-----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, HgG07lYnvjzOLq/N3+HfNFmXEQesSD5GojI6TmGmDBUe17U3GzaE49pkskaSgSNu lqYeJM7CHBfHFYp5f5lQ+g== 0000927016-99-003043.txt : 19990818 0000927016-99-003043.hdr.sgml : 19990818 ACCESSION NUMBER: 0000927016-99-003043 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19990817 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/A SEC ACT: SEC FILE NUMBER: 000-28430 FILM NUMBER: 99694217 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/A 1 FORM 10-Q/A AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A Amendment No. 1 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 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 (State or other jurisdiction of incorporation or organization) 06-1169696 (I.R.S. Employer Identification No.) 80 Lamberton Road, Windsor, Connecticut 06095 (Address of principal executive offices and 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. No Yes [X] No [_] Number of shares outstanding of the issuer's classes of common stock as of July 31, 1998: Class Number of Shares Outstanding ----- ---------------------------- Common Stock, par value $.01 per share 14,566,203 SS&C TECHNOLOGIES, INC. INDEX
Page Number ----------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets at June 30, 1998 and December 31, 1997 3 Consolidated Condensed Statements of Operations for the three- and six-month periods ended June 30, 1998 and 1997 4 Consolidated Condensed Statements of Cash Flows for the six-month periods ended June 30, 1998 and 1997 5 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURE 18 EXHIBIT INDEX 19
This Amendment No. 1 to Quarterly Report on Form 10-Q/A 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. EXPLANATORY NOTE This Amendment No. 1 to Quarterly Report on Form 10-Q/A amends and restates Item 1 and 2 of Part I and Item 6 of Part II of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, as filed by the Registrant on August 11, 1998 and is being filed to reflect the restatement of the Registrant's Consolidated Condensed Financial Statements. See "Restatement of Quarterly Financial Statements" in Note 1 of the Notes to the Consolidated Condensed Financial Statements for the discussion of the basis for such restatement. 2 PART 1--FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)
(unaudited) June 30, Dec. 31, 1998 1997 ------------------ --------------- ASSETS Current assets: Cash and cash equivalents $11,402 $23,660 Marketable securities 35,649 35,058 Accounts receivable, net 9,510 7,591 Unbilled accounts receivable, net 9,595 5,472 Income taxes 478 1,157 Other 2,977 1,563 ------------------ --------------- Total current assets 69,611 74,501 ------------------ --------------- Property and equipment, net 7,458 4,018 Unbilled accounts receivable - related party 316 420 Unbilled accounts receivable, net 794 828 Intangible assets, net 10,424 2,336 Deferred income taxes 5,377 3,205 ------------------ --------------- Total assets $93,980 $85,308 ================== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt - related party $ 527 $ 668 Current portion of long-term debt - 313 Accounts payable 1,917 1,440 Accrued bonus payable 839 1,663 Deferred licensing and professional services revenues 1,622 1,618 Accrued expenses 3,195 4,077 Deferred maintenance revenues 9,485 7,528 ------------------ --------------- Total current liabilities 17,585 17,307 ------------------ --------------- Long-term debt - related party 250 250 ------------------ --------------- Total liabilities 17,835 17,557 ------------------ --------------- Stockholders' equity: Common stock 145 137 Additional paid-in capital 79,297 69,089 Accumulated deficit (3,297) (1,475) ------------------ --------------- Total stockholders' equity 76,145 67,751 ------------------ --------------- Total liabilities and stockholders' equity $93,980 $85,308 ================== ===============
See accompanying notes to Consolidated Condensed Financial Statements. 3 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share information)
Three months ended Six months ended June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ------------------------------------- ------------------------------------- Revenues: Software licenses $ 8,971 $ 5,797 $14,765 $ 8,801 Maintenance 4,802 2,200 8,009 4,355 Professional services 4,365 2,508 6,954 4,880 ------------------------------------- ------------------------------------- Total revenues 18,138 10,505 29,728 18,036 ------------------------------------- ------------------------------------- Cost of revenues: Software licenses 337 329 608 604 Maintenance 1,438 785 2,210 1,621 Professional services 2,881 1,429 4,667 2,886 ------------------------------------- ------------------------------------- Total cost of revenues 4,656 2,543 7,485 5,111 ------------------------------------- ------------------------------------- Gross profit 13,482 7,962 22,243 12,925 Operating expenses: Selling and marketing 4,136 2,932 7,955 5,130 Research and development 5.091 2,382 7,930 4,631 General and administrative 3,013 1,984 4,458 3,047 Write-off of purchased in-process research and development 491 - 5,878 - ------------------------------------- ------------------------------------- Total operating expenses 12,731 7,298 26,221 12,808 ------------------------------------- ------------------------------------- Operating