##### 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, 2009
 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
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o 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, 2009
and 2008 (unaudited)
    
    
    2Consolidated Balance Sheets at September 30, 2009 (unaudited) and December 31, 2008
    
    
    3Consolidated Statement of Stockholders Equity and Comprehensive Income for the Nine
Months ended September 30, 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2009 and
2008 (unaudited)
    
    
    5Condensed
Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    28SIGNATURES
    
    
    29INDEX to EXHIBITS
    
    
    30Exhibit 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 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Operating Revenue
    
    $
    23,292
    
    
    $
    20,168
    
    
    $
    66,381
    
    
    $
    54,609Operating expenses:Cost of services provided
    
    
    4,465
    
    
    
    3,940
    
    
    
    13,298
    
    
    
    10,101Product development
    
    
    3,000
    
    
    
    2,074
    
    
    
    8,258
    
    
    
    6,314Sales and marketing
    
    
    1,298
    
    
    
    871
    
    
    
    3,553
    
    
    
    2,536General and administrative
    
    
    3,803
    
    
    
    4,360
    
    
    
    11,355
    
    
    
    12,032Amortization and depreciation
    
    
    943
    
    
    
    804
    
    
    
    2,517
    
    
    
    2,460Total operating expenses
    
    
    13,509
    
    
    
    12,049
    
    
    
    38,981
    
    
    
    33,443Operating income
    
    
    9,783
    
    
    
    8,119
    
    
    
    27,400
    
    
    
    21,166Interest income
    
    
    56
    
    
    
    134
    
    
    
    147
    
    
    
    396Interest expense
    
    
    (234
    )
    
    
    (440
    )
    
    
    (791
    )
    
    
    (1,176
    )Foreign exchange gain (loss)
    
    
    142
    
    
    
    (24
    )
    
    
    894
    
    
    
    135Income before income taxes
    
    
    9,747
    
    
    
    7,789
    
    
    
    27,650
    
    
    
    20,521Income tax expense
    
    
    (313
    )
    
    
    (391
    )
    
    
    (925
    )
    
    
    (1,118
    )Net income
    
    $
    9,434
    
    
    $
    7,398
    
    
    $
    26,725
    
    
    $
    19,403Basic earnings per common share
    
    $
    0.91
    
    
    $
    0.77
    
    
    $
    2.63
    
    
    $
    1.97Diluted earnings per common share
    
    $
    0.76
    
    
    $
    0.62
    
    
    $
    2.17
    
    
    $
    1.65Basic weighted average shares
outstanding
    
    
    10,412
    
    
    
    9,607
    
    
    
    10,177
    
    
    
    9,837Diluted weighted average shares
outstanding
    
    
    12,613
    
    
    
    12,170
    
    
    
    12,490
    
    
    
    12,040
  2




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    30,857
    
    
    $
    9,475Short-term investments
    
    
    1,369
    
    
    
    1,536Accounts receivable, less allowance of $548 and $453, respectively
    
    
    18,660
    
    
    
    13,562Advanced
deposits on pending business acquisitions
    
    
    11,880
    
    
    
    Other current assets
    
    
    1,860
    
    
    
    951Total current assets
    
    
    64,626
    
    
    
    25,524Property and equipment, net
    
    
    5,142
    
    
    
    3,774Goodwill
    
    
    104,339
    
    
    
    88,488Indefinite-lived intangibles
    
    
    14,790
    
    
    
    11,589Other intangible assets, net
    
    
    12,222
    
    
    
    10,235Other assets
    
    
    700
    
    
    
    1,557Total assets
    
    $
    201,819
    
    
    $
    141,167LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    4,184
    
    
    $
    8,245Accrued payroll and related benefits
    
    
    2,408
    
    
    
    2,709Short term debt
    
    
    23,850
    
    
    
    24,945Current
portion of convertible debt, net of discount of $811 and $0,
respectively
    
