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EX-23.2 - EX-23.2 - SS&C Technologies Holdings Incb78402a4exv23w2.htm
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As filed with the Securities and Exchange Commission on March 24, 2010
Registration No. 333-164043
­ ­
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
 
 
Amendment No. 4 to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
 
 
SS&C Technologies Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
 
     
Delaware   71-0987913
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification Number)
 
7372
(Primary Standard Industrial Classification Code Number)
 
 
 
 
80 Lamberton Road
Windsor, Connecticut 06095
(860) 298-4500
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
 
 
 
 
William C. Stone
Chairman of the Board and Chief Executive Officer
SS&C Technologies Holdings, Inc.
80 Lamberton Road
Windsor, Connecticut 06095
(860) 298-4500
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
 
 
 
Copies to:
 
     
John A. Burgess, Esq.    Stuart M. Cable, Esq.
Justin L. Ochs, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
  Mark T. Bettencourt, Esq.
Michael J. Minahan, Esq.
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts 02109
(617) 570-1000
 
 
 
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o           
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o           
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o           
 
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.
 
             
Large accelerated filer
  o   Accelerated filer   o
Non-accelerated filer
  þ (Do not check if a smaller reporting company)   Smaller reporting company   o
 
 
 
 
CALCULATION OF REGISTRATION FEE
 
                         
            Proposed Maximum
    Proposed Maximum
    Amount of
Title of Each Class of
          Offering Price
    Aggregate Offering
    Registration
Securities to be Registered     Amount to be Registered(1)     per Share(2)     Price(2)     Fee(3)
Common Stock, $0.01 par value per share
    12,333,750     $15.00     $185,006,250     $13,191
                         
(1)  Includes 1,608,750 shares of common stock that may be purchased by the underwriters to cover over-allotments, if any.
 
(2)  Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(a) under the Securities Act.
 
(3)  Calculated pursuant to Rule 457(a) based on an estimate of the proposed maximum aggregate offering price. A registration fee of $21,390 has been paid previously pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine.
 


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The information contained in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
 
Subject to Completion, dated March 24, 2010
Prospectus
 
10,725,000 Shares
 
(SS and C LOGO)
 
Common Stock
 
 
SS&C Technologies Holdings, Inc. is offering 8,225,000 shares of its common stock, and the selling stockholders are offering 2,500,000 shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders, except for the aggregate exercise price of options held by certain selling stockholders. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $13.00 and $15.00 per share.
 
We have applied to list our common stock on the NASDAQ Global Market under the symbol “SSNC.”
 
Investing in our common stock involves risks. See “Risk factors” beginning on page 16.
 
                 
 
    Per Share     Total  
 
 
Price to Public
  $                $             
Underwriting Discounts and Commissions
  $       $    
Proceeds to SS&C Holdings
  $       $    
Proceeds to Selling Stockholders
  $       $    
 
 
 
We have granted the underwriters the right to purchase up to an additional 1,608,750 shares of our common stock on the same terms and conditions set forth above to cover over-allotments, if any.
 
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The underwriters expect to deliver the shares to purchasers on or about          , 2010.
 
J.P. Morgan  
  Credit Suisse  
  Morgan Stanley  
  Deutsche Bank Securities
Jefferies & Company  
      Raymond James  
  Wells Fargo Securities
 
Prospectus dated          , 2010


 

 
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  F-1
 EX-23.2
 
 
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.
 
Until          , 2010 (25 days after the commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
 


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Prospectus summary
 
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk factors” beginning on page 16, and our consolidated financial statements and the accompanying notes, before making an investment decision.
 
Unless the context otherwise requires, in this prospectus, (1) “SS&C Holdings” means SS&C Technologies Holdings, Inc., our top-level holding company that was formerly known as Sunshine Acquisition Corporation, (2) “SS&C” means SS&C Technologies, Inc., our primary operating company and a direct wholly owned subsidiary of SS&C Holdings, (3) “we,” “us” and “our” mean (a) prior to November 23, 2005, SS&C and its consolidated subsidiaries and (b) on and after November 23, 2005, SS&C Holdings and its consolidated subsidiaries, including SS&C, and (4) references to our “common stock” include both shares of our common stock and shares of our Class A non-voting common stock.
 
Overview
 
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 4,500 clients, principally within the institutional asset management, alternative investment management and financial institutions vertical markets.
 
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, fund 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. Our principal software products and software-enabled services include:
 
     
•   Portfolio Management/Accounting
  •   Fund Administration Services
•   Financial Modeling
  •   Loan Management/Accounting
•   Trading/Treasury Operations
  •   Money Market Processing
•   Property Management
 
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


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integrated into our clients’ business processes. Our software-enabled services are generally provided under two-to five-year non-cancelable contracts with monthly or quarterly payments. 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 and the volume of transactions.
 
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 we define as our software-enabled services and maintenance revenues, increased as a percentage of total revenues from 52% in the year ended December 31, 2000 to 85% in the year ended December 31, 2009. 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 contracts for our core enterprise products.
 
Through a combination of organic growth and acquisitions, we generated revenues of $270.9 million for the year ended December 31, 2009 as compared to revenues of $95.9 million for the year ended December 31, 2004, which was the last reported fiscal year before the going-private transaction described below. We generated 79% of our revenues in 2009 from clients in North America and 21% from clients outside North America. Our revenues are highly diversified, with our largest client in 2009 accounting for less than 5% of our revenues.
 
Our industry
 
We serve a number of vertical markets within the financial services industry, including alternative investment funds, investment management firms, insurance companies, banks and brokerage firms. The recent economic crisis has negatively affected each of these markets and contributed to a significant decline in asset value. These factors all contribute to reducing revenues among the financial services firms, which, in turn, affects their access to credit, spending ability and, in some cases, their long-term viability. Many of these recent issues highlight the need for effective risk assessment tools, improved reporting systems, accurate accounting and compliance systems and overall management of middle- and back-office operations. These challenges provide us opportunities as industry participants seek to respond efficiently and effectively to increased regulation and investor demand for transparency, and to enhance their competitive position in a challenging environment.
 
Asset Classes and Securities Products Growing in Volume and Complexity. Investment professionals must increasingly track and invest in numerous types of asset classes 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.
 
Increasing Regulatory Requirements and Investor Demand for Transparency. Recent market and economic conditions have led to new legislation and numerous proposals for changes in the regulation of the financial services industry. Several high-profile scandals have also led to increased investor demand for transparency. In addition, as the financial services industry continues to grow in complexity, we anticipate regulatory oversight will continue to impose new demands on financial services providers. The expectation is that hedge funds may start to experience similar regulatory pressures. In addition, financial services providers continue to face increasing regulatory oversight from domestic organizations such as the Financial Industry


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Regulatory Authority, U.S. Treasury Department, U.S. Securities and Exchange Commission, New York Stock Exchange, National Association of Insurance Commissioners and U.S. Department of Labor as well as foreign regulatory bodies such as the Office of Supervision of Financial Institutions in Ottawa, Canada, Financial Services Association in London, England and Ministry of Finance in Tokyo, Japan.
 
Increasing Willingness to Implement Solutions from Independent Software Vendors and Outsource IT Operations. Rather than internally developing applications that automate business processes, many financial services providers are implementing advanced software solutions from independent software vendors to replace their current systems, which are often cumbersome, time-consuming to operate and expensive to implement, customize, update and support. Additionally, financial services providers globally are outsourcing a growing percentage of their business processes to benefit from best-in-class process execution, focus on core operations, quickly expand into new markets, reduce costs, streamline organizations, handle increased transaction volumes and ensure system redundancy.
 
Intense Global Competition Among Financial Services Providers. Competition within the financial services industry has become intense as financial services providers expand into new markets and offer new services to their clients. In response to these increasingly competitive conditions worldwide, financial services organizations seek to rapidly expand into new markets, manage operational enterprise risk, increase front-office productivity, and drive cost savings by utilizing software to automate and integrate their mission-critical and labor intensive business processes.
 
Our competitive strengths
 
We believe that our position in the marketplace results from several key competitive strengths, including:
 
Enhanced Capability Through Software Ownership. We use our proprietary software products and infrastructure to provide our software-enabled services, strengthening our overall operating margins. Because we use our own products 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.
 
Broad Portfolio of Products and Services Focused on Financial Services Organizations. Our broad portfolio of over 60 software products and software-enabled services allows professionals in the financial services industry to efficiently and rapidly analyze and manage information, increase productivity, devote more time to critical business decisions and reduce costs. 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.
 
Independent Fund Administration Services. Third-party service providers in the alternative investment market, such as auditors, fund administrators, attorneys, custodians and prime brokers, provide 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 becoming aware of these conflicts and seeking independent fund administrators such as SS&C.
 
Highly Attractive Operating Model. By growing our contractually recurring revenues from our software-enabled services and our maintenance contracts, we gain greater predictability in the operation of our business, reduce volatility in our revenues and earnings, enhance our ability to manage our business and strengthen long-term relationships with our clients. We have designed


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our software and software-enabled services to be highly scalable to accommodate significant additional business volumes with limited incremental costs, providing us with opportunities to improve our operating margins and generate significant operating cash flows. We utilize a direct sales force model that benefits from significant direct participation by senior management and leverages the Internet as a direct marketing medium.
 
Deep Domain Knowledge and Extensive Industry Experience. As of December 31, 2009, we had 1,061 development, service and support professionals with significant expertise across the vertical markets that we serve and a deep working knowledge of our clients’ businesses. 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.
 
Trusted Provider to Our Highly Diversified and Growing Client Base. By providing mission-critical, reliable software products and services for more than 20 years, we have become a trusted provider to 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. Our strong client relationships provide us with a significant opportunity to sell additional solutions to our existing clients and drive future revenue growth at lower cost.
 
Superior Client Support and Focus. Our ability to rapidly deliver improvements and our reputation for superior service have proven to be a strong competitive advantage when developing client relationships. We believe a close and active service and support relationship, which we foster through our dedicated client support teams for larger clients and through our interactive online client community (Solution Center), significantly enhances client satisfaction, strengthens client relationships and furnishes us with information regarding evolving client issues.
 
Our growth strategy
 
We intend to be the leading provider of superior technology solutions to the financial services industry. The key elements of our growth strategy include:
 
Continue to Develop Software-Enabled Services and New Proprietary Software. Since our founding in 1986, we have focused on building substantial financial services domain expertise, which 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, continuing to invest in internal development and opportunistically acquiring products and services that address the highly specialized needs of the financial services industry. Our software-enabled services revenues increased from $30.9 million for the year ended December 31, 2004 to $163.3 million for the year ended December 31, 2009, representing a compound annual growth rate of 40%.
 
Expand Our Client Base. Our client base of more than 4,500 clients represents a fraction of the total number of financial services providers globally. As a result, we believe there is substantial opportunity to grow our client base over time as our products become more widely adopted and to capitalize on the increasing adoption of mission-critical, sophisticated software and software-enabled services by financial services providers as they continue to replace inadequate legacy solutions and custom in-house solutions that are inflexible and costly to maintain.
 
Increase Revenues from Existing Clients. Revenues from our existing clients generally grow along with the amount and complexity of assets that they manage and the volume of


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transactions that they execute. Many of our current clients use our products only for a portion of their total assets under management and investment funds, providing us with significant opportunities to expand our business relationship and revenues. We have been successful in, and expect to continue to focus our marketing efforts on, providing additional modules or features to the products and services our existing clients already use, as well as cross-selling our other products and services. Moreover, our high quality of service helps us maintain significant client retention rates and longer lasting client relationships.
 
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. Our acquisitions have enabled us to expand our product and service offerings into new markets or client bases within the financial services industry. We believe that 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 have a proven ability to integrate complementary businesses as demonstrated by the 29 businesses that we have acquired since 1995.
 
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 2009, we generated 21% 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 expand our international market presence by leveraging our existing software products and software-enabled services.
 
Our acquisitions
 
We intend to continue to employ a highly disciplined and focused acquisition strategy to broaden and enhance our product and service offerings, add new clients and supplement our internal development efforts. Our 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 that our acquisitions have been an extension of our research and development effort and have enabled us to purchase proven products and remove the uncertainties sometimes associated with software development projects.
 
Since 1995, we have acquired 29 businesses within our industry. To date, our acquisitions have contributed marketable products or services that have added to our revenues. We believe that 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.


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Risks associated with our business
 
Our business is subject to numerous risks and uncertainties, as more fully described under “Risk factors” beginning on page 16, which you should carefully consider before purchasing our common stock. For example:
 
•  Our business is greatly affected by changes in the state of the general economy and the financial markets, and a prolonged downturn in the general economy or the financial services industry could disproportionately affect demand for our products and services.
 
•  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.
 
•  If we cannot attract, train and retain qualified managerial, technical and sales personnel, we may not be able to provide adequate technical expertise and customer service to our clients or maintain focus on our business strategy.
 
•  Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our 113/4% senior subordinated notes due 2013 and our senior credit facilities.
 
In addition, the ability of new investors to influence corporate matters may be limited because a small number of stockholders will beneficially own a substantial amount of our common stock after this offering. Following the completion of this offering, investment funds affiliated with Carlyle will beneficially own approximately 62.8% of our common stock, and William C. Stone, our Chairman of the Board of Directors and Chief Executive Officer, will beneficially own approximately 25.2% of our common stock, assuming that the underwriters do not exercise their option to purchase additional shares.
 
Principal stockholder—The Carlyle Group
 
The Carlyle Group, or Carlyle, is a global private equity firm with $88.6 billion under management committed to 67 funds as of December 31, 2009. Carlyle invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on technology, aerospace and defense, automotive and transportation, consumer and retail, energy and power, financial services, healthcare, industrial, infrastructure, business services and telecommunications and media. Since 1987, the firm has invested $59.6 billion of equity in 952 transactions for a total purchase price of $233.0 billion. The Carlyle Group employs 864 people in 19 countries. Carlyle deals have included the acquisitions of OpenLink Financial, a leading provider of portfolio management software solutions to the commodity, energy and financial services markets, Freescale Semiconductor, Inc., one of the world’s largest semiconductor companies, The Hertz Corporation, the largest worldwide car rental brand, Blackboard, Inc., a leading e-learning platform provider, and Booz Allen, a provider of management consulting for businesses and governments.
 
The going-private transaction
 
On November 23, 2005, SS&C Holdings, a Delaware corporation owned by investment funds affiliated with Carlyle, acquired SS&C through the merger of Sunshine Merger Corporation with and into SS&C, with SS&C being the surviving company and a wholly owned subsidiary of SS&C Holdings, and SS&C’s outstanding common stock converted into the right to receive $37.25 per share in cash. We refer to the acquisition of SS&C by SS&C Holdings as the “Acquisition.”


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The following transactions occurred in connection with the Acquisition:
 
•  Carlyle capitalized SS&C Holdings with an aggregate equity contribution of $381.0 million;
 
•  William C. Stone, SS&C’s Chairman of the Board and Chief Executive Officer, contributed $165.0 million of equity in the form of stock and rollover options, and certain other management and employee option holders contributed approximately $9.0 million of additional equity in the form of rollover options, to SS&C Holdings;
 
•  SS&C entered into senior secured credit facilities consisting of:
 
  •  a $75.0 million revolving credit facility, of which $10.0 million was drawn at closing; and
 
  •  a $275.0 million term loan B facility, which was fully drawn at closing and of which the equivalent of $75.0 million was drawn in Canadian dollars by one of SS&C’s Canadian subsidiaries;
 
•  SS&C issued and sold $205.0 million in aggregate principal amount of 113/4% senior subordinated notes due 2013;
 
•  all outstanding options to purchase shares of SS&C’s common stock became fully vested and immediately exercisable, and each outstanding option (other than options held by (1) non-employee directors, (2) certain individuals identified in a schedule to the Merger Agreement and (3) individuals who held options that were exercisable for fewer than 100 shares of SS&C’s common stock) were, subject to certain conditions, assumed by SS&C Holdings and converted into an option to acquire common stock of SS&C Holdings; and
 
•  all in-the-money warrants to purchase shares of SS&C’s common stock were cancelled in exchange for cash equal to the excess of the transaction price over the exercise price of the warrants.
 
In this prospectus, we refer to the Acquisition, the equity contributions to SS&C Holdings, the offering of the senior subordinated notes and the other transactions described above as the “Transaction.”
 
As a result of the Transaction, as of December 31, 2009, investment funds affiliated with Carlyle beneficially owned approximately 71% of the common stock of SS&C Holdings and William C. Stone, the Chairman of the Board and Chief Executive Officer of each of SS&C and SS&C Holdings, beneficially owned approximately 31% of the common stock of SS&C Holdings. See “Principal and selling stockholders” for additional information, including the calculation of beneficial ownership. The term “Successor” refers to us following the Acquisition, and the term “Predecessor” refers to us prior to the Acquisition.
 
The table set forth below compares the per share and aggregate amounts contributed to SS&C Holdings by William C. Stone, Carlyle and certain other management and employee option holders at the time of Transaction with the implied per share and aggregate value of the shares of our common stock at the time of this offering, based on an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus):
 
         
    Time of
  Time of
    Transaction   this offering
 
Per share
  $8.64   $14.00
Aggregate
  $555.0 million   $889.6 million
 
 


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Additional information
 
SS&C Holdings was incorporated in Delaware as Sunshine Acquisition Corporation in July 2005 and changed its name to SS&C Technologies Holdings, Inc. in June 2007. SS&C was organized as a Connecticut corporation in March 1986 and reincorporated as a Delaware corporation in April 1996. On November 23, 2005, SS&C Holdings acquired SS&C, as described above under “The going-private transaction.” Our principal executive offices are located at 80 Lamberton Road, Windsor, Connecticut 06095, and our telephone number at that location is (860) 298-4500. Our website address is www.ssctech.com. Information contained on our website does not constitute a part of this prospectus.


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The offering
 
Common stock offered by SS&C Technologies Holdings, Inc. 
8,225,000 shares
 
Common stock offered by the selling stockholders
2,500,000 shares
 
  Total
10,725,000 shares
 
Common stock to be outstanding after this offering
69,191,228 shares (70,799,978 shares if the over-allotment option is exercised in full)
 
Over-allotment option offered by SS&C Technologies Holdings, Inc.
We have granted the underwriters a 30-day option to purchase up to 1,608,750 shares of our common stock.
 
Use of proceeds
We estimate that we will receive approximately $104.7 million in net proceeds from the 8,225,000 shares of common stock that we are offering based upon an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use a majority of our net proceeds of this offering to redeem up to $71.75 million in principal amount of our outstanding 113/4% senior subordinated notes due 2013 at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest, and the balance of our net proceeds for working capital and other general corporate purposes, including potential acquisitions. We will not receive any proceeds from the sale of shares by the selling stockholders, except for the aggregate exercise price of options held by certain selling stockholders. See “Use of proceeds” for additional information.
 
Proposed NASDAQ Global Market symbol
“SSNC”
 
The number of shares of our common stock to be outstanding following this offering is based on 60,966,228 shares of our common stock outstanding as of December 31, 2009, which includes 551,726 shares to be sold by selling stockholders upon the exercise of outstanding options in connection with this offering and 14,450 shares to be sold by selling stockholders which were acquired upon the exercise of outstanding options in 2010 and excludes:
 
•  12,171,383 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2009 at a weighted average exercise price of $6.91 per share;


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•  1,874,258 shares of common stock reserved as of December 31, 2009 for future issuance under our 2006 equity incentive plan; and
 
•  2,623,661 shares of common stock reserved as of December 31, 2009 for future issuance under our 2008 stock incentive plan.
 
The shares of common stock offered by us and the selling stockholders in this offering will represent 15.5% of the total shares of common stock to be outstanding after this offering.
 
Unless otherwise indicated, all information in this prospectus reflects and assumes the following:
 
•  no exercise of outstanding options after December 31, 2009;
 
•  an 8.5-for-1 stock split of our common stock that was effected on March 10, 2010;
 
•  the effectiveness upon the closing of this offering of our restated certificate of incorporation and our amended and restated bylaws, which contain provisions customary for public companies, as more fully described below under “Description of capital stock”; and
 
•  no exercise by the underwriters of their over-allotment option.


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Summary historical financial data
 
The tables below summarize our historical consolidated financial data as of and for the periods indicated. You should read the following information together with the more detailed information contained in “Selected historical financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the accompanying notes.
 
On November 23, 2005, SS&C Holdings acquired SS&C through the merger of Sunshine Merger Corporation, a wholly owned subsidiary of SS&C Holdings, with and into SS&C, with SS&C being the surviving company and a wholly owned subsidiary of SS&C Holdings. We refer to the acquisition of SS&C by SS&C Holdings as the “Acquisition.” We refer to the Acquisition, together with related transactions entered into to finance the cash consideration for the Acquisition, to refinance certain of our existing indebtedness and to pay related transaction fees and expenses, as the “Transaction.”
 