income (loss) 751 664 (3,978) 117 Interest and other income, net 519 572 1,111 1,021 ------------------------------------- ------------------------------------- Income (loss) before income taxes 1,270 1,236 (2,867) 1,138 Provision (benefit) for income taxes 436 334 (1,045) 404 ------------------------------------- ------------------------------------- Net income (loss) $ 834 $ 902 $(1,822) $ 734 ===================================== ===================================== Basic earnings (loss) per share $ 0.06 $ 0.07 $ (0.13) $ 0.05 ===================================== ===================================== Basic weighted average number of common shares outstanding 14,501 13,506 14,198 13,462 ===================================== ===================================== Diluted earnings (loss) per share $ 0.05 $ 0.07 $ (0.13) $ 0.05 ===================================== ===================================== Diluted weighted average number of common and common equivalent shares outstanding 15,702 13,841 14,198 13,817 ===================================== =====================================
See accompanying notes to Consolidated Condensed Financial Statements. 4 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
Six months ended June 30, June 30, 1998 1997 ---------------------- -------------------- Cash flows from operating activities: Net income (loss) $ (1,822) $ 734 ---------------------- -------------------- Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization 2,539 920 Purchased in-process research and development 5,878 - Deferred income taxes (2,172) (1) Provision for doubtful accounts 1,254 716 Changes in operating assets and liabilities, net of acquisition effects: Accounts receivable (1,314) 3,248 Unbilled accounts receivable (1,669) (494) Other current assets (1,351) (60) Accounts payable (1,028) 285 Accrued expenses (1,815) (544) Deferred revenues (790) 462 Income taxes 679 317 ---------------------- -------------------- Total adjustments 211 4,849 ---------------------- -------------------- Net cash (used in) provided by operating activities (1,611) 5,583 ---------------------- -------------------- Cash flows from investing activities: Cash paid for business acquisitions (5,260) - Purchases of property and equipment (3,564) (649) Investments in marketable securities, net (591) (10,559) Capitalized software and other (2,228) (146) ---------------------- -------------------- Net cash used in investing activities (11,643) (11,354) ---------------------- -------------------- Cash flows from financing activities: Proceeds from exercise of options and issuance of shares 1,450 308 Release of collateral requirement on letter of credit - 505 Repayment of debt (454) (1,877) ---------------------- -------------------- Net cash provided by (used in) financing activities 996 (1,064) ---------------------- -------------------- Net decrease in cash and cash equivalents (12,258) (6,835) Cash and cash equivalents, at beginning of period 23,660 36,287 Cash and cash equivalents, at end of period $ 11,402 $ 29,452 ====================== ====================
Supplemental disclosure of non-cash investing activities: As more fully described in Note 3, effective March 20, 1998, the Company purchased substantially all of the assets of Quantra Corporation for $15.3 million. As more fully described in Note 3, effective April 9, 1998, the Company purchased the outstanding shares of Savid International, Inc. and The Savid Group, Inc. for $0.9 million. See accompanying notes to Consolidated Condensed Financial Statements. 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, 1998 and the results of its operations for the three and six months ended June 30, 1998 and 1997. 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, 1997 included in the Company's Form 10-K filed with the Securities and Exchange Commission. The December 31, 1997 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, 1998 are not necessarily indicative of the results to be expected for the full year. Basic and Diluted Earnings (Loss) Per Share Basic earnings (loss) per share includes no dilution and is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed based on net income (loss) divided by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares comprise stock options using the treasury stock method. Common equivalent shares are excluded from the computation if their effect is antidilutive. Outstanding options to purchase 1.0 million shares were not included in the computation of diluted loss per share for the six months ended June 30, 1998 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, 1998 1997 1998 1997 - --------------------------------------------------------------------------------------------- Basic weighted average shares outstanding 14,501 13,506 14,198 13,462 Weighted average common stock equivalents-options 1,201 335 - 355 ------ ------ ------ ------ Diluted weighted average shares outstanding 15,702 13,841 14,198 13,817 - ---------------------------------------------------------------------------------------------