    
    39,881
    
    
    
    11,518Current portion of long term debt and capital lease obligations
    
    
    181
    
    
    
    912Deferred revenue
    
    
    6,763
    
    
    
    5,383Other current liabilities
    
    
    321
    
    
    
    142Total current liabilities
    
    
    77,588
    
    
    
    53,854Convertible
debt
    
    
    
    
    
    
    15,000Long term debt and capital lease obligation, less current portion
    
    
    398
    
    
    
    290Other liabilities
    
    
    2,204
    
    
    
    941Deferred revenue
    
    
    53
    
    
    
    330Deferred rent
    
    
    702
    
    
    
    610Total liabilities
    
    
    80,945
    
    
    
    71,025Commitments and Contingencies, Note 8Stockholders 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,
10,509,741 issued and 10,496,238 outstanding at September 30, 2009
and 10,006,455 issued and 9,946,710 outstanding at December 31,
2008
    
    
    1,049
    
    
    
    981Additional paid-in capital
    
    
    123,835
    
    
    
    111,641Treasury stock (13,503 and 59,745 shares repurchased as of
September 30, 2009 and December 31, 2008, respectively)
    
    
    (76
    )
    
    
    (1,178
    )Accumulated deficit
    
    
    (3,474
    )
    
    
    (30,199
    )Accumulated
other comprehensive loss
    
    
    (460
    )
    
    
    (11,103
    )Total stockholders equity
    
    
    120,874
    
    
    
    70,142Total liabilities and stockholders equity
    
    $
    201,819
    
    
    $
    141,167
  3




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##### Table of Contents



Ebix, Inc. and SubsidiariesConsolidated Statement of Stockholders Equity and
Comprehensive Income(In thousands, except share amounts)
(Unaudited)
 AccumulatedCommon Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherTreasury
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Treasury
    
    
    Paid-in
    
    
    Deferred
    
    
    Accumulated
    
    
    (Loss)
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Deficit
    
    
    Income
    
    
    Total
    
    
    IncomeBalance, December 31, 2008
    
    
    10,006,455
    
    
    $
    981
    
    
    
    (59,745
    )
    
    $
    (1,178
    )
    
    $
    111,641
    
    
    $
    
    
    
    $
    (30,199
    )
    
    $
    (11,103
    )
    
    $
    70,142Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,725
    
    
    
    
    
    
    
    26,725
    
    
    $
    26,725Cumulative translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,643
    
    
    
    10,643
    
    
    $
    10,643Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    37,368Conversion of principal and
interest on Convertible
promissory notes
    
    
    459,502
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    10,842
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,888Repurchase of common
stock
    
    
    (16,224
    )
    
    
    (2
    )
    
    
    (10,650
    )
    
    
    (205
    )
    
    
    (298
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (505
    )Exercise of stock options
    
    
    89,846
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    1,448
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,457Vesting of Restricted stock
    
    
    27,054
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Retirement of Treasury Stock
    
    
    (56,892
    )
    
    
    
    
    
    
    56,892
    
    
    
    1,307
    
    
    
    (1,307
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred compensation and
amortization related to
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981Equity component from
proceeds of convertible
debt issuance (net of
tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    534Balance, September 30, 2009
    
    
    10,509,741
    
    
    
    1,049
    
    
    
    (13,503
    )
    
    $
    (76
    )
    
    $
    123,835
    
    
    $
    
    
    
    $
    (3,474
    )
    
    $
    (460
    )
    
    $
    120,874
  4




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
   Nine Months Ended September 30,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    26,725
    
    
    $
    19,403Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    2,517
    
    
    
    2,460Stock-based compensation
    
    
    148
    
    
    
    102Restricted stock compensation
    
    
    833
    
    
    
    423Unrealized foreign exchange gain on forward contracts
    
    
    (141
    )
    
    
    Provision for doubtful accounts
    
    
    90
    
    
    
