##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 333-135139
 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, CT 06095
(Address of principal executive offices, including zip code)
 860-298-4500
(Registrants telephone number, including area code)
 o þ
  o o þ
 o þ




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##### 



SS&C TECHNOLOGIES, INC.
 INDEX
 Page NumberPART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets at
June 30, 2006 and December 31, 2005
    
    
    2Consolidated Statements of Operations for the three months
and six months ended June 30, 2006 and 2005
    
    
    3Consolidated Statements of Cash Flows for the six months
ended June 30, 2006 and 2005
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    21PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 6.
    
    Exhibits
    
    
    32SIGNATURE
    
    
    33EXHIBIT INDEX
    
    
    34Ex-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32 Section 906 Certification of CEO & CFO
   1




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##### Table of Contents



Part I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
 
 SuccessorJune 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    14,558
    
    
    $
    15,584Accounts receivable, net of allowance for doubtful accounts of $1,951 and $2,092, respectively
    
    
    33,096
    
    
    
    32,862Income taxes receivable
    
    
    4,224
    
    
    
    8,176Prepaid expenses and other current assets
    
    
    6,952
    
    
    
    6,236Total current assets
    
    
    58,830
    
    
    
    62,858Property and equipmentLeasehold improvements
    
    
    2,599
    
    
    
    2,422Equipment, furniture, and fixtures
    
    
    10,316
    
    
    
    8,29812,915
    
    
    
    10,720Less accumulated depreciation
    
    
    (2,680
    )
    
    
    (431
    )Net property and equipment
    
    
    10,235
    
    
    
    10,289Goodwill
    
    
    836,855
    
    
    
    818,180Intangible and other assets, net of accumulated amortization of $13,058 and $1,870, respectively
    
    
    284,783
    
    
    
    285,044Total assets
    
    $
    1,190,703
    
    
    $
    1,176,371LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    8,186
    
    
    $
    10,438Accounts payable
    
    
    2,364
    
    
    
    2,367Accrued employee compensation and benefits
    
    
    4,861
    
    
    
    9,048Other accrued expenses
    
    
    6,720
    
    
    
    8,769Interest payable
    
    
    2,067
    
    
    
    3,082Deferred income taxes
    
    
    1,280
    
    
    
    1,305Deferred maintenance and other revenue
    
    
    28,740
    
    
    
    20,566Total current liabilities
    
    
    54,218
    
    
    
    55,575Long-term debt, net of current portion
    
    
    478,441
    
    
    
    478,143Other long-term liabilities
    
    
    1,254
    
    
    
    1,257Deferred income taxes
    
    
    87,241
    
    
    
    84,263Total liabilities
    
    
    621,154
    
    
    
    619,238Commitments and contingencies (Note 9)Stockholders equityCommon stock
    
    
    
    
    
    
    Additional paid-in capital
    
    
    555,037
    
    
    
    554,965Accumulated other comprehensive income
    
    
    12,120
    
    
    
    1,337Retained earnings
    
    
    2,392
    
    
    
    831Total stockholders equity
    
    
    569,549
    
    
    
    557,133Total liabilities and stockholders equity
    
    $
    1,190,703
    
    
    $
    1,176,371
  2




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##### Table of Contents



Successor
    
    
    
    PredecessorThree Months
    
    
    Six Months
    
    
    
    Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,
    
    
    
    Ended June 30,
    
    
    Ended June 30,2006
    
    
    2006
    
    
    
    2005
    
    
    2005Revenues:Software licenses
    
    $
    5,164
    
    
    $
    10,362
    
    
    
    $
    5,822
    
    
    $
    10,317Maintenance
    
    
    13,306
    
    
    
    26,348
    
    
    
    
    11,961
    
    
    
    21,804Professional services
    
    
    4,950
    
    
    
    10,128
    
    
    
    
    3,311
    
    
    
    5,932Outsourcing
    
    
    27,235
    
    
    
    52,182
    
    
    
    
    19,619
    
    
    
    30,076Total revenues
    
    
    50,655
    
    
    
    99,020
    
    
    
    
    40,713
    
    
    
    68,129Cost of revenues:Software licenses
    
    
    2,287
    
    
    
    4,548
    
    
    
    
    759
    
    
    
    1,354Maintenance
    
    
    5,064
    
    
    
    9,863
    
    
    
    
    2,877
    
    
    
    5,025Professional services
    
    
    3,311
    
    
    
    6,293
    
    
    
    
    2,552
    
    
    
    4,206Outsourcing
    
    
    13,843
    
    
    
    27,097
    
    
    
    
    10,439
    
    
    
    15,850Total cost of revenues
    
    
    24,505
    
    
    
    47,801
    
    
    
    
    16,627
    
    
    
    26,435Gross profit
    
    
    26,150
    
    
    
    51,219
    
    
    
    
    24,086
    
    
    
    41,694Operating expenses:Selling and marketing
    
    
    4,187
    
    
    
    7,895
    
    
    
    
    3,930
    
    
    
    6,373Research and development
    
    
    5,928
    
    
    
    11,804
    
    
    
    
    5,940
    
    
    
    9,423General and administrative
    
    
    4,695
    
    
    
    8,753
    
    
    
    
    3,475
    
    
    
    5,994Total operating expenses
    
    
    14,810
    
    
    
