10-K 1 y47025e10-k.txt FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR [ ] 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 (I.R.S. EMPLOYER IDENTIFICATION NO.) OR ORGANIZATION) 80 LAMBERTON ROAD WINDSOR, CT 06095 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) 860-298-4500 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, $.01 PAR VALUE PER SHARE 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 [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 20, 2001, the aggregate market value of the Registrant's Common Stock held by non-affiliates was approximately $45,752,035 based on the closing sale price of $5.06 of the Registrant's Common Stock on the Nasdaq National Market on such date. As of March 20, 2001, 16,187,259 shares of the Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's Proxy Statement for the 2001 Annual Stockholder's Meeting have been incorporated by reference into Items 10, 11, 12 and 13 of Part III of this Report. 2 SS&C TECHNOLOGIES, INC. YEAR 2000 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS

PAGE ---- PART I Item 1. Business.................................................... 2 Item 2. Properties.................................................. 10 Item 3. Legal Proceedings........................................... 10 Item 4. Submission of Matters to a Vote of Security Holders......... 10 Executive Officers of the Registrant........................ 10 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................................... 11 Item 6. Selected Financial Data..................................... 12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 12 Item 7A. Quantitative and Qualitative Disclosures about Market Risk........................................................ 18 Item 8. Financial Statements and Supplementary Data................. 19 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................... 19 PART III Item 10. Directors and Executive Officers of the Registrant.......... 19 Item 11. Executive Compensation...................................... 19 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 19 Item 13. Certain Relationships and Related Transactions.............. 19 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................................... 20 Signatures.................................................. 45

FORWARD-LOOKING INFORMATION This Annual Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, 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," and similar expressions are intended to identify forward-looking statements. The factors discussed under the caption "Certain Factors That May Affect Future Operating Results" in Item 7, 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 expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. PTS, Macro Pricing, SKYLINE, PRO-JECT, HedgeWare, and AdvisorWare are registered trademarks, SS&C, CAMRA, CAMRA 2000, CAMRA XE, XE for Asset Management, SKYLINE II, AdvisorWare 2000, LMS 2000, LMS 2000 SnapShots, Extend, PTS 2000, CapitalSuite, Total Return 2000, Antares 2000, Antares XE, SS&C Debt & Derivatives 2000, Mabel, REMS, and Finesse 2000 are trademarks, and SS&C Direct, ASPplus, Center of Excellence, and Straight-Thru Processing are service marks of either SS&C Technologies, Inc., or one of its subsidiaries. All other trademarks or trade names referred to in this Annual Report are the property of their respective owners. Page 1 3 PART I ITEM 1. BUSINESS SS&C Technologies, Inc. ("the "Company") was organized as a Connecticut corporation in March 1986 and reincorporated in Delaware in April 1996. The Company is a leading provider of client/server-based financial software solutions, Application Service Provider/Business Process Outsourcing ("ASP/BPO"), and software-related consulting services, designed to improve the efficiency and effectiveness of investment management, actuarial, and analytical functions across a broad range of financial institutions. The Company has developed a family of software products that provides a full range of mission-critical information management and analysis, trading, accounting, reporting, and compliance tools, to help high-level investment and actuarial professionals make informed, real-time decisions and automate many operational functions in today's increasingly complex and fast-moving financial markets. The Company's products improve the effectiveness of decision-making by providing open, fully integrated access to meaningful data, on a timely basis. The Company provides products and services to more than 5,500 organizations worldwide and its customers include asset managers, insurance companies, banks, corporate treasuries, hedge funds, family offices, and government agencies, as well as real estate investment managers and property managers. PRODUCTS AND SERVICES The Company offers a family of application software products designed to address the requirements of professionals in the financial services industry for flexible, scaleable, and secure analysis and reporting tools and support automation of the investment process. The Company's family of software products supports trading, accounting, reporting, and analysis requirements of a broad range of users within financial organizations, including senior executives, portfolio managers, actuaries, analysts, portfolio accountants, and traders. The following chart summarizes the Company's principal products and services and typical users:

-------------------------------------------------------------------------------------------- PRODUCTS AND SERVICES TYPICAL USERS -------------------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT, INVESTMENT ACCOUNTING Portfolio managers and investment operations CAMRA 2000(TM) personnel of asset managers, hedge funds, CAMRA XE(TM) (in beta release) family office managers, investment advisory Total Return 2000(TM) firms, insurance companies, pension funds, Mabel(TM) public funds, corporate treasuries, and banks SS&C Debt & Derivatives 2000(TM) AdvisorWare 2000(TM) -------------------------------------------------------------------------------------------- TRADE ORDER MANAGEMENT Securities traders and portfolio managers of Antares 2000(TM) asset managers, hedge funds, family office Antares XE(TM) (in beta release) managers, pension funds, and other financial institutions -------------------------------------------------------------------------------------------- SS&C DIRECT(SM) Asset management firms, insurance companies, pension funds, and banks -------------------------------------------------------------------------------------------- ASSET/LIABILITY MANAGEMENT Life insurance company CEOs, CFOs, product PTS 2000(TM) managers, and actuarial professionals -------------------------------------------------------------------------------------------- DYNAMIC FINANCIAL ANALYSIS CEOs, CFOs, and risk managers of property and Finesse 2000(TM) casualty insurance companies and other risk- sensitive industries -------------------------------------------------------------------------------------------- LOAN MANAGEMENT Mortgage loan portfolio managers and loan LMS 2000(TM) service businesses -------------------------------------------------------------------------------------------- REAL ESTATE EQUITY MANAGEMENT Real estate investment managers PRO-JECT(R) SKYLINE II(TM) -------------------------------------------------------------------------------------------- CONSULTING SERVICES Asset management firms, insurance companies, pension funds, and banks --------------------------------------------------------------------------------------------