    225Changes in operating assets and liabilities:Accounts receivable
    
    
    (4,644
    )
    
    
    (2,053
    )Other assets
    
    
    (622
    )
    
    
    324Accounts payable and accrued expenses
    
    
    (214
    )
    
    
    (392
    )Accrued payroll and related benefits
    
    
    (591
    )
    
    
    600Deferred revenue
    
    
    (29
    )
    
    
    (1,220
    )Deferred taxes
    
    
    (2,197
    )
    
    
    (529
    )Deferred rent and other liabilities
    
    
    252
    
    
    
    16Net cash provided by operating activities
    
    
    22,127
    
    
    
    19,359Cash flows from investing activities:Investment in Acclamation, net of cash acquired
    
    
    (85
    )
    
    
    (21,365
    )Investment in Telstra eBusiness Services, net of cash acquired
    
    
    
    
    
    
    (42,968
    )Investment in Periculum, net of cash acquired
    
    
    (200
    )
    
    
    (1,067
    )Investment in ConfirmNet
    
    
    (3,279
    )
    
    
    Investment in IDS
    
    
    (1,000
    )
    
    
    Investment in Facts, net of cash acquired
    
    
    (6,215
    )
    
    
    Investment in Infinity
    
    
    
    
    
    
    (500
    )Advanced deposits on acquisition of Peak
    
    
    (3,800
    )Advanced deposits on acquisitions of E-Z Data
    
    
    (8,080
    )
    
    
    (Purchase) Maturities of marketable securities, net
    
    
    167
    
    
    
    (1,496
    )Capital expenditures
    
    
    (1,941
    )
    
    
    (549
    )Net cash used in investing activities
    
    
    (24,433
    )
    
    
    (67,945
    )Cash flows from financing activities:Proceeds from line of credit
    
    
    23,850
    
    
    
    9,295Payments on line of credit
    
    
    (24,945
    )
    
    
    Proceeds from the issuance of common stock, net of issuance costs
    
    
    
    
    
    
    12,518Proceeds from the exercise of the stock options
    
    
    1,457
    
    
    
    1,225Proceeds
from the issuance of convertible debt, including equity component
    
    
    25,000
    
    
    
    15,000Repurchase of Common Stock
    
    
    (505
    )
    
    
    (24,510
    )Payments on capital lease obligations
    
    
    (99
    )
    
    
    (3
    )Principal payments of debt obligations
    
    
    (773
    )
    
    
    (483
    )Net cash provided in financing activities
    
    
    23,985
    
    
    
    13,042Effect of foreign exchange rates on cash
    
    
    (297
    )
    
    
    (2,172
    )Net change in cash and cash equivalents
    
    
    21,382
    
    
    
    (37,716
    )Cash and cash equivalents at the beginning of the period
    
    
    9,475
    
    
    
    48,437Cash and cash equivalents at the end of the period
    
    $
    30,857
    
    
    $
    10,721Supplemental disclosures of cash flow information:Interest paid
    
    $
    910
    
    
    $
    759Income taxes paid
    
    $
    3,706
    
    
    $
    1,169
 Supplemental Disclosure of noncash investing activities
  Supplemental Disclosure of noncash operating activities
   5




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 
 Condensed
Notes
to Consolidated Financial Statements (unaudited)
 Note 1: Description of Business and Summary of Significant Accounting Policies
 Description of Business
  For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(dollar amounts in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Carrier Systems
    
    $
    2,587
    
    
    $
    2,920
    
    
    $
    8,112
    
    
    $
    8,053Exchanges
    
    
    14,151
    
    
    
    11,915
    
    
    
    39,346
    
    
    
    30,646BPO
    
    
    3,617
    
    
    
    1,851
    
    
    
    10,692
    
    
    
    5,365Broker Systems
    
    
    2,937
    
    
    
    3,482
    
    
    
    8,231
    
    
    
