Edgar Filing: SS&C TECHNOLOGIES INC

Form 10-Q

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, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-28430

SS&C TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)


Delaware		06-1169696
(State or other jurisdiction of incorporation 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)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

There were 1,000 shares of the registrant’s common stock outstanding as of August 6, 2010.

SS&C TECHNOLOGIES, INC.

INDEX


	Page
	Number
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Condensed Consolidated Balance Sheets at June 30, 2010 and December 31, 2009		3

Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2010 and 2009		4

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009		5

Notes to Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		25

Item 4T. Controls and Procedures		25

PART II. OTHER INFORMATION

Item 1A. Risk Factors		26

Item 6. Exhibits		26

SIGNATURE		27

EXHIBIT INDEX		28

Exhibit 31.1
Exhibit 31.2
Exhibit 32

This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “should”, and similar expressions are intended to identify forward-looking statements. The important factors discussed under the caption “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. The Company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

SS&C TECHNOLOGIES, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	June 30,			December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	88,886		$	19,055
Accounts receivable, net of allowance for doubtful accounts of $1,760 and $1,425, respectively		44,744			41,600
Prepaid expenses and other current assets		5,243			6,164
Income taxes receivable		7,896			669
Deferred income taxes		1,988			1,780

Total current assets		148,757			69,268

Property and equipment:
Leasehold improvements		5,340			5,358
Equipment, furniture, and fixtures		27,932			25,915

		33,272			31,273
Less accumulated depreciation		(19,960	)		(17,237	)

Net property and equipment		13,312			14,036


Deferred income taxes		559			499
Goodwill (Note 9)		886,982			885,517
Intangible and other assets, net of accumulated amortization of $133,343 and $116,670, respectively		199,002			216,321


Total assets	$	1,248,612		$	1,185,641


LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Current portion of long-term debt (Note 5)	$	2,011		$	4,270
Accounts payable		3,921			4,804
Income taxes payable		—			703
Accrued employee compensation and benefits		8,341			14,693
Other accrued expenses		12,184			16,938
Interest payable		1,305			2,070
Deferred maintenance and other revenue		45,827			40,400

Total current liabilities		73,589			83,878

Long-term debt, net of current portion (Note 5)		313,387			392,989
Other long-term liabilities		9,574			10,764
Deferred income taxes		47,043			52,023

Total liabilities		443,593			539,654


Commitments and contingencies (Note 7)

Stockholder’s equity (Note 3 and 4):
Common stock		—			—
Additional paid-in capital		730,904			583,251
Accumulated other comprehensive income		14,432			16,436
Retained earnings		59,683			46,300

Total stockholder’s equity		805,019			645,987

Total liabilities and stockholder’s equity	$	1,248,612		$	1,185,641

See accompanying notes to Condensed Consolidated Financial Statements.

SS&C TECHNOLOGIES, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)


	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2010			2009			2010			2009
Revenues:
Software licenses	$	6,074		$	3,983		$	11,663		$	9,803
Maintenance		17,817			16,066			35,836			31,606
Professional services		5,099			5,393			10,488			10,589
Software-enabled services		52,628			41,809			101,805			78,975

Total revenues		81,618			67,251			159,792			130,973


Cost of revenues:
Software licenses		1,908			2,123			3,836			4,171
Maintenance		8,084			6,853			16,081			13,327
Professional services		3,260			3,512			6,618			7,489
Software-enabled services		27,688			22,033			53,567			42,606

Total cost of revenues		40,940			34,521			80,102			67,593


Gross profit		40,678			32,730			79,690			63,380


Operating expenses:
Selling and marketing		6,483			5,039			12,635			10,267
Research and development		7,860			6,757			15,619			12,624
General and administrative		6,546			5,099			12,226			10,181

Total operating expenses		20,889			16,895			40,480			33,072


Operating income		19,789			15,835			39,210			30,308

Interest expense, net		(8,058	)		(9,294	)		(17,075	)		(18,644	)
Other income (expense), net		115			(1,479	)		—			(922	)
Loss on extinguishment of debt		(5,480	)		—			(5,480	)		—


Income before income taxes		6,366			5,062			16,655			10,742
Provision for income taxes		2,004			1,571			3,272			3,353


Net income	$	4,362		$	3,491		$	13,383		$	7,389

See accompanying notes to Condensed Consolidated Financial Statements.

SS&C TECHNOLOGIES, INC.
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six months ended June 30,
	2010			2009
Cash flow from operating activities:
Net income	$	13,383		$	7,389
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,297			17,598
Amortization of loan origination costs		2,403			1,145
(Gain) loss on sale or disposition of property and equipment		(2	)		3
Deferred income taxes		(6,090	)		(5,628	)
Stock-based compensation expense		5,232			2,794
Provision for doubtful accounts		454			327
Changes in operating assets and liabilities, excluding effects from acquisitions:
Accounts receivable		(2,423	)		1,649
Prepaid expenses and other assets		818			1,634
Accounts payable		(857	)		(145	)
Accrued expenses and other liabilities		(10,914	)		(7,136	)
Income taxes receivable and payable		(3,838	)		(2,549	)
Deferred maintenance and other revenues		4,971			3,824

Net cash provided by operating activities		23,434			20,905


Cash flow from investing activities:
Additions to property and equipment		(2,238	)		(621	)
Proceeds from sale of property and equipment		52			3
Cash paid for business acquisitions, net of cash acquired		(11,372	)		(10,327	)
Additions to capitalized software and other intangibles		(99	)		—

Net cash used in investing activities		(13,657	)		(10,945	)


Cash flow from financing activities:
Repayment of debt		(81,597	)		(1,153	)
Transactions involving SS&C Holdings common stock		—			(184	)
Proceeds from common stock issuance, net of issuance costs		134,611			—
Proceeds from the exercise of stock options		5,396			—
Purchase of common stock for treasury		(1,169	)		—
Income tax benefit related to exercise of stock options		3,583			—

Net cash provided by (used in) financing activities		60,824			(1,337	)


Effect of exchange rate changes on cash and cash equivalents		(770	)		1,145


Net increase in cash and cash equivalents		69,831			9,768
Cash and cash equivalents, beginning of period		19,055			29,299

Cash and cash equivalents, end of period	$	88,886		$	39,067

See accompanying notes to Condensed Consolidated Financial Statements.

SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

SS&C Technologies, Inc., together with its subsidiaries, is referred to herein as the “Company,” “we,” “our,” and “us.” SS&C Technologies Holdings, Inc., our ultimate parent company, is referred to herein as “Holdings.”

1. Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These accounting principles were applied on a basis consistent with those of the audited consolidated financial statements contained in SS&C’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission (“SEC”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the condensed consolidated financial statements) necessary for a fair statement of its financial position as of June 30, 2010, the results of its operations for the three and six months ended June 30, 2010 and 2009 and its cash flows for the six months ended June 30, 2010 and 2009. These statements do not include all of the information and footnotes required by GAAP for annual financial statements. The financial statements contained herein should be read in conjunction with the audited consolidated financial statements and footnotes as of and for the year ended December 31, 2009, which were included in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2010. The December 31, 2009 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP for annual financial statements. The results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of the expected results for the full year. The results of operations for the six months ended June 30, 2010 include an adjustment of $0.3 million to reduce income tax expense related to tax attributes of prior periods.

2. The Transaction

SS&C was acquired on November 23, 2005 through a merger transaction with Holdings, a Delaware corporation formed by investment funds associated with The Carlyle Group and formerly known as Sunshine Acquisition Corporation. The acquisition was accomplished through the merger of Sunshine Merger Corporation into the Company, with the Company being the surviving company and a wholly-owned subsidiary of Holdings (the “Transaction”).

3. Equity and Stock-based Compensation

In April 2010, the Board of Directors of Holdings authorized 5,000,000 shares of preferred stock with a $0.01 par value per share.

In April 2010, Holdings completed the initial public offering (“IPO”) of its common stock at an offering price of $15.00 per share. The IPO included 8,225,000 newly issued shares of common stock sold by Holdings and 2,500,000 existing shares of Holdings’ common stock sold by selling stockholders. On April 13, 2010, the underwriters of the IPO purchased an additional 1,608,750 shares of Holdings’ common stock to cover over-allotments. The Company received total net proceeds from the offering, including the sale of shares to cover over-allotments, of approximately $134.6 million, none of which relates to proceeds from the sale of shares by the selling stockholders or the aggregate exercise price of stock options exercised by selling stockholders.

