SS&C Technologies, Inc.(www.ssctech.com), a global
provider of financial services software and outsourcing solutions,
today announced record revenue results for the fourth quarter and full
year ended December 31, 2005. Reported revenue on a GAAP basis for the
fourth quarter and the year 2005 was $47.4 million and $161.6 million,
respectively. Included in reported revenue for the fourth quarter and
the year 2005 is a $0.7 million reduction in revenue caused by
purchase accounting adjustments to reflect November 23, 2005 deferred
revenue at its estimated fair value. Excluding the purchase accounting
adjustment, revenue for the fourth quarter of 2005 was $48.1 million,
a 78% increase from the fourth quarter of 2004. Revenue for the year
2005 was $162.4 million, an increase of 69% over 2004. Net loss, on a
GAAP basis, for the fourth quarter and the year 2005, was $23.5
million and $3.9 million, respectively. Merger costs related to the
sale of SS&C were $44.7 million in the quarter and $45.8 million for
the year 2005.
Adjusted operating income (as defined in note 1 to the Consolidated Financial Information) was $17.2 million for the three months ended December 31, 2005, compared to $9.4 million in the fourth quarter of the prior year. GAAP operating loss in the fourth quarter of 2005 was $31.5 million and includes amortization of $3.4 million, merger costs of $44.7 million and deferred revenue adjustment and other purchase accounting items of $0.6 million. GAAP operating income in the fourth quarter of 2004 was $8.7 million and includes amortization of $0.7 million. Adjusted operating income for the year 2005 was $54.9 million, compared to $31.8 million for the year 2004. GAAP operating income for 2005 was $0.3 million and includes amortization of $8.2 million, merger costs of $45.8 million and purchase accounting adjustments of $0.6 million.
Consolidated EBITDA (as defined in note 2 of the Consolidated Financial Information) for the fourth quarter of 2005 was $20.0 million, compared to $16.7 million in the fourth quarter of 2004. Consolidated EBITDA was $73.6 million for the year 2005, compared to $60.5 million for the year 2004.
On November 23, 2005, SS&C Technologies, Inc. was acquired by Sunshine Acquisition Corporation, a corporation affiliated with The Carlyle Group, a global private equity firm. Bill Stone, SS&C's Chairman and CEO stated, "Being a privately-held company allows us to channel all of our resources on growing our business and continuing to produce excellent financial results."
Stone, commenting on recent results said, "Throughout 2005 we stayed focused on our business and executed on our strategy. We have extended our market reach, broadened our product offerings and improved our position in the global marketplace. As a result, we had an outstanding year with record revenue numbers quarter after quarter. We are realizing the benefits of many of our acquisitions as they are integrated, which is reflected in our strong fourth quarter numbers. All revenue segments showed significant growth for both Q4 and all of 2005, with outsourcing revenues clearly outperforming every other revenue segment," Stone continued, "In all business lines, we are seeing positive results and, as we integrate our acquisitions, we have been able to capitalize on cross-sell and up-sell opportunities, take advantage of our broader geographic reach, and realize cost-savings from several economy-of-scale initiatives."
Software
"Across the board, license revenues increased," said Stone. "In Q4 2005, license revenues were $5.9 million, a 22% increase over Q4, 2004. Total 2005 license revenues were $23.7 million, a 38% increase over 2004. We had an increase in licenses for CAMRA, LMS, Altair, AdvisorWare and SKYLINE. With the introduction of LMS Loan Suite, LMS license sales have taken hold, and in 2005, showed a 261% increase over 2004 LMS license sales, proving our commitment to R&D and our ability to respond effectively to market needs. Acquisitions also made a healthy contribution to license revenue growth, particularly Pages, Recon, Sylvan, FundRunner, and MarginMan."
Outsourcing Solutions
"Insurance companies, asset managers and hedge funds all continue to look to outsourcing as a way to implement cost-savings and shift some of their accounting and systems burden to a third party," said Stone. "Our expertise in each of these industries, as well as our technology, specifically designed for these markets, has given us a global, competitive advantage. Outsourcing revenues in 2005 were $75 million, an increase of 143% over 2004. In 2005, outsourcing revenues represented 46% of total revenues. In November, 2005, the Hedge Fund Manager Survey ranked SS&C Fund Services as the tenth largest hedge fund administrator, and the fastest growing fund administrator."
