SS&C Technologies Holdings Inc 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 54 Consolidated Balance Sheets as of December 31, 2022 and 2021 57 Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 58 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 59 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022, 2021 and 2020 60 Notes to Consolidated Financial Statements 61 Financial statement schedules are not submitted because they are not applicable, not required or the information is included in our Consolidated Financial Statements. 53 REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of SS&C Technologies Holdings, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of SS&C Technologies Holdings, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in the Report of Management on Internal Control over Financial Reporting, management has excluded Blue Prism from its assessment of internal control over financial reporting as of December 31, 2022 because they were acquired by the Company in a purchase business combination during 2022. We have also excluded Blue Prism from our audit of internal control over financial reporting. Blue Prism and its wholly-owned subsidiaries' total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 1% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in 54 accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill Impairment Assessment – Health Business Reporting Unit As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $8,863.0 million as of December 31, 2022, a portion of which relates to the health business reporting unit. Management tests goodwill annually for impairment as of December 31 and in interim periods if certain events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Management measures the fair value of the Company’s reporting units utilizing the income method. Significant judgment is required to determine appropriate revenue growth rates and to estimate the fair value of the Company’s reporting units. The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the health business reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumption related to the revenue growth rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s quantitative goodwill impairment assessment, including controls over the valuation of the health business reporting unit. These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the health business reporting unit; (ii) evaluating the appropriateness of the income method; (iii) testing the completeness and accuracy of underlying data used in the income method; and (iv) evaluating the reasonableness of the significant assumption used by management related to the revenue growth rates. Evaluating management’s assumption related to the revenue growth rates involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency with external market and industry data; and (iii) whether this assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the income method. Acquisition of Blue Prism Group PLC – Valuation of Completed Technology and Customer Relationships Intangible Assets As described in Note 8 to the consolidated financial statements, the Company completed the acquisition of Blue Prism Group PLC (Blue Prism) for a cash purchase price of $1.5 billion, net of cash acquired, which resulted in $250 million of completed technology and $520 million of customer relationships intangible assets being recorded. The fair value of the completed technology and customer relationships was determined using the income approach. Specifically, the relief-from-royalty method was utilized for completed technology and the excess earnings method was utilized for customer relationships. Significant assumptions used in the determination of fair value for completed technology were projected future revenues, royalty rate, obsolescence rate and discount rate. Significant assumptions used in the determination of fair value for customer relationships were projected future revenues and costs and discount rate. 55 The principal considerations for our determination that performing procedures relating to the valuation of the completed technology and customer relationships intangible assets acquired in the Blue Prism acquisition is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the completed technology and customer relationships intangible assets acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the projected future revenues, royalty rate, obsolescence rate and discount rate for completed technology, and the projected future revenues and costs and discount rate for the customer relationships intangible asset; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the completed technology and customer relationships intangible assets and the development of the significant assumptions related to the projected future revenues, royalty rate, obsolescence rate and discount rate for completed technology, and the projected future revenues and costs and discount rate for the customer relationships. These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimates of the completed technology and customer relationships intangible assets, (iii) evaluating the appropriateness of the relief-from-royalty and excess earnings valuation methods; (iv) testing the completeness and accuracy of data used in the valuation methods; and (v) evaluating the reasonableness of the significant assumptions used by management related to the projected future revenues, royalty rate, obsolescence rate and discount rate for completed technology, and the projected future revenues and costs and discount rate for the customer relationships. Evaluating the reasonableness of the projected future revenues and projected future revenues and costs considered (i) the past performance of the acquired business and (ii) consistency with external market and industry data. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the valuation methods and the reasonableness of the royalty rate, obsolescence rate, and discount rate assumptions. /s/ PricewaterhouseCoopers LLP Hartford, Connecticut February 28, 2023 We have served as the Company’s auditor since 1995. 56 SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED B ALANCE SHEETS (in millions, except per share data) December 31, December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 440.1 $ 564.0 Funds receivable and funds held on behalf of clients 966.3 2,755.7 Accounts receivable, net of allowance for credit losses of $ 21.7 and $ 17.9 , respectively (Note 3) 778.6 713.4 Contract asset 42.3 27.4 Prepaid expenses and other current assets 193.8 187.5 Restricted cash and cash equivalents 3.3 4.2 Total current assets 2,424.4 4,252.2 Property, plant and equipment, net (Note 4) 343.9 382.0 Operating lease right-of-use assets (Note 5) 260.6 291.2 Investments (Note 6) 193.9 172.8 Unconsolidated affiliates (Note 7) 266.9 306.1 Contract asset 115.9 77.9 Goodwill (Note 9) 8,863.0 8,045.5 Intangible and other assets, net of accumulated amortization of $ 3,445.4 and $ 2,890.5 , respectively (Note 9) 4,184.7 3,805.3 Total assets $ 16,653.3 $ 17,333.0 Liabilities, Redeemable Noncontrolling Interest and Equity Current liabilities: Current portion of long-term debt (Note 10) $ 55.7 $ 47.4 Client funds obligations 966.3 2,755.7 Accounts payable 49.5 28.7 Income taxes payable 34.3 25.5 Accrued employee compensation and benefits 235.8 322.2 Interest payable 28.4 27.5 Other accrued expenses 356.1 310.1 Deferred revenues 464.7 334.0 Total current liabilities 2,190.8 3,851.1 Long-term debt, net of current portion (Note 10) 7,023.9 5,901.5 Operating lease liabilities 237.0 268.2 Other long-term liabilities 225.8 254.0 Deferred income taxes 872.9 835.0 Total liabilities 10,550.4 11,109.8 Commitments and contingencies (Note 18) Redeemable noncontrolling interest (Note 6) 2.1 — Stockholders’ equity (Note 11): Preferred stock, $ 0.01 par value per share, 5.0 million shares authorized; no shares issued — — Class A non-voting common stock, $ 0.01 par value per share, 5.0 million shares authorized; no shares issued — — Common stock, $ 0.01 par value per share, 400.0 million shares authorized; 271.9 million shares and 269.1 million shares issued, respectively, and 251.0 million shares and 256.0 million shares outstanding, respectively 2.7 2.7 Additional paid-in capital 5,111.6 4,895.7 Accumulated other comprehensive loss ( 550.1 ) ( 242.0 ) Retained earnings 2,740.1 2,293.0 Cost of common stock in treasury, 20.9 and 13.1 million shares, respectively ( 1,260.1 ) ( 784.0 ) Total SS&C stockholders’ equity 6,044.2 6,165.4 Noncontrolling interest (Note 12) 56.6 57.8 Total equity 6,100.8 6,223.2 Total liabilities, redeemable noncontrolling interest and equity $ 16,653.3 $ 17,333.0 The accompanying notes are an integral part of these Consolidated Financial Statements. 57 SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions, except per share data) Year Ended December 31, 2022 2021 2020 Revenues: Software-enabled services $ 4,273.9 $ 4,256.1 $ 3,891.3 License, maintenance and related 1,009.1 794.9 776.6 Total revenues 5,283.0 5,051.0 4,667.9 Cost of revenues: Software-enabled services 2,414.8 2,326.0 2,257.3 License, maintenance and related 352.9 315.7 316.8 Total cost of revenues 2,767.7 2,641.7 2,574.1 Gross profit 2,515.3 2,409.3 2,093.8 Operating expenses: Selling and marketing 500.1 394.1 356.3 Research and development 447.3 414.9 399.4 General and administrative 425.0 358.0 352.3 Total operating expenses 1,372.4 1,167.0 1,108.0 Operating income 1,142.9 1,242.3 985.8 Interest income 4.3 4.1 4.0 Interest expense ( 312.2 ) ( 205.7 ) ( 249.9 ) Other income (expense), net 20.8 ( 18.2 ) 41.6 Equity in earnings of unconsolidated affiliates, net 25.8 25.4 ( 1.5 ) Loss on extinguishment of debt, net ( 5.5 ) ( 10.9 ) ( 4.2 ) Income before income taxes 876.1 1,037.0 775.8 Provision for income taxes (Note 17) 227.1 236.4 150.6 Net income 649.0 800.6 625.2 Net loss (income) attributable to noncontrolling interest 1.2 ( 0.6 ) — Net income attributable to SS&C common stockholders $ 650.2 $ 800.0 $ 625.2 Basic earnings per share attributable to SS&C common stockholders $ 2.56 $ 3.13 $ 2.44 Diluted earnings per share attributable to SS&C common stockholders $ 2.48 $ 2.99 $ 2.35 Basic weighted-average number of common shares outstanding 254.0 255.6 256.4 Diluted weighted-average number of common and common equivalent shares outstanding 262.0 267.3 266.6 Net income $ 649.0 $ 800.6 $ 625.2 Other comprehensive (loss) income, net of tax: Change in unrealized gain (loss) on interest rate swaps 4.8 0.7 ( 2.7 ) Defined benefit pension adjustment ( 1.3 ) 3.4 ( 3.2 ) Foreign currency exchange translation adjustment ( 311.6 ) ( 45.1 ) 57.9 Total other comprehensive (loss) income, net of tax ( 308.1 ) ( 41.0 ) 52.0 Comprehensive income 340.9 759.6 677.2 Comprehensive loss (income) attributable to noncontrolling interest 1.2 ( 0.6 ) — Comprehensive income attributable to SS&C common stockholders $ 342.1 $ 759.0 $ 677.2 The accompanying notes are an integral part of these Consolidated Financial Statements. 58 SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEM ENTS OF CASH FLOWS (in millions) Year Ended December 31, 2022 2021 2020 Cash flow from operating activities: Net income $ 649.0 $ 800.6 $ 625.2 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 671.6 667.4 725.3 Equity in earnings of unconsolidated affiliates, net ( 25.8 ) ( 25.4 ) 1.5 Distributions received from unconsolidated affiliates 2.3 10.0 8.0 Gain on bargain purchase — ( 2.6 ) — Stock-based compensation expense 124.8 114.0 87.8 Net gains on investments ( 26.1 ) ( 19.0 ) ( 24.2 ) Amortization and write-offs of loan origination costs and original issue discounts 13.9 13.2 13.8 Loss on extinguishment of debt, net 5.5 10.9 4.1 Loss on sale or disposition of property and equipment 0.6 1.0 4.6 Deferred income taxes ( 77.0 ) ( 88.0 ) ( 155.4 ) Provision for credit losses 10.6 8.2 7.7 Changes in operating assets and liabilities, excluding effects from acquisitions: Accounts receivable ( 38.1 ) ( 72.2 ) 24.3 Prepaid expenses and other assets 17.7 49.5 ( 86.9 ) Contract assets ( 52.1 ) ( 4.0 ) ( 2.5 ) Accounts payable 7.6 0.6 ( 13.1 ) Accrued expenses and other liabilities ( 135.5 ) 2.4 ( 8.2 ) Income taxes prepaid and payable 27.0 2.6 31.4 Deferred revenue ( 41.7 ) ( 40.2 ) ( 58.7 ) Net cash provided by operating activities 1,134.3 1,429.0 1,184.7 Cash flow from investing activities: Cash paid for asset acquisitions and business acquisitions, net of cash acquired ( 1,636.2 ) 7.3 ( 116.0 ) Additions to property and equipment ( 63.4 ) ( 51.3 ) ( 34.8 ) Proceeds from sale of property and equipment 11.4 5.3 2.3 Additions to capitalized software ( 144.9 ) ( 85.3 ) ( 71.6 ) Investments in securities ( 10.0 ) ( 20.1 ) ( 60.9 ) Proceeds from sales / maturities of investments 9.5 50.9 60.3 Distributions received from (contributions to) unconsolidated affiliates 66.2 ( 66.0 ) ( 0.1 ) Collection of other non-current receivables 9.8 11.0 10.3 Net cash used in investing activities ( 1,757.6 ) ( 148.2 ) ( 210.5 ) Cash flow from financing activities: Cash received from debt borrowings, net of original issue discount 1,727.1 370.0 286.0 Repayments of debt ( 599.8 ) ( 889.9 ) ( 1,024.2 ) Payment of deferred financing fees ( 14.7 ) — — Net (decrease) increase in client funds obligations ( 1,709.0 ) 1,480.5 ( 504.9 ) Proceeds from exercise of stock options 91.8 197.7 189.7 Withholding taxes paid related to equity award net share settlement ( 0.7 ) ( 7.0 ) ( 10.9 ) Purchases of common stock for treasury ( 476.1 ) ( 487.9 ) ( 227.7 ) Dividends paid on common stock ( 203.1 ) ( 174.0 ) ( 136.1 ) Proceeds from noncontrolling interests — 67.3 — Net cash (used in) provided by financing activities ( 1,184.5 ) 556.7 ( 1,428.1 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 26.0 ) ( 4.0 ) 2.4 Net (decrease) increase in cash, cash equivalents and restricted cash ( 1,833.8 ) 1,833.5 ( 451.5 ) Cash, cash equivalents and restricted cash, beginning of period 3,171.4 1,337.9 1,789.4 Cash, cash equivalents and restricted cash and cash equivalents, end of period $ 1,337.6 $ 3,171.4 $ 1,337.9 Reconciliation of cash, cash equivalents and restricted cash and cash equivalents: Cash and cash equivalents $ 440.1 $ 564.0 $ 209.3 Restricted cash and cash equivalents 3.3 4.2 5.9 Restricted cash and cash equivalents included in funds receivable and funds held on behalf of clients 894.2 2,603.2 1,122.7 $ 1,337.6 $ 3,171.4 $ 1,337.9 Supplemental disclosure of cash paid for: Interest $ 298.0 $ 192.5 $ 236.2 Income taxes, net of refunds $ 281.1 $ 310.4 $ 227.4 Supplemental disclosure of non-cash investing activities: Property and equipment acquired through tenant improvement allowances $ - $ - $ 4.4 The accompanying notes are an integral part of these Consolidated Financial Statements. 