Page 2 4 The Company's software applications are compatible with Intel x86 platforms (IBM PC compatible or emulators) and a wide range of popular topologies, protocols, and network operating systems, including Ethernet, Token Ring, IPX/SPX, TCP/IP, NET BEUI, Novell Netware, Windows, Windows '95, Windows NT, Pathworks, and UNIX. The prices of the Company's software products vary depending upon the product features included and, in the case of CAMRA 2000 and LMS 2000, on the client's assets under management. The Company's Antares 2000, Total Return 2000, Mabel system, and SS&C Debt & Derivatives 2000 software are available for purchase by site or based on the number of concurrent users. PORTFOLIO MANAGEMENT, INVESTMENT ACCOUNTING CAMRA 2000 The Company's Complete Asset Management, Reporting and Accounting ("CAMRA 2000") software supports the integrated management of asset portfolios by investment professionals operating across a wide range of institutional investment entities. CAMRA 2000 is a 32-bit, multi-user, integrated solution tailored to support the entire portfolio management function, and includes features to execute, account for, and report on all typical securities transactions. CAMRA 2000 is designed to account for all the activity of the investment operation and continually update through the processing of day-to-day securities transactions. The product accounts for both transactions and holdings and stores the results of most accounting calculations in its open, relational database, thereby providing user-friendly, flexible data access as well as supporting data warehousing. In addition to storing transactions and holdings data on securities, cash, and foreign exchange forward contracts, CAMRA 2000 also stores data on custodians, brokers and broker budgets, analytical information, general ledger entries, alternative accounting basis, tax information, and other aspects of the investment operation. To facilitate further automation of such extensive stored data, the Company has developed interface capabilities for smooth information exchange with custodian banks, data providers, and analytic data services. Other CAMRA 2000 features include the following: Comprehensive Accounting and Reporting Capabilities. CAMRA 2000 supports four accounting bases--GAAP, statutory, management, and tax--and has the flexibility to provide multiple alternative accrual methods, multiple sales methods, average cost or tax lot accounting, and multiple amortization methods. Support of Trading Transactions. CAMRA 2000 supports a wide variety of investment and accounting transactions, ranging from buy and sell to short and cover, swap, put, call, redemption, return of capital, settlement, account transfer, and portfolio transfer. All transactions are recorded on a real-time basis, permitting immediate enterprise-wide access to the most current portfolio information, by authorized users. Multi-Currency Processing. CAMRA 2000 automatically calculates transaction and translation values in accordance with applicable accounting and industry conventions. It supports calculation of market, accounting, and foreign exchange gains and losses, and provides a full foreign exchange trading capability with forward pricing, while taking into account such critical parameters as global calendars (with weekends and holidays defined by country), multiple-based currencies, and required rounding techniques. Regulatory Compliance. CAMRA 2000 includes standard reports to meet the annual and quarterly regulatory reporting requirements of insurance organizations as promulgated by the National Association of Insurance Commissioners (NAIC). CAMRA 2000 also supports regulatory reporting requirements of various other regulatory agencies such as the Securities and Exchange Commission and the Office of the Comptroller of the Currency. Page 3 5 Integrated Modules. CAMRA 2000 is designed to facilitate seamless integration with its software modules. Modules to CAMRA 2000 are available for: Performance measurement using computations consistent with Association for Investment Management and Research (AIMR) standards; Pre- and post-trade compliance monitoring; Internet connectivity via CapitalSuite(TM), the CAMRA 2000 Internet Portal; Net asset value computations for mutual funds; Optimization of trading in mortgage-backed securities on a to-be-announced (TBA) basis; Client fee billing; Portfolio rebalancing; and Interfacing with various products of Bloomberg Trade Book, Open Bloomberg, Interactive Data Corporation, and other analytic data services. CAMRA XE (in beta release) CAMRA XE is the portfolio management and accounting component of the Company's XE for Asset Management(TM) platform. This platform incorporates Microsoft's DNAfs architecture and development strategy, and uses XML-based messaging and workflow technology for processing trade order and allocation data from outside sources as well as within the SS&C application environment. Total Return 2000 Total Return 2000 is a portfolio management and partnership accounting system oriented toward the hedge fund and family office markets. Total Return 2000 is a multi-currency system which, like CAMRA 2000, is designed for securities accounting and reporting for businesses with high transaction volumes. Total Return 2000's TR1065 module supports partnership accounting, including the generation of tax forms 1065 and K-1. Total Return 2000 also incorporates a comprehensive general ledger. One module supports performance measurement using computations consistent with AIMR standards. Other modules to Total Return 2000 provide for tax reporting and trust reporting. Total Return 2000 also interfaces with brokers, pricing services, data services, and front-end trading systems. Mabel Mabel is a portfolio management system from the Company's Netherlands-based Mabel subsidiary, used by clients throughout Europe and the Caribbean. Mabel's functionality includes accounting and reporting, performance measurement consistent with AIMR standards, net asset value calculations for mutual funds, and support for stock brokering and custodial services. The Mabel system is designed to automatically map data to and from messages in the S.W.I.F.T. (Society for Worldwide Interbank Financial Communications) format. SS&C Debt & Derivatives 2000 SS&C Debt & Derivatives 2000 is a PC/LAN-based debt and derivative portfolio management system. SS&C Debt & Derivatives 2000 is a modularized application designed to process and analyze all activities related to debt and derivative portfolios: swaps, caps, floors, collars, FRAs, FX, futures, and options, as well as the issuance of short-, medium-, and long-term debt. AdvisorWare 2000 AdvisorWare 2000's multiple modules process a unified flow of information, including communications, research, portfolio management, trading, and operations, as well as portfolio accounting, financial Page 4 6 accounting and tax accounting. AdvisorWare 2000 features comprehensive report writing capabilities across all modules; seamless integration with all Microsoft Office products; the ability to retain multiple cost basis; an extensive user security system; and multi-user, client/server, Windows '95 or Windows NT operating systems. TRADE ORDER MANAGEMENT Antares 2000 Antares 2000 is a comprehensive, real-time, event-driven trading and profit and loss reporting system designed to integrate trade modeling with trade order management. Antares 2000 also offers pre-trade compliance, "what-if" analysis, and FIX connectivity. Modeling scenarios, including trader-defined formulas, can be customized and stored in a familiar spreadsheet environment. Antares 2000 is designed to transfer data seamlessly from modeling scenarios to trade orders. In Antares 2000, trades can be managed in the multiple steps of trade ordering, filling the order, and approving the trade, or recorded in a single step. Antares 2000 can also allocate trades across accounts at any step in the process. Trade blotters in Antares 2000 can be customized depending on client, product type, or trader. Antares 2000 delivers full position accounting across all types of securities. Antares 2000 also accepts real-time pricing updates and can display real-time positions and profit and loss statements. Portfolio rebalancing can be set to occur automatically. Antares 2000's open relational database supports customized reporting through internal report writing facilities, or through third-party reporting tools. Antares 2000 also includes functionality to automate the processing of options, futures, and forward currency contracts. For some financial institutions, the Antares 2000 trading system may serve as a comprehensive, stand-alone investment management system. For financial institutions with more accounting and historical reporting requirements, Antares 2000 may serve as the front-end trading system connected to CAMRA 2000, Total Return 2000, or other portfolio management investment accounting systems. Antares XE (in beta release) Antares XE is the trade order management component to the Company's XE for Asset Management platform. This platform incorporates Microsoft's DNAfs architecture and development strategy, and uses XML-based messaging and workflow technology for processing trade order and allocation data from outside sources as well as within the SS&C application environment. APPLICATION SERVICE PROVIDER/BUSINESS PROCESS OUTSOURCING (ASP/BPO) SERVICES SS&C Direct For those clients seeking an Application Service Provider/Business Process Outsourcing ("ASP/BPO") solution for portfolio accounting, reporting and analysis functions, the Company also provides comprehensive ASP/BPO services through its SS&C Direct operating unit. SS&C Direct's "ASPplus(SM)" service includes: hosting of the Company's application software, as well as automated workflow integration, automated quality control mechanisms, and extensive interface and connectivity services to custodian banks, data service providers, depositories, and other external entities. The "Outsourced Investment Accounting Services" option includes comprehensive investment accounting and investment operations services for sophisticated, global organizations. Clients also can access CapitalSuite, the Company's "Web Portal" to obtain front-end trade order management integrated with back-office accounting and operations, Internet-based XML workflow, risk analysis, external data and news feeds, and data access and reporting via a Web browser. As of December 31, 2000, SS&C Direct supports 46 clients with approximately $60 billion in assets for both its ASP and Outsourced Investment Accounting Services. Page 5 7 ASSET/LIABILITY MANAGEMENT PTS 2000 PTS 2000 provides an economic model of insurance assets and liabilities, generating option-adjusted cash flows to reflect the complex sets of options and covenants frequently encountered in insurance contracts or comparable agreements. PTS 2000 includes the following features: Large-Scale Corporate Simulation Models. The Company and certain significant clients have implemented a number of complex models of whole-company financial performance. PTS 2000 maintains an internal architecture patterned after the structure of insurance companies making full-scale corporate models practical. Such corporate models are used to facilitate capital structure decisions, revealing and measuring overall financial performance, and guiding overall risk management practice. Option Pricing. The PTS 2000 option-pricing model provides option-adjusted valuation of assets and liabilities under a consistent conceptual framework. The PTS 2000 option pricing model explicitly considers interest-sensitive embedded options, providing valid interest rate risk analysis, using price behavior curves that graphically depict asset/liability performance over shifts in the interest rate term structure. Macro Pricing. The Company's proprietary Macro-Pricing algorithm recognizes the complex relationships within contemporary financial intermediaries and provides a matrix of possible product and production quota options based upon the profit expectations of the client. DYNAMIC FINANCIAL ANALYSIS Finesse 2000 Finesse 2000 is a dynamic financial analysis tool designed and developed in cooperation with Ernst & Young LLP, to perform the following functions: Model operating results; Gauge the effects of reinsurance and validate pricing; Value business transactions such as mergers and acquisitions; Measure the impact of new products; Predict cash flows; Analyze the impact of investment decisions; and Improve strategic planning. Finesse 2000 generates iterative, computer-simulated scenarios in response to events that may have an impact on a client's business. The results of this iterative process are stored in Finesse 2000's "virtual general ledger," which mimics the financial accounting that would occur if these scenarios were to occur. All simulated results are recorded and can be easily viewed on Finesse 2000's "graphical palette," an on-line facility that visually depicts the likely occurrence of one or more specific events. LOAN MANAGEMENT LMS 2000 LMS 2000 enables mortgage professionals to process, analyze, and report on a comprehensive basis, information regarding their mortgage loan portfolios. LMS 2000 is a 32-bit, multi-user, integrated solution operating on a client/server platform, which eliminates the need for separate, independent systems within the mortgage loan area. LMS 2000, which can be integrated with data stored in the Company's CAMRA 2000 and PTS 2000 products, provides the following features: Application and Commitment Processing. LMS 2000 supports the processing of commercial and residential mortgage loans, providing on-line access to critical evaluative information, including credit Page 6 8 history, appraisals, ratio, broker information, duration, convexity, average life and discounted cash flow valuation, permitting loan recommendations to be generated quickly, consistently, and easily. Accounting and Servicing Support. LMS 2000 supports accurate and consistent servicing of loans, including general ledger entries at the sub-portfolio level, with a direct interface to the corporate general ledger. LMS 2000 also maintains appraisals and operating statements at the proper level to support loan and portfolio management. Comprehensive Reports. LMS 2000 generates and supports a wide range of accounting, servicing, and management reports. All reports can be viewed on-line, downloaded or printed. REO. LMS 2000 provides a smooth transition from a loan to an equity asset, establishes and monitors budgets, maintains depreciation records and processes REO-specific transactions. Executive Summary. LMS 2000 SnapShots captures a complete overview of a selected portfolio, making essential information immediately available in an executive summary format. LMS 2000 SnapShots also exports into Microsoft Excel or Lotus. Interested Party Directory. LMS 2000's Interested Party Directory serves as a common source for all business entities, providing comprehensive borrower financial exposure analysis, relationship tracking and business functionality exposure. Extend. LMS 2000's unique Extend utility allows users to customize their database by creating screens and database fields to enter, review, and report information. Imaging and Mapping. LMS 2000 enables users to attach image files to multiple areas of the system for document and collateral imaging and tracking, and plots properties onto on-line geographic maps, facilitating analyses at both a general and a property-specific detailed level. REAL ESTATE EQUITY MANAGEMENT SKYLINE SKYLINE for Windows/SKYLINE II is property management software that manages all aspects of office/industrial, residential, and retail properties, even those which are decentralized geographically. SKYLINE also features detailed, informative reports. PRO-JECT PRO-JECT for Windows is property valuation software that calculates the value of any combination of office, industrial, retail, apartment and mixed-use property types. PRO-JECT can perform sophisticated sensitivity analysis on property assumptions, and produce detailed reports such as present value and consolidated cash flow reports. CONSULTING SERVICES Building upon the capability and flexibility of its software products, the Company offers a range of professional services to assist clients in implementing the Company's software products and meeting their portfolio management needs. To facilitate successful product implementation, the Company's consultants assist clients with initial installation of a system, conversion of their historical data, and provide clients with ongoing training and support. The Company's team of consultants works closely with the client to ensure smooth transition and operation of the Company's systems. The Company believes providing dedicated professionals to facilitate the transition process strengthens its relationship with the client, provides the Company with valuable information regarding client requirements and offers the opportunity for sales of additional Company products and services to the client. The Company's consultants have a broad range of experience in the financial services industry and include certified public accountants, chartered financial analysts, mathematicians, and professionals from the asset management, real estate, Page 7 9 investment, insurance, and banking industries. The Company believes its commitment to professional services facilitates the adoption of the Company's software products across its target markets. SUPPORT The Company believes its high level of service and support is critical to its success, and an important competitive advantage. Further, the Company believes a close and active service and support relationship is important to client satisfaction, and provides the Company with important information regarding evolving client requirements. The Company provides clients with dedicated client support, organized by industry and by function, to resolve questions and concerns. In addition, the Company provides direct telephone support during extended business hours. Additional hours are available during peak periods, and the Company uses the Internet, electronic bulletin boards and other forms of electronic data distribution that provide clients with the latest information regarding its products. The Company uses Applix technology allowing clients to log issues and questions directly over the Internet, and Webex to provide clients with on-line diagnostics. The Company also provides periodic maintenance releases of licensed software to its clients, including regulatory updates, generally during the fourth quarter, to enable its clients to meet industry reporting obligations and other processing requirements as they evolve. The Company's service and support activities are supplemented by comprehensive training, including a comprehensive Center of Excellence(SM) client certification program, which provides certification classes in the Company's products. CLIENTS The Company's clients include a wide range of financial institutions and other organizations that require a full range of information management and analysis, accounting, actuarial, reporting, and compliance software on a timely and flexible basis, and include asset managers, insurance companies, banks, corporate treasuries, hedge funds, family offices, real estate asset managers, and government agencies. The Company provides products and services to more than 5,500 organizations worldwide. SALES AND MARKETING The Company believes a direct sales organization is essential to the successful implementation of its business strategy, given the complexity and importance of the operations and information the Company's products are designed to manage, and the extensive regulatory and reporting requirements of its clients. The Company's dedicated direct sales and support staff, which is supplemented by extensive ongoing product and sales training, is organized by business unit and situated in the Company's various sales offices. The Company also uses telemarketing to support sales of its real estate products. The Company's marketing personnel are responsible for evaluating and developing market opportunities and providing sales support. The Company's marketing activities include generation of client leads, targeted direct mail campaigns, Internet marketing, seminars, advertising, trade shows, conferences and public relations efforts. The marketing department also supports the sales force with appropriate documentation or electronic materials for use during the sales process. PRODUCT DEVELOPMENT; RESEARCH AND DEVELOPMENT; BACKLOG The Company believes it must introduce new products and features into the market on a regular basis to maintain its competitive advantage. To meet these goals, the Company uses multidisciplinary teams of highly trained finance, accounting, mathematical, actuarial, software, and investment personnel, and has invested heavily in developing a comprehensive product analysis process to meet rigorous requirements for product functionality and quality across its target markets. The Company's research and development engineers work closely with the Company's marketing and support personnel to assure product evolution reflects developments in the marketplace and trends in client requirements. Historically, the Company has issued a major functional release of its core products during the third quarter of each fiscal year, including functional enhancements, as well as an annual fourth Page 8 10 quarter release to reflect evolving regulatory changes in time to meet clients' year-end reporting requirements. Although the Company historically has met its scheduled dates for product releases and enhancements, software development is characterized by unanticipated delays, and there can be no assurance that the Company will be able to maintain future scheduled release dates as planned. Further, there can be no assurance that the Company's new product releases and product enhancements will adequately address the needs of the marketplace or will not contain "bugs" which could cause delays in product introduction or shipments or, if discovered in the future, require modification of the Company's products. As of December 31, 2000, the Company's research and development staff consisted of 105 employees. The Company's total expenses for research and development, excluding purchased in-process research and development, for the years ended December 31, 1998, 1999 and 2000 were $19.2 million, $18.7 million, and $14.2 million, respectively. Backlog is not a significant factor in the Company's business. COMPETITION The market for financial services software is competitive, rapidly evolving, and highly sensitive to new product introductions and marketing efforts by industry participants. The market is also highly fragmented and served by numerous firms, many of which serve only a particular local market or specific customer type, and much of the Company's competition stems from information systems or timesharing services developed and serviced internally by the MIS departments of financial services firms. The Company currently faces direct competition in various segments of the financial services industry from: Advent Software, Inc., Accenture, Capital Management Sciences, Conning and Co., Decalog, DST International, Eagle Development, EDS, Ernst & Young, Financial Models Company, IMS, Integrated Decision Systems, Investment Technology Group, Merrin, Princeton Financial Systems, Security APL, Sungard Data Systems, State Street Bank, Thomson Financial Services, Tillinghast, and UNISYS. The Company believes none of its competitors currently competes against it in all of its target industry segments, although there can be no assurance that one or more may not compete against the Company in the future in additional industry segments. Many of the Company's current and potential future competitors have significantly greater financial, technical, and marketing resources, generate higher revenues, and have greater name recognition than does the Company. There can be no assurance that the Company's current or potential competitors will not develop products that are comparable or superior to those developed by the Company or adapt more quickly than the Company to new technologies, evolving industry trends, or changing client requirements. It is also possible that alliances among competitors may emerge and rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margins, and loss of market share, any of which would materially adversely affect the Company's business, financial condition, and results of operations. The Company believes the principal competitive factors in its industry include product performance and functionality, ease of use, scalability, ability to integrate external data sources and processing systems, product and company reputation, client service and support, and price. Although the Company believes it currently competes effectively with respect to such factors, there can be no assurance that the Company will be able to maintain its competitive position against current and potential competitors. PROPRIETARY RIGHTS The Company primarily relies on a combination of copyright, trademark, and trade secret laws and license agreements to establish and protect proprietary rights of its products. The source code for the Company's products is protected as both a trade secret and an unpublished copyrighted work. In addition, the Company generally enters into confidentiality and/or license agreements with its employees, distributors, clients, and potential clients and limits access to, and distribution of, its software, documentation, and other proprietary information. Despite these precautions, it may be possible for a third party to copy or Page 9 11 otherwise obtain and use the Company's products or technology without authorization or to develop similar technology independently. In addition, effective copyright and trade protection may be unavailable or limited in certain foreign countries. In January 1996, the Company licensed the use of certain of its source code to General American Life Insurance Company and Conning Asset Management Company, affiliates of certain stockholders of the Company. Because the software development industry is characterized by rapid technological change, the Company believes factors such as technological and creative skills of its personnel, new product developments, frequent product enhancements, name recognition, and reliable service and support are more important to establishing and maintaining a leadership position than legal protections of its technology. EMPLOYEES As of December 31, 2000, the Company had 416 full-time employees, consisting of 105 employees in research and development, 125 employees in consulting and services, 66 employees in sales and marketing, 69 employees in client support, 51 employees in finance and administration. Of the total, 63 employees are in the Company's international operations. None of the Company's employees is covered by any collective bargaining agreements. The Company believes its relationship with its employees is good. The future success of the Company will depend upon its ability to attract and retain qualified personnel. Competition for such personnel is often intense, and there can be no assurance that the Company will be able to attract and retain adequate numbers of qualified personnel in the future. ITEM 2. PROPERTIES The Company leases its corporate offices, consisting of 73,000 square feet of office space, in Windsor, Connecticut. The initial lease term expires in 2008, and the Company has the right to extend the lease for one additional term of five years. In support of direct sales and support operations, the Company utilizes facilities and offices in eight locations in the United States and Canada and also has offices in London, England; Amsterdam, Netherlands; Kuala Lumpur, Malaysia; Singapore; and Tokyo, Japan. ITEM 3. LEGAL PROCEEDINGS From time to time, the Company is subject to certain legal proceedings and claims that arise in the normal course of its business. In the opinion of management, the Company is not party to any litigation that it believes could have a material effect on the Company or its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company did not submit any matters to a vote of security holders during the fourth quarter of the fiscal year covered by this Report. EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Company are as follows:

NAME AGE POSITION ---- --- -------- William C. Stone 45 President, Chief Executive Officer, and Chairman of the Board of Directors Anthony R. Guarascio 46 Senior Vice President, Chief Financial Officer Normand A. Boulanger 39 Senior Vice President