Acquisitions/Integration
"In 2005, SS&C completed six acquisitions, and we are very focused on the synergies of our merger and acquisition decisions," Stone commented. "We constantly work on improving our integration processes and each acquisition is integrated as quickly as possible. This year we added significant strength in asset management with the acquisition of Financial Models Company Inc. Our financial institutions added breadth with MarginMan and Open Information Systems. Our hedge fund business has added expertise with EisnerFast, and technology with Financial Interactive. Achievement Technologies adds a new dimension to SKYLINE and a new product offering for the real estate market. We expect to continue to pursue acquisitions that are a good fit for SS&C, adding more great people, products and services, clients, and prospects."
On March 6, 2006, SS&C announced the acquisition of Cogent Management Inc. Cogent, located in New Rochelle, New York, provides hedge fund management services, with a particular expertise in U.S.-based hedge funds. Stone commented on the acquisition, "We welcome the Cogent team and Cogent clients to SS&C and look forward to creating new opportunities for everyone."
Earnings Call
SS&C's Q4 2005 earnings call will take place at 5:00 p.m. Eastern Time today, March 7, 2006. The call will discuss Q4 and 2005 year-end results. Interested parties may dial 706-643-7858 (US, Canada and International) and request the "SS&C Fourth Quarter Earnings Call", conference ID #6135561. A replay will be available after 8:00 pm on March 7th, until midnight on April 7, 2006. To hear the replay, dial 706-645-9291 and enter the access code 6135561. A replay of the call will also be available after March 8, 2006 on our website at www.ssctech.com/about/investor.asp. -0- SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) Combined Predecessor Combined Predecessor Three Three Months Months Year Ended Ended Ended Year Ended December December December December 31, 2005 31, 2004 31, 2005 31, 2004 --------- ----------- --------- ----------- Revenues: Software licenses $ 5,850 $ 4,806 $ 23,734 $ 17,250 Maintenance 12,698 9,691 47,765 36,433 Professional services 5,520 3,770 15,085 11,320 Outsourcing 23,327 8,785 75,050 30,885 -------- ---------- -------- ---------- Total revenues 47,395 27,052 161,634 95,888 -------- ---------- -------- ---------- Cost of revenues: Software licenses 1,552 628 3,819 2,258 Maintenance 3,668 2,300 11,892 8,462 Professional services 2,333 1,764 8,710 6,606 Outsourcing 13,402 4,743 42,210 16,444 -------- ---------- -------- ---------- Total cost of revenues 20,955 9,435 66,631 33,770 -------- ---------- -------- ---------- Gross profit 26,440 17,617 95,003 62,118 -------- ---------- -------- ---------- Operating expenses: Selling and marketing 3,958 2,943 14,498 10,734 Research and development 6,075 3,746 21,270 13,957 General and administrative 3,270 2,229 13,084 8,014 Merger costs related to the sale of SS&C 44,677 - 45,848 - -------- ---------- -------- ---------- Total operating expenses 57,980 8,918 94,700 32,705 -------- ---------- -------- ---------- Operating income (loss) (31,540) 8,699 303 29,413 Interest income (expense) (5,395) 691 (5,951) 1,528 Other income, net 587 120 913 99 -------- ---------- -------- ---------- Income (loss) before income taxes (36,348) 9,510 (4,735) 31,040 Provision (benefit) for income taxes (12,854) 3,526 (794) 12,030 -------- ---------- -------- ---------- Net income (loss) $(23,494) $ 5,984 $ (3,941) $ 19,010 ======== ========== ======== ========== See Notes to Consolidated Condensed Financial Information. SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) Predecessor Successor ----------------- --------- Combined Period from Period January from Year 1, 2005 December Year ended through 1, 2005 ended December November through December 31, 30, December 31, 2004 2005 31, 2005 2005 -------- -------- --------- -------- Revenues: Software licenses $17,250 $20,147 $3,587 $23,734 Maintenance 36,433 44,064 3,701 47,765 Professional services 11,320 12,565 2,520 15,085 Outsourcing 30,885 67,193 7,857 75,050 -------- -------- --------- -------- Total revenues 95,888 143,969 17,665 161,634 -------- -------- --------- -------- Cost of revenues: Software licenses 2,258 2,963 856 3,819 Maintenance 8,462 10,393 1,499 11,892 Professional services 6,606 7,849 861 8,710 Outsourcing 16,444 37,799 4,411 42,210 -------- -------- --------- -------- Total cost of revenues 33,770 59,004 7,627 66,631 -------- -------- --------- -------- Gross profit 62,118 84,965 10,038 95,003 -------- -------- --------- -------- Operating expenses: Selling and marketing 10,734 13,134 1,364 14,498 Research and development 13,957 19,199 2,071 21,270 General and administrative 8,014 11,944 1,140 13,084 Merger costs related to the sale of SS&C - 45,848 - 45,848 -------- -------- --------- -------- Total operating expenses 32,705 90,125 4,575 94,700 -------- -------- --------- -------- Operating income (loss) 29,413 (5,160) 5,463 303 Interest income (expense) 1,528 (1,061) (4,890) (5,951) Other income, net 99 655 258 913 -------- -------- --------- -------- Income (loss) before income taxes 31,040 (5,566) 831 (4,735) Provision (benefit) for income taxes 12,030 (510) (284) (794) -------- -------- --------- -------- Net income (loss) $19,010 $(5,056) $1,115 $(3,941) ======== ======== ========= ======== See Notes to Consolidated Condensed Financial Information. SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) Predecessor Successor ------------------ --------- Combined Period Period Three from from Three months October December months ended 1, 2005 1, 2005 ended December through through December 31, November December 31, 2004 30, 2005 31, 2005 2005 -------- --------- --------- --------- Revenues: Software licenses $4,806 $2,263 $3,587 $5,850 Maintenance 9,691 8,997 3,701 12,698 Professional services 3,770 3,000 2,520 5,520 Outsourcing 8,785 15,470 7,857 23,327 -------- --------- --------- --------- Total revenues 27,052 29,730 17,665 47,395 -------- --------- --------- --------- Cost of revenues: Software licenses 628 696 856 1,552 Maintenance 2,300 2,169 1,499 3,668 Professional services 1,764 1,472 861 2,333 Outsourcing 4,743 8,991 4,411 13,402 -------- --------- --------- --------- Total cost of revenues 9,435 13,328 7,627 20,955 -------- --------- --------- --------- Gross profit 17,617 16,402 10,038 26,440 -------- --------- --------- --------- Operating expenses: Selling and marketing 2,943 2,594 1,364 3,958 Research and development 3,746 4,004 2,071 6,075 General and administrative 2,229 2,130 1,140 3,270 Merger costs related to the sale of SS&C - 44,677 - 44,677 -------- --------- --------- --------- Total operating expenses 8,918 53,405 4,575 57,980 -------- --------- --------- --------- Operating income (loss) 8,699 (37,003) 5,463 (31,540) Interest income (expense) 691 (505) (4,890) (5,395) Other income, net 120 329 258 587 -------- --------- --------- --------- Income (loss) before income taxes 9,510 (37,179) 831 (36,348) Provision (benefit) for income taxes 3,526 (12,570) (284) (12,854) -------- --------- --------- --------- Net income (loss) $5,984 $(24,609) $1,115 $(23,494) ======== ========= ========= ========= See Notes to Consolidated Condensed Financial Information. SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) Predecessor Successor ----------- ----------- December December 31, 31, 2004 2005 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 28,913 $ 15,584 Investments in marketable securities 101,922 - Accounts receivable, net 13,545 32,862 Income taxes receivable - 8,346 Prepaid expenses and other current assets 1,607 6,236 ---------- ---------- Total current assets 145,987 63,028 Property and equipment, net 5,353 10,289 Deferred income taxes 5,894 - Intangible and other assets, net 28,429 1,100,056 ---------- ---------- Total assets $ 185,663 $1,173,373 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long term debt $ - $ 10,438 Accounts payable 1,073 2,367 Income taxes payable 609 - Accrued employee compensation and benefits 6,248 9,048 Other accrued expenses 3,549 13,109 Deferred income taxes 188 1,097 Dividend payable 1,850 - Deferred maintenance and other revenue 16,052 20,566 ---------- ---------- Total current liabilities 29,569 56,625 Long-term debt - 478,143 Deferred income taxes - 81,188 ---------- ---------- Total liabilities 29,569 615,956 ---------- ---------- Total stockholders' equity before treasury stock 209,514 557,417 Less: cost of common stock in treasury 53,420 - ---------- ---------- Total stockholders' equity 156,094 557,417 ---------- ---------- Total liabilities and stockholders' equity $ 185,663 $1,173,373 ========== ========== See Notes to Consolidated Condensed Financial Information. SS&C Technologies, Inc. and Subsidiaries Note to Consolidated Condensed Financial Information Note 1. Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) Adjusted operating income represents operating income (loss) adjusted for amortization of acquisition-related intangible assets, merger costs and purchase accounting adjustments for deferred revenue and other expenses. Adjusted operating income is presented because we use this measure to evaluate performance of our business because we believe it is a useful indicator of the underlying performance of the Company. Adjusted operating income is not a recognized term under generally accepted accounting principles (GAAP). Adjusted operating income does not represent operating income, as that term is defined under GAAP, and should not be considered as an alternative to operating income as an indicator of our operating performance. Adjusted operating income as presented herein is not necessarily comparable to similarly titled measures. The following is a reconciliation between adjusted operating income and operating income, the GAAP measure we believe