
except for approximately $0.4 million, $1.7 million, $0.4 million and $2.6 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 – Conifer, Citigroup AIS, Primatics and
Advent, 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.
The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes only and
assume that the acquisitions of Conifer, GFS, Salentica and Citigroup AIS occurred on January 1, 2015 and Primatics, Varden and
Advent occurred on January 1, 2014. 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.
Revenues................................................................................ $ 1,641,009
152,391
Net income (loss)................................................................... $
Basic earnings (loss) per share .............................................. $
0.76
Basic weighted average number of common shares
outstanding .........................................................................
Diluted earnings (loss) per share ........................................... $
Diluted weighted average number of common and common
equivalent shares outstanding.............................................
200,252
0.74
205,793
2016
For the Year Ended December 31,
2015
$ 1,641,100
31,382
$
0.17
$
2014
$ 1,208,148
(49,718)
$
(0.30)
$
182,196
0.16
$
166,628
(0.30)
$
190,896
166,628
Note 12—Commitments and Contingencies
From time to time, the Company is subject to legal proceedings and claims. In the opinion of the Company’s management, the
Company is not involved in any litigation or proceedings that would have a material adverse effect on the Company or its business.
F-25
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2016 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.
Revenues by geography for the years ended December 31, were (in thousands):
United States ............................................................................. $ 1,081,260 $
105,381
United Kingdom........................................................................
101,320
Europe, excluding United Kingdom .........................................
90,086
Asia-Pacific and Japan ..............................................................
65,682
Canada.......................................................................................
37,707
Americas, excluding United States and Canada .......................
2015
682,293 $
107,081
68,347
64,816
55,562
22,186
Total........................................................................................ $ 1,481,436 $ 1,000,285 $
2016
2014
514,803
99,163
49,929
25,184
63,037
15,745
767,861
Long-lived assets as of December 31, were (in thousands):
United States ............................................................................. $
Canada.......................................................................................
Asia-Pacific and Japan ..............................................................
Europe .......................................................................................
Americas, excluding United States and Canada .......................
Total........................................................................................ $
76,929 $
6,909
6,454
4,163
782
95,237 $
64,141 $
5,493
5,715
4,336
1,301
80,986 $
60,373
6,376
4,738
10,204
1,499
83,190
2016
2015
2014
Revenues by product group for the years ended December 31, were (in thousands):
2016
Portfolio management/accounting ............................................ $ 1,347,736 $
64,267
Loan management/accounting ..................................................
32,171
Trading/treasury operations ......................................................
17,833
Property management ...............................................................
9,299
Money market processing .........................................................
8,928
Financial modeling....................................................................
1,202
Training .....................................................................................
2015
918,888 $
14,205
31,992
16,176
8,677
9,078
1,269
Total........................................................................................ $ 1,481,436 $ 1,000,285 $
2014
691,915
8,382
32,705
15,217
9,421
8,664
1,557
767,861
Note 14—Supplemental Guarantor Condensed Consolidating Financial Statements
On July 8, 2015, the Company issued $600.0 million aggregate principal amount of Senior Notes. The Senior Notes are jointly
and severally and fully and unconditionally guaranteed, in each case subject to certain customary release provisions, by substantially
all wholly-owned domestic subsidiaries of the Company that guarantee the Company’s Senior Secured Credit Facilities (collectively
“Guarantors”). All of the Guarantors are 100% owned by the Company. All other subsidiaries of the Company, either direct or
indirect, do not guarantee the Senior Notes (“Non-Guarantors”). The Guarantors also unconditionally guarantee the Senior Secured
Credit Facilities. There are no significant restrictions on the ability of the Company or any of the subsidiaries that are Guarantors to
obtain funds from its subsidiaries by dividend or loan. Condensed consolidating financial information as of December 31, 2016 and
2015 and for the years ended December 31, 2016, 2015 and 2014 are presented. The condensed consolidating financial information of
the Company and its subsidiaries are as follows (in thousands):
F-26
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016
Parent
Cash and cash equivalents................................................................ $
Accounts receivable, net ..................................................................
Prepaid expenses and other current assets .......................................
Prepaid income taxes........................................................................
Restricted cash .................................................................................
Net property, plant and equipment...................................................
Investment in subsidiaries ................................................................
Intercompany receivables.................................................................
Deferred income taxes, long-term....................................................
Goodwill, intangible and other assets, net .......................................
Total assets ....................................................................................... $
Current portion of long-term debt ....................................................
Accounts payable .............................................................................
Accrued expenses.............................................................................
Income taxes payable .......................................................................
Deferred revenue..............................................................................
