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MD&A (Item 7)
10,099 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Business. We are a leading provider of mission-critical, sophisticated software-enabled services that allow financial services providers to automate complex business processes. Our portfolio of software products and rapidly deployable software-enabled services allows our clients to automate and integrate front-office functions such as trading and modeling, middle-office functions such as portfolio management and reporting, and back-office functions such as accounting, transfer agency, compliance, regulatory services, performance measurement, reconciliation, reporting, processing and clearing. We provide our solutions globally to thousands of clients, principally within the institutional asset and wealth management, alternative investment management, brokerage, retirement, financial advisory and financial institutions vertical markets. In addition, we provide solutions to the healthcare industry including pharmacy, healthcare administration and health outcomes optimization solutions to satisfy their information processing, quality of care, cost management and payment integrity needs. Our healthcare solutions include claims adjudication, benefit management, care management and business intelligence services.
Acquisitions . To supplement our growth, we evaluate and execute acquisitions that provide complementary products or services, add proven technology and an established client base, expand our intellectual property portfolio or address a highly specialized problem or a market niche.
The following table lists the businesses we have acquired since January 1, 2023:
Acquired Business
Acquisition Date
Acquired Capabilities, Products and Services
Curo Fund Services
November 2025
Expanded fund administration offerings and market share growth across South Africa and the African continent
Calastone Limited
October 2025
Expanded global funds network that connects asset managers and market participants to automated mutual fund and ETF fund transaction processing
FPS Trust Company
February 2025
Enhanced the managed services provided including high-volume beneficiary distributions, paying agent services and tax processing solutions to institutional trustees and retirement plan administrators
Battea-Class Action Services, LLC
September 2024
Added expertise in in all stages of filing and processing settlement claims in connection with antitrust, securities litigation and settlement recovery services
Iress Managed Funds Administration Business
October 2023
Provided software and services for trading and market data, financial advice, investment management, mortgages, superannuation, life and pensions and data intelligence
The discussion in this Part II, Item 7 of this Annual Report on Form 10-K includes the operations of the businesses listed in the table above for the respective time periods each was owned by SS&C.
Revenues. As we have expanded our business, we have focused on increasing our software-enabled services. Since 2023, we have seen increased demand in the financial services industry for these services from existing and new customers. We have taken a number of steps to support that demand, such as automating our software-enabled services delivery methods and expanding our service offerings. We have also acquired businesses that offer software-enabled services or have a large base of term license or maintenance clients. In particular, the acquisition of Blue Prism increased our term license and maintenance revenues. Our software-enabled services revenues increased from $4,488.3 million in 2023 to $5,211.1 million in 2025. We believe that our high degree of these contractually recurring revenues provides us with the ability to better manage our costs and capital investments. To support the growth in our software-enabled services revenues and maintain our level of customer service, we have added personnel, expanded our facilities and invested in IT.
Liquidity. In October 2025, in connection with our acquisition of Calastone, we entered into an Incremental Joinder to our Credit Agreement, resulting in $1,050.0 million of additional Term B-8 Loans, which is described in Contractual Obligations.
We generated $1,744.8 million in cash from operating activities in 2025, compared to $1,388.6 million and $1,215.1 million in 2024 and 2023, respectively. In 2025, we used our operating cash flow, cash received from debt borrowings, $425.5 million in proceeds from the exercise of stock options and existing cash to fund the Calastone acquisition, purchase $1,036.0 million of common stock for treasury, pay $253.8 million in dividends and invest in capital expenditures in our business.
Results of Operations
We use the term organic to refer to the businesses and operations that are included in the comparable prior year period on a constant currency basis. Organic includes the change in an acquired business, but excludes the impact of any business which we acquired for the time period which would impact the comparable prior year period.
Ongoing macroeconomic conditions, such as changes in interest rates and inflation, volatility in capital markets, global trade issues, geopolitical tensions, foreign currency exchange rate fluctuations, and other similar factors could have impacts on our results that are uncertain and, in many respects, outside our control. The situations remain dynamic and subject to rapid and possibly material change, which ultimately could result in material negative effects on our business and results of operations. We will continue to evaluate the nature and extent of the potential impacts to our business, consolidated results of operations, liquidity and capital resources.
Our results of operations below include the results of our recent acquisitions from the date which they were acquired, including the Iress Managed Funds Administration Business in October 2023, Battea in September 2024, FPS Trust Company in February 2025, Calastone Limited in October 2025 and Curo Fund Services in November 2025.
Revenues
We derive our revenues from two sources: software-enabled services revenues and license, maintenance and related revenues. As a general matter, fluctuations in our software-enabled services revenues are attributable to our customer retention, the number of new software-enabled services clients as well as total assets under management in our clients’ portfolios and the number of outsourced transactions managed for our existing clients. Software-enabled services revenues also fluctuate as a result of reimbursements received for “out-of-pocket” expenses, such as postage and telecommunications charges, which are recorded as revenues on an accrual basis. Total out-of-pocket revenue was $100.1 million, $93.2 million and $93.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Because these additional revenues are offset by the reimbursable expenses incurred, there is no impact on gross profit, operating income and net income; however, the reimbursements billed and expenses incurred can lead to fluctuations in revenues, cost of revenues and gross margin percentage each period. License, maintenance and related revenues consist primarily of term and perpetual license fees, maintenance fees and professional services. Maintenance revenues vary based on customer retention and on the annual increases in fees, which are generally tied to the consumer price index. License and related revenues tend to fluctuate based on the number of new licensing clients, the timing and terms of contract renewals and demand for consulting services.