to be most directly comparable to adjusted operating income. Predecessor Successor ------------------ --------- Combined Period Period Three from from Three months October December months ended 1, 2005 1, 2005 ended December through through December 31, November December 31, (in thousands) 2004 30, 2005 31, 2005 2005 -------- --------- --------- --------- Operating income (loss) $ 8,699 $(37,003) $ 5,463 $(31,540) Purchase accounting adjustments - - 616 616 Merger costs - 44,677 - 44,677 Amortization of intangible assets 680 1,570 1,870 3,440 ------- -------- -------- -------- Adjusted operating income $ 9,379 $ 9,244 $ 7,949 $ 17,193 ======= ======== ======== ======== Predecessor Successor ----------------- --------- Combined Period from Period January from Year 1, 2005 December Year ended through 1, 2005 ended December November through December 31, 30, December 31, (in thousands) 2004 2005 31, 2005 2005 -------- -------- --------- -------- Operating income (loss) $29,413 $(5,160) $ 5,463 $ 303 Purchase accounting adjustments - - 616 616 Merger costs - 45,848 - 45,848 Amortization of intangible assets 2,400 6,288 1,870 8,158 ------- ------- -------- ------- Adjusted operating income $31,813 $46,976 $ 7,949 $54,925 ======= ======= ======== ======= Note 2. Reconciliation of Net Income (Loss) to EBITDA and Consolidated EBITDA EBITDA represents net income (loss) before interest (income) expense, income taxes, depreciation and amortization. Consolidated EBITDA, defined under our Credit Agreement entered in November 2005 and is used in calculating covenant compliance, is EBITDA adjusted for certain items. Consolidated EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described below. EBITDA and Consolidated EBITDA are presented because we use these measures to evaluate performance of our business because we believe them to be useful indicators of an entity's debt capacity and its ability to service debt. EBITDA and Consolidated EBITDA are not recognized terms under GAAP and should not be considered in isolation or as an alternative to operating income (loss), net income (loss) or cash flows from operating activities. EBITDA and Consolidated EBITDA do not represent net income (loss), as that term is defined under GAAP, and should not be considered as an alternative to net income (loss) as an indicator of our operating performance. Predecessor Successor ------------------ --------- Combined Period Period Three from from Three months October December months ended 1, 2005 1, 2005 ended December through through December 31, November December 31, (in thousands) 2004 30, 2005 31, 2005 2005 -------- --------- --------- --------- Net income (loss) $ 5,984 $(24,609) $ 1,115 $(23,494) Interest (income) expense (691) 505 4,890 5,395 Income Taxes 3,526 (12,570) (284) (12,854) Depreciation and amortization 1,271 2,299 2,301 4,600 ------- -------- -------- -------- EBITDA $10,090 $(34,375) $ 8,022 $(26,353) Purchase accounting adjustments - - 616 616 Merger costs - 44,677 - 44,677 Unusual or non-recurring charges (118) (329) (242) (571) Acquired EBITDA and cost savings 6,742 1,456 85 1,541 Other - - 107 107 ------- -------- -------- -------- Consolidated EBITDA $16,714 $ 11,429 $ 8,588 $ 20,017 ======= ======== ======== ======== Predecessor Successor ----------------- --------- Combined Period from Period January from Year 1, 2005 December Year ended through 1, 2005 ended December November through December 31, 30, December 31, (in thousands) 2004 2005 31, 2005 2005 -------- -------- --------- -------- Net income (loss) $19,010 $(5,056) $ 1,115 $(3,941) Interest (income) expense (1,528) 1,061 4,890 5,951 Income Taxes 12,030 (510) (284) (794) Depreciation and amortization 4,592 9,575 2,301 11,876 ------- ------- -------- ------- EBITDA 34,104 5,070 8,022 13,092 Purchase accounting adjustments - - 616 616 Merger costs - 45,848 - 45,848 Unusual or non-recurring charges (81) (737) (242) (979) Acquired EBITDA and cost savings 26,495 14,808 85 14,893 Other - - 107 107 ------- ------- -------- ------- Consolidated EBITDA $60,518 $64,989 $ 8,588 $73,577 ======= ======= ======== =======
Adjusted operating income (as defined in note 1 to the Consolidated Financial Information) was $17.2 million for the three months ended December 31, 2005, compared to $9.4 million in the fourth quarter of the prior year. GAAP operating loss in the fourth quarter of 2005 was $31.5 million and includes amortization of $3.4 million, merger costs of $44.7 million and deferred revenue adjustment and other purchase accounting items of $0.6 million. GAAP operating income in the fourth quarter of 2004 was $8.7 million and includes amortization of $0.7 million. Adjusted operating income for the year 2005 was $54.9 million, compared to $31.8 million for the year 2004. GAAP operating income for 2005 was $0.3 million and includes amortization of $8.2 million, merger costs of $45.8 million and purchase accounting adjustments of $0.6 million.