William C. Stone founded the Company in 1986 and has served as Chairman of the Board of Directors and Chief Executive Officer since the Company's inception. He has also served as the Company's President from inception through April 1997 and since March 1999. Prior to founding the Company, he directed the financial services consulting practice of KPMG LLP in Hartford, Connecticut and was Vice President of Administration and Special Investment Services at Advest, Inc. Page 10 12 Anthony R. Guarascio is Senior Vice President, Chief Financial Officer of the Company. Mr. Guarascio joined the Company in October 1998, after serving as Vice President, Finance and Administration and Chief Financial Officer for Executone Information Systems, Inc., a company specializing in integrated voice and data communications, from January 1994 to September 1998. Prior thereto he was Vice President and Corporate Controller since January 1990. Normand A. Boulanger is Senior Vice President at SS&C. He joined the Company in March of 1994. Previously, he was Vice President, SS&C Direct from 1998 to 2000, and Vice President of Professional Services for the Americas, from 1996 to 1998. He was Director of Consulting from 1994 to 1996. Prior to joining SS&C, he was Director of Investment Operations for Travelers, now a member of Citigroup. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock has been trading on the Nasdaq National Market under the symbol "SSNC" since the Company's initial public offering on May 31, 1996. The following table sets forth, for the fiscal periods indicated, the high and low sales prices per share of Common Stock as reported on the Nasdaq National Market:

FISCAL 2000 FISCAL 1999 PRICE RANGE PRICE RANGE -------------- ---------------- QUARTER HIGH LOW HIGH LOW ------- ----- ----- ------ ------ First $7.50 $4.63 $20.00 $11.38 Second 6.06 4.00 15.63 6.50 Third 6.75 4.13 8.50 5.25 Fourth 5.63 3.94 7.69 4.13

There were 58 stockholders of record of the Company's Common Stock as of March 20, 2001. The number of stockholders of record may not be representative of the number of beneficial owners because many shares are held by depositories, brokers, or other nominees. The Company has never declared or paid any cash dividends on its capital stock. The Company currently intends to retain earnings, if any, to support its growth strategy and does not anticipate paying cash dividends in the foreseeable future. Payment of future dividends, if any, will be at the discretion of the Company's Board of Directors after taking into account various factors, including the Company's financial condition, operating results, current and anticipated cash needs, and plans for expansion. The following information relates to the use of proceeds from the Company's initial public offering of Common Stock (the "Offering"). The effective date of the Company's Registration Statement on Form S-1 (File No. 333-3094) (the "Registration Statement") relating to the Offering, for which the following use of proceeds information is being disclosed, was May 30, 1996. From the effective date of the Registration Statement through December 31, 2000, the Company has used the net offering proceeds to the Company as follows (in thousands): Corporate move and equipment purchases $15,018 Acquisition of other business 5,333 Repayment of indebtedness 3,538 Purchase of Common Stock for Treasury 5,700 Marketable securities 23,211 ------- Total $52,800 All of the above-listed payments were direct or indirect payments to persons other than: directors, officers, general partners of the Company or their associates; persons owning ten percent or more of any class of equity securities of the Company; or affiliates of the Company. Page 11 13 ITEM 6. SELECTED FINANCIAL DATA

YEAR ENDED DECEMBER 31, ------------------------------------------------ 2000 1999(1) 1998(2) 1997(3) 1996 ------- -------- ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA Revenues $60,014 $ 65,736 $73,593 $45,527 $34,625 Income (loss) before taxes 3,333 (19,191) 2,278 1,563 453 Net income (loss) 2,172 (12,648) 1,053 534 39 Net income (loss) per share Basic earnings (loss) per share $ 0.14 $ (0.81) $ 0.07 $ 0.04 $ 0.00 Shares used in basic per share calculation 15,918 15,678 14,956 14,040 11,071 Diluted earnings (loss) per share $ 0.14 $ (0.81) $ 0.07 $ 0.04 $ 0.00 Shares used in diluted per share calculation 15,962 15,678 15,906 14,437 13,117 BALANCE SHEET DATA: Cash and cash equivalents $20,690 $ 14,304 $13,047 $ 5,026 $36,397 Working capital 54,330 53,617 59,134 54,885 52,444 Total assets 90,858 89,717 105,314 85,997 78,301 Long-term obligations 5 11 151 300 387 Stockholders' equity 72,654 72,553 78,922 65,646 63,347

