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Constellation Software Inc. Announces Results for the Fourth Quarter and Year Ended December 31, 2012 and Declares Quarterly Dividend

TORONTO, ONTARIO--(Marketwire - Mar 6, 2013) - Constellation Software Inc. (CSU.TO) ("Constellation" or the "Company") today announced its financial results for the fourth quarter and fiscal year ended December 31, 2012 and declared a $1.00 per share dividend payable on April 4, 2013 to all common shareholders of record at the close of business on March 18, 2013. This dividend has been designated as an eligible dividend for the purposes of the Income Tax Act (Canada). Please note that all dollar amounts referred to in this press release are in U.S. Dollars unless otherwise stated.

The following press release should be read in conjunction with the Company''s annual Consolidated Financial Statements, prepared in accordance with International Financial Reporting Standards ("IFRS") and our annual Management''s Discussion and Analysis for the year ended December 31, 2012, which can be found on SEDAR at www.sedar.com and on the Company''s website www.csisoftware.com. Additional information about the Company is also available on SEDAR at www.sedar.com.

2012 Highlights:

  • Revenue grew 15% to $891 million compared to $773 million in 2011
  • Adjusted EBITDA increased $17 million or 10% to $186 million as compared to 2011
  • Adjusted net income increased $32 million or 23% to $172 million ($8.13 on a fully diluted per share basis) from $140 million ($6.63 on a fully diluted per share basis) in 2011
  • Thirty-five acquisitions were completed for aggregate cash consideration of $141 million (which includes acquired cash and acquired bank indebtedness) plus cash holdbacks of $29 million and estimated value of contingent consideration of $10 million
  • Cash flows from operations increased $7 million or 5% to $145 million from $138 million in 2011 $35 million in cash proceeds was received and a $21 million gain was realized relating to the sale of investments

Q4 2012 Highlights:

  • Revenue grew 32% to $261 million compared to $198 million in Q4 2011. Organic revenue growth was 8% compared to 7% in Q4 2011
  • Adjusted EBITDA grew 15% to $54 million compared to Q4 2011
  • Adjusted net income grew 55% to $62 million compared to Q4 2011
  • Thirteen acquisitions were completed in the quarter for aggregate cash consideration of $62 million (which includes acquired cash and acquired bank indebtedness) plus cash holdbacks of $8 million and estimated value of contingent consideration of $2 million

Additional Highlights:

  • Subsequent to December 31, 2012, the Company completed six acquisitions for aggregate cash consideration of $32 million
  • For Q1 2013, the Company expects gross revenue to be in the range of $245 million to $260 million and expects Adjusted EBITDA margin to be in the range of 14% to 18%

Fourth quarter 2012 revenue was $261 million, an increase of 32%, or $63 million, compared to $198 million for the comparable period in 2011. For fiscal year 2012, total revenue was $891 million, an increase of 15%, or $118 million, compared to $773 million for the 2011 fiscal year. The increase for the quarter ended December 31, 2012 relative to the same period in the prior year is largely attributed to growth from acquisitions as organic growth was 8%. The increase for fiscal year 2012 is mainly attributed to growth from acquisitions as organic growth was 1% compared to fiscal year 2011.

Net income for the quarter ended December 31, 2012 increased $21 million to $40 million from $19 million for the same period in 2011. On a fully diluted per share basis this translated into Net income per share of $1.89 in the quarter ended December 31, 2012 compared to Net income per share of $0.92 in the quarter ended December 31, 2011. Net income for the year ended December 31, 2012 was $93 million compared to $157 million in fiscal year 2011. For the year ended December 31, 2012, Net income was reduced due to income tax expense of $18 million compared to income tax recovery of $75 million in 2011. The income tax recovery for the year ended December 31, 2011 was primarily due to a transfer of certain intangible assets from one subsidiary to another. In the prior year, a deferred tax asset was recorded on the increase in fair market value arising on the sale of intellectual property between entities within the Company at the rate of tax of the entity that acquired the assets notwithstanding that the gains are not otherwise recorded for accounting and financial reporting on consolidation. The deferred income tax recovery recorded through profit or loss represented the amount of these deferred income tax deductions that the Company determined was probable of being utilized for income tax deduction purposes in the future. Excluding the deferred income tax recovery, Net income for the year ended December 31, 2012 increased $24 million to $87 million from $63 million in fiscal year 2011. Net income per share on a fully diluted basis for the year increased to $4.11 from $2.99 in fiscal year 2011.

