##### 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 September 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
    
    06-1169696incorporation or organization)
    
    (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)
 þ o
  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
September 30, 2006 and December 31, 2005
    
    
    2Consolidated Statements of Operations for the three months
and nine months ended September 30, 2006 and 2005
    
    
    3Consolidated Statements of Cash Flows for the nine months
ended September 30, 2006 and 2005
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    23PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    24Item 1A.
    
    Risk Factors
    
    
    24Item 6.
    
    Exhibits
    
    
    24SIGNATURE
    
    
    25EXHIBIT INDEX
    
    
    26EX-31.1 SECTION 302 CERTIFICATION OF THE C.E.O.EX-31.2 SECTION 302 CERTIFICATION OF THE C.F.O.EX-32 SECTION 906 CERTIFICATION OF THE C.E.O. & C.F.O.
   1




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##### Table of Contents



Part I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
 
 SuccessorSeptember 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assetsCash and cash equivalents
    
    $
    10,646
    
    
    $
    15,584Accounts receivable, net of allowance for
doubtful accounts of $1,947 and $2,092,
respectively
    
    
    34,394
    
    
    
    32,862Income taxes receivable
    
    
    
    
    
    
    8,176Prepaid expenses and other current assets
    
    
    8,050
    
    
    
    6,236Total current assets
    
    
    53,090
    
    
    
    62,858Property and equipmentLeasehold improvements
    
    
    2,853
    
    
    
    2,422Equipment, furniture, and fixtures
    
    
    11,079
    
    
    
    8,29813,932
    
    
    
    10,720Less accumulated depreciation
    
    
    (3,771
    )
    
    
    (431
    )Net property and equipment
    
    
    10,161
    
    
    
    10,289Goodwill
    
    
    835,470
    
    
    
    818,180Intangible and other assets, net of
accumulated amortization of $18,731 and
$1,870, respectively
    
    
    277,645
    
    
    
    285,044Total assets
    
    $
    1,176,366
    
    
    $
    1,176,371LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    2,782
    
    
    $
    10,438Accounts payable
    
    
    2,265
    
    
    
    2,367Accrued employee compensation and benefits
    
    
    6,984
    
    
    
    9,048Other accrued expenses
    
    
    6,917
    
    
    
    8,769Interest payable
    
    
    8,051
    
    
    
    3,082Income taxes payable
    
    
    1,742
    
    
    
    Deferred income taxes
    
    
    729
    
    
    
    1,305Deferred maintenance and other revenue
    
    
    26,657
    
    
    
    20,566Total current liabilities
    
    
    56,127
    
    
    
    55,575Long-term debt, net of current portion
    
    
    473,634
    
    
    
    478,143Other long-term liabilities
    
    
    1,196
    
    
    
    1,257Deferred income taxes
    
    
    75,735
    
    
    
    84,263Total liabilities
    
    
    606,692
    
    
    
    619,238Commitments and contingencies (Note 9)Stockholders equityCommon stock
    
    
    
    
    
    
    Additional paid-in capital
    
    
    557,407
    
    
    
    554,965Accumulated other comprehensive income
    
    
    9,516
    
    
    
    1,337Retained earnings
    
    
    2,751
    
    
    
    831Total stockholders equity
    
    
    569,674
    
    
    
    557,133Total liabilities and stockholders equity
    
    $
    1,176,366
    
    
    $
    1,176,371
  2




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##### Table of Contents



Successor
    
    
    
    PredecessorThree Months
    
    
    Nine Months
    
    
    
    Three Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    September 30,
    
    
    September 30,2006
    
    
    2006
    
    
    
    2005
    
    
    2005Revenues:Software licenses
    
    $
    6,502
    
    
    $
    16,864
    
    
    
    $
    7,567
    
    
    $
    17,884Maintenance
    
    
    14,187
    
    
    
    40,535
    
    
    
    
    13,263
    
    
    
    35,067Professional services
    
    
    4,490
    
    
    
    14,618
    
    
    
    
    3,633
    
    
    
    9,565Outsourcing
    
    
    27,270
    
    
    
    79,452
    
    
    
    
    21,647
    
    
    
    51,723Total revenues
    
    
    52,449
    
    
    
    151,469
    
    
    
    
    46,110
    
    
    
    114,239Cost of revenues:Software licenses
    
    
    2,280
    
    
    
    6,828
    
    
    
    
    913
    
    
    
    2,267Maintenance
    
    
    5,201
    
    
    
    15,064
    
    
    
    
    3,199
    
    
    
    8,224Professional services
    
    
    3,142
    
    
    
    9,435
    
    
    
    
    2,171
    
    
    
    6,377Outsourcing
    
    
    15,185
    
    
    
    42,282
    
    
    