    28,452
    
    
    
    
    13,345
    
    
    
    21,790Operating income
    
    
    11,340
    
    
    
    22,767
    
    
    
    
    10,741
    
    
    
    19,904Interest (expense) income, net
    
    
    (11,764
    )
    
    
    (23,273
    )
    
    
    
    (451
    )
    
    
    121Other income, net
    
    
    888
    
    
    
    827
    
    
    
    
    65
    
    
    
    115Income before income taxes
    
    
    464
    
    
    
    321
    
    
    
    
    10,355
    
    
    
    20,140(Benefit) provision for income taxes
    
    
    (1,323
    )
    
    
    (1,240
    )
    
    
    
    3,766
    
    
    
    7,582Net income
    
    $
    1,787
    
    
    $
    1,561
    
    
    
    $
    6,589
    
    
    $
    12,558
  3




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##### Table of Contents



Successor
    
    
    
    PredecessorSix Months
    
    
    
    Six MonthsEnded
    
    
    
    EndedJune 30,
    
    
    
    June 30,2006
    
    
    
    2005Cash flow from operating activities:Net income
    
    $
    1,561
    
    
    
    $
    12,558Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    13,372
    
    
    
    
    4,127Foreign exchange gains on debt
    
    
    (682
    )
    
    
    
    Amortization of loan origination costs
    
    
    1,265
    
    
    
    
    27Equity earnings on long-term investment
    
    
    (72
    )
    
    
    
    Net realized gains on investments in marketable securities
    
    
    
    
    
    
    
    (197
    )Gain (loss) on sale or disposal of property and equipment
    
    
    (1
    )
    
    
    
    4Deferred income taxes
    
    
    (1,927
    )
    
    
    
    543Income tax benefit related to exercise of stock options
    
    
    
    
    
    
    
    1,777Provision for doubtful accounts
    
    
    187
    
    
    
    
    406Changes in operating assets and liabilities, excluding effects from acquisitions:Accounts receivable
    
    
    1,173
    
    
    
    
    (4,030
    )Prepaid expenses and other assets
    
    
    (1,149
    )
    
    
    
    (123
    )Income taxes receivable
    
    
    3,948
    
    
    
    
    (1,143
    )Accounts payable
    
    
    (45
    )
    
    
    
    (599
    )Accrued expenses
    
    
    (7,546
    )
    
    
    
    (1,639
    )Income taxes payable
    
    
    (247
    )
    
    
    
    (599
    )Deferred maintenance and other revenues
    
    
    6,964
    
    
    
    
    3,667Net cash provided by operating activities
    
    
    16,801
    
    
    
    
    14,779Cash flow from investing activities:Additions to property and equipment
    
    
    (1,944
    )
    
    
    
    (1,476
    )Proceeds from sale of property and equipment
    
    
    2
    
    
    
    
    3Cash paid for business acquisitions, net of cash acquired
    
    
    (11,500
    )
    
    
    
    (177,788
    )Cash paid for long-term investment
    
    
    
    
    
    
    
    (2,000
    )Purchases of marketable securities
    
    
    
    
    
    
    
    (88,250
    )Sales of marketable securities
    
    
    
    
    
    
    
    181,074Net cash used in investing activities
    
    
    (13,442
    )
    
    
    
    (88,437
    )Cash flow from financing activities:Cash received from borrowings
    
    
    13,400
    
    
    
    
    75,000Repayment of debt
    
    
    (18,171
    )
    
    
    
    (8,009
    )Exercise of options
    
    
    72
    
    
    
    
    1,662Issuance of common stock
    
    
    
    
    
    
    
    343Purchase of common stock for treasury
    
    
    
    
    
    
    
    (5,584
    )Common stock dividends
    
    
    
    
    
    
    
    (1,836
    )Net cash (used in) provided by financing activities
    
    
    (4,699
    )
    
    
    
    61,576Effect of exchange rate changes on cash
    
    
    314
    
    
    
    
    (414
    )Net decrease in cash and cash equivalents
    
    
    (1,026
    )
    
    
    
    (12,496
    )Cash and cash equivalents, beginning of period
    
    
    15,584
    
    
    
    
    28,913Cash and cash equivalents, end of period
    
    $
    14,558
    
    
    
    $
    16,417
  4




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##### Table of Contents



SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 
      Successor
  Predecessor
  5




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##### Table of Contents



PredecessorThree Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2005Net income, as reported
    
    $
    6,589
    
    
    $
    12,558Deduct: total stock-based employee
compensation determined under fair
value-based method for all awards,
net of related tax effects
    
    
    368
    
    
    
    637Net income, pro forma
    
    $
    6,221
    
    
    $
    11,921
    Successor
    
    
    
    PredecessorThree Months
    
    
    Six Months
    
    
    
    Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,
    
    
    
    Ended June 30,
    
    
    Ended June 30,2006
    
    
    2006
    
    
    
    2005
    
    
    2005Net income
    
    $
    1,787
    
    
    $
    1,561
    
    
    
    $
    6,589
    
    
    $
    12,558Foreign currency translation gains
    
    
    9,098
    
    
    
    8,040
    
    
    
    
    376
    
    
    
    149Unrealized
gains on interest rate swaps, net of tax
    
    
    1,207
    
    
    