59 SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CH ANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (in millions, except per share data) SS&C Stockholders Common Stock Number Accumulated of Additional Other Total Issued Paid-in Retained Comprehensive Treasury Noncontrolling Stockholders’ Shares Amount Capital Earnings (Loss) Income Stock Interest Equity Balance, at December 31, 2019 257.6 $ 2.6 $ 4,266.9 $ 1,177.9 $ ( 253.0 ) $ ( 78.3 ) $ — $ 5,116.1 Net income — — — 625.2 — — — 625.2 Foreign exchange translation adjustment (Note 11) — — — — 57.9 — — 57.9 Net change in interest rate swaps (Note 11) — — — — ( 2.7 ) — — ( 2.7 ) Defined benefit pension adjustment (Note 11) — — — — ( 3.2 ) — — ( 3.2 ) Stock-based compensation expense (Note 14) — — 87.8 — — — — 87.8 Exercise of options, net of withholding taxes (Note 14) 6.3 — 178.8 — — — — 178.8 Non-cash purchase price consideration — — 10.2 — — 9.9 — 20.1 Dividends declared - $ 0.53 per share (Note 11) — — 0.3 ( 136.1 ) — — — ( 135.8 ) Purchase of common stock (Note 11) — — — — — ( 227.7 ) — ( 227.7 ) Balance, at December 31, 2020 263.9 $ 2.6 $ 4,544.0 $ 1,667.0 $ ( 201.0 ) $ ( 296.1 ) $ — $ 5,716.5 Noncontrolling interest upon consolidation (Note 12) — — 46.8 — — — 57.2 104.0 Net income — — — 800.0 — — 0.6 800.6 Foreign exchange translation adjustment (Note 11) — — — — ( 45.1 ) — — ( 45.1 ) Net change in interest rate swaps (Note 11) — — — — 0.7 — — 0.7 Defined benefit pension adjustment (Note 11) — — — — 3.4 — — 3.4 Stock-based compensation expense (Note 14) — — 114.0 — — — — 114.0 Exercise of options, net of withholding taxes (Note 14) 5.2 0.1 190.6 — — — — 190.7 Dividends declared - $ 0.68 per share (Note 11) — — 0.3 ( 174.0 ) — — — ( 173.7 ) Purchase of common stock (Note 11) — — — — — ( 487.9 ) — ( 487.9 ) Balance, at December 31, 2021 269.1 $ 2.7 $ 4,895.7 $ 2,293.0 $ ( 242.0 ) $ ( 784.0 ) $ 57.8 $ 6,223.2 Net income — — — 650.2 — — ( 1.2 ) 649.0 Foreign exchange translation adjustment (Note 11) — — — — ( 311.6 ) — — ( 311.6 ) Net change in interest rate swaps (Note 11) — — — — 4.8 — — 4.8 Defined benefit pension adjustment (Note 11) — — — — ( 1.3 ) — — ( 1.3 ) Stock-based compensation expense (Note 14) — — 124.8 — — — — 124.8 Exercise of options, net of withholding taxes (Note 14) 2.8 — 91.1 — — — — 91.1 Dividends declared - $ 0.80 per share (Note 11) — — — ( 203.1 ) — — — ( 203.1 ) Purchase of common stock (Note 11) — — — — — ( 476.1 ) — ( 476.1 ) Balance, at December 31, 2022 271.9 $ 2.7 $ 5,111.6 $ 2,740.1 $ ( 550.1 ) $ ( 1,260.1 ) $ 56.6 $ 6,100.8 The accompanying notes are an integral part of these Consolidated Financial Statements. 60 SS&C Technologies Holdings, Inc., or “Holdings,” is our top-level holding company. SS&C Technologies, Inc., or “SS&C,” is our primary operating company and a wholly-owned subsidiary of SS&C Technologies Holdings, Inc. ”We,” “us,” “our,” and the “Company” means SS&C Technologies Holdings, Inc. and its consolidated subsidiaries, including SS&C. Note 1— Organization We provide software products and software-enabled services to the financial services and healthcare industries, primarily in North America. We also have operations in Europe, Asia, Australia, South America and Africa. Our portfolio of products and software-enabled services allows our financial services 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, performance measurement, reconciliation, reporting, processing and clearing. Our products and software-enabled services in the healthcare industry support claims adjudication, benefit management, care management and business intelligence services. Note 2—Summary of Significant Accounting Policies Use of Estimates The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles (“GAAP”) 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. Estimates are used for, but not limited to, collectability of accounts receivable, valuation of non-marketable securities, costs to complete certain contracts, valuation of acquired assets and liabilities, valuation of stock options, income tax accruals and the value of deferred tax assets and liabilities. Estimates are also used to determine the remaining economic lives and carrying value of fixed assets, goodwill and intangible assets. Actual results could differ from those estimates. Principles of Consolidation The Consolidated Financial Statements include the accounts of us and our subsidiaries. All significant accounts, transactions and profits between the consolidated companies have been eliminated in consolidation. We consolidate any entity in which we have a controlling financial interest. Under the voting interest model, generally the investor that has voting control (usually more than 50 % of an entity’s voting interests) consolidates the entity. Under the variable interest entity (“VIE”) model, the party that has the power to direct the entity’s most significant economic activities and the ability to participate in the entity’s economics consolidates the entity. An entity is considered a VIE if it possesses any one or more of the following characteristics: 1) the entity is thinly capitalized; 2) residual equity holders do not control the entity; 3) equity holders are shielded from economic losses; 4) equity holders do not participate fully in an entity’s residual economics; and 5) the entity was established with non-substantive voting interests. We have consolidated one VIE since we are the primary beneficiary as discussed in Note 12 below. Our investments in private equity funds meet the definition of a VIE; however, the private equity fund investments are not consolidated as we do not have the power to direct the entities’ most significant economic activities. We are the lessee in a series of operating leases covering a large portion of our Kansas City, Missouri-based leased office facilities. The lessors are generally joint ventures (in which we have 50 % ownership) that have been established specifically to purchase, finance and engage in leasing activities with the joint venture partners and unrelated third parties. Our analysis of our real estate joint ventures for all periods presented indicate that none qualified as a VIE and, accordingly, they have not been consolidated. Unconsolidated investments in entities over which we do not have control but have the ability to exercise influence over operating and financial policies, if any, are accounted for under the equity method of accounting. Earnings and losses from such investments are recorded on a pre-tax basis, if any. Revenue Recognition We account for the recognition of our revenue in accordance with the relevant accounting literature, primarily Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC 606). Our sources of revenue are described below. Software-enabled Services Revenue We primarily offer software-enabled outsourcing services in which we utilize our own software to offer comprehensive fund administration services for alternative investment managers, including fund manager services, transfer agency services, funds-of-funds services, tax processing and accounting. We also use our own software applications to provide healthcare organizations a variety of 61 medical and pharmacy benefit solutions to satisfy their information processing, quality of care, cost management concerns and payment integrity programs. Our healthcare solutions include claims adjudication, benefit management, care management, business intelligence and other ancillary services. We also offer subscription-based on-demand software applications that are managed and hosted at our facilities. The software-enabled services arrangements provide an alternative for clients who do not wish to install, run and maintain complicated financial software. Under these arrangements, the client does not have the right to take possession of the software, rather, we agree to provide access to our applications, remote use of our equipment to process transactions, access to client’s data stored on our equipment and connectivity between our environment and the client’s computing systems. 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. In software-enabled services arrangements, 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 or summarization of account information. 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 Accounting Standards Codification (“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. For our software-enabled services contracts, which are cancelable with 90 days’ notice or meet the allocation objective for a series of performance obligations under ASC 606, we have not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when we expect to recognize this revenue. License, Maintenance and Related Revenue Agreements 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. Under ASC 606, we identify a contract with a customer, we identify the performance obligations in the contract, we determine the transaction price, we allocate the transaction price to each performance obligation in the contract and recognize revenues when (or as) we satisfy a performance obligation. Software license performance obligations are functional intellectual property that are distinct as the user can benefit from the software on its own as defined under ASC 606. 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. The performance obligations are satisfied, and revenues are recognized, over time as the services are provided. 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 62 price for sales of license arrangements using the residual approach. In situations when the software license and the right to unspecified product upgrades are not distinct in the context of the contract, they are combined into a single performance obligation and revenue is recognized on a straight line basis over the contract duration. 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. We do not account for significant financing components if the period between when we transfer the promised product or service to the client and when the client pays for that product or service will be one year or less. We record revenue net of any taxes assessed by governmental authorities. Accounts Receivable, net is primarily comprised of billed and unbilled receivables for which we have an unconditional right to consideration, net of an allowance for credit losses. Costs of Revenues Costs of revenues include all costs, including depreciation and amortization, incurred to produce revenues. Incremental costs of obtaining a contract (e.g., sales commissions) are capitalized and amortized on a basis consistent with the pattern of transfer of goods or services to the customer to which the asset relates over the expected customer relationship period if we expect to recover those costs. The expected customer relationship period is determined based on average historical customer relationship periods, including expected renewals. Expected renewal periods are only included in the expected customer relationship period if commission amounts paid upon renewal are not commensurate with amounts paid on the initial contract. Incremental costs of obtaining a contract include only those costs we incur to obtain a contract that we would not have incurred if the contract had not been obtained. We have determined that certain commissions programs meet the requirements to be capitalized. Certain sales commissions associated with multi-year contracts are subject to an employee service requirement. As an action other than each party approving the contract is required to trigger payment of these sales commissions, they are not considered incremental costs to obtain a contract and are expensed as incurred. These costs are included in selling and marketing. We expense sales commissions as incurred when the amortization period would have been one year or less. Research and Development Research and development costs associated with computer software are charged to expense as incurred. Capitalization of internally developed computer software costs in the case of software to be sold begins upon the establishment of technological feasibility based on a working model. Capitalization of internally developed computer software costs in the case of internal use software begins when management authorizes and commits funding to a project and the preliminary design stage has been completed. Our policy is to amortize these costs upon a product’s general release to the client. 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 five years . 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 estimated fair 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 certain operating performance goals, 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. Forfeitures are accounted for as they occur. A deferred income tax asset is recorded over the vesting period as stock compensation expense is recorded for non-qualified option awards. The realizability of the deferred tax asset is ultimately based on the actual value of the stock-based award upon exercise. If 63 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 We account for income taxes in accordance with the relevant accounting literature. An asset and liability approach is used to recognize deferred tax assets and liabilities for the future tax consequences of items that are recognized in our financial statements and tax returns in different years. 