##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-15946
 Ebix, Inc.
  DELAWARE
    
    77-0021975(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)5 CONCOURSE PARKWAY, SUITE 3200ATLANTA, GEORGIA
    
    30328(Address of principal executive offices)
    
    (Zip Code)
 678-281-2020
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



Ebix, Inc. and Subsidiaries
   INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Consolidated Financial StatementsConsolidated Statements of Income for the three and nine months ended September 30, 2008 and 2007
(unaudited)
    
    
    3Consolidated Balance Sheets as of September 30, 2008 (unaudited) and December 31, 2007
    
    
    4Consolidated Statement of Stockholders Equity and Comprehensive Income for the nine months ended
September 30, 2008
    
    
    5Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2008
and 2007 (unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    35Item 5. Issuer Purchases of Equity Securities
    
    
    35Item 6. Exhibits
    
    
    36SIGNATURES
    
    
    37INDEX to EXHIBITS
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 Ebix, Inc. and Subsidiaries
 
 Consolidated Statements of Income
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Operating
revenue
    
    $
    20,168
    
    
    $
    11,806
    
    
    $
    54,609
    
    
    $
    30,640Operating expenses:Cost of services provided
    
    
    3,940
    
    
    
    1,840
    
    
    
    10,101
    
    
    
    5,124Product development
    
    
    2,074
    
    
    
    2,074
    
    
    
    6,314
    
    
    
    6,122Sales and marketing
    
    
    871
    
    
    
    1,099
    
    
    
    2,536
    
    
    
    3,129General and administrative
    
    
    4,360
    
    
    
    2,449
    
    
    
    12,032
    
    
    
    6,135Amortization and depreciation
    
    
    804
    
    
    
    632
    
    
    
    2,460
    
    
    
    1,882Total operating expenses
    
    
    12,049
    
    
    
    8,094
    
    
    
    33,443
    
    
    
    22,392Operating income
    
    
    8,119
    
    
    
    3,712
    
    
    
    21,166
    
    
    
    8,248Interest income
    
    
    134
    
    
    
    181
    
    
    
    396
    
    
    
    388Interest expense
    
    
    (440
    )
    
    
    (7
    )
    
    
    (1,176
    )
    
    
    (377
    )Foreign exchange gain (loss)
    
    
    (24
    )
    
    
    175
    
    
    
    135
    
    
    
    302Income before income taxes
    
    
    7,789
    
    
    
    4,061
    
    
    
    20,521
    
    
    
    8,561Income tax expense
    
    
    (391
    )
    
    
    (368
    )
    
    
    (1,118
    )
    
    
    (393
    )Net income
    
    $
    7,398
    
    
    $
    3,693
    
    
    $
    19,403
    
    
    $
    8,168Basic earnings per common share *
    
    $
    0.77
    
    
    $
    0.38
    
    
    $
    1.97
    
    
    $
    0.90Diluted earnings per common share *
    
    $
    0.62
    
    
    $
    0.33
    
    
    $
    1.65
    
    
    $
    0.80Basic weighted average shares outstanding *
    
    
    9,607
    
    
    
    9,816
    
    
    
    9,837
    
    
    
    9,098Diluted weighted average shares outstanding *
    
    
    12,170
    
    
    
    11,038
    
    
    
    12,040
    
    
    
    10,266
 *
    
    Adjusted for all periods presented to reflect the
effect of 3-for-1 stock split dated October 9, 2008; see Note 17   3




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
  September 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,246
    
    
    $
    49,466Accounts receivable, less allowance of $505 and $146, respectively
    
    
    14,314
    
    
    
    8,809Other current assets
    
    
    1,301
    
    
    
    1,130Total current assets
    
    
    28,861
    
    
    
    59,405Property and equipment, net
    
    
    3,539
    
    
    
    3,356Goodwill
    
    
    96,051
    
    
    
    36,408Intangible assets, net
    
    
    10,212
    
    
    
    7,318Other assets
    
    
    2,943
    
    
    
    2,023Total assets
    
    $
    141,606
    
    
    $
    108,510LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    
    4,467
    
    
    
    2,231Accrued payroll and related benefits
    
    
    3,195
    
    
    
    1,517Short term debt
    
    
    24,945
    
    
    
    15,650Current portion of long term debt and capital lease obligations
    
    
    509
    
    
    
    510Deferred revenue
    
    
    5,657
    
    
    
    5,645Other current liabilities
    
    
    275
    
    
    
    149Total current liabilities
    
    
    39,048
    
    
    
    25,702Convertible debt
    
    
    31,000
    
    
    
    20,000Long term debt and capital lease obligation, less current portion
    
    
    3
    
    
    