    2,743
    
    
    
    
    
    
    
    
    Unrealized
losses on marketable securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    (326
    )Total comprehensive income
    
    $
    12,092
    
    
    $
    12,344
    
    
    
    $
    6,880
    
    
    $
    12,381
  Successor
  SuccessorJune 30,
    
    
    December 31,2006
    
    
    2005Senior credit facility, revolving portion,
weighted-average interest rate of 8.10% and 6.57%,
respectively
    
    $
    5,400
    
    
    $
    7,734Senior credit facility, term loan portion,
weighted-average interest rate of 7.81% and 6.90%,
respectively
    
    
    276,224
    
    
    
    275,83311 3/4% Senior subordinated notes due 2013
    
    
    205,000
    
    
    
    205,000Other
    
    
    3
    
    
    
    14486,627
    
    
    
    488,581Short-term borrowings and current portion of long-term debt
    
    
    (8,186
    )
    
    
    (10,438
    )Long-term debt
    
    $
    478,441
    
    
    $
    478,143
   6




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##### Table of Contents



CogentTangible assets acquired, net of cash received
    
    $
    1,074Acquired client relationships and contracts
    
    
    4,500Goodwill
    
    
    9,377Deferred revenue
    
    
    (756
    )Debt
    
    
    (300
    )Deferred taxes
    
    
    (1,755
    )Other liabilities assumed
    
    
    (236
    )Consideration paid, net of cash received
    
    $
    11,904
       7




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##### Table of Contents



Successor
    
    
    
    PredecessorThree Months
    
    
    Six Months
    
    
    
    Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,
    
    
    
    Ended June 30,
    
    
    Ended June 30,2006
    
    
    2006
    
    
    
    2005
    
    
    2005United States
    
    $
    30,578
    
    
    $
    58,801
    
    
    
    $
    25,757
    
    
    $
    46,661Americas excluding United States
    
    
    9,369
    
    
    
    18,625
    
    
    
    
    6,443
    
    
    
    7,463Europe
    
    
    9,618
    
    
    
    19,465
    
    
    
    
    7,840
    
    
    
    12,744Asia Pacific and Japan
    
    
    1,090
    
    
    
    2,129
    
    
    
    
    673
    
    
    
    1,261$
    50,655
    
    
    $
    99,020
    
    
    
    $
    40,713
    
    
    $
    68,129
    3 4
  At June 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    3,804
    
    
    $
    1,602
    
    
    $
    9,152
    
    
    $
    
    
    
    $
    14,558Accounts receivable, net
    
    
    17,579
    
    
    
    5,125
    
    
    
    10,392
    
    
    
    
    
    
    
    33,096Income taxes receivable
    
    
    5,915
    
    
    
    544
    
    
    
    (2,235
    )
    
    
    
    
    
    
    4,224Prepaid expenses and other current assets
    
    
    3,163
    
    
    
    566
    
    
    
    3,223
    
    
    
    
    
    
    
    6,952Property and equipment, net
    
    
    4,259
    
    
    
    1,031
    
    
    
    4,945
    
    
    
    
    
    
    
    10,235Investment in subsidiaries
    
    
    79,782
    
    
    
    
    
    
    
    
    
    
    
    (79,782
    )
    
    
    Intercompany balances
    
    
    154,758
    
    
    
    (11,227
    )
    
    
    (143,531
    )
    
    
    
    
    
    
    Goodwill, intangible and other assets, net
    
    
    810,186
    
    
    
    17,595
    
    
    
    293,857
    
    
    
    
    
    
    
    1,121,638Total assets
    
    $
    1,079,446
    
    
    $
    15,236
    
    
    $
    175,803
    
    
    $
    (79,782
    )
    
    $
    1,190,703Current portion of long-term debt
    
    $
    7,404
    
    
    $
    
    
    
    $
    782
    
    
    $
    
    
    
    $
    8,186Accounts payable
    
    
    610
    
    
    
    190
    
    
    
    1,564
    
    
    
    
    
    
    
    2,364Accrued expenses
    
    
    7,851
    
    
    
    1,117
    
    
    
    4,680
    
    
    
    
    
    
    
    13,648Deferred income taxes
    
    
    (288
    )
    
    
    143
    
    
    
    1,425
    
    
    
    
    
    
    
    1,280Deferred maintenance and other revenue
    
    
    17,830
    
    
    
    4,322
    
    
    
    6,588
    
    
    
    
    
    
    
    28,740Long-term debt, net of current portion
    
    
    402,000
    
    
    
    
    
    
    
    76,441
    
    
    
    
    
    
    
    478,441Other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    1,254
    
    
    
    
    
    
    
    1,254Deferred income taxes, long-term
    
    
    74,490
    
    
    
    (1,823
    )
    
    
    14,574
    
    
    
    
    
    
    
    87,241Total liabilities
    
    
    509,897
    
    
    
    3,949
    
    
    
    107,308
    
    
    
    
    
    
    
    621,154Stockholders equity
    
    
    569,549
    
    
    
    11,287
    
    
    
    68,495
    
    
    
    (79,782
    )
    
    
    569,549Total liabilities and stockholders equity
    
    $
    1,079,446
    
    
    $
    15,236
    
    
    $
    175,803
    
    
    $
    (79,782
    )
    