The term “Successor” refers to us following the Acquisition, and the term “Predecessor” refers to us prior to the Acquisition. Certain financial information in this prospectus for the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005 has been presented on a combined basis. This presentation does not comply with generally accepted accounting principles or with the rules for pro forma presentation, but is presented because we believe that it provides a meaningful comparison of our results. The combined operating results may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
 
The as adjusted balance sheet data set forth below give effect to the sale by us of 8,225,000 shares of our common stock in this offering at an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the use of a majority of the net proceeds thereof to redeem $71.75 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest. The as adjusted balance sheet also gives effect to our receipt of the aggregate exercise price for the 551,726 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering and the 14,450 shares which were acquired by certain of the selling stockholders upon exercise of options in 2010, a loss on extinguishment of debt of approximately $5.5 million, including a $4.2 million redemption premium and a non-cash charge of approximately $1.3 million relating to the write-off of deferred financing fees attributable to the redeemed notes and the related tax effects of the above.
 


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    Predecessor       Successor     Combined1     Successor  
    January 1
      November 23
    Year
    Year
    Year
    Year
    Year
 
    through
      through
    ended
    ended
    ended
    ended
    ended
 
(In thousands,
  November 22,
      December 31,
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
 
except per share data)   2005       2005     2005     2006     2007     2008     2009  
 
Statement of operations data:
                                                         
Revenues:
                                                         
Software licenses
  $ 20,147       $ 3,587     $ 23,734     $ 22,925     $ 27,514     $ 24,844     $ 20,661  
Maintenance
    44,064         3,701       47,765       55,222       61,910       65,178       66,099  
Professional services
    12,565         2,520       15,085       19,582       17,491       24,352       20,889  
Software-enabled services
    67,193         7,857       75,050       107,740       141,253       165,632       163,266  
     
     
Total revenues
    143,969         17,665       161,634       205,469       248,168       280,006       270,915  
Total cost of revenues
    59,004         7,627       66,631       100,016       128,882       142,433       137,740  
     
     
Gross profit
    84,965         10,038       95,003       105,453       119,286       137,573       133,175  
     
     
Operating expenses:
                                                         
Selling, marketing, general and administrative
    25,078         2,504       27,582       37,964       44,274       45,686       39,559  
Research and development
    19,199         2,071       21,270       23,620       26,282       26,804       26,513  
Merger costs
    36,912               36,912                          
     
     
Total operating expenses
    81,189         4,575       85,764       61,584       70,556       72,490       66,072  
     
     
Operating income
    3,776         5,463       9,239       43,869       48,730       65,083       67,103  
Interest income
    1,031         30       1,061       388       939       409       28  
Interest expense
    (2,092 )       (4,920 )     (7,012 )     (47,427 )     (45,463 )     (41,539 )     (36,891 )
Other (expense) income, net
    655         258       913       456       1,911       1,994       (1,418 )
     
     
Income (loss) before income taxes
    3,370         831       4,201       (2,714 )     6,117       25,947       28,822  
Provision (benefit) for income taxes
    2,658               2,658       (3,789 )     (458 )     7,146       9,804  
     
     
Net income
  $ 712       $ 831     $ 1,543     $ 1,075     $ 6,575     $ 18,801     $ 19,018  
     
     
Earnings per share2 
                                                         
Basic
  $ 0.03       $ 0.01             $ 0.02     $ 0.11     $ 0.31     $ 0.31  
     
     
Diluted
  $ 0.03       $ 0.01             $ 0.02     $ 0.10     $ 0.30     $ 0.30  
     
     
Weighted average shares outstanding2
                                                         
Basic
    23,300         60,138               60,172       60,245       60,284       60,381  
Diluted
    24,478         62,167               62,182       63,382       63,700       63,653  
Other financial data:
                                                         
Recurring revenue percentage3
    77.3%         65.4%       76.0%       79.3%       81.9%       82.4%       84.7%  
Consolidated EBITDA4
  $ 64,989       $ 8,588     $ 73,577     $ 83,998     $ 98,667     $ 115,566     $ 119,266  
 
 
 

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    As of December 31, 2009  
(In thousands)   Actual     As adjusted  
 
 
Balance sheet data:
               
Cash and cash equivalents
  $ 19,055     $ 49,586  
Working capital (deficit)
    (14,610 )     18,388  
Total assets
    1,185,641       1,217,314  
113/4% senior subordinated notes due 2013
    205,000       133,250  
Senior credit facility, including current portion
    192,032       192,032  
Total stockholders’ equity
    645,987       750,400  
 
 
 
A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share would increase (decrease) the as adjusted amount of each of cash and cash equivalents, working capital, total assets and total stockholders’ equity by approximately $7.6 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts commissions and estimated offering expenses payable by us.
 
(1) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with generally accepted accounting principles (GAAP) or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results.
 
(2) Amounts for the Predecessor period are computed based upon the capital structure in existence prior to the Acquisition. Amounts for the Successor periods are computed based upon the capital structure in existence subsequent to the Acquisition.
 
(3) Recurring revenue percentage represents software-enabled services revenues and maintenance revenues as a percentage of total revenues. We do not believe that the recurring revenue percentage for the Successor period of 2005 is meaningful because such period is only five weeks in duration and not indicative of our overall trends.
 
(4) Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities.
 
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures.
 
Any breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA.
 
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.
 
Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including:
 
• Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions;
 
• Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;

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• Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges;
 
• Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and
 
• Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business.
 
The following is a reconciliation of net income to EBITDA and Consolidated EBITDA:
 
                                                           
 
 
    Predecessor       Successor     Combineda     Successor  
            Period
                               
    Period
      from
                               
    from
      November 23,
                               
    January 1
      2005
    Year
    Year
    Year
    Year
    Year
 
    through
      through
    ended
    ended
    ended
    ended
    ended
 
    November 22,
      December 31,
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
 
(In thousands)   2005       2005     2005     2006     2007     2008     2009  
 
Net income
  $ 712       $ 831     $ 1,543     $ 1,075     $ 6,575     $ 18,801     $ 19,018  
Interest expense, net
    1,061         4,890       5,951       47,039       44,524       41,130       36,863  
Income taxes
    2,658               2,658       (3,789 )     (458 )     7,146       9,804  
Depreciation and amortization
    9,575         2,301       11,876       27,128       35,047       35,038       36,028  
     
     
EBITDA
    14,006         8,022       22,028       71,453       85,668       102,115       101,713  
Purchase accounting adjustmentsb
            616       616       3,017       (296 )     (289 )     (93 )
Merger costs
    36,912               36,912                          
Capital-based taxes
                        1,841       1,721       1,212       795  
Unusual or non-recurring charges (income)c
    (737 )       (242 )     (979 )     1,485       (1,718 )     1,480       1,990  
Acquired EBITDA and cost savingsd
    14,808         85       14,893       1,147       135       2,379       8,053  
Stock-based compensation
                        3,871       10,979       7,323       5,607  
Othere
            107       107       1,184       2,158       1,346       1,201  
     
     
Consolidated EBITDA
  $ 64,989       $ 8,588     $ 73,577     $ 83,998     $ 98,667     $ 115,566     $ 119,266  
 
 
 
(a) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results.
 
(b) Purchase accounting adjustments include (1) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of the Transaction and (2) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction.
 
(c) Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, gains and losses on the sales of marketable securities, equity earnings and losses on investments, proceeds and payments associated with legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses.
 
(d) Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions.
 
(e) Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense.


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Consolidated EBITDA and consolidated leverage ratios
 
Our senior credit facilities require us to maintain both a maximum consolidated total leverage to Consolidated EBITDA ratio (currently no more than 5.50) and a minimum Consolidated EBITDA to consolidated net interest coverage ratio (currently not less than 2.25), in each case calculated for the trailing four quarters.
 
The table below summarizes our Consolidated EBITDA, consolidated total leverage ratio and consolidated net interest coverage ratio for the periods presented.
 
                                                 
 
    Combined1     Successor  
                                  Twelve months
 
    Twelve months
    Twelve months
    Twelve months
    Twelve months
    Twelve months
    ended
 
    ended
    ended
    ended
    ended
    ended
    December 31, 2009
 
(In thousands, except ratio data)   December 31, 2005     December 31, 2006     December 31, 2007     December 31, 2008     December 31, 2009     (As adjusted)6  
 
 
Consolidated EBITDA2
  $ 73,577     $ 83,998     $ 98,667     $ 115,566     $ 119,266     $ 119,266  
Consolidated total leverage to Consolidated EBITDA ratio (current maximum covenant level: 5.50)3
    6.43       5.48       4.30       3.28       3.17       2.48  
Consolidated EBITDA to consolidated net interest coverage ratio (current minimum covenant level: 2.25)4
    10.87 5     1.88       2.34       2.98       3.45       4.56  
 
 
 
(1) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results.
 
(2) We reconcile our Consolidated EBITDA for the trailing four quarters to net income for the same period using the same methods set forth above.
 
(3) Consolidated total leverage ratio is defined in our senior credit facilities at the last day of any period of four consecutive fiscal quarters, as the ratio of (a) the principal amount of all debt at such date, minus the amount, up to a maximum amount of $30.0 million, of cash and cash equivalents to (b) Consolidated EBITDA. The current maximum consolidated total leverage ratio is 5.50. The maximum consolidated total leverage ratio for 2009 was 5.50, for 2008 was 6.00, for 2007 was 6.75 and for 2006 was 7.50. There was no maximum consolidated total leverage ratio covenant prior to June 30, 2006.
 
(4) Consolidated net interest coverage ratio is defined in our senior credit facilities as for any period, the ratio of (a) Consolidated EBITDA for such period to (b) total cash interest expense for such period with respect to all outstanding indebtedness minus total cash interest income for such period. The current minimum consolidated net interest coverage ratio is 2.25. The minimum consolidated net interest coverage ratio for 2009 was 2.00, for 2008 was 1.70, for 2007 was 1.50 and for 2006 was 1.40. There was no minimum consolidated net interest coverage ratio covenant prior to June 30, 2006.
 
(5) This ratio is not comparable because we did not incur debt under our existing senior credit facilities until November 2005 in connection with the Transaction.
 
(6) As adjusted to give effect to the sale by us of 8,225,000 shares of our common stock in this offering at an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the use of a majority of the net proceeds thereof to redeem $71.75 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest. The as adjusted data also give effect to our receipt of the aggregate exercise price for the 551,726 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering and the 14,450 shares which were acquired by certain of the selling stockholders upon exercise of options in 2010.


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Risk factors
 
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding whether to invest in our common stock. If any of the following risks occur, our business, financial condition and operating results could be materially affected. The trading price of our common stock could decline as a result of any of these risks, and you might lose all or part of your investment in our common stock.
 
Risks relating to our business
 
Our business is greatly affected by changes in the state of the general economy and the financial markets, and a prolonged downturn in the general economy or the financial services industry could disproportionately affect the demand for our products and services.
 
The systemic impact of a potential long-term and wide-spread recession, energy costs, geopolitical issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market volatility and diminished expectations for both western and emerging economies. These unfavorable changes in economic conditions, as well as declining consumer confidence, inflation, recession or other factors, have caused and could continue to cause our clients or prospective clients to delay or reduce purchases of our products, and our revenues could be adversely affected. Fluctuations in the value of assets under our clients’ management could also adversely affect our revenues. These unfavorable conditions could also make it difficult for our clients to obtain credit on reasonable terms or at all, preventing them from making desired purchases of our products and services. Further, the current challenging economic conditions also may impair the ability of our clients to pay for products they have purchased and, as a result, our reserves, allowances for doubtful accounts and write-offs of accounts receivable could increase. We cannot predict the timing or duration of any economic downturn, generally, or in the markets in which our businesses operate. Continued turbulence in the U.S. and international markets and prolonged declines in business consumer spending could materially adversely affect our liquidity and financial condition, and the liquidity and financial condition of our clients.
 
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. As a result, we believe that fluctuations, disruptions, instability or prolonged downturns in the general economy and the financial services industry, including the current economic crisis, could disproportionately affect demand for our products and services. For example, such fluctuations, disruptions, instability or downturns may cause our clients to do the following:
 
•  cancel or reduce planned expenditures for our products and services;
•  process fewer transactions through our software-enabled services;
•  seek to lower their costs by renegotiating their contracts with us;
•  move their IT solutions in-house;
•  switch to lower-priced solutions provided by our competitors; or
•  exit the industry.
 
If such conditions occur and persist, our business and financial results, including our liquidity and our ability to fulfill our obligations to the holders of our 113/4% senior subordinated notes


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due 2013, which we refer to as the notes or senior subordinated notes, and our other lenders, could be materially adversely affected.
 
Further or accelerated consolidations and failures in the financial services industry could adversely affect our results of operations due to a resulting decline in demand for our products and services.
 
If banks and financial services firms fail or continue to 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 revenues.
 
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 information technology;
 
•  the level of competition from internal client solutions and from other vendors;
 
•  the quality of our client service;
 
•  our ability to update our products and services and develop new products and services needed by clients;
 
•  our ability to understand the organization and processes of our clients; and
 
•  our ability to integrate and manage acquired businesses.
 
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.


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Some of our current and potential competitors 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 alliances among competitors may emerge and rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margins and loss of market share. Accordingly, our business may not grow as expected and may decline.
 
Catastrophic events may adversely affect our ability to provide, our clients’ ability to use, and the demand for, our products and services, which may disrupt our business and cause a decline in revenues.
 
A war, terrorist attack, natural disaster 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 impact is due primarily to our significant investment in infrastructure. Although we maintain redundant facilities and have contingency plans in place to protect against both man-made and natural threats, it is impossible to fully anticipate and protect against all potential catastrophes. A computer virus, security breach, criminal act, military action, power or communication failure, flood, severe storm or the like could lead to service interruptions and data losses for clients, disruptions to our operations, or damage to important facilities. In addition, such an event may cause clients to cancel their agreements with us for our products or services. Any of these events could cause a decline in our revenues.
 
Our software-enabled services may be subject to disruptions that could adversely affect our reputation and our business.
 
Our software-enabled services maintain and process confidential data on behalf of our clients, some of which is critical to their business operations. For example, our trading systems maintain account and trading information for our clients and their customers. There is no guarantee that the systems and procedures that we maintain to protect against unauthorized access to such information 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, our clients could experience data loss, financial loss, harm to their reputation and significant business interruption. If that happens, we may be exposed to unexpected liability, our clients may leave, our reputation may be tarnished, and client dissatisfaction and lost business may result.
 
We may not achieve the anticipated benefits from our acquisitions and may face difficulties in integrating our acquisitions, which could adversely affect our revenues, subject us to unknown liabilities, increase costs and place a significant strain on our management.
 
We have made and intend in the future to make acquisitions of 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.


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Our success is also dependent on our ability to complete the integration of the operations of acquired businesses in an efficient and effective manner. Successful integration in the rapidly changing financial services software and services industry may be more difficult to accomplish than in other industries. We may not realize the benefits we anticipate from acquisitions, such as lower costs or increased revenues. We may also realize such benefits more slowly than anticipated, due to our inability to:
 
•  combine operations, facilities and differing firm cultures;
 
•  retain the clients or employees of acquired entities;
 
•  generate market demand for new products and services;
 
•  coordinate geographically dispersed operations and successfully adapt to the complexities of international operations;
 
•  integrate the technical teams of these companies with our engineering organization;
 
•  incorporate acquired technologies and products into our current and future product lines; and
 
•  integrate the products and services of these companies with our business, where we do not have distribution, marketing or support experience for these products and services.
 
Integration may not be smooth or successful. The inability of management to successfully integrate the operations of acquired companies could disrupt our ongoing operations, divert management from day-to-day responsibilities, increase our expenses and harm our operating results or financial condition. Such acquisitions may also place a significant strain on our administrative, operational, financial and other resources. To manage growth effectively, we must continue to improve our management and operational controls, enhance our reporting systems and procedures, integrate new personnel and manage expanded operations. If we are unable to manage our growth and the related expansion in our operations from recent and future acquisitions, our business may be harmed through a decreased ability to monitor and control effectively our operations and a decrease in the quality of work and innovation of our employees.
 
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. 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 value of assets under our clients’ management;


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•  cancellations of maintenance and/or software-enabled services arrangements by our clients;
 
•  changes in local, national and international regulatory requirements;
 
•  changes in our personnel;
 
•  implementation of our licensing contracts and software-enabled services arrangements;
 
•  changes in economic and financial market conditions; and
 
•  changes in the mix in the types of products and services we provide.
 
If we cannot attract, train and retain qualified managerial, technical and sales personnel, we may not be able to provide adequate technical expertise and customer service to our clients or maintain focus on our business strategy.
 
We believe that our success is due in part to our experienced management team. We depend in large part upon the continued contribution of our senior management and, in particular, William C. Stone, our Chief Executive Officer and Chairman of the Board of Directors. Losing the services of one or more members of our senior management could significantly delay or prevent the achievement of our business objectives. Mr. Stone has been instrumental in developing our business strategy and forging our business relationships since he founded the company in 1986. We maintain no key man life insurance policies for Mr. Stone or any other senior officers or managers.
 
Our success is also dependent upon our ability to attract, train and retain highly skilled technical and sales personnel. Loss of the services of these employees could materially affect our operations. Competition for qualified technical personnel in the software industry is intense, and we have, at times, found it difficult to attract and retain skilled personnel for our operations.
 
Locating candidates with the appropriate qualifications, particularly in the desired geographic location and with the necessary subject matter expertise, is difficult. 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 and we may, therefore, lose potential clients and suffer a decline in revenues.
 
If we are unable to protect our proprietary technology, 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. We rely on a combination of trade secret, copyright and trademark law, nondisclosure agreements and technical measures to protect our proprietary technology. 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 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 only 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


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engineer or otherwise obtain and use our proprietary information, and third parties may assert ownership rights in our proprietary technology.
 
Existing patent and copyright laws afford only limited protection. Others may develop substantially equivalent or superseding proprietary technology, or competitors may offer equivalent products in competition with our products, thereby substantially reducing the value of our proprietary rights. There are many patents in the financial services field. As a result, we are subject to the risk that others will claim that the important technology we have developed, acquired or incorporated into our products will infringe the rights, including the patent rights, such persons may hold. These claims, if successful, could result in a material loss of our intellectual property rights. Expensive and time-consuming litigation may be necessary to protect our proprietary rights.
 
We incorporate open source software into a limited number of our software solutions. We monitor our use of open source software to avoid subjecting our products to conditions we do not intend. Although we believe that we have complied with our obligations under the applicable licenses for open source software that we use, there is little or no legal precedent governing the interpretation of many of the terms of certain of these licenses. Therefore, 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 this technology across many 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 currently use certain third-party software in providing some of our products and services, such as industry standard databases and report writers. If we lost our licenses to use such software or if such licenses were found to infringe upon the rights of others, we would need to seek alternative means of obtaining the licensed software to continue to provide our products or services. Our inability to replace such software, or to replace such software in a timely manner, could have a negative impact on our operations and financial results.
 
We could become subject to litigation regarding intellectual property rights, which could seriously harm our business and require us to incur significant costs, which, in turn, could reduce or eliminate profits.
 
In recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. We may be a party to litigation in the future to enforce our intellectual property rights or as a result of an allegation that we infringe others’ intellectual property rights, including patents, trademarks and copyrights. From time to time we have received notices claiming our technology may infringe third-party intellectual property rights. Any parties asserting that our products or services infringe upon their proprietary rights could force us to defend ourselves and possibly our clients against the alleged infringement. These claims and any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation of our proprietary rights. These lawsuits, regardless of their success, could be time-consuming and expensive to resolve, adversely affect our revenues, profitability and prospects and divert management time and attention away from our operations. We may


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be required to re-engineer our products or services or obtain a license of third-party technologies on unfavorable terms.
 
Our failure to continue to derive substantial revenues from the licensing of, or the provision of software-enabled services related to, our CAMRA, TradeThru, Pacer, AdvisorWare and Total Return software, and the provision of maintenance and professional services in support of such licensed software, could adversely affect our ability to sustain or grow our revenues and harm our business, financial condition and results of operations.
 
The licensing of, and the provision of software-enabled services, maintenance and professional services relating to, our CAMRA, TradeThru, Pacer, AdvisorWare and Total Return software accounted for approximately 54% of our revenues for the year ended December 31, 2009. We expect that the revenues from these software products and services will continue to account for a significant portion of our total revenues for the foreseeable future. As a result, factors adversely affecting the pricing of or demand for such products and services, such as competition or technological change, could have a material adverse effect on our ability to sustain or grow our revenues and harm our business, financial condition and results of operations.
 