    486Other liabilities
    
    
    3,234
    
    
    
    1,477Deferred rent
    
    
    624
    
    
    
    719Total liabilities
    
    
    73,909
    
    
    
    48,384Commitments and Contingencies, see Note 9Stockholders equity:Convertible Series D Preferred stock, $.10 par value, 500,000
shares authorized, no shares issued and outstanding
    
    
    
    
    
    
    Common stock, $.10 par value, 20,000,000 shares authorized,
9,775,458 issued and 9,748,788 outstanding at September 30, 2008
and 10,218,702 issued and 10,192,032 outstanding at December 31,
2007 *
    
    
    959
    
    
    
    337Additional paid-in capital
    
    
    106,650
    
    
    
    114,771Treasury stock (26,670 shares repurchased as of September 30,
2008 and December 31, 2007)
    
    
    (149
    )
    
    
    (149
    )Accumulated deficit
    
    
    (38,110
    )
    
    
    (57,513
    )Accumulated other comprehensive income
    
    
    (1,653
    )
    
    
    2,680Total stockholders equity
    
    
    67,697
    
    
    
    60,126Total liabilities and stockholders equity
    
    $
    141,606
    
    
    $
    108,510
 *
    
    Adjusted for all periods presented to reflect retroactive
effect of 3-for-1 stock split dated October 9, 2008; see Note 17   4




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Ebix, Inc. and Subsidiaries
 
 Consolidated Statement of Stockholders Equity and Comprehensive Income
 (unaudited)
 (In thousands, except share amounts)
 AccumulatedCommon Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherTreasury
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    ComprehensiveIssued
    
    
    
    
    
    
    Stock
    
    
    Treasury
    
    
    Paid-in
    
    
    Deferred
    
    
    Accumulated
    
    
    (Loss)
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Deficit
    
    
    Income
    
    
    Total
    
    
    IncomeBalance, December 31, 2007
    
    
    10,218,702
    
    
    $
    337
    
    
    
    (26,670
    )
    
    $
    (149
    )
    
    $
    114,771
    
    
    $
    
    
    
    $
    (57,513
    )
    
    $
    2,680
    
    
    $
    60,126Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,403
    
    
    
    
    
    
    
    19,403
    
    
    $
    19,403Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,329
    )
    
    
    
    
    
    
    
    
    
    
    (4,333
    )
    
    
    (5,662
    )
    
    
    (4,333
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    15,070Proceeds from issuance of common
stock (net of issuance costs)
    
    
    510,000
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    12,502
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,519Conversion of principal and
interest on Convertible
promissory notes
    
    
    191,241
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    4,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,070Repurchase of common stock
    
    
    (1,215,000
    )
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    (24,469
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,510
    )Exercise of stock options
    
    
    98,319
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    1,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,230Restricted stock
    
    
    66,855
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    420Unvested portion of total
restricted stock
    
    
    (94,659
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effect of 3-1 Stock Split
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    
    
    
    
    (635
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred compensation and
amortization related to options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101Balance, September 30, 2008
    
    
    9,775,458
    
    
    $
    959
    
    
    
    (26,670
    )
    
    $
    (149
    )
    
    $
    106,650
    
    
    $
    
    
    
    $
    (38,110
    )
    
    $
    (1,653
    )
    
    $
    67,697
   5




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
   Nine Months EndedSeptember 30,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    19,403
    
    
    $
    8,168Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    2,460
    
    
    
    1,882Stock-based compensation
    
    
    102
    
    
    
    161Restricted stock compensation
    
    
    423
    
    
    
    102Provision for doubtful accounts
    
    
    225
    
    
    
    469Changes in assets and liabilities:Accounts receivable
    
    
    (2,053
    )
    
    
    (2,154
    )Other assets
    
    
    324
    
    
    
    (238
    )Accounts payable and accrued expenses
    
    
    (392
    )
    
    
    (62
    )Accrued payroll and related benefits
    
    
    600
    
    
    
    (263
    )Deferred revenue
    
    
    (1,220
    )
    
    
    622Deferred taxes
    
    
    (529
    )
    
    
    Deferred
rent and other liabilities
    
    
    16
    
    
    
    144Net cash provided by operating activities
    
    
    19,359
    
    
    
    8,831Cash flows from investing activities:Investment in Acclamation, net of cash acquired
    
    
    (21,365
    )
    
    
    Investment in Periculum, net of cash acquired
    
    
    (1,067
    )
    
    
    Investment in Telstra eBusiness Services, net of cash acquired
    
    
    (42,968
    )
    
    
    Investment in Finetre
    
    
    
    
    
    
    (15
    )Investment in Infinity
    
    
    (500
    )
    