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. We account for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 % likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes. Cash and Cash Equivalents We consider all highly liquid marketable securities with original maturities of three months or less at the date of acquisition to be cash equivalents. Funds Receivable and Funds Held on Behalf of Clients We hold client funds on behalf of transfer agency clients and pharmacy processing clients in connection with providing our data processing services. End-of-day available client bank balances for full service mutual fund transfer agency clients are invested overnight in credit quality government money market funds, bank deposits and repurchase agreements. Invested balances are returned to the full service mutual fund transfer agency clients’ accounts the following business day. Funds received from clients for the payment of pharmacy claims incurred by its members are invested in credit quality government money market funds, bank deposits and repurchase agreements until the paid claims are settled. Client funding receivables represent amounts due to us for pharmacy claims paid in advance of receiving client funding and for pharmacy claims processed for which client funding requests have not been made. Funds held on behalf of clients in the form of cash, cash equivalents and certificates of deposit with a maturity of less than twelve months are included in funds receivable and funds held on behalf of clients in the Consolidated Balance Sheet. Funds held on behalf of clients in the form of certificates of deposit with a maturity of greater than twelve months are classified as investments on the Consolidated Balance Sheets. All funds held on behalf of clients represent assets that are restricted for use. We have included funds held on behalf of clients that meet the definition of restricted cash and restricted cash equivalents in the beginning and end of period balances in the Consolidated Statements of Cash Flows. Cash inflows and outflows related to investment of funds held on behalf of clients are reported on a gross basis as “Investments in securities” and “Proceeds from sales / maturities of investments” in the investing section of the Consolidated Statements of Cash Flows. Client Funds Obligations Client funds obligations represent funds owed to full service mutual fund transfer agency clients for cash balances invested overnight, and our contractual obligations to satisfy client pharmacy claim obligations that are recorded on the balance sheet when incurred, generally after we have processed a claim on behalf of its pharmacy clients. Restricted Cash Restricted cash primarily includes amounts held by a bank as security for letters of credit issued due to lease requirements for office space. The letters of credit are expected to be renewed within the next twelve months, and as such, the restricted cash is classified as a current asset on the Consolidated Balance Sheets. 64 Investments and Unconsolidated Affiliates We hold various investments, including investments in marketable securities, non-marketable securities and partnership interests in private equity funds, joint ventures and other similar entities. The equity method of accounting is used for investments in entities, partnerships and similar interests (including investments in private equity funds where we are a limited partner and hold a greater than 5 % partnership interest in the fund) in which we have significant influence but do not control. Under the equity method, we recognize income or losses from our pro-rata share of these unconsolidated affiliates’ net income or loss, which changes the carrying value of the investment of the unconsolidated affiliate. We measure equity investments in marketable securities, seed capital investments and other investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee, at fair value, with changes in the fair value recognized in earnings. We use net asset value as a practical expedient for the fair value of partnership interests in private equity funds that are not accounted for under the equity method of accounting. Investments in non-marketable equity securities that do not have readily determinable fair values and do not qualify for the practical expedient to measure the investment using a net asset value per share are recorded using the measurement alternative in ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . These investments are recorded at cost, less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. At each reporting period, we assess if these investments continue to qualify for this measurement alternative. Impairment is recorded when there is evidence that the expected fair value of the investment has declined to below the recorded cost. We have certain investments in unconsolidated affiliates accounted for under the equity method of accounting in which our carrying value exceeds our proportionate share of net assets of the unconsolidated affiliate. The total investment in unconsolidated affiliates, including basis differences, is included in unconsolidated affiliates on the Consolidated Balance Sheet. We record our proportionate share of the results of the unconsolidated affiliates and amortization expense related to basis differences in equity in earnings of unconsolidated affiliates, net on the Consolidated Statements of Comprehensive Income. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation of property, plant 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 Land – Buildings 40 years Building improvements Shorter of 40 years or remaining life of the building Equipment and software 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 the Consolidated Statements of Comprehensive Income. Leases We account for our leases in accordance with ASC 842. We determine if our contractual agreements contain a lease at inception. A lease is identified when a contract allows us the right to control an identified asset for a period of time in exchange for consideration. Our lease agreements consist primarily of operating leases for office space. Our operating leases are included on the Consolidated Balance Sheets as operating lease assets and operating lease liabilities, under ASC 842. An operating lease asset represents our right to use an underlying asset over the term of a lease while an operating lease liability represents our obligation to make lease payments arising from the lease. Operating lease liabilities are recognized at the commencement date at the present value of the base minimum rent payments. Operating lease assets are also recognized at the commencement date as the total operating lease liability adjusted for prepaid rents, deferred rent liabilities and lease fair value adjustments that existed under ASC 840. As most of our leases do not provide an implicit rate, we use our estimated secured 65 incremental borrowing rate within each of the significant geographic regions in which we operate based on the information available at lease commencement date in determining the present value of lease payments. Our lease agreements typically do not contain variable lease payments, residual value guarantees or restrictive covenants. Many of our leases include the option to renew, however we do not believe it is reasonably certain that we will exercise the options as each individual lease is evaluated and further negotiated prior to the end of the current lease terms. Generally, our lease agreements include required separate payments for non-lease components (e.g. payments for common area maintenance, real estate taxes and/or utilities) which are expensed as incurred. We do have certain lease agreements that contain bundled minimum payments for lease components (e.g. payments for rent) and non-lease components. In these situations, we have applied the practical expedient available under ASC 842 to not separate the lease and non-lease components for purposes of the right-of-use asset and lease payment obligation calculations. Goodwill and Intangible Assets We test goodwill annually for impairment as of December 31 st (and in interim periods if certain events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount). We have completed the required impairment tests for goodwill and have determined that no impairment existed as of December 31, 2022 or 2021 . As of December 31, 2022 and 2021 , we have two reporting units, one is our health business and the other includes the rest of our operations. Our impairment analysis indicated that the fair value significantly exceeded the carrying value of each of our reporting units as of December 31, 2022 and 2021 . We measure the fair value of our reporting units utilizing the income method. Significant judgment is required to determine appropriate revenue growth rates and estimate the fair value of our reporting units. There were no other indefinite-lived intangible assets as of December 31, 2022 or 2021. Customer relationships, completed technology, trade names and other identifiable intangible assets are amortized over lives ranging from two to 17 years . Completed technology and 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 asset. Trade names are amortized on a straight line basis. Impairment of Long-Lived Assets We evaluate the recoverability of our long-lived assets when there is evidence that events or changes in circumstances have made recovery of the carrying value of the asset or asset group 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 or asset group. We have identified no such impairment losses in the years ended December 31, 2022 and 2021 . Concentration of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash, cash equivalents, marketable securities and trade receivables. We have 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 our client base is highly diversified. As of December 31, 2022 and 2021 , we had no significant concentrations of credit. International Operations and Foreign Currency The functional currency of each foreign subsidiary is generally 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 within other income (expense) in the Consolidated Statements of Comprehensive Income in the periods in which they occur. Comprehensive Income Our comprehensive income consists of net income, foreign currency translation adjustments, a defined benefit pension plan and our proportionate share of the change in value of an interest rate swap agreement that one of our unconsolidated affiliates is a party to, which are presented in the Consolidated Statements of Comprehensive Income, net of tax and reclassifications to earnings. The accumulated balance of other comprehensive income is reported separately from retained earnings and additional paid-in capital in the stockholders’ equity section of the Consolidated Balance Sheets. Total comprehensive income consists of net income and other accumulated comprehensive (loss) income disclosed in the equity section of the Consolidated Balance Sheets. 66 Treasury Stock Treasury stock purchases are accounted for under the cost method and are included as a deduction from equity in the stockholders’ equity section of the Consolidated Balance Sheets. Under the cost method, the price paid for the stock is charged to the treasury stock account. We use the average cost method to reduce the value of the treasury stock account if treasury stock is re-issued. Contingencies Loss contingencies from legal proceedings and claims may occur from government investigations, shareholder lawsuits, contractual claims, tax and other matters. Accruals are recognized when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. Gain contingencies are not recognized until realized. Legal fees are expensed as incurred. Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities From Contracts with Customer. ASU 2021-08 requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination on the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. ASU 2021-08 should be applied prospectively to business combinations that occur after the effective date. We adopted ASU 2021-08 as of January 1, 2022 on a prospective basis and applied it to the business combinations completed during 2022. Recent Accounting Pronouncements Not Yet Effective In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope . The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an interest rate for margining, discounting or contract price alignment. The standard will ease, if warranted, the requirements for accounting for the future effects of the rate reform. Additionally, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform: Deferral of the Sunset Date of Topic 848, which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024 to align with the amended cessation date of LIBOR. A substantial portion of our indebtedness bears interest at variable interest rates, primarily based on USD-LIBOR. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts, hedging relationships and other transactions. We will apply the guidance to impacted transactions during the transition period. The adoption of this standard does not have a material impact on our financial position, results of operations or cash flows. Note 3—Accounts Receivable, net Accounts receivable are as follows (in millions): December 31, 2022 2021 Accounts receivable $ 593.6 $ 521.9 Unbilled accounts receivable 206.7 209.4 Allowance for credit losses ( 21.7 ) ( 17.9 ) Total accounts receivable, net $ 778.6 $ 713.4 The following table represents the activity for the allowance for credit losses (in millions): Year Ended December 31, 2022 2021 2020 Balance at beginning of period $ 17.9 $ 16.8 $ 13.2 Charge to costs and expenses 10.6 8.2 7.7 Write-offs, net of recoveries ( 7.1 ) ( 7.0 ) ( 4.2 ) Foreign currency impact 0.3 ( 0.1 ) 0.1 Balance at end of period $ 21.7 $ 17.9 $ 16.8 67 Management establishes the allowance for credit losses accounts based on historical bad debt experience. In addition, management analyzes client accounts, client concentrations, client creditworthiness, current economic trends and changes in client payment terms when evaluating the adequacy of the allowance for credit losses. Note 4—Property, Plant and Equipment, net Property, plant and equipment and the related accumulated depreciation are as follows (in millions): December 31, 2022 2021 Land $ 39.3 $ 49.8 Building and improvements 279.2 307.5 Equipment, furniture, and fixtures 523.7 475.4 842.2 832.7 Less: accumulated depreciation ( 498.3 ) ( 450.7 ) Total property, plant and equipment, net $ 343.9 $ 382.0 Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $ 76.2 million, $ 81.1 million and $ 105.7 million, respectively. Note 5—Leases Our total operating lease costs were $ 72.3 million, $ 78.0 million and $ 77.4 million during the years ended December 31, 2022, 2021 and 2020, respectively. Cash paid for amounts included in operating lease liabilities was $ 74.3 million, $ 79.4 million and $ 77.7 million during the years ended December 31, 2022, 2021 and 2020 , respectively, and is included in operating cash flows. Total right-of-use assets obtained in exchange for operating lease liabilities was $ 26.5 million and $ 9.2 million for the years ended December 31, 2022 and 2021, respectively. Our weighted-average remaining lease term and weighted-average discount rates as of December 31, 2022 were 7.0 years and 4.9 %, respectively. Our weighted-average remaining lease term and weighted-average discount rates as of December 31, 2021 were 7.5 years and 4.8 %, respectively. Lease liabilities as of December 31, 2022 are as follows (in millions): Maturity of Lease Liabilities 2023 $ 69.9 2024 58.9 2025 45.7 2026 39.1 2027 30.5 Thereafter 113.5 Total lease payments $ 357.6 Less: interest ( 66.1 ) Present value of lease liabilities $ 291.5 We have certain lease agreements with our unconsolidated real estate joint ventures. We recognized operating lease expense of $ 1.3 m illion, $ 2.1 million and $ 2.4 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to these lease agreements. We have certain sublease agreements in place with third parties to lease portions of our office space. In addition, we serve as a lessor in other lease agreements for real estate and storage facilities. Total gross sublease and other rental income recognized for the years ended December 31, 2022, 2021 and 2020 was approximately $ 6.0 million, $ 9.1 million and $ 10.4 million, respectively. 