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Acquisitions
6 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Acquisitions

Note 7—Acquisitions

Citigroup’s Alternative Investor Services

On March 11, 2016, the Company purchased the assets of Citigroup’s Alternative Investor Services business, which includes Hedge Fund Services and Private Equity Fund Services (“Citigroup AIS”), for approximately $321.0 million, plus the costs of effecting the transaction and the assumption of certain liabilities. Citigroup AIS is a leading provider of hedge fund and private equity fund administration services.

The net assets and results of operations of Citigroup AIS have been included in the Company’s condensed consolidated financial statements from March 11, 2016. The fair value of the intangible assets, consisting of customer relationships and completed technology, was determined using the income approach. Specifically, the excess earnings method was utilized for the customer relationships, and the cost savings method was utilized for the completed technology. The customer relationships are amortized each year based on the ratio that the projected cash flows for the intangible assets bear to the total of current and expected future cash flows for the intangible assets. Completed technology is amortized based on a straight-line basis. The customer relationships are amortized over an estimated life of approximately thirteen years and completed technology is amortized over an estimated life of approximately four years, in each case the estimated lives of the assets. The remainder of the purchase price was allocated to goodwill and is tax deductible.

The following summarizes the preliminary allocation of the purchase price for the acquisition of Citigroup AIS (in thousands):

 

 

 

Citigroup AIS

 

Accounts receivable

 

$

57,789

 

Fixed assets

 

 

92

 

Other assets

 

 

1,856

 

Acquired client relationships and contracts

 

 

124,600

 

Completed technology

 

 

44,600

 

Goodwill

 

 

99,494

 

Deferred revenue

 

 

(3,910

)

Other liabilities assumed

 

 

(6,563

)

Consideration paid, net of cash acquired

 

$

317,958

 

 

 

The fair value of acquired accounts receivable balances for Citigroup AIS approximates the contractual amounts due from acquired customers, except for approximately $1.7 million of contractual amounts that are not expected to be collected as of the acquisition date and that were also reserved by Citigroup AIS.

The Company reported revenues totaling $65.1 million from Citigroup AIS from its acquisition date through June 30, 2016.

The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes only and assume that the acquisition of Citigroup AIS occurred on January 1, 2015 and acquisitions of Primatics Financial, Varden Technologies and Advent Software, Inc. occurred on January 1, 2014. This unaudited pro forma information (in thousands, except per share data) should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future.

 

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenues

 

$

381,246

 

 

$

392,392

 

 

$

764,155

 

 

$

777,016

 

Net income

 

$

34,756

 

 

$

3,942

 

 

$

53,995

 

 

$

854

 

Basic earnings per share

 

$

0.17

 

 

$

0.02

 

 

$

0.27

 

 

$

0.01

 

Basic weighted average number of common shares

   outstanding

 

 

198,765

 

 

 

170,810

 

 

 

198,143

 

 

 

169,674

 

Diluted earnings per share

 

$

0.17

 

 

$

0.02

 

 

$

0.26

 

 

$

0.00

 

Diluted weighted average number of common and common

   equivalent shares outstanding

 

 

204,916

 

 

 

179,104

 

 

 

204,596

 

 

 

177,974