-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QFRdyi6g94LzTCen8D4IEqlhxJLDGSJ2xrFFppvBMoJ3IT8wBmVGRGkczh1oVrEK dbrcnGHzFBSa3iJ4I4L6Dw== 0000927016-99-003003.txt : 19990817 0000927016-99-003003.hdr.sgml : 19990817 ACCESSION NUMBER: 0000927016-99-003003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SS&C TECHNOLOGIES INC CENTRAL INDEX KEY: 0001011661 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 061169696 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28430 FILM NUMBER: 99691644 BUSINESS ADDRESS: STREET 1: 80 LAMBERTON RD STREET 2: CORPORATE PLACE CITY: WINDSOR STATE: CT ZIP: 06095 BUSINESS PHONE: 8602427887 MAIL ADDRESS: STREET 1: CORPORATE PLACE STREET 2: 705 BLOOMFIELD AVE CITY: BLOOMFIELD STATE: CT ZIP: 06002 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________________ to __________________ Commission File Number 000-28430 SS&C TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 06-1169696 (State or other jurisdiction of (I.R.S. Employer identification No.) incorporation or organization) 80 Lamberton Road Windsor, CT 06095 (Address of principal executive offices, including zip code) 860-298-4500 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares outstanding of the issuer's classes of common stock as of July 26, 1999: Class Number of Shares Outstanding ----- ---------------------------- Common Stock, par value $.01 per share 15,643,782 Page 1 SS&C TECHNOLOGIES, INC. INDEX
Page Number ----------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at December 31, 1998 and June 30, 1999 3 Consolidated Condensed Statements of Operations for the three-and six-month periods ended June 30, 1999 and 1998 4 Consolidated Condensed Statements of Cash Flows for the six-month periods ended June 30, 1999 and 1998 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings 16 Item 2. Changes in Securities and Use of Proceeds 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURE 18 EXHIBIT INDEX 19
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects" and similar expressions are intended to identify forward-looking statements. The important factors discussed below under the caption "Certain Factors That May Affect Future Operating Results," among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Page 2 Part I. FINANCIAL INFORMATION Item 1. Financial Statements SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)
(unaudited) June 30, Dec. 31, 1999 1998 ------------------- ----------------- ASSETS Current assets: Cash and cash equivalents $ 17,575 $ 13,047 Restricted cash - 1,230 Investments in marketable securities 44,599 42,263 Accounts receivable, net 19,234 24,441 Note receivable - 2,250 Prepaid expenses and other current assets 1,613 1,709 Deferred income taxes 586 434 ------------------ ----------------- Total current assets 83,607 85,374 ------------------ ----------------- Property and equipment: Land 106 106 Building and leasehold improvements 3,161 2,748 Equipment, furniture and fixtures 12,493 10,740 ------------------ ---------------- 15,760 13,594 Less accumulated depreciation (6,924) (5,806) ------------------ ---------------- Net property and equipment 8,836 7,788 ------------------ ---------------- Accounts receivable 408 549 Deferred income taxes 6,230 6,266 Goodwill, net 509 722 Intangible and other assets, net 2,929 4,615 ------------------ ---------------- Total assets $ 102,519 $ 105,314 ================== ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 131 $ 171 Accounts payable 1,667 2,124 Taxes payable - 1,059 Accrued employee compensation and benefits 1,934 6,941 Other accrued expenses 1,718 2,492 Accrued litigation settlement costs 9,330 - Deferred maintenance and other revenues 15,263 13,301 ------------------ ---------------- Total current liabilities 30,043 26,088 Long-term debt 140 303 ------------------ ---------------- Total liabilities 30,183 26,391 ------------------ ---------------- Stockholders' equity: Common stock 157 153 Additional paid-in capital 85,543 81,509 Cumulative translation adjustment (366) (121) Accumulated deficit (12,998) (2,618) ------------------ ---------------- Total stockholders' equity 72,336 78,923 ------------------ ---------------- Total liabilities and stockholders' equity $ 102,519 $ 105,314 ================== ================
See accompanying notes to Consolidated Financial Statements. Page 3 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data)
Three Months Ended Six Months Ended ------------------------------------- ---------------------------------- June 30, June 30, June 30, June 30, 1999 1998 1999 1998 ---------------- ---------------- ---------------- ---------------- Revenues: Software licenses $ 4,383 $ 8,986 $ 12,389 $ 14,922 Maintenance and other recurring revenue 6,932 6,050 13,615 10,203 Professional services 5,306 4,031 10,064 6,510 ---------------- ---------------- ---------------- ---------------- Total revenues 16,621 19,067 36,068 31,635 ---------------- ---------------- ---------------- ---------------- Cost of revenues: Software licenses 1,078 1,026 2,090 1,455 Maintenance and other recurring revenue 2,521 2,276 4,754 3,713 Professional services 3,879 2,893 7,250 4,642 ---------------- ---------------- ---------------- ---------------- Total cost of revenues 7,478 6,195 14,094 9,810 ---------------- ---------------- ---------------- ---------------- Gross profit 9,143 12,872 21,974 21,825 ---------------- ---------------- ---------------- ---------------- Operating expenses: Selling and marketing 4,474 3,277 8,989 6,823 Research and development 5,445 5,806 10,340 9,295 General and administrative 3,193 2,907 5,487 4,498 Write-off of purchased in-process research and development - 491 - 5,878 Litigation settlement costs (Note 3) 9,330 - 9,330 - ---------------- ---------------- ---------------- ---------------- Total operating expenses 22,442 12,481 34,146 26,494 ---------------- ---------------- ---------------- ---------------- Operating income (loss) (13,299) 391 (12,172) (4,669) Interest income, net 530 490 1,094 1,080 Other income 95 22 378 86 ---------------- ---------------- ---------------- ---------------- Income (loss) before income taxes (12,674) 903 (10,700) (3,503) Provision (benefit) for income taxes (836) 436 (344) (1,045) ================ ================ ================ ================ Net income (loss) $ (11,838) $ 467 $ (10,356) $ (2,458) ================ ================ ================ ================ Basic earnings (loss) per share $ (0.76) $ 0.03 $ (0.67) $ (0.17) ================ ================ ================ ================ Basic weighted average number of common shares outstanding 15,627 15,000 15,503 14,703 ================ ================ ================ ================ Diluted earnings (loss) per share $ (0.76) $ 0.03 $ (0.67) $ ( 0.17) ================ ================ ================ ================ Diluted weighted average number of common and common equivalent shares outstanding 15,627 16,234 15,503 14,703 ================ ================ ================ ================
See accompanying notes to Consolidated Financial Statements. Page 4 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Six months ended June 30, June 30, 1999 1998 ------------------ ----------------- Cash flows from operating activities: Net loss $ (10,356) $ (2,458) ------------------ ----------------- Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 3.089 2,583 Non-cash adjustment related to litigation settlement 1,300 - Deferred income taxes (116) (2,172) Purchased in-process research and development - 5,878 Provision for doubtful accounts 1,601 1,315 Changes in operating assets and liabilities, excluding effects from acquisitions: Accounts receivable 3,525 (3,051) Prepaid expenses and other current assets 174 (1,351) Accrued litigation settlement costs 8,030 - Accounts payable (542) (926) Accrued expenses (2,737) (1,667) Taxes payable (1,059) 679 Deferred maintenance and other revenues 1,962 (634) ------------------ ----------------- Total adjustments 15,227 654 ------------------ ----------------- ------------------ ----------------- Net cash provided by (used in) operating activities 4,871 (1,804) ------------------ ----------------- Cash flow from investing activities: Additions to property and equipment (2,150) (3,631) Acquisition of Quantra, net of cash received - (5,260) Additions to capitalized software and other intangibles (88) (2,230) Proceeds from note receivable 2,250 - Purchases of marketable securities (8,700) (37,700) Sales of marketable securities 6,364 37,109 ------------------ ----------------- ------------------ ----------------- Net cash used by investing activities (2,324) (11,712) ------------------ ----------------- Cash flows from financing activities Repayment of debt (227) (620) Proceeds from note payable 475 - Issuance of common stock 446 168 Exercise of options 532 1,282 Transfer of cash from restricted cash equivalents 1,230 ------------------ ----------------- Net cash provided by financing activities 1,981 1,305 Net increase (decrease) in cash and cash equivalents 4,528 (12,211) Cash and cash equivalents, beginning of period 13,047 23,685 ------------------ ----------------- Cash and cash equivalents, end of period $ 17,575 $ 11,474 ================== =================
Supplemental disclosure of non-cash investing activities: As more fully described in Note 3, effective March 20, 1998, the Company purchased substantially all the assets of Quantra Corporation for $15.3 million. As more fully described in Note 3, effective March 11, 1999, the Company acquired in a pooling all the outstanding stock of HedgeWare, Inc. for 685,683 shares of the Company's Common Stock. See accompanying notes to Consolidated Financial Statements. Page 5 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (unaudited) 1. Summary of Significant Accounting Policies: Basis of Presentation In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the consolidated condensed financial statements) necessary to present fairly its financial position as of June 30, 1999 and the results of its operations for the three and six months ended June 30, 1999 and 1998. These statements are condensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and footnotes as of and for the year ended December 31, 1998 included in the Company's Form 10-K filed with the Securities and Exchange Commission. The December 31, 1998 consolidated condensed balance sheet data were derived from audited financial statements, but do not include all disclosures required by generally accepted accounting principles. The results of operations for the three and six months ended June 30, 1999 are not necessarily indicative of the results to be expected for the full year. Basic and Diluted Earnings Per Share Earnings per share is calculated in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share". Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of stock options using the treasury stock method. Common equivalent shares are excluded from the computation if their effect is antidilutive. Outstanding options to purchase 3.0 million and 1.2 million shares at June 30, 1999 and 1998, respectively, were not included in the computation of diluted earnings per share because the effect of including the options would be antidilutive. Income available to stockholders is the same for basic and diluted earnings per share. A reconciliation of the shares outstanding is as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30, 1999 1998 1999 1998 --------------- ---------------- ---------------- ---------------- Basic weighted average shares Outstanding 15,627 15,000 15,503 14,703 Weighted average common stock Equivalents-options 1,234 --------------- ---------------- ---------------- ---------------- Diluted weighted average shares Outstanding 15,627 16,234 15,503 14,703
