<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): March 20, 1998
-----------------------------------------------------------------
SS&C Technologies, Inc.
-----------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
--------
(State or Other Jurisdiction of Incorporation)
000-28430 06-1169696
--------- ----------
(Commission File Number) (I.R.S. Employer Identification No.)
80 Lamberton Road
Windsor, Connecticut 06095
-------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(860) 298-4500
--------------
(Registrant's Telephone Number, Including Area Code)
Corporate Place
705 Bloomfield Avenue
Bloomfield, CT 06002
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
This Amendment No. 1 to Current Report on Form 8-K/A is filed for the purpose of
filing the financial statements of Quantra Corporation ("Quantra") required by
Item 7(a) and the pro forma financial information required by Item 7(b).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
-------------------------------------------------
The financial statements of Quantra required by this item are included as
Exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein by
reference.
(b) Pro Forma Financial Information.
-------------------------------------
The pro forma financial information required by this item is included as
Exhibit 99.3 to this Current Report on Form 8-K/A and incorporated herein by
reference.
(c) Exhibits.
--------------
See Exhibit Index attached hereto.
<PAGE>
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 hereunto duly authorized.
Date: June 3, 1998 SS&C TECHNOLOGIES, INC.
-----------------------
(Registrant)
By: /s/ John S. Wieczorek
----------------------
John S. Wieczorek
Vice President, Chief Financial
Officer and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
2 Asset Purchase Agreement, dated as of March 20, 1998, by and among SS&C
Technologies, Inc., AEGON USA Realty Advisors, Inc. and Quantra
Corporation,(previously filed as Exhibit 2 to the Registrant's Current
Report on Form 8-K, dated March 20, 1998 (File No. 000-28430))
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP
99.1 Press Release dated March 23, 1998 (previously filed as Exhibit 99 to
the Registrant's Current Report on Form 8-K, dated March 20, 1998 (File
No. 000-28430))
99.2 Financial Statements of Quantra Corporation
99.3 Pro Forma Financial Information
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
SS&C Technologies, Inc. on Forms S-8 (file numbers 333-07205, 333-07207, 333-
07211, 333-07213 and 333-52295) of our report dated June 2, 1998, on our audit
of the consolidated financial statements of Quantra Corporation as of December
31, 1997 and for the year then ended, which report is included in this Current
Report on Form 8-K/A.
/s/ Coopers & Lybrand L.L.P.
Hartford, Connecticut
June 2, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
SS&C Technologies, Inc. on Forms S-8 (file numbers 333-07205, 333-07207, 333-
07211, 333-07213 and 333-52295) of our report dated January 23, 1997, with
respect to the consolidated financial statements of Quantra Corporation included
in this Current Report on Form 8-K/A.
/s/ Ernst & Young LLP
Chicago, Illinois
June 2, 1998
<PAGE>
Exhibit 99.2
Quantra Corporation
Consolidated Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Reports of Independent Accountants 2-3
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1996 and December 31, 1997 4
Consolidated Statements of Operations for the years ended
December 31, 1996 and 1997 5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996 and 1997 6
Consolidated Statements of Changes in Stockholder's Equity for the years 7
ended December 31, 1996 and 1997
Notes to the Consolidated Financial Statements 8-13
</TABLE>
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholder of Quantra Corporation:
We have audited the accompanying consolidated balance sheet of Quantra
Corporation and Subsidiary (the ''Company'') as of December 31, 1997, and the
related consolidated statements of operations, changes in stockholder's equity,
and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Quantra
Corporation and Subsidiary as of December 31 1997, and the consolidated results
of their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
As discussed in Note 11, substantially all of the assets of the Company were
sold to SS&C Technologies, Inc. on March 20, 1998.
/s/ Coopers & Lybrand L.L.P.
Hartford, Connecticut
June 2, 1998
2
<PAGE>
Report of Independent Accountants
To the Board of Directors of Quantra Corporation
We have audited the accompanying consolidated balance sheet of Quantra
Corporation (formerly Melson Technologies, Inc.)(the "Company") as of December
31, 1996, and the related consolidated statements of operations, shareholder's
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Quantra
Corporation at December 31, 1996 and the consolidated results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully described in
Note 2, the Company has incurred operating losses, has a working capital
deficiency, and an accumulated deficit. To date, financial support has been
substantially provided from AEGON USA Inc. ("AEGON"). As it is uncertain
whether AEGON will continue to provide financial support, there is substantial
doubt as to the Company's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability of assets or the amounts and
classifications of liabilities that may result from the outcome of this
uncertainty.