    
    Capital expenditures
    
    
    (549
    )
    
    
    (502
    )Net cash used in investing activities
    
    
    (66,449
    )
    
    
    (517
    )Cash flows from financing activities:Proceeds from (payments on) line of credit
    
    
    9,295
    
    
    
    (10,000
    )Proceeds from the issuance of common stock, net of issuance costs
    
    
    12,518
    
    
    
    13,275Repurchase of common stock
    
    
    (24,510
    )
    
    
    Proceeds from the exercise of the stock options
    
    
    1,225
    
    
    
    237Proceeds from issuance of convertible promissory notes
    
    
    15,000
    
    
    
    Payments on capital lease obligations
    
    
    (3
    )
    
    
    (2
    )Principal payments under debt obligations
    
    
    (483
    )
    
    
    (1,015
    )Net cash provided by financing activities
    
    
    13,042
    
    
    
    2,495Effect of foreign exchange rates on cash
    
    
    (2,172
    )
    
    
    52Net change in cash and cash equivalents
    
    
    (36,220
    )
    
    
    10,861Cash and cash equivalents at the beginning of the period
    
    
    49,466
    
    
    
    5,013Cash and cash equivalents at the end of the period
    
    $
    13,246
    
    
    $
    15,874Supplemental disclosures of cash flow information:Interest paid
    
    $
    759
    
    
    $
    277Income taxes paid
    
    $
    478
    
    
    $
    107
  6




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##### Table of Contents



Supplemental Disclosure of noncash investing activities
 Telstra eBusiness Services
 Acclamation Systems, Inc.
 Convertible Promissory Notes
   7




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 Note 1. Description of Business and Summary of Significant Accounting Policies
 Description of Business
 Summary of Significant Accounting Policies
 Basis of Presentation
 
  Use of Estimates
 Revenue Recognition and Deferred Revenue
  8




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Ebix, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Note 1. Description of Business and Summary of Significant Accounting Policies (Continued)
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Carrier Systems
    
    $
    2,920
    
    
    $
    3,930
    
    
    $
    8,053
    
    
    $
    7,855Exchanges
    
    $
    11,915
    
    
    $
    5,215
    
    
    $
    30,646
    
    
    $
    14,203BPO
    
    $
    1,851
    
    
    $
    66
    
    
    $
    5,365
    
    
    $
    127Broker Systems
    
    $
    3,482
    
    
    $
    2,595
    
    
    $
    10,545
    
    
    $
    8,455Totals
    
    $
    20,168
    
    
    $
    11,806
    
    
    $
    54,609
    
    
    $
    30,640
  Software Revenue Recognition
(SOP 97-2) Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions, (SOP 98-9)
   Revenue Recognition.
  9




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note 1. Description of Business and Summary of Significant Accounting Policies (Continued)
  Accounting for
Performance on Construction-Type and Certain Production-Type Contracts"
 Allowance for doubtful Accounts Receivable
 Segment Reporting Disclosures about Segments of an Enterprise and
Related Information"
 Cash and Cash Equivalents
 Fair Value of Financial Instruments
 Goodwill and Other Acquired Intangible Assets
  10




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note 1. Description of Business and Summary of Significant Accounting Policies (Continued)
  Goodwill
 September 30,
    
    
    December 31,2008
    
    
    2007Beginning balance
    
    $
    36,408
    
    
    $
    23,118Additions
    
    
    62,948
    
    
    
    12,530Foreign currency translation adjustments
    
    
    (3,305
    )
    
    
    760Ending balance
    
    $
    96,051
    
    
    $
    36,408
  Intangible Assets
 September 30,
    
    
    December 31,2008
    
    
    2007Intangible assets:Customer relationships
    
    $
    10,930
    
    
    $
    7,170Developed technology
    
    
    4,842
    
    
    
    4,103Trademarks
    
    
    691
    
    
    
    706Backlog
    
    
    140
    
    
    
    140Total intangibles
    
    
    16,603
    
    
    
    12,119Accumulated amortization:
    
    
    (6,391
    )
    
    
    (4,801
    )Intangibles net
    
    $
    10,212
    
    
    $
    7,318
 Intangible Assets
 Category
    
    Life (yrs)Customer relationships
    
    
    4-10Developed technology
    
    
    5-7Trademarks
    
    
    5-10Backlog
    
    
    1-2
 Income Taxes
  11




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##### Table of Contents



Ebix, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Note 1. Description of Business and Summary of Significant Accounting Policies (Continued)
 Accounting for Uncertainty in Income
TaxesAn Interpretation of FASB Statement No. 109
 Foreign Currency Translation
 Recent Accounting Pronouncements Business Combinations Business Combinations,
 The Fair Value Option for Financial
Assets and Financial LiabilitiesIncluding an Amendment of FASB Statement No. 115
 Note 2. Share Based Compensation
 Non-employee Stock Compensation Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
conjunction with Selling Goods or Services.
  12