Comprehensive Income (Loss ) Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130") requires that items defined as comprehensive income, such as foreign currency translation adjustments, be separately classified in the financial statements and that the accumulated balance of other comprehensive income be reported separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. There were no material differences between net income (loss) and comprehensive income (loss) for the three and six months ended June 30, 1998 and 1999. Reclassification of prior periods statement of operations As a result of continued efforts to refine cost allocations and methodologies, certain prior period costs have been reclassified to be consistent with the current period. 2. Related Party Transactions: Aegon USA Realty Advisors, Inc. ("Aegon") is the parent company of QSC Holding Inc. (formerly known as Quantra Corporation), which sold substantially all of its assets to the Company in March 1998. The president of Aegon also retains a Page 6 seat on the board of directors of the Company. During the quarter ended March 1999 Aegon licensed certain of the Company's products for $1.68 million. This amount was paid in full during the quarter ended March 31, 1999. 3. Commitments and Contingencies: On March 18, 1997 and April 8, 1997, two separate purported class action lawsuits ("Complaints") were filed against the Company, certain of its officers and the two leading managers of the Company's initial public offering. On July 8, 1997, a Consolidated Amended Class Action Complaint was filed in the United States District Court for the District of Connecticut in which the Complaints were consolidated and amended. On May 7, 1999, the Company announced that it had entered into an agreement that provides for the settlement of the consolidated securities class action lawsuit pending against the Company. The settlement provides that all claims against the Company, certain of its officers and directors and underwriters will be dismissed. Under the terms of the settlement, in exchange for the dismissal and release of all claims, the Company will pay to the class $7.5 million in cash, together with shares of Common Stock of the Company valued at $1.3 million. The Company recorded a charge for the settlement of approximately $9.3 million, including legal fees, in the quarter ended June 30, 1999. The settlement is subject to certain customary conditions, including notice to the class and approval by the Court. 4. Acquisitions: On March 20, 1998, the Company completed its acquisition (the "Quantra Acquisition") of substantially all of the assets of Quantra Corporation ("Quantra") pursuant to an Asset Purchase Agreement, dated as of March 20, 1998, among the Company, Quantra and AEGON USA Realty Advisors, Inc., the sole stockholder of Quantra. The purchase price for the Quantra Acquisition consisted of 546,019 unregistered shares of the Company's Common Stock valued at $8.8 million, $2.3 million in cash and the assumption of certain liabilities of Quantra of $4.1 million, plus the costs of effecting the transaction. The Company and Quantra also entered into an Escrow Agreement pursuant to which an additional $1.2 million was held in escrow to reimburse the Company in connection with certain acquisition costs and the breaches of representations, warranties and covenants, if any, by Quantra. During the second quarter of 1999, the escrow balance was released in accordance with the acquisition agreement. The Quantra Acquisition was accounted for as a purchase and, accordingly, the net assets and results of operations of Quantra have been included in the consolidated condensed financial statements from the acquisition date. The purchase price was allocated to tangible and intangible assets based on their fair market value on the date of the acquisition. The following summarizes the allocation of the purchase price of the Quantra Acquisition (in thousands): Accounts receivable $ 4,145 Equipment and furniture 425 Other assets 63 Complete technology 5,271 Incomplete technology 5,387 ----- Total purchase price $15,291 ======= On April 9, 1998, the Company completed its acquisition (the "Savid Acquisition") of the outstanding shares of Savid International Inc. and The Savid Group, Inc. (together "Savid") pursuant to a Stock Purchase Agreement, dated as of April 9, 1998, between the Company, Savid and the sole stockholder ("Stockholder") of Savid. The purchase price of the Savid Acquisition consisted of $739,000 in cash, net of cash received, and the assumption of certain liabilities of Savid of $118,000, plus the costs of effecting the transaction. A further cash payment of $750,000 shall be paid as additional consideration provided that the aggregate revenues for the period from and including April 15, 1998 through and including April 14, 2001 are greater than or equal to $3,000,000. The Company shall pay to the Stockholder an aggregate of 10% of the license fees with respect to sales and/or licensing of the Savid product during the period commencing on April 15, 1998 and ending on April 14, 2003. The results of operations of Savid prior to the acquisition were immaterial. The Savid Acquisition was accounted for as a purchase and, accordingly, the net assets and results of operations of Savid have been included in the consolidated condensed financial statements from the acquisition date. The purchase price was allocated to tangible and intangible assets based on their fair market value on the date of the acquisition. The following summarizes the allocation of the purchase price for the Savid Acquisition (in thousands): Page 7 Accounts receivable $ 30 Equipment and furniture 4 Complete technology 336 Incomplete technology 491 --- Total purchase price $861 ==== For the Quantra and Savid Acquisitions, the allocation to complete technology is based on future risk-adjusted cash flows. Complete technology has been capitalized and included in intangible assets in the accompanying consolidated condensed balance sheets. Complete technology will be amortized over two to four years based on the ratio that current gross revenues of the products bear to the total of current and anticipated future gross revenues of the products or the straight line-method, whichever is shorter. The allocation to incomplete technology is also based on future risk-adjusted cash flows and has been expensed in 1998, in accordance with generally accepted accounting principles. The incomplete technology had not achieved technological feasibility and had no alternative uses. For the Quantra and Savid Acquisitions, the Company developed revenue projections over a five-to-six year period in three categories: license, maintenance and consulting. License revenue projections were based on expected unit sales over the projected lives of the respective product lines. The other categories of revenues were generally estimated as a percentage of total license revenues and ranged from 15% to 20% for maintenance and from 10% to 30% for consulting, depending on the product. Savid consulting revenues were projected to be insignificant. Expense assumptions were based on the imposition of the Company's cost structure on the acquired technologies and products. The discount rates for the Quantra in-process research and development projects were 23% and 28%; the discount rate for the Savid in-process research and development projects was 20%. The unaudited pro forma condensed consolidated results of operations presented below for the three months ended March 31, 1998, assumes the Quantra Acquisition occurred at the beginning of the period (in thousands): Total revenues $14,295 Net loss (2,764) Basic loss per share (.19) Diluted loss per share (.19) These pro forma results are not necessarily indicative of results of operations that would have actually occurred had the acquisition taken place at the beginning of the period, or of future operations of the combined companies. On March 11, 1999, the Company acquired all of the outstanding stock of HedgeWare, Inc. ("HedgeWare"), a provider of portfolio, financial, partnership and tax accounting software and service support to hedge fund managers and traders, for 685,683 shares of Common Stock of the Company in a business combination accounted for as a pooling-of-interests. Accordingly, the financial statements for all periods prior to the combination have been restated to reflect the combined operations. The Company, HedgeWare and the former stockholders of HedgeWare have entered into an Escrow Agreement providing, among other things, that 89,139 shares of Common Stock will be held in escrow to reimburse the Company in connection with breaches of representations, warranties or covenants, if any, as well as potential rental obligations and sales tax liabilities of HedgeWare. The results of operations presented below for the quarter ended June 30, 1998 and the six months ended June 30, 1998 and 1999 present the Company and HedgeWare as stand-alone entities. There were no intercompany transactions and no adjustments to net assets of the combining companies to adopt the same accounting practices. Page 8
(in thousands) Total Company HedgeWare Company ------------- ------------- -------------- For the three months ended June 30, 1998: Revenues $ 18,119 $ 948 $ 19,067 Net income (loss) 834 (367) 467 For the six months ended June 30, 1998: Revenue $ 29,647 $ 1,988 $ 31,635 Net income (loss) (1,822) (636) (2,458) For the six months ended June 30, 1999: Revenue $ 33,399 $ 2,669 $ 36,068 Net income (loss) (11,752) 1,396 (10,356)