The following table sets forth the percentage of our total revenues represented by each of the following sources of revenues for the periods indicated:
Year Ended December 31,
Software-enabled services
License, maintenance and related
Total revenues
The following table sets forth revenues (dollars in millions) and percent change in revenues for the periods indicated:
Year Ended December 31,
Percent Change From Prior
Period
Software-enabled services
License, maintenance and related
Total revenues
Fiscal 2025 versus Fiscal 2024 . Our revenues increased $390.2 million, or 6.6%, primarily due to an increase of $281.2 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, Global Investor and Distribution Solutions and Wealth and Investment Technologies businesses. Our revenues also increased due to acquisitions, which contributed $77.5 million in revenues as well as the favorable impact from foreign currency translation of $31.5 million.
Software-enabled services revenues increased $370.8 million, or 7.7%, primarily due to an increase in organic revenues of $268.8 million, and acquisitions, which added $77.5 million in revenues, as well as the favorable impact from foreign currency translation of $24.5 million. License, maintenance and related revenues increased $19.4 million, or 1.9%, primarily due to an increase in organic revenues of $12.4 million and the favorable impact from foreign currency translation of $7.0 million.
Fiscal 2024 versus Fiscal 2023 . Our revenues increased $379.2 million, or 6.9%, primarily due to an increase of $336.8 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, virtual data room services, Global Investor and Distribution Solutions and Wealth and Investment Technologies businesses. Our revenues also increased due to acquisitions, which contributed $31.7 million in revenues as well as the favorable impact from foreign currency translation of $10.7 million.
Software-enabled services revenues increased $352.0 million, or 7.8%, primarily due to an increase in organic revenues of $311.7 million, and acquisitions, which added $29.9 million in revenues, as well as the favorable impact from foreign currency translation of $10.4 million. License, maintenance and related revenues increased $27.2 million, or 2.7%, primarily due to an increase in organic revenues of $25.1 million, acquisitions added $1.8 million in revenues and the favorable impact from foreign currency translation was $0.3 million.
Cost of Revenues
Cost of software-enabled services revenues consists primarily of costs related to personnel utilized in servicing our software-enabled services and amortization of intangible assets. Cost of license, maintenance and other related revenues consists primarily of the costs related to personnel utilized in servicing our maintenance contracts and to provide implementation, conversion and training services to our software licensees, as well as system integration and custom programming consulting services and amortization of intangible assets.
The following tables set forth each of the following cost of revenues as a percentage of their respective revenue source for the periods indicated:
Year Ended December 31,
Cost of software-enabled services
Cost of license, maintenance and related
Total cost of revenues
Gross margin percentage
The following table sets forth cost of revenues (dollars in millions) and percent change in cost of revenues for the periods indicated:
Year Ended December 31,
Percent Change From Prior
Period
Cost of software-enabled services
Cost of license, maintenance and related
Total cost of revenues
Fiscal 2025 versus Fiscal 2024 . Our total cost of revenues increased by $232.2 million, or 7.7%, primarily due to an increase in organic costs of $182.2 million and acquisitions, which added $40.4 million in costs. Our cost of revenues also increased due to the unfavorable impact from foreign currency translation of $9.6 million. Organic cost increases reflect the continued investment in delivering client service.
Cost of software-enabled services revenues increased $220.5 million, or 8.4%, primarily due to an increase of $172.2 million in organic costs, acquisitions, which added $40.4 million in costs, and the unfavorable impact from foreign currency translation of $7.9 million. Cost of license, maintenance and related revenues increased $11.7 million, or 2.9%, primarily due to an increase of $10.0 million in organic costs and the unfavorable impact from foreign currency translation of $1.7 million.
Fiscal 2024 versus Fiscal 2023 . Our total cost of revenues increased by $167.4 million, or 5.9%, primarily due to an increase in organic costs of $135.1 million and acquisitions, which added $25.5 million in costs. Our cost of revenues also increased due to the unfavorable impact from foreign currency translation of $6.8 million. Organic cost increases reflect the continued investment in delivering client service.
Cost of software-enabled services revenues increased $146.8 million, or 5.9%, primarily due to an increase of $116.0 million in organic costs, acquisitions, which added $25.4 million in costs, and the unfavorable impact from foreign currency translation of $5.4 million. Cost of license, maintenance and related revenues increased $20.6 million, or 5.4%, primarily due to an increase of $19.1 million in organic costs, the unfavorable impact from foreign currency translation of $1.4 million and acquisitions, which added $0.1 million in costs.
Operating Expenses
Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our products, including salaries, commissions, travel and entertainment. Such expenses also include amortization of intangible assets, the cost of branch sales offices, trade shows and marketing and promotional materials. Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products. General and administrative expenses consist primarily of personnel costs related to management, accounting and finance, legal, human resources and administration and associated overhead costs, as well as fees for professional services.
The following table sets forth operating expenses as a percentage of our total revenues for the periods indicated:
Year Ended December 31,
Selling and marketing
Research and development
General and administrative
Total operating expenses
The following table sets forth operating expenses (dollars in millions) and percent change in operating expenses for the periods indicated:
Year Ended December 31,
Percent Change From Prior
Period
Selling and marketing
Research and development
General and administrative
Total operating expenses
Fiscal 2025 versus 2024 . Operating expenses increased $64.8 million, or 4.3%, primarily due to an increase of $30.2 million in organic operating expenses, acquisitions, which added $26.5 million in expenses, and the unfavorable impact from foreign currency translation of $8.1 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.
Fiscal 2024 versus 2023 . Operating expenses increased $77.2 million, or 5.4%, primarily due to an increase of $66.9 million in organic operating expenses, acquisitions, which added $6.9 million in expenses, and the unfavorable impact from foreign currency translation of $3.4 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.
Comparison of Fiscal 2025, 2024 and 2023 for Interest, Taxes and Other
Interest expense . We had interest expense of $434.7 million in 2025 compared to $463.0 million in 2024 and $476.3 million in 2023. The decrease in interest expense for 2025 as compared to 2024 is due to lower average interest rates on debt. The decrease in interest expense for 2024 as compared to 2023 is due to lower average debt balances. We had an average interest rate of 6.10%, 6.71% and 6.65%, for the twelve months ended December 31, 2025, 2024 and 2023, respectively. Our debt balances are discussed further in “Liquidity and Capital Resources”.