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##### Table of Contents



Ebix Inc and Subsidiaries
Notes to Consolidated Financial Statements
 Note 2. Share Based Compensation (Continued)
 Stock Options
 WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateWithin Plans
    
    
    
    
    
    
    Average
    
    
    Contractual
    
    
    IntrinsicNonstatutory
    
    
    Incentive
    
    
    Outside
    
    
    Exercise
    
    
    Term
    
    
    Value (*)Options
    
    
    Options
    
    
    Plan
    
    
    Price
    
    
    (Years)
    
    
    (thousands)Outstanding at December 31,
2007
    
    
    1,439,601
    
    
    
    143,343
    
    
    
    7,500
    
    
    $
    3.97
    
    
    
    4.46
    
    
    $
    32,480Granted
    
    
    45,000
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Exercised
    
    
    (30,573
    )
    
    
    
    
    
    
    
    
    
    $
    8.86
    
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Outstanding at March 31, 2008
    
    
    1,454,028
    
    
    
    143,343
    
    
    
    7,500
    
    
    $
    3.88
    
    
    
    4.29
    
    
    $
    32,362Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Exercised
    
    
    (20,151
    )
    
    
    
    
    
    
    
    
    
    $
    8.86
    
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2008
    
    
    1,433,877
    
    
    
    143,343
    
    
    
    7,500
    
    
    $
    3.77
    
    
    
    4.06
    
    
    $
    35,078Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Exercised
    
    
    (11,034
    )
    
    
    (33,750
    )
    
    
    (2,811
    )
    
    $
    14.93
    
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    
    
    
    
    (2,814
    )
    
    $
    17.23
    
    
    
    
    
    
    
    Outstanding at September 30,
2008
    
    
    1,422,843
    
    
    
    109,593
    
    
    
    1,875
    
    
    $
    3.39
    
    
    
    3.92
    
    
    
    42,854Exercisable at September 30,
2008
    
    
    1,384,968
    
    
    
    109,593
    
    
    
    1,875
    
    
    $
    3.39
    
    
    
    3.92
    
    
    $
    41,797
 (*)
    
    The aggregate intrinsic value for stock options outstanding and exercisable is defined as the
difference between the market value of the Companys stock as of the end of the period and the
exercise price of the stock options. Restricted Stock
     13




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note 2. Share Based Compensation (Continued)
     Note 3. Earnings per Share
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic Wtd. Ave. Shares Outstanding
    
    
    9,607,173
    
    
    
    9,815,736
    
    
    
    9,837,252
    
    
    
    9,097,728Common Stock
Equivalents
    
    
    2,562,936
    
    
    
    1,222,494
    
    
    
    2,202,783
    
    
    
    1,167,987Diluted Shares Outstanding
    
    
    12,170,109
    
    
    
    11,038,230
    
    
    
    12,040,035
    
    
    
    10,265,715
  14




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##### Table of Contents



Ebix, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Note 4. Comprehensive Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    7,398
    
    
    $
    3,693
    
    
    $
    19,403
    
    
    $
    8,168Other comprehensive income (loss)foreign
currency translation adjustment
    
    
    (7,889
    )
    
    
    (256
    )
    
    
    (4,333
    )
    
    
    576Comprehensive income
    
    $
    (491
    )
    
    $
    3,437
    
    
    $
    15,070
    
    
    $
    8,744
 Note 5. Related Party Transactions
  Note 6. Business Combinations
 IDS
  (In thousands)Current assets
    
    $
    432Property and equipment
    
    
    139Intangible assets
    
    
    1,283Goodwill
    
    
    9,646Total assets acquired
    
    
    11,500Less: liabilities assumed
    
    
    (180
    )Net assets acquired
    
    $
    11,320
  15




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note 6. Business Combinations (Continued)
  Estimated Amortization Expenses:For the year ended December 31, 2008
    
    $
    142,000For the year ended December 31, 2009
    
    $
    142,000For the year ended December 31, 2010
    
    $
    142,000For the year ended December 31, 2011
    
    $
    142,000For the year ended December 31, 2012
    
    $
    138,000For the years ending after December 31, 2012
    
    $
    553,000
 Telstra eBusiness Services Recognition of Liabilities in Connection
with a Purchase Business Combination,
  (In thousands)Current assets
    