/s/ Ernst & Young LLP
Chicago, Illinois
January 23, 1997
3
<PAGE>
Quantra Corporation and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
---------------------------------------------
(in thousands, except par value )
1996 1997
----------------- ----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,549 $ 1,006
Accounts receivable, net of allowance for doubtful
accounts of $386 and $775, respectively 2,861 3,418
Unbilled accounts receivable 1,279 163
Tax benefit due from affiliate 867 1,472
Prepaids and other current assets 331 58
----------------- ----------------
Total current assets 6,887 6,117
Furniture and equipment, net 1,929 1,624
Software development costs, net of accumulated
amortization of $3,481 and $7,659, respectively 5,606 1,428
Other intangible assets, net of accumulated amortization
of $3,332 and $4,701, respectively 2,206 837
Deposits and other assets 90 101
----------------- ----------------
Total assets $ 16,718 $ 10,107
================= ================
LIABILITES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 793 $ 1,175
Accrued expenses 4,455 3,379
Deferred revenue 4,158 4,175
Other current liabilities 888 1,588
----------------- ----------------
Total current liabilities 10,294 10,317
Capital lease obligations, less current portion 81 58
Other long-term liabilities 1,104 -
----------------- ----------------
Total liabilities 11,479 10,375
----------------- ----------------
Commitments and Contingencies (Note 7)
Stockholder's equity:
Class A cumulative preferred stock, $1 par value; 10 shares
authorized, issued and outstanding 10 10
Class A common stock, no par value; 80 shares
authorized; 3 issued and outstanding 25 25
Class B common stock, no par value; 1,250 shares
authorized; 255 and 68 issued and outstanding,
respectively 3 1
Additional paid-in capital 45,184 56,134
Accumulated deficit (39,983) (56,438)
----------------- ----------------
Total stockholder's equity 5,239 (268)
----------------- ----------------
Total liabilities and stockholder's equity $ 16,718 $ 10,107
================= ================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
Quantra Corporation and Subsidiary
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------
(in thousands)
1996 1997
----------------- -----------------
<S> <C> <C>
Revenues:
Software licenses $ 5,895 $ 4,975
Maintenance 4,096 3,649
Professional services 3,844 3,426
----------------- -----------------
Total revenues 13,835 12,050
Cost of revenues:
Software licenses 893 1,943
Maintenance 645 1,480
Professional services 4,335 4,279
----------------- -----------------
Total cost of revenues 5,873 7,702
----------------- -----------------
Gross profit 7,962 4,348
----------------- -----------------
Operating expenses:
Sales and marketing 7,696 8,104
Research and development 8,437 10,018
General and administrative 9,767 11,202
----------------- -----------------
Total operating expenses 25,900 29,324
----------------- -----------------
Loss from operations (17,938) (24,976)
Interest expense - (387)
Other income 11 -
----------------- -----------------
Loss before benefit for income
taxes (17,927) (25,363)
Benefit for income taxes 335 8,908
----------------- -----------------
Net loss $(17,592) $(16,455)
================= =================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
Quantra Corporation and Subsidiary
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------
(in thousands)
1996 1997
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(17,592) $(16,455)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 3,053 6,547
Changes in operating assets and
liabilities:
Accounts receivable (1,220) (557)
Unbilled accounts receivable (72) 1,116
Due from affiliate (335) (605)
Prepaids and other current assets 179 273
Accounts payable 66 382
Accrued expenses 1,367 (1,076)
Deferred revenue 857 17
Other (888) (438)
----------------- ----------------
Net cash used in operating activities (14,585) (10,796)
----------------- ----------------
Cash flows from investing activities:
Purchases of furniture and equipment (1,698) (695)
Additions to capitalized software (3,875) -
Contingent payments for acquisition of businesses (315) -
----------------- ----------------
Net cash used in investing activities (5,888) (695)
Cash flows from financing activities:
Proceeds from issuance of common stock 15 (2)
Contributed capital 21,988 10,950
Dividends paid (98) -
----------------- ----------------
Net cash provided by financing activities 21,905 10,948
Net increase (decrease) in cash and cash
equivalents 1,432 (543)
Cash and cash equivalents, at beginning of year 117 1,549
----------------- ----------------
Cash and cash equivalents, at end of year $ 1,549 $ 1,006
================ ================
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 3 $ 13
Income taxes - -
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
QUANTRA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A PREFERRED STOCK PREFERRED STOCK COMMON STOCK CLASS A COMMON STOCK
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 - $ - 10 $ 10 1 $ 1 - $ -