--------------- (1) On March 11, 1999, the Company acquired all of the outstanding stock of HedgeWare, Inc. ("HedgeWare") for 685,683 shares of the Company's common stock in a business combination accounted for as a pooling-of-interests. Accordingly, the selected financial data for all periods prior to the combination have been restated to reflect the combined operations. See Notes 2 and 13 of Notes to the Company's Consolidated Financial Statements. (2) On March 20, 1998, the Company purchased substantially all of the assets of Quantra Corporation for an aggregate purchase price of 546,019 shares of the Company's Common Stock, $2.3 million in cash and the assumption of certain liabilities of approximately $4.1 million. On April 9, 1998, the Company purchased all the stock of Savid International Inc. and The Savid Group, Inc. for a purchase price of $861,000. See Notes 2 and 13 of Notes to the Company's Consolidated Financial Statements. (3) On November 14, 1997, the Company purchased all the stock of Mabel Systems BV for $2.5 million. On December 31, 1997, the Company purchased all the outstanding stock of Shepro Braun Systems, Inc. for 1.0 million shares of the Company's Common Stock in a business combination accounted for as a pooling-of-interests. Accordingly, the selected financial data for all periods prior to the combination have been restated to reflect the combined operations. See Notes 2 and 13 of Notes to the Company's Consolidated Financial Statements. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS OVERVIEW Years Ended December 31, 1998, 1999, and 2000 Revenues The Company's revenues are derived from software licenses, related maintenance and professional services, and outsourcing services provided by SS&C Direct. Net revenues were $73.6 million, $65.7 million and $60.0 million in 1998, 1999 and 2000, respectively, representing decreases of 10.7% from 1998 to 1999 and 8.7% from 1999 to 2000. The decrease in revenues from 1998 to 1999 of $7.9 million was due to a decrease in license revenue offset by increases in maintenance, professional services and outsourcing Page 12 14 revenues. The decrease in revenues from 1999 to 2000 of $5.7 million was due to a decrease in license revenues and professional services offset by increases in maintenance and outsourcing revenues. Software Licenses. Software license revenues decreased 46% from $34.9 million in 1998 to $18.7 million in 1999, and decreased 11% to $16.6 million in 2000. The decrease from 1998 to 1999 of $16.2 million was due mainly to a $17.6 million decrease in sales of CAMRA 2000, Total Return 2000, and Antares 2000 products, offset by an increase in the sales of our AdvisorWare product. The decrease from 1999 to 2000 of $2.1 million was mainly due to a decrease in the sales of LMS 2000, CAMRA 2000, and AdvisorWare offset by an increase in sales of Antares 2000 and SKYLINE. Product revenue results will vary depending on the timing, size, and nature of the Company's license transactions. Maintenance. Maintenance revenue increased 30% from $19.8 million in 1998 to $25.7 million in 1999, and increased 2% to $26.2 million in 2000. The increase in maintenance revenues from 1998 to 1999 of $5.9 million was primarily due to an increase in the Company's installed base of clients. The increase in maintenance revenues from 1999 to 2000 of $0.5 million was primarily due to an increase in the installed base of CAMRA clients offset by decrease in maintenance revenue from discontinued software products. Professional Services. Professional services revenue increased 12% from $16.6 million in 1998 to $18.6 million in 1999, and decreased 38% from 1999 to $11.5 million in 2000. The increase in the professional services revenue in 1999 was primarily due to the increased license revenue experienced in 1998 which resulted in an increase in demand for the Company's implementation services. The decrease in 2000 was primarily due to decreased license revenue in 1999 and the subsequent decrease in demand for the Company's implementation, conversion, and training services. The professional services revenues will continue to be affected by the overall license revenue levels. Outsourcing. Outsourcing revenues increased 16% from $2.3 million in 1998 to $2.7 million in 1999, and increased 108% to $5.6 million in 2000. The increases are primarily due to increased demand by customers for outsourcing services as an alternative to license purchases. Cost of Revenues The total cost of revenues increased 12% from $24.7 million in 1998 to $27.8 million in 1999, and decreased 17% to $23.0 million in 2000. The gross margin decreased from 66% in 1998 to 58% in 1999, and increased to 62% in 2000. The decrease in margins from 1998 to 1999 was primarily due to the decrease in the license revenue sales. The increase in margins from 1999 to 2000 was primarily due to the lower cost of software licenses. Cost of Software Licenses. Cost of software license revenues consists primarily of amortization expense of completed technology, royalties, the costs of product media, packaging, documentation and labor involved in the distribution of the Company's software. The cost of software license revenues increased from $3.8 million in 1998 to $4.2 million in 1999, and decreased to $1.0 million in 2000. The cost of software license revenues as a percentage of these revenues was 11%, 22%, and 6% in 1998, 1999, and 2000, respectively. The increase in costs from 1998 to 1999 was primarily due to the amortization expense of completed technology related to the Quantra, Savid, and Mabel acquisitions. The decrease in 2000 was primarily due to the reduction in amortization of completed technology. The amortization for completed technology, which was related to the Quantra acquisition, ended in the fourth quarter of 1999. Cost of Maintenance Revenue. Cost of maintenance revenues primarily consists of technical customer support and the engineering costs associated with product and regulatory updates. These costs decreased from $6.1 million in 1998 to $5.9 million in 1999, and increased to $6.5 million in 2000, representing 31%, 23%, and 25% of maintenance, respectively. The cost of maintenance revenue decreased 3% or $0.2 million in 1999. These costs increased 10% or $0.6 million in 2000. The dollar increase from 1999 to 2000 was primarily due to the investment in information systems and facilities to support a larger customer base. 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 the Company's software licensees, as well as system integration, custom programming, and actuarial consulting services. Page 13 15 These costs increased from $12.1 million in 1998 to $14.1 million in 1999, and decreased to $9.0 million in 2000, representing 73%, 76%, and 78% of professional services revenues in those years, respectively. The increase in 1999 was primarily due to the expansion of the Company's professional services resources, including consulting, training, and account management staff to support increased customer demand. In 2000, the Company significantly reduced its professional consulting organization due to the decrease in demand for the Company's implementation services which was a result of the lower license revenues as compared to the preceding years. Cost of Outsourcing Revenues. Cost of outsourcing revenues consists primarily of the cost related to personnel utilized in servicing the Company's outsourcing clients. The cost of outsourcing revenues increased from $2.6 million in 1998 to $3.6 million in 1999 and $6.5 million in 2000, representing 112%, 132% and 116% of outsourcing revenues in those years, respectively. The dollar increase in 1999 and 2000 was due to the expansion of the Company's outsourcing resources, including personnel and infrastructure costs. The Company expects that the outsourcing costs as a percentage of the outsourcing revenue will continue to be high as the Company invests substantial resources in this area. Operating Expenses Selling and Marketing. Selling and marketing expenses consist primarily of the cost of personnel associated with the selling and marketing of the Company's products, including salaries, commissions, and travel and entertainment. Such expenses also include the cost of branch sales offices, advertising, trade shows, and marketing and promotional materials. Selling and marketing expenses increased 20% from $15.2 million in 1998 to $18.2 million in 1999, and decreased 32% to $12.3 million in 2000, representing 21%, 28%, and 21%, respectively, of total revenues in those years. The increase in 1999 of selling and marketing expenses was largely attributable to costs associated with the hiring of additional sales and marketing personnel, including the expansion of international sales and marketing operations, and higher marketing, advertising, and promotional costs. In 2000, the Company took actions to reduce its selling and marketing expenses. The reductions were primarily in personnel costs, advertising, and promotional expenses. Research and Development. Research and development expenses consist primarily of personnel costs attributable to the development of new software products and the enhancement of existing products. Research and development expenses decreased 3% from $19.2 million in 1998 to $18.7 million in 1999, and decreased 24% to $14.2 million in 2000, representing 26%, 28%, and 24%, respectively, of total revenues in those years. Research and development expenses remained relatively comparable in absolute dollars from 1998 to 1999 but increased as a percentage of revenue due to the 1999 reduction in license revenues. The dollar decrease from 1999 to 2000 was mainly due to lower personnel costs as a result of headcount reductions. The decrease was the result of the Company's consolidation of its research and development functions and elimination of redundant costs. General and Administrative. General and administrative expenses consist primarily of personnel costs related to management, accounting, human resources, and administration and associated overhead costs, as well as fees for professional services. General and administrative expenses increased 60% from $8.6 million in 1998 to $13.8 million in 1999, and decreased 9% to $12.6 million in 2000, representing 12%, 21%, and 21%, respectively, of total revenues in those years. The expense increase in 1999 was primarily due to an increase in bad debt expense and additions to administrative personnel. In 2000, general and administrative expenses included acquisition performance payments of $2.0 million. These payments were based on certain revenue attainment goals related to the 1997 acquisition of Mabel and the 1998 acquisition of Savid. The expense decrease in 2000, after adjusting for the acquisition payments of $2.0 million was 23% or $3.2 million. The decrease in 2000 was mainly attributable to a reduction in the bad debt expense and lower administrative infrastructure costs offset by increased spending related to corporate information technology. Write-off of Purchased In-Process Research and Development. In the first quarter of 1998, the Company expensed $5.4 million of purchased in-process research and development associated with the Quantra Page 14 16 products acquired in March 1998. In the second quarter of 1998, the Company expensed $0.5 million of purchased in-process research and development associated with the Savid products acquired in April 1998. Because these products had not yet reached technological feasibility at the time of the respective acquisitions and, in the Company's judgment, there was no alternative use for the related research and development, such in-process research and development was charged to expense. For the Quantra and Savid acquisitions, the Company determined the value of the completed technologies and in-process research and development using a risk-adjusted, discounted cash flow approach. For the Quantra and Savid acquisitions, the Company developed revenue projections over a five- to six-year period in three categories: license, maintenance, and consulting. License revenue projections were based on expected unit sales over the projected lives of the respective product lines. The other categories of revenues were generally estimated as a percentage of total license revenues and ranged from 15% to 20% for maintenance and from 10% to 20% for consulting, depending on the product. Savid consulting revenues were projected to be insignificant. Expense assumptions were based on the imposition of the Company's cost structure on the acquired technologies and products. The discount rates for the Quantra in-process research and development projects were 23% and 28%; the discount rate for the Savid in-process research and development projects was 20%. The discount rates for these projects were higher than the Company's implied weighted average cost of capital due to the inherent uncertainties surrounding the successful development of the in-process research and development and the related risk of realizing cash flows from products that have not yet reached technological feasibility, among other factors. The Company believes that the assumptions used in the forecasts were reasonable. The Company cannot be assured, however, that the underlying assumptions used to estimate expected product sales, development costs or profitability, or the events associated with such projects, will transpire as estimated. Accordingly, actual results may vary from the projected results. Interest and Other Income, Net. Net interest income was $1.9 million, $2.3 million, and $2.9 million in 1998, 1999, and 2000, respectively. Interest income, net consists of interest income less interest expense. The increase in 1999 was due to higher returns on investments compared to 1998 results. In 2000, the Company moved the majority of its marketable securities to taxable instruments from non-taxable municipal bonds in 1999, and as a result improved the absolute dollar investment return. Included in other income, net in 2000, was a gain of $2.4 million resulting from the sale of an equity investment. Provision (Benefit) for Income Taxes. The Company had effective tax rates of approximately 54%, 34%, and 35% in 1998, 1999, and 2000, respectively. The tax rate in 1998 was higher than the expected rate of 34% due to the non-deductibility of S corporation losses and the rate differential of foreign operations. In 1999, the Company recorded a tax benefit of $2.3 million, or 25%, on the $9.3 million litigation settlement costs. It was determined that a portion of the litigation settlement costs was not tax-deductible. Excluding the one-time litigation expense, the effective tax rate in 1999 was 43%. The Company had $10.6 million of deferred tax assets at December 31, 2000. In future years, the Company expects to have sufficient levels of profitability to realize the deferred tax assets at December 31, 2000. LIQUIDITY AND CAPITAL RESOURCES The Company's cash, cash equivalents and marketable securities at December 31, 2000 were $56.5 million, increasing by $6.2 million from the $50.3 million at December 31, 1999. The increase in marketable securities includes an unrealized gain of $3.0 million. Included in marketable securities at December 31, 2000 is an equity investment valued at $3.9 million that is subject to considerable market risk due to its volatility. The net cash provided by operating activities was $9.5 million in 2000. Cash provided by operating activities was primarily due to earnings adjusted for non-cash items, the receipt of income taxes receivable and an increase in deferred revenue offset by an increase in accounts receivables. Page 15 17 Investing activities provided $2.0 million in cash in 2000. This was primarily due to the net proceeds from the sale of marketable securities of $5.7 million offset by capital expenditures totaling $2.6 million and the issuance of a loan of $1.0 million to WealthMetrics.com. Financing activities used $5.0 million in cash in 2000. This was primarily due to the Company's stock repurchase plan. In 2000, the Company purchased 1,061,000 shares of its Common Stock for treasury. This use of cash was partially offset by the proceeds from the issuance of Common Stock under the Company's 1996 Employee Stock Purchase Plan. As of December 31, 2000, the Company had $20.7 million in cash and $35.8 million of highly liquid marketable securities. The Company believes that its current cash and marketable securities balances and anticipated cash flow from operations will be sufficient to meet its working capital and capital expenditure requirements for at least the next twelve months. RECENT ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivatives Instruments and Hedging Activities ("SFAS 133") as amended by SFAS 137 and 138. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As amended, this statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Company does not currently intend to use derivative instruments and therefore does not expect that the adoption of SFAS 133 will have any impact on its financial position or results of operations. CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS FLUCTUATIONS IN QUARTERLY PERFORMANCE. Historically, the Company's revenues and operating results have varied substantially from quarter to quarter. The Company's quarterly operating results may continue to fluctuate due to a number of factors, including the timing, size and nature of the Company's individual license transactions; the timing of the introduction and the market acceptance of new products or product enhancements by the Company or its competitors; the relative proportions of revenues derived from license fees, maintenance, consulting, and other recurring revenues and professional services; changes in the Company's operating expenses; personnel changes; and fluctuations in economic and financial market conditions. The timing, size, and nature of individual license transactions are important factors in the Company's quarterly operating results. Many such license transactions involve large dollar amounts, and the sales cycles for these transactions are often lengthy and unpredictable. There can be no assurance that the Company will be successful in closing large license transactions on a timely basis or at all. DEPENDENCE ON THE FINANCIAL SERVICES INDUSTRY. The Company's clients include a range of organizations in the financial services industry. The success of these clients is intrinsically linked to the health of the financial markets. In addition, because of the capital expenditures required in connection with an investment in the Company's products, the Company believes that demand for its products could be disproportionately affected by fluctuations, disruptions, instability, or downturns in the financial markets, which may cause clients and potential clients to exit the industry or delay, cancel, or reduce any planned expenditures for investment management systems and software products. Any resulting decline in demand for the Company's products could have a material adverse effect on the Company's business, financial condition, and results of operations. BUSINESS MODEL CHANGE. The Company is in the process of modifying its business model from one based on license fees derived from licensing proprietary software to one based on both licensing its software and transaction fees for the use of SS&C Direct ASP/BPO services. Due to this change in the business model, the Company's revenues will increasingly depend on its ability to attract customers to SS&C Direct and on its ability to grow the number and volume of users of the Company's outsourcing services. The number of users and the volume of their activity are largely outside of the Company's control. Thus, the Company's past operating results may not be a meaningful indicator of its future performance. Page 16 18 PRODUCT CONCENTRATION. To date, substantially all of the Company's revenues have been attributable to the licensing of CAMRA 2000, AdvisorWare 2000, SKYLINE, PTS 2000, Total Return 2000, and Antares 2000 software and the provision of maintenance and consulting services in support of such software. The Company expects that the licensing of CAMRA 2000, AdvisorWare 2000, Total Return 2000, SKYLINE, and Antares 2000 software products will continue to account for a significant portion of its revenues for the foreseeable future. As a result, factors adversely affecting the pricing of or demand for such products and services, such as competition or technological change, could have a material adverse effect on the Company's business, financial condition and results of operations. MANAGEMENT OF GROWTH. The Company's business has grown significantly in size and complexity over the past several years. The growth in the size and complexity of the Company's business as well as its client base has placed, and is expected to continue to place, a significant strain on the Company's management and operations. The Company's ability to compete effectively and to manage future growth, if any, will depend on its ability to continue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manage, its work force. There can be no assurance that the Company's personnel, systems, procedures, and controls will be adequate to support the Company's operations. If the Company's management is unable to manage growth effectively, the quality of the Company's products and its business, financial condition, and results of operations could be materially adversely affected. COMPETITION. The market for financial services software is competitive, rapidly evolving, and highly sensitive to new product introductions and marketing efforts by industry participants. Although the Company believes that none of its competitors currently competes against the Company in all of the markets served by the Company, there can be no assurance that its competitors will not compete against the Company in the future in additional markets. In addition, many of the Company's current and potential future competitors have significantly greater financial, technical and marketing resources, generate higher revenues and have greater name recognition than the Company. RAPID TECHNOLOGICAL CHANGE. The market for the Company's products and services is characterized by rapidly changing technology, evolving industry standards, and new product introductions. The Company's future success will depend in part upon its ability to enhance its existing products and services and to develop and introduce new products and services to meet changing client needs. The process of developing software products such as those offered by the Company is extremely complex and is expected to become increasingly complex and expensive in the future due to the introduction of new platforms and technologies. There can be no assurance that the Company will successfully complete the development of new products in a timely fashion or that the Company's current or future products will satisfy the needs of the financial markets. DEPENDENCE ON DATABASE SUPPLIER. The relational database design used in many of the Company's software products incorporates PFXplus, a "C"-based database management system licensed to the Company by POWERflex Corporation Proprietary Limited, an Australian vendor ("Powerflex"). If Powerflex were to increase its fees under the license agreement, the Company's results of operations could be materially adversely affected. Moreover, if Powerflex were to terminate the license agreement, the Company would have to seek an alternative relational database for its software products. Even though the Company believes that it could migrate its products to an alternative database, there can be no assurance that the Company would be able to license a database in a timely fashion with similar features and on terms acceptable to the Company. DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's success and ability to compete is dependent in part upon its ability to protect its proprietary technology. The Company relies on a combination of trade secret, copyright, and trademark law, nondisclosure agreements and technical measures to protect its proprietary technology. There can be no assurance that the steps taken by the Company to protect its proprietary technology will be adequate to prevent misappropriation or independent third-party development of such technology. Page 17 19 PRODUCT DEFECTS AND PRODUCT LIABILITY. The Company's software products are highly complex and sophisticated and could, from time to time, contain design defects or software errors that are difficult to detect and correct. Errors, bugs or viruses may result in loss of or delay in market acceptance of the Company's software products or loss of client data. Although the Company has not experienced material adverse effects resulting from any software defects or errors, there can be no assurance that, despite testing by the Company and its clients, errors will not be found in new products, which errors could result in a delay in or an inability to achieve market acceptance and thus could have a material adverse effect upon the Company's business, financial condition, and results of operations. KEY PERSONNEL. The Company's success is dependent in part upon its ability to attract, train, and retain highly skilled technical, managerial and sales personnel. The loss of services of one or more of the Company's key employees could have a material adverse effect on the Company's business, financial condition, and results of operations. Over the last 12 months, four senior vice presidents terminated their employment with the Company. The Company continues to hire a significant number of additional sales, service, and technical personnel. Competition for the hiring of such personnel in the software industry is intense. Locating candidates with the appropriate qualifications, particularly in the desired geographic location, is difficult. Although the Company expects to continue to attract and retain sufficient numbers of highly skilled employees for the foreseeable future, there can be no assurance that the Company will be able to do so. RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. The Company intends to continue to expand its international sales activity as part of its business strategy. To accomplish such continued expansion, the Company must establish additional foreign operations and hire additional personnel requiring significant management attention and financial resources that could materially adversely affect the Company's business, financial condition, or results of operations. An increase in the value of the U.S. dollar relative to foreign currencies could make the Company's products more expensive and, therefore, potentially less competitive in those foreign markets. A portion of the Company's international sales is denominated in foreign currency. The Company occasionally hedges some of the risk associated with foreign exchange fluctuations. In addition, the Company's international business may be subject to a variety of other risks, including difficulties in obtaining U.S. export licenses, potentially longer payment cycles, increased costs associated with maintaining international marketing efforts, the introduction of non-tariff barriers and higher duty rates, and difficulties in enforcement of third-party contractual obligations and intellectual property rights. There can be no assurance that such factors will not have a material adverse effect on the Company's business, financial condition, or results of operations. Because of these and other factors, past financial performance should not be considered an indication of future performance. The Company's quarterly operating results may vary significantly, depending on factors such as the timing, size, and nature of licensing transactions and new product introductions by the Company or its competitors. Investors should not use historical trends to anticipate future results and should be aware that the trading price of the Company's common stock may be subject to wide fluctuations in response to quarterly variations in operating results and other factors, including those discussed above. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company purchases from time to time forward contracts to attempt to minimize the impact of exchange rate gains or losses from foreign currency transactions. The Company generally places its marketable security investments in high credit quality instruments, primarily U.S. Government and Federal Agency obligations, tax-exempt municipal obligations and corporate obligations. The Company does not expect any material loss from its marketable security investments and therefore believes that its potential interest rate exposure is not material. The Company invoices customers primarily in U.S. dollars and in the local currency in those countries in which the Company has branch and subsidiary operations. The Company is exposed to foreign exchange rate fluctuations from when customers are invoiced in local currency until collection occurs. Through December 31, 2000, foreign currency fluctuations have not had a material impact on the Company's Page 18 20 financial position or results of operations, and therefore the Company believes that its potential foreign currency exchange rate exposure is not material. 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 the Company to assess and mitigate risk discussed above should not be considered projections of future events or losses. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is contained in the Consolidated Financial Statements and related footnotes appearing in this Report and is incorporated herein by this reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information required by this Item 10 is set forth in the proxy statement to be provided to stockholders in connection with the Company's 2001 Annual Meeting of Stockholders (the "Proxy Statement") under the headings "Directors and Nominees for Director" and "Section 16(a) Beneficial Ownership Reporting Compliance," which information is incorporated herein by reference. The name, age, and position of each executive officer of the Company is set forth under the heading "Executive Officers of the Registrant" in Part I of this Report, which information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION Information required by this Item 11 is set forth in the Proxy Statement under the headings "Compensation of Executive Officers" and "Director Compensation," which information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information required by this Item 12 is set forth in the Proxy Statement under the heading "Security Ownership of Certain Beneficial Owners and Management," which information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information required by this Item 13 is set forth in the Proxy Statement under the heading "Compensation of Executive Officers--Employment Agreements," which information is incorporated herein by reference. Page 19 21 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following financial statements are filed as a part of this Report:

DOCUMENT PAGE -------- ---- Report of Independent Accountants 20 Consolidated Financial Statements: Balance Sheet as of December 31, 2000 and 1999 21 Statement of Operations for the years ended December 31, 2000, 1999, and 1998 22 Statements of Cash Flows for the years ended December 31, 2000, 1999, and 1998 23 Statements of Changes in Stockholders' Equity for the years ended December 31, 2000, 1999, and 1998 24 Notes to Financial Statements 25 Signatures 41

2. Exhibits The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission.

EXHIBIT NO. DESCRIPTION ------- ----------- 2.1+ Asset Purchase Agreement, dated as of March 20, 1998, by and among the Registrant, AEGON USA Realty Advisors, Inc., and Quantra Corporation is incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K, dated March 20, 1998 (File No. 000-28430) 2.2+ Stock Purchase Agreement, dated as of April 9, 1998, by and among the Registrant, Savid International, Inc., The Savid Group, Inc. and Diane Cossin, is incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K, dated April 9, 1998 (File No. 000-28430) 2.3+ Agreement and Plan of Merger, dated March 11, 1999, by and among the Registrant, HedgeWare, Inc., Asset Management Acquisition Corp. and the Sellers named herein, is incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K dated March 11, 1999 (File No. 000-28430) 2.4+ Stock Purchase Agreement dated March 31, 1999, by and among the Registrant, The Brookside Corporation and John M. Boyle is incorporated herein by reference to exhibit 2 to the Registrant's Current Report on Form 8-K, dated March 31, 1999 (File No. 000-28430) 3.1 Amended and Restated Certificate of Incorporation of the Registrant is incorporated herein by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 000-28430) 3.2 Second Amended and Restated By-Laws of the Registrant is incorporated herein by reference to Exhibit 3.0 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2000 (File No. 000-28430). 4 Specimen Certificate for shares of Common Stock, $.01 par value per share, of the Registrant is incorporated herein by reference to Exhibit 4 to the Registrant's Registration Statement on Form S-1, as amended (File No. 333-3094) (the "Form S-1"). 10.1* 1993 Stock Option Plan is incorporated herein by reference to Exhibit 10.1 to the Form S-1

Page 20 22

EXHIBIT NO. DESCRIPTION ------- ----------- 10.2* 1994 Stock Option Plan, as amended, is incorporated herein by reference to Exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 000-28430) 10.3* 1996 Director Stock Option Plan, as amended, is incorporated herein by reference to Annex D to the Registrant's Definitive Schedule 14A filed April 28, 2000 (File No. 000-28430) 10.4* 1998 Stock Incentive Plan, as amended, is incorporated by reference to Annex B to the Registrant's Definitive Schedule 14A filed April 28, 2000 (File No. 000-28430) 10.5* Employment Agreement between the Registrant and William C. Stone, dated March 28, 1996, is incorporated herein by reference to Exhibit 10.5 to the Form S-1 10.6 Reseller Agreement between the Registrant and PFX(USA), Inc., dated June 22, 1993, is incorporated herein by reference to Exhibit 10.16 to the Form S-1 10.7 Lease Agreement, dated September 23, 1997, by and between the Registrant and Monarch Life Insurance Company, as amended, is incorporated herein by reference to Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 000-28430) 21 Subsidiaries of the Registrant 23 Consent of PricewaterhouseCoopers LLP

--------------- * Management contract or compensatory plan or arrangement filed herewith in response to Item 14(a)(3) of the Instructions to the Annual Report on Form 10-K. + The Registrant hereby agrees to furnish supplementally a copy of any omitted schedules to this agreement to the Securities and Exchange Commission upon its request. (b) REPORTS ON FORM 8-K None. Page 21 23 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of SS&C Technologies, Inc. and Subsidiaries: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of SS&C Technologies, Inc. and its subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. 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 audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP Hartford, Connecticut February 8, 2001 Page 22 24 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, ---------------------- 2000 1999 --------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) ASSETS Current assets Cash and cash equivalents $ 20,690 $ 14,304 Investments in marketable securities (Note 3) 35,840 36,034 Accounts receivable, net of allowance for doubtful accounts of $3,800 and $4,341, respectively (Note 4) 10,509 11,079 Income taxes receivable 144 2,722 Prepaid expenses and other current assets 1,955 2,360 Deferred income taxes (Note 7) 3,391 4,271 -------- -------- Total current assets 72,529 70,770 -------- -------- Property and equipment: Leasehold improvements 2,983 2,872 Equipment, furniture, and fixtures 16,338 14,145 -------- -------- 19,321 17,017 Less accumulated depreciation (10,429) (7,105) -------- -------- Net property and equipment 8,892 9,912 -------- -------- Accounts receivable (Note 4) -- 301 Deferred income taxes (Note 7) 7,179 7,211 Goodwill, net of accumulated amortization of $201 and $1,838, respectively 129 296 Intangible and other assets, net of accumulated amortization of $449 and $6,372, respectively 2,129 1,227 -------- -------- Total assets $ 90,858 $ 89,717 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current portion of long-term debt (Note 5) $ 94 $ 131 Accounts payable 1,121 1,503 Accrued employee compensation and benefits 1,071 1,695 Other accrued expenses 3,492 2,448 Deferred maintenance and other revenue 12,421 11,376 -------- -------- Total current liabilities 18,199 17,153 Long-term debt (Note 5) 5 11 -------- -------- Total liabilities 18,204 17,164 -------- -------- Commitments and contingencies (Note 8 and 14) Stockholders' equity: Common stock, $0.01 par value, 50,000 shares authorized; 16,195 and 16,044 shares issued and 15,134 and 16,044 shares outstanding, respectively 162 161 Additional paid in capital 88,852 88,119 Accumulated other comprehensive income 2,434 (461) Accumulated deficit (13,094) (15,266) -------- -------- 78,354 72,553 Less: cost of common stock in treasury; 1,061 shares (Note 6) 5,700 -- -------- -------- Total stockholders' equity 72,654 72,553 -------- -------- Total liabilities and stockholders' equity $ 90,858 $ 89,717 ======== ========

The accompanying notes are an integral part of these financial statements. Page 23 25 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, --------------------------------------- 2000 1999 1998 ---------- ----------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Revenues: Software licenses $16,633 $ 18,700 $34,878 Maintenance 26,237 25,708 19,828 Professional services 11,519 18,619 16,558 Outsourcing 5,625 2,709 2,329 ------- -------- ------- Total revenues 60,014 65,736 73,593 ------- -------- ------- Cost of revenues: Software licenses 959 4,206 3,840 Maintenance 6,501 5,919 6,124 Professional services 9,031 14,067 12,150 Outsourcing 6,537 3,565 2,612 ------- -------- ------- Total cost of revenues 23,028 27,757 24,726 ------- -------- ------- Gross profit 36,986 37,979 48,867 ------- -------- ------- Operating expenses: Selling and marketing 12,332 18,237 15,180 Research and development 14,239 18,655 19,224 General and administrative 12,615 13,839 8,627 Write-off of purchased in-process research and development (Note 13) -- -- 5,878 Litigation settlement costs (Note 14) -- 9,330 -- ------- -------- ------- Total operating expenses 39,186 60,061 48,909 ------- -------- ------- Operating loss (2,200) (22,082) (42) ------- -------- ------- Interest income, net 2,855 2,345 1,944 Other income, net (Note 15) 2,678 546 376 ------- -------- ------- Income (loss) before income taxes 3,333 (19,191) 2,278 Provision (benefit) for income taxes (Note 7) 1,161 (6,543) 1,225 ------- -------- ------- Net income (loss) $ 2,172 $(12,648) $ 1,053 ======= ======== ======= Basic earnings (loss) per share $ 0.14 $ (0.81) $ 0.07 ======= ======== ======= Basic weighted average number of common shares outstanding 15,918 15,678 14,956 ======= ======== ======= Diluted earnings (loss) per share $ 0.14 $ (0.81) $ 0.07 ======= ======== ======= Diluted weighted average number of common and common equivalent shares outstanding 15,962 15,678 15,906 ======= ======== =======

The accompanying notes are an integral part of these financial statements. Page 24 26 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, -------------------------------- 2000 1999 1998 -------- -------- -------- (IN THOUSANDS) Cash flow from operating activities: Net income (loss) $ 2,172 $(12,648) $ 1,053 -------- -------- -------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 3,932 6,998 5,038 Gain on sales of equity investments (2,433) -- -- Loss (gain) on sale of property and equipment 110 (62) -- Common stock issued for litigation settlement (Note 14) -- 1,300 -- Equity-based compensation -- 123 141 Deferred income taxes 912 (4,784) (2,722) Income tax benefit related to exercise of stock options 11 281 482 Purchased in-process research and development -- -- 5,878 Provision for doubtful accounts 1,657 3,921 1,717 Changes in operating assets and liabilities, excluding effects from acquisitions: Accounts receivable (977) 9,482 (7,960) Prepaid expenses and other current assets 405 (371) (56) Taxes receivable 2,578 (2,722) 384 Accounts payable (382) (705) (868) Accrued expenses 420 (2,235) 1,160 Taxes payable -- (1,059) 684 Deferred maintenance and other revenues 1,045 (1,926) 1,177 -------- -------- -------- Total adjustments 7,278 8,241 5,055 -------- -------- -------- Net cash provided by (used in) operating activities 9,450 (4,407) 6,108 -------- -------- -------- Cash flow from investing activities Additions to property and equipment (2,559) (5,611) (4,723) Proceeds from sale of property and equipment 11 485 -- Cash paid for business acquisitions (Note 13) -- -- (3,021) Proceeds from note receivable (Note 15) -- 2,250 -- Issuance of convertible note receivable (1,000) (250) -- Additions to capitalized software and other intangibles (208) (71) (797) Cash paid for Caminus acquisition -- -- (2,226) Purchases of marketable securities (36,806) (24,903) (89,127) Sales of marketable securities 42,518 31,009 100,581 -------- -------- -------- Net cash provided by investing activities 1,956 2,909 687 -------- -------- -------- Cash flow from financing activities: Repayment of debt (43) (354) (1,175) Proceeds from note payable -- -- 673 Issuance of common stock 517 896 651 Exercise of options 206 983 2,307 Purchase of common stock for treasury (5,700) -- -- Transfer of cash from restricted cash equivalents -- 1,230 (1,230) -------- -------- -------- Net cash provided by (used in) financing activities (5,020) 2,755 1,226 -------- -------- -------- Net increase in cash and cash equivalents 6,386 1,257 8,021 Cash and cash equivalents, beginning of period 14,304 13,047 5,026 -------- -------- -------- Cash and cash equivalents, end of period $ 20,690 $ 14,304 $ 13,047 ======== ======== ======== Supplemental disclosure of cash flow information Cash paid (received) for Interest expense $ 18 $ 3 $ 9 Income taxes $ (2,682) $ 1,726 $ 2,013

Page 25 27 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES As more fully described in Note 13, effective March 11, 1999, the Company acquired all the outstanding stock of HedgeWare, Inc. for 685,683 shares of the Company's common stock. As more fully described in Note 13, effective March 20, 1998, the Company purchased substantially all the assets of Quantra Corporation for $15.3 million. As more fully described in Note 13, effective April 9, 1998, the Company purchased all the stock of Savid International Inc. and The Savid Group, Inc. for $0.9 million. As more fully described in Note 15, the Company sold its investment in Caminus Corporation for a $2.3 million note receivable. The accompanying notes are an integral part of these financial statements. Page 26 28 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1998, 1999, AND 2000

COMMON STOCK ACCUMULATED ------------------ OTHER TOTAL NUMBER OF ADDITIONAL ACCUMULATED COMPREHENSIVE STOCKHOLDERS' SHARES AMOUNT PAID-IN CAPITAL DEFICIT INCOME (LOSS) TREASURY STOCK EQUITY --------- ------ --------------- ----------- ------------- -------------- ------------- (IN THOUSANDS) Balance at December 31, 1997 14,245 $142 $69,150 $ (3,648) $ -- $ -- $ 65,644 Exercise of options 428 4 2,444 -- -- -- 2,448 Issuance of common stock 613 7 9,409 -- -- -- 9,416 Income tax benefit related to exercise of stock options -- -- 482 -- -- -- 482 Comprehensive income: Net income -- -- -- 1,053 -- -- 1,053 Foreign exchange translation adjustment -- -- -- -- (121) -- (121) ------ ---- ------- -------- ------ ------- -------- Balance at December 31, 1998 15,286 153 81,485 (2,595) (121) -- 78,922 Exercise of options 195 2 1,104 -- -- -- 1,106 Issuance of common stock 325 4 3,951 -- -- -- 3,955 Issuance of common stock for the litigation settlement 211 2 1,298 -- -- -- 1,300 Income tax benefit related to exercise of stock options -- -- 281 -- -- -- 281 Other 27 -- -- (23) -- -- (23) Comprehensive income: Net loss -- -- -- (12,648) -- -- (12,648) Foreign exchange translation adjustment -- -- -- -- (217) -- (217) Change in unrealized loss on investments -- -- -- -- (123) -- (123) ------ ---- ------- -------- ------ ------- -------- Balance, at December 31, 1999 16,044 161 88,119 (15,266) (461) -- 72,553 Exercise of options 40 -- 206 -- -- -- 206 Issuance of common stock 111 1 516 -- -- -- 517 Purchase of common stock -- -- -- -- -- (5,700) (5,700) Income tax benefit related to exercise of stock options -- -- 11 -- -- -- 11 Comprehensive income: Net income -- -- -- 2,172 -- -- 2,172 Foreign exchange translation adjustment -- -- -- -- (190) -- (190) Change in unrealized gain on investments -- -- -- -- 3,085 -- 3,085 ------ ---- ------- -------- ------ ------- -------- Balance, at December 31, 2000 16,195 $162 $88,852 $(13,094) $2,434 $(5,700) $ 72,654 ====== ==== ======= ======== ====== ======= ========