We may be unable to adapt to rapidly changing technology and evolving industry standards and regulatory requirements, and our inability to introduce new products and services could result in a loss of market share.
 
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 extremely complex and is expected to become increasingly complex and expensive in the future due to the introduction of new platforms, operating systems and technologies. 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 and other developments in the industries where our clients operate; and
 
•  we may be exposed to liability for security breaches that allow unauthorized persons to gain access to confidential information stored on our computers or transmitted over our network.
 
Our failure to enhance our existing products and services and to develop and introduce new products and services to promptly address the needs of the financial markets could adversely affect our business and results of operations.


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Undetected software design defects, errors or failures may result in 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 may result in loss of client data or require design modifications. We cannot assure you that, despite testing by us and our clients, errors will not be found in new products, which errors could result in data unavailability, loss or corruption of client assets, litigation and other claims for damages against us. The cost of defending such a lawsuit, regardless of its merit, could be substantial and could divert management’s attention from ongoing operations of the company. 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 operating results and financial condition.
 
Challenges in maintaining and expanding our international operations can result in increased costs, delayed sales efforts and uncertainty with respect to our intellectual property rights and results of operations.
 
For the years ended December 31, 2007, 2008 and 2009, international revenues accounted for 41%, 39% and 36%, respectively, of our total revenues. We sell certain of our products, such as Altair and Pacer, primarily outside the United States. Our international business may be subject to a variety of risks, including:
 
•  changes in a specific country’s or region’s political or economic condition;
 
•  difficulties in obtaining U.S. export licenses;
 
•  potentially longer payment cycles;
 
•  increased costs associated with maintaining international marketing efforts;
 
•  foreign currency fluctuations;
 
•  the introduction of non-tariff barriers and higher duty rates;
 
•  foreign regulatory compliance; and
 
•  difficulties in enforcement of third-party contractual obligations and intellectual property rights.
 
Such factors could have a material adverse effect on our ability to meet our growth and revenue projections and negatively affect our results of operations.


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Risks relating to our indebtedness
 
Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our 113/4% senior subordinated notes due 2013 and our senior credit facilities.
 
We have incurred a significant amount of indebtedness. As of December 31, 2009, we had total indebtedness of $397.3 million and additional available borrowings of $73.0 million under our revolving credit facility. Our total indebtedness consisted of $205.0 million of 113/4% senior subordinated notes due 2013, $190.0 million of secured indebtedness under our term loan B facility, $2.0 million of secured indebtedness under our revolving credit facility and $0.3 million of capital leases.
 
Our substantial indebtedness could have important consequences. For example, it could:
 
•  make it more difficult for us to satisfy our obligations with respect to our notes and our senior credit facilities;
 
•  require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts and other general corporate purposes;
 
•  increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
 
•  expose us to the risk of increased interest rates as borrowings under our senior credit facilities are subject to variable rates of interest;
 
•  place us at a competitive disadvantage compared to our competitors that have less debt; and
 
•  limit our ability to borrow additional funds.
 
In addition, the indenture governing the notes and the agreement governing our senior credit facilities contain 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 principal and interest payments on our senior and subordinated debt of approximately $35 million annually. Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
 
We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior credit facilities in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior credit


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facilities and the notes, 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 alliances. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all.
 
Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial financial leverage.
 
We and our subsidiaries may be able to incur substantial additional indebtedness in the future because the terms of the indenture governing the notes and our senior credit facilities do not fully prohibit us or our subsidiaries from doing so. Subject to covenant compliance and certain conditions, our senior credit facilities permit additional borrowing, including borrowing up to $75.0 million under our revolving credit facility. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify.
 
Restrictive covenants in the indenture governing the notes and the agreement governing our senior credit facilities may restrict our ability to pursue our business strategies.
 
The indenture governing the notes and the agreement governing our senior credit facilities limit SS&C’s ability, among other things, to:
 
•  incur additional indebtedness;
•  sell assets, including capital stock of restricted subsidiaries;
•  agree to payment restrictions affecting SS&C’s restricted subsidiaries;
•  pay dividends;
•  consolidate, merge, sell or otherwise dispose of all or substantially all of SS&C’s assets;
•  make strategic acquisitions;
•  enter into transactions with SS&C’s affiliates;
•  incur liens; and
•  designate any of SS&C’s subsidiaries as unrestricted subsidiaries.
 
In addition, our senior credit facilities include other covenants which, subject to permitted exceptions, prohibit us from making capital expenditures in excess of certain thresholds, making investments, loans and other advances, engaging in sale-leaseback transactions, entering into speculative hedging agreements, and prepaying our other indebtedness while indebtedness under our senior credit facilities is outstanding. The agreement governing our senior credit facilities also requires us to maintain compliance with specified financial ratios, particularly a leverage ratio and an interest coverage ratio. Our ability to comply with these ratios may be affected by events beyond our control. See “Description of certain indebtedness—Senior credit facilities” for additional information.
 
The restrictions contained in the indenture governing the notes and the agreement governing our senior credit facilities could limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions or otherwise restrict our activities or business plans.


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A breach of any of these restrictive covenants or our inability to comply with the required financial ratios could result in a default under the agreement governing our senior credit facilities. If a default occurs, the lenders under our senior credit facilities may elect to:
 
•  declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable; or
 
•  prevent us from making payments on the notes,
 
either of which would result in an event of default under the notes. The lenders also have the right in these circumstances 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 facilities also have the right to proceed against the collateral, including our available cash, granted to them to secure the indebtedness. If the indebtedness under our senior credit facilities and the notes were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness and our other indebtedness.
 
We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture governing the notes.
 
Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase. However, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of notes or that restrictions in our senior credit facilities will not allow such repurchases. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a “Change of Control” under the indenture governing the notes.
 
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. Our ability to pay dividends is limited by our status as a holding company and by the terms of the indenture governing our notes and the agreement governing our senior credit facilities, which significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to SS&C Holdings. See “Risk factors—Risks relating to our indebtedness—Restrictive covenants in the indenture governing the notes and the agreement governing our senior credit facilities may restrict our ability to pursue our business strategies.” Moreover, even in the absence of any such restrictions, 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. Also, SS&C Holdings has no ability to do acquisitions or conduct other business activities directly. These limitations could reduce our attractiveness to investors.


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Risks relating to this offering and ownership of our common stock
 
An active trading market for our common stock may not develop, and you may not be able to sell your common stock at or above the initial public offering price.
 
Prior to this offering, there has been no public market for the common stock of SS&C Holdings. Although we have applied to have our common stock listed on the NASDAQ Global Market, an active and liquid trading market for shares of our common stock may never develop or be sustained following this offering. If no trading market develops, securities analysts may not initiate or maintain research coverage of our company, which could further depress the market for our common stock. As a result, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell.
 
If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.
 
The trading market for our common stock will rely in part on 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 could decline if one or more equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.
 
The market price of our common stock may be volatile, which could result in substantial losses for investors purchasing shares in this offering.
 
The initial public offering price for our common stock will be determined through negotiations with the underwriters. This initial public offering price may vary from the market price of our common stock after the offering. 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;
 
•  announcements by us or our competitors of significant products, contracts, acquisitions or strategic alliances;
 
•  regulatory developments in the United States, foreign countries or both;
 
•  litigation involving our company, our general industry or both;
 
•  additions or departures of key personnel;


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•  investors’ general perception of us; and
 
•  changes in general economic, industry and market conditions.
 
In addition, if the market for technology 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.
 
A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.
 
Sales of a substantial number of shares of our common stock in the public market could occur at any time after the expiration of the lock-up agreements described in “Underwriting.” These sales, or the market perception that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have 69,191,228 shares of common stock outstanding based on the number of shares outstanding as of December 31, 2009. This includes the 10,725,000 shares of common stock being offered by this prospectus, which may be resold in the public market immediately. The remaining 58,466,228 shares, or 84.5% of our outstanding shares after this offering, are currently restricted as a result of securities laws or lock-up agreements but will be able to be sold, subject to any applicable volume limitations under federal securities laws with respect to affiliate sales, in the near future as set forth below.
 
     
Number of shares   Date available for sale into public market
 
222,323 shares
  On the date of this prospectus.
     
19,472 shares
  90 days after the date of this prospectus.
     
58,224,433 shares
  180 days after the date of this prospectus, subject to extension in specified instances, due to lock-up agreements between the holders of these shares and the underwriters. However, the underwriters can waive the provisions of these lock-up agreements and allow these stockholders to sell their shares at any time.
 
 
 
In addition, as of December 31, 2009, there were 12,171,383 shares subject to outstanding options that will become eligible for sale in the public market to the extent permitted by any applicable vesting requirements, the lock-up agreements and Rules 144 and 701 under the Securities Act of 1933, which we refer to as the Securities Act. Moreover, after this offering, holders of an aggregate of 58,204,288 shares of our common stock as of December 31, 2009, will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under our employee benefit plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements and the restrictions imposed on our affiliates under Rule 144.


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You will incur immediate and substantial dilution in the net tangible book value of your shares as a result of this offering.
 
If you purchase common stock in this offering, you will incur immediate and substantial dilution of $18.98 per share, representing the difference between the assumed initial public offering price of $14.00 per share and our adjusted net tangible book value per share after giving effect to this offering. Moreover, we issued options in the past to acquire common stock at prices significantly below the initial public offering price. As of December 31, 2009, there were 12,171,383 shares subject to outstanding options with a weighted average exercise price of $6.91 per share. To the extent that these outstanding options are ultimately exercised, you will incur further dilution.
 
A few significant stockholders control the direction of our business. If the ownership of our common stock continues to be highly concentrated, it will prevent you and other stockholders from influencing significant corporate decisions.
 
Following the completion of this offering, investment funds affiliated with Carlyle will beneficially own approximately 62.8% of our common stock, and William C. Stone, our Chairman of the Board and Chief Executive Officer, will beneficially own approximately 25.2% of our common stock, assuming that the underwriters do not exercise their option to purchase additional shares. We are also party to a stockholders agreement with Carlyle and Mr. Stone, pursuant to which Carlyle and Mr. Stone have agreed to vote in favor of nominees to our board of directors nominated by each other. As a result, Carlyle and Mr. Stone will continue to exercise control over matters requiring stockholder approval and our policy and affairs. See “Certain relationships and related transactions—Stockholders agreement.”
 
The presence of Carlyle’s nominees on our board of directors may result in a delay or the deterrence of possible changes in control of our company, which may reduce the market price of our common stock. The interests of our existing stockholders may conflict with the interests of our other stockholders. Additionally, Carlyle and its affiliates are in the business of making investments in companies, and from time to time acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or clients of ours.
 
We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
 
We cannot specify with certainty the particular uses of a portion of the net proceeds we will receive from this offering. Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described in “Use of proceeds.” Accordingly, you will have to rely upon the judgment of our management with respect to the use of the proceeds, with only limited information concerning management’s specific intentions. Our management may spend a portion of the net proceeds from this offering 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. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.


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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 you might otherwise receive a premium for your 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 if William C. Stone, investment funds affiliated with Carlyle, and certain transferees of Carlyle cease to collectively hold a majority of our outstanding common stock.
 
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 you could receive a premium for your common stock in an acquisition.
 
See “Description of capital stock—Anti-takeover provisions” for additional information on the anti-takeover measures applicable to us.
 
As a result of our operating as a public company, our management will be required to devote significant time to public company compliance requirements. This may divert management’s attention from the growth and operation of the business.
 
The Sarbanes-Oxley Act of 2002, and rules subsequently implemented by the Securities and Exchange Commission and the NASDAQ Global Market, impose a number of requirements on public companies, including provisions regarding corporate governance practices. Our management and other personnel will need to devote a significant amount of time to these compliance initiatives. Moreover, these rules and regulations will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial additional costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.


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In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we will need to perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we expend significant management time on compliance-related issues. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to sanctions or investigations by the NASDAQ Global Market, the Securities and Exchange Commission or other regulatory authorities, which would require additional financial and management resources.


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Forward-looking statements
 
This prospectus includes statements that are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “plans,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, technology and strategies and the industry in which we operate.
 
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.
 
The following list represents some, but not all, of the factors that may cause actual results to differ from those anticipated or predicted:
 
•  the effect of a prolonged downturn in the general economy or the financial services industry;
 
•  the effect of any further or accelerated consolidations in the financial services industry;
 
•  our ability to retain and attract clients and key personnel;
 
•  the integration of acquired businesses;
 
•  our ability to continue to derive substantial revenues from the licensing of, or provision of software-enabled services relating to, certain of our licensed software, and the provision of maintenance and professional services in support of such licensed software;
 
•  our ability to adapt to rapidly changing technology and evolving industry standards, and our ability to introduce new products and services;
 
•  challenges in maintaining and expanding our international operations;
 
•  the effects of war, terrorism and other catastrophic events;
 
•  the risk of increased interest rates due to the variable rates of interest on certain of our indebtedness; and
 
•  other risks and uncertainties, including those listed under the caption “Risk factors.”
 
You should also carefully read the factors described in the “Risk factors” section of this prospectus to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.
 
Any forward-looking statements that we make in this prospectus speak only as of the date of such statement, and we undertake no obligation to update such statements except as required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.


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Use of proceeds
 
We estimate that we will receive approximately $104.7 million in net proceeds from the 8,225,000 shares of common stock that we are offering based upon an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus), and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 would increase (decrease) the net proceeds to us from this offering by approximately $7.6 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. We will also receive proceeds of approximately $1.8 million from the exercise of stock options by certain selling stockholders in connection with this offering. If the underwriters exercise their over-allotment option in full, we estimate our net proceeds from this offering will be approximately $125.6 million. We will not receive any proceeds from the sale of shares of common stock offered by the selling stockholders, except for the aggregate exercise price of the selling stockholder options, as noted above.
 
 
We intend to use:
 
 
•  a majority of our net proceeds from this offering to redeem up to $71.75 million in principal amount of our outstanding 113/4% senior subordinated notes due 2013, at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest; and
 
 
•  the balance of our net proceeds from this offering for working capital and other general corporate purposes, including potential acquisitions.
 
 
We believe opportunities may exist from time to time to expand our current business through acquisitions of complementary companies, products or technologies. While we have no agreements or commitments for any specific acquisitions at this time, we may use a portion of the net proceeds for these purposes.
 
 
We have not yet determined the amount of notes we will redeem with a portion of our net proceeds from this offering. The amount we redeem will depend on the amount of our proceeds from this offering, our anticipated cash resources and needs and other factors we consider relevant. We may not redeem more than 35% of the aggregate principal amount of notes outstanding without a waiver from the lenders under our senior credit facilities. If we redeem 35% of the aggregate principal amount of the notes, we will redeem $71.75 million in principal amount of notes for $76.0 million in cash, plus accrued and unpaid interest. This redemption will result in a loss on extinguishment of debt of approximately $5.5 million in the period in which the notes are redeemed, which includes a $4.2 million redemption premium and a non-cash charge of approximately $1.3 million relating to the write-off of deferred financing fees attributable to the redeemed notes. For each $1.0 million decrease in the principal amount redeemed, we will pay $1.06 million less in cash to redeem the notes.
 
 
We have not yet determined with any certainty the manner in which we will allocate the balance of our net proceeds from this offering, and as a result management will retain broad discretion in the allocation and use of the net proceeds. The amounts and timing of our expenditures will vary depending on a number of factors, including the amount of cash generated by our operations, potential acquisitions, competitive developments and the rate of growth, if any, of our business. For example, if we were to expand our operations more rapidly than anticipated by our current plans, a greater portion of the net proceeds would likely be used for working capital. Alternatively, if we were to engage in an acquisition that contained a significant cash component, some or all of the net proceeds in excess of the amount required to redeem the notes might be used for that purpose.
 
Pending any use, as described above, we plan to invest the net proceeds in short-term, interest-bearing, investment-grade securities.


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Dividend policy
 
We do not expect to pay dividends on our common stock for the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used for the operation and growth of our business. Our ability to pay dividends to holders of our common stock is limited as a practical matter by our senior credit facilities and the indenture governing our notes, 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. In particular, SS&C is only permitted to pay dividends or advances to us in limited circumstances and, subject to compliance with specified financial ratios, in amounts determined by reference to, among other things, consolidated net income. Any future determination to pay dividends on our common stock is subject to the discretion of our board of directors and will depend upon various factors, including our results of operations, financial condition, liquidity requirements, restrictions that may be imposed by applicable law and our contracts, and other factors deemed relevant by our board of directors. See “Management’s discussion and analysis of financial condition and results of operations” and note 6 to our consolidated financial statements included elsewhere in this prospectus.


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Capitalization
 
The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2009, as follows:
 
•  on a pro forma basis giving effect to the 8.5-for-1 stock split of our common stock effected as of March 10, 2010 and the filing of our restated certificate of incorporation as of the closing date of this offering, which will reflect the creation of our Class A non-voting common stock described below; and
•  on a pro forma as adjusted basis to reflect:
 
  (1)  the sale of 8,225,000 shares of common stock that we are offering at an assumed initial public offering price of $14.00 per share, the midpoint of the estimated price range shown on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, the use of a majority of the net proceeds thereof to redeem $71.75 million in original principal amount of our outstanding 113/4% senior subordinated notes due 2013 at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest, a loss on extinguishment of debt of approximately $5.5 million, including a $4.2 million redemption premium and a non-cash charge of approximately $1.3 million relating to the write-off of deferred financing fees attributable to the redeemed notes and the related tax effect of the loss on extinguishment of debt; and
 
  (2)  the issuance of 551,726 shares of common stock upon the exercise of options held by certain selling stockholders in connection with this offering, the issuance of 14,450 shares of common stock upon the exercise of options by certain selling stockholders in 2010 and the receipt of the aggregate exercise price for such options and the associated tax effect of the exercises.
 
On February 16, 2010, we amended our certificate of incorporation to create our Class A non-voting common stock and amended an option previously granted by SS&C to Mr. Stone on February 17, 2000 to make it an option to purchase 637,500 shares of our Class A non-voting common stock at an exercise price of $0.87 per share. Mr. Stone exercised the option on February 17, 2010 and purchased 637,500 shares of our Class A non-voting common stock.
 
You should read the following table in conjunction with our consolidated financial statements and the accompanying notes and the sections entitled “Selected historical financial data” and “Management’s discussion and analysis of financial condition and results of operations” appearing elsewhere in this prospectus.
 


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    December 31, 2009  
          Pro forma
 
(In thousands, except per share data)   Pro forma     as adjusted  
 
 
Cash and cash equivalents
  $ 19,055     $ 49,586  
     
     
Senior credit facilities
  $ 192,032     $ 192,032  
113/4% senior subordinated notes due 2013
    205,000       133,250  
Capital leases
    227       227  
     
     
Total debt, including current portion
    397,259       325,509  
     
     
Stockholders’ equity:
               
Preferred stock, par value $0.01 per share; 5,000 shares authorized and no shares issued or outstanding, pro forma and pro forma as adjusted
           
Common stock, par value $0.01 per share; 100,000 shares authorized, pro forma and pro forma as adjusted; 60,807 shares issued and 60,400 shares outstanding, pro forma; 69,598 shares issued and 69,191 shares outstanding, pro forma as adjusted
    608       696  
Class A non-voting common stock, par value $0.01 per share; 5,000 shares authorized and no shares issued or outstanding, pro forma and pro forma as adjusted
           
Additional paid-in capital
    587,293       694,845  
Accumulated other comprehensive income
    16,436       16,436  
Retained earnings
    46,300       43,073  
Less: cost of common stock in treasury, 407 shares
    (4,650 )     (4,650 )
     
     
Total stockholders’ equity
    645,987       750,400  
     
     
Total capitalization, including current portion of long-term debt
  $ 1,043,246     $ 1,075,909  
     
     
 
 
 
A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share would increase (decrease) the as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $7.6 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
 
The preceding table excludes:
 
•  12,171,383 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2009 at a weighted average exercise price of $6.91 per share;
 
•  1,874,258 shares of common stock reserved as of December 31, 2009 for future issuance under our 2006 equity incentive plan; and
 
•  2,623,661 shares of common stock reserved as of December 31, 2009 for future issuance under our 2008 stock incentive plan.
 
In addition, the pro forma presentation excludes 551,726 shares to be sold by selling stockholders upon the exercise of outstanding options in connection with this offering and 14,450 shares to be sold by selling stockholders that were acquired upon the exercise of outstanding options in 2010.

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Dilution
 
If you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock immediately after this offering.
 
Our net tangible book value as of December 31, 2009 was a deficit of $(453.5) million, or $(7.51) per share of common stock. Net tangible book value per share represents the amount of our total tangible assets less our total liabilities, divided by the number of shares of common stock outstanding.
 