Consolidated EBITDA (as defined in note 2 of the Consolidated Financial Information) for the fourth quarter of 2005 was $20.0 million, compared to $16.7 million in the fourth quarter of 2004. Consolidated EBITDA was $73.6 million for the year 2005, compared to $60.5 million for the year 2004.
On November 23, 2005, SS&C Technologies, Inc. was acquired by Sunshine Acquisition Corporation, a corporation affiliated with The Carlyle Group, a global private equity firm. Bill Stone, SS&C's Chairman and CEO stated, "Being a privately-held company allows us to channel all of our resources on growing our business and continuing to produce excellent financial results."
Stone, commenting on recent results said, "Throughout 2005 we stayed focused on our business and executed on our strategy. We have extended our market reach, broadened our product offerings and improved our position in the global marketplace. As a result, we had an outstanding year with record revenue numbers quarter after quarter. We are realizing the benefits of many of our acquisitions as they are integrated, which is reflected in our strong fourth quarter numbers. All revenue segments showed significant growth for both Q4 and all of 2005, with outsourcing revenues clearly outperforming every other revenue segment," Stone continued, "In all business lines, we are seeing positive results and, as we integrate our acquisitions, we have been able to capitalize on cross-sell and up-sell opportunities, take advantage of our broader geographic reach, and realize cost-savings from several economy-of-scale initiatives."
Software
"Across the board, license revenues increased," said Stone. "In Q4 2005, license revenues were $5.9 million, a 22% increase over Q4, 2004. Total 2005 license revenues were $23.7 million, a 38% increase over 2004. We had an increase in licenses for CAMRA, LMS, Altair, AdvisorWare and SKYLINE. With the introduction of LMS Loan Suite, LMS license sales have taken hold, and in 2005, showed a 261% increase over 2004 LMS license sales, proving our commitment to R&D and our ability to respond effectively to market needs. Acquisitions also made a healthy contribution to license revenue growth, particularly Pages, Recon, Sylvan, FundRunner, and MarginMan."
Outsourcing Solutions
"Insurance companies, asset managers and hedge funds all continue to look to outsourcing as a way to implement cost-savings and shift some of their accounting and systems burden to a third party," said Stone. "Our expertise in each of these industries, as well as our technology, specifically designed for these markets, has given us a global, competitive advantage. Outsourcing revenues in 2005 were $75 million, an increase of 143% over 2004. In 2005, outsourcing revenues represented 46% of total revenues. In November, 2005, the Hedge Fund Manager Survey ranked SS&C Fund Services as the tenth largest hedge fund administrator, and the fastest growing fund administrator."
Acquisitions/Integration
"In 2005, SS&C completed six acquisitions, and we are very focused on the synergies of our merger and acquisition decisions," Stone commented. "We constantly work on improving our integration processes and each acquisition is integrated as quickly as possible. This year we added significant strength in asset management with the acquisition of Financial Models Company Inc. Our financial institutions added breadth with MarginMan and Open Information Systems. Our hedge fund business has added expertise with EisnerFast, and technology with Financial Interactive. Achievement Technologies adds a new dimension to SKYLINE and a new product offering for the real estate market. We expect to continue to pursue acquisitions that are a good fit for SS&C, adding more great people, products and services, clients, and prospects."