Comprehensive Income The Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130"), effective January 1, 1998. 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. Accounting Standards In June 1997, Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS No. 131"), was issued. SFAS No. 131 requires public companies to report all financial and descriptive information about operating segments in their financial statements and requires selected information about operating segments to be reported in interim financial reports issued to shareholders. Operating segment financial information is required to be reported on the basis that is used internally for evaluating segment performance and allocation of resources. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997 and requires presentation of comparative information for prior periods presented. SFAS No. 131 does not need to be applied to interim financial statements in 1998. The adoption of SFAS No. 131 is expected to impact the way the Company reports information on its operating segments. 6 On June 15, 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1, 2000 for the Company). SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Company anticipates that, due to its limited use of derivative instruments, the adoption of SFAS No. 133 will not have a significant effect on the Company's consolidated results of operations or its consolidated financial position. Restatement of Quarterly Financial Statements The Company believes that the amounts recorded as in-process research and development (IPR&D) charges at the dates of the acquisitions of Quantra and Savid were measured in a manner consistent with widely recognized appraisal practices that were being utilized at the time of the acquisitions. Subsequent to the acquisitions, in a letter dated September 15, 1998 to the American Institute of Certified Public Accountants, the Chief Accountant of the Securities and Exchange Commission (SEC) expressed views of the SEC staff that took issue with certain appraisal practices employed in the determination of the fair value of IPR&D that was the basis of the Company's measurement of its IPR&D charge. Accordingly, the Company has resolved to adjust the amount originally allocated to acquired IPR&D in a manner to reflect the SEC staff's. This revised allocation was completed in March 1999. The effect of this revised allocation was to increase the allocation of the purchase price to completed technology and to decrease the allocation of the purchase price to purchased in-process technology as reported in the table below. As reported As Restated (in thousands) ------------------------------ Tangible net assets $ 4,667 $ 4,667 Purchased in-process research and development 7,980 5,878 Purchased complete technology 3,505 5,607 -------- -------- $ 16,152 $ 16,152 The Company originally recorded a one-time charge for IPR&D in its operating results for the six months ended June 30, 1998 in the amount of approximately $8.0 million. After revaluing the IPR&D charge, the Company adjusted the one- time charge to $5.9 million, representing a reduction of $2.1 million to be amortized in subsequent periods as completed technology. Additional amortization due to this adjustment was $295 thousand for the quarter ended June 30, 1998 and $295 thousand for the six months ended June 30, 1998. The following tables outline the revisions to previously reported unaudited Consolidated Financial Statements (in thousands of dollars, except per share data). Consolidated Condensed Balance Sheet: June 30, 1998 Previously Reported Restated ---------- -------- Intangible assets, net $ 8,617 $ 10,424 Deferred income taxes 5,919 5,377 Accumulated deficit (4,562) (3,297) 7 Consolidated Condensed Statements of Operations:
Three months ended Six months ended June 30, 1998 June 30, 1998 Previously As Previously As Reported Restated Reported Restated ----------------------------------------------------------------------------- Cost of revenues: Software licenses $ 42 $ 337 $ 313 $ 608 Total cost of revenues 4,361 4,656 7,190 7,485 Gross profit 13,777 13,482 22,538 22,243 Operating expenses: Write-off of purchased in-process research and development 720 491 7,980 5,878 Total operating expenses 12,960 12,731 28,323 26,221 Operating income (loss) 817 751 (5,785) (3,978) Income (loss) before income taxes 1,336 1,270 (4,674) (2,867) Provision for (benefit from) income 454 436 (1,587) (1,045) taxes Net income (loss) 882 834 (3,087) (1,822) Basic earnings (loss) per share $ 0.06 $ 0.06 $ (0.22) $ (0.13) Diluted earnings (loss) per share $ 0.06 $ 0.05 $ (0.22) $ (0.13)
2. 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 (the "Consolidated Complaint") in which the Complaints were consolidated and amended. The Consolidated Complaint claims that the Prospectus for the Company's initial public offering allegedly made material misrepresentations in violation of Sections 11 and 12(2) of the Securities Act of 1933. The plaintiffs in the suit are seeking an undetermined amount of damages, and costs and expenses of the litigation. 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 will record a charge 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. 3. INTANGIBLES, INVESTMENTS AND OTHER ASSETS, NET: 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 will be 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. 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. 