Other (expense) income, net . We had other (expense) income, net of $(23.0) million in 2025 compared to $8.9 million in 2024 and $20.7 million in 2023. Other (expense) income, net for 2025 included losses on the sale of fixed assets of $35.1 million. Those losses were partially offset by investment gains of $14.0 million, which includes fair value adjustments to increase the carrying value of our investments and dividend income. Other income, net for 2024 included net investment gains of $19.6 million, which includes fair value adjustments to increase the carrying value of our investments and dividend income. Those investment gains were partially offset by foreign currency translation losses of $8.2 million. Other income, net for 2023 included net investment gains of $19.0 million, which includes fair value adjustments to increase the carrying value of our investments and dividend income. Other income, net for 2023 also included income of $13.4 million from the settlement of a dispute related to pre-acquisition matters. The remaining portion of other income, net consisted primarily of losses on the sale or adjustment to carrying value of fixed assets of $11.7 million.
Equity in earnings of unconsolidated affiliates, net . We had equity in earnings of unconsolidated affiliates, net of $(9.3) million for 2025, $24.4 million for 2024 and $100.0 million for 2023. Our equity in earnings of unconsolidated affiliates in 2025 is primarily related to a $10.6 million adjustment to decrease the carrying value of one of our investments. Our equity in earnings of unconsolidated affiliates is primarily related to an increase the carrying value of one of our investments of $19.1 million and $96.3 million in 2024 and 2023, respectively.
Loss on extinguishment of debt, net . We recorded a $3.3 million, $31.2 million and $2.1 million loss on extinguishment of debt in 2025, 2024 and 2023, respectively. The loss on extinguishment of debt, net in 2025 and 2023 relates to the write-off of a portion of the unamortized capitalized financing fees and the unamortized original issue discount associated with additional prepayments on our term loans prior to their scheduled maturity. The loss on extinguishment of debt, net in 2024 primarily related to the amendment of our credit agreement discussed further in “Liquidity and Capital Resources.”
Provision for income taxes. The following table sets forth the provision for income taxes (dollars in millions) and effective tax rates for the periods indicated:
Year Ended December 31,
Provision for income taxes
Effective tax rate
Our 2025, 2024 and 2023 effective tax rates differ from the statutory rate primarily due to the effect of our foreign operations and permanent book to tax differences. The change in the effective tax rate from 2024 to 2025 was primarily driven by the releases of uncertain tax positions due to closed audits and statute of limitation expirations, recognition of windfall tax benefits from stock awards, and a change in the composition of income before income taxes from foreign and domestic tax jurisdictions. Our effective tax rate for 2025 includes benefits related to releases of uncertain tax positions due to closed audits, recognition of a tax benefit associated with a change in domestic tax credit methodology, and benefits related to stock-based awards. Our effective tax rate for 2024 includes benefits related to releases of uncertain tax positions and tax refunds, both due to closed audits, recognition of a state tax benefit associated with income apportionment rules, recognition of a tax benefit associated with a change in domestic tax credit methodology, releases of valuation allowances on deferred tax assets, and benefits related to stock-based awards. Our effective tax rate for 2023 included increases in uncertain tax positions and benefits related to stock-based awards.
Our effective tax rate includes the effect of operations outside the U.S., which historically have been taxed at rates lower than the U.S. statutory rate. While we have income from multiple foreign sources, the majority of our non-U.S. operations are in the United Kingdom and India, where the statutory rates were 25.0% and approximately 25.3%, respectively, in 2025, 25.0% and approximately 25.4%, respectively, in 2024, and 23.5% and approximately 33.0%, respectively, in 2023. A future proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.
In 2021, the OECD (“Organisation for Economic Co-operation and Development”)/G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two. Further guidance continues to be released each year. Many non-U.S. tax jurisdictions in which we operate have either enacted legislation or are in the process of enacting legislation to adopt certain components of the Pillar Two Model Rules. The enactments effective in 2025 were not material to our provision for income taxes.
Liquidity and Capital Resources
Our primary cash requirements are to pay for the costs of our operations, to fund principal and interest payments with respect to our indebtedness, to invest in research and development, to acquire complementary businesses or assets, repurchase shares of our common stock and to pay dividends on our common stock. We expect our cash on hand, cash flows from operations, and cash available under our Credit Agreement to provide sufficient liquidity to fund our cash requirements for at least the next twelve months.
Our cash, cash equivalents and restricted cash and cash equivalents, including amounts held on behalf of clients, at December 31, 2025 were $3,573.8 million, an increase of $203.3 million from $3,370.5 million at December 31, 2024. The increase in cash was primarily due to the increase in cash and cash equivalents associated with funds held on behalf of clients. See Notes 8, 10, and 11 to our Consolidated Financial Statements for further discussion of acquisitions, debt, and equity, respectively.
Client funds obligations include our transfer agency client balances invested overnight as well as our contractual obligations to remit funds to satisfy client pharmacy claim obligations and are recorded on the Consolidated Balance Sheet when incurred, generally after a claim has been processed by us. Our contractual obligations to remit funds to satisfy client obligations are primarily sourced by
funds held on behalf of clients. We had $3,799.5 million and $3,162.2 million of client funds obligations at December 31, 2025 and 2024, respectively.
Cash flows from operating, investing and financing activities, as reflected in our Consolidated Statements of Cash Flows, are summarized in the following table (in millions):
Year Ended December 31,
Change From Prior Period
Net cash, cash equivalents and restricted cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase in cash, cash equivalents and restricted cash
Fiscal 2025 versus 2024
Operating activities: Cash provided by operating activities of $1,744.8 million during the year ended December 31, 2025 resulted from net income of $798.7 million, adjustments for non-cash items of $1,023.2 million, partially offset by changes in our working capital accounts totaling $77.1 million. The changes in our working capital accounts were primarily driven by increases in accounts receivable, contract assets and changes in income taxes prepaid and payable due to the timing of tax payments.