After giving effect to our sale of 8,225,000 shares of common stock in this offering at an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus) and the receipt of approximately $1.8 million in proceeds from the exercise of options held by certain selling stockholders and the related tax effect, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, but excluding any retirement of outstanding debt, our net tangible book value as of December 31, 2009 would have been a deficit of approximately $(344.6) million, or approximately $(4.98) per share. This amount represents an immediate increase in net tangible book value to our existing stockholders of $2.53 per share and an immediate dilution to new investors of $18.98 per share. Dilution per share to new investors is determined by subtracting the net tangible book value per share after this offering from the initial public offering price per share paid by a new investor. The following table illustrates the per share dilution without giving effect to the over-allotment option granted to the underwriters or the use of proceeds from this offering:
 
                 
 
 
Assumed initial public offering price per share
          $ 14.00  
Net tangible book value per share as of December 31, 2009
  $ (7.51 )        
Increase per share attributable to new investors
    2.53          
     
     
Net tangible book value per share after this offering
            (4.98 )
     
     
Dilution per share to new investors
          $ 18.98  
 
 
 
A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share would increase (decrease) the net tangible book value per share after this offering by approximately $0.11 and dilution per share to new investors by approximately $0.89, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over-allotment option is exercised in full, the net tangible book value per share after this offering would be a deficit of approximately $(4.57), resulting in dilution per share to new investors of $18.57.


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The following table summarizes, as of December 31, 2009, after giving effect to the issuance of 551,726 shares of common stock upon the exercise of options held by certain selling stockholders and the issuance of 14,450 shares of common stock upon the exercise of options by certain selling stockholders in 2010, the differences between the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by our existing stockholders and by new investors, based upon an assumed initial public offering price of $14.00 per share and before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
 
                                         
 
    Shares purchased     Total consideration     Average price
 
    Number     Percent     Amount     Percent     per share  
 
 
Existing stockholders
    60,966,228       88.1 %   $ 530.1 million       82.2 %   $ 8.69  
New investors
    8,225,000       11.9     $ 115.2 million       17.8     $ 14.00  
     
     
Total
    69,191,228       100.0 %   $ 645.3 million       100.0 %        
 
 
 
The preceding discussion and table assume no exercise of outstanding stock options as of December 31, 2009, other than the options to purchase an aggregate of 551,726 shares of common stock to be exercised by certain selling stockholders in connection with this offering and options to purchase an aggregate of 14,450 shares of common stock exercised by certain selling stockholders in 2010. As of December 31, 2009, we had outstanding options to purchase a total of 12,171,383 shares of common stock at a weighted average exercise price of $6.91 per share. To the extent any of these options are exercised, there will be further dilution to new investors.
 
The sale of 2,500,000 shares of our common stock to be sold by the selling stockholders in this offering will reduce the number of shares of our common stock held by existing stockholders to 58,466,228, or 84.5% of the total number of shares of our common stock outstanding after this offering, and will increase the number of shares of our common stock held by new investors to 10,725,000, or 15.5% of the total number of shares of our common stock outstanding after this offering.


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Selected historical financial data
 
You should read the selected historical consolidated financial data with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the accompanying notes. The selected consolidated financial data as of December 31, 2008 and 2009 and for the fiscal years ended December 31, 2007, 2008 and 2009 have been derived from our consolidated financial statements included elsewhere in this prospectus, which have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm. The selected consolidated financial data as of December 31, 2005, 2006 and 2007, for the periods from January 1, 2005 through November 22, 2005 and from November 23, 2005 through December 31, 2005 and for the fiscal year ended December 31, 2006 have been derived from audited consolidated financial statements not included in this prospectus. Our historical results may not be indicative of the operating results to be expected in any future periods.
 
On November 23, 2005, SS&C Holdings acquired SS&C through the merger of Sunshine Merger Corporation, a wholly owned subsidiary of SS&C Holdings, with and into SS&C, with SS&C being the surviving company and a wholly owned subsidiary of SS&C Holdings. We refer to the acquisition of SS&C by SS&C Holdings as the “Acquisition.” We refer to the Acquisition, together with related transactions entered into to finance the cash consideration for the Acquisition, to refinance certain of our existing indebtedness and to pay related transaction fees and expenses, as the “Transaction.”
 
The term “Successor” refers to us following the Acquisition, and the term “Predecessor” refers to us prior to the Acquisition. Our combined results of operations for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with generally accepted accounting principles or with the rules for pro forma presentation, but is presented because we believe it provides a meaningful comparison of our results. The combined operating results may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
 


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    Predecessor       Successor                                
    Period from
      Period from
    Combined     Successor  
    January 1,
      November 23,
    Year
    Year
    Year
    Year
    Year
 
    2005 through
      2005 through
    Ended
    Ended
    Ended
    Ended
    Ended
 
    November 22,
      December 31,
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
 
(In thousands, except per share and percentage data)   2005       2005     2005     2006     2007     2008     2009  
 
Statement of operations data:
                                                         
Revenues:
                                                         
Software licenses
  $ 20,147       $ 3,587     $ 23,734     $ 22,925     $ 27,514     $ 24,844     $ 20,661  
Maintenance
    44,064         3,701       47,765       55,222       61,910       65,178       66,099  
Professional services
    12,565         2,520       15,085       19,582       17,491       24,352       20,889  
Software-enabled services
    67,193         7,857       75,050       107,740       141,253       165,632       163,266  
     
     
Total revenues
    143,969         17,665       161,634       205,469       248,168       280,006       270,915  
Cost of revenues:
                                                         
Software licenses
    2,963         856       3,819       9,216       9,616       9,198       8,499  
Maintenance
    10,393         1,499       11,892       20,415       26,038       26,854       27,559  
Professional services
    7,849         861       8,710       12,575       14,277       16,118       14,154  
Software-enabled services
    37,799         4,411       42,210       57,810       78,951       90,263       87,528  
     
     
Total cost of revenues
    59,004         7,627       66,631       100,016       128,882       142,433       137,740  
     
     
Gross profit
    84,965         10,038       95,003       105,453       119,286       137,573       133,175  
     
     
Operating expenses:
                                                         
Selling and marketing
    13,134         1,364       14,498       17,598       19,701       19,566       20,362  
Research and development
    19,199         2,071       21,270       23,620       26,282       26,804       26,513  
General and administrative
    11,944         1,140       13,084       20,366       24,573       26,120       19,197  
Merger costs
    36,912               36,912                          
     
     
Total operating expenses
    81,189         4,575       85,764       61,584       70,556       72,490       66,072  
     
     
Operating income
    3,776         5,463       9,239       43,869       48,730       65,083       67,103  
Interest income
    1,031         30       1,061       388       939       409       28  
Interest expense
    (2,092 )       (4,920 )     (7,012 )     (47,427 )     (45,463 )     (41,539 )     (36,891 )
Other (expense) income, net
    655         258       913       456       1,911       1,994       (1,418 )
     
     
Income (loss) before income taxes
    3,370         831       4,201       (2,714 )     6,117       25,947       28,822  
(Benefit) provision for income taxes
    2,658               2,658       (3,789 )     (458 )     7,146       9,804  
     
     
Net income
  $ 712       $ 831     $ 1,543     $ 1,075     $ 6,575     $ 18,801     $ 19,018  
                                                           
                                                           
Earnings per share1
                                                         
Basic
  $ 0.03       $ 0.01             $ 0.02     $ 0.11     $ 0.31     $ 0.31  
                                                           
Diluted
  $ 0.03       $ 0.01             $ 0.02     $ 0.10     $ 0.30     $ 0.30  
                                                           
Weighted average shares outstanding1
                                                         
Basic
    23,300         60,138               60,172       60,245       60,284       60,381  
Diluted
    24,478         62,167               62,182       63,382       63,700       63,653  
Pro forma earnings per share2
                                                         
Basic
                                                    $ 0.36  
Diluted
                                                    $ 0.35  
Pro forma weighted average shares outstanding2
                                                         
Basic
                                                      66,216  
Diluted
                                                      69,488  
                                                           
Statement of cash flows data:
                                                         
Net cash provided by (used in):
                                                         
Operating activities
  $ 32,116       $ 4,915             $ 30,709     $ 57,057     $ 61,655     $ 59,852  
Investing activities
    (110,495 )       (877,261 )             (18,626 )     (12,839 )     (24,608 )     (54,134 )
Financing activities
    69,161         868,655               (16,427 )     (37,408 )     (25,532 )     (17,896 )
                                                           
Other financial data:
                                                         
Recurring revenue percentage3
    77.3%         65.4%       76.0%       79.3%       81.9%       82.4%       84.7%  
Consolidated EBITDA4
  $ 64,989       $ 8,588     $ 73,577     $ 83,998     $ 98,667     $ 115,566     $ 119,266  
                                                           
Balance sheet data (at period end):
                                                         
Cash, cash equivalents and marketable securities
            $ 15,584             $ 11,718     $ 19,175     $ 29,299     $ 19,055  
Working capital (deficit)
              7,283               (1,312 )     5,668       10,835       (14,610 )
Total assets
              1,176,371               1,152,521       1,190,495       1,127,353       1,185,641  
Long-term debt, net of current portion
              478,143               466,235       440,580       406,625       392,989  
Total stockholders’ equity
              557,133               563,132       612,593       587,253       645,987  
 
 
 
(1) Amounts for the Predecessor periods are computed based upon the capital structure in existence prior to the Acquisition. Amounts for the Successor periods are computed based upon the capital structure in existence subsequent to the Acquisition.

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(2) Pro forma basic and diluted earnings per share for the year ended December 31, 2009 give effect to the issuance of 5,834,509 shares by us in this offering whose proceeds will be used to redeem $71.75 million in principal amount of the notes, for $76.0 million in cash. As a result of this redemption, the Company’s aggregate annual interest expense in respect of the notes, net of tax will decrease by approximately $5.1 million. See “Use of proceeds.”
 
(3) Recurring revenue percentage represents software-enabled services revenues and maintenance revenues as a percentage of total revenues. We do not believe that the recurring revenue percentage for the Successor period of 2005 is meaningful because such period is only five weeks in duration and not indicative of our overall trends.
 
(4) Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities.
 
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures.
 
Any breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA.
 
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.
 
Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including:
 
• Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions;
 
• Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;
 
• Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges;
 
• Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and
 
• Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business.


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The following is a reconciliation of net income to Consolidated EBITDA as defined in our senior credit facilities.
 
                                                                   
 
    Predecessor       Successor     Combined     Successor        
            Period
                                     
    Period
      from
                                     
    from
      November 23,
                                     
    January 1
      2005
    Year
    Year
    Year
    Year
    Year
       
    through
      through
    Ended
    Ended
    Ended
    Ended
    Ended
       
    November 22,
      December 31,
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
       
(In thousands)   2005       2005     2005     2006     2007     2008     2009        
 
Net income
  $ 712       $ 831     $ 1,543     $ 1,075     $ 6,575     $ 18,801     $ 19,018          
Interest expense, net
    1,061         4,890       5,951       47,039       44,524       41,130       36,863          
Income taxes
    2,658               2,658       (3,789 )     (458 )     7,146       9,804          
Depreciation and amortization
    9,575         2,301       11,876       27,128       35,047       35,038       36,028          
     
     
EBITDA
    14,006         8,022       22,028       71,453       85,668       102,115       101,713          
Purchase accounting adjustmentsa
            616       616       3,017       (296 )     (289 )     (93 )        
Merger costs
    36,912               36,912                                  
Capital-based taxes
                        1,841       1,721       1,212       795          
Unusual or non-recurring charges (income)b
    (737 )       (242 )     (979 )     1,485       (1,718 )     1,480       1,990          
Acquired EBITDA and cost savingsc
    14,808         85       14,893       1,147       135       2,379       8,053          
Stock-based compensation
                        3,871       10,979       7,323       5,607          
Otherd
            107       107       1,184       2,158       1,346       1,201          
     
     
Consolidated EBITDA
  $ 64,989       $ 8,588     $ 73,577     $ 83,998     $ 98,667     $ 115,566     $ 119,266          
 
 
 
               
(a) Purchase accounting adjustments include (1) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of the Transaction and (2) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction.
 
(b) Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, gains and losses on the sales of marketable securities, equity earnings and losses on investments, proceeds and payments associated with legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses.
 
(c) Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions.
 
(d) Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense.


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Consolidated EBITDA and consolidated leverage ratios
 
Our senior credit facilities require us to maintain both a maximum consolidated total leverage to Consolidated EBITDA ratio (currently no more than 5.50) and a minimum Consolidated EBITDA to consolidated net interest ratio (currently not less than 2.25) in each case calculated for the trailing four quarters.
 
The table below summarizes our Consolidated EBITDA, consolidated total leverage ratio and consolidated net interest coverage ratio for the periods presented.
 
                                                 
 
          Successor  
    Combined1                             Twelve Months
 
    Twelve Months
    Twelve Months
    Twelve Months
    Twelve Months
    Twelve Months
    Ended
 
    Ended
    Ended
    Ended
    Ended
    Ended
    December 31,
 
    December 31,
    December 31,
    December 31,
    December 31,
    December 31,
    2009
 
(In thousands, except ratio data)   2005     2006     2007     2008     2009     (As adjusted)6  
 
 
Consolidated EBITDA2
  $ 73,577     $ 83,998     $ 98,667     $ 115,566     $ 119,266     $ 119,266  
Consolidated total leverage to Consolidated EBITDA ratio (current maximum covenant level: 5.50)3
    6.43       5.48       4.30       3.28       3.17       2.48  
Consolidated EBITDA to consolidated net interest coverage ratio (current minimum covenant level: 2.25)4
    10.87 5     1.88       2.34       2.98       3.45       4.56  
 
 
 
(1) Our combined results for the year ended December 31, 2005 represent the addition of the Predecessor period from January 1, 2005 through November 22, 2005 and the Successor period from November 23, 2005 through December 31, 2005. This combination does not comply with GAAP or with the rules for pro forma presentation, but is presented because we believe it provides the most meaningful comparison of our results.
 
(2) We reconcile our Consolidated EBITDA for the trailing four quarters to net income for the same period using the same methods set forth above.
 
(3) Consolidated total leverage ratio is defined in our senior credit facilities at the last day of any period of four consecutive fiscal quarters, as the ratio of (a) the principal amount of all debt at such date, minus the amount, up to a maximum amount of $30.0 million of cash and cash equivalents to (b) Consolidated EBITDA. The current maximum consolidated total leverage ratio is 5.50. The maximum consolidated total leverage ratio for 2009 was 5.50, for 2008 was 6.00, for 2007 was 6.75 and for 2006 was 7.50. There was no maximum consolidated total leverage ratio covenant prior to June 30, 2006.
 
(4) Consolidated net interest coverage ratio is defined in our senior credit facilities as for any period, the ratio of (a) Consolidated EBITDA for such period to (b) total cash interest expense for such period with respect to all outstanding indebtedness minus total cash interest income for such period. The current minimum consolidated net interest coverage ratio is 2.25. The minimum consolidated net interest coverage ratio for 2009 was 2.00, for 2008 was 1.70, for 2007 was 1.50 and for 2006 was 1.40. There was no minimum consolidated net interest coverage ratio covenant prior to June 30, 2006.
 
(5) This ratio is not comparable because we did not incur debt under our existing senior credit facilities until November 2005 in connection with the Transaction.
 
(6) As adjusted to give effect to the sale by us of 8,225,000 shares of our common stock in this offering at an assumed initial public offering price of $14.00 per share (which represents the midpoint of the estimated price range shown on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the use of a majority of the net proceeds thereof to redeem $71.75 million in original principal amount of our outstanding 113/4% senior subordinated notes at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest. The as adjusted data also give effect to our receipt of the aggregate exercise price for the 551,726 shares of common stock to be acquired by certain of the selling stockholders upon exercise of options in connection with this offering and the 14,450 shares which were acquired by certain of the selling stockholders upon exercise of options in 2010.


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Management’s discussion and analysis of
financial condition and results of operations
 
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the “Selected historical financial data” section of this prospectus and our consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements based on our current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the “Risk factors” section and elsewhere in this prospectus.
 
Overview
 
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 4,500 clients, principally within the institutional asset management, alternative investment management and financial institutions vertical markets. In addition, our clients include commercial lenders, corporate treasury groups, insurance and pension funds, municipal finance groups and real estate property managers.
 
Since 2007, we have expanded our presence in current markets and entered new markets, increased our recurring revenues, enhanced our operating income, paid down debt and reduced our debt leverage, increased our revenues through offering our proprietary software as software-enabled services, and expanded our reach in the financial services market. Our acquisitions since 2007 have expanded our offerings for alternative investment managers, added to our portfolio management systems and provided us with new trading products for broker/dealers and financial exchanges.
 
Our revenues for 2009 were $270.9 million, compared to $280.0 million and $248.2 million in 2008 and 2007, respectively. Our revenues decreased in 2009 due in part to the impact of the recent economic downturn and of a strengthened U.S. dollar, offset in part by revenues attributable to acquired businesses. Our recurring revenues, which consist of our maintenance revenues and software-enabled services revenues, were $229.4 million in 2009, compared to $230.8 million and $203.2 million in 2008 and 2007, respectively. In 2009, recurring revenues represented 84.7% of total revenues, compared to 82.4% and 81.9% in 2008 and 2007, respectively. We believe our high level of recurring revenues provides us with the ability to better manage our costs and capital investments. Our revenues from sales outside the United States were $98.6 million in 2009, compared to $110.3 million and $101.1 million in 2008 and 2007, respectively.
 
As we have expanded our business, we have focused on increasing our contractually recurring revenues. Since 2007, we have seen increased demand in the financial services industry for our


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software-enabled services from existing and new customers. To support that demand, we have taken a number of steps, such as automating our software-enabled services delivery methods and providing our employees with sales incentives. We have also acquired businesses that offer software-enabled services or that have a large base of maintenance clients. We believe that increasing the portion of our total revenues that are contractually recurring gives us the ability to better plan and manage our business and helps us reduce the fluctuations in revenues and cash flows typically associated with software license revenues. Our software-enabled services revenues increased from $141.3 million in 2007 to $163.3 million in 2009. Our maintenance revenues increased from $61.9 million in 2007 to $66.1 million in 2009. Maintenance customer retention rates have continued to be in excess of 90% 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 invested in increased personnel, facilities expansion and information technology. These investments and automation improvements in our software-enabled services have resulted in improved gross margins. Gross margins have increased from 48.1% in 2007 to 49.2% in 2009. We expect our contractually recurring revenues to continue to increase as a percentage of our total revenues.
 
We continue to focus on improving operating margins. Our total expenses, including costs of revenues, were $203.8 million in 2009, compared to $214.9 million and $199.4 million in 2008 and 2007, respectively. Our expenses decreased in 2009 over 2008 mainly as a result of our workforce reduction in November 2008 in an effort to reduce costs in response to the then anticipated effects of the recent economic downturn. As a result of managing our expenses, our operating income margins were 24.8% of revenues in 2009 compared to 23.2% in 2008 and 19.6% in 2007. Consolidated EBITDA, a non-GAAP financial measure defined in our credit agreement and used to measure our debt compliance, was $119.3 million in 2009 compared to $115.6 million and $98.7 million, in 2008 and 2007, respectively. Please see “Selected historical financial data” for a reconciliation of net income to Consolidated EBITDA.
 
We generated $59.9 million in cash from operating activities in 2009, compared to $61.7 million and $57.1 million in 2008 and 2007, respectively. In 2009, we used our operating cash flow and existing cash to repay $19.7 million of debt, acquire four businesses for $51.5 million and invest $2.6 million in capital equipment in our business.
 
Acquisitions
 
To supplement our organic growth, we evaluate and execute acquisitions that provide complementary products or services, add proven technology and an established client base, expand our intellectual property portfolio or address a highly specialized problem or a market niche. Since the beginning of 2007, we have spent approximately $88.9 million in cash to acquire seven businesses in the financial services industry.


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The following table lists the businesses we have acquired since January 1, 2007:
 
         
Acquired business   Acquisition date   Acquired capabilities, products and services
 
GIPS
  February 2010   Expanded fund administration services to private equity market
Tradeware
  December 2009   Added electronic trading offering in broker/ dealer market
TheNextRound
  November 2009   Expanded private equity client base with TNR Solution product
MAXIMIS
  May 2009   Expanded institutional footprint and provided new cross-selling opportunities
Evare
  March 2009   Expanded institutional middle- and back-office outsourcing services with financial data acquisition, transformation and delivery services
Micro Design Services
  October 2008   Added real-time, mission-critical order routing and execution services with ACA, BlockTalk and MarketLook products
Northport
  March 2007   Expanded fund administration services to private equity market
 
 
 
Critical accounting estimates and assumptions
 
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, doubtful accounts receivable, 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 revenues, and, to a lesser degree, software license and professional services revenues.
 