    10,545Total
    
    $
    23,292
    
    
    $
    20,168
    
    
    $
    66,381
    
    
    $
    54,609
 Summary of Significant Accounting Policies
 Basis of Presentation
 Reclassification
 Revenue Recognition and Deferred Revenue
  6




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
  Allowance for Doubtful Accounts Receivable
 Goodwill and Indefinite-Lived Intangible Assets th
  Indefinite-LivedGoodwill
    
    
    Intangible Assets(In thousands)Beginning Balance at December 31, 2008
    
    $
    88,488
    
    
    $
    11,589Additions
    
    
    7,715
    
    
    
    114Foreign currency translation adjustments
    
    
    8,136
    
    
    
    3,087Ending Balance at September 30, 2009
    
    $
    104,339
    
    
    $
    14,790
 th
 Finite-lived Intangible Assets
 7




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
 LifeCategory
    
    (yrs)Customer relationships
    
    4-20Developed technology
    
    3-7Trademarks
    
    5-10
  September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)Intangible assets:Customer relationships
    
    $
    14,655
    
    
    $
    11,373Developed technology
    
    
    5,370
    
    
    
    4,762Trademarks
    
    
    705
    
    
    
    656Backlog
    
    
    140
    
    
    
    140Total intangibles
    
    
    20,870
    
    
    
    16,931Accumulated amortization
    
    
    (8,648
    )
    
    
    (6,696
    )Intangibles, net
    
    $
    12,222
    
    
    $
    10,235Indefinite-lived intangibles:Customer/territorial relationships
    
    $
    14,790
    
    
    $
    11,589
  Income Taxes
 Recent Accounting Pronouncements
  8




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes
to Consolidated Financial Statements (unaudited)
   Financial Instruments
    Note 2: Earnings per Share
  9




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
  For the Three Months EndedSeptember 30,2009
    
    
    2008Basic Weighted Average Shares Outstanding
    
    
    10,411,880
    
    
    
    9,607,173Incremental Shares
    
    
    2,201,595
    
    
    
    2,562,936Diluted Shares Outstanding
    
    
    12,613,475
    
    
    
    12,170,109
 For the Nine Months EndedSeptember 30,2009
    
    
    2008Basic Weighted Average Shares Outstanding
    
    
    10,176,896
    
    
    
    9,837,252Incremental Shares
    
    
    2,312,995
    
    
    
    2,202,783Diluted Shares Outstanding
    
    
    12,489,891
    
    
    
    12,040,035
 Note 3: Stock Split
  Note 4: Business Acquisitions
  2009 Acquisition
 Facts Services, Inc.
  10




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
 September 30,(In thousands)
    
    2009Current assets
    
    $
    1,166Property and equipment
    
    
    Intangible assets
    
    
    2,194Indefinite-lived intangibles
    
    
    Goodwill
    
    
    4,748Total assets acquired
    
    
    8,108Less: liabilities assumed
    
    
    (1,097
    )Net assets acquired
    
    $
    7,011
  WeightedAverageIntangible asset category
    
    Fair Value
    
    
    Useful Life(in thousands)
    
    
    (in years)Customer relationships
    
    $
    1,850
    
    
    
    15.0Developed technology
    
    
    344
    
    
    
    5.0Total acquired intangible assets
    
    $
    2,194
    
    
    
    13.4
 Note 5: Pro Forma Financial Information (related to the Facts acquisition)
  Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    

September 30, 2008As Reported
    
    
    Pro Forma
    
    
    As Reported
    
    
    Pro FormaRevenue
    
    $
    66,381
    
    
    $
    67,855
    
    
    $
    54,609
    
    
    $
    57,632Net income
    
    $
    26,725
    
    
    $
    26,491
    
    
    $
    19,403
    
    
    $
    18,842Basic earnings per share
    
    $
    2.63
    
    
    $
    2.63
    
    
    $
    1.97
    
    
    $
    1.92Diluted earnings per share
    
    $
    2.17
    
    
    $
    2.15
    
    
    $
    1.65
    
    
    $
    1.60
 Note 6: Short-term Debt
  11




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
    Note 7: Convertible Debt
   12