Investing activities : Cash used in investing activities during the year ended December 31, 2025 totaled $1,307.6 million, which included $1,052.0 million paid for business acquisitions, net of cash acquired, capitalized software development costs of $221.9 million and capital expenditures of $80.8 million, partially offset by distributions received from unconsolidated affiliates of $20.5 million, proceeds from the sale of property and equipment of $17.8 million and receipts from the collection of other non-current receivables of $10.5 million.
Financing activities: Cash used in financing activities during the year ended December 31, 2025 was $243.5 million and primarily resulted from $1,036.0 million of purchases of common stock for treasury, $253.8 million in quarterly dividends paid, $79.2 million in withholding taxes paid related to equity award net share settlements, distributions from noncontrolling interests of $21.8 million and $7.6 million in payments of deferred financing fees. These expenditures were partially offset by net borrowings of $421.9 million, proceeds of $425.5 million from stock option exercises and the increase in client funds obligations of $307.5 million.
Fiscal 2024 versus 2023
Our cash, cash equivalents and restricted cash and cash equivalents, including amounts held on behalf of clients, at December 31, 2024 were $3,370.5 million, an increase of $371.9 million from $2,998.6 million at December 31, 2023. The increase in cash was primarily due to the increase in cash and cash equivalents associated with funds held on behalf of clients. See Notes 8, 10, and 11 to our Consolidated Financial Statements for further discussion of acquisitions, debt, and equity, respectively. We also had $3,162.2 million and $2,615.6 million of client funds obligations at December 31, 2024 and 2023, respectively.
Operating activities: Cash provided by operating activities of $1,388.6 million during the year ended December 31, 2024 resulted from net income of $761.7 million, adjustments for non-cash items of $811.6 million, partially offset by changes in our working capital accounts totaling $184.7 million. The changes in our working capital accounts were primarily driven by increases in accounts receivable, contract assets and prepaid expenses, partially offset by increases in deferred revenue.
Investing activities : Cash used in investing activities during the year ended December 31, 2024 totaled $855.7 million, which included $647.1 million paid for business acquisitions, net of cash acquired and asset acquisitions, capitalized software development costs of $194.3 million and capital expenditures of $61.4 million, partially offset by distributions received from unconsolidated affiliates of $25.3 million, receipts from the collection of other non-current receivables of $10.2 million, proceeds from sales and maturities of investments of $6.9 million and proceeds from the sale of property and equipment of $4.8 million.
Financing activities: Cash used in financing activities during the year ended December 31, 2024 was $152.3 million and primarily resulted from $737.5 million of purchases of common stock for treasury, $244.9 million in quarterly dividends paid, $39.4 million in payments of deferred financing fees and $26.2 million in withholding taxes paid related to equity award net share
settlements. These expenditures were partially offset by net borrowings of $289.9 million, proceeds of $355.1 million from stock option exercises, the increase in client funds obligations of $235.8 million and proceeds from noncontrolling interests of $14.9 million.
We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive operating cash flows. At December 31, 2025, we held approximately $296.7 million in cash and cash equivalents at non-U.S. subsidiaries where we have made such a determination and in turn no provision for income taxes had been made.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2025 that require us to make future cash payments (in millions):
Payments Due by Period
Contractual Obligations and
Other Commitments
Total
Less
than
1 Year
1-3 Years
Years
More than
5 Years
Short-term and long-term debt
Interest payments (1)
Operating lease obligations (2)
Purchase obligations (3)
Total contractual obligations
Reflects interest payments on our Credit Agreement at an assumed interest rate of one-month Adjusted Term SOFR of 3.72% plus 2.00% on our Term B-8 facility, one-month Adjusted Term SOFR of 3.72% plus 1.50% on our Term A-9 facility, 5.5% on our 5.5% Senior Notes and 6.5% on our 6.5% Senior Notes.
We are obligated under noncancelable operating leases for office space and office equipment.
Purchase obligations include the minimum amounts committed under contracts for goods and services.
As of December 31, 2025, our liability for uncertain tax positions and related interest and penalties payable was $92.2 million and $7.2 million, respectively. We are unable to reasonably estimate the timing of such liability and interest payments in individual years beyond 12 months due to uncertainties in the timing of the effective settlement of tax positions. As of December 31, 2025, our projected obligation related to our defined benefit pension plans was $35.9 million and we are unable to reasonably estimate the timing of such obligation due to uncertainties in the timing of payments. As a result, these amounts are not included in the above contractual obligations table.
Senior Secured Credit Facilities and Senior Notes
On April 16, 2018, in connection with our acquisition of DST, we entered into an amended and restated credit agreement with SS&C Technologies, Inc. (“SS&C”), SS&C European Holdings SARL, an indirect wholly-owned subsidiary of SS&C (“SS&C SARL”) and SS&C Technologies Holdings Europe SARL, an indirect wholly-owned subsidiary of SS&C (“SS&C Tech SARL”) as the borrowers (“Credit Agreement”), which included Term B-3 and Term B-4 Loans. Also in 2018, we entered into amendments to the Credit Agreement in connection with our acquisitions of Eze and Intralinks, the Term B-5 Loan. On March 22, 2022, in connection with our acquisition of Blue Prism, we entered into an Incremental Joinder to the Credit Agreement with certain of our subsidiaries. Pursuant to the Incremental Joinder, a new $650.0 million senior secured incremental term loan B facility (“Term B-6 Loan”) and a new $880.0 million senior secured incremental term loan B facility (“Term B-7 Loan” and together with the Term B-6 Loan, the “Incremental Term Loans”) was made available to us, the proceeds of which were used to finance substantially all of the consideration for the acquisition of Blue Prism.