In March 2010, the Board of Directors of Holdings approved an 8.5-for-1 stock split of the common stock of Holdings to be effected in the form of a stock dividend, effective as of March 10, 2010, and an increase in authorized shares to 100,000,000 shares of Holdings’ common stock and 5,000,000 shares of Holdings’ Class A non-voting common stock. All share data as it relates to this Form 10-Q for prior periods has been retroactively revised to reflect the stock split and increase in authorized shares.

In February 2010, the Board of Directors of Holdings amended the 2006 equity incentive plan to provide for the conversion of the outstanding superior options granted under the plan into performance-based options that vest based on EBITDA performance in 2010 and 2011. (For purposes of Note 3, references to EBITDA mean the Company’s consolidated EBITDA, as further adjusted to exclude acquired EBITDA and cost savings.) This amendment affected 1,680,868 outstanding options. Options to purchase the common stock of Holdings are granted to employees of the Company and result in stock-based compensation expense being recorded by the Company in accordance with relevant accounting literature.

In February 2010, the Board of Directors of Holdings established the Company’s annual EBITDA target range for 2010. As of that date, the Company estimated the weighted-average fair value of the performance-based options that vest upon the attainment of the 2010 EBITDA target range to be $6.90 per share. In estimating the common stock value, the Company valued the Company using the income approach and the guideline company method. The Company used the following weighted-average assumptions to estimate the option value: expected term to exercise of 2.5 years; expected volatility of 43.0%; risk-free interest rate of 1.2%; and no dividend yield. Expected volatility is based on the historical volatility of selected companies from the Company’s peer group. Expected term to exercise is based on the Company’s historical stock option exercise experience, adjusted for the Transaction.

During the three months ended June 30, 2010, the Company recorded total stock-based compensation expense of $3.9 million, of which $3.0 million related to the performance-based options based upon management’s assessment of the probability that the Company’s EBITDA for 2010 will meet or exceed the high end of the targeted range. During the six months ended June 30, 2010, the Company recorded total stock-based compensation expense of $5.2 million, of which $4.1 million related to the performance-based options based upon management’s assessment of the probability that the Company’s EBITDA for 2010 will meet or exceed the high end of the targeted range. The annual EBITDA target for 2011 will be determined by the Board of Directors of Holdings at the beginning of 2011. Time-based options represented the remaining $0.9 million and $1.1 million of compensation expense recorded during the three and six months ended June 30, 2010, respectively.

During the three months ended June 30, 2009, the Company recorded total stock-based compensation expense of $1.5 million, of which $0.7 million related to the performance-based options based upon management’s assessment of the probability that the Company’s EBITDA for 2009 would fall within the targeted range and $0.8 million related to time-based options. During the six months ended June 30, 2009, the Company recorded total stock-based compensation expense of $2.8 million, of which $1.0 million related to the performance-based options based upon management’s assessment of the probability that the Company’s EBITDA for 2009 would fall within the targeted range and $0.1 million related to the performance-based options that were immediately vested by the Board of Directors of Holdings in February. Time-based options represented the remaining $1.7 million of compensation expense recorded during the six months ended June 30, 2009.

The amount of stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2010 and 2009 was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Statements of operations classification	2010		2009		2010		2009
Cost of maintenance	$	98	$	31	$	125	$	56
Cost of professional services		140		57		186		104
Cost of software-enabled services		823		307		1,090		560

Total cost of revenues		1,061		395		1,401		720

Selling and marketing		557		258		765		495
Research and development		383		164		515		298
General and administrative		1,881		708		2,551		1,281

Total operating expenses		2,821		1,130		3,831		2,074


Total stock-based compensation expense	$	3,882	$	1,525	$	5,232	$	2,794

A summary of stock option activity for the six months ended June 30, 2010 is as follows:


	Shares of Holdings
	Underlying
	Options
Outstanding at January 1, 2010		12,737,559
Granted		2,139,635
Cancelled/forfeited		(107,626	)
Exercised		(1,716,240	)

Outstanding at June 30, 2010		13,053,328

4. Comprehensive Income (Loss)

Items defined as comprehensive income, such as foreign currency translation adjustments and unrealized gains (losses) on interest rate swaps qualifying as hedges, are separately classified in the financial statements. The accumulated balance of other comprehensive income is reported separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. Total comprehensive income consists of net income and other accumulated comprehensive income disclosed in the equity section of the balance sheet.

The following table sets forth the components of comprehensive income (loss) (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2010			2009		2010			2009
Net income	$	4,362		$	3,491	$	13,383		$	7,389
Foreign currency translation gains (losses)		(11,632	)		18,646		(3,190	)		11,541
Unrealized gains on interest rate swaps, net of tax		692			432		1,186			783

Total comprehensive income (loss)	$	(6,578	)	$	22,569	$	11,379		$	19,713

5. Debt

At June 30, 2010 and December 31, 2009, debt consisted of the following (in thousands):


	June 30,			December 31,
	2010			2009
Senior credit facility, revolving portion	$	—		$	2,000
Senior credit facility, term loan portion, weighted-average interest rate of 2.62% and 2.39%, respectively		182,021			190,032
11³/4% senior subordinated notes due 2013		133,250			205,000
Capital leases		127			227

		315,398			397,259
Short-term borrowings and current portion of long-term debt		(2,011	)		(4,270	)

Long-term debt	$	313,387		$	392,989

Capitalized financing costs of $0.6 million were amortized to interest expense during each of the three-month periods ended June 30, 2010 and 2009. Capitalized financing costs of $1.1 million were amortized to interest expense during each of the six-month periods ended June 30, 2010 and 2009.

The estimated fair value of the Company’s senior subordinated notes due 2013 was $139.2 million and $217.3 million at June 30, 2010 and December 31, 2009, respectively. The carrying value of the Company’s senior credit facility approximates its fair value given the variable rate nature of the debt.

In April 2010, the Company issued a notice of redemption for $71.75 million in principal amount of its outstanding 11³/4% senior subordinated notes due 2013 at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest on such amount to, but excluding, May 24, 2010, the day such redemption was completed. The Company recorded a loss on extinguishment of debt of $5.5 million in connection with the redemption, which includes the redemption premium of $4.2 million and $1.3 million of capitalized financing costs.

6. Derivatives and Hedging Activities

The Company uses interest rate swap agreements to manage a portion of its floating rate debt and follows the provisions of the accounting standards for derivative instruments and hedging activities, which requires that all derivative instruments be recorded on the balance sheet at fair value.

Quarterly variable interest payments were recognized as an increase in interest expense as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Interest rate swap	$	1,135	$	907	$	2,267	$	1,746

Changes in the fair value of the interest rate swaps are not included in earnings but are reported as a component of accumulated other comprehensive income (“AOCI”). For the three and six months ended June 30, 2010 and 2009, the change in the fair value of the interest rate swaps was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Amount of gain recognized in AOCI, net of tax	$	692	$	432	$	1,186	$	783

The market value of the swaps recorded in AOCI may be recognized in the statement of operations if certain terms of the senior credit facility change, if the loan is extinguished or if the swap agreements are terminated prior to maturity. As of June 30, 2010, the Company held one receive-variable/pay-fixed interest rate swap with a notional value of $100.0 million, which expires on December 31, 2010.

The Company follows the provisions of the accounting standard for fair value measurements with respect to the valuation of its interest rate swap agreements. The fair value measurement standard clarifies how companies are required to use a fair value measure for recognition and disclosure by establishing a common definition of fair value, a framework for measuring fair value, and expanding disclosures about fair value measurements.

The accounting standard for fair value measurements and disclosure establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company determines the fair value of its interest rate swaps based on the amount at which each could be settled, which is referred to as the exit price. This price is based upon observable market assumptions and appropriate valuation adjustments for credit risk. The Company has categorized its interest rate swaps as Level 2. The fair value of the Company’s remaining interest rate swap was a liability of $2.1 million and $4.2 million at June 30, 2010 and December 31, 2009, respectively, which are included in other accrued expenses in the accompanying condensed consolidated financial statements.

As of June 30, 2010 and December 31, 2009, the Company’s contingent consideration liability associated with TheNextRound, Inc. (“TNR”) of $1.0 million was measured at fair value using estimated future cash flows based on the potential payments of the liability based on the unobservable input of the estimated post-acquisition financial results of TNR through May 2011.