Long-term debt, net of current portion.............................................
Other long-term liabilities ................................................................
Intercompany payables.....................................................................
Deferred income taxes, long-term....................................................
Total liabilities .................................................................................
Total stockholders’ equity................................................................
Total liabilities and stockholders’ equity ......................................... $
— $
—
—
—
—
—
2,910,669
—
—
—
2,910,669 $
—
—
16,155
—
—
600,000
—
35,936
—
652,091
2,258,578
2,910,669 $
Cash and cash equivalents................................................................ $
Accounts receivable, net ..................................................................
Prepaid expenses and other current assets .......................................
Prepaid income taxes........................................................................
Restricted cash .................................................................................
Net property, plant and equipment...................................................
Investment in subsidiaries ................................................................
Intercompany receivables.................................................................
Deferred income taxes, long-term....................................................
Goodwill, intangible and other assets, net .......................................
Total assets ....................................................................................... $
Current portion of long-term debt ....................................................
Accounts payable .............................................................................
Accrued expenses.............................................................................
Income taxes payable .......................................................................
Deferred revenue..............................................................................
Long-term debt, net of current portion.............................................
Other long-term liabilities ................................................................
Intercompany payables.....................................................................
Deferred income taxes, long-term....................................................
Total liabilities .................................................................................
Total stockholders’ equity................................................................
Total liabilities and stockholders’ equity ......................................... $
— $
—
—
—
—
—
2,722,452
—
—
—
2,722,452 $
—
—
17,006
—
—
600,000
—
—
—
617,006
2,105,446
2,722,452 $
F-27
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Consolidating
and
Eliminating
Adjustments Consolidated
117,558
— $
32,393 $
241,307
—
162,649
31,119
—
16,929
23,012
1,412
21,600
2,116
—
1,788
80,395
—
39,342
—
(3,838,362)
927,693
(197,862)
—
162,791
2,410
—
—
3,869,957
— 5,209,054
5,235,142 $ 1,595,972 $ (4,034,812) $ 5,706,971
85,165 $
78,658
14,190
—
328
41,053
—
35,071
2,410
1,339,097
105,816
108,989
8,431
—
212,883
1,416,695
29,535
35,071
407,053
17,155
8,059
57,325
2,061
22,339
358,291
29,692
126,855
46,502
126,144
—
16,490
—
179,296
—
3,473
1,412
—
235,222
— 2,374,986
59,227
—
(197,862)
—
453,555
—
3,448,393
2,324,473
2,910,669
(3,838,362) 2,258,578
5,235,142 $ 1,595,972 $ (4,034,812) $ 5,706,971
668,279
927,693
(196,450)
December 31, 2015
Non-
guarantor
Subsidiaries
Consolidating
and
Eliminating
Adjustments Consolidated
434,159
— $
360,583 $
169,951
—
127,446
27,511
—
15,920
40,627
—
38,155
2,818
—
2,490
67,143
—
31,940
—
(3,376,730)
654,278
(135,212)
—
100,992
—
2,199
—
3,861,711
— 5,057,834
5,193,515 $ 1,398,217 $ (3,511,942) $ 5,802,242
73,576 $
42,505
11,591
2,472
328
35,203
—
34,220
2,199
1,196,123
15,038
4,590
47,848
1,428
19,772
472,674
19,686
100,992
61,911
17,243
7,367
84,174
—
202,252
1,646,396
31,748
34,220
447,663
32,281
—
11,957
—
149,028
—
1,428
—
—
222,024
— 2,719,070
51,434
—
(135,212)
—
509,574
—
3,696,796
2,471,063
2,722,452
(3,376,730) 2,105,446
5,193,515 $ 1,398,217 $ (3,511,942) $ 5,802,242
743,939
654,278
(135,212)
Parent
Guarantor
Subsidiaries
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2016
Revenues .......................................................................................... $
Cost of revenues...............................................................................
Gross profit.......................................................................................
Operating expenses:
Selling and marketing ................................................................
Research and development.........................................................
General and administrative ........................................................
Total operating expenses..................................................................
Operating income.......................................................................
Interest expense, net .........................................................................
Other (expense) income, net ............................................................
Earnings from subsidiaries...............................................................
Income before income taxes.............................................................
Provision for income taxes...............................................................
Net income ....................................................................................... $
Other comprehensive loss, net of tax:
Foreign currency exchange translation adjustment..........................
Comprehensive income.................................................................... $
Revenues .......................................................................................... $
Cost of revenues...............................................................................
Gross profit.......................................................................................
Operating expenses:
Selling and marketing ................................................................
Research and development.........................................................
General and administrative ........................................................