    $
    1,190,703
 8




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##### Table of Contents



At December 31, 2005 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    6,319
    
    
    $
    1,971
    
    
    $
    7,294
    
    
    $
    
    
    
    $
    15,584Accounts receivable, net
    
    
    15,825
    
    
    
    5,258
    
    
    
    11,779
    
    
    
    
    
    
    
    32,862Prepaid expenses and other current assets
    
    
    3,152
    
    
    
    467
    
    
    
    2,617
    
    
    
    
    
    
    
    6,236Income taxes receivable
    
    
    8,509
    
    
    
    1,133
    
    
    
    (1,466
    )
    
    
    
    
    
    
    8,176Property and equipment, net
    
    
    3,966
    
    
    
    1,289
    
    
    
    5,034
    
    
    
    
    
    
    
    10,289Investment in subsidiaries
    
    
    67,078
    
    
    
    
    
    
    
    
    
    
    
    (67,078
    )
    
    
    Intercompany balances
    
    
    152,516
    
    
    
    (23,738
    )
    
    
    (128,778
    )
    
    
    
    
    
    
    Goodwill, intangible and other assets, net
    
    
    800,837
    
    
    
    17,987
    
    
    
    284,400
    
    
    
    
    
    
    
    1,103,224Total assets
    
    $
    1,058,202
    
    
    $
    4,367
    
    
    $
    180,880
    
    
    $
    (67,078
    )
    
    $
    1,176,371Current portion of long-term debt
    
    $
    5,013
    
    
    $
    
    
    
    $
    5,425
    
    
    $
    
    
    
    $
    10,438Accounts payable
    
    
    1,128
    
    
    
    411
    
    
    
    828
    
    
    
    
    
    
    
    2,367Income taxes payable
    
    
    
    
    
    
    498
    
    
    
    (498
    )
    
    
    
    
    
    
    Accrued expenses
    
    
    11,320
    
    
    
    1,604
    
    
    
    7,975
    
    
    
    
    
    
    
    20,899Deferred income taxes
    
    
    46
    
    
    
    63
    
    
    
    1,196
    
    
    
    
    
    
    
    1,305Deferred maintenance and other revenue
    
    
    10,340
    
    
    
    2,910
    
    
    
    7,316
    
    
    
    
    
    
    
    20,566Long-term debt, net of current portion
    
    
    403,000
    
    
    
    
    
    
    
    75,143
    
    
    
    
    
    
    
    478,143Other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    1,257
    
    
    
    
    
    
    
    1,257Deferred income taxes, long-term
    
    
    70,222
    
    
    
    (1,766
    )
    
    
    15,807
    
    
    
    
    
    
    
    84,263Total liabilities
    
    
    501,069
    
    
    
    3,720
    
    
    
    114,449
    
    
    
    
    
    
    
    619,238Stockholders equity
    
    
    557,133
    
    
    
    647
    
    
    
    66,431
    
    
    
    (67,078
    )
    
    
    557,133Total liabilities and stockholders equity
    
    $
    1,058,202
    
    
    $
    4,367
    
    
    $
    180,880
    
    
    $
    (67,078
    )
    
    $
    1,176,371
 9




---



##### Table of Contents



For the three months ended June 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    19,693
    
    
    $
    13,944
    
    
    $
    17,344
    
    
    $
    (326
    )
    
    $
    50,655Cost of revenue
    
    
    9,786
    
    
    
    6,470
    
    
    
    8,575
    
    
    
    (326
    )
    
    
    24,505Gross profit
    
    
    9,907
    
    
    
    7,474
    
    
    
    8,769
    
    
    
    
    
    
    
    26,150Operating expenses:Selling & marketing
    
    
    2,336
    
    
    
    562
    
    
    
    1,289
    
    
    
    
    
    
    
    4,187Research & development
    
    
    3,051
    
    
    
    915
    
    
    
    1,962
    
    
    
    
    
    
    
    5,928General & administrative
    
    
    2,752
    
    
    
    1,704
    
    
    
    239
    
    
    
    
    
    
    
    4,695Total operating expenses
    
    
    8,139
    
    
    
    3,181
    
    
    
    3,490
    
    
    
    
    
    
    
    14,810Operating income
    
    
    1,768
    
    
    
    4,293
    
    
    
    5,279
    
    
    
    
    
    
    
    11,340Interest (expense), net
    
    
    (7,605
    )
    
    
    
    
    
    
    (4,159
    )
    
    
    
    
    
    
    (11,764
    )Other income (expense), net
    
    
    38
    
    
    
    (2
    )
    
    
    852
    
    
    
    
    
    
    
    888Income (loss) before income taxes
    
    
    (5,799
    )
    
    
    4,291
    
    
    
    1,972
    
    
    
    
    
    
    
    464Benefit for income taxes
    
    
    (75
    )
    
    
    (34
    )
    
    
    (1,214
    )
    
    
    
    
    
    
    (1,323
    )Equity in net income of subsidiaries
    
    
    7,511
    
    
    
    
    
    
    
    
    
    
    
    (7,511
    )
    
    
    Net income (loss)
    
    $
    1,787
    
    
    $
    4,325
    
    
    $
    3,186
    
    
    $
    (7,511
    )
    