Conversion of preferred and common stock 10 10 (10) (10) (1) (1) 2 13
Class A common stock issued - - - - - - 1 12
Contributed capital - - - - - - - -
Class B common stock issued - - - - - - - -
Cash dividends:
Preferred - $10.00 per share - - - - - - - -
Net loss - - - - - - - -
--------------------------------------------------------------------------------------
Balance at December 31, 1996 10 10 - - - - 3 25
Contributed Capital - - - - - - - -
Purchase of Class B Common Stock - - - - - - - -
Net Loss - - - - - - - -
--------------------------------------------------------------------------------------
Balance At December 31, 1997 10 $ 10 - $ - - $- 3 $ 25
======================================================================================
<CAPTION>
ADDITIONAL TOTAL
CLASS B COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDER'S
SHARES AMOUNT CAPITAL DEFICIT EQUITY
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 - $ - $ 23,208 $ (22,293) $ 926
Conversion of preferred and common stock - - (12) - -
Class A common stock issued - - - - 12
Contributed capital - - 21,988 - 21,988
Class B common stock issued 255 3 - - 3
Cash dividends:
Preferred - $10.00 per share - - - (98) (98)
Net loss - - - (17,592) (17,592)
-------------------------------------------------------------------
Balance at December 31, 1996 255 3 45,184 (39,983) 5,239
Contributed Capital - - 10,950 - 10,950
Purchase Of Class B Common Stock (187) (2) - - (2)
Net Loss - - - (16,455) (16,455)
-------------------------------------------------------------------
Balance At December 31, 1997 68 $ 1 $56,134 $ (56,438) $ (268)
===================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
Quantra Corporation and Subsidiary
Notes to Consolidated Financial Statements
(amounts in thousands, except share data, unless otherwise noted)
1. Organization
Effective April 1, 1996, Melson Technologies, Inc. amended its Articles of
Incorporation to change the name of the corporation to Quantra Corporation (the
"Company").
The Company is a national investment management software and consulting firm
that specializes in providing information systems and services to financial
institutions, insurance companies, real estate managers, investors, and owners.
As of December 31, 1997, the Company is a wholly owned subsidiary of AEGON USA
Realty Advisors, Inc. ("AEGON"). See Note 11.
2. Basis of Presentation
Prior to the sale of substantially all of the Company's assets (see Note 11),
the Company had incurred significant operating losses and had a working capital
deficiency. Management had anticipated that operating losses and negative cash
flows would continue into 1998 as the Company continued to invest in software
development activities. It was not clear as to whether the combination of a new
line of fully integrated and technologically current product offerings, along
with expanded distribution networks and access to new market segments, would
return the Company to profitability. The Company's ability to continue
as a going concern had been fully dependent upon continued funding from AEGON.
Funding provided by AEGON has been reflected in the accompanying financial
statements as contributed capital.
3. Summary of Significant Accounting Policies
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reincorporation
On March 8, 1996, the Company changed its state of incorporation from Texas to
Delaware. In connection with the reincorporation, the Company changed the amount
and type of authorized common and preferred stock, as reflected in the
accompanying consolidated balance sheets and statements of stockholder's equity.
See Notes 9 and 10.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. All intercompany accounts and transactions have
been eliminated.
Revenue Recognition
The Company recognizes revenue in accordance with the Statement of Position
("SOP") No. 91-1 on software revenue recognition issued by the American
Institute of Certified Public Accountants ("AICPA").
The Company licenses the right to use its software to customers under perpetual
license agreements. The Company generally recognizes license revenues on
delivery of the software to the customer provided that collection of the
resulting receivable is considered probable, unless the Company has significant
future obligations remaining under the license agreement or there is significant
uncertainty about customer acceptance. If there are significant future
obligations or uncertainty about customer acceptance, revenue is recognized when
such obligations are satisfied and any uncertainty about acceptance becomes
insignificant.
Deferred maintenance revenue is recognized as maintenance revenue ratably over
the contract term, generally one-year. Revenue from consulting and support
services is recognized as the work is performed. Earned but unbilled accounts
receivable represent amounts earned by the Company for license revenues or
services performed but not yet billed.
Cash and Cash Equivalents
The Company considers all short-term investments with maturities of 90 days or
less when purchased, and money market fund investments, to be cash equivalents.