On March 6, 2006, SS&C announced the acquisition of Cogent Management Inc. Cogent, located in New Rochelle, New York, provides hedge fund management services, with a particular expertise in U.S.-based hedge funds. Stone commented on the acquisition, "We welcome the Cogent team and Cogent clients to SS&C and look forward to creating new opportunities for everyone."
Earnings Call
SS&C's Q4 2005 earnings call will take place at 5:00 p.m. Eastern Time today, March 7, 2006. The call will discuss Q4 and 2005 year-end results. Interested parties may dial 706-643-7858 (US, Canada and International) and request the "SS&C Fourth Quarter Earnings Call", conference ID #6135561. A replay will be available after 8:00 pm on March 7th, until midnight on April 7, 2006. To hear the replay, dial 706-645-9291 and enter the access code 6135561. A replay of the call will also be available after March 8, 2006 on our website at www.ssctech.com/about/investor.asp. -0- SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) Combined Predecessor Combined Predecessor Three Three Months Months Year Ended Ended Ended Year Ended December December December December 31, 2005 31, 2004 31, 2005 31, 2004 --------- ----------- --------- ----------- Revenues: Software licenses $ 5,850 $ 4,806 $ 23,734 $ 17,250 Maintenance 12,698 9,691 47,765 36,433 Professional services 5,520 3,770 15,085 11,320 Outsourcing 23,327 8,785 75,050 30,885 -------- ---------- -------- ---------- Total revenues 47,395 27,052 161,634 95,888 -------- ---------- -------- ---------- Cost of revenues: Software licenses 1,552 628 3,819 2,258 Maintenance 3,668 2,300 11,892 8,462 Professional services 2,333 1,764 8,710 6,606 Outsourcing 13,402 4,743 42,210 16,444 -------- ---------- -------- ---------- Total cost of revenues 20,955 9,435 66,631 33,770 -------- ---------- -------- ---------- Gross profit 26,440 17,617 95,003 62,118 -------- ---------- -------- ---------- Operating expenses: Selling and marketing 3,958 2,943 14,498 10,734 Research and development 6,075 3,746 21,270 13,957 General and administrative 3,270 2,229 13,084 8,014 Merger costs related to the sale of SS&C 44,677 - 45,848 - -------- ---------- -------- ---------- Total operating expenses 57,980 8,918 94,700 32,705 -------- ---------- -------- ---------- Operating income (loss) (31,540) 8,699 303 29,413 Interest income (expense) (5,395) 691 (5,951) 1,528 Other income, net 587 120 913 99 -------- ---------- -------- ---------- Income (loss) before income taxes (36,348) 9,510 (4,735) 31,040 Provision (benefit) for income taxes (12,854) 3,526 (794) 12,030 -------- ---------- -------- ---------- Net income (loss) $(23,494) $ 5,984 $ (3,941) $ 19,010 ======== ========== ======== ========== See Notes to Consolidated Condensed Financial Information. SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) Predecessor Successor ----------------- --------- Combined Period from Period January from Year 1, 2005 December Year ended through 1, 2005 ended December November through December 31, 30, December 31, 2004 2005 31, 2005 2005 -------- -------- --------- -------- Revenues: Software licenses $17,250 $20,147 $3,587 $23,734 Maintenance 36,433 44,064 3,701 47,765 Professional services 11,320 12,565 2,520 15,085 Outsourcing 30,885 67,193 7,857 75,050 -------- -------- --------- -------- Total revenues 95,888 143,969 17,665 161,634 -------- -------- --------- -------- Cost of revenues: Software licenses 2,258 2,963 856 3,819 Maintenance 8,462 10,393 1,499 11,892 Professional services 6,606 7,849 861 8,710 Outsourcing 16,444 37,799 4,411 42,210 -------- -------- --------- -------- Total cost of revenues 33,770 59,004 7,627 66,631 -------- -------- --------- -------- Gross profit 62,118 84,965 10,038 95,003 -------- -------- --------- -------- Operating expenses: Selling and marketing 10,734 13,134 1,364 14,498 Research and development 13,957 19,199 2,071 21,270 General and administrative 8,014 11,944 1,140 13,084 Merger costs related to the sale of SS&C - 45,848 - 45,848 -------- -------- --------- -------- Total operating expenses 32,705 90,125 4,575 94,700 -------- -------- --------- -------- Operating income (loss) 29,413 (5,160) 5,463 303 Interest income (expense) 1,528 (1,061) (4,890) (5,951) Other income, net 99 655 258 913 -------- -------- --------- -------- Income (loss) before income taxes 31,040 (5,566) 831 (4,735) Provision (benefit) for income taxes 