HedgeWare had elected to be treated as a Subchapter S Corporation for income tax purposes and, as such, income taxes are provided from March 11, 1999 for HedgeWare's results of operations. During the quarter ended March 31, 1999, the Company issued stock valued at $3.1 million in satisfaction of certain shareholder and employee-related accrued expenses of Hedgeware that existed as of the effective date of the merger. On March 31, 1999, the Company acquired all of the outstanding stock of The Brookside Corporation, a Rhode Island corporation ("Brookside"), pursuant to a Stock Purchase Agreement, dated as of March 31, 1999 (the "Purchase Agreement"), by and among the Company, Brookside, and John M. Boyle (the "Stockholder"). Pursuant to the Purchase Agreement, all of the outstanding shares of common stock of Brookside held by the Stockholder were exchanged for an aggregate of 27,600 shares of Common Stock of the Company. The consolidated results of operations for the three and six months ended June 30, 1999 include the results of operations of Brookside from the beginning of the respective periods. The consolidated financial statements for prior periods have not been restated since the impact of such restatement would not be material. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 and 1998 RESULTS OF OPERATIONS Revenues The Company's revenues are derived from software licenses and related maintenance and professional services. Total revenues for the three and six months ended June 30, 1999 were $16.6 million and $36.1 million, respectively, representing a decrease of 13% and an increase of 14% from the $19.1 million and $31.6 million, respectively, reported for the comparable periods of the prior year. Software Licenses. Software license revenues for the three and six months ended June 30, 1999 were $4.4 million and $12.4 million, respectively, representing decreases of 51% and 17% over the $9.0 million and $14.9 million, respectively, in the comparable periods of the prior year. The decrease in license revenues for the three months ended June 30, 1999 was primarily the result of lower CAMRA sales offset slightly by an increase in Advisorware sales. The decrease for the six months ended June 30, 1999 was also due to lower CAMRA sales compared to the prior period, offset by increases in the Advisorware and LMS 2000 product lines. A large percentage of lower license revenue was due to customer deferral of purchases while resolving their Y2K issues, as well as the Company's sales execution and staffing requirements. Maintenance and Other Recurring Revenues. Maintenance and other recurring revenues for the three and six months ended June 30, 1999 were $6.9 million and $13.6 million, respectively, representing increases of 15% and 33% from the $6.1 million and $10.2 million, respectively, in the comparable periods of the prior year. The increase for both periods was primarily due to growth in the Company's installed base of clients requiring maintenance services. Professional Services. Professional services revenues for the three and six months ended June 30, 1999 were $5.3 million and $10.1 million, respectively, representing increases of 32% and 55% from the $4.0 million and $6.5 million, respectively, in the Page 9 comparable periods of the prior year. The increase in the professional services revenue was primarily attributable to increases in implementation, conversion and training services as a result of higher license revenue from the quarter ended December 1998 and March 31, 1999. Cost of Revenues Total cost of revenues for the three and six months ended June 30, 1999 were $7.5 million and $14.1 million, respectively, representing increases of 21% and 44% from $6.2 million and $9.8 million, respectively, in the comparable periods of the prior year. The gross margin decreased from 68% and 69% for the three and six months ended June 30, 1998 to 55% and 61% for the three and six months ended June 30, 1999, primarily due to reductions in license revenue and increases in professional services revenues which have lower margins. Cost of Software Licenses. Cost of software license revenues relates primarily to royalties, the costs of product media, packaging, documentation and labor involved in the distribution of the Company's software as well as amortization of completed technology. The cost of software licenses for the three months ended June 30, 1999 and 1998 remained approximately constant while increasing during the six months ended June 30, 1999 compared to the comparable period in 1998. The increase in these costs was due primarily to the amortization of completed technology related to the Quantra and Savid acquisitions. Cost of Maintenance and Other Recurring Revenue. Cost of maintenance and other recurring revenue primarily consists of technical customer support and development costs associated with product and regulatory updates. The cost of maintenance and other recurring revenue increased for the three and six months ended June 30, 1999 by 11% and 28% respectively, from the comparable periods of the prior year. The change was primarily due to increased headcount for the infrastructure to support the expanded installed client base. Cost of Professional Services. Cost of professional service revenues consists primarily of the cost related to personnel utilized to provide implementation, conversion and training services to the Company's software licensees, as well as custom programming, system integration and actuarial consulting services. The cost of professional services revenues were $3.9 million and $7.3 million respectively for the three and six months ended June 30, 1999, respectively, representing increases 34% and 56% over the comparable periods of the prior year. The cost of professional services revenues as a percentage of revenues remained approximately the same. The increase in the cost of professional services was primarily attributable to the addition of personnel required to support the corresponding increase in implementation, conversion and training services. Operating Expenses Selling and Marketing. Selling and marketing expenses consist primarily of the cost of personnel associated with the selling and marketing of the Company's products, including salaries, commissions, and travel and entertainment. These expenses also include the cost of branch sales offices, advertising, trade shows, marketing and promotional materials. These expenses were $4.5 million and $9.0 million respectively for the three and six months ended June 30, 1999, respectively, representing increases of 37% and 32% over the corresponding periods of last year. The increase was largely attributable to costs associated with the hiring of additional sales and marketing personnel, and the expansion of international operations into Japan and Australia, including a dedicated international sales and marketing operation. Research and Development. Research and development expenses consist primarily of personnel costs attributable to the development of new software products and the enhancement of existing products. Research and development expenses as a percentage of total revenues, for the three and six months ended June 30, 1999 were 33% and 29%, respectively, as compared with 30% and 29%, respectively, in the comparable periods of 1998. For the three and six months ended June 30, 1999, these expenses decreased by 6% to $5.4 million and increased 11% to $10.3 million, respectively. The dollar increase for the six months ended June 30, 1999 over the comparable period last year was due to the hiring of additional personnel. The decrease for the three months ended June 30, 1998 over the comparable period in 1998 was primarily due to a reduction in contracted employees. The Company believes that due to the sophistication of its products, research and development spending should remain at these levels. General and Administrative. General and administrative expenses primarily comprise personnel costs related to management, accounting, human resources and administration and associated overhead costs, as well as fees for professional services. General and administrative cost as a percentage of total revenues, for the three and six months ended June 30, 1999 were 19% and 15%, respectively, as compared with 15% and 14%, respectively, in the comparable periods of the prior year. For the three and six months ended June 30, 1999, general and administrative expenses increased by 10% to $3.2 million and by 22% to $5.5 million, respectively, from $2.9 million and $4.5 million, respectively, in the comparable periods of 1998. The dollar increase for the six months ended June 30, 1999 primarily relates to an increase in the allowance for doubtful accounts offset slightly by professional fees and other general expenses. Page 10 Write-off of Purchased In-Process Research and Development. In the first quarter of 1998, the Company expensed $5.4 million of purchased in-process research and development associated with the Quantra products acquired in March 1998. In the second quarter of 1998, the Company expensed $0.5 million of purchased in-process research and development associated with the Savid products acquired in April 1998. Because these products had not yet reached technological feasibility at the time of the respective acquisitions and, in the Company's judgment, there was no alternative use for the related research and development, such in-process research and development was charged to expense. Interest income and income taxes. Interest income remained relatively constant between quarters and on a year to date basis. The effective tax rate for the three and six months ended June 30, 1999 is significantly lower than the comparable periods of last year due to the fact that no tax effect was given to the litigation settlement costs. The Company has not recorded a tax benefit in the second quarter for the settlement expense, since it is not determinable at this time. A tax benefit may be recorded in future quarters when the accounting of the class participants is finalized. Litigation settlement costs/other. On May 7, 1999, the Company announced that it had entered into an agreement that provides for the settlement of the consolidated securities class action lawsuit pending against the Company. The settlement provides that all claims against the Company, certain of its officers and directors and underwriters will be dismissed. Under the terms of the settlement, in exchange for the dismissal and release of all claims, the Company will pay to the class $7.5 million in cash, together with shares of Common Stock of the Company valued at $1.3 million. The Company recorded a charge of $9.3 million, including legal fees, in the quarter ending June 30, 1999. The settlement is subject to certain customary conditions, including notice to the class and approval by the Court. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents and marketable securities totaled $62.2 million at June 30, 1999 compared with $56.5 million at December 31, 1998. The increase in cash and cash equivalents was primarily due to cash provided from operating activities. Although net income was lower in the first six months of 1999 compared to the first six months of 1998, net cash provided by operating activities improved by $6.7 million. The increase was primarily due to a reduction in accounts receivable, the increase in the accrued litigation costs and an increase in deferred maintenance and other revenues. These items were offset by a decrease in taxes payable. The accounts receivable decreased by $3.5 million in the first six months of 1999 compared to an increase of $3.1 million in the first six months of 1998. The accrued litigation costs of $9.3 million are expected to be paid in the third quarter of 1999. Net cash used by investing activities was $2.3 million in the six months ended June 30, 1998 compared to $11.7 million in the comparable period of 1998. The decrease was primarily due to the acquisition of Quantra in the first six months of 1998 compared to no acquisition investing activities in the same period in 1999 and the payment of the note receivable associated with the Caminus Energy Ventures, LLC transaction. In addition, acquisition of property and equipment and capitalized software was lower in the six months ended June 30, 1999 than the comparable period in 1998. Net cash provided from financing activities was $2.0 million in the six months ended June 30, 1999 compared to $1.3 million in the comparable period of 1998. Cash provided by financing activities consisted mainly of the proceeds from the exercise of stock options, the issuance of stock for the Employee Stock Purchase Plan and the release of escrowed funds associated with the Quantra acquisition offset by the repayment of debt. The Company believes that its current cash, cash equivalents, marketable securities and net cash provided by operating activities will be sufficient to meet its working capital including the anticipated payment of the litigation settlement and capital expenditure requirements for at least for the next 12 months. Year 2000 Year 2000 Compliance. The information presented below related to year 2000 compliance contains forward-looking statements that are subject to risks and uncertainties. The Company's actual results may differ significantly from the results discussed below and elsewhere in this Form 10-Q regarding Year 2000 compliance. Year 2000 Issue Defined. The Year 2000 ("Y2K") issue is the result of certain computer hardware, operating system software and software application programs having been developed using two digits rather than four digits to define a year. For example, the clock circuit in the hardware may be incapable of holding a date beyond the year 1999; some operating systems recognize a date using "00" as the year 1900 rather than 2000 and certain applications may have limited date processing capabilities. These problems could result in the failure of major systems or miscalculations, which could have material impact on companies through business interruption or shutdown, financial loss, damage to reputation, and legal liability to third parties. Page 11 State of Readiness. The Company formed at Y2K Review Team ("Team") in 1998 to address the potential impact of Y2K on the Company. In particular, the Y2K Plan addresses four principal areas that may be impacted by the Y2K issue: SS&C Technologies Products, Information Technology (IT) Systems, Third Party Relationships and non-IT Systems. The initial phase was to organize a Team of both IT and non-IT employees and to develop a process. The second phase was to establish an inventory of all potential areas where Y2K problems could exist. The inventory included: server hardware (BIOS), server operating systems, server application software, network device hardware and software, PC hardware (BIOS), PC operating systems, PC application software, phone and security systems, the Company's Products and its vendors. Each area listed in the inventory was assigned to a Team member to evaluate the current Y2K compliance and where required, recommend a solution to correct the problem. As of the end of the second quarter of 1999, the Company has substantially completed both phases for both the IT and non-IT systems. The Company is currently involved in the remediation phase and expects to be completed in the fourth quarter of 1999. However, the Company continues to review information developed as a result of its overall effort, which could result in additional items being added to its Y2K inventory. SS&C Technologies Products. The Company has utilized both in-house and outside consultants to test whether its products are Y2K compliant. Most of the Company's key products have already passed rigorous testing to be certified as Y2K compliant. In the event that any Y2K-compliance issues with its supported products arise, it is the Company's intention to rectify those problems through the software support process. Costs associated with the testing and modifications to make the Company's products Y2K compliant have not had, and are not expected to have a material adverse effect on the Company's business, financial condition or results of operations and cash flows. Third Party Relationships. The Company's business operations are dependent on third party suppliers. The Company is working with its key external partners to identify and to mitigate the potential risks of Y2K. The failure of external parties to resolve their own Y2K issues, in a timely manner, could result in a material financial risk to the Company. As part of the overall Y2K program, the Company is actively communicating with third parties through correspondence. Because the Company's Y2K compliance is dependant on the timely Y2K compliance of third parties, there can be no assurance that the Company's efforts alone will resolve all Y2K issues. Contingency Plans. There can be no assurance that the systems of other parties upon which the Company's business relies directly or indirectly will be Year 2000 compliant. The costs of becoming Y2K compliant, or the failure thereof by the Company or other parties, could have a material adverse effect on the Company's business, financial condition or results of operations. Given the possibility of system failure as a result of the century change, the Company is currently in the process of formulating one or more contingency plans, which it anticipates implementing during the fourth quarter of 1999. Costs to Address Year 2000 issues. The Y2K costs incurred to date have not been material. Most software applications, BIOS and operating system upgrades to Y2K compliance were incorporated into the Company's standard licensing agreements. As part of the contingency planning effort we will examine additional potential Y2K costs, where applicable. The foregoing shall be considered a Year 2000 readiness disclosure to the maximum extent allowed under the Year 2000 Information and Readiness Disclosure Act. Conversion to Euro On January 1, 1999, 11 of the 15 members of the European Union established fixed conversion rates between their existing currencies and the "Euro." The Euro will trade on currency exchanges and the legacy currencies will remain legal tender for a transition period between January 1, 1999 and January 1, 2002. During the transition period, goods and services may be paid for using the Euro or the participating country's legacy currency. Participating countries no longer control their own monetary policies by directing independent interest rates for their legacy currencies. Instead, the authority to direct monetary policy, including money supply and official interest rates, will be exercised by the new European Central Bank. No later than July 1, 2002, the legacy currencies of the participating countries will no longer be legal tender for any transaction, making conversion to the Euro complete. The Company has established plans and has begun developing the necessary modifications for the technical adaptation of its internal information technology and other systems to accommodate Euro-denominated transactions. The Company expects that it will be able to process Euro-denominated transactions on a timely basis. The Company is also assessing the business implications of the conversion to the Euro, including long-term competitive implications and the effect of market risk with respect to financial instruments. The Company is currently unable to determine the ultimate financial impact of these matters, if any, on its business, financial condition and results of operations. However, the Company will continue to assess the impact of Euro conversion issues as the applicable accounting, tax, legal and regulatory guidance evolves. Page 12 CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS Fluctuations in Quarterly Performance. The Company's revenues and operating results historically have varied substantially from quarter to quarter. The Company's quarterly operating results may continue to fluctuate due to a number of factors, including the timing, size, and nature of the Company's individual license transactions; the timing of the introduction and the market acceptance of new products or product enhancements by the Company or its competitors; the relative proportions of revenues derived from license fees, maintenance, consulting, and other recurring revenues and professional services; changes in the Company's operating expenses; personnel changes; and fluctuations in economic and financial market conditions. The timing, size, and nature of individual license transactions are important factors in the Company's quarterly operating results. Many such license transactions involve large dollar amounts, and the sales cycles for these transactions are often lengthy and unpredictable. There can be no assurance that the Company will be successful in closing large license transactions on a timely basis or at all. Dependence on Financial Services Industry. The Company's clients include a range of organizations in the financial services industry, and the success of such clients is intrinsically linked to the health of the financial markets. In addition, because of the capital expenditures required in connection with an investment in the Company's products, the Company believes that demand for its products could be disproportionately affected by fluctuations, disruptions, instability, or downturns in the financial markets, which may cause clients and potential clients to exit the industry or delay, cancel, or reduce any planned expenditures for investment management systems and software products. Any resulting decline in demand for the Company's products could have a material adverse effect on the Company's business, financial condition, and results of operations. Product