8
<PAGE>
Quantra Corporation and Subsidiary
Notes to Consolidated Financial Statements
(amounts in thousands, except share data, unless otherwise noted)
Furniture and Equipment
Furniture and equipment are stated at cost. Depreciation expense is calculated
using the straight-line method over five years for furniture, fixtures, and
office equipment and three years for computer equipment. Depreciation expense,
including depreciation of assets recorded under capital leases, amounted to $836
and $1,000 in 1996 and 1997, respectively.
Capitalized Software Costs
The Company capitalizes software costs in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed." The Company commences
amortization of capitalized software upon general release of the software
products to customers. Costs are amortized over the estimated economic lives of
the respective products, five years or less, on a product-by-product basis using
the gross revenue method. Amortization of capitalized software costs was $1,028
and $4,178 in 1996 and 1997, respectively.
Other Intangible Assets
Other intangible assets includes non-competition agreements and goodwill
associated with certain acquisitions (See Note 4). Amortization expense for
non-competition agreements is calculated using the straight-line method over the
term of the agreement, generally five years. Goodwill is amortized using the
straight-line method over five years. Amortization of other intangible assets
was $1,189 and $1,369 in 1996 and 1997, respectively.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents and accounts
receivable.
The Company licenses software and provides services to clients primarily in the
real estate industry throughout the United States. The Company performs
periodic credit evaluations of its customers' financial condition and generally
does not require collateral. Receivables are generally due within 30 days.
Credit losses from customers have historically been within management's
expectations, and management believes that the current allowance for doubtful
accounts is adequate.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS 109, an asset and liability approach
is used to recognize deferred tax assets and liabilities for the future tax
consequences of items that have already been recognized in its financial
statements and tax returns. A valuation allowance is established against net
deferred tax assets if, based on the weight of available evidence, it is more
likely than not that some or all of the net deferred tax assets will not be
realized.
The Company is included in the AEGON US Holding Corporation and Subsidiaries'
("Affiliated Company") consolidated income tax returns. See Note 11. The
Affiliated Company provided the Company with the benefit from utilization of the
Company's net operating losses in the 1997 and 1996 consolidated returns.
Advertising
The Company expenses the production costs of advertising as incurred.
Advertising expenses for the years ended December 31, 1996 and 1997 were $638
and $210, respectively.
Accounting Standards
In June 1997, the FASB issued two pronouncements, Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," ("SFAS No. 130")
and No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"). SFAS No. 130 establishes standards for reporting
and display of comprehensive income, which is defined as the equity of a
business enterprise during a period from nonowner sources. SFAS No. 130 is
effective for years beginning after December 15, 1997 and requires restatement
of financial statements for all prior years presented. The adoption of SFAS No.
130, to be included in the Company's 1998 financial statements, is expected to
only impact the presentation of financial information.
SFAS No. 131 requires public companies to report all financial and descriptive
information about operating segments in their financial statements and requires
selected information about operating segments to be reported on the basis that
is used internally for evaluating segment performance and allocation of
resources. SFAS No. 131 is effective for financial statements for periods
beginning after December 15, 1997 and requires presentation of comparative
information for prior periods presented. The adoption of SFAS No. 131 is
expected to impact the way the Company reports information about its operating
segments.
In October 1997, the AICPA issued Statement of Position ("SOP") No. 97-2,
Software Revenue Recognition, which is effective in fiscal years beginning after
December 15, 1997. Retroactive application of the provisions of SOP 97-2 from
the previously issued SOP on software revenue recognition is prohibited. The
adoption of SOP 97-2 will begin with financial statements for 1998.
9
<PAGE>
Quantra Corporation and Subsidiary
Notes to Consolidated Financial Statements
(amounts in thousands, except share data, unless otherwise noted)
Reclassification
Certain amounts in the 1996 consolidated financial statements have been
reclassified to conform with the 1997 presentation.
4. Acquisitions
On November 2, 1995, the Company acquired certain assets and assumed certain
liabilities relating to the Investment Management division of Magnus Software
Corporation ("Magnus"). The acquisition was accounted for using the purchase
method of accounting. The final cost of the acquisition is contingent based upon
future sales of acquired products and, accordingly, as the purchase price
contingencies are resolved, the purchase price is allocated to identifiable
assets and liabilities based on their estimated fair value at the acquisition
date. A minimum guaranteed payment has been recorded as a current liability as
of December 31, 1997. Results of operations for the acquisition are included in
the consolidated financial statement since the date of acquisition.