68 Lease payments to be received as of December 31, 2022 are as follows (in millions): Lease Payments to be Received 2023 $ 6.8 2024 3.9 2025 3.6 2026 3.0 2027 2.7 Thereafter 2.7 Total lease payments $ 22.7 Note 6—Investments Investments are as follows (in millions): December 31, 2022 2021 Non-marketable equity securities $ 124.0 $ 84.5 Seed capital investments 30.6 32.0 Marketable equity securities 24.3 40.8 Partnership interests in private equity funds 15.0 15.5 Total investments $ 193.9 $ 172.8 Realized and unrealized gains and losses for our equity securities are as follows (in millions): Year Ended December 31, 2022 2021 2020 Unrealized gains on equity securities held as of the end of the period $ 25.8 $ 6.5 $ 7.2 Realized (losses) gains for equity securities sold during the period ( 1.1 ) 10.9 18.6 Total gains recognized in other income (expense), net $ 24.7 $ 17.4 $ 25.8 Fair Value Measurement Authoritative accounting guidance on fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2022 and 2021, we held certain investment assets and certain liabilities that are required to be measured at fair value on a recurring basis. These investments include money market funds, marketable equity securities and seed capital investments, each of which determines fair value using quoted prices in active markets. Accordingly, the fair value measurements of these investments have been classified as Level 1 in the tables below. Investments for which we elected net asset value as a practical expedient for fair value and investments measured using the fair value measurement alternative are excluded from the table below. Fair value for deferred compensation liabilities that are credited with deemed gains or losses of the underlying hypothetical investments, primarily equity securities, have been classified as Level 1 in the tables below. 69 The following tables present assets and liabilities measured at fair value on a recurring basis (in millions): Fair Value Measurements at Reporting Date Using December 31, 2022 Quoted prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Money market funds (1) $ 674.5 $ 674.5 $ — $ — Seed capital investments (2) 30.6 30.6 — — Marketable equity securities (2) 24.3 24.3 — — Deferred compensation liabilities (3) ( 13.6 ) ( 13.6 ) — — Total $ 715.8 $ 715.8 $ — $ — Fair Value Measurements at Reporting Date Using December 31, 2021 Quoted prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Money market funds (1) $ 1,961.0 $ 1,961.0 $ — $ — Seed capital investments (2) 32.0 32.0 — — Marketable equity securities (2) 40.8 40.8 — — Deferred compensation liabilities (3) ( 21.3 ) ( 21.3 ) — — Total $ 2,012.5 $ 2,012.5 $ — $ — _____________________________________________________ (1) Included in cash and cash equivalents and funds receivable and funds held on behalf of clients on the Consolidated Balance Sheet. (2) Included in investments on the Consolidated Balance Sheet. (3) Included in other long-term liabilities on the Consolidated Balance Sheet. During the years ended December 31, 2022 and 2021, we provided $ 10.0 million and $ 20.0 million, respectively, in seed capital funding to either mutual funds or exchange-traded funds issued by one of our subsidiaries. During the years ended December 31, 2022 and 2021, we redeemed $ 7.6 million and $ 13.5 million, respectively, of our seed capital investments. In February 2020, we entered into a Series A Convertible Share Purchase Agreement with SILAC, Inc. (“SILAC”), pursuant to which we acquired 40 million shares of Series A convertible preferred stock of SILAC for a purchase price of $ 40 million. The investment is classified as a non-marketable equity security without a readily determinable fair value. Mr. William C. Stone, our Chairman of the Board of Directors and Chief Executive Officer, has an economic interest in SILAC and is a member of its board of directors. Accordingly, SILAC is considered a related party. During the year ended December 31, 2022, as a result of an observable price change, we recorded a fair value adjustment of $ 39.5 million to increase the carrying value of SILAC. The fair value adjustment was recorded as an unrealized gain in Other income (expense) on our Consolidated Statements of Comprehensive Income. In each of the years ended December 31, 2022 and 2021, we received a preferred stock dividend from SILAC of $ 8.0 million which is recorded in Other income (expense) on our Consolidated Statements of Comprehensive Income. We have partnership interests in various private equity funds that are not included in the table above. Our investments in private equity funds were $ 15.0 million and $ 15.5 million at December 31, 2022 and 2021 , respectively, of which $ 10.8 million and $ 12.7 million, respectively, were measured using net asset value as a practical expedient for fair value and $ 4.2 million and $ 2.8 million, respectively, were accounted for under the equity method of accounting. The investments in private equity funds represent underlying investments in domestic and international markets across various industry sectors. Generally, our investments in private equity funds are non-transferable or are subject to long holding periods, and withdrawals from the private equity firm partnerships are typically not permitted. The maximum risk of loss related to our private equity fund investments is limited to the carrying value of our investments in the entities. 70 We add new investment products such as mutual funds and exchange traded funds, through our subsidiary, ALPS Advisors, from time to time by providing the initial cash investments as seed capital. We consolidate seed capital investments when our ownership percentage exceeds 50%. Shares in those investments not owned by us are reflected as a redeemable noncontrolling interest on the condensed consolidated balance sheet. Note 7—Unconsolidated Affiliates Investments in unconsolidated affiliates are as follows (in millions): December 31, 2022 December 31, 2021 Ownership Percentage Carrying Value Excess carrying value of investment over proportionate share of net assets Carrying Value Excess carrying value of investment over proportionate share of net assets Orbit Private Investments L.P. 9.8 % $ 115.3 $ — $ 86.0 $ — International Financial Data Services L.P. 50.0 % 85.1 34.8 87.8 38.2 Pershing Road Development Company, LLC 50.0 % 10.6 57.9 74.0 65.9 Broadway Square Partners, LLP 50.0 % 53.8 30.3 54.3 29.8 Other unconsolidated affiliates 2.1 — 4.0 — Total $ 266.9 $ 123.0 $ 306.1 $ 133.9 Investments in unconsolidated affiliates are accounted for under the equity method of accounting. The total investment in unconsolidated affiliates, including basis differences, is included in unconsolidated affiliates on the Consolidated Balance Sheets. We record our proportionate share of the results of the unconsolidated affiliates and amortization expense related to basis differences in equity in earnings of unconsolidated affiliates, net on the Consolidated Statements of Comprehensive Income. Equity in earnings of unconsolidated affiliates is as follows (in millions): Year Ended December 31, 2022 2021 2020 Orbit Private Investments L.P. $ 29.3 $ — $ — International Financial Data Services L.P. 0.3 1.6 3.6 Pershing Road Development Company, LLC ( 5.4 ) ( 1.1 ) 2.8 Broadway Square Partners, LLP 1.7 1.8 1.6 Other unconsolidated affiliates ( 0.1 ) 23.1 ( 9.5 ) Total $ 25.8 $ 25.4 $ ( 1.5 ) We have a 9.8 % ownership interest in Orbit Private Investments L.P. (“Orbit Private Investments”), which is a provider of shareholder and pension technology. International Financial Data Services L.P. (“IFDS L.P.”) is a 50 % owned joint venture with State Street Corporation with operations in Canada, Ireland and Luxembourg. Pershing Road Development Company, LLC (“PRDC LLC”) is a 50 % owned special-purpose entity formed to develop and lease office space to the U.S. government. Broadway Square Partners, LLP (“Broadway Square Partners”) is a 50 % owned real estate joint venture formed to purchase, finance and engage in leasing activities with us and unrelated third parties. The difference between the amount at which each of IFDS L.P., PRDC LLC and Broadway Square Partners is carried and the amount of underlying equity in net assets, will be amortized as a component of equity in earnings of unconsolidated affiliates over approximately 15 years, 28 years and 40 years, respectively. Equity in earnings of other unconsolidated affiliates for the year ended December 31, 2021 includes a $ 23.4 million gain from the Kans as City Downtown Hotel Group, L.L.C unconsolidated affiliate as a result of a sale of its primary asset. 71 The following tables summarize related party transactions and balances outstanding with our related parties, which is primarily comprised of transactions with our unconsolidated affiliates (in millions): Year Ended December 31, 2022 2021 2020 Operating revenues from related parties $ 65.2 $ 71.7 $ 44.4 Amounts paid to related parties (1) 46.5 50.5 43.0 Distributions received from related parties 68.7 30.1 8.1 December 31, 2022 2021 Outstanding advances/loans to related parties $ 1.9 $ 1.9 Trade accounts receivable from related parties 11.7 13.2 Total amounts receivable from related parties $ 13.6 $ 15.1 Amounts payable to related parties $ 1.3 $ 0.7 (1) Excludes amounts paid to our unconsolidated joint ventures related to loans, advancements and other capital investments. Operating revenues from related parties were primarily generated from services provided for the use of our proprietary software and software development services. Payments to our related parties include transfer agency subcontracting services performed by IFDS L.P. and payments to other unconsolidated real estate joint ventures for rent and other facility costs. During the year ended December 31, 2022, we received a distribution of $ 64.5 million from our unconsolidated affiliate, Pershing Road Development Company, LLC (“PRDC”), which reduced our investment in the affiliate. In addition, the interest rate swap agreement to which PRDC was a party to was terminated. For the year ended December 31, 2021, distributions received include $ 10.0 million return on investment and $ 20.0 million return of investment related to our investments in IFDS L.P. and the Kansas City Downtown Hotel Group, L.L.C., respectively. For the year ended December 31, 2020, distributions received include $ 8.0 million return on investment related to our investments in IFDS L.P. and PRDC LLC. Note 8—Acquisitions 2022 Acquisitions Blue Prism On March 16, 2022 , we purchased all of the outstanding stock of Blue Prism Group plc (“Blue Prism”) for approximately $ 1.6 billion in cash, plus the costs of effecting the transaction pursuant to a Scheme of Arrangement entered into under the U.K. Takeover Code. We financed the acquisition by entering into an Incremental Joinder (the “Incremental Joinder”) to the amended and restated credit agreement. Blue Prism is a global leader in enterprise robotics process automation and intelligent automation. The net assets and results of operations of Blue Prism have been included in our Consolidated Financial Statements from March 16, 2022. The fair value of the intangible assets, consisting of customer relationships, completed technology and trade names, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for completed technology and trade names, and the excess earnings method was utilized for customer relationships. Significant assumptions used in the determination of fair value for completed technology were projected future revenues, royalty rate, obsolescence rate and discount rate. Significant assumptions used in the determination of fair value for customer relationships were projected future revenues, costs and discount rate. Customer relationships, completed technology and trade names are expected to be amortized over approximately fifteen, eight and fourteen years, respectively, in each case the estimated life of the assets. The remainder of the purchase price was allocated to goodwill and is not tax deductible. The Consolidated Statements of Comprehensive Income for the year ended December 31, 2022 includes $ 201.2 milli on in revenues from Blue Prism’s operations. Blue Prism generates revenues primarily from software license fees and related maintenance and service fees. 72 Hubwise On March 25, 2022 , we purchased all of the outstanding stock of Hubwise Holdings Limited (“Hubwise”) for approximately $ 75.0 million in cash, plus the costs of effecting the transaction. Hubwise is a regulated business-to-business investment platform serving advisers, discretionary wealth managers and self-directed direct-to-consumer propositions. The net assets and results of operations of Hubwise have been included in our Consolidated Financial Statements from March 25, 2022. The fair value of the intangible assets, consisting of customer relationships, completed technology and trade names, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for completed technology and trade names, and the excess earnings method was utilized for customer relationships. Customer relationships, completed technology and trade name are expected to be amortized over approximately twelve, eight and fourteen years, respectively, in each case the estimated life of the assets. The remainder of the purchase price was allocated to goodwill and is not tax deductible. The Consolidated Statements of Comprehensive Income for the year ended December 31, 2022 includes $ 4.1 milli on in revenues from Hubwise’s operations. Tier1 On August 23, 2022 , we purchased the sell-side Tier1 customer relationship management (“CRM”) business (“Tier1”) and related assets from Tier1 Financial Solutions for approximately $ 32.5 million in cash, plus the costs of effecting the transaction. Tier1 is a leading provider of sell-side CRM solutions targeting capital markets and investment banks. Tier1 supplies CRM capabilities to sell-side financial services firms, including research, trading, and sales teams within capital markets groups, and provides deal management experience to investment banks. The net assets and results of operations of Tier1 have been included in our Consolidated Financial Statements from August 23, 2022. The preliminary fair value of the intangible assets, consisting of customer relationships and completed technology, was determined using the income approach. Specifically, the relief-from-royalty method was utilized for completed technology, and the excess earnings method was utilized for customer relationships. Customer relationships and completed technologies are expected to be amortized over approximately fourteen and six years, respectively, in each case the estimated life of the assets. The remainder of the purchase price was allocated to goodwill and is tax deductible. The Consolidated Statements of Comprehensive Income for the year ended December 31, 2022 includes $ 4.7 mi llion in revenues from Tier1’s operations. 