    $
    3,094Property and equipment
    
    
    170Intangible assets
    
    
    3,367Goodwill
    
    
    41,314Total assets acquired
    
    
    47,495Less: liabilities assumed
    
    
    (3,997
    )Net assets acquired
    
    $
    43,948
  16




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note 6. Business Combinations (Continued)
  Estimated Amortization Expenses:For the year ended December 31, 2008
    
    $
    403,260For the year ended December 31, 2009
    
    $
    403,260For the year ended December 31, 2010
    
    $
    403,260For the year ended December 31, 2011
    
    $
    403,260For the year ended December 31, 2012
    
    $
    403,260For the years ending after December 31, 2012
    
    $
    1,351,626
 Periculum Services Group
  (In thousands)Current assets
    
    $
    197Property and equipment
    
    
    Intangible assets
    
    
    140Goodwill
    
    
    890Total assets acquired
    
    
    1,227Less: liabilities assumed
    
    
    (167
    )Net assets acquired
    
    $
    1,060
  Estimated Amortization Expenses:For the year ended December 31, 2008
    
    $
    10,333For the year ended December 31, 2009
    
    $
    15,500For the year ended December 31, 2010
    
    $
    15,500For the year ended December 31, 2011
    
    $
    15,500For the year ended December 31, 2012
    
    $
    15,500For the years ending after December 31, 2012
    
    $
    67,667
  17




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##### Table of Contents



Ebix, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Note 6. Business Combinations (Continued)
 Acclamation Systems, Inc.
  (In thousands)Current assets
    
    $
    3,157Property and equipment
    
    
    190Intangible assets
    
    
    1,305Goodwill
    
    
    18,887Total assets acquired
    
    $
    23,539Less: liabilities assumed
    
    
    (1,470
    )Net assets acquired
    
    $
    22,069
  Estimated Amortization Expenses:For the year ended December 31, 2008
    
    $
    71,000For the year ended December 31, 2009
    
    $
    170,000For the year ended December 31, 2010
    
    $
    170,000For the year ended December 31, 2011
    
    $
    170,000For the year ended December 31, 2012
    
    $
    170,000For the years ending after December 31, 2012
    
    $
    555,000
 Note 7. Pro Forma Financial Information (related to recent acquisitions)
   18




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note
7. Pro Forma Financial Information (related to recent acquisitions) (Continued)
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007As Reported
    
    
    Pro Forma
    
    
    As Reported
    
    
    Pro FormaRevenue
    
    $
    54,609
    
    
    $
    61,350
    
    
    $
    30,640
    
    
    $
    53,659Net income
    
    $
    19,403
    
    
    $
    20,623
    
    
    $
    8,168
    
    
    $
    10,751Basic earnings per share
    
    $
    2.02
    
    
    $
    2.14
    
    
    $
    0.51
    
    
    $
    0.80Diluted earnings per share
    
    $
    1.65
    
    
    $
    1.75
    
    
    $
    0.45
    
    
    $
    0.71
 Note 8. Line of Credit and Letters of Credit
 Bank Line of Credit
  Letters of Credit
 Note 9. Commitments and Contingencies
 Form 10-K,
 Note 10. Convertible Debt
   19




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note
10. Convertible Debt (Continued)
  Note 11. Long-term Debt
  Note 12. Stock Repurchase
  Note 13. Repurchase of Common Stock from an Affiliate
  Note 14. Sale of Unregistered Common Stock
   20




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note
14. Sale of Unregistered Common Stock (Continued)
        21




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note 15. Income Taxes
 Effective Tax Rate
   FIN 48 Accounting for Uncertainty in Income Taxes
 (in thousands)Balance at January 1, 2008
    
    $
    600Additions based on tax positions related to
current year
    
    $
    104Additions for tax positions of prior years
    
    $
    33Reductions for tax position of prior years
    
    $
    (379
    )Settlements
    
    $
    Balance at September 30, 2008
    
    $
    358
  Note 16. Geographic Information
  Nine months ended September 30, 2008
 New(dollar amounts in thousands)
    
    Domestic
    
    
    Australia
    
    
    India
    
    
    Singapore
    
    
    Zealand
    
    
    TotalRevenue
    
    $
    33,443
    
    
    $
    18,928
    
    
    $
    36
    
    
    $
    1,486
    
    
    $
    716
    
    
    $
    54,609Fixed assets
    
    $
    2,206
    
    
    $
    479
    
    
    $
    791
    
    
    $
    36
    
    
    $
    27
    
    
    $
    3,539Goodwill
    
    $
    49,300
    
    
    $
    46,751
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    96,051Intangible assets
    
    $
    7,244
    
    
    $
    2,968
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,212Employees
    
    
    289
    
    
    
    64
    
    
    
    226
    
    
    
    6
    
    
    
    9
    
    
    