7. Commitments and Contingencies

From time to time, the Company is subject to legal proceedings and claims that arise in the normal course of its business. In the opinion of management, the Company is not involved in any litigation or proceedings by third parties that management believes could have a material adverse effect on the Company or its business.

8. Acquisitions

On February 3, 2010, the Company purchased substantially all of the assets and related business associated with the Geller Investment Partnership Services (“GIPS”) division of Geller & Company LLC for approximately $12.2 million in cash, plus the assumption of certain liabilities. GIPS provides accounting and reporting, performance, tax, administrative and investor services for private equity funds, funds of hedge funds and limited partners that invest in alternative asset classes.

The net assets and results of operations of GIPS have been included in the Company’s consolidated financial statements from February 4, 2010. The purchase price was allocated to tangible and intangible assets based on their fair value at the date of acquisition. The fair value of the intangible assets, consisting of customer relationships and contracts, was determined using the income approach. Specifically, the discounted cash flows method was utilized for the contractual relationships. The intangible assets are amortized each year based on the ratio that the projected cash flows for the intangible asset bear to the total of current and expected future cash flows for the intangible asset. The contractual relationships are amortized over approximately six years, the estimated life of the asset. A portion of the purchase price was attributed to the settlement of a $1.0 million liability associated with the Company’s acquisition of TNR. The remainder of the purchase price was allocated to goodwill.

The following summarizes the preliminary allocation of the purchase price, net of the $1.0 million described above, for the acquisition of GIPS (in thousands):


Accounts receivable	$	1,680
Tangible assets acquired, net of cash received		32
Acquired customer relationships and contracts		2,500
Goodwill		8,404
Deferred revenue		(1,126	)
Other liabilities assumed		(118	)

Consideration paid, net of cash received	$	11,372

The Company reported revenues of $2.9 million from GIPS from the acquisition date through June 30, 2010. The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes only and assume that the acquisitions of Evare, LLC (“Evare”), Unisys Corporation’s MAXIMIS software (“MAXIMIS”), TNR, Tradeware Global Corp (“Tradeware”), and GIPS occurred on January 1, 2009. This unaudited pro forma information (in thousands) should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on that date, or of the results that may be obtained in the future.


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Revenues	$	81,618	$	77,067	$	160,448	$	152,559
Net income	$	4,362	$	4,581	$	13,459	$	9,025

9. Goodwill

The change in carrying value of goodwill for the six months ended June 30, 2010 was as follows (in thousands):


Balance at December 31, 2009	$	885,517
2010 acquisition		8,404
Income tax benefit on rollover options exercised		(4,049	)
Effect of foreign currency translation		(2,890	)

Balance at June 30, 2010	$	886,982

10. Product and Geographic Sales Information

The Company operates in one reportable segment. The Company attributes net sales to an individual country based upon location of the customer. The Company manages its business primarily on a geographic basis. The Company’s geographic regions consist of the United States, Canada, Americas excluding the United States and Canada, Europe, Asia Pacific and Japan. The European region includes European countries as well as the Middle East and Africa.

Revenues by geography were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
United States	$	54,596	$	43,205	$	106,711	$	84,135
Canada		12,674		9,947		24,359		19,663
Americas excluding United States and Canada		2,277		972		3,279		3,250
Europe		10,172		10,353		21,569		19,825
Asia Pacific and Japan		1,899		2,774		3,874		4,100

	$	81,618	$	67,251	$	159,792	$	130,973

Revenues by product group were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Portfolio management/accounting	$	65,326	$	55,101	$	127,551	$	106,491
Trading/treasury operations		10,240		5,958		20,160		12,076
Financial modeling		2,250		2,197		4,596		4,296
Loan management/accounting		1,082		1,022		2,031		2,290
Property management		1,028		1,222		2,218		2,491
Money market processing		1,077		1,068		1,983		1,901
Training		615		683		1,253		1,428

	$	81,618	$	67,251	$	159,792	$	130,973

11. Supplemental Guarantor Condensed Consolidating Financial Statements

On November 23, 2005, in connection with the Transaction, the Company issued $205.0 million aggregate principal amount of 11³/4% senior subordinated notes due 2013. The senior subordinated notes are jointly and severally and fully and unconditionally guaranteed on an unsecured senior subordinated basis, in each case, subject to certain exceptions, by substantially all wholly-owned domestic subsidiaries of the Company (collectively “Guarantors”). All of the Guarantors are 100% owned by the Company. None of the other subsidiaries of the Company, either direct or indirect, guarantee the senior subordinated notes (“Non-Guarantors”). The Guarantors also unconditionally guarantee the senior secured credit facilities. There are no significant restrictions on the ability of the Company or any of the subsidiaries that are Guarantors to obtain funds from its subsidiaries by dividend or loan.

Condensed consolidating financial information as of June 30, 2010 and December 31, 2009 and the three and six months ended June 30, 2010 and 2009 are presented. The condensed consolidating financial information of the Company and its subsidiaries are as follows:


	At June 30, 2010
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Cash and cash equivalents	$	74,395		$	3,561		$	10,930		$	—		$	88,886
Accounts receivable, net		26,623			5,971			12,150			—			44,744
Income taxes receivable		7,896			—			—			—			7,896
Prepaid expenses and other current assets		2,225			673			2,345			—			5,243
Deferred income taxes		1,496			220			272			—			1,988
Property and equipment, net		7,764			1,372			4,176			—			13,312
Investment in subsidiaries		203,443			—			—			(203,443	)		—
Intercompany balances		99,301			(1,847	)		(97,454	)		—			—
Deferred taxes, long-term		—			—			559			—			559
Goodwill, intangible and other assets, net		747,731			59,028			279,225			—			1,085,984

Total assets	$	1,170,874		$	68,978		$	212,203		$	(203,443	)	$	1,248,612


Current portion of long-term debt	$	1,649		$	—		$	362		$	—		$	2,011
Accounts payable		2,257			376			1,288			—			3,921
Accrued expenses and other liabilities		15,021			2,041			4,768			—			21,830
Income taxes payable		(3,278	)		2,450			828			—			—
Deferred maintenance and other revenue		33,191			4,666			7,970			—			45,827
Long-term debt, net of current portion		279,079			—			34,308			—			313,387
Other long-term liabilities		2,692			281			6,601			—			9,574
Deferred income taxes, long-term		35,244			2,938			8,861			—			47,043

Total liabilities		365,855			12,752			64,986			—			443,593

Stockholder’s equity		805,019			56,226			147,217			(203,443	)		805,019

Total liabilities and stockholder’s equity	$	1,170,874		$	68,978		$	212,203		$	(203,443	)	$	1,248,612


	At December 31, 2009
			Total			Total Non-			Consolidating
	SS&C		Guarantors			Guarantors			Adjustments			Total
Cash and cash equivalents	$	6,226	$	1,087		$	11,742		$	—		$	19,055
Accounts receivable, net		24,958		5,898			10,744			—			41,600
Prepaid expenses and other current assets		3,440		575			2,149			—			6,164
Income taxes receivable		669		—			—			—			669
Deferred income taxes		1,321		220			239			—			1,780
Property and equipment, net		7,998		1,620			4,418			—			14,036
Investment in subsidiaries		193,769		—			—			(193,769	)		—
Intercompany balances		104,903		(6,353	)		(98,550	)		—			—
Deferred income taxes, long-term		—		—			499			—			499
Goodwill, intangible and other assets, net		754,745		60,997			286,096			—			1,101,838

Total assets	$	1,098,029	$	64,044		$	217,337		$	(193,769	)	$	1,185,641


Current portion of long-term debt	$	3,725	$	—		$	545		$	—		$	4,270
Accounts payable		1,935		1,043			1,826			—			4,804
Accrued expenses		23,733		3,813			6,155			—			33,701
Income taxes payable		739		(63	)		27			—			703
Deferred maintenance and other revenue		29,308		2,888			8,204			—			40,400
Long-term debt, net of current portion		351,624		—			41,365			—			392,989
Other long-term liabilities		3,482		384			6,898			—			10,764
Deferred income taxes, long-term		37,496		3,265			11,262			—			52,023