    
    12,958
    
    
    
    28,808Total cost of revenues
    
    
    25,808
    
    
    
    73,609
    
    
    
    
    19,241
    
    
    
    45,676Gross profit
    
    
    26,641
    
    
    
    77,860
    
    
    
    
    26,869
    
    
    
    68,563Operating expenses:Selling and marketing
    
    
    4,856
    
    
    
    12,751
    
    
    
    
    4,167
    
    
    
    10,540Research and development
    
    
    6,099
    
    
    
    17,903
    
    
    
    
    5,772
    
    
    
    15,195General and administrative
    
    
    5,107
    
    
    
    13,860
    
    
    
    
    3,820
    
    
    
    9,814Merger costs related to the sale of SS&C
    
    
    
    
    
    
    
    
    
    
    
    1,171
    
    
    
    1,171Total operating expenses
    
    
    16,062
    
    
    
    44,514
    
    
    
    
    14,930
    
    
    
    36,720Operating income
    
    
    10,579
    
    
    
    33,346
    
    
    
    
    11,939
    
    
    
    31,843Interest expense, net
    
    
    (12,155
    )
    
    
    (35,428
    )
    
    
    
    (677
    )
    
    
    (556
    )Other (expense) income, net
    
    
    (83
    )
    
    
    744
    
    
    
    
    211
    
    
    
    326(Loss) income before income taxes
    
    
    (1,659
    )
    
    
    (1,338
    )
    
    
    
    11,473
    
    
    
    31,613(Benefit) provision for income taxes
    
    
    (2,018
    )
    
    
    (3,258
    )
    
    
    
    4,478
    
    
    
    12,060Net income
    
    $
    359
    
    
    $
    1,920
    
    
    
    $
    6,995
    
    
    $
    19,553
  3




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##### Table of Contents



Successor
    
    
    
    PredecessorNine Months
    
    
    
    Nine MonthsEnded
    
    
    
    EndedSeptember 30,
    
    
    
    September 30,2006
    
    
    
    2005Cash flow from operating activities:Net income
    
    $
    1,920
    
    
    
    $
    19,553Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    20,140
    
    
    
    
    7,277Stock-based compensation
    
    
    1,707
    
    
    
    
    Foreign exchange gains on debt
    
    
    (660
    )
    
    
    
    Amortization of loan origination costs
    
    
    2,224
    
    
    
    
    59Equity earnings on long-term investment
    
    
    (72
    )
    
    
    
    Net realized gains on investments in marketable securities
    
    
    
    
    
    
    
    (197
    )Loss on sale or disposal of property and equipment
    
    
    4
    
    
    
    
    15Deferred income taxes
    
    
    (11,656
    )
    
    
    
    650Income tax benefit related to exercise of stock options
    
    
    
    
    
    
    
    2,375Provision for doubtful accounts
    
    
    312
    
    
    
    
    930Changes in operating assets and liabilities, excluding
effects from acquisitions:Accounts receivable
    
    
    137
    
    
    
    
    (8,143
    )Prepaid expenses and other assets
    
    
    (1,921
    )
    
    
    
    (343
    )Income taxes receivable
    
    
    8,172
    
    
    
    
    Accounts payable
    
    
    (184
    )
    
    
    
    801Accrued expenses
    
    
    503
    
    
    
    
    (2,506
    )Income taxes payable
    
    
    1,499
    
    
    
    
    578Deferred maintenance and other revenues
    
    
    3,676
    
    
    
    
    (9
    )Net cash provided by operating activities
    
    
    25,801
    
    
    
    
    21,040Cash flow from investing activities:Additions to property and equipment
    
    
    (2,941
    )
    
    
    
    (2,092
    )Proceeds from sale of property and equipment
    
    
    1
    
    
    
    
    3Cash paid for business acquisitions, net of cash acquired
    
    
    (13,967
    )
    
    
    
    (183,604
    )Cash paid for long-term investment
    
    
    
    
    
    
    
    (2,000
    )Purchases of marketable securities
    
    
    
    
    
    
    
    (88,250
    )Sales of marketable securities
    
    
    
    
    
    
    
    181,037Net cash used in investing activities
    
    
    (16,907
    )
    
    
    
    (94,906
    )Cash flow from financing activities:Cash received from borrowings
    
    
    13,400
    
    
    
    
    75,000Repayment of debt
    
    
    (28,276
    )
    
    
    
    (8,013
    )Exercise of options
    
    
    72
    
    
    
    
    2,279Issuance of common stock
    
    
    663
    
    
    
    
    343Purchase of common stock for treasury
    
    
    
    
    
    
    
    (5,584
    )Common stock dividends
    
    
    
    
    
    
    