On March 28, 2019, we issued $2.0 billion aggregate principal amount of 5.5% Senior Notes due 2027 (“5.5% Senior Notes”), the proceeds of which were used to repay a portion of the outstanding Term B-3 Loan under our Credit Agreement.
The Credit Agreement had a revolving credit facility with a five-year term available for borrowings by SS&C with $250.0 million in available commitments (“Revolving Credit Facility”). The Revolving Credit Facility also contained a $25 million letter of credit sub-facility. On December 28, 2022, we entered into an amendment (the “Revolving Facility Amendment”) to the Credit Agreement with certain of our subsidiaries. Pursuant to the Revolving Facility Amendment, the Revolving Credit Facility was amended to: (i) extend the maturity date to December 28, 2027, (ii) amend the interest rate provisions to replace LIBOR with Term SOFR as the interest rate benchmark, (iii) increase the aggregate commitments from $250.0 million to $600.0 million, (iv) increase the letter of credit sub-facility from $25.0 million to $75.0 million and (v) make certain other revisions fully set forth in the Revolving Facility Amendment.
On May 9, 2024, we entered into the Incremental Joinder & First Amendment to Credit Agreement (the “Amendment”) which amended our Credit Agreement. Pursuant to the Amendment, we borrowed $3,935.0 million in aggregate principal amount of incremental term B-8 loans (the “Term B-8 Loans”). The Term B-8 Loans bear interest at, at our option, the Base Rate (as defined in the Amendment), plus 1.00% per annum, or the Term SOFR Rate (as defined in the Amendment), plus 2.00% per annum.
Also on May 9, 2024, we issued $750.0 million aggregate principal amount of 6.5% Senior Notes due 2032 (the “6.5% Senior Notes”). The 6.5% Senior Notes are senior unsecured obligations and rank equal in right of payment with all of our existing and future senior indebtedness. The 6.5% Senior Notes are fully and unconditionally guaranteed, jointly and severally, by SS&C Holdings and all of its existing domestic restricted subsidiaries (other than SS&C Technologies) that guarantee our existing senior secured credit facilities and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities and certain other indebtedness. Interest on the 6.5% Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024.
The net proceeds of the Term B-8 Loans and from the sale of the 6.5% Senior Notes were used to repay all amounts owed under the term B-3 loans, the term B-4 loans, the term B-5 loans, the term B-6 loans and the term B-7 loans (together, the “Existing Term Loans”) under the Credit Agreement, as well as to pay related fees and expenses.
On September 27, 2024, in connection with our acquisition of Battea, we entered into an Incremental Joinder to our Credit Agreement (the “September 2024 Incremental Joinder”). Pursuant to the September 2024 Incremental Joinder, we borrowed $800.0 million in aggregate principal amount of incremental term A-9 loans (“Term A-9 Loans”), the net proceeds of which were used to finance in part the acquisition of Battea, the payment of fees and expenses related thereto and for working capital and general corporate purposes. The Term A-9 Loans bear interest at, at our option, the Base Rate (as defined in the Incremental Joinder), plus 0.50% per annum, or the Term SOFR Rate (as defined in the Incremental Joinder), plus 1.50% per annum, in each case with two leverage-based adjustments that increase the interest rate margin by 0.25% per annum if our consolidated net secured leverage ratio is greater than 3.50x and 4.25x, respectively, and one leverage-based adjustment that reduces the interest rate margin by 0.125% per annum if our consolidated net secured leverage ratio is less than or equal to 2.50x.
On October 14, 2025, in connection with our acquisition of Calastone, we entered into an Incremental Joinder to our Credit Agreement (the “October 2025 Incremental Joinder”). Pursuant to the October 2025 Incremental Joinder, we borrowed $1,050.0 million in aggregate principal amount of incremental term B-8 loans (the “Incremental Term B-8 Loans”). The net proceeds of the Incremental B-8 Loans were used to finance the acquisition of Calastone, the payment of fees and expenses related thereto and for working capital and general corporate purposes. The Incremental Term B-8 Loans are a fungible increase to SS&C’s existing term B-8 Loans and have the same terms, maturity date, and interest.
The table below provides a summary of the key terms of our Senior Secured Credit Facilities and Senior Notes:
Amount Outstanding
at December 31, 2025
Maturity
Scheduled Quarterly
(in millions)
Date
Payments Required
Senior Secured Credit Facilities
Term B-8 Loans
May 9, 2031
Term A-9 Loans
September 27, 2029 (2)
Revolving Credit Facility (4)
December 28, 2027
None
5.5% Senior Notes
September 30, 2027
None
6.5% Senior Notes
June 1, 2032
None
Per the September 2024 Incremental Joinder, scheduled quarterly payments of 0.25% are required. We have made prepayments on our Term B-8 Loans and do not have any principal quarterly payments due until March 2030.
The Term A-9 Loans will mature on the earlier to occur of (1) September 27, 2029 or (2) 91 days prior to the maturity of (x) the 5.5% Senior Notes if more than $150.0 million aggregate principal amount remains outstanding on the 91 st day prior to such maturity or (y) the Revolving Credit Facility if more than $150.0 million aggregate principal amount of commitments remain outstanding on the 91 st day prior to such maturity, whichever of (x) or (y) comes first.
Scheduled quarterly payment required for the first eight fiscal quarters commencing with the fiscal quarter ending December 31, 2024. The scheduled quarterly payment will increase to 1.250% for each quarter thereafter until the maturity date of the Term A-9 Loans.
The senior secured credit facility has a revolving credit facility available for borrowing by SS&C with $600.0 million in available commitments (“Revolving Credit Facility”), of which $593.7 million was available as of December 31,
2025. The Revolving Credit Facility also contains a $75.0 million letter of credit sub-facility, of which $6.3 million was utilized as of December 31, 2025.