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes
to Consolidated Financial Statements (unaudited)
  th
 th
 Note 8: Commitments and Contingencies
 Lease Commitments
 Contingencies
 Self Insurance
 13




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
 Note 9: Income Taxes
 Effective Tax Rate
   Accounting for Uncertainty in Income Taxes
 (in thousands)Balance at January 1, 2009
    
    $
    914Additions for tax positions related to current year
    
    $
    212Additions for tax positions of prior years
    
    $
    Reductions for tax position of prior years
    
    $
    (588
    )Balance at September 30, 2009
    
    $
    538
  Note 10 Financial Instruments
  14




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed
Notes to Consolidated Financial Statements (unaudited)
  Note 11: Derivative Instruments
  Note 12: Geographic Information
  Nine Months ended September 30, 2009
 NorthAmerica
    
    
    Australia
    
    
    New Zealand
    
    
    India
    
    
    Singapore
    
    
    TotalRevenue
    
    $
    48,925
    
    
    $
    15,262
    
    
    $
    851
    
    
    $
    
    
    
    $
    1,343
    
    
    $
    66,381Fixed assets
    
    $
    2,500
    
    
    $
    910
    
    
    $
    41
    
    
    $
    1,646
    
    
    $
    45
    
    
    $
    5,142Goodwill
    
    $
    65,358
    
    
    $
    38,981
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    104,339Other intangible assets
    
    $
    9,649
    
    
    $
    2,573
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,222Headcount
    
    
    312
    
    
    
    67
    
    
    
    9
    
    
    
    292
    
    
    
    10
    
    
    
    690
 Nine Months ended September 30, 2008
 NorthAmerica
    
    
    Australia
    
    
    New Zealand
    
    
    India
    
    
    Singapore
    
    
    TotalRevenue
    
    $
    33,443
    
    
    $
    18,928
    
    
    $
    716
    
    
    $
    36
    
    
    $
    1,486
    
    
    $
    54,609Fixed assets
    
    $
    2,206
    
    
    $
    479
    
    
    $
    27
    
    
    $
    791
    
    
    $
    36
    
    
    $
    3,539Goodwill
    
    $
    49,300
    
    
    $
    46,751
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    96,051Other intangible assets
    
    $
    7,244
    
    
    $
    2,968
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,212Headcount
    
    
    289
    
    
    
    64
    
    
    
    9
    
    
    
    226
    
    
    
    6
    
    
    
    594
  15




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##### Table of Contents



Ebix, Inc. and Subsidiaries
 Condensed Notes to Consolidated Financial Statements (unaudited)
 Note 14: Subsequent Events through November 6, 2009
 Completion of Business Acquisitions
   Conversions of Portions of Outstanding Debt
   16




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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 6, and 7 of the Condensed Notes to Consolidated Financial Statements, and
our future liquidity needs discussed under Liquidity and Financial Condition, 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 8 of the Condensed Notes to Consolidated Financial
Statements, Commitments and Contingencies, and Contractual Obligations and Commercial
Commitments in MD&A, changes in the market value of our assets or the actual cost of
our commitments or contingencies;
    
    Regarding Note 4 of the Condensed Notes to Consolidated Financial Statements
related to acquired intangible assets 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 in particular the analysis of the nine month revenue trend, and
the actual level of demand for our services during the immediately foreseeable future.
  Company Overview
   17




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##### Table of Contents



Offices and Geographic Information
  Key Performance Indicators
   For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(dollar amounts in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    23,292
    
    
    $
    20,168
    
    
    $
    66,381
    
    
    $
    54,609Revenue growth (yr over yr)
    