    (3,718
    )Net cash (used in) provided by financing activities
    
    
    (14,141
    )
    
    
    
    60,307Effect of exchange rate changes on cash
    
    
    309
    
    
    
    
    (501
    )Net decrease in cash and cash equivalents
    
    
    (4,938
    )
    
    
    
    (14,060
    )Cash and cash equivalents, beginning of period
    
    
    15,584
    
    
    
    
    28,913Cash and cash equivalents, end of period
    
    $
    10,646
    
    
    
    $
    14,853
  4




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##### Table of Contents



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




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##### Table of Contents



Statements of operations classificationCost of Maintenance
    
    $
    50Cost of Professional services
    
    
    52Cost of Outsourcing
    
    
    334Total cost of revenues
    
    
    436Selling and marketing
    
    
    324Research and development
    
    
    185General and administrative
    
    
    762Total operating expenses
    
    
    1,271Total stock-based compensation expense
    
    $
    1,707
 Predecessor
  PredecessorThree Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005
    
    
    2005Net income, as reported
    
    $
    6,995
    
    
    $
    19,553Deduct: total stock-based employee
compensation determined under
fair value-based method for all awards,
net of related tax effects
    
    
    308
    
    
    
    963Net income, pro forma
    
    $
    6,687
    
    
    $
    18,590
 6




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##### Table of Contents



Successor
    
    
    
    PredecessorThree Months
    
    
    Nine Months
    
    
    
    Three Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    September 30,
    
    
    September 30,2006
    
    
    2006
    
    
    
    2005
    
    
    2005Net income
    
    $
    359
    
    
    $
    1,920
    
    
    
    $
    6,995
    
    
    $
    19,553Foreign currency translation (losses) gains
    
    
    (353
    )
    
    
    7,686
    
    
    
    
    7,508
    
    
    
    7,657Unrealized (losses) gains on interest rate
swaps, net of tax
    
    
    (2,250
    )
    
    
    492
    
    
    
    
    
    
    
    
    Unrealized losses on marketable
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    (59
    )
    
    
    (385
    )Total comprehensive (loss) income
    
    $
    (2,244
    )
    
    $
    10,098
    
    
    
    $
    14,444
    
    
    $
    26,825
  Successor
  SuccessorSeptember 30,
    
    
    December 31,2006
    
    
    2005Senior credit facility, revolving portion,
weighted-average interest rate of 6.57%
    
    $
    
    
    
    $
    7,734Senior credit facility, term loan portion,
weighted-average interest rate of 7.73% and 6.90%,
respectively
    
    
    271,416
    
    
    
    275,83311 3/4% Senior subordinated notes due 2013
    
    
    205,000
    
    
    
    205,000Other
    
    
    
    
    
    
    14476,416
    
    
    
    488,581Short-term borrowings and current portion of long-term debt
    
    
    (2,782
    )
    
    
    (10,438
    )Long-term debt
    
    $
    473,634
    
    
    $
    478,143
     7




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##### Table of Contents



Zoologic
    
    
    CogentTangible assets acquired, net of cash received
    
    $
    535
    
    
    $
    1,074Completed technology
    
    
    425
    
    
    
    Trade names
    
    
    60
    
    
    
    Acquired client relationships and contracts
    
    
    500
    
    
    
    4,500Goodwill
    
    
    2,488
    
    
    
    9,367Deferred revenue
    
    
    (1,163
    )
    
    
    (756
    )Debt
    
    
    
    
    
    
    (300
    )Deferred taxes
    
    
    
    
    
    
    (1,755
    )Other liabilities assumed
    
    
    (169
    )
    
    
    (236
    )Consideration paid, net of cash received
    
    $
    2,676
    
    
    $
    11,894
   8




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##### Table of Contents



Successor
    
    
    
    PredecessorThree Months
    
    
    Nine Months
    
    
    
    Three Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    September 30,
    
    
    September 30,2006
    
    
    2006
    
    
    
    2005
    
    
    2005United States
    
    $
    31,174
    
    
    $
    89,975
    
    
    
    $
    27,824
    
    
    $
    74,484Americas excluding United States
    
    
    10,134
    
    
    
    28,759
    
    
    
    
    8,262
    
    
    
    15,725Europe
    
    
    10,070
    
    
    
    29,535
    
    
    
    
    8,828
    
    
    
    21,572Asia Pacific and Japan
    
    
    1,071
    
    
    
    3,200
    
    
    
    
    1,196
    
    
    
    2,458$
    52,449
    
    
    $
    151,469
    
    
    
    $
    46,110
    
    
    $
    114,239
  3 4
 9




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##### Table of Contents



At September 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash and cash equivalents
    
    $
    1,778
    
    
    $
    480
    
    
    $
    8,388
    
    
    $
    
    
    