    $
    1,787
 For the three months ended June 30, 2005 - PredecessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    19,325
    
    
    $
    10,316
    
    
    $
    11,363
    
    
    $
    (291
    )
    
    $
    40,713Cost of revenue
    
    
    5,739
    
    
    
    5,702
    
    
    
    5,477
    
    
    
    (291
    )
    
    
    16,627Gross profit
    
    
    13,586
    
    
    
    4,614
    
    
    
    5,886
    
    
    
    
    
    
    
    24,086Operating expenses:Selling & marketing
    
    
    1,785
    
    
    
    541
    
    
    
    1,604
    
    
    
    
    
    
    
    3,930Research & development
    
    
    2,637
    
    
    
    687
    
    
    
    2,616
    
    
    
    
    
    
    
    5,940General & administrative
    
    
    1,981
    
    
    
    241
    
    
    
    1,253
    
    
    
    
    
    
    
    3,475Total operating expenses
    
    
    6,403
    
    
    
    1,469
    
    
    
    5,473
    
    
    
    
    
    
    
    13,345Operating income
    
    
    7,183
    
    
    
    3,145
    
    
    
    413
    
    
    
    
    
    
    
    10,741Interest
(expense) income, net
    
    
    (507
    )
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    (451
    )Other income (expense), net
    
    
    92
    
    
    
    
    
    
    
    (27
    )
    
    
    
    
    
    
    65Income (loss) before income taxes
    
    
    6,768
    
    
    
    3,145
    
    
    
    442
    
    
    
    
    
    
    
    10,355Provision for income taxes
    
    
    3,558
    
    
    
    110
    
    
    
    98
    
    
    
    
    
    
    
    3,766Equity in net income of subsidiaries
    
    
    3,379
    
    
    
    
    
    
    
    
    
    
    
    (3,379
    )
    
    
    Net income (loss)
    
    $
    6,589
    
    
    $
    3,035
    
    
    $
    344
    
    
    $
    (3,379
    )
    
    $
    6,589
 10




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##### Table of Contents



For the six months ended June 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    38,553
    
    
    $
    27,145
    
    
    $
    33,912
    
    
    $
    (590
    )
    
    $
    99,020Cost of revenue
    
    
    19,435
    
    
    
    12,116
    
    
    
    16,840
    
    
    
    (590
    )
    
    
    47,801Gross profit
    
    
    19,118
    
    
    
    15,029
    
    
    
    17,072
    
    
    
    
    
    
    
    51,219Operating expenses:Selling & marketing
    
    
    4,388
    
    
    
    1,110
    
    
    
    2,397
    
    
    
    
    
    
    
    7,895Research & development
    
    
    6,372
    
    
    
    1,601
    
    
    
    3,831
    
    
    
    
    
    
    
    11,804General & administrative
    
    
    5,223
    
    
    
    2,988
    
    
    
    542
    
    
    
    
    
    
    
    8,753Total operating expenses
    
    
    15,983
    
    
    
    5,699
    
    
    
    6,770
    
    
    
    
    
    
    
    28,452Operating income
    
    
    3,135
    
    
    
    9,330
    
    
    
    10,302
    
    
    
    
    
    
    
    22,767Interest (expense), net
    
    
    (15,145
    )
    
    
    
    
    
    
    (8,128
    )
    
    
    
    
    
    
    (23,273
    )Other income (expense), net
    
    
    45
    
    
    
    (1
    )
    
    
    783
    
    
    
    
    
    
    
    827Income (loss) before income taxes
    
    
    (11,965
    )
    
    
    9,329
    
    
    
    2,957
    
    
    
    
    
    
    
    321Provision
(benefit) for income taxes
    
    
    (1,194
    )
    
    
    573
    
    
    
    (619
    )
    
    
    
    
    
    
    (1,240
    )Equity in net income of subsidiaries
    
    
    12,332
    
    
    
    
    
    
    
    
    
    
    
    (12,332
    )
    
    
    Net income (loss)
    
    $
    1,561
    
    
    $
    8,756
    
    
    $
    3,576
    
    
    $
    (12,332
    )
    
    $
    1,561
 For the six months ended June 30, 2005 - PredecessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    37,921
    
    
    $
    17,361
    
    
    $
    13,404
    
    
    $
    (557
    )
    
    $
    68,129Cost of revenue
    
    
    11,182
    
    
    
    9,434
    
    
    
    6,376
    
    
    
    (557
    )
    
    
    26,435Gross profit
    
    
    26,739
    
    
    
    7,927
    
    
    
    7,028
    
    
    
    
    
    
    
    41,694Operating expenses:Selling & marketing
    
    
    3,353
    
    
    
    628
    
    
    
    2,392
    
    
    
    
    
    
    
    6,373Research & development
    
    
    5,249
    
    
    
    1,385
    
    
    
    2,789
    
    
    
    
    
    
    
    9,423General & administrative
    
    
    4,117
    
    
    
    432
    
    
    
    1,445
    
    
    
    
    
    
    
    5,994Total operating expenses
    
    
    12,719
    
    
    
    2,445
    
    
    
    6,626
    
    
    
    
    
    
    
    21,790Operating income
    
    
    14,020
    
    
    
    5,482
    
    
    
    402
    
    
    
    
    
    
    
    19,904Interest income, net
    
    
    65
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    121Other income (expense), net
    