Concentration. To date, substantially all of the Company's revenues have been attributable to the licensing of its CAMRA, PTS, FILMS, REMS, MLMS, Telesales, Antares, Total Return, and Advisorware software and the provision of maintenance and consulting services in connection therewith. The Company currently expects that the licensing of such software products, as well as certain other products acquired by the Company in connection with recent acquisitions and the provision of related services, will account for a substantial portion of its revenues for the foreseeable future. As a result, factors adversely affecting the pricing of or demand for such products and services, such as competition or technological change, could have a material adverse effect on the Company's business, financial condition, and results of operations. Management of Growth. The Company's business has grown significantly in size and complexity over the past several years. The growth in the size and complexity of the Company's business as well as its client base has placed and is expected to continue to place a significant strain on the Company's management and operations. The Company's ability to compete effectively and to manage future growth, if any, will depend on its ability to continue to implement and improve operational, financial, and management information systems on a timely basis and to expand, train, motivate, and manage its work force. There can be no assurance that the Company's personnel, systems, procedures, and controls will be adequate to support the Company's operations. If the Company's management is unable to manage growth effectively, the quality of the Company's products and its business, financial condition, and results of operations could be materially adversely affected. Integration of Operations. The Company's success is dependent in part on its ability to complete its integration of the operations of its recent acquisitions, including HedgeWare, in an efficient and effective manner. The successful integration in a rapidly changing financial services industry may be more difficult to accomplish than in other industries. The combination of these acquired companies will require, among other things, integration of the acquired companies' respective product offerings and coordination of their sales and marketing and research and development efforts. There can be no assurance that such integration will be accomplished smoothly or successfully. The difficulties of such integration may be increased by the necessity of coordinating geographically separated organizations. The integration of certain operations will require the dedication of management resources that may temporarily distract attention from the day-to-day business of the combined Company. The inability of management to successfully integrate the operations of acquired companies could have a material adverse effect on the business, financial condition, and results of operations of the Company. Competition. The market for financial service software is competitive, rapidly evolving, and highly sensitive to new product introductions and marketing efforts by industry participants. Although the Company believes that none of its competitors currently competes against the Company in all of the markets served by the Company, there can be no assurance that such competitors will not compete against the Company in the future in additional markets. In addition, many of the Company's current and potential future competitors have significantly greater financial, technical and marketing resources, generate higher revenues, and have greater name recognition than does the Company. Rapid Technological Change. The market for the Company's products and services is characterized by rapidly changing technology, evolving industry standards, and new product introductions. The Company's future success will depend in part upon its ability to enhance its existing products and services and to develop and introduce new products and services to meet Page 13 changing client requirements. The process of developing software products such as those offered by the Company is extremely complex and is expected to become increasingly complex and expensive in the future with the introduction of new platforms and technologies. There can be no assurance that the Company will successfully complete the development of new products in a timely fashion or that the Company's current or future products will satisfy the needs of the financial markets. Dependence on Database Supplier. The relational database design in many of the Company's software products incorporates PFXplus, a "C"-based database management system licensed to the Company by POWERflex Corporation Proprietary Limited, an Australian vendor ("Powerflex"). If Powerflex were to increase its fees under the license agreement, the Company's results of operations could be materially adversely affected. Moreover, if Powerflex were to terminate the license agreement, the Company would have to seek an alternative relational database for its software products. While the Company believes that it could migrate its products to an alternative database, there can be no assurance that the Company would be able to license in a timely fashion a database with similar features and on terms acceptable to the Company. Dependence on Proprietary Technology. The Company's success and ability to compete is dependent in part upon its proprietary technology. The Company relies on a combination of trade secret, copyright, and trademark law, nondisclosure agreements and technical measures to protect its proprietary technology. There can be no assurance that the steps taken by the Company to limit access to its proprietary technology will be adequate to deter misappropriation or independent third-party development of such technology. Product Defects and Product Liability. The Company's software products are highly complex and sophisticated and could, from time to time, contain design defects or software errors that could be difficult to detect and correct. Errors, bugs, or viruses may result in loss of or delay in market acceptance or loss of client data. Although the Company has not experienced material adverse effects resulting from any software defects or errors, there can be no assurance that, despite testing by the Company and its clients, errors will not be found in new products, which errors could result in a delay in or inability to achieve market acceptance and thus could have a material adverse impact upon the Company's business, financial condition, and results of operations. Key Personnel. The Company's success is dependent in part upon its ability to attract, train, and retain highly skilled technical, managerial, and sales personnel. The loss of services of one or more of the Company's key employees could have a material adverse effect on the Company's business, financial condition and results of operations. The Company continues to hire a significant number of additional sales, service, and technical personnel. Competition for the hiring of such personnel in the software industry is intense. Locating candidates with the appropriate qualifications, particularly in the desired geographic location, can be difficult. Although the Company expects to continue to attract and retain sufficient numbers of highly skilled employees for the foreseeable future, there can be no assurance that the Company will do so. Risks Associated with International Operations. The Company intends to continue to expand its international sales activity as part of its business strategy. To accomplish such continued expansion, the Company must establish additional foreign operations and hire additional personnel requiring significant management attention and financial resources that could materially adversely affect the Company's business, financial condition, or results of operations. An increase in the value of the U.S. dollar relative to foreign currencies could make the Company's products more expensive and, therefore, potentially less competitive in those foreign markets. A portion of the Company's international sales is denominated in foreign currency. The Company occasionally hedges some of this risk; however, significant fluctuations in the value of foreign currencies could have an adverse effect on the earnings of the Company. In addition, the Company's international business may be subject to a variety of risks, including difficulties in obtaining U.S. export licenses, potentially longer payment cycles, increased costs associated with maintaining international marketing efforts, the introduction of non-tariff barriers and higher duty rates, and difficulties in enforcement of contractual obligations and intellectual property rights. There can be no assurance that such factors will not have a material adverse effect on the Company's business, financial condition, or results of operations. Because of these and other factors, past financial performance should not be considered an indication of future performance. The Company's quarterly operating results may vary significantly, depending on factors such as the timing, size, and nature of licensing transactions and new product introductions by the Company or its competitors. Investors should not use historical trends to anticipate future results and should be aware that the trading price of the Company's common stock may be subject to wide fluctuations in response to quarterly variations in operating results and other factors, including those discussed above. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company purchases from time to time forward contracts to attempt to minimize the impact of exchange rate gains or losses from foreign currency transactions. The Company generally places its marketable security investments in high credit quality instruments, primarily U.S. Government and Federal Agency obligations, tax-exempt municipal obligations Page 14 and corporate obligations. The Company does not expect any material loss from its marketable security investments and therefore believes that its potential interest rate exposure is not material. The Company invoices customers primarily in U.S. dollars and in local currency in those countries in which the Company has branch and subsidiary operations. The Company is exposed to foreign exchange rate fluctuations from when customers are invoiced in local currency until collection occurs. Through June 30, 1999, foreign currency fluctuations have not had a material impact on the Company's financial position or results of operation, and therefore the Company believes that its potential foreign currency exchange rate exposure is not material. The foregoing risk management discussion and the effect thereof are forward-looking statements. Actual results in the future may differ materially from these projected results due to actual developments in global financial markets. The analytical methods used by the Company to assess and mitigate risk discussed above should not be considered projections of future events, income or losses. Page 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings On May 7, 1999, the Company announced that it had entered into an agreement that provides for the settlement of the consolidated securities class action lawsuit pending against the Company. The settlement provides that all claims against the Company, certain of its officers and directors and underwriters will be dismissed. Under the terms of the settlement, in exchange for the dismissal and release of all claims, the Company will pay to the class $7.5 million in cash, together with shares of Common Stock of the Company valued at $1.3 million. The Company recorded a charge of $9.3 million, including legal fees, in the quarter ending June 30, 1999. The settlement is subject to certain customary conditions, including notice to the class and approval by the Court. Item 2. Changes in Securities and Use of Proceeds The following information relates to the use of proceeds from the Company's initial public offering of Common Stock (the "Offering"). The effective date of the Company's Registration Statement on Form S-1 (File No. 333-3094) (the "Registration Statement") relating to the Offering, for which the following use of proceeds information is being disclosed, was May 30, 1996. From the effective date of the Registration Statement through June 30, 1999, the Company has used the net Offering proceeds to the Company as follows: Corporate move and equipment purchases $ 8,053,000 Acquisition of other business $ 5,333,000 Repayment of indebtedness $ 3,324,000 Working capital $ 7,793,000 Marketable securities $ 28,297,000 All of the above listed payments were direct or indirect payments to persons other than: directors, officers, general partners of the Company or their associates; persons owning ten percent or more of any class of equity securities of the Company, or affiliates of the Company. Item 4. Submission of Matters to a Vote of Security Holders At the 1999 Annual Meeting of Stockholders of the Company (the "Annual Meeting") held on May 11, 1999, the following matters were acted upon by the stockholders of the Company: 1. The election of David L. Blankenship, David W. Clark, Jr. and William C. Stone as Class III Directors for the ensuing three years; 2. Approval of the amendment to the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock from 25,000,000 to 50,000,000. Shares; and 3. Approval of the amendment to the Company's 1996 Employee Stock Purchase Plan, as amended, to increase the number of shares of Common Stock authorized for issuance thereunder from 200,000 to 400,000 shares; and 4. Ratification of the appointment of PricewaterhouseCoopers LLP as independent public accountants of the Company for the current fiscal year. The number of shares of Common Stock outstanding and entitled to vote at the Annual Meeting was 15,620,801. The other directors of the Company, whose terms of office as directors continued after the Annual Meeting, are Jonathan M. Schofield, William W. Wyman, Joseph H. Fisher and Stephen P. Reynolds. The results of the voting on each of the matters presented to stockholders at the Annual Meeting are set forth below: Page 16
Votes Broker Votes For Withheld Votes Against Abstentions Non-Votes --------------------------------------------------------------------- Election of Class III Directors: David L. Blankenship 11,270,925 234,196 N/A N/A N/A David W. Clark, Jr. 11,433,525 71,596 N/A N/A N/A William C. Stone 11,433,525 71,596 N/A N/A N/A Charter Amendment 11,309,842 N/A 186,316 8,963 N/A Approval of amendment to 1996 Employee Stock Purchase Plan 11,330,501 N/A 164,772 9,848 N/A Ratification of Independent Public Accountants 11,475,594 N/A 24,699 4,828 N/A
Item 6. Exhibits and Reports on Form 8-K a. The exhibits listed in the Exhibit Index immediately preceding such exhibits are filed as part of or are included in this report. b. On April 23, 1999, the Company filed a Current Report on Form 8-K, dated March 31, 1999, to report under Item 5 (Other Events) that the Company had acquired all of the outstanding stock of The Brookside Corporation. No financial Statements were required to be filed with such report. Page 17 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SS&C TECHNOLOGIES, INC. Date August 16, 1999 By: /s/ Anthony R. Guarascio Anthony R. Guarascio Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Page 18 EXHIBIT INDEX Exhibit Number Description - --------------------------- 3.1 Amended and Restated Certificate of Incorporation, as amended. 10.1 1996 Director Stock Option Plan, as amended 27.1 Financial Data Schedule for the six months ended June 30, 1999. 27.2 Restated Financial Data schedule for the six months ended June 30, 1998. Page 19 EX-3.1 2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION Exhibit 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SS&C TECHNOLOGIES, INC. SS&C Technologies, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows: 1. The Corporation filed its original Certificate of Incorporation with the Secretary of the State of Delaware on March 29, 1996, which was amended by a Certificate of Retirement of Stock filed on even date herewith. 2. By a Written Action of the Board of Directors of the Corporation, a resolution was duly adopted, pursuant to Sections 141(f), 242 and 245 of the General Corporation Law of the State of Delaware, setting forth an Amended and Restated Certificate of Incorporation of the Corporation and declaring said Amended and Restated Certificate of Incorporation advisable. The stockholders of the Corporation duly approved said proposed Amended and Restated Certificate of Incorporation by written consent in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware, and written notice of such consent has been given to all stockholders who have not Consented in writing to said restatement. The resolution setting forth the Amended and Restated Certificate of Incorporation is as follows: RESOLVED: That the Certificate of Incorporation of the Corporation, be and - -------- hereby is amended and restated in its entirety so that the same shall read as follows: FIRST. The name of the Corporation is: SS&C Technologies, Inc. SECOND. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purposes to be conducted or promoted by the Corporation is as follows: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 26,000,000 shares, consisting of (i) 25,000,000 shares of Common Stock, $.01 par value per share ("Common Stock"), and (ii) 1,000,000 shares of Preferred Stock, $.01 par value per share ("Preferred Stock"). The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation. 1. COMMON STOCK. ------------ a. General. The voting, dividend and liquidation rights of the holders of the ------- Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of the Preferred Stock of any series. b. Voting. The holders of the Common Stock are entitled to one vote for each ------ share held at all meetings of stockholders. There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware. c. Dividends. Dividends may be declared and paid on the Common Stock from --------- funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding Preferred Stock. d. Liquidation. Upon the dissolution or liquidation of the Corporation, ----------- whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential rights of any then outstanding Preferred Stock. PREFERRED STOCK. - --------------- Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided. Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of Delaware. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise provided in this Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation. FIFTH. The Corporation shall have a perpetual existence. SIXTH. In furtherance of and not in limitation of powers conferred by statute, it is further provided: 1. Election of directors need not be by written ballot. 2. The Board of Directors is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation. SEVENTH. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or Stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. EIGHTH. Except to the extent that the General Corporation Law of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. NINTH. 1. Actions, Suits and Proceedings Other than by or in the Right of --------------------------------------------------------------- the Corporation. The Corporation shall indemnify each person who was or is a - --------------- party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an Indemnitees), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a ---- ---------- presumption that the person did not act in good faith and in a manner which he reasonably believed to be in, or not opposed to. the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding anything to the contrary in this Article, except as set forth in Section 7 below, the Corporation shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Article, the Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund such indemnification payments to the Corporation to the extent of such insurance reimbursement. 2. Actions or Suits by or in the Right of the Corporation. The ------------------------------------------------------ Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware shall deem proper. 3. Indemnification for Expenses of Successful Party. Notwithstanding the ------------------------------------------------ other provisions of this Article, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, he shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. 4. Notification and Defense of Claim. As a condition precedent to his --------------------------------- right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 4. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. 5. Advance of Expenses. Subject to the provisions of Section 6 below, in ------------------- the event that the Corporation does not assume the defense pursuant to Section 4 of this Article of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, any expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; provided, -------- however, that the payment of such expenses incurred by an Indemnitee in advance - ------- of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article. Such undertaking shall be accepted without reference to the financial ability of the Indemnitee to make such repayment. 