    $
    10,646Accounts receivable, net
    
    
    17,585
    
    
    
    5,781
    
    
    
    11,028
    
    
    
    
    
    
    
    34,394Prepaid expenses and other current assets
    
    
    3,921
    
    
    
    731
    
    
    
    3,398
    
    
    
    
    
    
    
    8,050Property and equipment, net
    
    
    4,494
    
    
    
    1,034
    
    
    
    4,633
    
    
    
    
    
    
    
    10,161Investment in subsidiaries
    
    
    80,255
    
    
    
    
    
    
    
    
    
    
    
    (80,255
    )
    
    
    Intercompany balances
    
    
    154,915
    
    
    
    (8,113
    )
    
    
    (146,802
    )
    
    
    
    
    
    
    Goodwill, intangible and other assets, net
    
    
    803,969
    
    
    
    17,413
    
    
    
    291,733
    
    
    
    
    
    
    
    1,113,115Total assets
    
    $
    1,066,917
    
    
    $
    17,326
    
    
    $
    172,378
    
    
    $
    (80,255
    )
    
    $
    1,176,366Current portion of long-term debt
    
    $
    2,000
    
    
    $
    
    
    
    $
    782
    
    
    $
    
    
    
    $
    2,782Accounts payable
    
    
    1,106
    
    
    
    325
    
    
    
    834
    
    
    
    
    
    
    
    2,265Accrued expenses
    
    
    15,563
    
    
    
    1,271
    
    
    
    5,118
    
    
    
    
    
    
    
    21,952Deferred income taxes
    
    
    (40
    )
    
    
    (416
    )
    
    
    1,185
    
    
    
    
    
    
    
    729Income taxes payable
    
    
    (3,066
    )
    
    
    3,166
    
    
    
    1,642
    
    
    
    
    
    
    
    1,742Deferred maintenance and other revenue
    
    
    16,863
    
    
    
    3,709
    
    
    
    6,085
    
    
    
    
    
    
    
    26,657Long-term debt, net of current portion
    
    
    401,500
    
    
    
    
    
    
    
    72,134
    
    
    
    
    
    
    
    473,634Other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    1,196
    
    
    
    
    
    
    
    1,196Deferred income taxes, long-term
    
    
    63,317
    
    
    
    (1,763
    )
    
    
    14,181
    
    
    
    
    
    
    
    75,735Total liabilities
    
    
    497,243
    
    
    
    6,292
    
    
    
    103,157
    
    
    
    
    
    
    
    606,692Stockholders equity
    
    
    569,674
    
    
    
    11,034
    
    
    
    69,221
    
    
    
    (80,255
    )
    
    
    569,674Total liabilities and stockholders equity
    
    $
    1,066,917
    
    
    $
    17,326
    
    
    $
    172,378
    
    
    $
    (80,255
    )
    
    $
    1,176,366
 10




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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
 11




---



##### Table of Contents



For the three months ended September 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    20,838
    
    
    $
    14,575
    
    
    $
    17,287
    
    
    $
    (251
    )
    
    $
    52,449Cost of revenue
    
    
    10,636
    
    
    
    6,639
    
    
    
    8,784
    
    
    
    (251
    )
    
    
    25,808Gross profit
    
    
    10,202
    
    
    
    7,936
    
    
    
    8,503
    
    
    
    
    
    
    
    26,641Operating expenses:Selling & marketing
    
    
    2,765
    
    
    
    492
    
    
    
    1,599
    
    
    
    
    
    
    
    4,856Research & development
    
    
    3,405
    
    
    
    836
    
    
    
    1,858
    
    
    
    
    
    
    
    6,099General & administrative
    
    
    3,477
    
    
    
    1,688
    
    
    
    (58
    )
    
    
    
    
    
    
    5,107Total operating expenses
    
    
    9,647
    
    
    
    3,016
    
    
    
    3,399
    
    
    
    
    
    
    
    16,062Operating income
    
    
    555
    
    
    
    4,920
    
    
    
    5,104
    
    
    
    
    
    
    
    10,579Interest expense, net
    
    
    (7,928
    )
    
    
    (7
    )
    
    
    (4,220
    )
    
    
    
    
    
    
    (12,155
    )Other expense, net
    
    
    (16
    )
    
    
    
    
    
    
    (67
    )
    
    
    
    
    
    
    (83
    )Income (loss) before income taxes
    
    
    (7,389
    )
    
    
    4,913
    
    
    
    817
    
    
    
    
    
    
    
    (1,659
    )Provision (benefit) for income taxes
    
    
    (5,314
    )
    
    
    3,367
    
    
    
    (71
    )
    
    
    
    
    
    
    (2,018
    )Equity in net income of subsidiaries
    
    
    2,434
    
    
    