The purchase price was allocated to the net assets acquired and net liabilities
assumed based on their fair values as follows:
<TABLE>
<S> <C>
Current assets, including cash of $1,100 $ 1,599
Current liabilities (1,826)
-------
Working capital (227)
Other assets 1,000
Other liabilities (1,000)
Property, plant and equipment 227
-------
Fair value of net assets acquired $ -
-------
</TABLE>
As a result of the sale of the Company's assets (see Note 11), Magnus has
asserted additional rights associated with this acquisition. The Company is
currently evaluating these claims and has provided for its assessment of the
obligation to Magnus.
On May 17, 1993, the Company acquired 100% of the outstanding common stock of
Financial Automation, Ltd. ("FAL"), a developer and distributor of real estate
valuation software. The purchase price consisted of contingent cash payments
based upon future revenues from certain software and related services over a
three-year period from the date of purchase. The Company also executed non-
competition agreements with certain former employees and shareholders of FAL
under a similar contingent payment structure. The combined purchase price and
non-competition payments are not to exceed $2,150. As of December 31, 1996 and
1997, combined purchase price and non-competition payments totaling $1,724 and
$272, respectively, had been paid or accrued. The acquisition is being
accounted for using the purchase method and, accordingly, as the purchase price
contingencies are resolved, the purchase price is allocated to identifiable
assets based on their estimated fair value at the acquisition date. On February
12, 1994, certain parties to the FAL stock purchase agreement and non-
competition agreements agreed to defer the timing of the payment of part of the
consideration under those agreements. On that date, the Company also canceled
certain employment agreements and consulting agreements related to the FAL
acquisition, resulting in a one-time charge of $600, included in general and
administrative expenses, to be paid in future years. The deferred portions of
the consideration payable under the stock purchase agreement and non-competition
agreements, and the one-time cancellation charge, totaled approximately $697 at
December 31, 1996. The remaining deferred balance was paid in 1997.
5. Furniture and Equipment
Furniture and equipment at December 31 consists of the following:
<TABLE>
<CAPTION>
1996 1997
--------------------
<S> <C> <C>
Computer equipment and software $3,320 $4,043
Office equipment 486 485
Furniture and fixtures 647 620
--------------------
4,453 5,148
Accumulated depreciation (2,524) (3,524)
--------------------
$1,929 $1,624
--------------------
</TABLE>
10
<PAGE>
Quantra Corporation and Subsidiary
Notes to Consolidated Financial Statements
(amounts in thousands, except share data, unless otherwise noted)
6. Income Taxes
At December 31, 1997, the Company had net operating loss carryforwards of
$26,500 which expire at various dates through 2011.
The deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1996 1997
--------------------------
<S> <C> <C>
Total deferred tax assets $ 10,200 $ 8,645
Less: valuation allowance (10,200) (8,645)
-------- ---------
Net deferred tax assets $ - $ -
-------- ---------
</TABLE>
The Company also has Separate Return Limitation Year ("SRLY") net operating loss
carryforwards of $12,400 and expire at various dates through 2009.
The temporary difference that give rise to significant portions of deferred tax
assets and deferred tax liabilities relate primarily to net operating loss
carryforwards, accounts receivable reserves and differences between financial
statement and tax bases of fixed assets and intangibles.
The difference between the reported income tax benefit and what might be
expected by applying the federal statutory rate to the operating loss before
income tax benefit is primarily attributable to the ability of the Affiliated
Company to utilize the losses incurred by the Company for each respective year
and non deductible items.
7. Commitments and Contingencies
Lease Commitments
The Company leases office facilities under non-cancelable operating lease
agreements. Rental expense totaled $1,130 and $1,295 in 1996 and 1997,
respectively, and is included in general and administrative expenses.
Future minimum lease commitments under non-cancelable operating leases at
December 31, 1997, are as follows:
<TABLE>
<S> <C>
1998 $1,034
1999 648
2000 and thereafter -
------
$1,682
------
</TABLE>
The Company leases office equipment under capital leases. Future minimum
payments under capital leases consisted of the following at December 31, 1997:
<TABLE>
<S> <C>
1998 $27
1999 29
2000 29
----
Total minimum lease payments 85
Amounts representing interest (11)
----
$74
----
</TABLE>
Legal Contingencies
In the normal course of business, the Company is named as a defendant in various
lawsuits in which claims are asserted against the Company. In the opinion of
management, the liabilities, if any, which may ultimately result from such
lawsuits are not expected to have a material adverse effect on the financial
statements of the Company.
License Agreements
The Company has license agreements with various developers and producers of
computer software, which require the Company to pay royalties, some of which are
based upon a percentage of net revenues of the product. During the years ended
December 31, 1996 and 1997, the Company paid royalties of $720 and $431,
respectively.