8 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): 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%. On May 1, 1998, the Company invested $2.2 million plus an exclusive distribution agreement for a 24% ownership interest in Caminus Energy Ventures, LLC ("CEV"), a limited liability company organized to provide comprehensive consulting services and software technology to the power and gas trading business. The investment was funded with cash from the proceeds of the Company's initial public offering. The exclusive distribution agreement allows CEV to sell the Company's software products within energy-related markets over a five-year period based on certain terms and conditions. The Company may be required to invest up to an additional $761,000 in accordance with the terms of the subscription agreement and in proportion to the overall investment from all investors such that the Company's equity position will not fall below 24%. The Company also received a warrant to purchase up to an additional 8.4% 9 ownership interest in CEV upon certain terms and conditions. The investment in CEV will be recorded on the equity method with a delay of one quarter from CEV's actual results. The Company anticipates that it will recognize in the third quarter of fiscal 1998 its proportionate share of any write-off of in-process research and development attributable to CEV's acquisition of two companies, as well as the operating results of CEV for the two-month period ended June 30, 1998. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 and 1997 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, 1998 were $18.1 million and $29.7 million, respectively, representing increases of 73% and 65% from the $10.5 million and $18.0 million, respectively, reported for the comparable periods of the prior year. Software license revenues accounted for approximately 50% of total revenues in each of the three and six months ended June 30, 1998 and 1997. Software license revenues for the three and six months ended June 30, 1998 were $9.0 million and $14.8 million, respectively, representing increases of 55% and 68% over the $5.8 million and $8.8 million, respectively, in the comparable periods of the prior year. The growth in license revenues was primarily the result of continuing strong domestic demand and growing international demand for the Company's CAMRA product, as well as continuing strong sales of the Company's Total Return product. Maintenance revenues accounted for approximately one-quarter of total revenues in each of the three and six months ended June 30, 1998 and 1997. Maintenance revenues for the three and six months ended June 30, 1998 were $4.8 million and $8.0 million, respectively, representing increases of 118% and 84% from the $2.2 million and $4.4 million, respectively, in the comparable periods of the prior year. The increase in revenues was primarily the result of maintenance revenues relating to the Quantra Acquisition and the expanding customer base in the asset management product line. Revenues from professional services, which include implementation, conversion, outsourcing and training services, accounted for approximately one-quarter of total revenues in each of the three and six months ended June 30, 1998 and 1997. Professional services revenues for the three and six months ended June 30, 1998 were $4.4 million and $7.0 million, respectively, representing increases of 74% and 43% from the $2.5 million and $4.9 million, respectively, in the comparable periods of the prior year. The higher revenues were primarily the result of increasing demand both domestically and internationally for implementation and conversion services, as well as revenues from Quantra professional services agreements. Gross Profit Gross profit, as a percentage of total revenues, for each of the three and six months ended June 30, 1998 was 74% and 75%, respectively, as compared with 76% and 72%, respectively, in the comparable periods of 1997. Software license profit, as a percentage of software license revenues, exceeded 90% for each of the three and six months ended June 30, 1998 and 1997, as the cost of software license revenues, which primarily includes royalties, amortization of purchased complete technology, costs of product media, packaging, documentation and delivery, remained proportionately small. Maintenance profit, as a percentage of maintenance revenues, for the three and six months ended June 30, 1998 was 70% and 72%, respectively, as compared with 64% and 63%, respectively, in the comparable periods of 1997. For the three and six months ended June 30, 1998, cost of maintenance revenues, which primarily consists of technical customer support and development costs associated with product and regulatory updates, increased by 83% to $1.4 million and 36% to $2.2 million, respectively, from $0.8 million and $1.6 million in the comparable periods of 1997. Margins improved as increased efficiencies in servicing the growing customer base more than offset the incremental costs required to service the higher volume. Professional services profit, as a percentage of professional services revenues, for the three and six months ended June 30, 1998 was 34% and 33%, respectively, as compared with 43% and 41%, respectively, in the comparable periods of 1997. Cost of professional services revenues includes employee and other costs related to providing implementation, conversion and training services to the Company's software licensees, as well as custom programming, outsourcing, systems integration and actuarial consulting services. For the three and six months ended June 30, 1998, these costs increased by 102% to $2.9 million and by 62% to $4.7 million, respectively, from $1.4 million and $2.9 million in the comparable periods of 1997, causing margins to decline approximately eight to nine percentage points. The margin decline was attributable to the initial hiring and training of newly hired staff in the United States and the start-up of a separate professional services organization servicing mostly European clients. 