The accompanying notes are an integral part of the financial statements. Page 27 29 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION SS&C Technologies, Inc. and Subsidiaries ("SS&C" or the "Company") develops, manufactures and markets client/server based software solutions for the financial services industry. The Company also offers consulting, training, support, and outsourcing services in support of its customers' use of its software products. The Company's clients include a range of organizations that manage investment portfolios, including asset managers, insurance companies, banks, mutual funds, public and private pension funds, hedge funds, corporate treasuries, property managers, real estate investment trusts and government agencies. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates 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. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances among the companies have been eliminated. Revenue Recognition The Company follows the guidelines of Statement of Position (SOP) No. 97-2, "Software Revenue Recognition" ("SOP 97-2"), which provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions. SOP 97-2 requires that revenue recognized from software transactions be allocated to each element of the transaction based on the relative fair values of the elements, such as software products, specific upgrades, enhancements, post contract customer support, installation, or training. The determination of fair value is based upon vendor-specific objective evidence. Under SOP 97-2, the Company recognizes software license revenue allocated to software products, specified upgrades, and enhancements generally upon delivery of each of the related products, upgrades, or enhancements. License Revenue The Company generally recognizes revenue from sales of software or products including proprietary software upon product shipment and upon receipt of a signed contract, provided that collection is probable and all other revenue recognition criteria of SOP 97-2 are met. The Company's products generally do not require significant modification or customization of software. Installation of the products is generally routine and is not essential to the functionality of the product. The Company occasionally enters into license agreements requiring significant customization of the Company's software. The Company accounts for these agreements on the percentage of completion basis. This method requires estimates to be made for costs to complete the agreement utilizing an estimate of development man-hours remaining. Due to uncertainties inherent in the estimation process, it is at least reasonably possible that completion costs may be revised. Such revisions are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are determined on a contract-by-contract basis, and are made in the period in which such losses are first estimated or determined. Page 28 30 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Maintenance Agreements Maintenance agreements generally require the Company to provide technical support and software updates to its customers. Maintenance revenue is recognized ratably over the term of the maintenance agreement. Professional and Outsourcing Services The Company provides consulting, training, and outsourcing services to its customers. Revenue for such services are generally recognized over the period during which the applicable services are performed. The Company records an allowance for doubtful accounts based on individual customer analyses. Write-offs of accounts receivable were $2,196,000, $2,991,000, and $558,000 for the years ended December 31, 2000, 1999, and 1998, respectively. Recent Accounting Pronouncements The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivatives Instruments and Hedging Activities" as amended by Statement No. 137 and No. 138. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As amended, this statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Company does not currently intend to use derivative instruments and therefore does not expect that the adoption of Statement of Accounting Standards No. 133, as amended will have any impact on its financial position or results of operations. Impairment of Long-Lived Assets The Company evaluates the recoverability of its long-lived assets in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed of." The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances have made recovery of the assets' carrying value unlikely. An impairment loss would be recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. The Company has identified no such impairment losses. Substantially all of the Company's long-lived assets are located in the United States. Research and Development Research and development costs associated with computer software are charged to expense as incurred. In accordance with Statement of Financial Accounting Standards No. 86 "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed," capitalization of internally developed computer software costs begins upon the establishment of technological feasibility based on a working model. Capitalized software costs of $814,000, and $806,000 are included in the December 31, 2000 and 1999 balance sheets, respectively, under "Intangible and other assets." The Company's policy is to amortize these costs upon a product's general release to the customer. Amortization of capitalized software costs is calculated by the greater of (a) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or (b) the straight-line method over the remaining estimated economic life of the product including the period being reported on, typically two to six years. It is reasonably possible that those estimates of anticipated future gross revenues, the remaining estimated economic life of the product, or both could be reduced significantly due to competitive pressures. Amortization expense related to capitalized software for 2000, 1999, and 1998, was $201,000, $193,000, and $36,000, respectively. Page 29 31 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Cash and Cash Equivalents and Marketable Securities The Company considers all highly liquid marketable securities with original maturities of three months or less at the date of acquisition to be cash equivalents. Debt securities with original maturities of more than three months at the date of acquisition are classified as marketable securities. The Company classifies its entire investment portfolio, consisting of debt securities issued by state and local governments of the United States, debt securities issued by corporations and equities, as available for sale securities. The cost basis, using the specific identification method, approximates fair market value and an unrealized gain or loss is recognized. Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is calculated using a combination of straight-line and accelerated methods over the estimated useful lives of the assets as follows:

DESCRIPTION USEFUL LIFE ----------- ----------- Equipment 3-5 years Furniture and fixtures 7-10 years Leasehold improvements Shorter of lease term or estimated useful life

Maintenance and repairs are expensed as incurred. The costs of sold or retired assets are removed from the related asset and accumulated depreciation accounts and any gain or loss is included in operations. Goodwill and Intangible Assets Goodwill resulting from acquisitions is amortized on a straight-line basis over its estimated life of five years. The carrying amount of goodwill is evaluated for future recoverability on a periodic basis, relying on a number of factors, including the estimated life of the customer base under the annual maintenance agreements, operating results for each division, business plans, budgets, and economic projections and undiscounted cash flows. In addition, the Company's evaluation considers non-financial data such as market trends, product development cycles, and changes in management's market emphasis. Amortization expense associated with goodwill was $168,000, $426,000, and $412,000 for the years ended December 31, 2000, 1999, and 1998, respectively. Other intangible assets, excluding completed technology, are being amortized on a straight-line basis over their estimated lives of two to three years. Completed technology is amortized over approximately two to four years based on the ratio that current gross revenues of the product bear to the total of current and anticipated future gross revenues of the product or on a straight-line method, whichever is shorter. Amortization expense associated with completed technology for the years ended December 31, 2000, 1999, and 1998 was $96,000, $3,299,000, and $2,974,000, respectively. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, cash equivalents, marketable securities, and trade receivables. The Company has cash investment policies that limit investments to investment grade securities. Concentrations of credit risk, with respect to trade receivables, are limited due to the fact that the Company's customer base is highly diversified. As of December 31, 2000 and 1999, the Company had no significant concentrations of credit risk and the carrying value of these assets approximates fair value. Page 30 32 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. International Operations and Foreign Currency The functional currency of each foreign subsidiary is the local currency. Accordingly, assets and liabilities of foreign subsidiaries are translated to U.S. dollars at period-end exchange rates, and capital stock accounts are translated at historical rates. Revenues and expenses are translated using the average rates during the period. The resulting translation adjustments are excluded from net earnings and accumulated as a separate component of stockholders' equity. Foreign currency transaction gains and losses are included in the results of operations in the periods in which they occur and are immaterial for all periods presented. Basic and Diluted Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares and common equivalent shares outstanding. Common equivalent shares consist of stock options using the "treasury stock" method and are excluded if their effect is dilutive. The following table sets forth the computation of basic and diluted earnings per share (in thousands):

2000 1999 1998 ------ ------ ------ Weighted average common shares outstanding 15,918 15,678 14,956 Weighted average common stock equivalents--options 44 -- 950 ------ ------ ------ Weighted average common and common equivalent shares outstanding 15,962 15,678 15,906 ====== ====== ======

Options to purchase 2,809,180, 2,920,180, and 297,500 shares were outstanding at December 31, 2000, 1999, and 1998, respectively, but were not included in the computation of diluted earnings per share because the effect of including the options would be antidilutive. Comprehensive Income Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," requires that items defined as comprehensive income, such as foreign currency translation adjustments, and unrealized gains (losses) on marketable securities, be separately classified in the financial statements and that the accumulated balance of other comprehensive income be reported separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. Total comprehensive income is comprised of net income and other accumulated comprehensive income disclosed in the equity section of the balance sheet. Page 31 33 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth the components of comprehensive income (in thousands):

2000 1999 1998 ------ -------- ------ Net income (loss) $2,172 $(12,648) $1,053 Foreign currency translation (losses) (190) (217) (121) Unrealized gains (losses) on marketable securities 3,085 (123) -- ------ -------- ------ Total comprehensive income (loss) $5,067 $(12,988) $ 932 ====== ======== ======

Reclassification Certain amounts in the 1998 and 1999 consolidated financial statements have been reclassified to be comparable with the 2000 presentation. These classifications have had no effect on net income, working capital, or net equity. 3. MARKETABLE SECURITIES At December 31, 2000 and 1999, the cost basis, fair value, and unrealized gains and losses by major security type, were as follows (in thousands):

GROSS UNREALIZED FAIR COST GAINS (LOSSES) VALUE December 31, 2000: ------- -------------- ------- State, municipal and county government bonds $ 8,054 $ (1) $ 8,053 US government securities 13,768 148 13,916 Corporate bonds 9,979 36 10,015 Equities 1,077 2,779 3,856 ------- ------ ------- Total $32,878 $2,962 $35,840 ------- ------ -------

GROSS UNREALIZED FAIR COST LOSSES VALUE December 31, 1999: ------- ---------- ------- State, municipal and county government bonds $26,141 $ (58) $26,083 US government securities 2,642 (30) 2,612 Corporate bonds 3,374 (19) 3,355 Floating rate notes 4,000 (16) 3,984 Total $36,157 $(123) $36,034 ------- ----- -------

The following table summarizes the maturities of marketable securities at December 31 (in thousands):

2000 1999 ------- ------- Less than one year $32,751 $29,321 Due in 1-2 years 3,089 6,713 ------- ------- Total $35,840 $36,034 ======= =======

Page 32 34 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 4. ACCOUNTS RECEIVABLE Accounts receivable are as follows (in thousands):

DECEMBER 31, ------------------ 2000 1999 CURRENT ------- ------- Accounts receivable, net of allowance for doubtful accounts of $3,649 and $3,862, respectively $ 7,354 $ 7,741 Unbilled accounts receivable, net of allowance for doubtful accounts of $151 and $479, respectively 3,155 3,338 ------- ------- Total current accounts receivable 10,509 11,079 NONCURRENT Unbilled accounts receivable -- 301 ------- ------- Total accounts receivable $10,509 $11,380 ======= =======

The Company records an allowance for doubtful accounts based on individual customer analyses. Write-offs of accounts receivable were $2,196,000, $2,991,000, and $558,000 for the years ended December 31, 2000, 1999, and 1998, respectively. 5. LONG-TERM DEBT Long-term debt consists of the following (in thousands):

DECEMBER 31, ------------- 2000 1999 ---- ----- Note payable to former Mabel shareholders $ 88 $ 125 Capitalized lease obligations for office equipment, through September 2002 11 17 ---- ----- 99 142 ---- ----- Less current portion (94) (131) ---- ----- Long-term debt $ 5 $ 11 ==== =====

The note payable to former Mabel shareholders was issued in connection with the Company's acquisition of Mabel Systems BV ("Mabel") (See Note 13). The terms of the purchase agreement are for the Company to pay $375,000 in three equal installments of $125,000 on the first, second, and third anniversaries of the closing date of the acquisition. Each payment was conditional on the continued employment of the former shareholders with the Company as of the date of the payment. The December 31, 2000 balance of $88,000 due the former Mabel shareholders was paid in January 2001. 6. COMMON STOCK At December 31, 2000, 50,000,000 shares were authorized and 15,133,965 shares were outstanding. At December 31, 1999, 25,000,000 shares of common stock were authorized and 16,044,203 shares were outstanding. On March 11, 1999, the Company issued 685,683 shares of the Company's common stock in connection with the Company's acquisition of HedgeWare, Inc. On March 31, 1999, the Company issued 27,500 shares of the Company's common stock in connection with the acquisition of the Brookside Corporation. The Company's Board of Directors has approved the repurchase of up to $20 million of its common stock. Pursuant to the repurchase program, the Company purchased 1,061,119 of the Company's common stock for approximately $5.7 million in the year ended December 31, 2000. Page 33 35 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 7. INCOME TAXES The sources of income (loss) before income taxes were as follows (in thousands):

YEAR ENDED DECEMBER 31, ---------------------------- 2000 1999 1998 ------ -------- ------ U.S. $3,696 $(18,884) $ 150 Foreign (363) (307) 2,128 ------ -------- ------ Income (loss) from consolidated companies before taxes $3,333 $(19,191) $2,278 ====== ======== ======

The income tax provision (benefit) for the years ended December 31, 2000, 1999, and 1998 consists of the following (in thousands):

YEAR ENDED DECEMBER 31, ---------------------------- 2000 1999 1998 ------ ------- ------- Current: Federal $ (28) $(1,955) $ 2,192 Foreign 443 101 1,026 State (166) 95 729 Deferred: Federal 1,032 (3,826) (2,161) State (120) (958) (561) ------ ------- ------- Total $1,161 $(6,543) $ 1,225 ====== ======= =======

The effective tax rates were 34.8%, 34.1%, and 53.8% for the years ended December 31, 2000, 1999, and 1998, respectively. The reconciliation between the effective tax rates and the expected tax expense is computed by applying the US federal corporate income tax rate of 34% to income before income taxes as follows (in thousands):