12,030 (510) (284) (794) -------- -------- --------- -------- Net income (loss) $19,010 $(5,056) $1,115 $(3,941) ======== ======== ========= ======== See Notes to Consolidated Condensed Financial Information. SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) Predecessor Successor ------------------ --------- Combined Period Period Three from from Three months October December months ended 1, 2005 1, 2005 ended December through through December 31, November December 31, 2004 30, 2005 31, 2005 2005 -------- --------- --------- --------- Revenues: Software licenses $4,806 $2,263 $3,587 $5,850 Maintenance 9,691 8,997 3,701 12,698 Professional services 3,770 3,000 2,520 5,520 Outsourcing 8,785 15,470 7,857 23,327 -------- --------- --------- --------- Total revenues 27,052 29,730 17,665 47,395 -------- --------- --------- --------- Cost of revenues: Software licenses 628 696 856 1,552 Maintenance 2,300 2,169 1,499 3,668 Professional services 1,764 1,472 861 2,333 Outsourcing 4,743 8,991 4,411 13,402 -------- --------- --------- --------- Total cost of revenues 9,435 13,328 7,627 20,955 -------- --------- --------- --------- Gross profit 17,617 16,402 10,038 26,440 -------- --------- --------- --------- Operating expenses: Selling and marketing 2,943 2,594 1,364 3,958 Research and development 3,746 4,004 2,071 6,075 General and administrative 2,229 2,130 1,140 3,270 Merger costs related to the sale of SS&C - 44,677 - 44,677 -------- --------- --------- --------- Total operating expenses 8,918 53,405 4,575 57,980 -------- --------- --------- --------- Operating income (loss) 8,699 (37,003) 5,463 (31,540) Interest income (expense) 691 (505) (4,890) (5,395) Other income, net 120 329 258 587 -------- --------- --------- --------- Income (loss) before income taxes 9,510 (37,179) 831 (36,348) Provision (benefit) for income taxes 3,526 (12,570) (284) (12,854) -------- --------- --------- --------- Net income (loss) $5,984 $(24,609) $1,115 $(23,494) ======== ========= ========= ========= See Notes to Consolidated Condensed Financial Information. SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) Predecessor Successor ----------- ----------- December December 31, 31, 2004 2005 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 28,913 $ 15,584 Investments in marketable securities 101,922 - Accounts receivable, net 13,545 32,862 Income taxes receivable - 8,346 Prepaid expenses and other current assets 1,607 6,236 ---------- ---------- Total current assets 145,987 63,028 Property and equipment, net 5,353 10,289 Deferred income taxes 5,894 - Intangible and other assets, net 28,429 1,100,056 ---------- ---------- Total assets $ 185,663 $1,173,373 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long term debt $ - $ 10,438 Accounts payable 1,073 2,367 Income taxes payable 609 - Accrued employee compensation and benefits 6,248 9,048 Other accrued expenses 3,549 13,109 Deferred income taxes 188 1,097 Dividend payable 1,850 - Deferred maintenance and other revenue 16,052 20,566 ---------- ---------- Total current liabilities 29,569 56,625 Long-term debt - 478,143 Deferred income taxes - 81,188 ---------- ---------- Total liabilities 29,569 615,956 ---------- ---------- Total stockholders' equity before treasury stock 209,514 557,417 Less: cost of common stock in treasury 53,420 - ---------- ---------- Total stockholders' equity 156,094 557,417 ---------- ---------- Total liabilities and stockholders' equity $ 185,663 $1,173,373 ========== ========== See Notes to Consolidated Condensed Financial Information. SS&C Technologies, Inc. and Subsidiaries Note to Consolidated Condensed Financial Information Note 1. Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) Adjusted operating income represents operating income (loss) adjusted for amortization of acquisition-related intangible assets, merger costs and purchase accounting adjustments for deferred revenue and other expenses. Adjusted operating income is presented because we use this measure to evaluate performance of our business because we believe it is a useful indicator of the underlying performance of the Company. Adjusted operating income is not a recognized term under generally accepted accounting principles (GAAP). Adjusted operating income does not represent operating income, as that term is defined under GAAP, and should not be considered as an alternative to operating income as an indicator of our