    
    93
    
    
    
    39
    
    
    
    (17
    )
    
    
    
    
    
    
    115Income (loss) before income taxes
    
    
    14,178
    
    
    
    5,521
    
    
    
    441
    
    
    
    
    
    
    
    20,140Provision for income taxes
    
    
    7,332
    
    
    
    110
    
    
    
    140
    
    
    
    
    
    
    
    7,582Equity in net income of subsidiaries
    
    
    5,712
    
    
    
    
    
    
    
    
    
    
    
    (5,712
    )
    
    
    Net income (loss)
    
    $
    12,558
    
    
    $
    5,411
    
    
    $
    301
    
    
    $
    (5,712
    )
    
    $
    12,558
 11




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##### Table of Contents



For the six months ended June 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash Flow from Operating Activities:Net income (loss)
    
    $
    1,561
    
    
    $
    8,756
    
    
    $
    3,576
    
    
    $
    (12,332
    )
    
    $
    1,561Non-cash adjustments
    
    
    (2,027
    )
    
    
    674
    
    
    
    1,163
    
    
    
    12,332
    
    
    
    12,142Changes in operating assets and liabilities
    
    
    3,074
    
    
    
    911
    
    
    
    (887
    )
    
    
    
    
    
    
    3,098Net cash provided by operating activities
    
    
    2,608
    
    
    
    10,341
    
    
    
    3,852
    
    
    
    
    
    
    
    16,801Cash Flow from Investment Activities:Intercompany transactions
    
    
    6,386
    
    
    
    (10,628
    )
    
    
    4,242
    
    
    
    
    
    
    
    Cash paid for businesses acquired, net of cash acquired
    
    
    (11,492
    )
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (11,500
    )Additions to property and equipment
    
    
    (1,179
    )
    
    
    (84
    )
    
    
    (681
    )
    
    
    
    
    
    
    (1,944
    )Proceed from sale of property and equipment
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Net cash provided by (used in) investing activities
    
    
    (6,285
    )
    
    
    (10,710
    )
    
    
    3,553
    
    
    
    
    
    
    
    (13,442
    )Cash Flow from Investment Activities:Net borrowings (repayments) of debt
    
    
    1,090
    
    
    
    
    
    
    
    (5,861
    )
    
    
    
    
    
    
    (4,771
    )Exercise of stock options
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72Net cash used in financing activities
    
    
    1,162
    
    
    
    
    
    
    
    (5,861
    )
    
    
    
    
    
    
    (4,699
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    314
    
    
    
    
    
    
    
    314Net increase (decrease) in cash and cash equivalents
    
    
    (2,515
    )
    
    
    (369
    )
    
    
    1,858
    
    
    
    
    
    
    
    (1,026
    )Cash and cash equivalents, beginning of period
    
    
    6,319
    
    
    
    1,971
    
    
    
    7,294
    
    
    
    
    
    
    
    15,584Cash and cash equivalents, end of period
    
    $
    3,804
    
    
    $
    1,602
    
    
    $
    9,152
    
    
    $
    
    
    
    $
    14,558
 For the six months ended June 30, 2005 - PredecessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash Flow from Operating Activities:Net income (loss)
    
    $
    12,558
    
    
    $
    5,411
    
    
    $
    301
    
    
    $
    (5,712
    )
    
    $
    12,558Non-cash adjustments
    
    
    (1,362
    )
    
    
    855
    
    
    
    1,482
    
    
    
    5,712
    
    
    
    6,687Changes in operating assets and liabilities
    
    
    (56,819
    )
    
    
    173
    
    
    
    52,180
    
    
    
    
    
    
    
    (4,466
    )Net cash provided by operating activities
    
    
    (45,623
    )
    
    
    6,439
    
    
    
    53,963
    
    
    
    
    
    
    
    14,779Cash Flow from Investment Activities:Intercompany transactions
    
    
    (106,691
    )
    
    
    (839
    )
    
    
    110,129
    
    
    
    (2,599
    )
    
    
    Cash paid for businesses acquired, net of cash acquired
    
    
    (15,741
    )
    
    
    (3,949
    )
    
    
    (158,098
    )
    
    
    
    
    
    
    (177,788
    )Purchases of marketable securities
    
    
    (88,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,250
    )Sales of marketable securities
    
    
    181,074
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,074Purchase of long-term investment
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Proceeds from sale of property and equipment
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Additions to property and equipment
    
    
    (963
    )
    
    
    (255
    )
    
    
    (258
    )
    
    
    
    
    
    
    (1,476
    )Net cash provided by (used in) investing activities
    
    
    (32,568
    )
    
    
    (5,043
    )
    
    
    (48,227
    )
    
    
    (2,599
    )
    
    
    (88,437
    )Cash Flow from Investment Activities:Net borrowings of debt
    
    
    66,991
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,991Issuance of common stock
    
    
    343
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343Exercise of stock options
    
    
    1,662
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,662Purchase of common stock for treasury
    
    
    (5,584
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,584
    )Common stock dividends
    
    
    (1,836
    )
    
    
    
    
    
    
    (2,599
    )
    
    
    2,599
    
    
    
    (1,836
    )Net cash provided by (used in) financing activities
    
    
    61,576
    
    
    
    
    