    
    15.5
    %
    
    
    70.8
    %
    
    
    21.6
    %
    
    
    78.2
    %Operating income
    
    $
    9,783
    
    
    $
    8,119
    
    
    $
    27,400
    
    
    $
    21,166Operating margin
    
    
    42.0
    %
    
    
    40.3
    %
    
    
    41.3
    %
    
    
    38.8
    %Net income
    
    $
    9,434
    
    
    $
    7,398
    
    
    $
    26,725
    
    
    $
    19,403Diluted earnings per share
    
    $
    0.76
    
    
    $
    0.62
    
    
    $
    2.17
    
    
    $
    1.65Cash provided by operating activities
    
    $
    6,578
    
    
    $
    8,700
    
    
    $
    22,127
    
    
    $
    19,359
 18




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##### Table of Contents



Results of Operations Three Month Periods Ended September 30, 2009 and 2008
 Operating Revenue
   For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(dollar amounts in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Carrier Systems
    
    $
    2,587
    
    
    $
    2,920
    
    
    $
    8,112
    
    
    $
    8,053Exchanges
    
    $
    14,151
    
    
    $
    11,915
    
    
    $
    39,346
    
    
    $
    30,646BPO
    
    $
    3,617
    
    
    $
    1,851
    
    
    $
    10,692
    
    
    $
    5,365Broker Systems
    
    $
    2,937
    
    
    $
    3,482
    
    
    $
    8,231
    
    
    $
    10,545Totals
    
    $
    23,292
    
    
    $
    20,168
    
    
    $
    66,381
    
    
    $
    54,609
  Cost of Services Provided
  Product Development Expenses
  19




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##### Table of Contents



Sales and Marketing Expenses
  General and Administrative Expenses
  Amortization and Depreciation Expenses
  Income Taxes
  Results of Operations Nine-Month Periods Ended September 30, 2009 and 2008
 Operating Revenue
  Cost of Services Provided
  20




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##### Table of Contents



Product Development Expenses
  Sales and Marketing Expenses
  General and Administrative Expenses
  Amortization and Depreciation Expenses
  Income Taxes
  Liquidity and Capital Resources
   21




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##### Table of Contents



Operating Activities
   Investing Activities
  22




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##### Table of Contents



Financing Activities
   Revolving Credit Facility
  Off-Balance Sheet Arrangements
  Contractual Obligations and Commercial Commitments
  23




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##### Table of Contents



Payment Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    5 years(in thousands)Short-term debt
    
    $
    23,850
    
    
    $
    23,850
    
    
    $
    
    
    
    $
    
    
    
    $
    Convertible debt
    
    $
    40,693
    
    
    $
    40,693
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    $
    5,784
    
    
    $
    1,838
    
    
    $
    2,514
    
    
    $
    1,395
    
    
    $
    37Capital leases
    
    $
    579
    
    
    $
    201
    
    
    $
    260
    
    
    $
    118
    
    
    $
    Total
    
    $
    70,906
    
    
    $
    66,582
    
    
    $
    2,774
    
    
    $
    1,513
    
    
    $
    37
 Recent Accounting Pronouncements
  Application of Critical Accounting Policies
  Revenue Recognition
  Valuation of Goodwill
  24




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##### Table of Contents



Income Taxes
    
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   25




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##### Table of Contents



Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
 Internal Control over Financial Reporting
 
 Part II  OTHER INFORMATION
 
 Item 1A. RISK FACTORS
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  26




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##### Table of Contents



Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Nominee
    
    Votes For
    
    
    Votes WithheldRobin Raina
    
    
    7,461,196
    
    
    
    1,414,258Pavan Bhalla
    
    
    7,175,166
    
    
    
    1,700,288Hans Ueli Keller
    
    
    6,504,015
    
    
    
    2,371,439Hans U. Benz
    
    
    6,504,403
    
    
    
    2,371,051Neil D. Eckert
    
    
    6,269,765
    
    
    