    594
  22




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
 Note
16. Geographic Information (Continued)
 Nine months ended September 30, 2007
 New(dollar amounts in thousands)
    
    Domestic
    
    
    Australia
    
    
    India
    
    
    Singapore
    
    
    Zealand
    
    
    TotalRevenue
    
    $
    22,565
    
    
    $
    5,998
    
    
    $
    43
    
    
    $
    1,343
    
    
    $
    691
    
    
    $
    30,640Fixed assets
    
    $
    1,141
    
    
    $
    186
    
    
    $
    809
    
    
    $
    43
    
    
    $
    22
    
    
    $
    2,201Goodwill
    
    $
    16,542
    
    
    $
    7,090
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23,632Intangible assets
    
    $
    6,110
    
    
    $
    383
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6,493Employees
    
    
    131
    
    
    
    34
    
    
    
    107
    
    
    
    6
    
    
    
    9
    
    
    
    287
  Note 17. Material Change is Assets and Liabilities
 Assets
 Liabilities
 Note 18. Subsequent Events
 Material modification to the rights of security holders
 Convertible
Promissory Notes 
 Completion of business acquisition
 
    
    The factor of 2.077 times the amount of ConfirmNet revenues for the period of
October 1, 2008 through December 31, 2008;
 
    
    The factor of 1.538 times the amount by which ConfirmNets revenue for the twelve
month period ending December 31, 2009 exceeds the revenue for the twelve month period
ending December 31, 2008; and,
 
    
    The factor of 1.000 times the first year of net revenue generated by
ConfirmNets agreement with Marsh & McClennan Companies, Inc. Net revenue is
defined as revenue after all costs directly associated with the Marsh & McClennan
Companies, Inc agreement.
   23




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##### Table of Contents



Item 2.

    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Safe Harbor for Forward-Looking Statements under the Securities Litigation Reform Act of 1995
  
    
    Regarding Notes 8, 10, and 13 of the Notes to Consolidated Financial Statements, and
our future liquidity needs discussed under Liquidity and Financial Condition, and
specifically our ability to generate cash from operating activities and any declines in
our credit ratings or financial condition which could restrict our access to the
capital markets or materially increase our financing costs;
    
    With respect to Note 9 of the Notes to Consolidated Financial Statements,
Commitments and Contingencies, and Contractual Obligations and Commercial
Commitments in MD&A, and specifically changes in the market value of our assets or
the actual cost of our commitments or contingencies;
    
    Regarding Note 6 of the Notes to Consolidated Financial Statements pertaining to
estimated future amortization expense related to definite-lived acquired intangible
assets at September 30, 2008, and our ability to accurately estimate the fair value of
such assets; and,
    
    With respect this Management Discussion & Analysis of Financial Condition and
Results of Operation and the analysis of the nine month revenue trend, the actual level
of demand for our products during the immediately foreseeable future.
  Company Overview
   24




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##### Table of Contents



For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Carrier Systems
    
    $
    2,920
    
    
    $
    3,930
    
    
    $
    8,053
    
    
    $
    7,855Data Exchanges
    
    $
    11,915
    
    
    $
    5,215
    
    
    $
    30,646
    
    
    $
    14,203BPO
    
    $
    1,851
    
    
    $
    66
    
    
    $
    5,365
    
    
    $
    127Broker Systems
    
    $
    3,482
    
    
    $
    2,595
    
    
    $
    10,545
    
    
    $
    8,455Totals
    
    $
    20,168
    
    
    $
    11,806
    
    
    $
    54,609
    
    
    $
    30,640
     Offices and Geographic Information
  Key Performance Indicators
   25




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##### Table of Contents



For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(dollar amounts in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    20,168
    
    
    $
    11,806
    
    
    $
    54,609
    
    
    $
    30,640Revenue growth
    
    
    70.8
    %
    
    
    61.8
    %
    
    
    78.2
    %
    
    
    53.4
    %Operating income
    
    $
    8,119
    
    
    $
    3,712
    
    
    $
    21,166
    
    
    $
    8,248Operating margin
    
    
    40.3
    %
    
    
    31.4
    %
    
    
    38.8
    %
    
    
    26.9
    %Net income
    
    $
    7,398
    
    
    $
    3,693
    
    
    $
    19,403
    
    
    $
    8,168Diluted earnings per share
    
    $
    0.62
    
    
    $
    0.33
    
    
    $
    1.65
    
    
    $
    0.80Cash provided by operating activities
    
    $
    8,700
    
    
    $
    5,042
    
    
    $
    19,359
    
    
    $
    8,848
 Results of Operations  Three Month Period Ended September 30, 2008 and 2007
 Operating Revenue
 Total revenue
 Services revenue
 Software revenue
 Cost of Services Provided
  Product Development Expenses
   26