Debt Terms
Our obligations under the Term B-8 Loans and Term A-9 Loans are guaranteed by our existing and future wholly-owned domestic restricted subsidiaries (subject to customary exceptions and limitations). The obligations of the loan parties under the amended senior secured credit facility are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain foreign restricted subsidiaries of such persons (with customary exceptions and limitations).
The amended senior secured credit facility includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of our restricted subsidiaries to incur debt or liens, make investments (including in the form of loans and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of our subsidiaries, pay dividends on our capital stock or redeem, repurchase or retire our capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with our affiliates. The amended senior secured credit facility also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions. In addition, the amended senior secured credit facility contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a maximum consolidated net secured leverage ratio. The amended senior secured credit facility also contains a financial maintenance covenant for the benefit of the Term A-9 Loans that will require us to maintain a separate maximum consolidated net secured leverage ratio. In addition, under the amended senior secured credit facility, certain defaults under agreements governing other material indebtedness could result in an event of default under the amended senior secured credit facility, in which case the lenders could elect to accelerate payments under the amended senior secured credit facility and terminate any commitments they have to provide future borrowings. As of December 31, 2025, we were in compliance with all financial and non-financial covenants.
The 5.5% Senior Notes are guaranteed, jointly and severally, by SS&C Holdings and all of its existing and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities or certain other indebtedness. The 5.5% Senior Notes are unsecured senior obligations that are equal in right of payment to all of our existing and future senior unsecured indebtedness. Interest on the 5.5% Senior Notes is payable on March 30 and September 30 of each year.
At any time after March 30, 2025, we may, at our option, redeem some or all of the 5.5% Senior Notes, in whole or in part, at 100% of the principal amount, plus accrued and unpaid interest to the redemption date:
At any time prior to June 1, 2027, we may, at our option, redeem some or all of the 6.5% Senior Notes, in whole or in part, at a price equal to 100% of the principal amount of the 6.5% Senior Notes, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, the date of redemption. On and after June 1, 2027, we may, at our option, redeem some or all of the 6.5% Senior Notes, in whole or in part, at the redemption prices set forth in the following table, expressed as a percentage of the principal amount, plus accrued and unpaid interest to the redemption date:
Year
Price
On or after June 1, 2027
On or after June 1, 2028
June 1, 2029 and thereafter
We may also, from time to time in our sole discretion, purchase, redeem, or retire any outstanding 5.5% Senior Notes and 6.5% Senior Notes, through tender offers, in privately negotiated or open market transactions, or otherwise.
The indentures governing the 5.5% Senior Notes and 6.5% Senior Notes contain a number of covenants that restrict, subject to certain thresholds and exceptions, our ability and the ability of our domestic restricted subsidiaries to incur debt or liens, make certain investments, pay dividends, dispose of certain assets, or enter into transactions with its affiliates. Any event of default under the amended senior secured credit facility that leads to an acceleration of those amounts due also results in a default under the indenture governing each of the Senior Notes.
Debt Issuance Costs and Loss on Extinguishment of Debt
We evaluated the borrowing of our Term B-8 Loans and issuance of 6.5% Senior Notes and the repayment of our Existing Term Loans in accordance with FASB Accounting Standards Codification 470-50, Debt Modifications and Extinguishments . We determined that the new debt borrowing and issuance and existing debt repayment were two independent transactions due to the fact that (i) no single investor held a significant concentration of both the old and the new debt, (ii) none of the old investors were included in negotiations with creditors about modifying the old debt, and (iii) all lenders were provided the same opportunity to participate in the new debt regardless of whether they were an existing lender. Consequently, the refinancing was accounted for as a debt extinguishment. As a result, the Existing Term Loans borrowing costs of $27.7 million were expensed and are included in Loss on extinguishment of debt in the Consolidated Statement of Comprehensive Income during the year ended December 31, 2024.
In connection with the October 2025 Incremental B-8 Loans, we capitalized an aggregate of $7.6 million during the year ended December 31, 2025 in financing costs, which represent new third-party costs.
We made additional principal payments prior to their scheduled maturity in 2025, 2024 and 2023, which resulted in a loss on extinguishment of debt of $3.3 million, $3.5 million and $2.1 million, respectively, due to the write-off of a portion of the unamortized capitalized financing fees and the unamortized original issue discount.
Covenant Compliance
Under the Revolving Credit Facility portion of the amended senior secured credit facility, we are required to satisfy and maintain a specified financial ratio at the end of each fiscal quarter if the sum of (i) outstanding amount of all loans under the Revolving Credit Facility and (ii) all non-cash collateralized letters of credit issued under the Revolving Credit Facility in excess of $20 million is equal to or greater than 30% of the total commitments under the Revolving Credit Facility. In addition, the Term A-9 Loans will be subject to a 5.25x consolidated net secured leverage ratio commencing at the fiscal quarter ending December 31, 2024, which will, at our option, increase to 5.75x for four consecutive fiscal quarters following a material permitted acquisition. Our ability to meet either financial ratio can be affected by events beyond our control, and we cannot assure you that we will meet either ratio. Any breach of either financial covenant could result in an event of default under the amended senior secured credit facility. Upon the occurrence of any event of default under the amended senior secured credit facility, the lenders could elect to declare all amounts outstanding under the amended senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit. Any default and subsequent acceleration of payments under the amended senior secured credit facility would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under the amended senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to baskets and ratios based on Consolidated EBITDA.
Consolidated EBITDA is a non-GAAP financial measure used in key financial covenants contained in the amended senior secured credit facility, which is the material facility supporting our capital structure and providing liquidity to our business. Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under the amended senior secured credit facility. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with the specified financial ratio and other financial condition tests contained in the amended senior secured credit facility.
Management uses Consolidated EBITDA to gauge the costs of our capital structure on a day-to-day basis when full financial statements are unavailable. Management further believes that providing this information allows our investors greatertransparency and a better understanding of our ability to meet our debt service obligations and make capital expenditures.