On December 30, 1994, the Company entered into an agreement with
FlexiInternational Software, Inc. ("Flexi"), whereby Flexi granted to the
Company a nonexclusive license to develop software and create
11
<PAGE>
Quantra Corporation and Subsidiary
Notes to Consolidated Financial Statements-Continued
(amounts in thousands, except share data, unless otherwise noted)
modified software using Flexi source code, Flexi proprietary development tools,
and Flexi proprietary code generation tools. Flexi also granted to the Company a
worldwide, semi-exclusive license to reproduce, sublicense, market, distribute,
support, and service the software and the modified software to clients in the
real estate industry. The total of the committed base payments, $920, was
charged to research and development expenses in the year ended December 31,
1994. The total amount outstanding under this agreement was $380 and $80 at
December 31, 1996 and 1997, respectively. Additionally, the agreement requires
the Company to pay royalties based upon a percentage of net revenues from the
software and the modified software. No such royalties were incurred for the
years ended December 31, 1996 and 1997.
8. Employee Benefit Plans
The Company established the Melson Technologies Savings and Investment Plan, a
defined-contribution plan, for the benefit of all of the eligible employees
which allows participants to contribute up to 20% of eligible annual
compensation and which requires the Company to match 25% of those contributions,
up to a maximum of 1% of each participant's compensation for the plan year.
Company matching contributions were $92 and $91 for 1996 and 1997, respectively.
The plan is funded in accordance with applicable regulatory guidelines and plan
assets are held by an unrelated third party.
9. Preferred Stock
Effective June 1, 1996, the Company amended its Articles of Incorporation to
authorize issuance of 20,000 shares of preferred stock, 10,000 of which have
been designated as Class A preferred stock. The Class A preferred stock has a
par value of $1.00 and a stated value of $1,000 per share and earns cumulative
dividends at 1% of the stated value per annum payable annually on March 31,
1997, and each year thereafter. Upon occurrence of an event which constitutes a
change in control, as defined in the Articles of Incorporation, the Company is
obligated to redeem the preferred shares at a price equal to $1,520 per share
plus appreciation at the rate of 8% per annum from the date of issuance, plus
the payment of all accrued but unpaid dividends as of the date of redemption.
Upon liquidation or dissolution of the Company, the preferred shares shall
receive preferential distribution of assets equal to the sum which would be
payable upon a change in control redemption before any distributions may be made
to holders of common shares. As a result of the sale described in Note 11, the
preferred stockholders have deferred their rights of redemption for a period of
time of at least two years. The preferred shares are non-voting, except in
matters which involve amending the Articles of Incorporation or authorization or
issuance of share or convertible securities which may have an equal or senior
preference as to the payment of dividends or rights upon liquidation or
dissolution. The designation of additional series of preferred stock, including
stated value, dividend rate, and redemption value, are to be determined by the
Board of Directors. No such designation was made in 1997.
10. Common Stock Plan
During 1996, the Company adopted a Class B Common Stock Plan (the "Plan") for
eligible employees and directors of the Company, reserving 1,250,000 shares for
awards in various forms, including stock options, rights to purchase, and stock
appreciation rights. These awards are granted at exercise prices which are
determined by the Board of Directors at the estimated fair market value of the
Company's Class B common stock at the date of grant.
Under the Plan, employees purchased 254,900 restricted shares in 1996 at $.01
per share. The restricted shares are subject to a call option, which is
released ratably over the four-year period beginning on the date of grant. An
additional 327,100 non-qualified stock options were granted in 1996 with an
exercise price of $.01 per share. These options vest either: (i) 50%
immediately and the remaining ratably over a four-year period beginning on the
first anniversary of the date of grant, or (ii) ratably over a four-year period
beginning on the first anniversary of the date of grant. Upon termination of
employment for any reason other than death, eligible retirement, or total
disability of participant, any options that have not vested shall terminate and
be of no further force or effect. All options, if not exercised or terminated,
shall terminate on the tenth anniversary of the vesting date. Approximately
47,650 options were exercisable at December 31, 1996 and 1997, respectively. At
December 31, 1997, there were an additional 668,000 Class B shares available for
future grants under the Plan. See Note 11.