Software-enabled services revenues, which are based on a monthly fee or transaction-based, are recognized as the services are performed. Software-enabled services are provided under arrangements that generally have terms of two to five years and contain monthly or quarterly fixed payments, with additional billing for increases in market value of a client’s assets, pricing and trading activity under certain contracts.
 
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 collectibility 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


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the month in which the activity occurs based upon our summarization of account information and trading volume.
 
We recognize revenues from the sale of software 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 objective evidence 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 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.
 
We also sell term licenses with maintenance. These arrangements range from one to seven years. Vendor-specific objective evidence does not exist for the maintenance element in the term licenses, and revenues are therefore recognized ratably over the contractual term of the arrangement.
 
We occasionally enter into software 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 software 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.
 
Allowance for doubtful accounts
 
The preparation of financial statements requires our management to make estimates relating to the collectibility of our accounts receivable. 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 our clients’ payment terms when evaluating the adequacy of the allowance for doubtful accounts. Such


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estimates require significant judgment on the part of our management. Therefore, changes in the assumptions underlying our estimates or changes in the financial condition of our clients could result in a different required allowance, 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). We test the recoverability of goodwill by comparing the fair value or our reporting unit to its book 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 comparable company market multiples decline from the levels at December 31, 2009, 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 of our reporting unit exceeded its carrying value by more than 25% at December 31, 2009.
 
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 and thus materially different results of operations.
 
Acquisition accounting
 
In connection with our acquisitions, we allocate the purchase price to the assets and liabilities we acquire, such as net tangible assets, completed technology, in-process research and development, client contracts, other identifiable intangible assets, deferred revenue and goodwill. We applied significant judgments and estimates in determining the fair market value of the assets acquired and their useful lives. For example, we have determined the fair value of existing client contracts based on the discounted estimated net future cash flows from such client contracts existing at the date of acquisition and the fair value of the completed technology based on the relief-from-royalties method on estimated future revenues of such completed technology. While actual results during the years ended December 31, 2009, 2008 and 2007 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.


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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 fair value of our common stock, 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. 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.
 
To date, we have granted stock options to our employees and directors under our 2006 equity incentive plan and 2008 stock incentive plan. Given the lack of a public market for our common stock, our board of directors must determine the fair value of our common stock on the measurement date, which requires making complex and subjective judgments. Our board has reviewed and considered a number of factors when determining the fair value of our common stock, including:
 
•  the value of our business as determined at arm’s length in connection with the Transaction;
 
•  significant business milestones that may have affected the value of our business subsequent to the Transaction;
 
•  the continued risks associated with our business;
 
•  the economic outlook in general and the condition and outlook of our industry;
 
•  our financial condition and expected operating results;
 
•  our level of outstanding indebtedness;
 
•  the market price of stocks of publicly traded corporations engaged in the same or similar lines of business;
 
•  as of July 31, 2006, March 31, 2007 and March 1, 2008, analyses using a weighted average of three generally accepted valuation procedures: the income approach, the market approach—publicly traded guideline company method and the market approach—transaction method; and
 
•  as of November 15, 2008, April 1, 2009 and November 30, 2009, analyses using a weighted average of two generally accepted valuation procedures: the income approach and the market approach-publicly traded guideline company method. The market approach—transaction method was not utilized due to the lack of comparable transactions in the evaluation period.


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The following table summarizes information about stock options granted since August 2006, the date of the first option grants since the Transaction:
 
                                                 
 
                Fair value
    Weighted-average grant date fair value of options by vesting type1:  
    Shares
          of
                Change
 
    under
    Exercise
    underlying
                in
 
Grant date   option     price     stock     Time     Performance     control  
 
 
August 2006
    9,909,555     $ 8.77     $ 8.77     $ 3.66     $ 3.88     $ 2.50  
November 2006
    89,250       8.77       8.77       3.62       3.84       2.50  
March 2007
    195,500       8.77       8.77       3.61       3.83       0.87  
May 2007
    148,750       11.64       11.64       4.81       5.10       1.07  
June 2007
    25,500       11.64       11.64       4.87       5.16       1.02  
January 2009
    255,041       10.08       10.08       2.86              
December 2009
    102,000       14.53       14.53       4.54              
January 2010
    4,250       14.53       14.53       4.49              
February 2010
    400,350       14.53       14.53       4.48              
March 2010
    1,615,085       14.53       14.53       4.51              
 
 
 
(1) The weighted-average fair value of options by vesting type represents the value at the grant date. These fair values do not reflect the re-valuation of certain options related to modifications effected in February 2009, March 2008 and April 2007, or the resolutions approved by our board and compensation committee in February 2010 relating to performance-based and superior options, as more fully described in notes 10, 16 and 17 to the consolidated financial statements included elsewhere in this prospectus.
 
Stock options granted
 
Between the closing date of the Transaction in November 2005 and early August 2006, we did not award any options or other equity awards to our employees or directors. In August 2006, our board of directors adopted, and our stockholders approved, our 2006 equity incentive plan. On August 9, 2006, our board of directors granted options to purchase an aggregate of 9,909,555 shares of common stock at an exercise price of $8.77 per share. Our board of directors determined that $8.77, which was the value of our common stock at the time of the Transaction and which was arrived at in an arm’s-length negotiation between representatives of the independent committee of SS&C’s board of directors and representatives of investment funds affiliated with The Carlyle Group, continued to represent the fair value of our common stock in August 2006. The board of directors believed that the business had not fundamentally changed since November 2005 and that the likelihood of a liquidity event, including a potential sale of the company or a public offering of stock, was remote. Subsequently, we filed a registration statement for a proposed public offering on June 13, 2007, which we withdrew on October 29, 2008 due to market conditions.
 
In October 2007, in connection with our prior proposed public offering and in anticipation of receiving a recommended initial public offering price range from our managing underwriters, our board of directors undertook a reassessment of the fair value of our common stock as of July 31, 2006 (the “October 2007 reassessment”). Our board of directors reassessed the fair value of our common stock using three generally accepted valuation procedures: the income approach, the market approach—publicly traded guideline company method and the market approach—transaction method. The income approach is a method used to value business interests that involves estimating the future cash flows of the business, discounted to their present value. The market approach—publicly traded guideline company method estimates fair value using revenue and EBITDA multiples derived from the stock price of publicly traded companies engaged in a similar line of business. The market approach—transaction method


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estimates fair value using transactions involving the actual sale or purchase of similar companies, and we reviewed eight transactions as part of this analysis. We then compared the results of the various valuation methods and other factors to calculate the enterprise value attributable to common stockholders and the fair value of each share, which we determined to be between $7.42 and $9.06 per share. As the board’s prior valuation of $8.77 not only fell within the range of estimated values in the reassessment but also reflected the arm’s-length price negotiated at the time of the Transaction, the board determined that $8.77 continued to represent the fair value per share of our common stock as of August 9, 2006.
 
In November 2006 and March 2007, we granted options to purchase an aggregate of 284,750 shares of common stock at an exercise price of $8.77 per share. In November 2006, we also sold an aggregate of 75,650 shares of common stock to our employees under the 2006 equity incentive plan for a purchase price of $8.77 per share. The board believed that $8.77 continued to represent the fair value of the common stock at this time because the business had not changed fundamentally and a liquidity event continued to be remote. The board did not conduct contemporaneous or retrospective valuations of the common stock in connection with the November and March grants because of the immaterial size of the awards and the cost of such valuations.
 
Between May 10, 2007 and June 19, 2007, we granted options to purchase an aggregate of 174,250 shares of common stock at an exercise price of $11.64 per share, which our board of directors determined was equal to the fair value of our common stock. In setting the fair value of our common stock at $11.64, our board used the same three generally accepted valuation procedures that were used in its October 2007 reassessment: the income approach, the market approach—publicly traded guideline company method and the market approach—transaction method. We conducted the assessment as of March 31, 2007 and then correlated the results of the various valuation methods and other factors to calculate the enterprise value attributable to common stockholders and the fair value of each share. Our board believed that the fair value of our common stock had increased to $11.64 per share as of March 31, 2007 because of improvements in the performance of our business and the near-term outlook of our business, as well as management’s expectations regarding the imminence of our prior proposed public offering. The fair value of our common stock had increased since the July 2006 determinations under all three methodologies for the following reasons:
 
Income Approach. Our board factored in timing differences in the receipt of future cash flows, as well as the reduction in net debt. In addition, while the expected timing of a liquidity event was still believed to be remote as of July 31, 2006, a public offering was imminent as of March 31, 2007 and thus our board did not apply a liquidity discount as of March 31, 2007.
 
Publicly Traded Guideline Company Method. Our board determined that revenue and EBITDA multiples for guideline companies generally increased or remained flat between July 31, 2006 and March 31, 2007. Moreover, we experienced improvements in the performance of our business between July 31, 2006 and March 31, 2007, which resulted in higher trailing twelve-month and projected revenues and EBITDA. Under this methodology, our board also factored in the reduction in net debt and the imminence of a public offering.
 
Transaction Method. Our board believed our valuation was higher due to our improved revenue and EBITDA metrics (against flat multiples of comparable transactions), our reduction in net debt and the imminence of a public offering.
 
On January 6, 2009, we granted options to purchase an aggregate of 255,041 shares of common stock at an exercise price of $10.08 per share, which our board of directors determined was equal to the fair value of our common stock. In setting the fair value of our common stock at $10.08, our


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board used two generally accepted valuation procedures: the income approach and the market approach—publicly traded guideline company method. The market approach—transaction method was not utilized due to the lack of comparable transactions in the evaluation period. We conducted the assessment as of November 15, 2008 and then correlated the results of the various valuation methods and other factors to calculate the enterprise value attributable to common stockholders and the fair value of each share. The board did not conduct contemporaneous or retrospective valuations of the common stock in connection with the January 2009 grants because of the availability of the November 15, 2008 valuation, the immaterial size of the awards and the cost of such valuation.
 
On December 31, 2009, we authorized the grant of options to purchase an aggregate of 102,000 shares of common stock to former employees of TheNextRound whom we hired in connection with our acquisition of such business, and on January 27, 2010, we authorized the grants of options to purchase 4,250 shares of common stock to one of our employees in accordance with the terms of his offer letter. These options had an exercise price of $14.53 per share, which our board of directors determined was equal to the estimated fair value of our common stock. In addition, on February 4, 2010, we authorized the grant of options to purchase an aggregate of 2,125,000 shares of common stock at an exercise price of $14.53 per share, which our board of directors determined was equal to the fair value of our common stock, of which options for the purchase of 318,750 shares were granted to our named executive officers and the balance to employees designated by our chief executive officer. On March 23, 2010, options for the purchase of 1,615,085 shares were awarded to certain of our non-executive officer employees designated by our chief executive officer pursuant to his previously delegated authority.
 
On February 11, 2010, we authorized the grant of options to purchase an aggregate of 81,600 shares of common stock to former employees of GIPS whom we hired in connection with our acquisition of such business (see note 16 to our consolidated financial statements included elsewhere in this prospectus). The options had an exercise price of $14.53 per share, which our board of directors determined was equal to the estimated fair value of our common stock. In estimating the fair value of our common stock, our board used two generally accepted valuation procedures: the income approach and the market approach—publicly traded guideline company method. The market approach—transaction method was not utilized due to the lack of comparable transactions in the evaluation period. We conducted the assessment as of November 30, 2009 and then correlated the results of the various valuation methods and other factors to calculate the enterprise value attributable to common stockholders and the fair value of each share. The board did not conduct contemporaneous or retrospective valuations of the common stock in connection with the December 2009, February 2010 or March 2010 grants because of the availability of the November 2009 valuation. In addition, the board of directors believed that the business had not fundamentally changed since November 2009 and that the $14.53 price continued to represent the estimated fair value of our common stock in December 2009 and February 2010. In accordance with the authority delegated to him on February 4, 2010, our chief executive officer granted the March 2010 options at an exercise price of $14.53 per share, which he concluded continued to represent the fair value of our common stock based on the fact that $14.53 is within the estimated price range set forth on the cover page of this prospectus, and represents approximately 97% of the high-point of such estimated range. Our board believed that the fair value of our common stock had increased to $14.53 per share as of November 30, 2009 from the January 2009 and April 2009 valuations because of improvements in the performance of our business, the near-term outlook of our business and overall strengthening of the equity markets during this period as reflected by the impact on multiples of comparable companies, as well as management’s expectations regarding an initial public offering in the first half of 2010.


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Stock option modifications
 
In April 2007, our board of directors approved (i) the vesting, as of April 18, 2007, of 50% of the performance-based options granted to our employees through March 31, 2007 that would have vested if the we had met our EBITDA target for fiscal year 2006 (collectively, the “2006 Performance Options”); (ii) the vesting, conditioned upon us meeting our EBITDA target for fiscal year 2007, of the other 50% of the 2006 Performance Options; and (iii) the reduction of our EBITDA target for fiscal year 2007. We re-measured those awards using the Black-Scholes option-pricing model and assumptions reflecting current facts and circumstances as of the modification date. As of the modification date, we estimated the fair value of the modified performance-based options to be $5.35. We estimated the fair value of our common stock as of the modification to be $11.64. Our board used the three generally accepted valuation procedures used in its March 2008 reassessment: the income approach, the market approach—publicly traded guideline company method and the market approach—transaction method. We used the following assumptions to estimate the value of the modified performance-based options: expected term to exercise of 3.5 years; expected volatility of 41.0%; risk-free interest rate of 4.57%; and no dividend yield. Expected volatility is based on a combination of our historical volatility adjusted for the Transaction and historical volatility of our peer group. Expected term to exercise is based on our historical stock option exercise experience, adjusted for the Transaction. For purposes of our discussion of stock-based compensation, references to EBITDA targets and EBITDA target ranges refer to our Consolidated EBITDA, as further adjusted to exclude acquired EBITDA and cost savings.
 
In March 2008, our board of directors approved (1) the vesting, conditioned upon our EBITDA for 2008 falling within the targeted range, of the 2006 and 2007 performance-based options that did not otherwise vest during 2007, and (2) the reduction of our annual EBITDA target range for 2008. We re-measured affected performance-based options using the Black-Scholes option pricing model and assumptions reflecting current facts and circumstances as of the modification date. We estimated the weighted-average fair value of performance-based options that vest upon the attainment of the 2008 EBITDA target range to be $4.83. We estimated the fair value of our common stock as of the modification to be $12.95. Our board used the three generally accepted valuation procedures used in its March 2008 reassessment: the income approach, the market approach—publicly traded guideline company method and the market approach—transaction method. We used the following weighted-average assumptions to estimate the option value: expected term to exercise of 2.5 years; expected volatility of 26.0%; risk-free interest rate of 1.735%; and no dividend yield. Expected volatility is based on the historical volatility of our peer group. Expected term to exercise is based on our historical stock option exercise experience, adjusted for the Transaction.
 
In February 2009, our board of directors (1) approved the immediate vesting of the 2006, 2007 and 2008 performance-based options that did not otherwise vest during 2006, 2007 or 2008 and (2) established our annual EBITDA target range for 2009. As of that date, we estimated the weighted-average fair value of the performance-based options that were vested by the board and those that vest upon the attainment of the 2009 EBITDA target range to be $3.65. We estimated the fair value of our common stock as of the modification to be $10.91 (the April 1, 2009 analysis). Our board believed that the fair value of our common stock had decreased from $11.64 per share as of June 2007 to $10.91 as of April 1, 2009 because of the then current economic crisis, as reflected by the impact on multiples of comparable companies, and accompanying downturn in general market conditions, mitigated to a degree by the fact that our revenues and cash flows were not as proportionately affected as revenues and cash flows of others in our industry. Our board believed that the fair value of our common stock had


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increased from $10.08 per share as of January 6, 2009 to $10.91 per share as of April 1, 2009 because of an increase in the multiples of comparable companies and our acquisition of Evare. Our board used two generally accepted valuation procedures: the income approach and the market approach-publicly traded guideline company method. The market approach-transaction method was not utilized due to the lack of comparable transactions in the evaluation period. We used the following weighted-average assumptions to estimate the option value: expected term to exercise of 2.5 years; expected volatility of 38.0%; risk-free interest rate of 1.2%; and no dividend yield. Expected volatility is based on the historical volatility of our peer group. Expected term to exercise is based on our historical stock option exercise experience, adjusted for the Transaction.
 
If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period. In addition, there is a risk that our estimates of the fair values of our share-based compensation awards on the grant dates may bear little resemblance to the actual values realized upon the exercise, expiration, early termination or forfeiture of those share-based payments in the future. Certain share-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements.
 
We believe that we have used reasonable methodologies, approaches and assumptions consistent with the AICPA’s Practice Aid Valuation of Privately-Held-Company Equity Securities Issued as Compensation to determine the fair value of our common stock on the date of grant or the date of the modification of a grant.
 
The values of outstanding vested and unvested options as of December 31, 2009 based on the difference between an assumed initial public offering price of $14.00 per share and the exercise price of the options outstanding are as follows:
 
         
    Options   Intrinsic value
 
Unvested
  2,682,077   $13,009,543
Vested
  10,055,482   $79,417,635
 
 
 
On February 4, 2010, our compensation committee approved, effective upon the closing of this offering:
 
•  the conversion of the outstanding superior options granted under the 2006 equity incentive plan into performance-based options that vest based on our EBITDA performance in 2010 and 2011, which affects 1,680,868 outstanding options, of which 701,497 are held by our named executive officers; 
 
•  the elimination of pre-determined EBITDA targets from the option agreements and provision for the annual proposal of EBITDA ranges by management, subject to approval by our board, which EBITDA target range for 2010 was established by our board in a subsequent meeting described below; and
 
•  the “rolling over” of performance-based options that do not vest (in whole or in part) in any given year into performance-based options for the following year, except as otherwise provided by our board of directors. Under the 2006 equity incentive plan, our board has the authority to amend the options to effect such a “rollover” and, generally, has the authority to amend, suspend or terminate any option, provided that, except with respect to specified


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corporate events, neither the amendment, suspension nor termination of the option shall, without the consent of the optionee, alter or impair any rights or obligations under the option. The rollover affects 689,007 outstanding unvested performance-based options, of which 280,600 are held by our named executive officers, and would affect 1,680,868 outstanding superior options, of which 701,497 are held by our named executive officers, that will be converted to performance-based options upon the closing of this offering.
 
In addition, on February 24, 2010, our board established our annual EBITDA target range for 2010 and eliminated the previously established EBITDA target for 2011. The establishment of the 2010 EBITDA target range affected 1,512,781 options, of which 631,349 are held by our named executive officers, including 840,434 superior options, of which 350,749 are held by our named executive officers, that will be converted to 2010 performance-based options upon the closing of this offering.
 
As of February 24, 2010, we estimated the weighted-average fair value of the performance-based options that vest upon the attainment of the 2010 EBITDA target range, including the 840,434 superior options that will be converted to 2010 performance-based options, to be $6.90. In estimating the common stock value, we used our most recent equity valuation which utilized the income approach and the guideline company method. We used the following weighted-average assumptions to estimate the option value: expected term to exercise of 2.5 years; expected volatility of 43%; risk-free interest rate of 1.2%; and no dividend yield. Expected volatility is based on the historical volatility of our peer group. Expected term to exercise is based on our historical stock option exercise experience, adjusted for the Transaction. The total unearned non-cash stock-based compensation cost related to the performance-based awards that vest based upon achieving the 2010 EBITDA target, excluding the potential conversion of superior options to performance-based options, that we could recognize during 2010 is estimated to be approximately $4.6 million. We estimate we could recognize approximately an additional $5.8 million of non-cash stock-based compensation cost related to the conversion of superior options to 2010 performance-based options during 2010.
 
Upon the closing of this offering, we will evaluate the likelihood that we will achieve our 2010 EBITDA target. The additional stock-based compensation expense that will be recorded upon the closing of this offering as a result of the changes to the superior options will be determined based on (1) the likelihood of achieving our 2010 EBITDA target and (2) the period of time that has elapsed between the February modification and the closing of the offering.
 
The superior options that convert to performance-based options that vest based upon our EBITDA for 2011 will be re-measured when our board determines the EBITDA target range for that year.
 
On February 16, 2010, we entered into an amended and restated stock option agreement with Mr. Stone governing an option that SS&C originally granted to Mr. Stone on February 17, 2000 under its 1998 stock incentive plan. Pursuant to the amended and restated stock option agreement, the option (which was previously an option to purchase 637,500 shares of our common stock at an exercise price of $0.87 per share) was amended to make it an option to purchase 637,500 shares of our Class A non-voting common stock at an exercise price of $0.87 per share. The option was fully vested at the date of the amendment, and such amendment did not result in any incremental stock-based compensation expense. Mr. Stone exercised the option on February 17, 2010 and purchased 637,500 shares of our Class A non-voting common stock.