Consolidated EBITDA does not represent net income or cash flow from operations as those terms are defined by generally accepted accounting principles, or GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Further, the amended senior secured credit facility requires that Consolidated EBITDA be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year.
Consolidated EBITDA is not a recognized measurement under GAAP and investors should not consider Consolidated EBITDA as a substitute for measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities. Because other companies may calculate Consolidated EBITDA differently than we do, Consolidated EBITDA may not be comparable to similarly titled measures reported by other companies. Consolidated EBITDA has other limitations as an analytical tool, when compared to the use of net income, which is the most directly comparable GAAP financial measure, including:
Consolidated EBITDA does not reflect the interest expense we incur as a result of our debt leverage;
Consolidated EBITDA does not reflect the provision (benefit) of income tax expense in our various jurisdictions;
Consolidated EBITDA does not reflect any attribution of costs to our operations related to our investments and capital expenditures through depreciation and amortization charges;
Consolidated EBITDA does not reflect the cost of compensation we provide to our employees in the form of stock-based awards;
Consolidated EBITDA does not reflect the equity in earnings of unconsolidated affiliates; and
Consolidated EBITDA excludes expenses and income that are permitted to be excluded per the terms of our Credit Agreement, but which others may believe are normal expenses for the operation of a business.
The following is a reconciliation of net income to Consolidated EBITDA attributable to SS&C common stockholders, as defined in our amended senior secured credit facility.
Year Ended December 31,
(in millions)
Net income
Interest expense, net
Provision for income taxes
Depreciation and amortization
EBITDA
Stock-based compensation
Acquired EBITDA and cost savings (1)
Loss on extinguishment of debt
Equity in earnings of unconsolidated affiliates, net
Purchase accounting adjustments (2)
ASC 606 adoption impact
Foreign currency translation losses (gains)
Investment gains (3)
Facilities and workforce restructuring
Acquisition related (4)
Other (5)
Consolidated EBITDA
Consolidated EBITDA attributable to noncontrolling interest (6)
Consolidated EBITDA attributable to SS&C common stockholders
Acquired EBITDA reflects the EBITDA impact of significant businesses that were acquired during the period as if the acquisition occurred at the beginning of the period, as well as cost savings enacted in connection with acquisitions.
Purchase accounting adjustments include (a) an adjustment to increase revenues by the amount that would have been recognized if deferred revenue were not adjusted to fair value at the date of acquisitions, (b) an adjustment to increase personnel and commissions expense by the amount that would have been recognized if prepaid commissions and deferred personnel costs were not adjusted to fair value at the date of the acquisitions and (c) an adjustment to increase or decrease rent expense by the amount that would have been recognized if lease obligations were not adjusted to fair value at the date of acquisitions.
Investment gains includes unrealized fair value adjustments of investments and dividend income received on investments.
Acquisition related includes costs related to both current acquisitions and the resolution of pre-acquisition matters.
Other includes additional expenses and income that are permitted to be excluded per the terms of our amended senior secured credit facility from Consolidated EBITDA, a financial measure used in calculating our covenant compliance, and includes a loss on the sale of fixed assets of $33.3 million during the twelve months ended December 31, 2025.
Consolidated EBITDA attributable to noncontrolling interest represents Consolidated EBITDA based on the ownership interest retained by the noncontrolling parties of DomaniRx, our consolidated variable interest entity.
Our covenant requirement for consolidated net secured leverage ratio for the benefit of the Revolving Credit Facility and the actual ratio as of December 31, 2025 are as follows:
Covenant
Requirement
Actual
Ratio
Maximum consolidated net secured leverage to
Consolidated EBITDA ratio (1)
(1) Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, as defined by the amended senior secured credit facility, for the period of four consecutive fiscal quarters ended on the measurement date. Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.
Critical Accounting Estimates
A number of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our Consolidated Financial Statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, management’s observation of trends in the industry, information provided by our clients and information available from other outside sources, as appropriate. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, goodwill and other intangible assets and other contingent liabilities. Actual results may differ significantly from the estimates contained in our Consolidated Financial Statements. Information about recently adopted accounting pronouncements and accounting pronouncements not yet effective is included in Note 2 to our Consolidated Financial Statements. We believe that the following comprise the accounting estimates or assumptions we have made where the nature of the estimates or assumptions could be material due to the levels of subjectivity and judgment involved.
Acquisition Accounting, Intangible Assets and Goodwill
In connection with the completion of our acquisitions, we allocate the purchase price to the assets and liabilities we acquire, such as net tangible assets, completed technology, customer relationships, other identifiable intangible assets, deferred revenue and goodwill. We apply significant judgments and estimates in determining the fair market value of the assets acquired and their useful lives. For example, we have determined the fair value of existing client contracts based on the discounted estimated net future cash flows from such client contracts existing at the date of acquisition and the fair value of the completed technology based on the relief-from-royalties method on estimated future revenues of such completed technology and assumed obsolescence factors. While actual results during the years ended December 31, 2025, 2024 and 2023 were consistent with our estimated cash flows and we did not incur any impairment charges during those years, different estimates and assumptions in valuing acquired assets could yield materially different results.
We must test goodwill annually for impairment (and in interim periods if certain events occur indicating that the carrying value of goodwill or indefinite-lived intangible assets may be impaired) by comparing the fair value of a reporting unit to its carrying value. Judgment is required in the determination of goodwill reporting units. As of December 31, 2025 and 2024, we have two reporting units, one is our health business and the other includes the rest of our operations. To the extent that we do not achieve our revenue or operating cash flow plans or other measures of fair value decline, including external valuation assumptions, our current goodwill carrying value could be impaired. Our impairment analysis indicated that the fair values of our reporting units significantly exceeded their carrying values at December 31, 2025.