6. Procedure for Indemnification. In order to obtain indemnification or ----------------------------- advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to the indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the Corporation determines within such 60-day period that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), whether or not a quorum, (b) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (c) independent legal counsel (who may, to the extent permitted by law, be regular legal counsel to the Corporation), or (d) a court of competent jurisdiction. 7. Remedies. The right to indemnification or advances as granted by this -------- Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in Section 6. Unless otherwise required by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee's expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation. 8. Subsequent Amendment. No amendment, termination or repeal of this -------------------- Article or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal. 9. Other Rights. The indemnification and advancement of expenses provided ------------- by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article, In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article. 10. Partial Indemnification. If an Indemnitee is entitled under any ----------------------- provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled. 11. Insurance. The Corporation may purchase and maintain insurance, at --------- its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware. 12. Merger or Consolidation. If the Corporation is merged into or ----------------------- consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation. 13. Savings Clause. If this Article or any portion hereof shall be -------------- invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law. 14. Definitions. Terms used herein and defined in Section 145(h) and ----------- Section 145(i) of the General Corporation Law of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i). 15. Subsequent Legislation. If the General Corporation Law of Delaware is ---------------------- amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. TENTH. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Amended and Restated Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. ELEVENTH. This Article is inserted for the management of the business and for the conduct of the affairs of the Corporation. 1. Number of Directors. The number of directors of the Corporation shall ------------------- not be less than three. The exact number of directors within the limitations specified in the preceding sentence shall be fixed from time to time by, or in the manner provided in, the Corporation's By-Laws. 2. Classes of Directors. The Board of Directors shall be and is divided -------------------- into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the designated number of directors by three, then, if such fraction is one-third, the extra director shall be a member of Class I, and if such fraction is two-thirds, one of the extra directors shall be a member of Class I and one of the extra directors shall be a member of Class II, unless otherwise provided from time to time by resolution adopted by the Board of Directors. 3. Election of Directors. Elections of directors need not be by written --------------------- ballot except as and to the extent provided in the By-Laws of the Corporation. 4. Terms of Office. Each director shall serve for a term ending on the --------------- date of the third annual meeting following the annual meeting at which such director was elected; provided, that each initial director in Class I shall -------- serve for a term ending on the date of the annual meeting in 1997; each initial director in Class II shall serve for a term ending on the date of the annual meeting in 1998; and each initial director in Class III shall serve for a term ending on the date of the annual meeting in 1999; and provided further, that the -------- ------- term of each director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal. 5. Allocation of Directors Among Classes in the Event of Increases or ------------------------------------------------------------------ Decreases in the Number of Directors. In the event of any increase or decrease - ------------------------------------ in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he is a member and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of offices are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors. 6. Quorum; Action at Meeting. A majority of the directors at any time in ------------------------- office shall constitute a quorum for the transaction of business. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each director so disqualified, provided that in no case shall less than one-third of the number of directors fixed pursuant to Section 1 above constitute a quorum. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of those present may adjourn the meeting from time to time. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law, by the By-Laws of the Corporation or by this Amended and Restated Certificate of Incorporation. 7. Removal. Directors of the Corporation may be removed only for cause by ------- the affirmative vote of the holders of at least two-thirds of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote. 8. Vacancies. Any vacancy in the Board of Directors, however occurring, --------- including a vacancy resulting from an enlargement of the board, shall be filled only by a vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected to hold office until the next election of tile class for which such director shall have been chosen, subject to the election and qualification of his successor and to his earlier death, resignation or removal. 9. Stockholder Nominations and Introduction of Business, Etc. Advance ---------------------------------------------------------- notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the By-Laws of the Corporation. 10. Amendments to Article. Notwithstanding any other provisions of law, --------------------- this Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article ELEVENTH. TWELFTH. Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, the Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article TWELFTH. THIRTEENTH. Special meetings of stockholders may be called at any time by only the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President) or the Board of Directors. Business transacted at any Special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provision of law, this Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the shares of capital stock of the Corporation issued and outstanding and entitled to vote shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article THIRTEENTH. IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be affixed hereto and this Amended and Restated Certificate of Incorporation to be signed by its President this 5th day of June, 1996. SS&C TECHNOLOGIES, INC. By: /s/ William C. Stone -------------------------------- William C. Stone President CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SS&C TECHNOLOGIES, INC. Pursuant to Section 242 of the General Corporation Law of the State of Delaware, SS&C Technologies, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify: FIRST: That the Board of Directors of the Corporation, at a meeting of the Board of Directors held on February 24, 1999, duly adopted resolutions proposing and declaring advisable the following amendment to the Amended and Restated Certificate of Incorporation of the Corporation: RESOLVED: That the Amended and Restated Certificate of Incorporation of the - -------- Corporation be amended by deleting the first paragraph of Article FOURTH in its entirety and inserting the following in lieu thereof: "FOURTH. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 51,000,000 shares, consisting of (i) 50,000,000 shares of Common Stock, $.01 par value per share ("Common Stock"), and (ii) 1,000,000 shares of Preferred Stock, $.01 par value per share ("Preferred Stock")." SECOND: That the stockholders of the Corporation, at the Annual Meeting of Stockholders held on May 11, 1999, duly approved said proposed Certificate of Amendment of Amended and Restated Certificate of Incorporation in accordance with Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer this 12th day of May, 1999. SS&C TECHNOLOGIES, INC. By: /s/ William C. Stone -------------------------------------------- William C. Stone President and Chief Executive Officer EX-10 3 1996 DIRECTOR STOCK OPTION PLAN Exhibit 10 SS&C TECHNOLOGIES, INC. 1996 DIRECTOR STOCK OPTION PLAN 1. Purpose. ------- The purpose of this 1996 Director Stock Option Plan (the "Plan") of SS&C Technologies, Inc. (the "Company") is to encourage ownership in the Company by outside directors of the Company whose continued services are considered essential to the Company's future progress and to provide them with a further incentive to remain as directors of the Company. 2. Administration. -------------- The Board of Directors shall supervise and administer the Plan. Grants of stock options under the Plan and the amount and nature of the awards to be granted shall be automatic in accordance with Section 5. However, all questions concerning interpretation of the Plan or any options granted under it shall be resolved by the Board of Directors and such resolution shall be final and binding upon all persons having an interest in the Plan. 3. Participation in the Plan. ------------------------- Directors of the Company who are not full-time employees of the Company or any subsidiary of the Company ("outside directors") shall be eligible to receive options under the Plan. 4. Stock Subject to the Plan. ------------------------- (a) The maximum number of shares of the Company's Common Stock, par value $.01 per share ("Common Stock"), which may be issued under the Plan shall be 150,000 shares, subject to adjustment as provided in Section 7. (b) If any outstanding option under the Plan for any reason expires or is terminated without having been exercised in full, the shares covered by the unexercised portion of such option shall again become available for issuance pursuant to the Plan. (c) All options granted under the Plan shall be non-statutory options not entitled to special tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 5. Terms, Conditions and Form of Options. ------------------------------------- Each option granted under the Plan shall be evidenced by a written agreement in such form as the Board of Directors shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions: (a) Option Grant Dates. Options shall automatically be granted to all ------------------ eligible outside directors as follows: (i) each person who first becomes an eligible outside director after the closing date (the "Closing Date") of the Company's initial public offering of Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended, shall