Total liabilities		452,042		11,330			76,282			—			539,654

Stockholder’s equity		645,987		52,714			141,055			(193,769	)		645,987

Total liabilities and stockholder’s equity	$	1,098,029	$	64,044		$	217,337		$	(193,769	)	$	1,185,641


	For the three months ended June 30, 2010
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Revenue	$	36,445		$	23,715		$	21,814		$	(356	)	$	81,618
Cost of revenue		20,081			13,103			8,112			(356	)		40,940

Gross profit		16,364			10,612			13,702			—			40,678
Operating expenses:
Selling & marketing		3,855			1,004			1,624			—			6,483
Research & development		4,099			1,794			1,967			—			7,860
General & administrative		4,496			879			1,171			—			6,546

Total operating expenses		12,450			3,677			4,762			—			20,889

Operating income		3,914			6,935			8,940			—			19,789
Interest expense, net		(5,359	)		—			(2,699	)		—			(8,058	)
Other income (expense), net		381			(112	)		(154	)		—			115
Loss on extinguishment of debt		(5,480	)		—			—			—			(5,480	)

(Loss) income before income taxes		(6,544	)		6,823			6,087			—			6,366
(Benefit) provision for income taxes		(1,468	)		1,374			2,098			—			2,004
Equity in net income of subsidiaries		9,438			—			—			(9,438	)		—

Net income	$	4,362		$	5,449		$	3,989		$	(9,438	)	$	4,362


	For the three months ended June 30, 2009
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Revenue	$	28,512		$	18,340		$	20,806		$	(407	)	$	67,251
Cost of revenue		16,154			11,569			7,205			(407	)		34,521

Gross profit		12,358			6,771			13,601			—			32,730
Operating expenses:
Selling & marketing		3,078			590			1,371			—			5,039
Research & development		4,034			885			1,838			—			6,757
General & administrative		4,051			260			788			—			5,099

Total operating expenses		11,163			1,735			3,997			—			16,895

Operating income		1,195			5,036			9,604			—			15,835
Interest expense, net		(6,394	)		—			(2,900	)		—			(9,294	)
Other (expense) income, net		178			(303	)		(1,354	)		—			(1,479	)

(Loss) income before income taxes		(5,021	)		4,733			5,350			—			5,062
(Benefit) provision for income taxes		(1,461	)		928			2,104			—			1,571
Equity in net income of subsidiaries		7,051			—			—			(7,051	)		—

Net income	$	3,491		$	3,805		$	3,246		$	(7,051	)	$	3,491


	For the six months ended June 30, 2010
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Revenue	$	71,346		$	45,960		$	43,202		$	(716	)	$	159,792
Cost of revenue		38,645			26,147			16,026			(716	)		80,102

Gross profit		32,701			19,813			27,176			—			79,690
Operating expenses:
Selling & marketing		7,344			2,121			3,170			—			12,635
Research & development		8,206			3,400			4,013			—			15,619
General & administrative		8,498			1,425			2,303			—			12,226

Total operating expenses		24,048			6,946			9,486			—			40,480

Operating income		8,653			12,867			17,690			—			39,210
Interest expense, net		(11,730	)		—			(5,345	)		—			(17,075	)
Other income (expense), net		710			(150	)		(560	)		—			—
Loss from extinguishment of debt		(5,480	)		—			—			—			(5,480	)

(Loss) income before income taxes		(7,847	)		12,717			11,785			—			16,655
(Benefit) provision for income taxes		(2,038	)		2,502			2,808			—			3,272
Equity in net income of subsidiaries		19,192			—			—			(19,192	)		—

Net income	$	13,383		$	10,215		$	8,977		$	(19,192	)	$	13,383


	For the six months ended June 30, 2009
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Revenue	$	55,023		$	36,984		$	39,839		$	(873	)	$	130,973
Cost of revenue		30,635			22,858			14,973			(873	)		67,593

Gross profit		24,388			14,126			24,866			—			63,380
Operating expenses:
Selling & marketing		6,017			1,580			2,670			—			10,267
Research & development		7,297			1,687			3,640			—			12,624
General & administrative		7,712			481			1,988			—			10,181

Total operating expenses		21,026			3,748			8,298			—			33,072

Operating income		3,362			10,378			16,568			—			30,308
Interest expense, net		(12,814	)		—			(5,830	)		—			(18,644	)
Other (expense) income, net		629			(333	)		(1,218	)		—			(922	)

Income (loss) before income taxes		(8,823	)		10,045			9,520			—			10,742
(Benefit) provision for income taxes		(2,155	)		1,890			3,618			—			3,353
Equity in net income of subsidiaries		14,057			—			—			(14,057	)		—

Net income	$	7,389		$	8,155		$	5,902		$	(14,057	)	$	7,389


	For the six months ended June 30, 2010
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Cash Flow from Operating Activities:
Net income	$	13,383		$	10,215		$	8,977		$	(19,192	)	$	13,383
Non-cash adjustments		(2,195	)		2,590			2,707			19,192			22,294
Changes in operating assets and liabilities		(10,970	)		1,444			(2,717	)		—			(12,243	)

Net cash provided by operating activities		218			14,249			8,967			—			23,434

Cash Flow from Investment Activities:
Intercompany transactions		12,929			(11,512	)		(1,417	)		—			—
Cash paid for business acquisitions, net		(11,372	)		—			—			—			(11,372	)
Proceeds from sale of property and equipment		52			—			—			—			52
Additions to capitalized software and other intangibles		(99	)		—			—			—			(99	)
Additions to property and equipment		(1,358	)		(263	)		(617	)		—			(2,238	)

Net cash provided by (used in) investing activities		152			(11,775	)		(2,034	)		—			(13,657	)

Cash Flow from Financing Activities:
Net repayments of debt		(74,621	)		—			(6,976	)		—			(81,597	)
Proceeds from common stock issuance, net of issuance costs		134,611			—			—			—			134,611
Proceeds from the exercise of stock options		5,396			—			—			—			5,396
Purchase of common stock for treasury		(1,169	)		—			—			—			(1,169	)
Income tax benefit related to exercise of stock options		3,582			—			1			—			3,583

Net cash provided by (used in) financing activities		67,799			—			(6,975	)		—			60,824

Effect of exchange rate changes on cash		—			—			(770	)		—			(770	)

Net increase (decrease) in cash and cash equivalents		68,169			2,474			(812	)		—			69,831
Cash and cash equivalents, beginning of period		6,226			1,087			11,742			—			19,055

Cash and cash equivalents, end of period	$	74,395		$	3,561		$	10,930		$	—		$	88,886


	For the six months ended June 30, 2009
				Total			Total Non-			Consolidating
	SS&C			Guarantors			Guarantors			Adjustments			Total
Cash Flow from Operating Activities:
Net income	$	7,389		$	8,155		$	5,902		$	(14,057	)	$	7,389
Non-cash adjustments		(2,881	)		1,689			3,374			14,057			16,239
Changes in operating assets and liabilities		(4,446	)		3,647			(1,924	)		—			(2,723	)

Net cash provided by operating activities		62			13,491			7,352			—			20,905

Cash Flow from Investment Activities:
Intercompany transactions		14,364			(14,793	)		429			—			—
Additions to property and equipment		(388	)		(29	)		(204	)		—			(621	)
Cash paid for business acquisitions, net of cash acquired		(10,456	)		129			—			—			(10,327	)
Proceeds from sale of property and equipment		—			—			3			—			3

Net cash provided by (used in) investing activities		3,520			(14,693	)		228			—			(10,945	)

Cash Flow from Financing Activities:
Net repayments of debt		(961	)		—			(192	)		—			(1,153	)
Transactions involving SS&C Technologies Holdings, Inc. common stock		(184	)		—			—			—			(184	)

Net cash used in financing activities		(1,145	)		—			(192	)		—			(1,337	)

Effect of exchange rate changes on cash		—			—			1,145			—			1,145

Net increase (decrease) in cash and cash equivalents		2,437			(1,202	)		8,533			—			9,768
Cash and cash equivalents, beginning of period		10,329			5,180			13,790			—			29,299

Cash and cash equivalents, end of period	$	12,766		$	3,978		$	22,323		$	—		$	39,067

12. Recent Accounting Pronouncements

In February 2010, the Financial Accounting Standards Board (the “FASB”) issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately, and the Company adopted these new requirements upon issuance of the guidance.