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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 statement of operations. 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, 2009, we had $7.0 million of liabilities for unrecognized tax benefits. All of the unrecognized tax benefits, if recognized, would decrease our effective tax rate and increase our net income. We recognize accrued interest and penalties relating to unrecognized tax benefits as a component of the income tax provision.
 
Results of operations
 
The following table sets forth revenues (dollars in thousands) and changes in revenues for the periods indicated:
 
                                         
 
          Percent change
 
    Year ended December 31,     from prior period  
    2009     2008     2007     2009     2008  
 
 
Revenues:
                                       
Software licenses
  $ 20,661     $ 24,844     $ 27,514       (16.8 )%     (9.7 )%
Maintenance
    66,099       65,178       61,910       1.4       5.3  
Professional services
    20,889       24,352       17,491       (14.2 )     39.2  
Software-enabled services
    163,266       165,632       141,253       (1.4 )     17.3  
                     
                     
Total revenues
  $ 270,915     $ 280,006     $ 248,168       (3.2 )     12.8  
                 
                 
 
The following table sets forth the percentage of our total revenues represented by each of the following sources of revenues for the periods indicated:
 
                         
 
    Year ended December 31,  
    2009     2008     2007  
 
 
Revenues:
                       
Software licenses
    7.6 %     8.9 %     11.1 %
Maintenance
    24.4       23.3       25.0  
Professional services
    7.7       8.7       7.0  
Software-enabled services
    60.3       59.1       56.9  
     
     
Total revenues
    100.0 %     100.0 %     100.0 %
 
 


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Comparison of years ended December 31, 2009, 2008 and 2007
 
Revenues
 
Our revenues consist primarily of software-enabled services and maintenance revenues, and, to a lesser degree, software license and professional services revenues. As a general matter, our software license and professional services revenues tend to fluctuate based on the number of new licensing clients, while fluctuations in our software-enabled services revenues are attributable to the number of new software-enabled services clients as well as the number of outsourced transactions provided to our existing clients and total assets under management in our clients’ portfolios. Maintenance revenues vary based on the rate by which we add or lose maintenance clients over time and, to a lesser extent, on the annual increases in maintenance fees, which are generally tied to the consumer price index.
 
Revenues were $270.9 million, $280.0 million and $248.2 million in 2009, 2008 and 2007, respectively. The revenue decrease in 2009 of $9.1 million, or 3.2%, was primarily due to a decrease in revenues for businesses and products that we have owned for at least 12 months, or organic revenues, of $18.3 million, or 7%, partially offset by revenues from products and services that we acquired through our acquisitions of Micro Design Services, or MDS, in October 2008, Evare in March 2009, MAXIMIS in May 2009 and TheNextRound, or TNR, in November 2009, which added $15.6 million in revenues in the aggregate. The revenue decrease in 2009 was due in part to the impact of the recent economic downturn and the unfavorable impact from foreign currency translation of approximately $6.4 million resulting from the strength of the U.S. dollar relative to the Canadian dollar, British pound, Australian dollar and the euro. Revenue growth in 2008 of $31.8 million, or 13%, was driven by organic revenues, which increased $28.7 million, or 12%. The remaining $3.1 million increase was due to sales of products and services that we acquired in our acquisitions of Northport, which we acquired in March 2007, and MDS. The impact from foreign currency translation in 2008 was not significant.
 
Software licenses
 
Software license revenues were $20.7 million, $24.8 million and $27.5 million in 2009, 2008 and 2007, respectively. The decrease in software license revenues from 2008 to 2009 of $4.1 million was due to a decrease of $5.1 million in organic software license revenues and a decrease of $0.4 million related to foreign currency translation, partially offset by revenues of $1.4 million from acquisitions. During 2009, we had fewer perpetual license transactions than in 2008, but at a similar average size. The decrease in software license revenues from 2007 to 2008 of $2.7 million was due to a decrease of $3.3 million in organic license sales, partially offset by acquisitions, which added $0.6 million. During 2008, we had fewer perpetual license transactions than in 2007, but at a similar average size, offset by an increase in revenues from term licenses. Software license revenues will vary depending on the timing, size and nature of our license transactions. For example, the average size of our software license transactions and the number of large transactions may fluctuate on a period-to-period basis. Additionally, software license revenues will vary among the various products that we offer, due to differences such as the timing of new releases and variances in economic conditions affecting opportunities in the vertical markets served by such products.
 
Maintenance
 
Maintenance revenues were $66.1 million, $65.2 million and $61.9 million in 2009, 2008 and 2007, respectively. The increase in maintenance revenues of $0.9 million, or 1%, in 2009 was


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primarily due to revenue from acquisitions, which added $5.0 million, partially offset by a decrease of $2.7 million in organic maintenance revenues and a decrease of $1.4 million related to foreign currency translation The decrease in organic maintenance revenues was primarily due to a decrease in fees for one significant customer. The increase in maintenance revenues of $3.3 million, or 5%, in 2008 was due in part to organic revenue growth of $2.8 million and acquisitions, which added $0.5 million. We typically provide maintenance services under one-year renewable contracts that provide for an annual increase in fees, generally tied to the percentage changes in the consumer price index. Future maintenance revenue growth is dependent on our ability to retain existing clients, add new license clients and increase average maintenance fees.
 
Professional services
 
Professional services revenues were $20.9 million, $24.4 million and $17.5 million in 2009, 2008 and 2007, respectively. The decrease in professional services revenues of $3.5 million, or 14%, in 2009 was primarily due to a decrease of $4.9 million in organic revenues and a decrease of $0.7 million related to foreign currency translation, partially offset by revenues of $2.1 million from acquisitions. The increase in professional services revenues of $6.9 million, or 39%, in 2008 was primarily due to organic growth of $6.0 million and acquisitions, which contributed $0.9 million to the increase. The decrease in organic revenues in 2009 and the growth in organic revenues in 2008 was primarily due to one significant professional services project that commenced during the first quarter of 2008 and was completed during 2008. Our overall software license revenue levels and market demand for professional services will continue to have an effect on our professional services revenues.
 
Software-enabled services
 
Software-enabled services revenues were $163.3 million, $165.6 million and $141.3 million in 2009, 2008 and 2007, respectively. The decrease in software-enabled services revenues in 2009 of $2.3 million, or 1%, was primarily due to a decrease of $5.5 million in organic revenues and a decrease of $3.9 million related to foreign currency translation, partially offset by revenues of $7.1 million from acquisitions. Contributing to the decline in organic revenues was a decrease in fees for one significant client and decreases in the variable portion of our fees, which are tied to our clients’ assets under management. The increase in software-enabled services revenues in 2008 of $24.3 million, or 17%, was primarily due to organic growth of $23.2 million and acquisitions, which added $1.1 million. Future software-enabled services revenue growth is dependent on our ability to add new software-enabled services clients, retain existing clients and increase average software-enabled services fees.
 
Cost of revenues
 
The total cost of revenues was $137.7 million, $142.4 million and $128.9 million in 2009, 2008 and 2007, respectively. The gross margin increased from 48% in 2007 to 49% in 2008 and 2009. The decrease in total cost of revenues in 2009 of $4.7 million was primarily due to cost reductions of approximately $9.1 million as a result of our workforce reduction in November 2008 and a decrease in costs of $3.6 million related to foreign currency translation. Stock-based compensation decreased by $0.5 million, as the time-based options granted in August 2006 became fully vested during the year and a lower valuation was ascribed to the 2009 performance-based options as compared to the 2008 performance-based options. These cost


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reductions were partially offset by our acquisitions of MDS, Evare, MAXIMIS and TNR, which added costs of $8.5 million in the aggregate. The increase of $13.5 million in total cost of revenues in 2008 was mainly due to personnel increases early in the year to support revenue growth, particularly professional services and software-enabled services, and acquisitions. Cost increases to support our organic revenue growth were $12.5 million and acquisitions added $1.5 million in costs, primarily in software-enabled services revenues. In November 2008, we reduced our workforce by approximately 9% in response to the anticipated effects of the current economic downturn. Severance expenses related to this action added $0.6 million in expenses to total cost of revenues in 2008. These increases were offset by a decrease of $1.1 million in stock-based compensation expense, as 2007 stock-based compensation expense included charges related to the vesting of 2006 performance options.
 
Cost of software license revenues
 
Cost of software license revenues consists primarily of amortization expense of completed technology, royalties, third-party software, and the costs of product media, packaging and documentation. The cost of software license revenues was $8.5 million, $9.2 million and $9.6 million in 2009, 2008 and 2007, respectively. The decrease in cost of software licenses in both 2009 and 2008 was primarily due to a reduction in amortization expense under the percent of cash flows method, as a lower percentage of current license revenues was deemed associated with technology that existed at the date of the Transaction, partially offset by amortization expense related to acquisitions occurring in each of those years. Additionally, 2009 costs include a decrease of $0.1 million related to foreign currency translation.
 
Cost of maintenance revenues
 
Cost of maintenance revenues consists primarily of technical client support, costs associated with the distribution of products and regulatory updates and amortization of intangible assets. The cost of maintenance revenues was $27.6 million, $26.9 million and $26.0 million in 2009, 2008 and 2007, respectively. The increase in cost of maintenance revenues of $0.7 million in 2009 was primarily due to our acquisitions, which added $1.9 million in costs, partially offset by a decrease in costs of $0.6 million and a decrease of $0.6 million related to foreign currency translation. The increase in cost of maintenance revenues in 2008 was primarily due to additional costs of $0.7 million and additional amortization expense of $0.3 million as a result of increasing cash flows, partially offset by a decrease of $0.1 million in stock-based compensation expense.
 
Cost of professional services revenues
 
Cost of professional services 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, custom programming and actuarial consulting services. The cost of professional services revenue was $14.2 million, $16.1 million and $14.3 million in 2009, 2008 and 2007, respectively. The decrease in cost of professional services revenues of $1.9 million in 2009 was primarily due to cost reductions of $3.6 million and a decrease of $0.5 million related to foreign currency translation, partially offset by acquisitions, which added $2.2 million in costs. The increase in cost of professional services revenues in 2008 was primarily due to an increase of $0.4 million in costs, partially offset by a decrease of $0.1 million in stock-based compensation expense. Acquisitions added $0.8 million in costs.


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Cost of software-enabled services revenues
 
Cost of software-enabled services revenues consists primarily of the cost related to personnel utilized in servicing our software-enabled services clients and amortization of intangible assets. The cost of software-enabled services revenues was $87.5 million, $90.3 million and $79.0 million in 2009, 2008 and 2007, respectively. The decrease in cost of software-enabled services revenues of $2.8 million in 2009 was primarily due to cost reductions of $3.7 million, a decrease of $2.3 million related to foreign currency translation and a decrease of $0.5 million in stock-based compensation expense, partially offset by our acquisitions, which added $3.7 million in costs. The increase in cost of software-enabled services revenues in 2008 was primarily due to an increase of $10.8 million in costs, primarily related to personnel and communications, to support the growth in organic revenues and our acquisition of Northport, which added $0.7 million, representing a full year of costs. Additionally, severance expenses related to our workforce reduction in November 2008 contributed $0.4 million and amortization expense increased $0.3 million. These increases were partially offset by a decrease of $0.9 million in stock-based compensation expense.
 
Operating expenses
 
Our total operating expenses were $66.1 million, $72.5 million and $70.6 million in 2009, 2008 and 2007, respectively, representing 24%, 26% and 28%, respectively, of total revenues in those years. The decrease in operating expenses of $6.4 million in 2009 was primarily due to cost reductions of approximately $7.6 million, which were partially the result of non-recurring prior year expenses of $1.6 million related to our prior proposed initial public offering, which was withdrawn due to market conditions, and severance expenses of $1.0 million related to our workforce reduction in November 2008. Additionally, our acquisitions added costs of $3.8 million, partially offset by a decrease of $1.2 million in stock-based compensation expense and a decrease of $1.4 million related to foreign currency translation. The increase in operating expenses in 2008 was primarily due to our expensing $1.6 million in costs related our prior proposed initial public offering and severance expenses of $1.0 million. Additionally, operating costs increased $2.3 million, primarily related to personnel, and amortization expense increased $0.2 million. These increases were offset in part by a decrease of $2.6 million in stock-based compensation expense, as 2007 stock-based compensation expense included charges related to the vesting of 2006 performance options, a decrease of $0.5 million in capital-based taxes and a decrease of $0.5 million in expenses paid to The Carlyle Group. Acquisitions added $0.4 million in costs.
 
Selling and marketing
 
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. Selling and marketing expenses were $20.4 million, $19.6 million and $19.7 million in 2009, 2008 and 2007, respectively, representing 8%, 7% and 8%, respectively, of total revenues in those years. The increase in selling and marketing expenses of $0.8 million in 2009 was primarily attributable to our acquisitions, which added $1.1 million in costs, partially offset by a decrease in stock-based compensation expense of $0.2 million and a reduction in costs of $0.1 million. Additionally, a decrease of $0.5 million related to foreign currency translation was partially offset by an increase in costs of $0.4 million. The decrease in selling and marketing expenses in 2008 was


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primarily attributable to a decrease in stock-based compensation expense of $0.6 million, partially offset by acquisitions, which added $0.2 million in costs, and an increase of $0.3 million in amortization expense.
 
Research and development
 
Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products. Research and development expenses were $26.5 million, $26.8 million and $26.3 million in 2009, 2008 and 2007, respectively, representing 10%, 10% and 11%, respectively, of total revenues in those years. The decrease in research and development expenses of $0.3 million in 2009 was primarily due to a reduction in costs of $1.8 million, a decrease of $0.5 million related to foreign currency translation and a decrease in stock-based compensation expense of $0.2 million, partially offset by our acquisitions, which added $2.2 million in costs. The increase in research and development expenses in 2008 was primarily due to an increase of $0.6 million in costs to support organic revenue growth, and severance expenses of $0.3 million, partially offset by a decrease of $0.4 million in stock-based compensation expense.
 
General and administrative
 
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. General and administrative expenses were $19.2 million, $26.1 million and $24.6 million in 2009, 2008 and 2007, respectively, representing 7%, 9% and 10%, respectively, of total revenues in those years. The decrease in general and administrative expenses of $6.9 million in 2009 was primarily due to cost reductions of $6.2 million, which were partially the result of non-recurring prior year expenses of $1.6 million related our prior proposed initial public offering, which was withdrawn due to market conditions, and severance expenses of $0.7 million related to our workforce reduction in November 2008. A decrease of $0.7 million in stock-based compensation expense and a decrease of $0.4 million related to foreign currency translation were partially offset by our acquisitions, which added $0.4 million in costs. The increase in general and administrative expenses in 2008 was primarily due to an increase in costs of $1.7 million, our expensing $1.6 million in costs related to our prior proposed initial public offering and prior year severance expenses of $0.7 million. These increases were offset in part by a decrease of $1.6 million in stock-based compensation expense, a decrease of $0.5 million in capital-based taxes and a decrease of $0.5 million in expenses paid to Carlyle. Acquisitions added $0.2 million in costs.
 
Interest income, interest expense and other income (expense), net
 
We had interest expense of $36.9 million and interest income of less than $0.1 million in 2009 compared to interest expense of $41.5 million and interest income of $0.4 million in 2008. In 2007, we had interest expense of $45.5 million and interest income of $0.9 million. The decrease in interest expense in 2009 reflects the lower average debt balance and lower average interest rates on the unhedged floating portion of our debt as compared to 2008. The decrease in interest income in 2009 is also related to the lower average interest rates as compared to 2008. The decrease in interest expense in 2008 reflects the lower average debt balance and lower average interest rates on the floating portion of our debt as compared to 2007. The decrease in


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interest income in 2008 is also related to the lower average interest rates as compared to 2007. Other expense, net in 2009 consists primarily of foreign currency transaction losses of $1.5 million. Other income, net in 2008 consists primarily of foreign currency transaction gains of $4.0 million, partially offset by a $2.0 million loss we recorded relating to our investment in a private company which we account for under the equity method of accounting. Other income, net in 2007 consists primarily of foreign currency transaction gains of $0.6 million, property tax refunds of $0.9 million and $0.4 million related to the favorable settlement of a liability accrued at the time of our acquisition of Financial Models in 2005.
 
Provision for income taxes
 
For the year ended December 31, 2009, we recorded a provision for income taxes of $9.8 million. The difference between the provision we recorded and the statutory rate was primarily due to foreign tax benefits of approximately $2.3 million, partially offset by state income taxes of $1.8 million. For the year ended December 31, 2008, we recorded a provision for income taxes of $7.1 million. The difference between the provision we recorded and the statutory rate was primarily due to foreign tax benefits of approximately $2.3 million and a benefit of $0.6 million due to changes in Canadian withholding rates enacted in December 2008. These benefits were partially offset by state income taxes of $1.0 million. For the year ended December 31, 2007, we recorded a benefit of $0.5 million. The difference between the benefit we recorded and the statutory rate was partially due to changes in Canadian statutory tax rates enacted in June 2007 and December 2007, for which we recorded a benefit of approximately $1.5 million, and other foreign tax benefits of approximately $1.9 million. We had $66.4 million of deferred tax liabilities and $16.7 million of deferred tax assets at December 31, 2009. In future years, we expect to have sufficient levels of taxable income to realize the net deferred tax assets at December 31, 2009.
 
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, the net proceeds of this offering, cash flows from operations and availability under the revolving credit portion of our senior credit facilities to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending for at least the next twelve months.
 
Our cash and cash equivalents at December 31, 2009 were $19.1 million, a decrease of $10.2 million from $29.3 million at December 31, 2008. Cash provided by operations was offset by net repayments of debt and cash used for acquisitions and capital expenditures.
 
Net cash provided by operating activities was $59.9 million in 2009. Net cash provided by operating activities during 2009 was primarily the result of our net income of $19.0 million, plus non-cash expenses of $35.3 million, including depreciation and amortization, stock compensation expense, amortization of loan origination costs and a decrease in deferred income taxes and changes in our working capital accounts totaling $5.6 million. Excluding the effects of our acquisitions of TNR and Tradeware, our working capital accounts generated cash primarily due to improvements in the timing of collections and in days’ sales outstanding, which decreased our outstanding accounts receivable, and an increase in deferred revenues, primarily


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due to an increase in maintenance revenues and a significant term license fee received in 2009, partially offset by tax payments made during 2009. Our acquisitions of TNR and Tradeware added $4.6 million to our accounts receivable balance, which amount has been excluded from the foregoing discussion.
 
Investing activities used net cash of $54.1 million in 2009. Cash used by investing activities was primarily due to $51.5 million cash paid for acquisitions and $2.6 million in capital expenditures.
 
Net cash used in financing activities was $17.9 million in 2009, primarily related to net repayments of debt.
 
Contractual obligations
 
The following table summarizes our contractual obligations as of December 31, 2009 that require us to make future cash payments (in thousands):
 
                                                 
 
          Less than
                More than
       
Contractual obligations   Total     1 Year     1-3 Years     3-5 Years     5 Years     All other  
 
 
Short-term and long-term debt
  $ 397,259     $ 4,270       $187,989     $ 205,000     $     $  
Interest payments1
    113,935       33,200       56,648       24,087              
Operating lease obligations2
    33,959       9,486       13,490       7,132       3,851        
Purchase obligations3
    8,322       5,556       1,879       770       117        
Uncertain tax positions and related interest4
    8,238                               8,238  
     
     
Total contractual obligations
  $ 561,713     $ 52,512       $260,006     $ 236,989     $ 3,968     $ 8,238  
 
 
 
(1) Reflects interest payments on our term loan facility and associated interest rate swap agreement at an assumed interest rate of three-month LIBOR of 0.26% plus 2.0% for U.S. dollar loans and CDOR of 0.38% plus 2.5% for Canadian dollar loans, and required interest payments on our senior subordinated notes of 11.75%.
 
(2) We are obligated under noncancelable operating leases for office space and office equipment. The lease for the corporate facility in Windsor, Connecticut expires in 2016. We sublease office space under noncancelable leases. We received rental income under these leases of $1.3 million, $1.4 million and $1.5 million for the years ended December 31, 2009, 2008 and 2007, respectively. The effect of the rental income to be received in the future has not been included in the table above.
 
(3) Purchase obligations include the minimum amounts committed under contracts for goods and services.
 
(4) As of December 31, 2009, our liability for uncertain tax positions and related net interest payable were $7.0 million and $1.3 million, respectively. We are unable to reasonably estimate the timing of such liability and interest payments in individual years beyond 12 months due to uncertainties in the timing of the effective settlement of tax positions.
 
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.