    
    
    
    
    
    
    
    
    (2,434
    )
    
    
    Net income
    
    $
    359
    
    
    $
    1,546
    
    
    $
    888
    
    
    $
    (2,434
    )
    
    $
    359
 For the three months ended September 30, 2005 - PredecessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    19,874
    
    
    $
    10,845
    
    
    $
    15,655
    
    
    $
    (264
    )
    
    $
    46,110Cost of revenue
    
    
    6,168
    
    
    
    6,060
    
    
    
    7,277
    
    
    
    (264
    )
    
    
    19,241Gross profit
    
    
    13,706
    
    
    
    4,785
    
    
    
    8,378
    
    
    
    
    
    
    
    26,869Operating expenses:Selling & marketing
    
    
    1,630
    
    
    
    646
    
    
    
    1,891
    
    
    
    
    
    
    
    4,167Research & development
    
    
    2,855
    
    
    
    680
    
    
    
    2,237
    
    
    
    
    
    
    
    5,772General & administrative
    
    
    2,169
    
    
    
    259
    
    
    
    1,392
    
    
    
    
    
    
    
    3,820Merger costs related to the sale of SS&C
    
    
    1,171
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,171Total operating expenses
    
    
    7,825
    
    
    
    1,585
    
    
    
    5,520
    
    
    
    
    
    
    
    14,930Operating income
    
    
    5,881
    
    
    
    3,200
    
    
    
    2,858
    
    
    
    
    
    
    
    11,939Interest expense, net
    
    
    (672
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (677
    )Other income (expense), net
    
    
    233
    
    
    
    (1
    )
    
    
    (21
    )
    
    
    
    
    
    
    211Income before income taxes
    
    
    5,442
    
    
    
    3,199
    
    
    
    2,832
    
    
    
    
    
    
    
    11,473Provision for income taxes
    
    
    3,424
    
    
    
    295
    
    
    
    759
    
    
    
    
    
    
    
    4,478Equity in net income of subsidiaries
    
    
    4,977
    
    
    
    
    
    
    
    
    
    
    
    (4,977
    )
    
    
    Net income
    
    $
    6,995
    
    
    $
    2,904
    
    
    $
    2,073
    
    
    $
    (4,977
    )
    
    $
    6,995
 12




---



##### Table of Contents



For the nine months ended September 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    59,391
    
    
    $
    41,720
    
    
    $
    51,199
    
    
    $
    (841
    )
    
    $
    151,469Cost of revenue
    
    
    30,071
    
    
    
    18,755
    
    
    
    25,624
    
    
    
    (841
    )
    
    
    73,609Gross profit
    
    
    29,320
    
    
    
    22,965
    
    
    
    25,575
    
    
    
    
    
    
    
    77,860Operating expenses:Selling & marketing
    
    
    7,153
    
    
    
    1,602
    
    
    
    3,996
    
    
    
    
    
    
    
    12,751Research & development
    
    
    9,777
    
    
    
    2,437
    
    
    
    5,689
    
    
    
    
    
    
    
    17,903General & administrative
    
    
    8,700
    
    
    
    4,676
    
    
    
    484
    
    
    
    
    
    
    
    13,860Total operating expenses
    
    
    25,630
    
    
    
    8,715
    
    
    
    10,169
    
    
    
    
    
    
    
    44,514Operating income
    
    
    3,690
    
    
    
    14,250
    
    
    
    15,406
    
    
    
    
    
    
    
    33,346Interest expense, net
    
    
    (23,073
    )
    
    
    (7
    )
    
    
    (12,348
    )
    
    
    
    
    
    
    (35,428
    )Other income (expense), net
    
    
    29
    
    
    
    (1
    )
    
    
    716
    
    
    
    
    
    
    
    744Income (loss) before income taxes
    
    
    (19,354
    )
    
    
    14,242
    
    
    
    3,774
    
    
    
    
    
    
    
    (1,338
    )Provision (benefit) for income taxes
    
    
    (6,508
    )
    
    
    3,940
    
    
    
    (690
    )
    
    
    
    
    
    
    (3,258
    )Equity in net income of subsidiaries
    
    
    14,766
    
    
    
    
    
    
    
    
    
    
    
    (14,766
    )
    
    
    Net income
    
    $
    1,920
    
    
    $
    10,302
    
    
    $
    4,464
    
    
    $
    (14,766
    )
    
    $
    1,920
 For the nine months ended September 30, 2005  PredecessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    57,795
    
    
    $
    28,206
    
    
    $
    29,059
    
    
    $
    (821
    )
    
    $
    114,239Cost of revenue
    
    
    17,350
    
    
    
    15,494
    
    
    