In January 2010, the FASB issued authoritative guidance related to improving disclosures about fair value measurements. This guidance requires the disclosure of separate amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and the reason for such transfers. It also requires information related to purchases, sales, issuances, and settlements of Level 3 financial assets and liabilities to be presented separately in the reconciliation of fair value measurements for the period presented. In addition, the guidance clarifies existing disclosure guidance with respect to the level of disaggregation for classes of financial assets and liabilities as well as valuation techniques and inputs used for both recurring and nonrecurring fair value measurements of Level 2 and Level 3 assets and liabilities. The Company adopted the new disclosure requirements effective January 1, 2010.

In October 2009, the FASB issued authoritative guidance related to multiple-deliverable revenue arrangements. This updated literature establishes the accounting and reporting guidance for arrangements including multiple revenue-generating activities. The standard provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. The amendments in this standard also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The Company adopted the new requirements upon the effective date of the guidance and such adoption did not affect the Company’s results of operations, cash flows or financial position.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CRITICAL ACCOUNTING POLICIES

Certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our consolidated financial statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, management’s observation of trends in the industry, information provided by our clients and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our consolidated financial statements. There have been no material changes to our critical accounting estimates and assumptions or the judgments affecting the application of those estimates and assumptions since the filing on February 26, 2010 of our Annual Report on Form 10-K for the year ended December 31, 2009. Our critical accounting policies are described in our Annual Report on Form 10-K and include:

•		Revenue Recognition

•		Allowance for Doubtful Accounts

•		Long-Lived Assets, Intangible Assets and Goodwill

•		Acquisition Accounting

•		Income Taxes

•		Stock-Based Compensation

Results of Operations for the Three Months and Six Months Ended June 30, 2010 and 2009

The following table sets forth revenues (in thousands) and changes in revenues for the periods indicated:


	Three months ended June 30,				%			Six months ended June 30,				%
	2010		2009		Change			2010		2009		Change
Revenues:
Software licenses	$	6,074	$	3,983		52	%	$	11,663	$	9,803		19	%
Maintenance		17,817		16,066		11	%		35,836		31,606		13	%
Professional services		5,099		5,393		-5	%		10,488		10,589		-1	%
Software-enabled services		52,628		41,809		26	%		101,805		78,975		29	%

Total revenues	$	81,618	$	67,251		21	%	$	159,792	$	130,973		22	%

The following table sets forth the percentage of our revenues represented by each of the following sources of revenues for the periods indicated:


	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009
Revenues:
Software licenses		7	%		6	%		7	%		8	%
Maintenance		22	%		24	%		22	%		24	%
Professional services		6	%		8	%		7	%		8	%
Software-enabled services		65	%		62	%		64	%		60	%

Total revenues		100	%		100	%		100	%		100	%

Revenues

Our revenues consist primarily of software-enabled services and maintenance revenues, and, to a lesser degree, software license and professional services revenues. As a general matter, our software license and professional services revenues tend to fluctuate based on the number of new licensing clients, while fluctuations in our software-enabled services revenues are attributable to the number of new software-enabled services clients as well as the number of outsourced transactions provided to our existing clients and total assets under management in our clients’ portfolios. Maintenance revenues vary based on the rate by which we add or lose maintenance clients over time and, to a lesser extent, on the annual increases in maintenance fees, which are generally tied to the consumer price index.

Revenues for the three months ended June 30, 2010 were $81.6 million compared to $67.3 million for the same period in 2009. The revenue increase of $14.3 million, or 21%, was primarily a result of revenues from products and services that we acquired through our acquisitions of Evare in March 2009, MAXIMIS in May 2009, TNR in November 2009, Tradeware in December 2009, and GIPS in February 2010, which added $8.5 million in revenues in the aggregate, and a $4.4 million increase in revenues for businesses and products that we have owned for at least 12 months, or organic revenues. Additionally, the favorable impact from foreign currency translation accounted for $1.4 million of the total increase, resulting from the weakness of the U.S. dollar relative to currencies such as the Canadian dollar and the Australian dollar. Revenues for the six months ended June 30, 2010 were $159.8 million, increasing 22% from $131.0 million for the same period in 2009. The increase was primarily a result of revenues from products and services that we acquired through our acquisitions, which added $19.3 million in revenues in the aggregate, and a $5.5 million increase in organic revenues. Additionally, the favorable impact from foreign currency translation accounted for $4.0 million of the total increase, resulting from the weakness of the U.S. dollar relative to currencies such as the Canadian dollar and the Australian dollar.

Software Licenses. Software license revenues were $6.1 million and $4.0 million for the three months ended June 30, 2010 and 2009, respectively. The increase in software license revenues of $2.1 million was primarily due to an increase of $2.0 million in organic software license revenues and revenues from acquisitions, which contributed $0.1 million. Software license revenues were $11.7 million and $9.8 million for the six months ended June 30, 2010 and 2009, respectively. The increase in software license revenues of $1.9 million was primarily due to an increase of $1.1 million in organic software license revenues, revenues from acquisitions, which contributed $0.7 million, and an increase of $0.1 million related to foreign currency translation. Software license revenues will vary depending on the timing, size and nature of our license transactions. For example, the average size of our software license transactions and the number of large transactions may fluctuate on a period-to-period basis. For the three months and six months ended June 30, 2010, the average size and number of perpetual license transactions increased from those for the comparable periods in 2009, while revenues from term licenses decreased from the prior year periods. Additionally, software license revenues will vary among the various products that we offer, due to differences such as the timing of new releases and variances in economic conditions affecting opportunities in the vertical markets served by such products.

Maintenance. Maintenance revenues were $17.8 million and $16.1 million for the three months ended June 30, 2010 and 2009, respectively. The increase in maintenance revenues of $1.7 million, or 11%, was primarily due to revenues from acquisitions, which contributed $2.0 million in the aggregate, partially offset by a decrease in organic maintenance revenues of $0.3 million. Maintenance revenues were $35.8 million and $31.6 million for the six months ended June 30, 2010 and 2009, respectively. The increase in maintenance revenues of $4.2 million, or 13%, was primarily due to revenues from acquisitions, which contributed $4.5 million in the aggregate, and a favorable impact from foreign currency translation of $0.4 million. These increases were partially offset by decreases in organic maintenance revenues of $0.7 million. We typically provide maintenance services under one-year renewable contracts that provide for an annual increase in fees, which are generally tied to the percentage change in the consumer price index. Future maintenance revenue growth is dependent on our ability to retain existing clients, add new license clients, and increase average maintenance fees.

Professional Services. Professional services revenues were $5.1 million and $5.4 million for the three months ended June 30, 2010 and 2009, respectively. The decrease of $0.3 million was primarily due to a decrease of $0.8 million in organic professional services revenues, partially offset by revenues from acquisitions, which contributed $0.4 million in the aggregate, and a favorable impact from foreign currency translation of $0.1 million. Professional services revenues were $10.5 million and $10.6 million for the six months ended June 30, 2010 and 2009, respectively. The decrease of $0.1 million was primarily due to a decrease of $1.7 million in organic professional services revenues, partially offset by revenues from acquisitions, which contributed $1.3 million in the aggregate, and a favorable impact from foreign currency translation of $0.3 million. The decrease in organic revenues for both periods was primarily due to a one-time significant project fee paid in the second quarter of 2009. Our overall software license revenue levels and market demand for professional services will continue to have an effect on our professional services revenues.

Software-Enabled Services. Software-enabled services revenues were $52.7 million and $41.8 million for the three months ended June 30, 2010 and 2009, respectively. The increase in software-enabled services revenues of $10.9 million, or 26%, was primarily due to revenues from acquisitions, which contributed $6.1 million, an increase of $3.5 million in organic software-enabled services revenues and a favorable impact from foreign currency translation of $1.3 million. Software-enabled services revenues were $101.8 million and $79.0 million for the six months ended June 30, 2010 and 2009, respectively. The increase in software-enabled services revenues of $22.8 million, or 29%, was primarily due to revenues from acquisitions, which contributed $12.8 million, an increase of $6.8 million in organic software-enabled services revenues and a favorable impact from foreign currency translation of $3.2 million. Future software-enabled services revenue growth is dependent on our ability to retain existing clients, add new clients and increase the level of services provided or average fees.