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Our credit arrangements
 
The Transaction
 
On November 23, 2005, in connection with the Transaction, SS&C (1) entered into a new $350.0 million credit facility, consisting of a $200.0 million term loan facility with SS&C as the borrower, a $75.0 million-equivalent term loan facility with a Canadian subsidiary as the borrower ($17.0 million of which is denominated in US dollars and $58.0 million of which is denominated in Canadian dollars) and a $75.0 million revolving credit facility and (2) issued $205.0 million aggregate principal amount of 113/4% senior subordinated notes due 2013.
 
As a result of the Transaction, we are highly leveraged and our debt service requirements are significant. At December 31, 2009, our total indebtedness was $397.3 million and we had $73.0 million available for borrowing under our revolving credit facility.
 
Senior credit facilities
 
SS&C’s borrowings under the senior credit facilities bear interest at either a floating base rate or a Eurocurrency rate plus, in each case, an applicable margin. In addition, SS&C pays a commitment fee in respect of unused revolving commitments at a rate that will be adjusted based on our leverage ratio. SS&C is obligated to make quarterly principal payments on the term loan of $2.0 million per year. Subject to certain exceptions, thresholds and other limitations, SS&C is required to prepay outstanding loans under the senior credit facilities with the net proceeds of certain asset dispositions and certain debt issuances and 50% of its excess cash flow (as defined in the agreements governing our senior credit facilities), which percentage will be reduced based on our reaching certain leverage ratio thresholds.
 
The obligations under our senior credit facilities are guaranteed by SS&C Holdings and all of SS&C’s existing and future material wholly owned U.S. subsidiaries, with certain exceptions as set forth in our credit agreement. The obligations of the Canadian borrower are guaranteed by SS&C Holdings, SS&C and each of SS&C’s U.S. and Canadian subsidiaries, with certain exceptions as set forth in the credit agreement. The obligations under the senior credit facilities are secured by a perfected first priority security interest in all of SS&C’s capital stock and all of the capital stock or other equity interests held by SS&C Holdings, SS&C and each of SS&C’s existing and future U.S. subsidiary guarantors (subject to certain limitations for equity interests of foreign subsidiaries and other exceptions as set forth in our credit agreement) and all of SS&C Holdings’ and SS&C’s tangible and intangible assets and the tangible and intangible assets of each of SS&C’s existing and future U.S. subsidiary guarantors, with certain exceptions as set forth in the credit agreement. The Canadian borrower’s borrowings under the senior credit facilities and all guarantees thereof are secured by a perfected first priority security interest in all of SS&C’s capital stock and all of the capital stock or other equity interests held by SS&C Holdings, SS&C and each of SS&C’s existing and future U.S. and Canadian subsidiary guarantors, with certain exceptions as set forth in the credit agreement, and all of SS&C Holdings’ and SS&C’s tangible and intangible assets and the tangible and intangible assets of each of SS&C’s existing and future U.S. and Canadian subsidiary guarantors, with certain exceptions as set forth in the credit agreement.
 
The senior credit facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, SS&C’s (and its restricted subsidiaries’) ability to incur additional indebtedness, pay dividends and distributions on capital stock, create liens on assets, enter into sale and lease-back transactions, repay subordinated indebtedness, make capital expenditures,


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engage in certain transactions with affiliates, dispose of assets and engage in mergers or acquisitions. In addition, under the senior credit facilities, SS&C is required to satisfy and maintain a maximum total leverage ratio and a minimum interest coverage ratio. We were in compliance with all covenants at December 31, 2009.
 
113/4% senior subordinated notes due 2013
 
The 113/4% senior subordinated notes due 2013 are unsecured senior subordinated obligations of SS&C that are subordinated in right of payment to all existing and future senior debt, including the senior credit facilities. The senior subordinated notes will be pari passu in right of payment to all future senior subordinated debt of SS&C.
 
The senior subordinated notes are redeemable in whole or in part, at SS&C’s option, at any time at varying redemption prices that generally include premiums, which are defined in the indenture. In addition, upon a change of control, SS&C is required to make an offer to redeem all of the senior subordinated notes at a redemption price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest.
 
The indenture governing the senior subordinated notes contains a number of covenants that restrict, subject to certain exceptions, SS&C’s ability and the ability of its restricted subsidiaries to incur additional indebtedness, pay dividends, make certain investments, create liens, dispose of certain assets and engage in mergers or acquisitions.
 
We intend to use a majority of our net proceeds from this offering to redeem up to $71.75 million in principal amount of outstanding senior subordinated notes, at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest. We may not redeem more than 35% of the aggregate principal amount of notes outstanding without a waiver from the lenders under our senior credit facilities. If we redeem 35% of the aggregate principal amount of the notes, we will redeem $71.75 million in principal amount of notes for $76.0 million in cash, plus accrued and unpaid interest. This redemption will result in a loss on extinguishment of debt of approximately $5.5 million in the period in which the notes are redeemed, which includes a $4.2 million redemption premium and a non-cash charge of approximately $1.3 million relating to the write-off of deferred financing fees attributable to the redeemed notes. For each $1.0 million decrease in the principal amount redeemed, we will pay $1.06 million less in cash to redeem the notes. See “Use of proceeds” for additional information.
 
Covenant compliance
 
Under the senior credit facilities, we are required to satisfy and maintain specified financial ratios and other financial condition tests. As of December 31, 2009, we were in compliance with the financial and non-financial covenants. Our continued ability to meet these financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet these ratios and tests. A breach of any of these covenants could result in a default under the senior credit facilities. Upon the occurrence of any event of default under the senior credit facilities, the lenders could elect to declare all amounts outstanding under the senior credit facilities 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 our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and


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other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities.
 
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures.
 
Any breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA.
 
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.
 
Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including:
 
•  Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions;
 
•  Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;
 
•  Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges;
 
•  Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and
 
•  Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business.


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The following is a reconciliation of net income to Consolidated EBITDA as defined in our senior credit facilities.
 
                         
 
    Year ended December 31,  
(In thousands)   2009     2008     2007  
 
 
Net income
  $ 19,018     $ 18,801     $ 6,575  
Interest expense, net
    36,863       41,130       44,524  
Income tax provision (benefit)
    9,804       7,146       (458 )
Depreciation and amortization
    36,028       35,038       35,047  
     
     
EBITDA
    101,713       102,115       85,688  
Purchase accounting adjustments1
    (93 )     (289 )     (296 )
Capital-based taxes
    795       1,212       1,721  
Unusual or non-recurring charges2
    1,990       1,480       (1,718 )
Acquired EBITDA and cost savings3
    8,053       2,379       135  
Stock-based compensation
    5,607       7,323       10,979  
Other4
    1,201       1,346       2,158  
     
     
Consolidated EBITDA, as defined
  $ 119,266     $ 115,566     $ 98,667  
 
 
 
(1) Purchase accounting adjustments include (a) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of acquisitions and (b) an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction.
 
(2) Unusual or non-recurring charges include foreign currency transaction gains and losses, expenses related to our prior proposed public offering, severance expenses associated with workforce reduction, equity earnings and losses on investments, proceeds and payments from legal and other settlements, costs associated with the closing of a regional office and other one-time gains and expenses.
 
(3) Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions.
 
(4) Other includes management fees and related expenses paid to Carlyle and the non-cash portion of straight-line rent expense.
 
Our covenant restricting capital expenditures for the year ended December 31, 2009 limits expenditures to $18.9 million. Actual capital expenditures for the year ended December 31, 2009 were $2.6 million. Our covenant requirements for total leverage ratio and minimum interest coverage ratio and the actual ratios for the year ended December 31, 2009 are as follows:
 
                 
 
    Covenant
    Actual
 
    requirements     ratios  
 
 
Maximum consolidated total leverage to Consolidated EBITDA Ratio
    5.50 x     3.17 x
Minimum Consolidated EBITDA to consolidated net interest coverage ratio
    2.00 x     3.45 x
 
 
 
Recent accounting pronouncements
 
In October 2009, the Financial Accounting Standards Board (“FASB”) issued an authoritative literature update relating to multiple-deliverable revenue arrangements. This updated literature establishes the accounting and reporting guidance for arrangements including multiple revenue-generating activities. The standard provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of


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accounting. The amendments in this standard also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. These amendments are effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June 15, 2010. Early application is permitted. We are currently evaluating the impact of this new standard.
 
In June 2009, the FASB issued “The FASB Accounting Standards Codification (Codification) and the Hierarchy of GAAP”, which establishes the Codification as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SEC rules and interpretive releases are also sources of authoritative GAAP for SEC registrants. The Codification modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. We adopted the Codification in July 2009. As it is not intended to change or alter existing GAAP, it did not affect our results of operations, cash flows or financial position.
 
In May 2009, the FASB issued new accounting guidance related to the accounting and disclosures of subsequent events. This guidance establishes general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We adopted this guidance upon its issuance and such adoption did not have a material impact on our consolidated financial statements.
 
In April 2009, the FASB issued new accounting guidance related to interim disclosures about the fair values of financial instruments, which requires disclosures about fair value of financial instruments not measured on the balance sheet at fair value in interim financial statements as well as in annual financial statements. Prior to this, fair values for these assets and liabilities were only disclosed annually. This new accounting guidance requires all entities to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments. We adopted this guidance upon its issuance and such adoption did not have a material impact on our consolidated financial statements.
 
Quantitative and qualitative disclosures about market risk
 
We do not use derivative financial instruments for trading or speculative purposes. As of December 31, 2009, we did not hold any cash equivalents or investments. When necessary we have borrowed to fund acquisitions.
 
At December 31, 2009, excluding capital leases, we had total debt of $397.0 million, including $192.0 million of variable interest rate debt. We have entered into an interest rate swap agreement having a notional value of $100 million that effectively fixes our interest rate at 6.78% and expires in December 2010. During the period when this swap agreement is effective, a 1% change in interest rates would result in a change in interest expense of approximately $0.9 million per year. Upon the expiration of the interest rate swap agreement in December 2010, a 1% change in interest rates would result in a change in interest expense of approximately $1.9 million per year. The fair value of this interest rate swap at December 31, 2009 was a liability of $4.2 million.


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At December 31, 2009, $41.9 million of our debt was denominated in Canadian dollars. We expect that our Canadian dollar-denominated debt will be serviced through operating cash flows from our Canadian operations. A 5% change in the foreign currency exchange rate between the U.S. dollar and Canadian dollar would result in a change in our consolidated debt balance of approximately $2.1 million.
 
During 2009, approximately 36% of our revenues were from clients located outside the United States. A portion of the revenues from clients located outside the United States is denominated in foreign currencies, the majority being 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 functional 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 or losses, which we report in other income (expense). These outstanding amounts have been reduced during 2009 and we do not believe that our foreign currency transaction gains or losses will be material during 2010. 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 in the future. We continue to monitor our exposure to foreign currency exchange rates as a result of our foreign currency denominated debt, 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.


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Business
 
Overview
 
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 4,500 clients, principally within the institutional asset management, alternative investment management and financial institutions vertical markets. In addition, our clients include commercial lenders, 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, fund 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. The following table describes selected functionality of our software products and software enabled services and the eight vertical markets that we serve.
 
                                                                 
 
                Treasury,
                            Real
 
    Alternative
          banks &
    Institutional
    Insurance &
          Municipal
    estate
 
    investment
    Financial
    credit
    asset
    pension
    Commercial
    finance
    property
 
Selected functionality   managers     markets     unions     managers     funds     lenders     groups     managers  
 
 
Portfolio Management/Accounting
    ü       ü       ü       ü       ü                          
Trading/Treasury Operations
    ü       ü       ü       ü       ü                          
Financial Modeling
                    ü               ü               ü          
Fund Administration Services
    ü                                                          
Loan Management/Accounting
                    ü               ü       ü                  
Money Market Processing
                    ü                                          
Property Management
                                                            ü  
 
 


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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 two- to five-year non-cancelable contracts with monthly or quarterly payments. 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 and the volume of transactions.
 
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 we define as our software-enabled services and maintenance revenues, represented 85% of total revenues in the year ended December 31, 2009. 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 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.
 
Through a combination of organic growth and acquisitions, we generated revenues of $270.9 million for the year ended December 31, 2009 as compared to revenues of $248.2 million for the year ended December 31, 2007. We generated 79% of our revenues in 2009 from clients in North America and 21% from clients outside North America. Our revenues are highly diversified, with our largest client in 2009 accounting for less than 5% of our revenues. Additional financial information, including geographic information, is available in our consolidated financial statements, including the notes thereto.
 
Our industry
 
We serve a number of vertical markets within the financial services industry, including alternative investment funds, investment management firms, insurance companies, banks and brokerage firms. The recent economic crisis has negatively affected each of these markets and contributed to a significant decline in asset value. In particular, alternative investment funds, such as hedge funds, experienced increased redemption requests and money managers experienced a shift from equities to money market funds, treasuries and other liquid investments. These factors all contribute to reducing revenues among the financial services firms, which, in turn, affects their access to credit, spending ability and, in some cases, their long-term viability.
 
Many of these recent issues highlight the need for effective risk assessment tools, improved reporting systems, accurate accounting and compliance systems and overall management of middle- and back-office operations. These challenges provide us opportunities as industry participants seek to respond efficiently and effectively to increased regulation and investor demand for transparency, and to enhance their competitive position in a challenging environment.


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Opportunities
 
The current market turmoil that the industry is experiencing is amidst a decade of change for the financial services industry as a whole where trading volumes have risen, the complexity of instruments has expanded, regulatory pressure has intensified and automation has evolved in the capital markets.
 
Asset Classes and Securities Products Growing in Volume and Complexity. Investment professionals must increasingly track and invest in numerous types of asset classes 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, firms see increasing value in outsourcing the management of these assets to firms such as SS&C who offer software-enabled services.
 
Increasing Regulatory Requirements and Investor Demand for Transparency. Recent market and economic conditions have led to new legislation and numerous proposals for changes in the regulation of the financial services industry, including significant additional legislation and regulation in the United States. Several high-profile scandals have also led to increased investor demand for transparency. The financial services industry must meet these complicated and burdensome requirements, and many have struggled to do so. In addition, as the financial services industry continues to grow in complexity, we anticipate regulatory oversight will continue to impose new demands on financial services providers. The expectation is that hedge funds may start to experience similar regulatory pressures. In addition, financial services providers continue to face increasing regulatory oversight from domestic organizations such as the Financial Industry Regulatory Authority, U.S. Treasury Department, Securities and Exchange Commission, New York Stock Exchange, National Association of Insurance Commissioners and U.S. Department of Labor as well as foreign regulatory bodies such as the Office of Supervision of Financial Institutions in Ottawa, Canada, Financial Services Association in London, England and Ministry of Finance in Tokyo, Japan.
 
Increasing Willingness to Implement Solutions from Independent Software Vendors and Outsource IT Operations. Historically, financial services providers have relied in large part on their internal IT departments to supply the systems required to manage, analyze and control vast amounts of data. Rather than internally developing applications that automate business processes, many financial services providers are implementing advanced software solutions from independent software vendors to replace their current systems, which are often cumbersome, time-consuming to operate and expensive to implement, customize, update and support. Additionally, financial services providers globally are outsourcing a growing percentage of their business processes to benefit from best-in-class process execution, focus on core operations, quickly expand into new markets, reduce costs, streamline organizations, handle increased transaction volumes and ensure system redundancy. We believe that one of the key challenges faced by investment management industry participants is how to expand their use of third-party service providers to address the increasing complexity of new products and the growing investor and regulatory information demands. For example, many alternative investment firms lack the substantial in-house IT resources necessary to establish and manage the complex IT infrastructures their investment professionals require. These firms increasingly seek end-to-end solutions that enable them to outsource their operations from the front-office through the back-office.


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Intense Global Competition Among Financial Services Providers. Competition within the financial services industry has become intense as financial services providers expand into new markets and offer new services to their clients in an effort to maximize their profitability. Additionally, a significant number of small- and medium-sized organizations, such as hedge funds, have begun to compete with large financial institutions as they seek to attract new clients whose assets they can manage. As traditional equity and debt instruments become more commoditized, financial services providers are expanding into more complex product and service offerings to drive profitability. In response to these increasingly competitive conditions worldwide, financial services organizations seek to rapidly expand into new markets, manage operational enterprise risk, increase front-office productivity and drive cost savings by utilizing software to automate and integrate their mission-critical and labor intensive business processes.
 
Our competitive strengths
 
We believe that our position in the marketplace results from several key competitive strengths, including:
 
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 use our own products 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.
 
Broad Portfolio of Products and Services Focused on Financial Services Organizations. Our broad portfolio of over 60 software products and software-enabled services allows professionals in the financial services industry to efficiently and rapidly analyze and manage information, increase productivity, devote more time to critical business decisions and reduce costs. Our products and services automate our clients’ most mission-critical, complex business processes, and improve their operational efficiency. 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. 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. Our solutions allow our clients to automate and integrate their front-office, middle-office and back-office functions, thus enabling straight-through processing.
 
Independent Fund Administration Services. The third-party service providers that participate in the alternative investment market include 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 becoming aware of these conflicts and seeking independent fund administrators such as SS&C.
 
Highly Attractive Operating Model. We believe we have a highly attractive operating model due to the contractually recurring nature of our revenues, the scalability of our software and


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software-enabled services, the significant operating cash flow we generate and our highly effective sales and marketing model.
 
Growing Contractually Recurring Revenues. We continue to focus on growing our contractually recurring revenues from our software-enabled services and our maintenance contracts because they provide greater predictability in the operation of our business and enable us to strengthen long-term relationships with our clients. Contractually recurring revenues represented 85% of total revenues for the year ended December 31, 2009, up from 52% of total revenues in 2000.
 
Scalable Software and Software-enabled Services. We have designed our software and software-enabled services to accommodate significant additional business volumes with limited incremental costs. The ability to generate additional revenues from increased volumes without incurring substantial incremental costs provides us with opportunities to improve our operating margins.
 
Significant Operating Cash Flow. We are able to generate significant operating cash flows due to our strong operating margins and the relatively modest capital requirements needed to grow our business.
 
Highly Effective Sales and Marketing Model. We utilize a direct sales force model that benefits from significant direct participation by senior management. We achieve significant efficiency in our sales model by leveraging the Internet as a direct marketing medium. We currently deliver over 375,000 electronic newsletters to industry participants worldwide approximately every two weeks. These eBriefings are integrated with our corporate website, www.ssctech.com, and are the source for a substantial number of our sales leads. Our deep domain knowledge and extensive participation in day-to-day investment, finance and fund administration activities enable us to create informative and timely articles that are the basis of our eBriefings.
 
Deep Domain Knowledge and Extensive Industry Experience. As of December 31, 2009, we had 1,061 development, service and support professionals with significant expertise across the eight vertical markets that we serve and a deep working knowledge of our clients’ businesses. 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. For example, our Complete Asset Management, Reporting and Accounting, or CAMRA, software, which supports the entire portfolio management function across all typical securities transactions, was originally released in 1989 and has been continually updated to meet our clients’ new business requirements. We were founded in 1986 by William C. Stone, who has served as our Chairman and Chief Executive Officer since our inception. Our senior management team has a track record of operational excellence and an average of more than 15 years of experience in the software and financial services industries.
 
Trusted Provider to Our Highly Diversified and Growing Client Base. By providing mission-critical, reliable software products and services for more than 20 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


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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.
 
Superior Client Support and Focus. Our ability to rapidly deliver improvements and our reputation for superior service have proven to be a strong competitive advantage when developing client relationships. We provide our larger clients with a dedicated client support team whose primary responsibility is to resolve questions and provide solutions to address ongoing needs. We also offer the Solution Center, an interactive website that serves as an exclusive online client community where clients can find answers to product questions, exchange information, share best practices and comment on business issues. We believe a close and active service and support relationship significantly enhances client satisfaction, strengthens client relationships and furnishes us with information regarding evolving client issues.
 
Our growth strategy
 
We intend to be the leading provider of superior technology solutions to the financial services industry. The key elements of our growth strategy include:
 
Continue to Develop Software-Enabled Services and New Proprietary Software. 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 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. Our software-enabled services revenues increased from $30.9 million for the year ended December 31, 2004 to $163.3 million for the year ended December 31, 2009, representing a compound annual growth rate of 40%.
 
Expand Our Client Base. Our client base of more than 4,500 clients represents a fraction of the total number of financial services providers globally. As a result, we believe there is substantial opportunity to grow our client base over time as our products become more widely adopted. We have a substantial opportunity to capitalize on the increasing adoption of mission-critical, sophisticated software and software-enabled services by financial services providers as they continue to replace inadequate legacy solutions and custom in-house solutions that are inflexible and costly to maintain.
 