    13,653
    
    
    
    (821
    )
    
    
    45,676Gross profit
    
    
    40,445
    
    
    
    12,712
    
    
    
    15,406
    
    
    
    
    
    
    
    68,563Operating expenses:Selling & marketing
    
    
    4,983
    
    
    
    1,274
    
    
    
    4,283
    
    
    
    
    
    
    
    10,540Research & development
    
    
    8,104
    
    
    
    2,065
    
    
    
    5,026
    
    
    
    
    
    
    
    15,195General & administrative
    
    
    6,286
    
    
    
    691
    
    
    
    2,837
    
    
    
    
    
    
    
    9,814Merger costs related to the sale of SS&C
    
    
    1,171
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,171Total operating expenses
    
    
    20,544
    
    
    
    4,030
    
    
    
    12,146
    
    
    
    
    
    
    
    36,720Operating income
    
    
    19,901
    
    
    
    8,682
    
    
    
    3,260
    
    
    
    
    
    
    
    31,843Interest (expense) income, net
    
    
    (607
    )
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    (556
    )Other income (expense), net
    
    
    326
    
    
    
    38
    
    
    
    (38
    )
    
    
    
    
    
    
    326Income before income taxes
    
    
    19,620
    
    
    
    8,720
    
    
    
    3,273
    
    
    
    
    
    
    
    31,613Provision for income taxes
    
    
    10,756
    
    
    
    405
    
    
    
    899
    
    
    
    
    
    
    
    12,060Equity in net income of subsidiaries
    
    
    10,689
    
    
    
    
    
    
    
    
    
    
    
    (10,689
    )
    
    
    Net income
    
    $
    19,553
    
    
    $
    8,315
    
    
    $
    2,374
    
    
    $
    (10,689
    )
    
    $
    19,553
 13




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##### Table of Contents



For the nine months ended September 30, 2006 - SuccessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash Flow from Operating Activities:Net income
    
    $
    1,920
    
    
    $
    10,302
    
    
    $
    4,464
    
    
    $
    (14,766
    )
    
    $
    1,920Non-cash adjustments
    
    
    (5,748
    )
    
    
    494
    
    
    
    2,487
    
    
    
    14,766
    
    
    
    11,999Changes in operating assets and liabilities
    
    
    11,589
    
    
    
    3,514
    
    
    
    (3,221
    )
    
    
    
    
    
    
    11,882Net cash provided by operating activities
    
    
    7,761
    
    
    
    14,310
    
    
    
    3,730
    
    
    
    
    
    
    
    25,801Cash Flow from Investment Activities:Intercompany transactions
    
    
    7,836
    
    
    
    (15,539
    )
    
    
    7,703
    
    
    
    
    
    
    
    Cash paid for businesses acquired, net of
cash
acquired
    
    
    (14,249
    )
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    (13,967
    )Additions to property and equipment
    
    
    (1,811
    )
    
    
    (264
    )
    
    
    (866
    )
    
    
    
    
    
    
    (2,941
    )Proceeds from sale of property and
equipment
    
    
    
    
    
    
    2
    
    
    
    (1
    )
    
    
    
    
    
    
    1Net cash provided by (used in) investing
activities
    
    
    (8,224
    )
    
    
    (15,801
    )
    
    
    7,118
    
    
    
    
    
    
    
    (16,907
    )Cash Flow from Financing Activities:Net repayments of debt
    
    
    (4,813
    )
    
    
    
    
    
    
    (10,063
    )
    
    
    
    
    
    
    (14,876
    )Exercise of stock options
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72Issuance of common stock
    
    
    663
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    663Net cash used in financing activities
    
    
    (4,078
    )
    
    
    
    
    
    
    (10,063
    )
    
    
    
    
    
    
    (14,141
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    309
    
    
    
    
    
    
    
    309Net increase (decrease) in cash and cash
equivalents
    
    
    (4,541
    )
    
    
    (1,491
    )
    
    
    1,094
    
    
    
    
    
    
    
    (4,938
    )Cash and cash equivalents, beginning of
period
    
    
    6,319
    
    
    
    1,971
    
    
    
    7,294
    
    
    
    
    
    
    
    15,584Cash and cash equivalents, end of period
    
    $
    1,778
    
    
    $
    480
    
    
    $
    8,388
    
    
    $
    
    
    
    $
    10,646
 For the nine months ended September 30, 2005 - PredecessorTotal
    
    
    Total Non-
    
    
    ConsolidatingSS&C
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash Flow from Operating Activities:Net income
    
    $
    19,553
    
    
    $
    8,315
    
    
    $
    2,374
    
    
    $
    (10,689
    )
    
    $
    19,553Non-cash adjustments
    
    
    (4,061
    )
    