Total operating expenses..................................................................
Operating income.......................................................................
Interest expense, net .........................................................................
Other (expense) income, net ............................................................
Loss on extinguishment of debt .......................................................
Earnings from subsidiaries...............................................................
Income before income taxes.............................................................
Provision for income taxes...............................................................
Net income ....................................................................................... $
Other comprehensive loss, net of tax:
Foreign currency exchange translation adjustment..........................
Comprehensive (loss) income .......................................................... $
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Parent
— $
—
—
1,007,522 $
522,445
485,077
475,713 $
279,843
195,870
Consolidating
and
Eliminating
Adjustments Consolidated
(1,799) $ 1,481,436
(1,799)
800,489
—
680,947
—
—
—
—
—
(35,086)
—
166,082
130,996
—
$
130,996
88,067
107,648
87,527
283,242
201,835
(68,312)
(45,590)
88,750
176,683
10,601
$
166,082
29,031
45,041
34,938
109,010
86,860
(25,056)
48,965
—
110,769
22,019
$
88,750
—
—
—
—
—
—
—
(254,832)
(254,832)
—
$
(254,832)
117,098
152,689
122,465
392,252
288,695
(128,454)
3,375
—
163,616
32,620
130,996
(55,903)
$
75,093
(55,903)
$
110,179
(57,783)
$
30,967
113,686
$
(141,146)
(55,903)
75,093
Year Ended December 31, 2015
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Parent
— $
—
—
596,497 $
290,979
305,518
405,371 $
242,954
162,417
Consolidating
and
Eliminating
Adjustments Consolidated
(1,583) $ 1,000,285
(1,583)
532,350
—
467,935
—
—
—
—
—
(17,006)
—
—
59,868
42,862
—
$
42,862
65,157
70,090
74,011
209,258
96,260
(41,432)
(23,985)
(23,375)
62,375
69,843
9,975
$
59,868
29,793
40,325
23,821
93,939
68,478
(18,919)
27,863
(7,042)
—
70,380
8,005
$
62,375
—
—
—
—
—
—
—
—
(122,243)
(122,243)
—
$
(122,243)
94,950
110,415
97,832
303,197
164,738
(77,357)
3,878
(30,417)
—
60,842
17,980
42,862
(68,049)
$
(25,187)
(68,049)
$
(8,181)
(54,490)
$
7,885
122,539
$
296
(68,049)
(25,187)
F-28
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2014
Revenues .......................................................................................... $
Cost of revenues...............................................................................
Gross profit.......................................................................................
Operating expenses:
Selling and marketing ................................................................
Research and development.........................................................
General and administrative ........................................................
Total operating expenses..................................................................
Operating income.......................................................................
Interest expense, net .........................................................................
Other (expense) income, net ............................................................
Earnings from subsidiaries...............................................................
Income before income taxes.............................................................
Provision for income taxes...............................................................
Net income ....................................................................................... $
Other comprehensive loss, net of tax:
Foreign currency exchange translation adjustment..........................
Comprehensive income.................................................................... $
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Parent
— $
—
—
400,554 $
187,040
213,514
369,226 $
225,610
143,616
Consolidating
and
Eliminating
Adjustments Consolidated
767,861
410,731
357,130
(1,919) $
(1,919)
—
—
—
—
—
—
—
—
131,127
131,127
—
$
131,127
31,012
35,121
32,694
98,827
114,687
(11,024)
(915)
67,974
170,722
39,595
$
131,127
17,580
22,166
18,185
57,931
85,685
(14,448)
3,669
—
74,906
6,932
$
67,974
—
—
—
—
—
—
—
(199,101)
(199,101)
—
$
(199,101)
48,592
57,287
50,879
156,758
200,372
(25,472)
2,754
—
177,654
46,527
131,127
(45,495)
$
85,632
(45,495)
$
85,632
(49,947)
$
18,027
95,442
$
(103,659)
(45,495)
85,632
F-29
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2016
Parent
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Consolidating
and
Eliminating
Adjustments Consolidated
Cash Flow from Operating Activities:
Net income .............................................................................. $
Non-cash adjustments .............................................................
Intercompany transactions ......................................................
Earnings from subsidiaries......................................................
Changes in operating assets and liabilities..............................
Net cash provided by operating activities .........................
130,996 $
—
35,935
(166,082)
(849)
—
$
166,082
135,476
(172,636)
(88,750)
87,219
127,391
$
88,750
64,056
136,701
—
1,509
291,016
$
(254,832)
—
—
254,832
—
—
130,996
199,532
—
—
87,879
418,407
Cash Flow from Investment Activities:
Additions to property and equipment......................................