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##### Table of Contents



Sales and Marketing Expenses
  General and Administrative Expenses
  Amortization and Depreciation Expenses
  Interest Expense
  Income Taxes
  Results of Operations  Nine Month Period Ended September 30, 2008 and 2007
 Operating Revenue
 Total revenue
 Services
revenue
  27




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##### Table of Contents



Software
revenue
 Cost of Services Provided
  Product Development Expenses
  Sales and Marketing Expenses
  General and Administrative Expenses
  Amortization and Depreciation Expenses
  Interest Expense
   28




---



##### Table of Contents



Income Taxes
    Liquidity and Capital Resources
    Operating Activities
   Investing Activities
    29




---



##### Table of Contents



Financing Activities
   Revolving Credit Facility
  Off-Balance Sheet Arrangements
  Contractual Obligations and Commercial Commitments
  Payment Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    5 years(in thousands)Short-term debt (1)
    
    $
    24,945
    
    
    $
    
    
    
    $
    24,945
    
    
    $
    
    
    
    $
    Long-term
debt (2)
    
    $
    56,445
    
    
    $
    500
    
    
    $
    55,945
    
    
    $
    
    
    
    $
    Operating leases
    
    $
    5,714
    
    
    $
    1,904
    
    
    $
    2,014
    
    
    $
    
    
    
    $
    477Capital leases
    
    $
    7
    
    
    $
    4
    
    
    $
    3
    
    
    $
    
    
    
    $
    Total
    
    $
    87,111
    
    
    $
    2,408
    
    
    $
    82,907
    
    
    $
    1,319
    
    
    $
    477
 
 (1)
    
    The Company will pay down the balance on its revolving credit
facility with available cash generated from its operating activities,
if it deems that to be the best use of those funds. Upon its
expiration in December 2009, the Company expects to renew the
revolving line of credit facility.(2)
    
    Includes interest at an imputed interest rate of 4% for the February 2004 LifeLink
acquisition which represents the effective interest rate at the date of acquisition. Related Party Transactions
   30




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##### Table of Contents



Recent Accounting Pronouncements
  Application of Critical Accounting Policies
  Revenue Recognition and Deferred Revenue
  Software Revenue Recognition
(SOP 97-2) Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions, (SOP 98-9)
 , Accounting for
Performance on Construction-Type and Certain Production-Type Contracts
 Revenue Recognition.
  31




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##### Table of Contents



Allowance for doubtful Accounts Receivable
 Income Taxes Accounting for Income Taxes
 Accounting for Uncertainty in
Income TaxesAn Interpretation of FASB Statement No. 109
 (in thousands)Balance at January 1, 2008
    
    $
    600Additions based on tax positions related to current year
    
    $
    104Additions for tax positions of prior years
    
    $
    33Reductions for tax position of prior years
    
    $
    (379
    )Settlements
    
    $
    Balance at September 30, 2008
    
    $
    358
 Goodwill and Other Acquired Intangible Assets Goodwill and Other Intangible Assets
  32




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##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   rd
  
 Item 4. CONTROLS AND PROCEDURES
    33




---



##### Table of Contents



Part II  OTHER INFORMATION
 
 Item 1A. RISK FACTORS
  
    
    Changes in U.S. and global economic conditions and significant
movements in interest rates and currency exchange rates;
    
    Risks associated with financing including the willingness of credit
institutions to provide financing to us;
    
    Changes in the insurance industry and the financial position or our customers;
    
    Changes in market demand for our products and services;
    
    Our ability to successfully develop and market new products and
services, incorporate new technology and adapt to technological change and
customer demand;
    
    Our ability to protect our intellectual property;
    
    Pricing strategies, new product introductions and other pressures
from existing or emerging competitors which could result in a loss of customers
or a rate of increase or decrease in prices for our services different than past
experience;
    
    Changes in laws and regulations governing our business and the
application of existing laws, including international, federal or state
regulations effecting the insurance industry;
    
    Disruptions in our business-critical systems and operations which
could interfere with our ability to deliver products and services to our
customers;
    
    Risks associated with our integration of IDS, Telstra, Periculum,
and Acclamation, and other acquired technologies, businesses and investments;
and,
    
    Significant concentration of the ownership of our common stock
which will limit an investors ability to influence corporate actions.
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     34




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##### Table of Contents



Use of Proceeds from the Recent Sale of Unregistered Securities
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Nominee
    
    Votes For
    
    
    Votes WithheldRobin Raina
    
    
    6,991,518
    
    
    
    57,879Pavan Bhalla
    
    
    7,013,787
    
    
    
    335,613Hans Ueli Keller
    
    
    6,967,368
    
    
    