12
<PAGE>
Quantra Corporation and Subsidiary
Notes to Consolidated Financial Statements-Continued
(amounts in thousands, except share data, unless otherwise noted)
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation." This statement encourages companies
to record compensation costs for stock options granted to employees on the date
of grant based on the fair value of these options. Alternatively, it allows
companies to continue to measure compensation based on the difference between
the option exercise price and the fair market value on the date of grant. The
Company has elected to continue measuring compensation under Accounting
Principle Board Opinion No. 25. The pro forma net loss under SFAS No. 123
requirements would not be significantly different from the reported 1996 and
1997 net loss.
11. Subsequent Event
Pursuant to an Asset Purchase Agreement among the Company, SS&C Technologies,
Inc. ("SS&C") and AEGON dated March 20, 1998, substantially all of the assets of
the Company were sold to SS&C. The assets were sold for 546,019 shares of
SS&C's common stock and $2.3 million in cash, plus the costs of effecting the
transaction. SS&C also agreed to assume certain liabilities of the Company.
Additionally, the Company and SS&C entered into an Escrow Agreement pursuant to
which an additional $1.2 million will be held in escrow to reimburse SS&C in
connection with certain acquisition costs and the breaches, if any, of
representations, warranties or covenants, by the Company. In connection with
this transaction, the Company effectively ceased all normal day-to-day
operations, all outstanding non-qualified options expired without value, and the
Class B Common Stock Plan was terminated.
13
<PAGE>
Exhibit 99.3
SS&C TECHNOLOGIES, INC. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1997 and the three months ended March
31, 1998 reflect the consolidated results of operations, respectively, of SS&C
Technologies, Inc. and Subsidiaries ("SS&C") after giving effect to the March
20, 1998 acquisition of Quantra Corporation ("Quantra") under the assumptions
set forth in the accompanying notes. The pro forma condensed consolidated
statements of operations are not necessarily indicative of SS&C's consolidated
results of operations as they may be in the future. These pro forma condensed
consolidated statements of operations should be read in conjunction with the
accompanying explanatory notes, the Asset Purchase Agreement dated as of March
20, 1998, and the historical financial statements and related notes of SS&C
previously filed and the financial statements of Quantra appearing elsewhere in
this Current Report on Form 8-K/A.
<PAGE>
SS&C TECHNOLOGIES, INC. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(000'S, except per share data)
(unaudited)
<TABLE>
<CAPTION>
SS&C QUANTRA PRO FORMA PRO FORMA
ADJUSTMENTS SS&C
<S> <C> <C> <C> <C>
Revenues:
Software licenses $22,948 $ 4,975 $ - $ 27,923
Maintenance 9,670 3,649 - 13,319
Professional
services 9,574 3,426 - 13,000
------------------- ------------------- ------------------- -------------------
Total revenues 42,192 12,050 - 54,242
------------------- ------------------- ------------------- -------------------
Cost of revenues:
Software licenses 1,191 1,943 1,780(i) 4,914
Maintenance 3,220 1,480 - 4,700
Professional
services 6,165 4,279 - 10,444
------------------- ------------------- ------------------- -------------------
Total cost of
revenues 10,576 7,702 1,780 20,058
------------------- ------------------- ------------------- -------------------
Gross profit 31,616 4,348 (1,780) 34,184
------------------- ------------------- ------------------- -------------------
Operating expenses:
Selling and marketing 12,059 8,104 - 20,163
Research and
development 10,245 10,018 - 20,263
General and
administrative 7,802 11,202 (882)(ii) 18,122
Write-off of purchased
in-process research
and development 861 - - 861
------------------- ------------------- ------------------- -------------------
Total operating
expenses 30,967 29,324 (882) 59,409
------------------- ------------------- ------------------- -------------------
Operating income (loss) 649 (24,976) (898) (25,225)
Interest income,
and other net 2,176 (387) - 1,789
------------------- ------------------- ------------------- -------------------
Income (loss) before
income taxes 2,825 (25,363) (898) (23,436)
Provision (benefit) for
income taxes 1,029 (8,908) (327)(iii) (8,206)
------------------- ------------------- ------------------- -------------------
Net income (loss) $ 1,796 $(16,455) $(571) $(15,230)
------------------- ------------------- ------------------- -------------------
Basic loss per share $(1.08)
-------------------
Basic weighted average
number of common
shares outstanding 14,086
-------------------
Diluted loss per share $(1.08)
-------------------
Diluted weighted
average number of
common and common
equivalent shares
outstanding 14,086
-------------------
</TABLE>
See the accompanying notes to the pro forma condensed consolidated financial
statements.