Proceeds from sale of property and equipment.......................
Cash paid for business acquisitions, net of cash acquired ......
Additions to capitalized software............................................
Purchase of long-term investment...........................................
Net changes in restricted cash .................................................
Net cash used in investing activities .................................
Cash Flow from Financing Activities:
Cash received from debt borrowings, net of original issue
discount ...................................................................................
Repayments of debt.................................................................
Transactions involving Holding's common stock ...................
Intercompany transactions ......................................................
Payment of fees related to refinancing activities ....................
Net cash (used in) provided by financing activities..........
Effect of exchange rate changes on cash and cash equivalents .......
Net (decrease) increase in cash and cash equivalents ......................
Cash and cash equivalents, beginning of period ..............................
Cash and cash equivalents, end of period ........................................ $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— $
(14,660)
68
(433,747)
(5,231)
(1,000)
702
(453,868)
120,000
(265,800)
27,861
116,745
(519)
(1,713)
—
(328,190)
360,583
32,393 $
(13,266)
3
(23,764)
(4,390)
—
(2)
(41,419)
—
(117,636)
—
(116,745)
—
(234,381)
(3,627)
11,589
73,576
85,165 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— $
(27,926)
71
(457,511)
(9,621)
(1,000)
700
(495,287)
120,000
(383,436)
27,861
—
(519)
(236,094)
(3,627)
(316,601)
434,159
117,558
F-30
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2015
Parent
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Consolidating
and
Eliminating
Adjustments Consolidated
Cash Flow from Operating Activities:
Net income .............................................................................. $
Non-cash adjustments .............................................................
Intercompany transactions ......................................................
Earnings from subsidiaries......................................................
Changes in operating assets and liabilities..............................
Net cash provided by operating activities .........................
42,862 $
—
—
(59,868)
17,006
—
$
59,868
97,829
(11,122)
(62,375)
56,657
140,857
$
62,375
37,871
11,122
—
(21,601)
89,767
$
(122,243)
—
—
122,243
—
—
42,862
135,700
—
—
52,062
230,624
Cash Flow from Investment Activities:
Additions to property and equipment......................................
Proceeds from sale of property and equipment.......................
Cash paid for business acquisitions, net of cash acquired ......
Additions to capitalized software............................................
Net changes in restricted cash .................................................
Net cash used in investing activities .................................
Cash Flow from Financing Activities:
Cash received from debt borrowings, net of original issue
discount ...................................................................................
Repayments of debt.................................................................
Transactions involving Holding's common stock ...................
Intercompany transactions ......................................................
Payment of fees related to refinancing activities ....................
Net cash provided by (used in) financing activities..........
Effect of exchange rate changes on cash and cash equivalents .......
Net increase (decrease) in cash and cash equivalents ......................
Cash and cash equivalents, beginning of period ..............................
Cash and cash equivalents, end of period ........................................ $
—
—
—
—
—
—
(7,878)
5
(2,723,168)
(1,651)
453
(2,732,239)
(5,722)
59
(7,788)
(2,622)
—
(16,073)
—
—
—
—
—
—
—
—
—
— $
2,410,527
(554,604)
726,689
373,832
(39,130)
2,917,314
—
325,932
34,651
360,583 $
657,548
(348,844)
1,775
(373,832)
(6,895)
(70,248)
(4,796)
(1,350)
74,926
73,576 $
—
(13,600)
—
64
— (2,730,956)
—
(4,273)
—
453
— (2,748,312)
— 3,068,075
—
(903,448)
—
728,464
—
—
—
(46,025)
— 2,847,066
—
(4,796)
—
324,582
—
109,577
— $
434,159
F-31
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2014
Parent
Guarantor
Subsidiaries
Non-
guarantor
Subsidiaries
Consolidating
and
Eliminating
Adjustments Consolidated
Cash Flow from Operating Activities:
Net income .............................................................................. $
Non-cash adjustments .............................................................
Intercompany transactions ......................................................
Earnings from subsidiaries......................................................
Changes in operating assets and liabilities..............................
Net cash provided by operating activities .........................
131,127 $
—
—
(131,127)
—
—
Cash Flow from Investment Activities:
Additions to property and equipment......................................
Proceeds from sale of property and equipment.......................
Cash paid for business acquisitions, net of cash acquired ......
Additions to capitalized software............................................
Net changes in restricted cash .................................................
Net cash used in investing activities .................................
Cash Flow from Financing Activities:
Cash received from debt borrowings, net of original issue
discount ...................................................................................
Repayments of debt.................................................................
Transactions involving Holding's common stock ...................