    
    
    (2,599
    )
    
    
    2,599
    
    
    
    61,576Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (414
    )
    
    
    
    
    
    
    (414
    )Net increase (decrease) in cash and cash equivalents
    
    
    (16,615
    )
    
    
    1,396
    
    
    
    2,723
    
    
    
    
    
    
    
    (12,496
    )Cash and cash equivalents, beginning of period
    
    
    23,204
    
    
    
    304
    
    
    
    5,405
    
    
    
    
    
    
    
    28,913Cash and cash equivalents, end of period
    
    $
    6,589
    
    
    $
    1,700
    
    
    $
    8,128
    
    
    $
    
    
    
    $
    16,417
 12




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 CRITICAL ACCOUNTING POLICIES
  -
    
    Revenue Recognition-
    
    Allowance for Doubtful Accounts-
    
    Long-Lived Assets, Intangible Assets and Goodwill-
    
    Acquisition Accounting-
    
    Income Taxes
 The Transaction
   Results of Operations for the Three Months and Six Months Ended June 30, 2006 and 2005
   Successor
    
    
    Predecessor
    
    
    
    
    
    
    Successor
    
    
    PredecessorThree months
    
    
    Three months
    
    
    
    
    
    
    Six months
    
    
    Six monthsended
    
    
    ended
    
    
    
    
    
    
    ended
    
    
    endedJune 30,
    
    
    June 30,
    
    
    Percent
    
    
    June 30,
    
    
    June 30,
    
    
    Percent2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeRevenues:Software licenses
    
    $
    5,164
    
    
    $
    5,822
    
    
    
    -11
    %
    
    $
    10,362
    
    
    $
    10,317
    
    
    
    0
    %Maintenance
    
    
    13,306
    
    
    
    11,961
    
    
    
    11
    %
    
    
    26,348
    
    
    
    21,804
    
    
    
    21
    %Professional services
    
    
    4,950
    
    
    
    3,311
    
    
    
    50
    %
    
    
    10,128
    
    
    
    5,932
    
    
    
    71
    %Outsourcing
    
    
    27,235
    
    
    
    19,619
    
    
    
    39
    %
    
    
    52,182
    
    
    
    30,076
    
    
    
    74
    %Total revenues
    
    $
    50,655
    
    
    $
    40,713
    
    
    
    24
    %
    
    $
    99,020
    
    
    $
    68,129
    
    
    
    45
    %
 13




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##### Table of Contents



Successor
    
    Predecessor
    
    Successor
    
    PredecessorThree months
    
    Three months
    
    Six months
    
    Six monthsended
    
    ended
    
    ended
    
    endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Revenues:Software licenses
    
    
    10
    %
    
    
    14
    %
    
    
    10
    %
    
    
    15
    %Maintenance
    
    
    26
    %
    
    
    30
    %
    
    
    27
    %
    
    
    32
    %Professional services
    
    
    10
    %
    
    
    8
    %
    
    
    10
    %
    
    
    9
    %Outsourcing
    
    
    54
    %
    
    
    48
    %
    
    
    53
    %
    
    
    44
    %
 Revenues
  Software Licenses
 14




---



##### Table of Contents



Maintenance
 Professional Services
 Outsourcing
 Cost of Revenues
  15




---



##### Table of Contents



Cost of Software Licenses
 Cost of Maintenance
 Cost of Professional Services
 Cost of Outsourcing
 Operating Expenses
  Selling and Marketing
 16




---



##### Table of Contents



Research and Development
 General and Administrative
 Interest and Other Income, Net 3 4
 Provision for Income Taxes
 Liquidity and Capital Resources
    17




---



##### Table of Contents



Off-Balance Sheet Arrangements
  The Transaction
  Senior Credit Facilities
    18




---



##### Table of Contents



11 3/4 % Senior Subordinated Notes due 2013
 3 4
   Covenant Compliance
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##### Table of Contents



Successor
    
    
    PredecessorThree months
    
    
    Six months
    
    
    Three months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,(in thousands)
    
    2006
    
    
    2006
    
    
    2005
    
    
    2005Net income
    
    $
    1,787
    
    
    $
    1,561
    
    
    $
    6,589
    
    
    $
    12,558Interest (income) expense, net
    
    
    11,764
    
    
    
    23,273
    
    
    
    451
    
    
    
    (121
    )Income taxes
    
    
    (1,323
    )
    
    
    (1,240
    )
    
    
    3,766
    
    
    
    7,582Depreciation and amortization
    
    
    6,803
    
    
    
    13,372
    
    
    
    2,754
    
    
    
    4,127EBITDA
    
    $
    19,031
    
    
    $
    36,966
    
    
    $
    13,560
    
    
    $
    24.146Purchase accounting adjustments (1)
    
    
    1,414
    
    
    
    2,555
    
    
    
    
    
    
    
    Unusual or non-recurring charges (2)
    
    
    145
    
    
    
    210
    
    
    
    (66
    )
    
    
    (115
    )Acquired EBITDA and cost savings (3)
    
    
    116
    
    
    
    748
    
    
    
    3,580
    
    
    
    12,382Other (4)
    
    
    250
    
    
    
    500
    
    
    
    
    
    
    