<PAGE>
SS&C TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(000'S, except per share data)
(unaudited)
<TABLE>
<CAPTION>
SS&C QUANTRA PRO FORMA PRO FORMA
ADJUSTMENTS SS&C
<S> <C> <C> <C> <C>
Revenues:
Software licenses $ 5,794 $ 1,131 $ - $ 6,925
Maintenance 3,207 784 - 3,991
Professional
services 2,589 790 - 3,379
------- ------- ------- -------
Total revenues 11,590 2,705 - 14,295
------- ------- ------- --------
Cost of revenues:
Software licenses 271 57 211(i) 539
Maintenance 772 133 - 905
Professional
services 1,786 - - 1,786
Royalties/other - 257 - 257
------- ------- ------- --------
Total cost of
revenues 2,829 447 211 3,487
------- ------- ------- --------
Gross profit 8,761 2,258 (211) 10,808
------- ------- ------- --------
Operating expenses:
Selling and marketing 3,819 58 - 3,877
Research and
development 2,839 - - 2,839
General and
administrative 1,445 5,417 (220)(ii) 6,642
Write-off of purchased
in-process research
and development 7,259 - (7,259) -
------- ------- ------- --------
Total operating
expenses 15,362 5,475 (7,479) 13,358
------- ------- ------- --------
Operating loss (6,601) (3,217) 7,268 (2,550)
Interest and other, net 592 (379) - 213
------- ------- ------- --------
Loss before income taxes (6,009) (3,596) 7,268 (2,337)
Provision (benefit) for
income taxes (2,041) - 2,468(iii) 427
------- ------- ------- --------
Net loss $(3,968) $(3,596) $ 4,800 $ (2,764)
------- ------- ------- --------
Basic loss per share $ (0.19)
--------
Basic weighted average
number of common
shares outstanding 14,366
--------
Diluted loss per share $ (0.19)
--------
Diluted weighted
average number of
common and common
equivalent shares
outstanding 14,366
--------
</TABLE>
See the accompanying notes to the pro forma condensed consolidated financial
statements.
<PAGE>
SS&C Technologies, Inc. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
(amounts in thousands, except share data, unless otherwise noted)
(Unaudited)
----------------------
The pro forma condensed consolidated financial statements reflect the
consolidated results of operations of SS&C after giving effect to the March 20,
1998 acquisition of Quantra. SS&C acquired substantially all of the assets and
assumed certain liabilities of Quantra. The purchase price for the Quantra
acquisition consisted of 546,019 shares of the Company's Common Stock, $2,300 in
cash and the assumption of certain liabilities of Quantra totaling $3,900, plus
the costs of effecting the transaction. The Company and Quantra also entered
into an Escrow Agreement pursuant to which an additional $1,200 shall be held in
escrow to reimburse the Company in connection with certain acquisition costs and
the breaches, if any, of representations, warranties or covenants by Quantra.
1. The pro forma adjustments to the condensed consolidated statements of
operations reflect the purchase, as if the purchase had occurred as of January
1, 1997.
2. The Quantra acquitisition has been accounted for as a purchase transaction
in accordance with generally accepted accounting principles. Accordingly, the
net assets acquired of Quantra have been recorded in the pro forma condensed
consolidated financial statements at management's estimate of their fair value.
The final values will be determined upon the completion of certain valuations or
studies, which may result in adjustments to the values ascribed herein.
The following pro forma adjustments have been made to reflect the terms of
the acquisition and to record the purchase as prescribed by the purchase method
of accounting:
a) Statements of Operations:
i) The amortization expense of completed technology has been increased
by approximately $1,780 and $211 for the year ended December 31,
1997 and the three months ended March 31, 1998, respectively.
ii) Depreciation expense has been reduced by approximately $882 and $220
for the year ended December 31, 1997 and the three months ended
March 31, 1998, respectively, to account for the adjustment to fair
market value of fixed assets acquired.
iii) The tax provision has been adjusted to reflect the increase in the
amortization of the completed technology and the decrease in
depreciation to account for the adjustment to fair market value of
fixed assets acquired at tax rates of 36% and 34% for the year ended
December 31, 1997 and the three months ended March 31, 1998,
respectively. In addition, for the three months ended March 31,
1998, the tax benefit associated with the write-off of purchased in-
process research and development was eliminated.
iv) The write-off of purchased in-process research and development of
$7,259 is a nonrecurring charge directly attributable to the
acquisition. This charge was recorded by SS&C in the first quarter
of 1998 as part of the accounting for the Quantra acquisition.
v) The 546,019 shares of SS&C common stock issued in the transaction
have been assumed to be outstanding for all periods presented for
purposes of determining the pro forma basic and diluted loss per
common and common equivalent share.