Cost of Revenues

The total cost of revenues was $40.9 million and $34.5 million for the three months ended June 30, 2010 and 2009, respectively. The gross margin was 50% for the three months ended June 30, 2010 compared to 49% for the comparable period in 2009. Our costs of revenues increased by $6.4 million primarily as a result of acquisitions, which added costs of revenues of $5.0 million, an increase in costs of $0.6 million related to foreign currency translation, and an increase of $0.8 million in costs to support organic revenue growth. The total cost of revenues was $80.1 million and $67.6 million for the six months ended June 30, 2010 and 2009, respectively. The gross margin was 50% for the six months ended June 30, 2010 compared to 48% for the comparable period in 2009. Our costs of revenues increased by $12.5 million primarily as a result of acquisitions, which added costs of revenues of $10.4 million, an increase in costs of $1.9 million related to foreign currency translation, and an increase of $0.2 million in costs to support organic revenue growth.

Cost of Software Licenses. Cost of software license revenues consists primarily of amortization expense of completed technology, royalties, third-party software, and the costs of product media, packaging and documentation. The cost of software license revenues was $1.9 million and $2.1 million for the three months ended June 30, 2010 and 2009, respectively. The decrease in cost of software licenses was primarily due to a reduction of $0.3 million in amortization expense under the percent of cash flows method, as a lower percentage of current license revenues was deemed associated with technology that existed at the date of the Transaction, partially offset by amortization expense of $0.1 million related to acquisitions. The cost of software license revenues was $3.8 million and $4.2 million for the six months ended June 30, 2010 and 2009, respectively. The decrease in cost of software licenses was primarily due to a reduction of $0.5 million in amortization expense under the percent of cash flows method, as a lower percentage of current license revenues was deemed associated with technology that existed at the date of the Transaction, partially offset by amortization expense of $0.1 million related to acquisitions.

Cost of Maintenance. Cost of maintenance revenues consists primarily of technical client support, costs associated with the distribution of products and regulatory updates and amortization of intangible assets. The cost of maintenance revenues was $8.1 million and $6.9 million for the three months ended June 30, 2010 and 2009, respectively. The increase in cost of maintenance revenues of $1.2 million, or 18%, was primarily due to acquisitions, which added $1.1 million in costs, and an increase in costs of $0.1 million related to foreign currency translation. Cost of maintenance revenues as a percentage of these revenues was 45% for the three months ended June 30, 2010 compared to 43% for the three months ended June 30, 2009. The cost of maintenance revenues was $16.1 million and $13.3 million for the six months ended June 30, 2010 and 2009, respectively. The increase in cost of maintenance revenues of $2.8 million, or 21%, was primarily due to acquisitions, which added $2.4 million in costs, an increase in costs of $0.3 million related to foreign currency translation and an increase in costs to support organic maintenance revenues of $0.1 million. Cost of maintenance revenues as a percentage of these revenues was 45% for the six months ended June 30, 2010 compared to 42% for the six months ended June 30, 2009.

Cost of Professional Services. Cost of professional services revenues consists primarily of the cost related to personnel utilized to provide implementation, conversion and training services to our software licensees, as well as system integration, custom programming and actuarial consulting services. The cost of professional services revenues was $3.3 million and $3.5 million for the three months ended June 30, 2010 and 2009, respectively. The decrease in costs of professional services revenues of $0.2 million, or 7%, was primarily related to a reduction of $0.7 million in costs to support organic professional services revenues, primarily as a result of one significant implementation project that occurred during 2009, partially offset by our acquisitions, which added $0.4 million in costs, and an increase in costs of $0.1 million related to foreign currency translation. Cost of professional services revenues as a percentage of these revenues was 64% for the three months ended June 30, 2010 compared to 65% for the three months ended June 30, 2009. The cost of professional services revenues was $6.6 million and $7.5 million for the six months ended June 30, 2010 and 2009, respectively. The decrease in costs of professional services revenues of $0.9 million, or 12%, was primarily related to a reduction of $2.0 million in costs to support organic professional services revenues, primarily as a result of one significant implementation project that occurred during 2009, partially offset by our acquisitions, which added $0.9 million in costs, and an increase in costs of $0.2 million related to foreign currency translation. Cost of professional services revenues as a percentage of these revenues was 63% for the six months ended June 30, 2010 compared to 71% for the six months ended June 30, 2009.

Cost of Software-Enabled Services. Cost of software-enabled services revenues consists primarily of the cost related to personnel utilized in servicing our software-enabled services clients and amortization of customer relationship intangible assets. The cost of software-enabled services revenues was $27.7 million and $22.0 million for the three months ended June 30, 2010 and 2009, respectively. The increase in costs of software-enabled services revenues of $5.7 million, or 26%, was primarily related to our acquisitions, which added $3.4 million in costs, an increase of $1.3 million in costs to support the growth of organic software-enabled services revenues, an increase in stock-based compensation of $0.5 million, and an increase in costs of $0.5 million related to foreign currency translation. Cost of software-enabled services revenues as a percentage of these revenues was 53% for each of the three-month periods ended June 30, 2010 and 2009. The cost of software-enabled services revenues was $53.6 million and $42.6 million for the six months ended June 30, 2010 and 2009, respectively. The increase in costs of software-enabled services revenues of $11.0 million, or 26%, was primarily related to our acquisitions, which added $7.0 million in costs, an increase of $2.1 million in costs to support the growth of organic software-enabled services revenues, an increase in costs of $1.4 million related to foreign currency translation and an increase in stock-based compensation of $0.5 million. Cost of software-enabled services revenues as a percentage of these revenues was 53% for the six months ended June 30, 2010 compared to 54% for the six months ended June 30, 2009.

Operating Expenses

Total operating expenses were $20.9 million and $16.9 million for the three months ended June 30, 2010 and 2009, respectively. The increase in total operating expenses of $4.0 million, or 24%, was primarily due to our acquisitions, which added $2.5 million in costs, an increase in stock-based compensation of $1.7 million and an increase in costs of $0.3 million related to foreign currency translation. These increases were partially offset by a reduction of $0.5 million in costs to support organic revenues. Total operating expenses as a percentage of total revenues were 26% for the three-month period ended June 30, 2010 compared to 25% for the three-month period ended June 30, 2009. Total operating expenses were $40.5 million and $33.1 million for the six months ended June 30, 2010 and 2009, respectively. The increase in total operating expenses of $7.4 million, or 22%, was primarily due to our acquisitions, which added $5.3 million in costs, an increase in stock-based compensation of $1.8 million and an increase in costs of $0.9 million related to foreign currency translation. These increases were partially offset by a decrease of $0.6 million in costs to support organic revenues. Total operating expenses as a percentage of total revenues were 25% for each of the six-month periods ended June 30, 2010 and 2009.

Selling and Marketing. Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our products, including salaries, commissions and travel and entertainment. Such expenses also include amortization of trade name intangible assets, the cost of branch sales offices, trade shows and marketing and promotional materials. Selling and marketing expenses were $6.5 million and $5.0 million for the three months ended June 30, 2010 and 2009, respectively, representing 8% of total revenues in each of those periods. The increase in selling and marketing expenses of $1.5 million, or 29%, was primarily related to our acquisitions, which added $0.9 million in costs, an increase in stock-based compensation of $0.3 million, an increase of $0.2 million in costs to support organic revenue growth, and an increase of $0.1 million related to foreign currency translation. Selling and marketing expenses were $12.6 million and $10.3 million for the six months ended June 30, 2010 and 2009, respectively, representing 8% of total revenues in each of those periods, respectively. The increase in selling and marketing expenses of $2.3 million, or 23%, was primarily related to our acquisitions, which added $1.8 million in costs, an increase in stock-based compensation of $0.3 million, and an increase in costs of $0.2 million related to foreign currency translation.

Research and Development. Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products. Research and development expenses were $7.9 million and $6.8 million for the three months ended June 30, 2010 and 2009, respectively, representing 10% of total revenues in each of those periods. The increase in research and development expenses of $1.1 million, or 16%, was primarily related to our acquisitions, which added $0.8 million in costs, an increase in costs of $0.2 million related to foreign currency translation, and an increase in stock-based compensation of $0.2 million. These increases were partially offset by a decrease of $0.1 million in costs to support organic revenue growth. Research and development expenses were $15.6 million and $12.6 million for the six months ended June 30, 2010 and 2009, respectively, representing 10% of total revenues in each of those periods. The increase in research and development expenses of $3.0 million, or 24%, was primarily related to our acquisitions, which added $2.1 million in costs, an increase in costs of $0.5 million related to foreign currency translation, an increase of $0.2 million in costs to support organic revenue growth, and an increase in stock-based compensation of $0.2 million.