YEAR ENDED DECEMBER 31, --------------------------- 2000 1999 1998 ------ ------- ------ Computed "expected" tax expense (benefit) $1,133 $(6,525) $ 775 Increase (decrease) in income taxes resulting from: State income taxes (net of federal income tax benefit) (189) (570) 103 Tax-exempt interest income (215) (369) (680) Foreign operations rate differential 350 206 324 Litigation settlement -- 1,086 -- Meals and entertainment 59 84 75 Research and development credit (419) (200) -- Non-deductible acquisition payment 447 -- -- S Corporation (earnings) loss not (taxable) beneficial to the Company -- (88) 614 Other (5) (167) 14 ------ ------- ------ Income tax expense $1,161 $(6,543) $1,225 ====== ======= ======

Page 34 36 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The components of the net deferred tax assets at December 31, 2000 and 1999 are as follows (in thousands):

DECEMBER 31, ----------------- 2000 1999 ------- ------- Deferred tax assets $12,628 $12,911 Deferred tax liabilities (1,469) (1,040) Valuation allowance (589) (389) ------- ------- Net deferred tax assets $10,570 $11,482 ======= =======

The components of deferred income taxes at December 31, 2000 and 1999 are as follows (in thousands):

DECEMBER 31, -------------------------------------------------- 2000 1999 ----------------------- ----------------------- DEFERRED DEFERRED DEFERRED DEFERRED TAX TAX TAX TAX ASSETS LIABILITIES ASSETS LIABILITIES -------- ----------- -------- ----------- Purchased in-process research and development $ 4,615 $ -- $ 4,571 $ -- Net operating loss carryforwards 2,762 -- 3,440 -- Acquired technology 2,203 -- 2,287 -- Accounts receivable 1,142 191 1,270 386 Tax credit carryforwards 1,404 -- 821 -- Accrued expenses 401 -- 298 -- Accounting method change--advance payments -- -- 144 -- Fixed assets -- 951 -- -- Capitalized software -- 327 -- 315 Other 101 -- 80 339 ------- ------ ------- ------ Total $12,628 $1,469 $12,911 $1,040 ======= ====== ======= ======

At December 31, 2000, the Company had available federal net operating loss carryforwards of $4,763,000 that expire in 2019 and state net operating loss carryforwards of $8,962,000 that expire between 2004 through 2019. The foreign net operating loss carryforwards other than Japan of $1,453,000 are available to offset foreign income on an indefinite carryforward basis. Japan's net operating loss of $437,000 expires in 2005. Alternative minimum tax credits of $404,000 are available to offset U.S. federal taxable income on an indefinite carryforward basis. The company also has research and development credits of $940,000 and foreign tax credits of $242,000 that will expire at various dates through 2020. 8. LEASES The Company is obligated under noncancelable operating leases for office space and office equipment. Total rental expense for the years ended December 31, 2000, 1999, and 1998 was $3,366,000, $3,046,000, and $2,155,000, respectively. The lease for the corporate facility in Windsor, Connecticut expires in 2008 Page 35 37 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) and the Company has the right to extend the lease for an additional term of five years. Future minimum lease payments under these operating leases are as follows (in thousands):

YEAR ENDING DECEMBER 31, ------------------------ 2001 $ 3,036 2002 2,231 2003 1,987 2004 1,864 2005 1,453 Thereafter 2,324 ------- $12,895 -------

The Company subleases office space under noncancelable leases. The Company received rental income under these leases of $620,000, $479,000, and $212,000 for the years ended December 31, 2000, 1999, and 1998, respectively. Minimum future lease receipts under these leases are as follows (in thousands):

YEAR ENDING DECEMBER 31, ------------------------ 2001 $498 2002 61 ---- $559 ----

9. RELOCATION EXPENSES In 1997, the Company announced plans to relocate its corporate facilities. In connection with the relocation, and in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and EITF No. 94-3, the Company recognized in general and administrative expense an impairment loss on the building and furniture it previously occupied and used of $0.5 million for the year ended December 31, 1997. In 1999, the Company sold its previous corporate facility in Bloomfield, Connecticut. 10. LICENSE AND ROYALTY AGREEMENTS The Company has non-exclusive rights to integrate certain third-party software into certain of the Company's products. Under the terms of the agreement, the licenser of the software is paid minimum monthly royalties and additional royalties based on a percentage of the related license fee revenues collected by the Company. Under this agreement, the Company is obligated to pay on a cumulative basis at least $25,000 per quarter. The total royalty expense under these agreements for the years ended December 31, 2000, 1999, and 1998 was $476,000, $487,000, and $527,000, respectively. In connection with the Savid acquisition, the Company has agreed to pay 10% of license fees with respect to sales and/or licensing of the Savid system during the period commencing on April 15, 1998 and ending on April 14, 2003. Royalty expense for the years ended December 31, 2000, 1999, and 1998 was $37,380, $93,250, and $44,650, respectively. In connection with the Quantra acquisition in 1998, the Company is party to three royalty agreements as a result of utilities that interface with the Company's SKYLINE II product. The royalties are paid based on either annual guaranteed total unit sales of the product at a rate of $15 per user, or as a percentage of the utility list price, which is typically 33.33%. Royalty expense for the periods ended December 31, 2000, 1999, and 1998 was $3,643, $100,196, and $19,166, respectively. Page 36 38 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 11. DEFINED CONTRIBUTION PLANS The Company has a 401(k) Retirement Plan (the "Plan"), which covers substantially all employees. Each employee may elect to contribute to the Plan, through payroll deductions, up to 20% of his or her salary, subject to certain limitations. The Plan provides for a Company match of employees' contributions in an amount equal to 50% of an employee's contributions up to $2,000. In connection with the acquisition of HedgeWare (Note 13), the Company assumed the pre-existing deferred compensation plan for HedgeWare employees, which was established in January 1994. Since the March 1999 acquisition, HedgeWare employees may elect to contribute to the SS&C plan. The HedgeWare plan has been frozen for any additional contributions. During the years ended December 31, 2000, 1999, and 1998, the Company incurred $568,000, $371,000, and $286,000, respectively, of expenses related to these plans. 12. STOCK OPTION AND PURCHASE PLANS During 1994, the Board of Directors approved a new plan ("1994 Plan"), effective January 1, 1995, for which 1,000,000 shares of common stock were reserved. The 1994 Plan was amended in October 1995 and April 1996 to reserve additional shares of common stock for issuance under the plan, bringing the total shares of common stock reserved for issuance to 3,000,000. Options under the 1994 Plan generally vest ratably over four years and expire ten years subsequent to the grant. The Board of Directors, as of April 30, 1998, decided that no further options shall be granted under the 1994 plan. There were options to purchase 1,253,876, 1,704,223, and 2,110,719 shares of common stock outstanding as of December 31, 2000, 1999, and 1998, respectively. Options to purchase 784,020, 896,714, and 856,709 shares of common stock were exercisable as of December 31, 2000, 1999, and 1998, respectively. The Company's 1996 Director Stock Option Plan provides for non-employee directors to receive options to purchase common stock of the Company at an exercise price equal to the fair market value of the common stock at the date of grant. Each option granted under the 1996 Plan is fully vested immediately upon the option grant date and expires ten years from the grant date. On May 23, 2000, the plan was amended to increase the number of reserved shares to 300,000. At December 31, 2000, 1999, and 1998, there were 160,000, 70,000, and 90,000 shares, respectively, available for director option grants. There were options to purchase 125,000, 65,000, and 45,000 shares of common stock outstanding as of December 31, 2000, 1999, and 1998, respectively. All options outstanding were exercisable as of December 31, 2000, 1999, and 1998, respectively. During 1998, the Board of Directors approved the 1998 Stock Incentive Plan ("1998 Plan"), which has 1,500,000 shares of common stock reserved for issuance. On May 23, 2000, the number of reserved shares was increased by 500,000 for a total of 2,000,000 shares. Generally, options under the 1998 Plan vest ratably over four years and expire ten years subsequent to the grant. Shares available for option grants under the 1998 Plan were 1,134,070, 554,043 and 1,204,542 at December 31, 2000, 1999, and 1998, respectively. There were options to purchase 859,680, 945,957, and 295,458 shares of common stock outstanding at December 31, 2000, 1999, and 1998, respectively, of which options to purchase 294,206, 81,561 and 1,583 shares were exercisable. In 1999, the Board of Directors approved the Company's 1999 Non-Officer Employee Stock Incentive Plan ("1999 Plan") and reserved 1,250,000 shares of Common Stock for issuance under the 1999 Plan. All the Company's employees, consultants, and advisors other than the Company's executive officers and directors are eligible to participate in the 1999 Plan. Only non-statutory stock options, restricted stock awards, and other stock-based awards may be granted under the 1999 Plan. Shares available for option grants under the 1999 Plan were 217,266 and 1,045,000 at December 31, 2000 and 1999, respectively. Page 37 39 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) There were options to purchase 999,400 and 205,000 shares of common stock outstanding at December 31, 2000 and 1999, respectively, of which options to purchase 67,917 and 66,667 shares were exercisable. The following table summarizes stock option transactions for the years ended December 31, 2000, 1999, and 1998.

WEIGHTED AVERAGE SHARES EXERCISE PRICE ---------- ---------------- Outstanding at December 31, 1997 2,287,200 $ 7.37 Granted 1,360,500 14.30 Canceled (768,077) 8.96 Exercised (428,446) 4.87 ---------- ------ Outstanding at December 31, 1998 2,451,177 $10.97 Granted 1,259,965 $12.23 Cancelled (410,381) 12.36 Exercised (380,581) 11.07 ---------- ------ Outstanding at December 31, 1999 2,920,180 $11.32 Granted 1,542,750 $ 5.37 Cancelled (1,185,390) 9.33 Exercised (39,584) 5.20 ---------- ------ Outstanding at December 31, 2000 3,237,956 $ 9.28 ========== ======

The following table summarizes information about stock options outstanding at December 31, 2000:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE --------------------------------- ------------------------- WEIGHTED AVERAGE WEIGHTED RANGE OF NUMBER REMAINING WEIGHTED NUMBER AVERAGE EXERCISE OUTSTANDING AT CONTRACTUAL LIFE AVERAGE EXERCISABLE AT EXERCISE PRICE 12/31/00 (YEARS) EXERCISE PRICE 12/31/00 PRICE --------------- -------------- ---------------- -------------- -------------- -------- $ 3.94 - $ 5.75 1,545,713 8.5 $ 5.19 359,827 $ 4.63 6.00 - 9.00 230,582 6.8 6.93 160,760 7.15 9.38 - 13.50 588,350 7.3 10.57 412,082 10.39 14.58 - 18.13 758,145 4.4 15.22 256,341 15.64 22.75 - 23.63 115,166 7.3 23.21 82,133 23.15

The exercise price for each of the above grants was determined by the Board of Directors of the Company to be equal to the fair market value of the Company's common stock on the date of grant The Company's 1996 Employee Stock Purchase Plan which permits employees of the Company to purchase shares of common stock pursuant to payroll deductions at a price equal to 85% of the fair market value of the Company's common stock on either the first or last day of the purchase period, whichever is lower. The Company has adopted semiannual purchase periods of October through March and April through September. As of December 31, 2000, employees had deposited with the Company, through payroll deductions, approximately $100,000 to purchase shares through the stock purchase plan at March 31, 2001. In May 2000, the Plan was further amended to increase the reserved shares from 400,000 to 600,000. At December 31, 2000, 1999, and 1998, 4,968,000, 4,839,000, and 3,990,000 shares, respectively, were reserved for the stock option and Employee Stock Purchase plans. Page 38 40 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Stock-Based Compensation The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations in accounting for its stock options. Under APB 25, because the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded. The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option plans and employee stock purchase plan. Had compensation cost for the Company's stock option plans and employee stock purchase plan been determined consistent with SFAS No. 123, the Company's net income (loss) and earnings (loss) per share would have been adjusted to the pro forma amounts indicated in the table below for the periods ending December 31 (in thousands except per share):