10 Operating Income (Loss) and Net Income (Loss) Selling and marketing expenses, as a percentage of total revenues, for the three and six months ended June 30, 1998 were 23% and 27%, respectively, as compared with 28% for both comparable periods of 1997. For the three and six months ended June 30, 1998, selling and marketing expenses increased by 41% to $4.1 million and by 55% to $8.0 million, respectively, from $2.9 million and $5.1 million in the comparable periods of 1997. The increase in these expenses was primarily the result of the Quantra Acquisition, an increased direct sales effort principally associated with the Total Return product, and enhancement of the Company's marketing staff. Research and development expenses, as a percentage of total revenues, for the three and six months ended June 30, 1998 were 28% and 27%, respectively, as compared with 23% and 26%, respectively, in the comparable periods of 1997. For the three and six months ended June 30, 1998, these expenses increased by 114% to $5.1 million and by 71% to $7.9 million, respectively, from $2.4 million and $4.6 million in the comparable periods of 1997. The increase in research and development expenses was principally the result of increased spending on Antares, CAMRA 2000 version 3.0, SKYLINE for Windows and PRO-Ject version 2.0 programs. General and administrative expenses, as a percentage of total revenues, for the three and six months ended June 30, 1998 were 17% and 15%, respectively, as compared with 19% and 17%, respectively, in the comparable periods of the prior year. For the three and six months ended June 30, 1998, general and administrative expenses increased by 52% to $3.0 million and by 46% to $4.5 million, respectively, from $2.0 million and $3.0 million, respectively, in the comparable periods of 1997. The dollar increase in general and administrative expenses primarily related to the growth in the volume and complexity of the overall business. 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. Subsequent to the issuance of the Company's June 30, 1998 condensed consolidated financial statements, the Securities and Exchange Commission (the "SEC") issued new guidance on its views regarding the valuation methodology used in determining purchased in-process technology expensed at the date of acquisitions. The Company also had ongoing discussions with the SEC staff concerning the valuation of purchased in-process technology acquired in connection with the Quantra Acquisition. As a result of the SEC guidance and these discussions, the Company has modified its methods used to value the purchased in-process technology and has applied the stage of completion approach to the in-process research and development acquired through the 1998 acquisitions. The effect of this estimate was to increase the allocation of the purchase price to completed technology and decrease the allocation of the purchase price to purchased in-process technology. As a result of these changes, the Company is restating its March 30, 1998, June 30, 1998 and September 30, 1998 consolidated condensed financial statements. The write-off of purchased in- process research and development decreased by $2.1 million in the first six months of 1998. Amortization of the completed technology increased by $295 thousand for the three and six months ended June 30, 1998. For these acquisitions, the Company determined the value of the completed technologies and in-process research and development using a risk-adjusted, discounted cash flow approach. In-process research and development projects identified at the Quantra and Savid Acquisition dates included the following: Quantra Mortgage Loan Management System ("MLMS"). This project involves upgrading the loan management software from 16-bit to 32-bit architecture. MLMS is a complete software solution designed to process and provide information required by managers of mortgage loan portfolios. As of the acquisition date, the Company estimated that this project was 26% complete. The estimated cost to complete the project was approximately $2.8 million with $1.0 million expected to be incurred in 1999. The anticipated product launch for this project is the second half of 1999, at which time the Company expects to begin to benefit economically from this project. Real Estate Management System ("REMS"). This project involves completing the development and/or upgrading of approximately half of the twenty-one modules of this integrated, modular suite of software. The software is designed to process and provide information for managers of real estate portfolios. The development effort will mostly involve the development and integration of these modules with a central data management module. As of the acquisition date, the Company estimated that the project was 34% complete. The estimated cost to complete the project was $4.9 million with $3.7 million expected to be incurred in 1999 and beyond. The anticipated product launch for certain modules are in late 1998 with additional module launches expected in 1999 and 2000. SKYLINE for Windows. This project involved the development of the property management software in a Windows platform. The Company expects the product to achieve technological feasibility in the third quarter of 1998. As of the acquisition date, the Company estimated that the project was 77% complete. The estimated cost to complete the project was $0.3 million. 