2021 Acquisitions Capita On March 1, 2021 , we purchased all of the outstanding stock of Capita Life & Pensions Services (Ireland) Limited (“Capita”) and certain related businesses. The acquisition of Capita resulted in a net receipt of approximately $ 7.1 million in cash, as the amount of cash acquired exceeded the cash paid consideration. Capita provides business process management, technology and consultancy services to the international life and pensions sector. Services offered include financial and back-office administration, claims management, actuarial and financial reporting, investment administration, product and IT development and business transformation services. The net assets and results of operations of Capita have been included in our Consolidated Financial Statements from March 1, 2021. The excess of fair values of the net assets over the purchase price was recorded as a gain on bargain purchase within other income, net on the Consolidated Statement of Comprehensive Income. 73 The following summarizes the allocation of the purchase price for the 2022 acquisitions of Blue Prism, Hubwise and Tier1 and the 2021 acquisition of Capita (in millions): Blue Prism Hubwise Tier1 Capita Accounts receivable $ 50.1 $ 0.7 $ 0.3 $ 3.8 Property, plant and equipment 1.8 0.1 0.1 0.5 Other assets 10.4 0.3 0.2 5.5 Operating lease right-of-use assets 4.4 — — — Customer relationships 520.0 23.0 16.3 — Completed technologies 250.0 8.7 6.4 — Trade names 38.0 1.0 — — Goodwill 951.4 50.0 21.6 — Accounts payable ( 6.6 ) ( 0.2 ) ( 1.0 ) ( 3.5 ) Accrued employee compensation and other liabilities ( 64.0 ) ( 0.7 ) ( 2.0 ) ( 7.7 ) Deferred revenue ( 166.9 ) — ( 8.6 ) ( 3.1 ) Deferred income taxes ( 111.1 ) ( 7.4 ) — — Gain on bargain purchase — — — ( 2.6 ) Consideration paid, net of cash acquired $ 1,477.5 $ 75.5 $ 33.3 $ ( 7.1 ) Additionally, we acquired 5 M’s Minerals Management, LLC (“MineralWare”) in May 2022 for approximately $ 18.0 million and Complete Financial Ops, Inc. (“CFO”) in December 2022 for approximately $ 5.7 million. We acquired assets related to O’Shares exchange traded funds (“O’Shares”) in June 2022 for approximately $ 28.3 million. The goodwill associated with each of the transactions above is a result of expected synergies from combining the operations of businesses acquired with us and intangible assets that do not qualify for separate recognition, such as an assembled workforce. The following unaudited pro forma condensed consolidated results of operations are provided for illustrative purposes only and assume that the acquisitions of Blue Prism, Hubwise, MineralWare, Tier1 and CFO occurred on January 1, 2021 and the acquisition of Capita occurred on January 1, 2020, after giving effect to certain adjustments, including amortization of intangibles, interest, transaction costs and tax effects. This unaudited pro forma information (in millions) should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on those dates, nor of the results that may be obtained in the future. Year Ended December 31, 2022 2021 2020 Revenues $ 5,351.9 $ 5,322.9 $ 4,727.6 Net income $ 633.7 $ 659.4 $ 629.8 We recorded severance expense related to personnel reductions in several of our financial services and healthcare businesses. The amount of severance expense recognized in our Consolidated Statements of Comprehensive Income was as follows (in millions): For the Year Ended December 31, Consolidated Statements of Comprehensive Income Classification 2022 2021 2020 Cost of software-enabled services $ 8.2 $ 11.4 $ 21.0 Cost of license, maintenance and other related 1.9 1.1 1.1 Total cost of revenues 10.1 12.5 22.1 Selling and marketing 3.1 1.6 1.5 Research and development 2.4 5.6 5.2 General and administrative 0.6 2.2 3.3 Total operating expenses 6.1 9.4 10.0 Total severance expense $ 16.2 $ 21.9 $ 32.1 74 Note 9—Goodwill and Intangible Assets The following table summarizes changes in goodwill (in millions): Balance at December 31, 2020 $ 8,078.7 Adjustments to prior acquisitions ( 0.3 ) Effect of foreign currency translation ( 32.9 ) Balance at December 31, 2021 $ 8,045.5 Acquisitions completed in the current year 1,032.3 Adjustments to prior acquisitions 0.3 Effect of foreign currency translation ( 215.1 ) Balance at December 31, 2022 $ 8,863.0 A summary of the components of intangible assets is as follows (in millions): December 31, 2022 2021 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Customer relationships $ 5,007.6 $ ( 2,073.7 ) $ 2,933.9 $ 4,490.0 $ ( 1,743.7 ) $ 2,746.3 Completed technology 1,611.0 ( 983.1 ) 627.9 1,381.6 ( 854.6 ) 527.0 Trade names 276.2 ( 130.6 ) 145.6 241.6 ( 107.7 ) 133.9 Other 43.0 ( 43.0 ) — 43.0 ( 43.0 ) — Total intangible assets $ 6,937.8 $ ( 3,230.4 ) $ 3,707.4 $ 6,156.2 $ ( 2,749.0 ) $ 3,407.2 Total estimated amortization expense, related to intangible assets, for each of the next five years and thereafter, as of December 31, 2022, is expected to approximate (in millions): Year Ending December 31, 2023 $ 503.2 2024 485.2 2025 457.7 2026 435.3 2027 410.0 Thereafter 1,416.0 Total $ 3,707.4 Amortization expense associated with customer relationships, completed technology and other amortizable intangible assets was $ 516.4 million, $ 526.5 million and $ 580.1 million for the years ended December 31, 2022, 2021 and 2020, respectively. Net capitalized software costs of $ 225.5 million and $ 156.6 million are included in the December 31, 2022 and 2021 Consolidated Balance Sheets, respectively, under “Intangible and other assets”. Amortization expense related to capitalized software development costs was $ 78.9 million, $ 59.8 million and $ 39.5 million for each of the years ended December 31, 2022, 2021, and 2020 , respectively. 75 Note 10—Debt At December 31, 2022 and 2021, debt consisted of the following (in millions): December 31, 2022 2021 Senior secured credit facilities, weighted-average interest rate of 6.27 % and 1.85 %, respectively $ 5,129.1 $ 3,974.5 5.5 % senior notes due 2027 2,000.0 2,000.0 Other indebtedness 0.8 5.2 Unamortized original issue discount and debt issuance costs ( 50.3 ) ( 30.8 ) 7,079.6 5,948.9 Less: current portion of long-term debt 55.7 47.4 Long-term debt $ 7,023.9 $ 5,901.5 The table below provides a summary of the key terms of our Senior Secured Credit Facilities and Senior Notes: Amount Outstanding at December 31, 2022 Maturity Scheduled Quarterly Interest (in millions) Date Payments Required Rate Senior Secured Credit Facilities Term Loan B-3 $ 1,199.0 April 16, 2025 0.25 % Variable rate (1) Term Loan B-4 974.8 April 16, 2025 0.25 % Variable rate (1) Term Loan B-5 1,650.1 April 16, 2025 0.25 % Variable rate (1) Term Loan B-6 520.7 March 22, 2029 0.25 % Variable rate (2) Term Loan B-7 784.5 March 22, 2029 0.25 % Variable rate (2) Revolving Credit Facility — December 28, 2027 None Variable rate (3) Senior Notes 2,000.0 September 30, 2027 None Fixed at 5.5 % (1) Initially incurred interest at either LIBOR plus 2.50 % of at the base rate plus 1.50 %, and were subject to a step-down at any time our consolidated net secured leverage ratio was less than 4.75 times, to 2.25 % in the case of the LIBOR margin and 1.25 % in the case of the base rate margin. In January 2020, we entered into a pricing amendment, whereby the interest rate margin applicable to the term loans was reduced from LIBOR plus 2.25 % to LIBOR plus 1.75 %. (2) Bears interest at, at our option, either (a) the Base Rate, plus 1.25 % per annum or the (b) Term Secured Overnight Financing Rate (“SOFR ”), which is subject to a floor of 0.50 %, plus a credit spread adjustment set forth in the Credit Agreement, plus 2.25 % per annum. (3) Bears interest at, at our option, the Base Rate per annum or the Term SOFR. Loans based on the Base Rate bear interest at a rate between the Base Rate plus 0.25 % or 0.50 %, depending on our consolidated secured net leverage ratio. Loans based on Term SOFR bear interest at a rate between Term SOFR plus 1.25 % and Term SOFR plus 1.50 %, depending on our consolidated secured net leverage ratio. Senior Secured Credit Facilities 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. 76 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. As of December 31, 2022, there was $ 2.5 million utilized of the letter of credit sub-facility and $ 597.5 million available of the Revolving Facility Amendment. SS&C’s and SS&C SARL’s obligations under the Term Loans are guaranteed by (i) our existing and future U.S. wholly-owned restricted subsidiaries, in the case of the Term B-3 Loan, Term B-5 Loan, Term B-6 Loan and the Revolving Credit Facility and (ii) our existing and future wholly-owned restricted subsidiaries, in the case of the Term B-4 Loan and Term B-7 Loan. The obligations of the U.S. loan parties under the Credit Agreement 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). All obligations of the non-U.S. loan parties under the Credit Agreement are secured by substantially all of our and the other guarantors’ assets (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of our wholly-owned restricted subsidiaries (with customary exceptions and limitations). The Credit Agreement includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of its 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 its subsidiaries, pay dividends on its capital stock or redeem, repurchase or retire its capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with its affiliates. The Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions. In addition, the Credit Agreement contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a minimum consolidated net secured leverage ratio. In addition, under the Credit Agreement, certain defaults under agreements governing other material indebtedness could result in an event of default under the Credit Agreement, in which case the lenders could elect to accelerate payments under the Credit Agreement and terminate any commitments they have to provide future borrowings. Senior Notes On March 28, 2019, we issued $ 2.0 billion aggregate principal amount of 5.5 % Senior Notes due 2027 (“Senior Notes”), the proceeds of which were used to repay a portion of the outstanding Term B-3 Loan under our Credit Agreement. The Senior Notes are guaranteed, jointly and severally, by Holdings and all of its existing and future domestic restricted subsidiaries that guarantee our existing senior secured credit facilities or certain other indebtedness. The 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 Senior Notes is payable on March 30 and September 30 of each year. At any time on or after March 30, 2022, we may redeem some or all of the 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: Redemption Date Price On or after March 30, 2022 104.125 % On or after March 30, 2023 102.750 % On or after March 30, 2024 101.375 % March 30, 2025 and thereafter 100.000 % We may also, from time to time in our sole discretion, purchase, redeem, or retire our existing senior notes, through tender offers, in privately negotiated or open market transactions, or otherwise. The indenture governing the Senior Notes contains 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 77 dividends, dispose of certain assets, or enter into transactions with its affiliates. Any event of default under the Credit Agreement that leads to an acceleration of those amounts due also results in a default under the indenture governing the Senior Notes. Debt Issuance Costs and Loss on Extinguishment of Debt We capitalized an aggregate of $ 37.7 million and $ 3.0 million in financing costs during the twelve months ended December 31, 2022 in connection with the Incremental Joinder and Revolving Facility Amendment, respectively . We made additional principal payments prior to their scheduled maturity in 2022, 2021 and 2020, which resulted in a loss on extinguishment of debt of $ 5.5 million, $ 10.9 million and $ 2.2 million, respectively, due to the write-off of a portion of the unamortized capitalized financing fees and the unamortized original issue discount. We accounted for the Pricing Amendment as a debt modification with respect to amounts that were obligations of lenders that exited the syndicate or remained in the syndicate but experienced a change in cash flows of greater than 10 % in accordance with FASB Accounting Standards Codification 470-50, Debt-Modifications and Extinguishments , which resulted in $ 2.8 million loss on extinguishment of debt in 2020. During 2020, we purchased $ 184.8 million principal amount of our Term Loans in privately negotiated transactions, which resulted in a gain on extinguishment of debt of $ 0.8 million. Fair Value of Debt The carrying amounts and fair values of financial instruments are as follows (in millions): December 31, 2022 December 31, 2021 Carrying Fair Carrying Fair Amount Value Amount Value Financial liabilities: Senior secured credit facilities $ 5,082.2 $ 5,069.0 $ 3,947.8 $ 3,943.5 5.5% senior notes due 2027 1,996.6 1,880.9 1,995.9 2,094.8 Other indebtedness 0.8 0.8 5.2 5.2 The above fair values, which are Level 2 liabilities, were computed based on comparable quoted market prices. The fair values of cash, accounts receivable, net, short-term borrowings and accounts payable approximate the carrying amounts due to the short-term maturities of these instruments. Future Maturities of Debt At December 31, 2022, annual maturities of long-term debt during the next five years and thereafter are as follows (in millions): Year ending December 31, 2023 $ 55.7 2024 54.9 2025 3,753.4 2026 13.1 2027 2,013.1 Thereafter 1,239.7 Total $ 7,129.9 Note 11—Stockholders’ Equity Common Stock Issuance In May 2020, we used 0.4 million shares from treasury stock in connection with our acquisition of Innovest. Dividends In 2022 , we paid a quarterly cash dividend of $ 0.20 per share of common stock in March, June, September and December, totaling $ 203.1 million. In 2021 , we paid a quarterly cash dividend of $ 0.16 per share of common stock in March, June and September and $ 0.20 per share of common stock in December, totaling $ 174.0 million. In 2020, we paid a quarterly cash dividend of 78 $ 0.125 per share of common stock in March and June and $ 0.14 per share of common stock in September and December, totaling $ 136.1 million . Stock Repurchase Program In July 2020, our Board