    
    1,314
    
    
    
    3,167
    
    
    
    10,689
    
    
    
    11,109Changes in operating assets and liabilities
    
    
    (4,768
    )
    
    
    (2,067
    )
    
    
    (2,787
    )
    
    
    
    
    
    
    (9,622
    )Net cash (used in) provided by operating
activities
    
    
    10,724
    
    
    
    7,562
    
    
    
    2,754
    
    
    
    
    
    
    
    21,040Cash Flow from Investment Activities:Intercompany transactions
    
    
    (162,409
    )
    
    
    (966
    )
    
    
    165,974
    
    
    
    (2,599
    )
    
    
    Cash paid for businesses acquired, net of
cash
acquired
    
    
    (15,743
    )
    
    
    (3,949
    )
    
    
    (163,912
    )
    
    
    
    
    
    
    (183,604
    )Purchases of marketable securities
    
    
    (88,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,250
    )Sales of marketable securities
    
    
    181,037
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,037Purchase of long-term investment
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Proceeds from sale of property and
equipment
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Additions to property and equipment
    
    
    (1,324
    )
    
    
    (337
    )
    
    
    (431
    )
    
    
    
    
    
    
    (2,092
    )Net cash used in investing
activities
    
    
    (88,686
    )
    
    
    (5,252
    )
    
    
    1,631
    
    
    
    (2,599
    )
    
    
    (94,906
    )Cash Flow from Financing Activities:Net borrowings of debt
    
    
    66,987
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,987Issuance of common stock
    
    
    343
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343Exercise of stock options
    
    
    2,279
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,279Purchase of common stock for treasury
    
    
    (5,584
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,584
    )Common stock dividends
    
    
    (3,718
    )
    
    
    
    
    
    
    (2,599
    )
    
    
    2,599
    
    
    
    (3,718
    )Net cash provided by (used in) financing
activities
    
    
    60,307
    
    
    
    
    
    
    
    (2,599
    )
    
    
    2,599
    
    
    
    60,307Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    (501
    )
    
    
    
    
    
    
    (501
    )Net increase (decrease) in cash and cash
equivalents
    
    
    (17,655
    )
    
    
    2,310
    
    
    
    1,285
    
    
    
    
    
    
    
    (14,060
    )Cash and cash equivalents, beginning of
period
    
    
    23,204
    
    
    
    304
    
    
    
    5,405
    
    
    
    
    
    
    
    28,913Cash and cash equivalents, end of period
    
    $
    5,549
    
    
    $
    2,614
    
    
    $
    6,690
    
    
    $
    
    
    
    $
    14,853
 14




---



##### 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 Nine Months Ended September 30, 2006 and
2005
  Successor
    
    
    Predecessor
    
    
    
    
    
    
    Successor
    
    
    PredecessorThree months
    
    
    Three months
    
    
    
    
    
    
    Nine months
    
    
    Nine monthsended
    
    
    ended
    
    
    
    
    
    
    ended
    
    
    endedSeptember 30,
    
    
    September 30,
    
    
    Percent
    
    
    September 30,
    
    
    September 30,
    
    
    Percent2006
    
    
    2005
    
    
    Change
    
    
    2006
    
    
    2005
    
    
    ChangeRevenues:Software licenses
    
    $
    6,502
    
    
    $
    7,567
    
    
    
    -14
    %
    
    $
    16,864
    
    
    $
    17,884
    
    
    
    -6
    %Maintenance
    
    
    14,187
    
    
    
    13,263
    
    
    
    7
    %
    
    
    40,535
    
    
    
    35,067
    
    
    
    16
    %Professional services
    
    
    4,490
    
    
    
    3,633
    
    
    
    24
    %
    
    
    14,618
    
    
    
    9,565
    
    
    
    53
    %Outsourcing
    
    
    27,270
    
    
    
    21,647
    
    
    
    26
    %
    
    
    79,452
    
    
    
    51,723
    
    
    
    54
    %Total revenues
    
    $
    52,449
    
    
    $
    46,110
    
    
    
    14
    %
    
    $
    151,469
    
    
    $
    114,239
    
    
    
    33
    %
 15




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##### Table of Contents



Successor
    
    Predecessor
    
    Successor
    
    PredecessorThree months
    
    Three months
    
    Nine months
    
    Nine monthsended
    
    ended
    
    ended
    
    endedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Revenues:Software licenses
    
    
    12
    %
    
    
    16
    %
    
    
    11
    %
    
    
    16
    %Maintenance
    
    
    27
    %
    
    
    29
    %
    
    
    27
    %
    
    
    31
    %Professional services
    
    
    9
    %
    
    
    8
    %
    
    
    10
    %
    
    
    8
    %Outsourcing
    
    
    52
    %
    
    
    47
    %
    
    
    52
    %
    
    
    45
    %
 Revenues
  Software Licenses
 Maintenance
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##### Table of Contents