    Consolidated EBITDA
    
    $
    20,956
    
    
    $
    40,979
    
    
    $
    17,074
    
    
    $
    36,413
 
 (1)
    
    Purchase accounting adjustments include the adjustment of deferred revenue and
lease obligations to fair value at the date of the Transaction.(2)
    
    Unusual or non-recurring charges include capital-based taxes reflected in general
and administrative expenses, foreign currency gains and losses, gains and losses on
the sales of marketable securities and proceeds from legal settlements.(3)
    
    Acquired EBITDA and cost savings reflects the impact of
EBITDA and cost savings from synergies for significant businesses that were
acquired during the period as if the acquisition occurred at the beginning of that
period.(4)
    
    Other includes management fees paid to The Carlyle Group.  Covenant
    
    ActualRequirements
    
    RatiosMaximum consolidated total leverage to Consolidated EBITDA Ratio
    
    
    7.50x
    
    
    
    5.91xMinimum Consolidated EBITDA to consolidated net interest coverage ratio
    
    
    1.40x
    
    
    
    2.87x
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
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Item 4. Controls and Procedures
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
     
 Item 1A. Risk Factors
 3 4
 Risks Relating to Our Indebtedness
 Our substantial indebtedness could adversely affect our financial health and prevent us
from fulfilling our obligations under the notes.
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To service our indebtedness, we will require a significant amount of cash. Our ability to
generate cash depends on many factors beyond our control.
   Despite current indebtedness levels, we and our subsidiaries may still be able to incur
substantially more debt. This could further exacerbate the risks associated with our
substantial financial leverage.
  Your rights to receive payments on the notes are junior to the borrowings under our senior
credit facilities and all future secured or senior indebtedness. Further, the guarantees of
the notes are junior to the guarantors secured and senior indebtedness and all future
secured or senior indebtedness.
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Restrictive covenants in the indenture governing the notes and the agreement governing our
senior credit facilities may restrict our ability to pursue our business strategies.
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Federal and state statutes allow courts, under specific circumstances, to void guarantees
and require note holders to return payments received from guarantors.
          Certain subsidiaries are not included as subsidiary guarantors.
   We may not have the ability to raise the funds necessary to finance the change of control
offer required by the indenture governing the notes.
  *Your ability to transfer the exchange notes may be limited by the absence of an active
trading market, and we cannot assure you that an active trading market for the exchange
notes will develop.
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*The
market price for the notes may be volatile.
  *If you do not properly tender your old notes, your ability to transfer your old notes
will be adversely affected.
  Risks Relating to Our Business
 Our business is greatly affected by changes in the state of the general economy and the
financial markets, and a slowdown or downturn in the general economy or the financial
markets could adversely affect our results of operations.
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Further or accelerated consolidations in the financial services industry could adversely
affect our business, financial condition and results of operations.
  We expect that our operating results, including our profit margins and profitability, may
fluctuate over time.
             If we are unable to retain and attract clients, our revenues and net income would remain
stagnant or decline.
         We face significant competition with respect to our products and services, which may result
in price reductions, reduced
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gross margins or loss of market share.
   We may not achieve the anticipated benefits from our acquisitions and may face difficulties
in integrating our acquisitions, which could adversely affect our revenues, subject us to
unknown liabilities, increase costs and place a significant strain on our management.
           If we are unable to protect our proprietary technology, our success and our ability to
compete will be subject to various risks, such as third-party infringement claims,
unauthorized use of our technology, disclosure of our proprietary information or
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inability to license technology from third parties.
     We could become subject to litigation regarding intellectual property rights, which could
seriously harm our business and require us to incur significant costs, which, in turn,
could reduce or eliminate profits.
  Our failure to continue to derive substantial revenues from the licensing of, or
outsourcing solutions related to, our CAMRA, TradeThru, Pacer, AdvisorWare and Total Return
software, and the provision of maintenance and professional
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services in support of such licensed software, could adversely affect our ability to
sustain or grow our revenues and harm our business, financial condition and results of
operations.
  We may be unable to adapt to rapidly changing technology and evolving industry standards,
and our inability to introduce new products and services could adversely affect our
business, financial condition and results of operations.
       Undetected software design defects, errors or failures may result in loss of or delay in
market acceptance of our products or in liabilities that could adversely affect our
revenues, financial condition and results of operations.
  If we cannot attract, train and retain qualified managerial, technical and sales personnel,
we may not be able to provide adequate technical expertise and customer service to our
clients or maintain focus on our business strategy.
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Challenges in maintaining and expanding our international operations can result in
increased costs, delayed sales efforts and uncertainty with respect to our intellectual
property rights and results of operations.
          Catastrophic events may adversely affect our ability to provide, our clients ability to
use, and the demand for, our products and services, which may disrupt our business and
cause a decline in revenues.
  Our application service provider systems may be subject to disruptions that could adversely
affect our reputation and our business.
  We are controlled by The Carlyle Group, whose interests may not be aligned with yours.
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Item 6. Exhibits
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SIGNATURE
  SS&C TECHNOLOGIES, INC.Date: August 14, 2006
    By:
    /s/ Patrick J. PedontiPatrick J. PedontiSenior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 33




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Exhibit Index
 Exhibit Number
    
    Description31.1
    
    Certification of the Registrants Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Registrants Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification of the Registrants Chief Executive Officer
and Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 34