of Directors authorized the renewal and increase of our stock repurchase program, which enabled us to repurchase up to $ 750 million in the aggregate of our outstanding common stock on the open market or in privately negotiated transactions. In July 2021, our Board of Directors authorized a stock repurchase program which enabled us to repurchase up to $ 1 billion in the aggregate of our outstanding common stock. In July 2022, our Board of Directors authorized a stock repurchase program which enables us to repurchase up to $ 1 billion in the aggregate of our common stock. Our authority to repurchase shares under the program will continue until the one-year anniversary of the Board’s authorization, unless earlier terminated by the Board. During 2022, 2021 and 2020 , we repurchased 7.8 million, 6.8 million and 3.7 million shares of common stock for approximately $ 476.1 million, $ 487.9 million and $ 227.7 million, respectively. Other Comprehensive Loss Accumulated other comprehensive loss (income) balances, net of tax consist of the following (in millions): Interest Rate Swap Foreign Currency Translation Defined Benefit Obligation Accumulated Other Comprehensive Loss Balance, December 31, 2020 $ ( 5.5 ) $ ( 192.3 ) $ ( 3.2 ) $ ( 201.0 ) Net current period other comprehensive income (loss) 0.7 ( 45.1 ) 3.4 ( 41.0 ) Balance, December 31, 2021 $ ( 4.8 ) $ ( 237.4 ) $ 0.2 $ ( 242.0 ) Net current period other comprehensive income (loss) 4.8 ( 311.6 ) ( 1.3 ) ( 308.1 ) Balance, December 31, 2022 $ — $ ( 549.0 ) $ ( 1.1 ) $ ( 550.1 ) Adjustments to accumulated other comprehensive (loss) income attributable to us are as follows (in millions): Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Pretax Tax Effect Pretax Tax Effect Pretax Tax Effect Interest Rate Swap Unrealized gains (losses) on interest rate swaps $ 8.8 $ ( 1.7 ) $ 0.4 $ ( 0.3 ) $ ( 3.7 ) $ 1.0 Reclassification of (gains) losses into net earnings on interest rate swaps ( 2.3 ) — 0.6 — — — Net change in cash flow hedges 6.5 ( 1.7 ) 1.0 ( 0.3 ) ( 3.7 ) 1.0 Defined Benefit Pension Unrealized net (losses) gains on defined benefit pension plan ( 0.5 ) ( 0.8 ) 3.4 — ( 3.9 ) 0.7 Foreign Currency Translation Current period translation adjustments ( 326.1 ) 14.5 ( 45.5 ) 0.4 58.8 ( 0.9 ) Total other comprehensive (loss) income $ ( 320.1 ) $ 12.0 $ ( 41.1 ) $ 0.1 $ 51.2 $ 0.8 Note 12—Variable Interest Entity On July 15, 2021 (the “Effective Date”), we entered into an agreement whereby we obtained an 80.2 % interest in DomaniRx, LLC (“DomaniRx”), a variable interest entity under GAAP. The purpose of DomaniRx is to develop a contemporary, cloud-native platform to support the operation of a full service pharmacy benefits manager. At formation, we contributed cash, a non-exclusive license of our claims processing platform known as RxNova and assigned a services agreement we have with one of the other parties in the agreement. The other parties contributed cash and other intangible assets at formation. We will perform development work, day-to-day management, services related to the fulfillment of the assigned services agreement and certain shared services under subcontract with DomaniRx in exchange for market-based fees. In addition to the initial contributions, each member of the agreement is responsible for future additional cash capital contributions in accordance with each member's ownership interest in DomaniRx at the time of the call. Our additional cash capital contribution is up to $ 240.6 million. We are then solely responsible for a further development cost overage of up to $ 100.0 million for no additional ownership interest. 79 We have the power to direct the majority of the activities of DomaniRx that most significantly impact its economic performance, the obligation to absorb losses and the right to receive benefits from DomaniRx. Accordingly, we determined that we are the primary beneficiary of DomaniRx and consolidate its results. The carrying value of the assets and liabilities associated with DomaniRx included in the Consolidated Balance Sheets as of December 31, 2022 and 2021, which are limited for use in its operations and do not have recourse against our general credit or our senior secured credit facilities, are as follows: December 31, 2022 2021 Assets: Cash and cash equivalents $ 134.1 $ 139.5 Intangible assets 160.5 144.5 Other assets 0.6 8.7 Liabilities: Other liabilities 10.0 0.6 Note 13—Revenue Deferred revenues primarily represents unrecognized fees billed or collected for maintenance and professional services. Deferred revenues are recognized as (or when) we perform under the contract. Deferred revenues are recorded on a net basis with contract assets at the contract level. Accordingly, as of December 31, 2022 and 2021, approxim ately $ 68.0 mil lion and $ 61.0 million, respectively, of deferred revenue is presented net within contract assets arising from the same co ntracts. The amount of revenues recognized in the period that was included in the opening deferred revenues balance was $ 262.9 mill ion, $ 273.8 million and $ 289.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 , revenue of approximately $ 1,000.3 million is expected to be recognized from remaining performance obligations for license, maintenance and related revenues, of which $ 484.8 million is e xpected to be recognized over the next twelve months. As of December 31, 2021 , revenue of approximately $ 538.7 million is expected to be recognized from remaining performance obligations for license, maintenance and related revenues, of which $ 287.6 million is expected to be recognized over the next twelve months. Revenue Disaggregation The following table disaggregates our revenues by geography (in millions): Year Ended December 31, 2022 2021 2020 United States $ 3,731.8 $ 3,628.2 $ 3,427.4 United Kingdom 573.1 596.0 569.9 Europe (excluding United Kingdom), Middle East and Africa 402.1 327.9 251.3 Asia-Pacific and Japan 258.2 228.0 193.3 Canada 228.0 190.5 148.7 Americas, excluding United States and Canada 89.8 80.4 77.3 Total $ 5,283.0 $ 5,051.0 $ 4,667.9 The following table disaggregates our revenues by source (in millions): Year Ended December 31, 2022 2021 2020 Software-enabled services $ 4,273.9 $ 4,256.1 $ 3,891.3 Maintenance and term licenses 874.7 671.2 663.1 Professional services 110.1 101.4 90.5 Perpetual licenses 24.3 22.3 23.0 Total $ 5,283.0 $ 5,051.0 $ 4,667.9 80 Note 14—Stock-based Compensation In March 2019, our Board of Directors adopted the Second Amended and Restated 2014 Stock Incentive Plan, which amended and restated our Amended and Restated 2014 Stock Incentive Plan (the “Amended 2014 Plan”) (together with the Amended 2014 Plan, the “2014 Plans”), which became effective in May 2019 upon stockholder approval. The 2014 Stock Option Plan authorized stock options to be granted for up to 6.0 million shares of our common stock. The Amended 2014 Plan was adopted with an initial share capacity of 24.0 million shares available for the grant of awards. The Amended 2014 Plan authorizes the issuance of equity awards, including stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) and allows the class of participants to include non-employee directors. The Second Amended and Restated 2014 Stock Incentive Plan was adopted to increase the shares available for equity awards by an additional 34.0 million shares. Under the terms of the 2014 Plans, the exercise price of awards is set on the grant date and may not be less than the fair market value per share on such date. Generally, awards expire ten years from the date of grant. We generally settle RSUs, RSAs, stock appreciation rights (“SARs”), performance-based stock units (“PSUs”), and stock option exercises with newly issued common shares. Restricted Stock Units During the year ended December 31, 2022 , we granted RSUs which generally vest 33.3 % on the first anniversary of the grant and 1/4th of the remaining balance each six months thereafter for two years . We did not grant any RSUs during the years ended December 31, 2021 and 2020. At December 31, 2022, there was approximately $ 119.9 million of unearned non-cash stock-based compensation related to RSUs that we expect to recognize as expense over a remaining period of approximately 2.9 years. At December 31, 2021 , there was no remaining unearned non-cash stock-based compensation related to RSUs. Performance-based Stock Units In July 2021 and March 2022, we granted performance-based stock units at a grant date fair value of $ 75.03 per share and $ 71.89 per sh are, respectively. These awards include established annual earnings per share growth targets and will measure performance against the target over the 2 -year performance period. Performance is measured relative to a 2-year average annual growth rate that is established at the beginning of the cycle and held constant. Participants will only be entitled to receive any portion of the PSUs that are earned if they remain employed through the final determination of the satisfaction of these performance goals. The actual number of units that will be issued ranges from zero , if the threshold level of performance is not achieved, to 200 % of the targeted number of units, if the annual growth rate meets or exceeds a specified level. As of December 31, 2022, the PSUs are not expected to vest. During the year ended December 31, 2022, we recorded a true-up to reverse previously recorded stock-based compensation expense relating to the PSUs. At December 31, 2021 there was approximately $ 25.7 million of unearned non-cash stock-based compensation related to PSUs that we expected to recognize as expense over a remaining period of approximately 1.6 years. Time-based Stock Options and SARs Time-based stock options and SARs generally vest 25 % on the first anniversary of the grant date and 1/36 th of the remaining balance each month thereafter for 36 months. All outstanding time-based stock options and SARs vest upon a change in control, subject to certain conditions. Time-based stock options granted during 2022, 2021 and 2020 have a weighted-average grant date fair valu e of $ 15.26 , $ 22.28 and $ 18.06 per share, respectively, based on the Black-Scholes option pricing model. Compensation expense is recorded on a straight-line basis over the requisite service period. The fair value of time-based stock options vested during the years ended December 31, 2022, 2021 and 2020 was appro ximately $ 102.1 million, $ 103.0 million and $ 81.1 million, respectively. At December 31, 2022 and 2021, there was appr oximately $ 201.6 millio n and $ 270.1 million, respectively, of unearned non-cash stock-based compensation related to time-based stock options that we expect to recognize as expense over a weighted-average remaining period of approxim ately 2.7 years and 2 .8 years, respectively. Performance-based Stock Options In March and December 2021, we granted performance-based stock options (“PSOs”). These awards include established annual earnings per share growth targets and will measure performance against the target over the 3 -year performance period. Performance is measured relative to a 3-year average annual growth rate that is established at the beginning of the cycle and held constant. Participants will only be entitled to receive any portion of the PSOs that are earned if they remain employed through the final determination of the satisfaction of these performance goals. The actual number of options that will be issued ranges from zero , if the threshold level of performance is not achieved, to 200 % of the targeted number of options, if the annual growth rate meets or exceeds 81 a specified level. PSOs granted during 2021 have a weighted-average grant date fair value of $ 21.88 per share, based on the Black-Scholes options pricing model. During the year ended December 31, 2022 and 2021, no PSOs have vested. At December 31, 2022 and 2021, there was approxima tely $ 60.8 million and $ 103.2 mi llion, respectively of unearned non-cash stock-based compensation related to PSOs that we expect to recognize as expense over a remaining period of approximately 2.1 years and 3.1 years, respectively. For the stock-options valued using the Black-Scholes option-pricing model, we used the following weighted-average assumptions: Time-based stock options PSOs 2022 2021 2020 2021 Expected term to exercise (years) 4.0 4.0 4.0 4.0 Expected volatility 35.26 % 36.42 % 34.85 % 36.34 % Risk-free interest rate 3.96 % 1.07 % 0.28 % 1.03 % Expected dividend yield 1.55 % 0.98 % 0.80 % 0.98 % Total Stock Options, RSUs and PSUs The amount of stock-based compensation expense recognized in our Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 was as follows (in millions): Year Ended December 31, 2022 2021 2020 Consolidated Statements of Comprehensive Income Classification Options RSUs, PSUs Total Options, SARs RSUs, PSUs Total Options, SARs RSUs Total Cost of software-enabled services $ 47.2 $ ( 1.1 ) $ 46.1 $ 39.1 $ 3.7 $ 42.8 $ 32.2 $ 2.3 $ 34.5 Cost of license, maintenance and other related 5.6 ( 0.1 ) 5.5 5.2 0.1 5.3 5.3 — 5.3 Total cost of revenues 52.8 ( 1.2 ) 51.6 44.3 3.8 48.1 37.5 2.3 39.8 Selling and marketing 24.2 ( 1.3 ) 22.9 19.1 1.5 20.6 13.1 0.7 13.8 Research and development 17.2 ( 0.6 ) 16.6 14.2 0.8 15.0 11.1 0.2 11.3 General and administrative 35.1 ( 1.4 ) 33.7 28.4 1.9 30.3 21.4 1.5 22.9 Total operating expenses 76.5 ( 3.3 ) 73.2 61.7 4.2 65.9 45.6 2.4 48.0 Total stock-based compensation expense $ 129.3 $ ( 4.5 ) $ 124.8 $ 106.0 $ 8.0 $ 114.0 $ 83.1 $ 4.7 $ 87.8 The associated future income tax benefit recognized was $ 23.8 million, $ 22.5 million and $ 17.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. For the year ended December 31, 2022, the amount of cash received from the exercise of stock options was $ 91.8 million, with an associated tax benefit from stock awards realized of $ 19.2 million . The intrinsic value of stock options and SARs exercised during the year ended December 31, 2022 was approximately $ 92.6 million. For the year ended December 31, 2021 , the amount of cash received from the exercise of stock options was $ 197.7 million, with an associated tax benefit from stock awards realized of $ 43.6 million. The intrinsic value of stock options and SARs exercised during the year ended December 31, 2021 was approximately $ 183.7 million. For the year ended December 31, 2020 , the amount of cash received from the exercise of stock options was $ 189.7 million, with an associated tax benefit from stock awards realized of $ 48.6 million. The intrinsic value of stock options and SARs exercised during the year ended December 31, 2020 was approximately $ 196.9 million. 