    2,605,689Rolf Herter
    
    
    7,519,673
    
    
    
    1,355,781
 
 Item 5. OTHER INFORMATION
  Maximum Number (orTotal Number of Shares
    
    
    
    
    
    
    Approximate Dollar Value) ofPurchased as Part of
    
    
    
    
    
    
    Shares that May Yet BePublicly-Announced
    
    
    Average Price Paid
    
    
    Purchased Under the Plans orPeriod
    
    Plans or Programs
    
    
    Per Share (1)
    
    
    Programs (2)As of December 31, 2008
    
    
    70,245
    
    
    $
    20.43
    
    
    $
    3,565,000January 1, 2009 to
March 31, 2009
    
    
    26,874
    
    
    $
    18.82
    
    
    $
    3,059,000April 1, 2009 to June
30, 2009
    
    
    
    
    
    $
    
    
    
    $
    3,059,000July 1, 2009 to
September 30, 2009
    
    
    
    
    
    $
    
    
    
    $
    3,059,000Total
    
    
    97,119
    
    
    $
    19.98
    
    
    $
    3,059.000
 (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 70,245 shares.
 27




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##### Table of Contents



Item 6. EXHIBITS
  28




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##### Table of Contents



Ebix, Inc.Date: November 9, 2009
    By:
    /s/ Robin RainaRobin RainaChief Executive Officer(Principal Executive Officer)Date: November 9, 2009
    By:
    /s/ Robert F. KerrisRobert F. KerrisSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer) 29




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##### Table of Contents



Index to Exhibits
 ExhibitNumber2.1
    
    Stock Purchase Agreement dated February 23, 2004 by and among the Company and the
shareholders of LifeLink Corporation (incorporated by reference to Exhibit 2.1 to the
Companys Current Report of Form 8-K dated February 23, 2004 (the February 2004 8-K))
and incorporated herein by reference.2.2
    
    Secured Promissory Note, dated February 23, 2004, issued by the Company (incorporated by
reference to Exhibit 2.2 of the February 2004 8-K and incorporated herein by reference).2.3
    
    Purchase Agreement, dated June 28, 2004, by and between Heart Consulting Pty Ltd. And
Ebix Australia Pty Ltd. (incorporated by reference to Exhibit 2.1 to the Companys
Current Report of Form 8-K dated July 14, 2004 (the July 14, 2004 8-K)) and
incorporated herein by reference.2.4
    
    Agreement, dated July 1, 2004, by and between Heart Consulting Pty Ltd. and Ebix, Inc.
(incorporated by reference to Exhibit 2.2 to the Companys Current Report of Form 8-K
dated July 14, 2004 (the July 14, 2004 8-K)) and incorporated herein by reference.2.5
    
    Agreement and Plan of Merger by and among Ebix, Finetre and Steven F. Piaker, as
shareholders Representative dated September 22, 2006 (incorporated by reference to
Exhibit 2.1 to the Companys Current Report on 8-K/A dated October 2, 2006) and
incorporated herein by reference.2.6
    
    Asset Purchase Agreement, dated May 9, 2006, by and among Ebix, Inc., Infinity Systems
Consulting, Inc. and the Shareholders of Infinity Systems Consulting, Inc.
(incorporated here by reference to Exhibit 2.1 to the Companys Current Report on
Form 8-K/A dated May 9, 2006) and incorporated herein by reference.2.7
    
    Agreement and Plan of Merger dated October 31, 2007 by and among Ebix, Inc.,
Jenquest, Inc. IDS Acquisition Sub. and Robert M. Ward as Shareholder Representative
(incorporated here by reference to Exhibit 2.1 to the Companys Current Report on
Form 8-K/A dated November 7, 2007) and incorporated herein by reference.2.8
    
    Stock Purchase Agreement by and among Ebix, Inc., Acclamation Systems, Inc., and Joseph
Ott (incorporated here by reference to Exhibit 2.1 to the Companys Current Report on
Form 8-K dated August 5, 2008 and incorporated herein by reference.)2.9
    