11 Savid The Savid in-process research and development projects include the development of five existing debt and derivative modules in a Windows platform in addition to developing a new risk management module. As of the acquisition date, the Company estimated that the remaining cost required to achieve technological feasibility for both projects was approximately $0.2 million. Three of the five modules are expected to achieve technological feasibility in the third quarter 1998. The Company expects to benefit from the acquisition of the remaining research and development projects as the remaining modules are expected to be launched beginning in the second half of 1999. The value of in-process research and development was determined by estimating the costs to develop the in-process projects into commercially viable projects, estimating the resulting net cash flows from such projects, discounting the net cash flows back to their present values, and adjusting that result to reflect each product's stage of completion. The expected cash flows of the in-process projects were also adjusted to reflect the contribution of completed and core technologies. 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 20% for consulting, depending on the product. The Company has included the consulting revenues in the valuation of the technologies because they consist of installation, data conversion and customer training services directly and specifically related to the corresponding technology. 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 discount rates for these projects were higher than the Company's implied weighted average cost of capital due to the inherent uncertainties surrounding the successful development of the in-process research and development and the related risk of realizing cash flows from products that have not yet reached technological feasibility, among other factors. The Company believes that the assumptions used in the forecasts were reasonable at the date of acquisition. The Company cannot be assured, however, that the underlying assumptions used to estimate expected product sales, development costs or profitability, or the events associated with such projects, will transpire as estimated. Accordingly, actual results may vary from the projected results. All development efforts for Quantra and Savid products are proceeding as expected and management believes that technological feasibility can be achieved. If these projects are not successfully completed, the sales and profitability of the Company may be adversely affected in future periods and the value of certain related intangibles may become impaired. Operating income for the three months ended June 30, 1998 was $0.8 million, or 5% of total revenues, as compared with $0.7 million, or 6% of total revenues, in the three months ended June 30, 1997. For the six months ended June 30, 1998, the operating loss was $4.0 million, or 13% of total revenues, as compared with operating income of $0.1 million, or 1% of total revenues, in the six months ended June 30, 1997. Interest and other income, net for both of the three and six months ended June 30, 1998, remained essentially unchanged from the amounts reported for the comparable periods of the prior year. The effective tax rate for each of the three and six months ended June 30, 1998 was 34% and 36%, respectively, as compared with 27% and 36%, respectively, in the comparable periods of the prior year. The increase or decrease in the effective tax rate was primarily the result of the fluctuations in pre-tax earnings of foreign operations in countries where the tax rates were lower than in the United States. For the full year ending December 31, 1998, Company management expects its effective tax rate to remain at 34%. Net income for the three months ended June 30, 1998 was $0.8 million, or $0.06 diluted earnings per share, as compared with $0.9 million, or $0.07 diluted earnings per share, in the three months ended June 30, 1997. For the six months ended June 30, 1998, the net loss was $1.8 million, or $0.13diluted loss per share, as compared with net income of $0.7 million, or $0.05 diluted earnings per share, in the six months ended June 30, 1997. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents for the six months ended June 30, 1998 decreased by $12.3 million primarily as a result of business acquisitions and other investing activities. Cash and cash equivalents, for the six months ended June 30, 1997, decreased by $6.8 million 12 primarily as a result of a $10.6 million net transfer of cash into short-term marketable securities and a $1.9 million repayment of debt being partly offset by $5.6 million of cash provided by operations. Operations used cash of $1.6 million for the six months ended June 30, 1998 primarily as a result of the net loss for the period and unfavorable changes in working capital. For the comparable period of the prior year, operations provided cash of $5.6 million, primarily as a result of collections of accounts receivable and net income for the period. Investing activities for the six months ended June 30, 1998 and 1997 used $11.6 million and $11.4 million, respectively. In 1998, the Company acquired the Quantra and Savid businesses, made an equity investment in CEV, acquired office and other equipment and invested in capitalized software. During the six months ended June 30, 1997, the Company invested $10.6 million, net, in short-term marketable securities. Financing activities for the six months ended June 30, 1998 provided cash of $1.0 million as compared with using $1.1 million for the comparable period of the prior year. During 1998, approximately $1.5 million received from the exercise of options and issuance of shares was partly offset by payments of debt, while in the comparable period of 1997, the repayment of $1.9 million of debt was partially offset by other financing activities. As of June 30, 1998, the Company had $47.1 million in cash, cash equivalents and marketable securities. The Company believes that its current cash balances and net cash provided by operating activities will be sufficient to meet its working capital and capital expenditure requirements for at least 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. 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 our 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 Year 2000 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 heavily dependent on third party materials suppliers. The Company is working with all 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 13 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. 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 and Total Return 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. 14 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 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. 15 ACCOUNTING PRONOUNCEMENTS In June 1997, Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS No. 131"), was issued. SFAS No. 131 requires public companies to report all financial and descriptive information about operating segments in their financial statements and requires selected information about operating segments to be reported in interim financial reports issued to shareholders. Operating segment financial information is required to be reported on the basis that is used internally for evaluating segment performance and allocation of resources. SFAS No. 131 is effective for financial statements for periods beginning after December 15, 1997 and requires presentation of comparative information for prior periods presented. SFAS No. 131 does not need to be applied to interim financial statements in 1998. The adoption of SFAS No. 131 is expected to impact the way the Company reports information on its operating segments. On June 15, 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1, 2000 for the Company). SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Company anticipates that, due to its limited use of derivative instruments, the adoption of SFAS No. 133 will not have a significant effect on the Company's consolidated results of operations or its consolidated financial position. 16 PART II - OTHER INFORMATION 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 2, 1998, the Company filed a Current Report on Form 8-K, dated March 20, 1998, to report under Item 2 (Acquisition or Disposition of Assets) the Company's acquisition of substantially all of the assets of Quantra. On April 23, 1998, the Company filed a Current Report on Form 8-K, dated April 9, 1998, to report under Item 5 (Other Events) the Company's acquisition of Savid International Inc. and The Savid Group, Inc. No financial statements were required to be filed with such report. On June 3, 1998, the Company filed Amendment No. 1 to Current Report on Form 8-K/A, dated March 20, 1998, for the purpose of filing the financial statements of Quantra required by Item 7(a) and the pro forma financial information required by Item 7(b) with respect to the Company's acquisition of substantially all of the assets of Quantra on March 20, 1998. 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 17, 1999 By: /s/ Anthony R. Guarascio Anthony R. Guarascio Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 18 EXHIBIT INDEX Exhibit Number Description -------------- ----------- 2 Stock Purchase Agreement, dated as of April 9, 1998, by and among SS&C Technologies, Inc., Savid International, Inc. The Savid Group, Inc. and Diane Cossin is incorporated by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K, dated April 9, 1998 (File No. 000-28430) 27 Restated Financial Data Schedule 19 THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THIS QUARTERLY REPORT ON FORM 10Q. 20 EX-27 2 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THIS QUARTERLY REPORT ON FORM 10Q. 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 11,402 35,649 21,760 2,792 0 69,611 11,869 4,412 93,980 17,585 0 0 0 145 76,000 93,980 29,728 29,728 0 7,485 26,221 375 0 (2,867) (1,045) (1,822) 0 0 0 (1,822) (0.13) (0.13)
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