82 The following table summarizes stock option and SAR activity as well as RSU and PSU activity as of and for the years ended December 31, 2022, 2021 and 2020 (share data in millions): Stock Options and SARs PSUs and RSUs Shares Weighted-Average Exercise Price Shares Weighted-Average Grant Date Fair Value Outstanding at December 31, 2019 42.1 $ 41.37 0.5 $ 44.94 Granted 8.4 $ 70.35 — $ — Cancelled/forfeited ( 1.4 ) $ 52.45 — $ — Vested — $ — ( 0.3 ) $ 45.42 Exercised ( 6.4 ) $ 31.57 — $ — Outstanding at December 31, 2020 42.7 $ 48.16 0.2 $ 44.96 Granted 9.5 $ 80.24 0.4 $ 75.03 Cancelled/forfeited ( 2.1 ) $ 61.90 — $ — Vested — $ — ( 0.2 ) $ 45.59 Exercised ( 5.2 ) $ 39.23 — $ — Outstanding at December 31, 2021 44.9 $ 55.31 0.4 $ 75.03 Granted 3.2 $ 51.45 3.1 $ 55.61 Cancelled/forfeited ( 1.6 ) $ 71.50 ( 0.1 ) $ 72.47 Exercised ( 2.9 ) $ 32.60 — $ — Outstanding at December 31, 2022 43.6 $ 55.91 3.4 $ 58.71 The following table summarizes information about vested stock options and SARs outstanding that are currently exercisable and stock options and SARs outstanding that are exercisable and expected to vest at December 31, 2022: Outstanding, Vested Stock Options and SARs Currently Exercisable Outstanding Stock Options and SARs Exercisable and Expected to Vest Weighted- Weighted- Weighted- Average Weighted- Average Average Aggregate Remaining Average Aggregate Remaining Exercise Intrinsic Contractual Exercise Intrinsic Contractual Shares Price Value Term Shares Price Value Term (In millions) (In millions) (Years) (In millions) (In millions) (Years) 27.8 $ 47.70 $ 258.8 5.33 43.4 $ 55.81 $ 260.0 6.54 Note 15—Benefit Plans We sponsor defined contribution plans that cover our domestic and international employees. During the years ended December 31, 2022, 2021 and 2020, we incurred $ 111.7 m illion, $ 99.2 million and $ 92.0 million, respectively, of employer contribution expenses under these plans. Additionally, we sponsor a defined benefit pension plan, which has total assets of $ 16.4 million and a net asset of $ 2.5 million as of December 31, 2022 . The defined benefit pension plan we sponsor had total assets of $ 26.3 million and a net asset of $ 2.6 million as of December 31, 2021. Note 16—Basic and Diluted Earnings per Share Earnings per share (“EPS”) is calculated in accordance with the relevant standards. Basic EPS includes no dilution and is computed by dividing income available to our common stockholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted-average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, SARs, RSUs and PSUs using the treasury stock method. Common equivalent shares are excluded from the computation of diluted earnings per share if the effect of including such common equivalent shares would be anti-dilutive because their total assumed proceeds exceed the average fair value of 83 common stock for the period. We have two classes of common stock, each with identical participation rights to earnings and liquidation preferences, and therefore the calculation of EPS as described above is identical to the calculation under the two-class method. The following table sets forth the computation of basic and diluted EPS (in millions, except per share amounts): Year Ended December 31, 2022 2021 2020 Net income attributable to SS&C common stockholders $ 650.2 $ 800.0 $ 625.2 Shares attributable to SS&C: Weighted-average common shares outstanding – used in calculation of basic EPS 254.0 255.6 256.4 Weighted-average common stock equivalents – stock options and restricted shares 8.0 11.7 10.2 Weighted-average common and common equivalent shares outstanding – used in calculation of diluted EPS 262.0 267.3 266.6 Earnings per share attributable to SS&C common stockholders – Basic $ 2.56 $ 3.13 $ 2.44 Earnings per share attributable to SS&C common stockholders – Diluted $ 2.48 $ 2.99 $ 2.35 Weighted-average stock options, SARs, RSUs and PSUs representin g 22.2 million, 8.9 million and 9.6 million shares were outstanding for the years ended December 31, 2022, 2021 and 2020 , respectively, but were not included in the computation of diluted EPS because the effect of including them would be anti-dilutive. Note 17—Income Taxes The sources of income before income taxes were as follows (in millions): Year Ended December 31, 2022 2021 2020 U.S. $ 790.5 $ 831.0 $ 593.4 Foreign 85.6 206.0 182.4 Income before income taxes $ 876.1 $ 1,037.0 $ 775.8 The income tax provision consists of the following (in millions): Year Ended December 31, 2022 2021 2020 Current: Federal $ 185.6 $ 190.9 $ 190.0 Foreign 45.5 60.8 43.5 State 73.0 72.7 72.5 Total 304.1 324.4 306.0 Deferred: Federal ( 51.9 ) ( 64.6 ) ( 97.7 ) Foreign ( 14.9 ) 4.0 ( 3.8 ) State ( 10.2 ) ( 27.4 ) ( 53.9 ) Total ( 77.0 ) ( 88.0 ) ( 155.4 ) Total $ 227.1 $ 236.4 $ 150.6 84 The reconciliation between the expected tax expense and the actual tax provision is computed by applying the U.S. federal corporate income tax rate of 21 % to income before income taxes as follows (in millions): Year Ended December 31, 2022 2021 2020 Computed “expected” tax expense $ 184.0 $ 217.8 $ 162.9 Increase (decrease) in income tax expense resulting from: State income taxes (net of federal income tax benefit) 49.5 35.8 14.0 Foreign operations 8.7 ( 10.8 ) 1.9 Effects of stock based compensation ( 9.3 ) ( 24.4 ) ( 25.7 ) Effect of valuation allowance 8.5 4.1 0.3 Uncertain tax positions ( 7.9 ) 8.9 ( 4.6 ) Tax credits ( 2.0 ) ( 7.4 ) ( 7.9 ) Change in rate 0.2 13.5 6.1 Other ( 4.6 ) ( 1.1 ) 3.6 Provision for income taxes $ 227.1 $ 236.4 $ 150.6 The components of deferred income taxes at December 31, 2022 and 2021 are as follows (in millions): 2022 2021 Deferred Deferred Deferred Deferred Tax Tax Tax Tax Assets Liabilities Assets Liabilities Net operating loss carryforwards $ 113.4 $ — $ 22.1 $ — Deferred compensation 74.0 — 56.4 — Tax credit carryforwards 29.7 — 34.8 — Accrued expenses 20.7 — 24.5 — Leases 74.7 66.4 83.8 75.2 Other 81.3 15.4 75.7 12.3 Depreciable and amortizable property — 943.7 — 847.4 Investments — 155.9 — 148.1 Total 393.8 1,181.4 297.3 1,083.0 Valuation allowance ( 67.0 ) — ( 40.7 ) — Total $ 326.8 $ 1,181.4 $ 256.6 $ 1,083.0 At December 31, 2022 and 2021 , we had accrued a deferred income tax liability for foreign withholding taxes of $ 12.7 million and $ 10.2 million, respectively, on the unremitted earnings of our major Canadian subsidiary and certain unconsolidated foreign affiliates we do not control and whose earnings cannot be considered permanently reinvested. We have not accrued any deferred income taxes for withholding, foreign local or U.S. state income taxes on the unremitted earnings of other foreign subsidiaries as those earnings are permanently reinvested. At December 31, 2022 , we have domestic federal net operating loss carryforwards of $ 104.4 million, which will begin to expire in 2026 and state net operating loss carryforwards of $ 184.3 million, which will begin to expire in 2023 . At December 31, 2022 , we have foreign net operating loss carryforwards of $ 327.0 million, of which $ 285.1 million can be carried forward indefinitely. The remaining $ 41.9 million will begin to expire in 2023 . At December 31, 2022 , we have tax credit carryforwards of $ 29.7 million relating to domestic and foreign jurisdictions, of which $ 19.1 million relate to domestic tax credits that are expected to be utilized before they begin to expire in 2023 , $ 8.6 million relate to domestic tax credits that are not expected to be utilized before they begin to expire in 2023 , $ 1.4 million relate to foreign jurisdictions that are expected to be utilized before they begin to expire in 2027 and $ 0.6 million relate to foreign jurisdictions that are not expected to be utilized before they begin to expire in 2027 . The domestic credits consist primarily of federal and state research and development credits and foreign tax credits, while the foreign credits consist primarily of minimum alternative tax credit carryforwards related to our India operations. A valuation allowance is recorded against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We have recorded valuation allowances of $ 67.0 million at December 31, 2022 related primarily to certain foreign and state net operating loss carryforwards, tax credit carryforwards and 85 disallowed interest expense carryforwards, and $ 40.7 million at December 31, 2021 related primarily to certain foreign and state net operating loss carryforwards, tax credit carryforwards and disallowed interest expense carryforwards. Of the $ 67.0 million valuation allowance recorded at December 31, 2022 , $ 45.7 million relates to foreign attribute carryforwards that do not expire. The following table summarizes the activity related to our unrecognized tax benefits for the years ended December 31, 2022 and 2021 (in millions): Balance at December 31, 2020 $ 127.7 Increases related to current year tax positions 13.1 Increases related to prior tax positions 1.7 Lapse in statute of limitation ( 9.3 ) Foreign exchange translation adjustment ( 0.3 ) Balance at December 31, 2021 $ 132.9 Increases related to current year tax positions 10.8 Decreases related to prior tax positions ( 12.0 ) Lapse in statute of limitation ( 4.8 ) Foreign exchange translation adjustment ( 0.8 ) Balance at December 31, 2022 $ 126.1 We recorded a net benefit of $ 3.7 million and accrued $ 3.4 million for potential penalties and interest on the unrecognized tax benefits during 2022 and 2021 , respectively, and have recorded a total liability for potential penalties and interest, including penalties and interest related to unrecognized tax benefits, of $ 28.4 million and $ 32.8 million at December 31, 2022 and 2021, respectively. Our unrecognized tax benefits decreased from 2021 to 2022 due to a lapse in the statute of limitations for certain domestic and foreign tax filings and decreases in prior year tax positions, offset partially by an increase in current year tax positions. Our unrecognized tax benefits increased from 2020 to 2021 due to increases in current and prior year tax positions, offset partially by a decrease due to a lapse in the statute of limitations for certain domestic filings. Our unrecognized tax benefits as of December 31, 2022 relate to domestic and foreign taxing jurisdictions and are recorded in other long-term liabilities on our Consolidated Balance Sheet at December 31, 2022. We are subject to examination by tax authorities throughout the world, including such major jurisdictions as the U.S., United Kingdom, India, California, Massachusetts, Missouri, New Jersey and New York. In these major jurisdictions, we are no longer subject to examination by tax authorities prior to tax years ending 2017, 2021, 2013, 2007, 2019, 2019, 2018 and 2015, respectively. Our U.S. federal income tax returns are currently under audit for the tax periods ended December 31, 2017 through December 31, 2019 . Our India income tax returns are currently under audit or in appeals for tax periods ending March 31, 2013, March 31, 2014, March 31, 2015, March 31, 2016, March 31, 2017, March 31, 2018, March 31, 2020 and March 31, 2021 . Our California income tax returns are currently under audit or in appeals for the tax periods ended December 31, 2007 through 2019 . Our New York income tax returns are currently under audit for the tax periods ended December 31, 2015 through 2018 . Note 18— Commitments and Contingencies Purchase Obligations Our contractual cash obligations for our committed purchase obligations as of December 31, 2022 are as follows (in millions): Year Ending December 31, 2023 $ 131.3 2024 63.2 2025 43.8 2026 42.3 2027 and thereafter 0.1 Total $ 280.7 Legal Proceedings From time to time, we are subject to legal proceedings and claims. In our opinion, we are not involved in any litigation or proceedings that would have a material adverse effect on us or our business. 86 In connection with recent legal proceedings related to the ongoing DST ERISA matters described below, including the arbitration awards, we have recorded an accrued liability of $ 51.5 million. Of this amount, $ 8.1 million and $ 43.4 million were recorded in 2022 and 2021, respectively, to Other income (expense), net on the Consolidated Statements of Comprehensive Income. Due to the inherent uncertainties associated with the resolution of these matters, the ultimate resolution of and any additional potential exposure related to these matters are uncertain at this time. On September 1, 2017, a putative representative action was filed on behalf of the DST 401(k) Profit Sharing Plan (the “Plan”) in the United States District Court for the Southern District of New York, captioned Ferguson, et al v. Ruane Cunniff & Goldfarb Inc., et al. (“Ferguson”), naming as defendants DST, the Compensation Committee of DST’s Board of Directors, the Advisory Committee of the Plan and certain of DST’s present and/or former officers and directors (collectively the “DST Defendants”), alleging breach of fiduciary duties and other violations of the Employee Retirement Income Security Act (“ERISA”). The DST Defendants answered the operative complaint and asserted crossclaims for contribution and/or indemnification against Ruane, Cunniff & Goldfarb Inc. (“Ruane”). On January 9, 2020, Ruane filed an amended answer to the amended complaint and asserted crossclaims for contribution and/or indemnification against DST. On March 8, 2021, the Court entered an order denying without prejudice the plaintiffs’ (the “Ferguson Plaintiffs”) then-pending motions for leave to file a third amended complaint and for class certification, ordering that the parties address the effect, if any, on the Ferguson Plaintiffs’ motions of the March 4, 2021 decision by the United States Court of Appeals for the Second Circuit Court in Cooper v. Ruane Cunniff & Goldfarb Inc. The Ferguson Plaintiffs renewed their motions for leave to file a third amended complaint and for class certification, which motions were fully briefed on May 10, 2021. On August 17, 2021, the Court entered an order certifying a mandatory, non-opt-out class under Federal Rule of Civil Procedure 23(b)(1) that includes all plan participants other than certain plan fiduciaries. Arbitration Claimants, and the Canfield Plaintiffs and Mendon Plaintiffs, each as defined below, filed petitions under Federal Rule of Civil Procedure 23(f) with the Second Circuit on August 30, 2021 and August 31, 2021, respectively, seeking interlocutory review of the Ferguson class certification order, which the Ferguson Plaintiffs and the DST Defendants opposed. The Second Circuit denied the Rule 23(f) petitions on May 24, 2022 and May 25, 2022, respectively. On February 4, 2022, the Ferguson Plaintiffs filed a third amended complaint, which included the class allegations. On March 7, 2022, the DST Defendants and Ruane each filed answers to the Ferguson Plaintiffs’ third amended complaint and reasserted their respective cross-claims. On