Intercompany transactions ......................................................
Payment of contingent consideration......................................
Payment of fees related to refinancing activities ....................
Net cash (used in) provided by 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 ........................................ $
Note 15—Selected Quarterly Financial Data (Unaudited)
Unaudited quarterly results for 2016 and 2015 were:
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— $
$
131,127
37,290
30,072
(67,974)
23,415
153,930
(9,051)
20
(2,363)
(964)
(1)
(12,359)
75,000
(132,175)
16,738
(90,950)
—
—
(131,387)
—
10,184
24,467
34,651 $
$
67,974
52,123
(30,072)
—
8,577
98,602
$
(199,101)
—
—
199,101
—
—
131,127
89,413
—
—
31,992
252,532
(5,989)
22
(84,548)
(2,553)
984
(92,084)
—
(79,825)
1,109
90,950
(500)
(512)
11,222
(2,817)
14,923
60,003
74,926 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— $
(15,040)
42
(86,911)
(3,517)
983
(104,443)
75,000
(212,000)
17,847
—
(500)
(512)
(120,165)
(2,817)
25,107
84,470
109,577
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
($ in thousands, except per share data)
2016
Revenue................................................................................... $
Gross profit .............................................................................
Operating income ....................................................................
Net income ..............................................................................
Basic earnings per share.......................................................... $
Diluted earnings per share....................................................... $
Cash dividends declared per common share ........................... $
324,131 $
147,447
50,444
7,005
0.04 $
0.03 $
0.0625 $
373,077 $
162,598
66,037
28,221
0.14 $
0.14 $
0.0625 $
383,304 $
175,277
76,903
38,747
0.19 $
0.19 $
0.0625 $
400,924
195,625
95,311
57,023
0.28
0.28
0.0625
F-32
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
First
Quarter
Second
Quarter
Third
Quarter (1)
Fourth
Quarter
($ in thousands, except per share data)
2015
Revenue................................................................................... $
Gross profit .............................................................................
Operating income ....................................................................
Net income (loss) ....................................................................
Basic earnings (loss) per share................................................ $
Diluted earnings (loss) per share............................................. $
Cash dividends declared per common share ........................... $
205,735 $
93,428
43,133
26,246
0.16 $
0.15 $
0.0625 $
212,768 $
103,265
58,351
39,128
0.23 $
0.22 $
0.0625 $
280,894 $
129,030
14,952
(34,610)
(0.18) $
(0.18) $
0.0625 $
300,888
142,212
48,302
12,098
0.06
0.06
0.0625
(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.
Note 16—Subsequent Event
Dividend declared. On February 17, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.0625 per
share of common stock payable on March 15, 2017 to stockholders of record as of the close of business on March 1, 2017.
F-33
Exhibit
Number
2.4†
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9*
EXHIBIT INDEX
Description of Exhibit
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)
Restated Certificate of Incorporation of the Registrant is incorporated herein by reference to Exhibit 3.1 to the Company’s
Quarterly Report on Form 10-Q, filed on August 5, 2016 (File No. 001-34675)
Amended and Restated Bylaws of the Registrant are incorporated herein by reference to Exhibit 3.4 to the 2010 Form S-1
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 4.1 of the Registrants Current Report on
Form 8-K, filed on July 8, 2015 (File No. 001-34675)
First Supplemental Indenture, dated as of March 4, 2016 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 4.2 of the
Registrant’s registration statement on Form S-4 (File No. 333-210667)
Second Supplemental Indenture, dated as of March 21, 2016 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 4.3 of the
Registrant’s registration statement on Form S-4 (File No. 333-210667)
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”)
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
F-34
Exhibit
Number
10.10*
Form of Stock Award Agreement is incorporated herein by reference to Exhibit 10.4 to the August 15, 2006 8-K
Description of Exhibit
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
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
10.21*
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*
10.29*
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)
Amended and Restated 2014 Stock Incentive Plan of SS&C Technologies Holdings, Inc. is incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on May 26, 2016
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)
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)
F-35
Exhibit
Number
21
23.1
31.1
31.2
32
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP
Description of Exhibit
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, 2016 and 2015, (ii) Consolidated Statements of Comprehensive Income (Loss) for
the years ended December 31, 2016, 2015 and 2014, (iii) Consolidated Statements of Cash Flows for the years ended December 31,
2016, 2015 and 2014, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2016, 2015
and 2014 and (v) Notes to Consolidated Financial Statements.
F-36
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
EXECUTIVE OFFICERS
ANNUAL MEETING
The Annual Meeting of Stockholders will be held on
Wednesday, May 17, 2017 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