2000 1999 1998 ------- -------- ------- Net income (loss), as reported $ 2,172 $(12,648) $ 1,053 Net income (loss), pro forma (2,073) (17,690) (3,444) Basic earnings (loss) per share, as reported 0.14 (0.81) 0.07 Basic earnings (loss) per share, pro forma (0.13) (1.13) (0.23) Diluted earnings (loss)per share, as reported 0.14 (0.81) 0.07 Diluted earnings (loss) per share, pro forma (0.13) (1.13) (0.23)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2000, 1999, and 1998, respectively: dividend yield of 0%; expected volatility of 65%, 70%, and 70%; risk-free interest rate of 6.6%, 5.2%, and 5.4%; and expected lives of 5 years for 2000 and 1998 and 4.26 years for 1999. The weighted-average fair value of options granted using this option-pricing model in 2000, 1999, and 1998 was $3.26, $6.04, and $8.65, respectively. The fair value of each estimated stock grant under the employee stock purchase plan is based on the price of the stock at the beginning of the offering period using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2000, 1999, and 1998, respectively: dividend yield of 0%; expected volatility of 65%, 70%, and 70%; risk-free interest rate of 5.53%, 4.96%, and 4.81%, and expected lives of six months. 13. ACQUISITIONS On November 14, 1997, the Company acquired all of the outstanding stock of Mabel for $2.5 million, which included $100,000 of direct costs associated with the acquisition. The purchase was paid in the form of cash for $475,000, 72,816 shares of common stock of the Company valued at $750,000, $375,000 due in three equal annual installments of $125,000 on the anniversary date of the transaction, $286,000 of notes payable to the former Mabel shareholders, and the assumption of liabilities of $623,000. The agreement also calls for a contingent payment to be made in 2001. The payment is contingent on the continued employment of the former Mabel shareholders and is based on the revenues generated by the Mabel division. As of December 31, 2000, upon achieving certain milestones, the Company recorded a liability of $1.3 million associated with this contingent payment. The payment is expected to be made in the first quarter of 2001. The acquisition was accounted for as a purchase and, accordingly, the net assets and results of operations of Mabel have been included in the consolidated financial statements from the acquisition date. The purchase price was first allocated to tangible assets based on their net realizable value or fair market value Page 39 41 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) on the date of the acquisition. The remaining portion of the purchase price was allocated to identified intangible assets, goodwill, and in-process research and development. In 1998, the Company acquired substantially all of the assets of Quantra Corporation ("Quantra") pursuant to an Asset Purchase Agreement, among the Company, Quantra, and AEGON USA Realty Advisors, Inc., the sole stockholder of Quantra. The purchase price for the Quantra acquisition consisted of 546,019 shares of the Company's common stock valued at $8.8 million, $2.3 million in cash and the assumption of certain liabilities of Quantra of approximately $4.1 million, plus the costs of effecting the transaction. The Company and Quantra also entered into an Escrow Agreement pursuant to which an additional $1.2 million was held in escrow to reimburse the Company in connection with certain acquisition costs and breaches of representations, warranties, and covenants, if any, by Quantra. The escrow agreement expired on March 20, 1999 and all the escrowed monies were returned to the Company. The acquisition was accounted for as a purchase and, accordingly, the net assets and results of operations of Quantra have been included in the consolidated financial statements from the acquisition date. The purchase price was allocated to tangible and intangible assets and liabilities based on their fair market value on the date of the acquisition. Also in 1998, the Company completed its acquisition (the "Savid Acquisition") of the outstanding shares of Savid International Inc. and The Savid Group, Inc. (together, "Savid") pursuant to a Stock Purchase Agreement between the Company, Savid and the sole stockholder ("Stockholder") of Savid. The purchase price of the Savid acquisition consisted of $739,000 in cash, net of cash received of $82,500, and the assumption of certain liabilities of Savid of $118,000, plus the costs of effecting the transaction. The acquisition was accounted for as a purchase and, accordingly, the net assets and results of operations of Savid have been included in the consolidated financial statements from the acquisition date. The purchase price was allocated to tangible and intangible assets, liabilities, and in-process research and development based on their fair market value on the date of the acquisition. Under the agreement, an additional consideration of $750,000 was to be provided if revenues of $3,000,000 were attained since April 15, 1998. This level of revenue was attained in the third quarter of 2000. In addition, the Company shall pay to the stockholder an aggregate of 10% of the license fees with respect to sales and/or licensing of the Savid product during the period commencing on April 15, 1998 and ending on April 14, 2003. In 1999, the Company acquired all of the outstanding stock of HedgeWare, Inc. ("HedgeWare"), a provider of portfolio, financial, partnership, and tax accounting software and service support to hedge fund managers and traders, for 685,683 shares of Common Stock of the Company in a business combination accounted for as a pooling-of-interests. Accordingly, the financial statements for all periods prior to the combination have been restated to reflect the combined operations. The Company, HedgeWare and the former stockholders of HedgeWare have entered into an Escrow Agreement providing, among other things, that 89,139 shares of Common Stock will be held in escrow to reimburse the Company in connection with breaches of representations, warranties or covenants, if any, as well as potential rental obligations and sales tax liabilities of HedgeWare. To date, there have been no claims against the escrow and, therefore, the escrow shares were released in the first quarter of 2001. The results of operations presented below for the years ended December 31, 1998 and 1999 present the Company and HedgeWare as stand-alone entities. There were no intercompany transactions and no adjustments to net assets of the combining companies to adopt the same accounting practices. Page 40 42 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TOTAL COMPANY HEDGEWARE COMPANY -------- --------- -------- (IN THOUSANDS) 1998 Revenues $ 69,413 $ 4,180 $ 73,593 Net income (loss) $ 2,862 $(1,809) $ 1,053 -------- ------- -------- 1999 Revenues $ 63,067 $ 2,669 $ 65,736 Net income (loss) (14,044) 1,396 (12,648)

HedgeWare had elected to be treated as a Subchapter S Corporation for income tax purposes and, as such, income taxes are provided from March 11, 1999 for HedgeWare's results of operations. During the quarter ended March 31, 1999, the Company issued stock valued at $3.1 million in satisfaction of certain shareholder and employee-related accrued expenses of HedgeWare that existed as of the effective date of the merger. Also in 1999, the Company acquired all of the outstanding stock of The Brookside Corporation. Pursuant to the Purchase Agreement, all of the outstanding shares of common stock of Brookside held by the stockholder were exchanged for an aggregate of 27,600 shares of Common Stock of the Company. The consolidated results of operations for the year ended December 31, 1999 include the results of operations of Brookside from the beginning of the year. The consolidated financial statements for prior periods have not been restated since the impact of such restatement would not be material. For the Mabel, Quantra, and Savid acquisitions, the allocation to completed technology is based on future risk-adjusted discounted cash flows. Completed technology has been capitalized and included within Intangible and Other Assets. Amortization expense associated with completed technology for the Mabel, Quantra, and Savid acquisitions for the years ended December 31, 1998, 1999, and 2000 were $2,973,000, $3,299,000, and $96,000, respectively. The Company believes that the amounts recorded as in-process research and development (IPR&D) charges at the dates of the acquisitions of Quantra and Savid were measured in a manner consistent with widely recognized appraisal practices that were being utilized at the time of the acquisitions. Subsequent to the acquisitions, in a letter dated September 15, 1998 to the American Institute of Certified Public Accountants, the Chief Accountant of the Securities and Exchange Commission (SEC) expressed views of the SEC staff that took issue with certain appraisal practices employed in the determination of the fair value of IPR&D that was the basis of the Company's measurement of its IPR&D charge. Accordingly, the Company has resolved to adjust the amount originally allocated to acquired IPR&D in a manner to reflect the SEC staff's. This revised allocation was completed March 24, 1999. The effect of this revised allocation was to increase the allocation of the purchase price to completed technology and decreased the allocation of the purchase price to purchased in-process technology as reported in the table below (in thousands).

AS AS REPORTED RESTATED -------- -------- Tangible net assets $ 4,667 $ 4,667 Purchased in-process research and development 7,980 5,878 Purchased completed technology 3,505 5,607 ------- ------- $16,152 $16,152 ======= =======

Other factors considered in the allocation of the purchase price to in-process research and development include the estimated net cash flows generated from such projects, discounting the net cash flows back to Page 41 43 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) their present values, and adjusting values to reflect the contribution of completed and core technologies. For the Quantra and Savid acquisitions, the Company developed revenue projections over a five to six year period in three categories: license, maintenance, and consulting. License revenue projections were based on expected unit sales over the projected lives of the respective product lines. The other categories of revenue were generally estimated as a percentage of total license revenues and ranged from 15% to 20% for maintenance and from 10% to 30% for consulting, depending on the product. Savid consulting revenues were projected to be insignificant. Expense assumptions were based on the imposition of the Company's cost structure on the acquired technologies and products. The discount rates for the Quantra in-process research and development projects were 23% and 28%; the discount rate for the Savid in-process research and development projects was 20%. For the Mabel acquisition, the Company developed revenue projections based on unit sales estimates over the projected lives of the Mabel product lines. Expense assumptions were based on Mabel's past experience and had not been adjusted for expected cost synergies with SS&C. The discount rate for the Mabel in-process research and development was 22%. The following summarizes the allocation of the purchase price for the Quantra and Savid acquisitions (in thousands):

1998 ------- Accounts receivable $ 1,481 Unbilled accounts receivable 2,694 Other assets 63 Equipment and furniture 429 Completed technology 5,607 Incomplete technology 5,878 ------- $16,152 =======

The unaudited pro forma condensed consolidated results of operations presented below for the year ended December 31, 1998 assumes the Quantra and Savid acquisitions occurred at the beginning of 1998. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1998 excludes the $5.9 million write-off of purchased in-process research and development related to the Quantra and Savid acquisitions (in thousands, except per share data):

1998 ------- Total revenues $76,299 Operating income 2,618 Net income 1,571 Basic earnings per share 0.11 Diluted earnings per share 0.10

These pro forma results are not necessarily indicative of results of operations that would have actually occurred had the acquisition taken place at the beginning of each period, or of future operations of the combined companies. 14. COMMITMENTS AND CONTINGENCIES On May 7, 1999, the Company announced that it had entered into an agreement that provides for the settlement of the consolidated securities class action lawsuit pending against the Company. The settlement provides that all claims against the Company, certain of its officers and directors, and underwriters, will be dismissed. Under the terms of the settlement, in exchange for the dismissal and release of all claims, the Page 42 44 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Company paid to the class $7.5 million in cash, together with shares of Common Stock of the Company valued at $1.3 million. The Company recorded a charge for the settlement of approximately $9.3 million, including legal fees, in the quarter ended June 30, 1999. From time to time, the Company is subject to certain legal proceedings and claims that arise in the normal course of its business. In the opinion of management, the Company is not a party to any other litigation that it believes could have a material effect on the Company or its business. 15. RELATED PARTY TRANSACTIONS The Company has a liability with the former Mabel shareholders. (see Note 5) On May 1, 1998, the Company invested approximately $2.2 million in cash in exchange for a 24% ownership interest in Caminus Corporation, a services and software company serving the power and gas trading business. The Company also entered into an exclusive distribution agreement which allows Caminus to sell the Company's software products within energy-related markets over a five-year period based on certain terms and conditions. Under this agreement, Caminus purchased $750,000 in 1998, $1,250,000 in 1999 and $750,000 in 2000 of software. In the fourth quarter of 1998, the Company sold its interest in Caminus for $2,250,000 and obtained a warrant to purchase 4.5% of Caminus. In January 2000, the Company exercised the warrant to purchase 277,052 shares of Caminus for $1.8 million. During 2000, the Company sold 111,205 shares and realized a gain of $2.3 million. Aegon USA Realty Advisors, Inc. ("Aegon") is the parent company of QSC Holding Inc. (formerly known as Quantra Corporation), which sold substantially all of its assets to the Company in March 1998. David L. Blankenship, the president of Aegon, relinquished his seat on the board of directors of the Company as of May 23, 2000. During the quarter ended March 31, 1999, Aegon purchased a license for certain of the Company's products for $1.68 million. This amount was paid in full during the quarter ended March 31, 1999. 16. INTERNATIONAL SALES AND GEOGRAPHIC INFORMATION During fiscal 1999, the Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. There were no sales to any individual customers during the years in the three-year period ended 2000 that represented 10% or more of net sales. 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 reportable segments are comprised of the Americas and Europe. The Americas segment includes both North and South America. The European segment includes European countries as well as the Middle East and Africa. Other operating segments include Asia Pacific and Japan. Revenues by geography for the years ended December 31, were (in thousands):

2000 1999 1998 ------- ------- ------- Americas $49,974 $53,471 $63,661 Europe 6,850 11,557 9,127 Other segments 3,190 708 805 ------- ------- ------- $60,014 $65,736 $73,593 ======= ======= =======

Page 43 45 SS&C TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Long-lived assets by geography for the years ended December 31, were (in thousands):

2000 1999 ------- ------- Americas $10,533 $10,547 Europe 424 720 Other segments 193 168 ------- ------- $11,150 $11,435 ======= =======

17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ------- -------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) 2000 Revenue $15,120 $ 15,403 $15,312 $14,179 Gross profit 8,955 9,549 9,876 8,606 Operating income (loss) (1,290) 87 89 (1,086) Net income 11 609 634 918 Basic earnings per share -- .04 .04 .06 Diluted earnings per share -- .04 .04 .06 1999 Revenue $19,447 $ 16,621 $15,228 $14,440 Gross profit 12,831 9,143 8,165 7,591 Operating income (loss) 1,126 (13,299) (4,948) (4,961) Net income (loss) 1,481 (11,838) (2,113) (178) Basic earnings (loss) per share 0.10 (0.76) (0.14) (0.01) Diluted earnings (loss) per share 0.09 (0.76) (0.14) (0.01)

The fourth quarter of 2000 includes a $2.0 million gain related to the sale of additional Caminus shares. The second quarter of 1999 includes the $9.3 million settlement of the lawsuit related to the Company's initial public offering. Page 44 46 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on March 30, 2001. SS&C Technologies, Inc. By: /s/ WILLIAM C. STONE ------------------------------------ William C. Stone President, Chief Executive Officer and Chairman of the Board of Directors Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE --------- ----- ---- /s/ WILLIAM C. STONE President, Chief Executive March 30, 2001 --------------------------------------------------- Officer, and Chairman of the William C. Stone Board of Directors (Principal Executive Officer) /s/ ANTHONY R. GUARASCIO Senior Vice President, Chief March 30, 2001 --------------------------------------------------- Financial Officer (Principal Anthony R. Guarascio Financial and Accounting Officer) /s/ DAVID W. CLARK, JR. Director March 30, 2001 --------------------------------------------------- David W. Clark, Jr. /s/ JOSEPH H. FISHER Director March 30, 2001 --------------------------------------------------- Joseph H. Fisher /s/ JONATHAN M. SCHOFIELD Director March 30, 2001 --------------------------------------------------- Jonathan M. Schofield /s/ WILLIAM W. WYMAN Director March 30, 2001 --------------------------------------------------- William W. Wyman /s/ PATRICK J. MCDONNELL Director March 30, 2001 --------------------------------------------------- Patrick J. McDonnell

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