operating performance. Adjusted operating income as presented herein is not necessarily comparable to similarly titled measures. The following is a reconciliation between adjusted operating income and operating income, the GAAP measure we believe to be most directly comparable to adjusted operating income. Predecessor Successor ------------------ --------- Combined Period Period Three from from Three months October December months ended 1, 2005 1, 2005 ended December through through December 31, November December 31, (in thousands) 2004 30, 2005 31, 2005 2005 -------- --------- --------- --------- Operating income (loss) $ 8,699 $(37,003) $ 5,463 $(31,540) Purchase accounting adjustments - - 616 616 Merger costs - 44,677 - 44,677 Amortization of intangible assets 680 1,570 1,870 3,440 ------- -------- -------- -------- Adjusted operating income $ 9,379 $ 9,244 $ 7,949 $ 17,193 ======= ======== ======== ======== Predecessor Successor ----------------- --------- Combined Period from Period January from Year 1, 2005 December Year ended through 1, 2005 ended December November through December 31, 30, December 31, (in thousands) 2004 2005 31, 2005 2005 -------- -------- --------- -------- Operating income (loss) $29,413 $(5,160) $ 5,463 $ 303 Purchase accounting adjustments - - 616 616 Merger costs - 45,848 - 45,848 Amortization of intangible assets 2,400 6,288 1,870 8,158 ------- ------- -------- ------- Adjusted operating income $31,813 $46,976 $ 7,949 $54,925 ======= ======= ======== ======= Note 2. Reconciliation of Net Income (Loss) to EBITDA and Consolidated EBITDA EBITDA represents net income (loss) before interest (income) expense, income taxes, depreciation and amortization. Consolidated EBITDA, defined under our Credit Agreement entered in November 2005 and is used in calculating covenant compliance, is EBITDA adjusted for certain items. Consolidated EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described below. EBITDA and Consolidated EBITDA are presented because we use these measures to evaluate performance of our business because we believe them to be useful indicators of an entity's debt capacity and its ability to service debt. EBITDA and Consolidated EBITDA are not recognized terms under GAAP and should not be considered in isolation or as an alternative to operating income (loss), net income (loss) or cash flows from operating activities. EBITDA and Consolidated EBITDA do not represent net income (loss), as that term is defined under GAAP, and should not be considered as an alternative to net income (loss) as an indicator of our operating performance. Predecessor Successor ------------------ --------- Combined Period Period Three from from Three months October December months ended 1, 2005 1, 2005 ended December through through December 31, November December 31, (in thousands) 2004 30, 2005 31, 2005 2005 -------- --------- --------- --------- Net income (loss) $ 5,984 $(24,609) $ 1,115 $(23,494) Interest (income) expense (691) 505 4,890 5,395 Income Taxes 3,526 (12,570) (284) (12,854) Depreciation and amortization 1,271 2,299 2,301 4,600 ------- -------- -------- -------- EBITDA $10,090 $(34,375) $ 8,022 $(26,353) Purchase accounting adjustments - - 616 616 Merger costs - 44,677 - 44,677 Unusual or non-recurring charges (118) (329) (242) (571) Acquired EBITDA and cost savings 6,742 1,456 85 1,541 Other - - 107 107 ------- -------- -------- -------- Consolidated EBITDA $16,714 $ 11,429 $ 8,588 $ 20,017 ======= ======== ======== ======== Predecessor Successor ----------------- --------- Combined Period from Period January from Year 1, 2005 December Year ended through 1, 2005 ended December November through December 31, 30, December 31, (in thousands) 2004 2005 31, 2005 2005 -------- -------- --------- -------- Net income (loss) $19,010 $(5,056) $ 1,115 $(3,941) Interest (income) expense (1,528) 1,061 4,890 5,951 Income Taxes 12,030 (510) (284) (794) Depreciation and amortization 4,592 9,575 2,301 11,876 ------- ------- -------- ------- EBITDA 34,104 5,070 8,022 13,092 Purchase accounting adjustments - - 616 616 Merger costs - 45,848 - 45,848 Unusual or non-recurring charges (81) (737) (242) (979) Acquired EBITDA and cost savings 26,495 14,808 85 14,893 Other - - 107 107 ------- ------- -------- ------- Consolidated EBITDA $60,518 $64,989 $ 8,588 $73,577 ======= ======= ======== =======
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