August 23, 2021, the DST Defendants moved for a temporary restraining order and preliminary injunction against other proceedings, including the below-described arbitrations, which arise out of or relate to the allegations in Ferguson. Following briefing, on November 18, 2021, the Court granted the DST Defendants’ motion and entered a preliminary injunction enjoining the Ferguson class members, including Arbitration Claimants, from instituting new actions or litigating in arbitration or other proceedings against the DST Defendants matters arising out of or relating to the facts or transactions alleged in the Ferguson amended complaint. On November 18, 2021, the Court also ordered the DST Defendants and Arbitration Claimants to submit briefing regarding how the arbitration awards that have been entered against the DST Defendants should be handled in light of the Court’s class certification order and preliminary injunction. On December 15, 2021, Arbitration Claimants and the Canfield Plaintiffs and Mendon Plaintiffs filed appeals of the Court’s preliminary injunction. On December 23, 2021, the DST Defendants, Arbitration Claimants, and the Ferguson Plaintiffs submitted briefs concerning the treatment of the arbitration awards that have been entered against the DST Defendants, and further briefing by the DST Defendants and Arbitration Claimants was submitted on January 26, 2022. On December 31, 2021, Arbitration Claimants moved by order to show cause for an immediate stay of the preliminary injunction pending their appeal to the Second Circuit. On January 3, 2022, the Court denied Arbitration Claimants’ motion for an immediate stay and ordered the DST Defendants to show cause as to why the Court should not issue a stay of the preliminary injunction pending appeal. On February 3, 2022, the Court denied Arbitration Claimants’ motion to stay the preliminary injunction pending appeal. In the same order, the Court held that it would determine the status of the arbitration awards already entered against DST at final judgment in the Ferguson action, either after trial or after settlement. On February 4, 2022, Arbitration Claimants filed a motion in the Second Circuit to stay the preliminary injunction pending their appeal of the Court’s preliminary injunction. On June 7, 2022, the Second Circuit denied Arbitration Claimants’ motion to stay the preliminary injunction pending appeal. On February 8, 2022, Arbitration Claimants and the Canfield Plaintiffs and Mendon Plaintiffs noticed an appeal of the Court’s February 3, 2022 order. The February 8, 2022 appeal was consolidated with the December 15, 2021 appeal of the preliminary injunction. On May 17, 2022, Arbitration Claimants and the Canfield Plaintiffs and Mendon Plaintiffs filed their opening brief in the consolidated appeals. The DST Defendants filed their answering brief on September 15, 2022, and the reply was filed on October 20, 2022. On January 30, 2023, the Second Circuit calendared oral argument for the appeal of the Court's preliminary injunction for April 20, 2023. This appeal remains pending. On July 10, 2020, the Ferguson Plaintiffs and the DST Defendants reached an agreement in principle to settle the class claims for $ 27 million, subject to the occurrence of certain conditions, including: Court certification of a “non‑opt-out” class in the case that includes as class members all participants of the Plan, Court approval of the settlement in accordance with applicable law and the satisfactory resolution of claims made by certain other litigants. On September 18, 2020, the parties submitted a letter to the Court disclosing that the Ferguson Plaintiffs and Ruane also had reached a settlement in principle, subject to Court approval. The Ferguson 87 Plaintiffs and the DST Defendants entered into a settlement agreement dated January 8, 2021 memorializing the terms of their proposed settlement, which was filed by the Ferguson Plaintiffs with the Court on the same date. On January 12, 2021, the Ferguson Plaintiffs moved for preliminary approval of the settlement with the DST Defendants, as well as preliminary approval of a separate settlement reached between the Ferguson Plaintiffs and Ruane. Arbitration Claimants and the U.S. Department of Labor (“DOL”) objected to various aspects of those settlements in filings dated January 15, 2021, January 27, 2021, and February 5, 2021. On August 17, 2021, the Court denied the Ferguson Plaintiffs’ motion for preliminary approval of the settlement on the terms proposed. On November 10, 2022, the Ferguson parties filed a notice of settlement and joint motion to stay the proceedings. The notice informed the Court that the parties had reached a settlement in principle to settle the class claims (as discussed above, the class excludes certain plan fiduciaries), and the joint motion requested a stay while the parties sought to finalize their agreement and prepare an application for Court approval of the contemplated settlement. On November 18, 2022, the Court entered an order staying the Ferguson action for 30 days. On December 19, 2022, the Ferguson parties filed a joint motion to stay the proceedings for an additional 30 days, which the Court granted on January 9, 2023, staying the proceedings until February 8, 2023. On February 8, 2023, the Ferguson parties filed a joint motion to stay the proceedings for an additional 45 days, which the Court granted on February 21, 2023, staying the proceedings until April 7, 2023. On September 28, 2018, a complaint was filed in the United States District Court for the Southern District of New York captioned Robert Canfield, et al. v. SS&C Technologies Holdings, Inc., et al., on behalf of five individual plaintiffs (the “Canfield Plaintiffs”). On November 5, 2018, a similar complaint was filed in the United States District Court for the Southern District of New York captioned Mark Mendon, et al. v. SS&C Technologies Holdings, Inc., et al., on behalf of two individual plaintiffs (the “Mendon Plaintiffs”). These complaints name as defendants SS&C, the DST Defendants, and Ruane. The underlying claim in each complaint is the same as in the above-described Ferguson matter, with the exception that these actions purport to be brought as individual actions and not putative class actions. On July 10, 2020, the Court entered an order granting the DST Defendants’ motion to disqualify plaintiffs’ counsel in the Canfield and Mendon actions. On March 17, 2021, the Court issued an opinion and order denying the DST Defendants’ motion to disqualify counsel from the arbitrations described below. On April 12, 2021, the Canfield Plaintiffs and Mendon Plaintiffs filed notices of voluntary dismissal dismissing their claims against Ruane with prejudice, which were entered by the Court on April 13, 2021. On April 22, 2021, the DST Defendants filed motions to dismiss the Canfield and Mendon actions. Those motions were fully briefed on May 28, 2021. On November 19, 2021, the Court dismissed the Canfield and Mendon actions. On December 17, 2021, the Canfield Plaintiffs and Mendon Plaintiffs appealed the Court’s November 19, 2021 orders dismissing their respective actions to the Second Circuit. On May 17, 2022, the Canfield Plaintiffs and Mendon Plaintiffs filed their opening briefs in those appeals. The DST Defendants filed their answering briefs on September 15, 2022. The Canfield Plaintiffs and Mendon Plaintiffs filed their reply briefs on October 20, 2022. On January 30, 2023, the Second Circuit calendared oral argument for the appeals of the Court's dismissal of the Canfield and Mendon actions for April 20, 2023. These appeals remain pending. On October 8, 2019, a substantially similar action to the above-described Ferguson, Canfield, Mendon and below-described arbitration matters captioned Scalia v. Ruane, Cunniff & Goldfarb Inc. was filed by the DOL in the United States District Court for the Southern District of New York naming as defendants DST, the Advisory Committee of the Plan, the Compensation Committee of DST’s Board of Directors and certain of DST’s former officers and directors, and alleging that the DST Defendants breached fiduciary duties in violation of ERISA in connection with the Plan. The complaint also names as defendants Ruane and its former Chairman and Chief Executive Officer Robert D. Goldfarb. In the complaint, the DOL seeks disgorgement, damages and any other appropriate injunctive or equitable relief. The DST Defendants moved to dismiss the complaint on December 4, 2020 on the ground that the DOL’s complaint is time-barred. Other defendants also filed motions to dismiss on the same and other grounds. Briefing on the motions to dismiss was completed on February 5, 2021. On March 28, 2022, the court denied Defendants’ motions to dismiss, and Martin J. Walsh was substituted for Eugene Scalia as the plaintiff. On April 11, 2022, the DST Defendants answered the DOL’s complaint. DST, the Advisory Committee of the Plan, and the Compensation Committee of DST’s Board of Directors have been named in 579 substantially similar individual demands for arbitration to date, by former and current DST employees demanding arbitration under the DST Employee Arbitration Program and Agreement (the “Arbitration Claimants”). The underlying claim in each is the same as in the above-described Ferguson matter, with the exception that the arbitrations purport to be brought as individual actions. On November 24, 2021, in light of the preliminary injunction entered in Ferguson discussed above, the American Arbitration Association ceased administration of the arbitrations brought by members of the Ferguson class, which includes all of the Arbitration Claimants with the exception of certain former Plan fiduciaries. As of November 24, 2021, 557 demands for arbitration had been submitted to the American Arbitration Association (the “AAA”). As of the date on which the preliminary injunction was entered, those individual arbitrations were at various stages depending on the particular proceeding. Certain of those arbitrations had resulted in awards against DST and others had resulted in decisions finding no liability as against DST. Many of those decisions were subject to further appeal within the AAA. Certain of the arbitration proceedings had been resolved in whole or in part by settlement. Since November 24, 2021, 88 the AAA has administered only those arbitration proceedings associated with claimants who are not members of the Ferguson class, certain of which have resulted in awards against DST. Between August 20, 2021 and November 17, 2021, counsel for Arbitration Claimants filed 177 motions to confirm certain of the arbitration awards. DST filed responses to those motions. Between October 4 and December 22, 2021, the Western District of Missouri issued orders confirming those 177 arbitration awards and entering judgments against DST. DST appealed those judgments to the Eighth Circuit. On November 20, 2021, DST requested that the Eighth Circuit stay the pending appeals in light of the preliminary injunction entered in Ferguson. On December 3, 2021, the Eighth Circuit ordered the parties to brief DST’s stay request, and on January 3, 2022, the Eighth Circuit declined to stay the briefing schedule on the pending appeals and consolidated those appeals. DST filed its opening brief in the Eighth Circuit on March 24, 2022. Arbitration Claimants filed their opposition brief on April 26, 2022, and DST filed its reply brief on May 18, 2022. The Eighth Circuit heard oral argument on June 14, 2022. On November 28, 2022, the Eighth Circuit vacated the judgments confirming the 177 arbitration awards and remanded those actions to the Western District of Missouri to determine whether the district court has subject-matter jurisdiction and whether the district court should transfer the cases to the Southern District of New York. On December 14, 2022, the parties submitted simultaneous briefing to the Western District of Missouri regarding transfer. On November 9, 2021, counsel for Arbitration Claimants filed in the Western District of Missouri a petition to compel arbitration captioned Addison v. DST Systems, Inc. (the “Addison Petition”) on behalf of 155 Arbitration Claimants, which DST opposed. On September 15, 2022, the Western District of Missouri dismissed the Addison Petition without prejudice, subject to that action being reopened after the Eighth Circuit’s rulings on DST’s appeals of the 177 orders confirming arbitration awards. We continue to vigorously defend these matters. On November 11, 2020, DST, the Compensation Committee of DST’s Board of Directors, and the Advisory Committee of the Plan as plaintiffs filed a complaint in the United States District Court for the Southern District of New York against Ruane, certain of its related entities, and certain of its current and former employees. The complaint asserts claims for contribution, indemnification, and breach of contract arising out of Ruane’s management of the Plan’s investments and claims for actual and constructive fraudulent conveyances. On May 24, 2021, Defendant Robert Goldfarb filed an answer to the complaint. On December 17, 2021, the remaining defendants filed a motion to dismiss the DST plaintiffs’ complaint. On July 27, 2022, the Court denied without prejudice the pending motion to dismiss, and ordered the parties to submit by October 3, 2022 a joint status report with a new briefing schedule on the motion. On October 3, 2022, the parties filed a joint status report with a new briefing schedule on the motion, which the court approved on October 4, 2022. On December 16, 2022, and January 13, 2023, the parties filed joint motions to stay the proceedings, which were granted on January 31, 2023, staying proceedings until February 8, 2023. On February 8, 2023, the parties filed a joint motion to stay the proceedings for an additional 45 days. This motion remains pending. Note 19—Segment and Geographic Information We operate in one operating segment. Our geographic regions consist of the (a) United States, (b) Europe, Middle East and Africa, (c) Asia Pacific and Japan, (d) Canada and (e) the Americas, excluding the United States and Canada. Long-lived assets as of December 31, were (in millions): 2022 2021 2020 United States $ 256.9 $ 285.7 $ 307.1 Europe, Middle East and Africa 73.5 80.7 86.6 Asia-Pacific and Japan 18.4 20.6 25.0 Canada 5.0 5.1 5.4 Americas, excluding United States and Canada 0.1 0.3 0.4 Total $ 353.9 $ 392.4 $ 424.5 Note 20—Subsequent Events Dividend Declared On February 13, 2023 , our Board of Directors declared a quarterly cash dividend of $ 0.20 per share of common stock payable on March 15, 2023 to stockholders of record as of the close of business on March 1, 2023 . 89 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.