Professional Services
 Outsourcing
 Cost of Revenues
  17




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##### Table of Contents



Cost of Software Licenses
 Cost of Maintenance
 Cost of Professional Services
 Cost of Outsourcing
 Operating Expenses
  18




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##### Table of Contents



Selling and Marketing
 Research and Development
 General and Administrative
 Merger Costs Related to the Pending Sale of SS&C
 Interest and Other Expense, Net 3 4
 Provision for Income Taxes
 19




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##### Table of Contents



Liquidity and Capital Resources
      Off-Balance Sheet Arrangements
  The Transaction
  Senior Credit Facilities
   20




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##### Table of Contents



11 3/4 % Senior Subordinated Notes due 2013
 3 4
   Covenant Compliance
     21




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##### Table of Contents



Successor
    
    
    PredecessorThree months
    
    
    Nine months
    
    
    Three months
    
    
    Nine monthsended
    
    
    ended
    
    
    ended
    
    
    endedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2006
    
    
    2005
    
    
    2005Net income
    
    $
    359
    
    
    $
    1,920
    
    
    $
    6,995
    
    
    $
    19,553Interest (income) expense, net
    
    
    12,155
    
    
    
    35,428
    
    
    
    677
    
    
    
    556Income taxes
    
    
    (2,018
    )
    
    
    (3,258
    )
    
    
    4,478
    
    
    
    12,060Depreciation and amortization
    
    
    6,768
    
    
    
    20,140
    
    
    
    3,150
    
    
    
    7,277EBITDA
    
    $
    17,264
    
    
    $
    54,230
    
    
    $
    15,300
    
    
    $
    39,446Purchase accounting adjustments(1)
    
    
    403
    
    
    
    2,958
    
    
    
    
    
    
    
    Merger costs(2)
    
    
    
    
    
    
    
    
    
    
    1,171
    
    
    
    1,171Unusual or non-recurring charges(3)
    
    
    1,033
    
    
    
    1,243
    
    
    
    (208
    )
    
    
    (323
    )Acquired EBITDA and cost savings(4)
    
    
    174
    
    
    
    1,147
    
    
    
    2,516
    
    
    
    15,073Stock-based compensation
    
    
    1,707
    
    
    
    1,707
    
    
    
    
    
    
    
    Other(5)
    
    
    250
    
    
    
    750
    
    
    
    
    
    
    
    Consolidated EBITDA
    
    $
    20,831
    
    
    $
    62,035
    
    
    $
    18,779
    
    
    $
    55,367
 
 (1)
    
    Purchase accounting adjustments include the adjustment of deferred revenue and
lease obligations to fair value at the date of the Transaction.(2)
    
    Merger costs include expenses for investment banking, legal and accounting
services related to the acquisition of the company by The Carlyle Group.(3)
    
    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 costs associated with the closing of a
regional office.(4)
    
    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.(5)
    
    Other includes management fees paid to The Carlyle Group.  Covenant
    
    ActualRequirements
    
    RatiosMaximum consolidated total leverage to Consolidated EBITDA Ratio
    
    
    7.50x
    
    
    
    5.65xMinimum Consolidated EBITDA to consolidated net interest coverage ratio
    
    
    1.40x
    
    
    
    2.14x
  22




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
      
 Item 4. Controls and Procedures
   23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
     
 Item 1A. Risk Factors
  
 Item 6. Exhibits
  24




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##### Table of Contents



SIGNATURE
  SS&C TECHNOLOGIES, INC.Date: November 14, 2006
    
    By:/s/ Patrick J. PedontiPatrick J. PedontiSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)
 25




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description10.1
    
    2006 Equity Incentive Plan of Sunshine Acquisition
Corporation is incorporated herein by reference to Exhibit
10.1 to SS&C Technologies, Inc.s Current Report on Form
8-K filed August 15, 2006 (File No. 000-28430) (the August
15, 2006 Form 8-K)10.2
    
    Form of Stock Option Grant Notice and Stock Option
Agreement is incorporated herein by reference to Exhibit
10.2 to the August 15, 2006 Form 8-K10.3
    
    Form of Dividend Equivalent Agreement is incorporated
herein by reference to Exhibit 10.3 to the August 15, 2006
Form 8-K10.4
    
    Form of Stock Award Agreement is incorporated herein by
reference to Exhibit 10.4 to the August 15, 2006 Form 8-K31.1
    
    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
 
 
    
    Confidential treatment has been requested as to certain portions of this
Exhibit. Such portions have been omitted and filed separately with the Securities and
Exchange Commission. 26