Increase Revenues from Existing Clients. We believe our established client base presents a substantial opportunity for growth. Revenues from our existing clients generally grow along with the amount and complexity of assets that they manage and the volume of transactions


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that they execute. While we expect to continue to benefit from the financial services industry’s growing assets under management, expanding asset classes, and increasing transaction volumes, we also intend to leverage our deep understanding of the financial services industry to identify other opportunities to increase our revenues from our existing clients. Many of our current clients use our products only for a portion of their total assets under management and investment funds, providing us with significant opportunities to expand our business relationship and revenues. We have been successful in, and expect to continue to focus our marketing efforts on, providing additional modules or features to the products and services our existing clients already use, as well as cross-selling our other products and services. Additionally, we intend to sell additional software products and services to new divisions and new funds of our existing client base. Our client services team is primarily responsible for expanding our relationships with current clients. Moreover, our high quality of service helps us maintain significant client retention rates and longer lasting client relationships.
 
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 that our acquisitions have been an extension of our research and development effort that has enabled us to purchase proven products and remove the uncertainties associated with software development projects. We will seek to opportunistically acquire, at reasonable valuations, businesses, products and technologies in our existing or complementary vertical markets that will enable us to better satisfy our clients’ rigorous and evolving needs. We have a proven ability to integrate complementary businesses as demonstrated by the 29 businesses that we have acquired since 1995. Our experienced senior management team leads a rigorous evaluation of our acquisition candidates 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 2009, we generated 21% 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.
 
Our acquisitions
 
We intend to continue to employ a highly disciplined and focused acquisition strategy to broaden and enhance our product and service offerings, add new clients and supplement our internal development efforts. Our 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 that our acquisitions have been an extension of our


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research and development effort and have enabled us to purchase proven products and remove the uncertainties sometimes associated with software development projects.
 
Since 1995, we have acquired 29 businesses within our industry. To date, our acquisitions have contributed marketable products or services that have added to our revenues. We believe that 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, and 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.
 
The following table provides a list of acquisitions we have made since 1995.
 
             
Acquisition
           
date   Acquired business   Contract purchase price*   Acquired capabilities, products and services
 
March 1995
  Chalke   $10,000,000   Expanded insurance footprint with PTS actuarial product
November 1997
  Mabel Systems   $850,000 and 109,224 shares   Entered Benelux market with investment accounting product
December 1997
  Shepro Braun Systems   1,500,000 shares   Entered hedge fund and family office markets with Total Return product
March 1998
  Quantra   $2,269,800 and 819,028 shares   Entered the real estate property management market with SKYLINE product
April 1998
  The Savid Group   $821,500   Expanded debt and derivative product offerings
March 1999
  HedgeWare   1,028,524 shares   Expanded product offerings for the hedge fund and family office markets


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Acquisition
           
date   Acquired business   Contract purchase price*   Acquired capabilities, products and services
 
March 1999
  Brookside   41,400 shares   Expanded our consulting services capabilities
November 2001
  Digital Visions   $1,350,000   Entered financial institutions market with BANC Mall, PALMS and PortPro products
January 2002
  Real-Time USA   $4,000,000   Expanded financial institutions offering with Lightning and Real-Time products
November 2002
  DBC   $4,500,000   Added municipal finance structuring products for underwriters, investment banks, municipal issuers and financial advisors
December 2003
  Amicorp Fund Services   $1,800,000   Entered offshore fund administration services market
January 2004
  Investment Advisory Network   $3,000,000   Expanded wealth management capabilities with Compass and Portfolio Manager products
February 2004
  NeoVision Hypersystems   $1,600,000   Added data visualization dashboard capabilities with Heatmaps product
April 2004
  OMR Systems   $19,671,000   Added integrated, global product offering for financial institutions and hedge funds with TradeThru product
February 2005
  Achievement Technologies   $470,000   Enhanced real estate property management offering with SamTrak facilities management product
February 2005
  Eisnerfast   $25,300,000   Expanded fund administration services to the hedge fund and private equity markets
April 2005
  Financial Models Company   $159,000,000   Expanded front-, middle- and back-office products and services to the investment management industry including Pacer, Pages, Recon and Sylvan products
June 2005
  Financial Interactive   358,424 shares and warrants to purchase 50,000 shares   Expanded alternative investment fund offerings with FundRunner CRM product

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Acquisition
           
date   Acquired business   Contract purchase price*   Acquired capabilities, products and services
 
August 2005
  MarginMan   $5,600,000   Expanded depth in foreign currency exchange market with MarginMan product
October 2005
  Open Information Systems   $24,000,000   Entered money market, custody and security lending market with Global Debt Manager, Information Manager and Money Market Manager products
March 2006
  Cogent Management   $12,250,000   Expanded fund administration services to hedge fund and private equity markets
August 2006
  Zoologic   $3,000,000   Added education and training courseware offerings for financial institutions
March 2007
  Northport   $5,000,000   Expanded fund administration services to private equity market
October 2008
  Micro Design Services   $17,200,000   Added real-time, mission-critical order routing and execution services with ACA, BlockTalk and MarketLook products
March 2009
  Evare   $3,514,500   Expanded institutional middle- and back-office outsourcing services with financial data acquisition, transformation and delivery services
May 2009
  MAXIMIS   $7,700,000   Expanded institutional footprint and provided new cross-selling opportunities
November 2009
  TheNextRound   $21,000,000   Expanded private equity client base with TNR Solution product
December 2009
  Tradeware   $22,500,000   Added electronic trading offering in broker/dealer market
February 2010
  GIPS   $12,000,000   Expanded fund administration services to private equity market
 
 
 
Share references are to shares of SS&C common stock after giving effect to SS&C’s three-for-two common stock split in the form of a stock dividend effective as of March 2004, but do not reflect the capital structure of SS&C Holdings.
 
Products and services
 
Our products and services allow professionals in the financial services industry to automate complex business processes within financial services providers and are instrumental in helping our clients manage significant information processing requirements. Our solutions enable our clients to focus on core operations, better monitor and manage investment performance and risk, improve operating efficiency and reduce operating costs. Our portfolio of over 60 products

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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.
 
The following chart summarizes our principal software products and services, typical users and the vertical markets each product serves. Most of these products are also used to deliver our software-enabled services.
 
             
Products     Typical users     Vertical markets served
Portfolio Management/Accounting
           
AdvisorWare
    Portfolio managers     Alternative investment managers
Altair
    Asset managers     Financial markets
CAMRA
    Fund administrators     Institutional asset managers
Debt & Derivatives
    Investment advisors     Insurance & pension funds
FundRunner Marathon
    Auditors     Treasury, banks & credit unions
GlobalWealth Platform
    Alternative investment managers      
Lightning
    Broker/dealers      
MAXIMIS
           
Pacer
           
Pages
           
PALMS
           
PortPro
           
Recon
           
Suite for Australia
           
Sylvan
           
TNR Solution
           
Total Return
           
             
Trading/Treasury Operations
           
Antares
    Securities traders     Alternative investment managers
Antares Trader
    Financial institutions     Financial markets
BlockTalk
    Risk managers     Institutional asset managers
BlockTalk Plus
    Foreign exchange traders     Insurance & pension funds
MarginMan
    Asset managers     Treasury, banks & credit unions
MarketLook Information System
    Brokers/dealers     Corporate treasuries
TradeDesk
    Financial exchanges      
TradeThru
           
Tradeware MarketCenter
           
             


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Products     Typical users     Vertical markets served
Financial Modeling
           
DBC
    CEO/CFOs     Insurance & pension funds
PTS
    Risk managers     Municipal finance groups
      Actuarial professionals     Treasury, banks & credit unions
      Bank asset/liability managers      
      Investment bankers      
      State/local treasury staff      
      Financial advisors      
             
Loan Management/Accounting
           
LMS Loan Suite
    Mortgage originators     Commercial lenders
LMS Originator
    Commercial lenders     Insurance & pension funds
LMS Servicer
    Mortgage loan servicers     Treasury, banks & credit unions
The BANC Mall
    Mortgage loan portfolio managers      
      Real estate investment managers      
      Bank/credit union loan officers      
             
Property Management
           
SKYLINE
    Real estate investment managers     Real estate leasing/property
      Real estate leasing agents     managers
      Real estate property managers      
      Facility managers      
             
Money Market Processing
           
Information Manager
    Financial Institutions     Treasury, banks & credit unions
Money Market Manager
    Custodians      
Global Debt Manager
    Security lenders      
      Cash managers      
             
Training
           
Zoologic Learning Solutions
    Financial institutions     All verticals
      Asset managers      
      Hedge fund managers      
      Investment bankers      
             

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Services     Typical users     Vertical markets served
Advanced Component
    Portfolio managers     Alternative investment managers
Architecture
    Asset managers     Financial markets
Custom Mobility
    Financial exchanges     Institutional asset managers
Evare
    Fund administrators     Insurance & pension funds
GlobalX
    Investment advisors     Treasury, banks & credit unions
SS&C Direct
    Alternative investment managers      
SS&C Fund Services
    Securities traders      
SSCNet
    Broker/dealers      
SVC
           
Tradeware FIXLink
           
Tradeware OATS Consolidator
           
             
 
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.
 
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 (including German tax requirements), 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.
 
Altair. Altair software is a portfolio management system designed for companies that are looking for a solution that meets Benelux market requirements and want client/server architecture with SQL support. We license Altair primarily to European asset managers, stock brokers, custodians, banks, pension funds and insurance companies. Altair supports a full range of financial instruments, including fixed income, equities, real estate investments and alternative investment vehicles.
 
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 32-bit, multi-user, integrated solution tailored to support the entire portfolio management function and includes features to execute, account for and report on all typical securities transactions.
 
We have designed CAMRA to account for all activities of the investment operation and to continually update investment information through the processing of day-to-day securities transactions. CAMRA maintains transactions and holdings and stores the results of most accounting calculations in its open, relational database, providing user-friendly, flexible data access and supporting data warehousing.
 
CAMRA offers a broad range of integrated modules that can support specific client requirements, such as TBA dollar rolls, trading, compliance monitoring, net asset value calculations, performance measurement, fee calculations and reporting.


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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.
 
FundRunner Marathon. FundRunner Marathon gives hedge fund managers the tools necessary for investor communication and reporting.
 
GlobalWealth Platform. A web-based service, GlobalWealth Platform combines our core asset management product functions with an innovative, easy-to-use interface. GlobalWealth 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.
 
Lightning. Lightning is a comprehensive software-enabled service supporting the front-, middle- and back-office processing needs of commercial banks and broker-dealers of all sizes and complexity. Lightning automates a number of processes, including trading, sales, funding, accounting, risk analysis and asset/liability management.
 
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.
 
PALMS. PALMS (Portfolio Asset Liability Management System) is an Internet-based service for community banks and credit unions that enables them to manage and analyze their balance sheet. PALMS gives financial institutions instant access to their balance sheet by importing data directly from general ledger, loan, deposit and investment systems and can perform simulations for detailed analysis of the data.
 
PortPro. PortPro delivers Internet-based portfolio accounting and is available as a software-enabled service. PortPro helps financial institutions effectively measure, analyze and manage balance sheets and investment portfolios. PortPro is offered as a stand-alone product or as a module of Lightning. PortPro includes bond accounting and analytics.
 
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.


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Suite for Australia. Suite for Australia is a web-based portfolio management solution for investment managers, managed account providers, wholesale fund managers, and private client administrators in the Australian market.
 
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 system delivers comprehensive processing for global treasury and derivative operations. Solutions are available to clients either through a license or as a software-enabled service.
 
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.
 
Antares Trader. Antares Trader is an integrated order and execution management system (OEMS) that enables clients to integrate pre-trade compliance, real-time position and profit and loss (P&L), “what-if” analysis, reporting, and Financial Information eXchange (FIX) connectivity. In addition, Antares Trader facilitates the routing of trades to multiple brokers and execution venues and provides direct market access for equities, futures and options trading.
 
BlockTalk. BlockTalk is a broadcast messaging platform that enables floor brokers to send liquidity alerts for any New York Stock Exchange-listed security to the floor community.
 
BlockTalkPlus. BlockTalkPlus is a subscription-based distribution platform enabling sponsored “off-floor” trading desks and their clients to receive liquidity alerts directly from the trading floor of the New York Stock Exchange.
 
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.
 
TradeDesk. TradeDesk is a comprehensive paperless trading system that automates front- and middle-office aspects of fixed-income transaction processing. In particular, TradeDesk enables


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clients to automate ticket entry, confirmation and access to offerings and provides clients with immediate, online access to complete client information and holdings.
 
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 backoffice 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.
 
Tradeware MarketCenter. Tradeware MarketCenter is an order management solution for all aspects of global agency trading process, from sending indications of interest (IOI’s) to managing order flow to providing back-office and compliance 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.
 
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
 
•  Federal Housing Administration – insured revenue bonds and securitizations.
 
Our DBC products also deliver solutions for debt structuring, cash flow modeling and database management. Typical users of our DBC products include investment banks, municipal issuers and financial advisors for structuring new issues, securitizations, strategic planning and asset/liability management.
 
PTS. PTS is a pricing and financial modeling tool for life insurance companies. PTS provides an economic model of insurance assets and liabilities, generating option-adjusted cash flows to reflect the complex set of options and covenants frequently encountered in insurance contracts or comparable agreements.
 
Loan management/accounting
 
Our products that support loan administration activities are LMS and The BANC Mall.
 
LMS Loan Suite. The LMS Loan Suite is a single database application that provides comprehensive loan management throughout the life cycle of a loan, from the initial request to final disposition. We have structured the flexible design of the LMS Loan Suite to meet the most


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complex needs of commercial lenders and servicers worldwide. The LMS Loan Suite includes both the LMS Originator and the LMS Servicer, facilitating integrated loan portfolio processing.
 
LMS Originator. LMS Originator is a comprehensive commercial loan origination system, designed to bring efficiencies and controls to streamline the loan origination process. LMS Originator tracks the origination of a loan from the initial request through the initial funding. It enables clients to set production goals, measure production volumes against these goals and analyze the quality of loan requests being submitted by third parties. LMS Originator is integrated with LMS Servicer for seamless loan management processing throughout the life cycle of a loan.
 
LMS Servicer. LMS Servicer is a comprehensive commercial loan servicing system designed to support the servicing of a wide variety of product types and complex loan structures. LMS Servicer provides capabilities in implementing complex investor structures, efficient payment processing, escrow processing and analysis, commercial mortgage-backed securities (CMBS) servicing and reporting and portfolio analytics. LMS Servicer is integrated with LMS Originator for seamless loan management processing throughout the life cycle of a loan.
 
The BANC Mall. The BANC Mall is an Internet-based lending and leasing tool designed for loan officers and loan administrators. The BANC Mall provides, as a software-enabled service, online lending, leasing and research tools that deliver critical information for credit processing and loan administration. Clients use The BANC Mall on a fee-for-service basis to access more than a dozen data providers.
 
Property management
 
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. Market segments served include:
     
     
•   commercial
  •   retirement communities
     
•   residential
  •   universities
     
•   retail
  •   hospitals
 
Money market processing
 
Information Manager. Information Manager is a comprehensive web-enabled solution for financial institutions that delivers core business application functionality to internal and external clients’ desktops. Information Manager provides reporting, transaction entry, scheduling, entitlement and work flow management and interfaces to third-party applications. Information Manager supports back-office systems, including custody, trust accounting, security lending, cash management, collateral management and global clearing.
 
Money Market Manager. Money Market Manager (M3) is a web-enabled solution that is used by banks and broker-dealers for the money market issuance services. M3 provides the functionality required for issuing and acting as a paying agent for money market debt


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instruments. M3 provides the reports needed for clients to manage their business, including deals, issues and payment accruals.
 
Global Debt Manager. Global Debt Manager is a robust browser based application for corporate and municipal bond accounting. Fully integrated with Money Market Manager (M3), Global Debt Manager offers processing for conventional and structured debt within a secure and flexible platform.
 
Training
 
Zoologic Learning Solutions. Zoologic Learning Solutions is a suite of learning solutions that provides in-depth, introductory and continuing education training at all levels, offering mix-and-match courses easily configured into curriculums that meet our clients’ needs. It includes instructor-led training, web-based courseware and program design.
 
Services
 
Advanced Component Architecture (ACA). ACA is a robust set of service capabilities to develop customized trading and support solutions for exchanges, brokerages and financial institutions. With the core technology components of ACA, clients can significantly reduce the traditional system delivery process.
 
Custom Mobility. Custom Mobility provides expertise in designing and developing mobility solutions for the financial markets. We believe that our understanding of the power of mobile/wireless technology, coupled with a deep understanding of the financial markets, has permitted us to offer services tailored to this growing portion of the market.
 
Evare. Evare is a leader in financial data acquisition, transformation and delivery services. Global Managed Services connect you to your clients and 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.
 
GlobalX. GlobalX is a trading solution providing broker-dealers with a simplified, integrated cross-border trade execution and settlement process. The GlobalX technology is designed to provide clients with improved operational efficiency, lower costs and a significantly higher percentage of successful cross-border trades.
 
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 investment operations services,
•  hosting of a company’s application software,
•  automated workflow integration,
•  automated quality control mechanisms, and
•  extensive interface and connectivity services to custodian banks, data service providers, depositories and other external entities.


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SS&C Fund Services. We provide comprehensive on- and offshore fund administration services to hedge fund and other alternative investment managers using our proprietary software products. SS&C Fund Services offers fund manager services, transfer agency services, funds of funds services, tax processing and accounting and processing. SS&C Fund Services supports all fund types and investment strategies. Market segments served include:
     
•   hedge fund managers
  •   investment managers
•   funds of funds managers
  •   commodity pool operators
•   commodity trading advisors
  •   proprietary traders
•   family offices
  •   private equity groups
•   private wealth groups
  •   separate managed accounts
 
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.
 
Tradeware FIXLink. Tradeware FIXLink is a FIX network for IOIs, trades, orders, and allocations, providing a reliable broker-neutral and platform-neutral FIX connectivity service to broker-dealers and institutions.
 
Tradeware OATS Consolidator. Tradeware OATS Consolidator is a broker-neutral compliance service that provides an Order Audit Trail System, or OATS, reporting solution for broker-dealers using multiple trading systems.
 
Software and service delivery options
 
Our delivery methods include software-enabled services, software licenses with related maintenance agreements, and blended solutions. Substantially all of our software-enabled services are built around and leverage our proprietary software.
 
Software-Enabled Services. We provide a broad range of software-enabled services for our clients. By utilizing our proprietary software and avoiding the substantial use of third-party products to provide our software-enabled services, we are able to greatly reduce potential operating risks, efficiently tailor our products and services to meet specific client needs, significantly improve overall service levels and generate high overall operating margins and cash flow. Our software-enabled services are generally provided under two- to five-year non-cancelable contracts with monthly and quarterly payments. Pricing on our software-enabled services varies depending upon the complexity of the services being provided, the number of users, assets under management and transaction volume. Importantly, our software-enabled services allow us to leverage our proprietary software and existing infrastructure, thereby increasing our aggregate profits and cash flows. For the year ended December 31, 2009, revenues from software-enabled services represented 60.3% of total revenues.
 
Software License and Related Maintenance Agreements. We license our software to clients through either perpetual or term licenses. In connection with these contracts we provide


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maintenance. Maintenance contracts on our core enterprise software products, which typically incorporate annual pricing increases, provide us with a stable and contractually recurring revenue base due to average revenue retention rates of over 90% in each of the last five years. We typically generate additional revenues as our existing clients expand usage of our products. For the year ended December 31, 2009, license and maintenance revenues represented 7.6% and 24.4% of total revenues, respectively.
 
Blended Solutions. We provide certain clients with targeted, blended solutions based on a combination of our various software and software-enabled services. We believe that this capability further differentiates us from many of our competitors that are unable to provide this level of service.
 
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, 2009, revenues from professional services represented 7.7% 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 resolve 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. We also offer the Solution Center, a website that serves as an exclusive online community for clients, where clients can find answers to product questions, exchange information, share best practices and comment on business issues. Approximately every two weeks, we distribute via the Internet our software and services eBriefings, which are industry-specific articles in our eight vertical markets and in geographic regions around the world. We supplement our service and support activities with comprehensive training. Training options include regularly hosted classroom and online instruction, e.Training, 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 4,500 clients globally in eight vertical markets within 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


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multinational banks, retail banks and credit unions, hedge funds, funds of funds and family offices, institutional asset managers, insurance companies and pension funds, municipal finance groups, brokers/dealers, financial exchanges, commercial lenders, real estate lenders and property managers. Our clients include many of the largest and most well-recognized firms in the financial services industry. During the year ended December 31, 2009, our top 10 clients represented approximately 18% of revenues, with no single client accounting for more than 5% of revenues.