be granted an option to purchase 5,000 shares of Common Stock on the date of his or her initial election to the Board of Directors, provided that such eligible director is elected on a date other than the date of an Annual Meeting of Stockholders; and (ii) each eligible outside director shall be granted an additional option to purchase 5,000 shares of Common Stock on the date of each Annual Meeting of Stockholders of the Company commencing with the 1997 Annual Meeting of Stockholders, provided that he or she continues to serve as a director immediately following such Annual Meeting. (b) Option Exercise Price. The option exercise price per share for each --------------------- option granted under the Plan shall equal (i) the last reported sales price per share of the Company's Common Stock on the Nasdaq National Market (or, if the Company is traded on a nationally recognized securities exchange on the date of grant, the reported closing sales price per share of the Company's Common Stock by such exchange) on the date of grant (or if no such price is reported on such date such price as reported on the nearest preceding day) or (ii) if the Common Stock is not traded on the Nasdaq National Market or an exchange, the fair market value per share on the date of grant as most recently determined by the Board of Directors. (c) Options Non-Transferable. To the extent required to qualify for the ------------------------ exemption provided by Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any option granted under the Plan to an optionee shall not be transferable by the optionee other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, and shall be exercisable during the optionee's lifetime only by the optionee or the optionee's guardian or legal representative. -2- (d) Vesting Period. -------------- (i) General. Each option granted under the Plan shall become exercisable ------- on the first anniversary of the Option Grant Date; provided, however, that the optionee continue to serve as a director on such date. (ii) Acceleration Upon Change in Control. Notwithstanding the foregoing, ----------------------------------- each outstanding option granted under the Plan shall immediately become exercisable in full in the event a Change in Control (as defined in Section 8) of the Company occurs. (e) Termination. Each option shall terminate, and may no longer be ----------- exercised, on the earlier of the (i) the date 10 years after the Option Grant Date or (ii) the date 60 days after the optionee ceases to serve as a director of the Company; provided that, in the event an optionee ceases to serve as a director due to his or her death or disability (within the meaning of Section 22(e)(3) of the Code or any successor provision), then the exercisable portion of the option may be exercised, within the period of 180 days following the date the optionee ceases to serve as a director (but in no event later than 10 years after the Option Grant Date), by the optionee or by the person to whom the option is transferred by will, by the laws of descent and distribution, or by written notice pursuant to Section 5(h). (f) Exercise Procedure. An option may be exercised only by written notice ------------------ to the Company at its principal office accompanied by payment in cash of the full consideration for the shares as to which the option is exercised. (g) Exercise by Representative Following Death of Director. An optionee, by ------------------------------------------------------ written notice to the Company, may designate one or more persons (and from time to time change such designation), including his or her legal representative, who, by reason of the optionee's death, shall acquire the right to exercise all or a portion of the option. If the person or persons so designated wish to exercise any portion of the option, they must do so within the term of the option as provided herein. Any exercise by a representative shall be subject to the provisions of the Plan. 6. Limitation of Rights. -------------------- (a) No Right to Continue as a Director. Neither the Plan, nor the ---------------------------------- granting of an option nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain the optionee as a director for any period of time. (b) No Stockholders' Rights for Options. An optionee shall have no rights ----------------------------------- as a stockholder with respect to the shares covered by his or her option until the date of the issuance to him or her of a stock certificate therefor, and no adjustment will be made -3- for dividends or other rights (except as provided in Section 7) for which the record date is prior to the date such certificate is issued. 7. Adjustment Provisions for Mergers, Recapitalizations and Related ---------------------------------------------------------------- Transactions. ------------ If, through or as a result of any merger, consolidation, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar transaction, (i) the outstanding shares of Common Stock are exchanged for a different number or kind of securities of the Company or of another entity, or (ii) additional shares or new or different shares or other securities of the Company or of another entity are distributed with respect to such shares of Common Stock, the Board of Directors shall make an appropriate and proportionate adjustment in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to then outstanding options under the Plan, and/or (z) the price for each share subject to any then outstanding options under the Plan (without changing the aggregate purchase price for such options), to the end that each option shall be exercisable, for the same aggregate exercise price, for such securities as such optionholder would have held immediately following such event if he had exercised such option immediately prior to such event. No fractional shares will be issued under the Plan on account of any such adjustments. 8. Change in Control. For purposes of the Plan, a "Change in Control" shall ----------------- be deemed to have occurred only if any of the following events occurs: (i) any "person", as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities; (ii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (iii) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (iv) individuals who, on the date on which the Plan was adopted by the Board of Directors, constituted the Board of Directors of the Company, together with any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who were directors on the date on which the Plan was adopted by the -4- Board of Directors or whose election or nomination was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors. 9. Modification, Extension and Renewal of Options. ---------------------------------------------- The Board of Directors shall have the power to modify or amend outstanding options; provided, however, that no modification or amendment may (i) have the effect of altering or impairing any rights or obligations of any option previously granted without the consent of the optionee, or (ii) modify the number of shares of Common Stock subject to the option (except as provided in Section 7). 10. Termination and Amendment of the Plan. ------------------------------------- The Board of Directors may suspend, terminate or discontinue the Plan or amend it in any respect whatsoever; provided, however, that without approval of the stockholders of the Company, no amendment may (i) increase the number of shares subject to the Plan (except as provided in Section 7), (ii) materially modify the requirements as to eligibility to receive options under the Plan, or (iii) materially increase the benefits accruing to participants in the Plan; and provided further that the Board of Directors may not amend the provisions of Sections 3, 5(a), 5(b) or 5(c) more frequently than once every six months, other than to comply with changes in the Code or the rules thereunder. 11. Notice. ------ Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the Treasurer of the Company and shall become effective when it is received. 12. Governing Law. ------------- The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware. 13. Stockholder Approval. -------------------- The Plan is conditional upon stockholder approval of the Plan within one year from its date of adoption by the Board of Directors. No option under the Plan may be exercised until such stockholder approval is obtained, and the Plan and all options granted under the Plan shall be null and void if the Plan is not so approved by the Company's stockholders. Adopted by the Board of Directors on April 1, 1996 Approved by the stockholders on April 1, 1996 -5- AMENDMENT NO. 1 TO THE 1996 DIRECTOR STOCK OPTION PLAN OF SS&C TECHNOLOGIES, INC. October 30, 1996 The 1996 Director Stock Option Plan (the "Plan") of SS&C Technologies, Inc. is hereby amended as follows (capitalized terms used herein and not defined herein shall have the respective meaning ascribed to such terms in the Plan): 1. The reference to Section 5(h) at the end of Section 5(e) of the Plan shall be amended to refer to Section 5(f). 2. Section 10 of the Plan shall be deleted in its entirety and replaced with the following: "10. Termination and Amendment of the Plan. The Board of Directors may ------------------------------------- suspend, terminate or discontinue the Plan or amend it in any respect whatsoever." Except as aforesaid, the Plan shall remain in full force and effect. SS&C TECHNOLOGIES, INC. AMENDMENT NO. 2 TO 1996 DIRECTOR STOCK OPTION PLAN, AS AMENDED 1. The 1996 Director Stock Option Plan, as amended (the "Plan"), is hereby amended to delete subsection 5(d) thereof and replace such subsection in its entirety with the following: "(d) Vesting Period. Each option granted under the Plan shall be -------------- exercisable in full immediately upon the Option Grant Date." 2. The Plan is hereby amended to delete section 8 thereof and replace such section in its entirety with the following: "8. Intentionally deleted." 3. Except as aforesaid, the Plan shall remain in full force and effect. Adopted by the Board of Directors on May 5, 1999 EX-27.1 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THIS ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 17,575 44,599 19,642 3,889 0 83,607 15,760 6,924 102,519 30,043 0 0 0 157 72,179 102,519 36,068 36,068 0 14,094 34,146 0 0 (10,700) (344) (10,356) 0 0 0 (10,356) (.67) (.67)
EX-27.2 5 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THIS ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 11,474 35,649 20,605 2,869 0 71,386 12,560 4,846 94,749 20,922 0 0 0 145 73,259 94,749 31,635 31,635 0 9,810 26,494 0 0 (3,503) (1,045) (2,458) 0 0 0 (2,458) (.17) (.17)
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