We assess the impairment of identifiable intangibles and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:
significant underperformance relative to historical or projected future operating results;
significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and
significant negative industry or economic trends.
When we determine that the carrying value of intangibles may not be recoverable due to the existence of one or more of the above indicators of potential impairment, we assess whether an impairment has occurred based on whether net book value of the
assets exceeds related projected undiscounted cash flows from these assets. We consider a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles in estimating future cash flows. Differing estimates and assumptions of any of the factors described above could result in a materially different impairment charge, if any, and thus materially different results of operations.
Software Capitalization
Significant management judgment is required in determining which projects and costs associated with software development will be capitalized and in assigning estimated economic lives to the completed projects. Management specifically evaluates software development projects, milestones achieved and the commitments to continue funding the projects. Significant changes in any of these items may result in discontinuing capitalization of development costs, as well as immediately expensing previously capitalized costs. We review, on a quarterly basis, our capitalized software for possible impairment.
Revenue Recognition
Our revenues consist of software-enabled services and license, maintenance and related revenues.
Software-enabled services revenues, which are based on a monthly fee or are transaction-based, are recognized as the services are performed. Software-enabled services are generally provided under contracts with initial terms of one to five years that require monthly or quarterly payments, and are subject to automatic annual renewal at the end of the initial term unless terminated by either party.
We recognize software-enabled services revenues on a monthly basis as the arrangement is a single performance obligation or a stand-ready performance obligation, which in either case is comprised of a series of distinct services that are substantially the same and have the same pattern of transfer to the customer (i.e. distinct days or months of service). We apply a measure of progress (typically time-based) to any fixed consideration and allocate variable consideration to the distinct periods of service based on usage. These variable payments relate specifically to our efforts to perform the services in the period in which the fee applies. This variability is solely attributed to and resolved as a result of the transfer of these services; these fees are independent of the transfer of past or future goods or services. These fees meet the allocation objective of ASC 606 because they represent the amount of consideration we are entitled to for these services. Revenue is generally recognized over the period the services are provided, which results in revenue recognition that corresponds with the value to the client of the services transferred to date relative to the remaining services promised.
We generate revenues in the form of software license fees and related maintenance and services fees. License fees include perpetual license fees and term license fees that differ mainly in the duration over which the customer benefits from the software. Maintenance and services primarily consist of fees for maintenance services (including support and unspecified upgrades and enhancements when and if they are available) and, in some cases, professional services which focus on both deployment and training our customers to fully leverage the use of our products.
Software license revenues are recognized at the point of time when the software license has been delivered. Term license fees are typically due in annual installments at the beginning of each annual period, and we record a contract asset for amounts recognized as revenue in excess of amounts billed. We recognize maintenance revenues ratably over the term of the underlying contract term because we transfer control evenly by providing a stand-ready service. The term of the maintenance contract on a perpetual license is usually one year and the duration of a term license contract is usually between one to five years. Renewals of maintenance contracts create new performance obligations that are satisfied over the term with the revenues recognized ratably over the term. Revenues from professional services consist mostly of services provided on a time and materials basis.
In contracts with multiple performance obligations, we account for individual performance obligations separately if they are distinct. We allocate the transaction price to each performance obligation based on our relative standalone selling price out of total consideration of the contract. Standalone selling price is determined utilizing observable prices to the extent available. If the standalone selling price for a performance obligation is not directly observable, we estimate it maximizing the use of observable inputs. For maintenance and support, we determine the standalone selling price based on the price at which we separately sell a renewal contract and the economic relationship between licenses and maintenance. We primarily determine the standalone selling price for sales of license arrangements using the residual approach. For professional services, we determine the standalone selling prices based on the price at which we separately sell those services.
We occasionally enter into license agreements requiring significant customization of our software that are not material to our results of operations. We account for the license and professional service fees under these agreements as a single performance obligation, recognized over time using an input method during the development of the license. This method requires estimates to be made for costs to complete the agreement utilizing an estimate of development man-hours remaining. Revenue is recognized each period based on the hours incurred to date compared to the total hours expected to complete the project. Due to uncertainties inherent
in the estimation process, it is at least reasonably possible that completion costs will 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.
Stock-based Compensation
Using the fair value recognition provisions of relevant accounting literature, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the appropriate service period. Determining the fair value of stock-based awards requires considerable judgment, including estimating the expected term of stock options and the expected volatility of our stock price. In addition, for stock-based awards where vesting is dependent upon achieving earnings per share growth targets, we estimate the likelihood of achieving the performance goals. Differences between actual results and these estimates could have a material effect on our financial results. A deferred income tax asset is recorded over the vesting period as stock compensation expense is recorded for non-qualified stock options. The realizability of the deferred tax asset is ultimately based on the actual value of the stock-based award upon exercise. If the actual value is lower than the fair value determined on the date of grant, then there would be an income tax expense for the portion of the deferred tax asset that is not realizable.
Income Taxes
The carrying value of our deferred tax assets assumes that we will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, we may be required to record additional valuation allowances against our deferred tax assets resulting in additional income tax expense in our Consolidated Statements of Comprehensive Income. On a quarterly basis, we evaluate whether deferred tax assets are realizable and assess whether there is a need for additional valuation allowances. The carrying value of our deferred tax assets and liabilities is recorded based on the statutory rates that we expect our deferred tax assets and liabilities to reverse into income. We estimate the state rate at which our deferred tax assets and liabilities will reverse based on estimates of state income apportionment for future years. Each of these estimates requires significant judgment on the part of our management. In addition, we evaluate the need to provide additional tax provisions for adjustments proposed by taxing authorities.
As of December 31, 2025, we had $92.2 million in liabilities associated with unrecognized tax benefits. All of the unrecognized tax benefits, if recognized, would decrease our effective tax rate and increase our net income. Additionally, we recognize accrued interest and penalties relating to unrecognized tax benefits as a component of the income tax provision.