    82,029Hans U. Benz
    
    
    6,967,368
    
    
    
    82,029Neil D. Eckert
    
    
    6,360,645
    
    
    
    688,752Rolf Herter
    
    
    7,008,471
    
    
    
    58,926
 
 Votes For
    
    Votes Against
    
    Votes Withheld6,701,622
    
    343,938
    
    3,837
 
 Item 5. ISSUER PURCHASES OF EQUITY SECURITIES
   35




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##### Table of Contents



Maximum Number (orTotal Number of Shares
    
    
    
    
    
    
    Approximate Dollar Value) ofPurchased as Part of
    
    
    
    
    
    
    Shares that May Yet BePublicly-Announced
    
    
    
    
    
    
    Purchased Under the Plans orPeriod
    
    Plans or Programs
    
    
    Average Price Paid Per Share (1)
    
    
    Programs (2)March 2008
    
    
    
    
    
    
    
    
    
    $
    4,851,000September 2008
    
    
    15,000
    
    
    $
    34.00
    
    
    $
    4,341,000Total
    
    
    15,000
    
    
    $
    34.00
    
    
    $
    4,341,000
 (1)
    
    Average price paid per share for shares purchased as part of our publicly-announced plan
(includes brokerage commissions).(2)
    
    On March 21, 2008, the Companys board of directors ratified, and we publicly announced, an
increase in the Companys ability to repurchase shares of our outstanding common stock from an
amount of $1.0 million to $5.0 million in shares. The opening balance stated here reflects the
previous repurchase of 26,670 shares. 
 Item 6. EXHIBITS
   36




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##### Table of Contents



Ebix, Inc.Date: November 10, 2008
    By:
    /s/ Robin RainaRobin RainaChief  Executive Officer(Principal Executive Officer) Date: November 10, 2008
    By:
    /s/ Robert F. KerrisRobert F. KerrisSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)  37




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##### Table of Contents



EXHIBIT INDEX
 EXHIBITNo.
    
    DESCRIPTION2.1
    
    
    Share Sale Agreement by and among Ebix, Inc., Ebix Australia (vic) Pty Ltd, and Telstra Services
Solutions Holdings Limited dated December 22, 2007 (incorporated
by reference to Exhibit 2.1 to
the Companys Current Report on Form 8-K filed on March 18, 2008 and incorporated herein by
reference)2.2
    
    
    Stock Purchase Agreement by and amongst Ebix, Acclamation Systems, Inc., and Joseph Ott, as
Seller dated July 31, 2008 (incorporated by reference to Exhibit 2.1 to the Companys Current
Report on Form 8-K filed August 5, 2008 and incorporated herein by reference)2.3
    
    

Agreement
and Plan of Merger by and among Ebix, Inc., ConfirmNet Corporation,
Ebix Software India Private Limited, ConfirmNet Acquisition Sub, Inc
and Craig A. Irving, as shareholders Representation dated
November 1, 2008 (incorporated by reference to Exhibit 2.1
to the Companys Current Report on Form 8-K filed
November 11, 2008 and incorporated herein by reference)3.1
    
    
    Certificates of Incorporation of the Company, as amended (including Certificates of Designations)
(incorporated by reference to Exhibit 3.1 to the Companys Form S-1/A filed on November 4, 2008
and incorporated herein by reference)3.2
    
    
    Bylaws of the Company (filed as Exhibit 3.2 to the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 and incorporated herein by reference)10.29
    
    
    Share Purchase Agreement made and entered into as of April 2, 2008 by and among Ebix, Inc and
Rennes Foundation (incorporated by reference to Exhibit 10.29 to the Companys Current Report on
Form 8-K filed on April 14, 2008 and incorporated herein by reference)10.30
    
    
    Share Purchase Agreement made and entered into as of April 7, 2008 by and among Ebix, Inc and
Ashford Capital Management, Inc. (incorporated by reference to Exhibit 10.30 to the Companys
Current Report on Form 8-K filed on April 14, 2008 and incorporated herein by reference)10.31
    
    
    Stock Re-Purchase Agreement made and entered into as of April 16, 2008 by and among Ebix, Inc and
Brit Insurance, Holdings, Inc. (incorporated by reference to Exhibit 10.31 to the Companys
Current Report on Form 8-K filed April 17, 2008 and incorporated herein by reference)31.1
    
    
    Certification of Chief Executive Officer Pursuant to 13a-14(a) (Section 302 of the Sarbanes-Oxley
Act of 2002)31.2
    
    
    Certification of Chief Financial Officer Pursuant to 13a-14(a) (Section 302 of the Sarbanes-Oxley
Act of 2002)32.1
    
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  38