General and Administrative. General and administrative expenses consist primarily of personnel costs related to management, accounting and finance, information management, human resources and administration and associated overhead costs, as well as fees for professional services. General and administrative expenses were $6.5 million and $5.1 million for the three months ended June 30, 2010 and 2009, respectively, representing 8% of total revenues in each of those periods. The increase in general and administrative expenses of $1.4 million, or 28%, was primarily related to an increase in stock-based compensation of $1.2 million and our acquisitions, which added $0.8 million in costs. These increases were partially offset by a reduction of $0.6 million in costs to support organic revenues. General and administrative expenses were $12.2 million and $10.2 million for the six months ended June 30, 2010 and 2009, respectively, representing 8% of total revenues in each of those periods. The increase in general and administrative expenses of $2.0 million, or 20%, was primarily related to our acquisitions, which added $1.4 million in costs, an increase in stock-based compensation of $1.3 million, and an increase in costs of $0.2 million related to foreign currency translation. These increases were partially offset by a decrease in costs of $0.9 million to support organic revenues. The decrease in costs to support organic revenues for both periods is due in part to the termination of the Carlyle management agreement, which required us to make a quarterly payment of $0.3 million up until the completion of an initial public offering. The final quarterly payment was made during the first quarter of 2010.

Interest Expense, Net. Net interest expense for the three months ended June 30, 2010 and 2009 was $8.1 million and $9.3 million, respectively. Net interest expense for the six months ended June 30, 2010 and 2009 was $17.1 million and $18.6 million, respectively. Net interest expense is primarily related to interest expense on debt outstanding under our senior credit facility and 11³/4% senior subordinated notes due 2013. The decrease in interest expense for both periods was primarily due to a decrease in outstanding debt and lower average interest rates. During the three-month period ended June 30, 2010, we used proceeds from Holdings’ IPO to redeem $71.75 million in principal amount of our 11³/4% senior subordinated notes due 2013 (see Liquidity and Capital Resources).

Other Income (Expense), Net. Other income, net for the three months ended June 30, 2010 consisted primarily of foreign currency transaction gains. Other expense, net for the three months and six months ended June 30, 2009 consisted primarily of foreign currency transaction losses.

Loss on Extinguishment of Debt. Loss from extinguishment of debt for the three months and six months ended June 30, 2010 consisted of $4.2 million in note redemption premiums and $1.3 million from the write-offs of deferred financing costs associated with the redemption of $71.75 million our notes, which is discussed further in Liquidity and Capital Resources.

Provision for Income Taxes. We had effective tax rates of 31.5% and 31.0% for the three months ended June 30, 2010 and 2009, respectively. We had effective tax rates of 19.6% and 31.2% for the six months ended June 30, 2010 and 2009, respectively. The expected effective tax rate for the year ended December 31, 2010 is forecasted to be between 25% and 30%. The difference between the June 30, 2010 effective tax rate and the forecasted tax rate for the year ended December 31, 2010 is attributable to a release of uncertain income tax positions, refunds and enacted rate changes in the first quarter of 2010.

Liquidity and Capital Resources

Our principal cash requirements are to finance the costs of our operations pending the billing and collection of client receivables, to fund payments with respect to our indebtedness, to invest in research and development and to acquire complementary businesses or assets. We expect our cash on hand, cash flows from operations and availability under the revolving credit portion of our senior credit facilities to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending for at least the next twelve months.

Our cash and cash equivalents at June 30, 2010 were $88.9 million, an increase of $69.8 million from $19.1 million at December 31, 2009. The increase in cash is due primarily to proceeds from the Holdings’ IPO of $134.6 million and cash provided by operations, which was partially offset by repayments of debt, cash used for an acquisition and capital expenditures.

Net cash provided by operating activities was $23.4 million for the six months ended June 30, 2010. Cash provided by operating activities was primarily due to net income of $13.4 million adjusted for non-cash items of $22.3 million, partially offset by changes in our working capital accounts (excluding the effect of acquisitions) totaling $12.3 million. The changes in our working capital accounts were driven by decreases in accrued expenses and other liabilities and accounts payable and by increases in income taxes receivable and payable and accounts receivable, partially offset by increases in deferred revenues and decreases in prepaid expenses and other assets. The decrease in accrued expenses was primarily due to the payment of annual employee bonuses. The increase in accounts receivable was primarily due to the increase in revenue, partially offset by an improvement in days’ sales outstanding. The increase in deferred revenues was primarily due to the collection of annual maintenance fees.

Investing activities used net cash of $13.7 million for the six months ended June 30, 2010, primarily related to $11.4 million cash paid for our acquisition of GIPS and $2.3 million cash paid for capital expenditures.

Financing activities provided net cash of $60.8 million for the six months ended June 30, 2010, representing $134.6 million in net proceeds received from Holdings’ IPO received in April 2010, $5.4 million received from the exercise of stock options and income tax windfall benefits of $3.6 million related to the exercise of stock options, partially offset by $81.6 million in net repayments of debt and $1.2 million in purchases of common stock for treasury. The repayment of debt during the period is due to our use of proceeds from Holdings’ IPO to redeem $71.75 million in principal amount of our outstanding 11³/4% senior subordinated notes due 2013 at a redemption price of 105.875% of the principal amount and approximately $9.8 million of repayments on our senior credit facility.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is or would be material to investors.

Senior Credit Facilities

Our borrowings under the senior credit facilities bear interest at either a floating base rate or a Eurocurrency rate plus, in each case, an applicable margin. In addition, we pay a commitment fee in respect of unused revolving commitments at a rate that is adjusted based on our leverage ratio. We are obligated to make quarterly principal payments on the term loan totaling $1.9 million per year. Subject to certain exceptions, thresholds and other limitations, we are required to prepay outstanding loans under the senior credit facilities with the net proceeds of certain asset dispositions and certain debt issuances and 50% of our excess cash flow (as defined in the agreements governing our senior credit facilities), which percentage will be reduced based on our reaching certain leverage ratio thresholds.

The obligations under our senior credit facilities are guaranteed by Holdings and all of our existing and future material wholly-owned U.S. subsidiaries, with certain exceptions as set forth in our credit agreement. The obligations of the Canadian borrower are guaranteed by Holdings, us and each of our U.S. and Canadian subsidiaries, with certain exceptions as set forth in the credit agreement. The obligations under the senior credit facilities are secured by a perfected first priority security interest in all of our capital stock and all of the capital stock or other equity interests held by Holdings, us and each of our existing and future U.S. subsidiary guarantors (subject to certain limitations for equity interests of foreign subsidiaries and other exceptions as set forth in our credit agreement) and all of Holdings’ and our tangible and intangible assets and the tangible and intangible assets of each of our existing and future U.S. subsidiary guarantors, with certain exceptions as set forth in the credit agreement. The Canadian borrower’s borrowings under the senior credit facilities and all guarantees thereof are secured by a perfected first priority security interest in all of our capital stock and all of the capital stock or other equity interests held by Holdings, us and each of our existing and future U.S. and Canadian subsidiary guarantors, with certain exceptions as set forth in the credit agreement, and all of Holdings’ and our tangible and intangible assets and the tangible and intangible assets of each of our existing and future U.S. and Canadian subsidiary guarantors, with certain exceptions as set forth in the credit agreement.

The senior credit facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, our (and our restricted subsidiaries’) ability to incur additional indebtedness, pay dividends and distributions on capital stock, create liens on assets, enter into sale and lease-back transactions, repay subordinated indebtedness, make capital expenditures, engage in certain transactions with affiliates, dispose of assets and engage in mergers or acquisitions. In addition, under the senior credit facilities, we are required to satisfy and maintain a maximum total leverage ratio and a minimum interest coverage ratio. We were in compliance with all covenants at June 30, 2010.

11³/4% Senior Subordinated Notes due 2013

The 11³/4% senior subordinated notes due 2013 are unsecured senior subordinated obligations that are subordinated in right of payment to all existing and future senior debt, including the senior credit facilities. The senior subordinated notes will be pari passu in right of payment to all future senior subordinated debt.