    Stock Purchase Agreement by and amongst Ebix, Inc., ConfirmNet Corporation, Ebix
Software India Private Limited, ConfirmNet Acquisition Sub, Inc., and Craig Irving, as
Shareholders Representative (incorporated here by reference to Exhibit 2.1 to the
Companys Current Report on Form 8-K dated November 12, 2008 and incorporated herein by
reference.)2.10
    
    Agreement and Plan of Merger, dated September 30, 2009, by and amongst Ebix, E-Z Data,
and Dale Okuno and Dilip Sontakey, as Sellers (incorporated here by reference to
Exhibit 2.1 to the Companys Current Report on Form 8-K dated October 6, 2009 and
incorporated herein by reference.)2.11
    
    IP Asset Purchase Agreement, dated September 30, 2009, by and amongst Ebix Singapore
PTE LTD., Ebix, Inc., E-Z Data, and Dale Okuno and Dilip Sontakey, as Shareholders
dated September 30, 2009 (incorporated here by reference to Exhibit 2.2 to the
Companys Current Report on Form 8-K dated October 6, 2009 and incorporated herein by
reference.)3.1
    
    Certificate of Incorporation, as amended, of Ebix, Inc. (incorporated by reference to
Exhibit 3.1 on Form S-1/A dated November 4, 2008 and incorporated herein by reference.)3.2
    
    Bylaws of Ebix, Inc. (incorporated by reference to Exhibit 3.2 to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2000).
 30




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##### Table of Contents



ExhibitNumber10.35
    
    Third Amendment to the Second Amended and Restated Loan and Security Agreement between
Ebix, Inc. and Bank of America Corporation dated August 27, 2009 (incorporated by
reference to Exhibit 2.1 to the Companys Current Report on Form 8-K dated August 28,
2009 and incorporated herein by reference).10.36
    
    Second Amendment to Secured Promissory Note Due December 18, 2009 between Ebix, Inc.
and Whitebox VSC, Ltd dated August 24, 2009 (incorporated by reference to Exhibit 2.2
to the Companys Current Report on Form 8-K dated August 28, 2009 and incorporated
herein by reference).10.37
    
    Amendment to Secured Promissory Note Due July 11, 2010 between Ebix, Inc. and Whitebox
VSC, Ltd. Dated August 24, 2009 (incorporated by reference to Exhibit 2.3 to the
Companys Current Report on Form 8-K dated August 28, 2009 and incorporated herein by
reference).10.38
    
    Convertible Note Purchase Agreement by and between Ebix, Inc. and Whitebox VSC, Ltd
dated August 26, 2009 (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K dated August 28, 2009 and incorporated herein by reference).10.39
    
    Convertible Promissory Note by and between Ebix, Inc. and Whitebox VSC, Ltd dated
August 26, 2009 (incorporated by reference to Exhibit 10.2 to the Companys Current
Report on Form 8-K dated August 28, 2009 and incorporated herein by reference).10.40
    
    Convertible Note Purchase Agreement by and between Ebix, Inc. and IAM Mini-Fund 14
Limited dated August 26, 2009 (incorporated by reference to Exhibit 10.3 to the
Companys Current Report on Form 8-K dated August 28, 2009 and incorporated herein by
reference).10.41
    
    Convertible Promissory Note by and between Ebix, Inc. and IAM Mini-Fund 14 Limited
dated August 26, 2009 (incorporated by reference to Exhibit 10.4 to the Companys
Current Report on Form 8-K dated August 28, 2009 and incorporated herein by reference).10.42
    
    Convertible Note Purchase Agreement by and between Ebix, Inc. and the Rennes Foundation
dated August 25, 2009 (incorporated by reference to Exhibit 10.5 to the Companys
Current Report on Form 8-K dated August 28, 2009 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 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
 31