The senior subordinated notes are redeemable in whole or in part, at our option, at any time at varying redemption prices that generally include premiums, which are defined in the indenture. In addition, upon a change of control, we are required to make an offer to redeem all of the senior subordinated notes at a redemption price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest. In April 2010, we issued a notice of redemption for $71.75 million in principal amount of our outstanding 11³/4% senior subordinated notes due 2013 at a redemption price of 105.875% of the principal amount, plus accrued and unpaid interest on May 24, 2010, the date of redemption.

The indenture governing the senior subordinated notes contains a number of covenants that restrict, subject to certain exceptions, our ability and the ability of our restricted subsidiaries to incur additional indebtedness, pay dividends, make certain investments, create liens, dispose of certain assets and engage in mergers or acquisitions.

Covenant Compliance

Under the senior credit facilities, we are required to satisfy and maintain specified financial ratios and other financial condition tests. As of June 30, 2010, we were in compliance with the financial and non-financial covenants. Our continued ability to meet these financial ratios and tests can be affected by events beyond our control, and we provide no assurance that we will continue to meet these ratios and tests in the future. A breach of any of these covenants could result in a default under the senior credit facilities. Upon the occurrence of any event of default under the senior credit facilities, the lenders could elect to declare all amounts outstanding under the senior credit facilities to be immediately due and payable and terminate all commitments to extend further credit.

Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in our senior credit facilities, which are material facilities supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (EBITDA), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under our senior credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratios and other financial condition tests contained in our senior credit facilities.

Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greater transparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures.

The breach of covenants in our senior credit facilities that are tied to ratios based on Consolidated EBITDA could result in a default under that agreement, in which case the lenders could elect to declare all amounts borrowed due and payable and to terminate any commitments they have to provide further borrowings. Any such acceleration would also result in a default under our indenture. Any default and subsequent acceleration of payments under our debt agreements would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Consolidated EBITDA.

Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, our senior credit facilities require that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.

Consolidated EBITDA is not a recognized measurement under GAAP, and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income (loss), which is the most directly comparable GAAP financial measure, including:

•

Consolidated EBITDA does not reflect the provision of income tax expense in our various jurisdictions;

•

Consolidated EBITDA does not reflect the significant interest expense we incur as a result of our debt leverage;

•

Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges;

•

Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock option awards; and

•

Consolidated EBITDA excludes expenses that we believe are unusual or non-recurring, but which others may believe are normal expenses for the operation of a business.

The following is a reconciliation of net income to Consolidated EBITDA as defined in our senior credit facilities.



	Three Months Ended						Six Months Ended						Twelve Months Ended
	June 30,						June 30,						June 30,
	2010			2009			2010			2009			2010
Net income	$	4,362		$	3,491		$	13,383		$	7,389		$	25,012
Interest expense (1)		13,538			9,294			22,555			18,644			40,774
Income taxes		2,004			1,571			3,272			3,353			9,723
Depreciation and amortization		10,184			9,025			20,297			17,598			38,727

EBITDA		30,088			23,381			59,507			46,984			114,236
Purchase accounting adjustments (2)		(60	)		(54	)		(37	)		(105	)		(25	)
Unusual or non-recurring charges (3)		(267	)		1,755			84			1,283			791
Acquired EBITDA and cost savings (4)		—			857			192			2,025			4,041
Stock-based compensation		3,882			1,525			5,232			2,794			8,045
Capital-based taxes		228			342			454			676			573
Other (5)		(45	)		295			161			640			722

Consolidated EBITDA	$	33,826		$	28,101		$	65,593		$	54,297		$	128,383


(1)		Interest expense includes loss from extinguishment of debt shown as a separate line item on our Statement of Operations for the three months and six months ended June 30, 2010 and 2009.

(2)		Purchase accounting adjustments include an adjustment to increase rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of the Transaction.

(3)		Unusual or non-recurring charges include foreign currency gains and losses, proceeds from legal and other settlements and other one-time expenses.

(4)		Acquired EBITDA and cost savings reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period and cost savings to be realized from such acquisitions.

(5)		Other includes management fees and related expenses paid to The Carlyle Group and the non-cash portion of straight-line rent expense.

Our covenant restricting capital expenditures for year ending December 31, 2010 limits expenditures to $25.5 million. Actual capital expenditures through June 30, 2010 were $2.2 million. Our covenant requirements for total leverage ratio and minimum interest coverage ratio and the actual ratios for the twelve months ended June 30, 2010 are as follows:


	Covenant			Actual
	Requirements			Ratios

Maximum consolidated total leverage to Consolidated EBITDA ratio		5.50	x		2.22	x
Minimum Consolidated EBITDA to consolidated net interest coverage ratio		2.25	x		3.89	x

Recent Accounting Pronouncements

In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately, and we adopted these new requirements upon issuance of the guidance.

In January 2010, the FASB issued authoritative guidance related to improving disclosures about fair value measurements. This guidance requires the disclosure of separate amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and the reason for such transfers. It also requires information related to purchases, sales, issuances, and settlements of Level 3 financial assets and liabilities to be presented separately in the reconciliation of fair value measurements for the period presented. In addition, the guidance clarifies existing disclosure guidance with respect to the level of disaggregation for classes of financial assets and liabilities as well as valuation techniques and inputs used for both recurring and nonrecurring fair value measurements of Level 2 and Level 3 assets and liabilities. We adopted the new disclosure requirements effective January 1, 2010.

In October 2009, the FASB issued authoritative guidance related to multiple-deliverable revenue arrangements. This updated literature establishes the accounting and reporting guidance for arrangements including multiple revenue-generating activities. The standard provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. The amendments in this standard also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. We adopted the new requirements upon the effective date of the guidance and such adoption did not affect our results of operations, cash flows or financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We do not use derivative financial instruments for trading or speculative purposes. We have invested our available cash in short-term, highly liquid financial instruments, having initial maturities of three months or less. When necessary, we have borrowed to fund acquisitions.

At June 30, 2010, excluding capital leases, we had total debt of $315.3 million, including $182.0 million of variable interest rate debt. We have an interest rate swap agreement with a notional value of $100.0 million that effectively fixes our interest rate at 6.78% and expires in December 2010. During the period when this swap agreement is effective, a 1% change in interest rates would result in a change in interest expense of approximately $0.8 million per year. Upon the expiration of the interest rate swap agreement in December 2010, a 1% change in interest rates would result in a change in interest expense of approximately $1.8 million per year.

At June 30, 2010, $34.7 million of our debt was denominated in Canadian dollars. We expect that our foreign denominated debt will be serviced through our Canadian operations.

During 2009, approximately 36% of our revenues were from clients located outside the United States. A portion of the revenues from clients located outside the United States is denominated in foreign currencies, the majority being the Canadian dollar. While revenues and expenses of our foreign operations are primarily denominated in their respective local currencies, some subsidiaries do enter into certain transactions in currencies that are different from their functional currency. These transactions consist primarily of cross-currency intercompany balances and trade receivables and payables. As a result of these transactions, we have exposure to changes in foreign currency exchange rates that result in foreign currency transaction gains or losses, which we report in other income (expense). These outstanding amounts were reduced during 2009 and we do not believe that our foreign currency transaction gains or losses will be material during the remainder of 2010. The amount of these balances can fluctuate in the future as we bill customers and buy products or services in currencies other than our functional currency, which could increase our exposure to foreign currency exchange rates in the future. We continue to monitor our exposure to foreign currency exchange rates as a result of our foreign currency denominated debt, our acquisitions and changes in our operations. We do not enter into any market risk sensitive instruments for trading purposes.

The foregoing risk management discussion and the effect thereof are forward-looking statements. Actual results in the future may differ materially from these projected results due to actual developments in global financial markets. The analytical methods used by us to assess and minimize risk discussed above should not be considered projections of future events or losses.

Item 4T. Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2010. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2010, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1A. Risk Factors

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that could materially affect our business, financial condition or future results, which we believe are most important for you to consider, are discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal quarter ended December 31, 2009 as filed with the Securities and Exchange Commission on February 26, 2010. There are no material changes to the Risk Factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

Item 6. Exhibits

The exhibits listed in the Exhibit Index immediately preceding such exhibits are filed as part of this Report.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SS&C TECHNOLOGIES, INC.
Date: August 9, 2010	By:	/s/ Patrick J. Pedonti
		Patrick J. Pedonti
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit Index


Exhibit
Number		Description
	31.1	Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	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

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