Adjusted EBITDA for the quarter ended December 31, 2012 increased 15% to $54 million compared to $47 million for the same period in 2011. On a fully diluted per share basis this translated into Adjusted EBITDA per share of $2.56 in the quarter ended December 31, 2012 compared to Adjusted EBITDA per share of $2.24 in the quarter ended December 31, 2011. Adjusted EBITDA for the year ended December 31, 2012 increased $17 million to $186 million from $169 million in fiscal year 2011. Adjusted EBITDA per share on a fully diluted basis for the year increased to $8.77 from $7.96 in fiscal year 2011.

Adjusted net income for the quarter ended December 31, 2012 increased 55% to $62 million compared to $40 million for the same period in 2011. On a fully diluted per share basis this translated into Adjusted net income per share of $2.94 in the quarter ended December 31, 2012 compared to Adjusted net income per share of $1.90 in the quarter ended December 31, 2011. The increase in Adjusted net income for the quarter ended December 31, 2012 is largely due to the gains on sales of available-for-sale financial assets. Adjusted net income for the year ended December 31, 2012 increased $32 million, or 23%, to $172 million from $140 million in fiscal year 2011. Adjusted net income per share on a fully diluted basis for the year increased to $8.13 from $6.63 in fiscal year 2011.

Net indebtedness (bank indebtedness less cash) of $3 million, increased by $37 million for the year primarily due to acquisitions. For the year ended December 31, 2012, thirty-five acquisitions were completed, and combined with post-acquisition settlement payments resulted in cash outflows of $139 million. In the prior year, twenty-two acquisitions were completed for net cash consideration, when combined with post-acquisition settlement payments, resulted in cash outflows of $46 million.

The following table displays our revenue by reportable segment and the percentage change for the three and twelve months ended December 31, 2012 compared to the same periods in 2011:

  Three months ended Period-Over-Period     Fiscal year ended Period-Over-Period  
  December 31, Change     December 31, Change  
  2012 2011 $ %     2012 2011 $ %  
  ($000, except percentages)     ($000, except percentages)  
Public Sector                      
Licenses 15,541 11,511 4,030 35 %   48,851 43,748 5,103 12 %
Professional services 47,335 37,081 10,254 28 %   154,815 146,281 8,534 6 %
Hardware and other 34,348 22,822 11,526 51 %   97,800 97,133 667 1 %
Maintenance and other recurring 92,230 73,205 19,025 26 %   334,525 284,489 50,036 18 %
  189,454 144,619 44,835 31 %   635,991 571,651 64,340 11 %
                       
Private Sector                      
Licenses 7,142 5,432 1,710 31 %   23,556 19,359 4,197 22 %
Professional services 11,259 8,956 2,303 26 %   42,335 34,885 7,450 21 %
Hardware and other 3,596 2,736 860 31 %   13,559 11,583 1,976 17 %
Maintenance and other recurring 49,548 36,614 12,934 35 %   175,785 135,863 39,922 29 %
  71,545 53,738 17,807 33 %   255,235 201,690 53,545 27 %

Public Sector

For the quarter ended December 31, 2012, total revenue in the public sector reportable segment increased by 31%, or $44 million to $189 million, compared to $145 million for the quarter ended December 31, 2011. For the year ended December 31, 2012, total revenue increased by 11%, or $64 million to $636 million, compared to $572 million in 2011. Revenue growth from acquired businesses contributed approximately $34 million to our Q4 2012 revenues and $67 million to our year ended December 31, 2012 revenues compared to the same periods in 2011. We have completed 28 acquisitions since the beginning of 2011, 10 of which were acquired in fiscal year 2011. Organic revenues increased by 7% in Q4 2012 and were unchanged in the year ended December 31, 2012 compared to the same periods in 2011. Excluding PTS, organic revenues increased 7% in Q4 2012 and 1% in the year ended December 31, 2012 respectively, compared to the same periods in 2011.

Constellation acquired the Public Transit Solutions business ("PTS") from Continental Automotive AG ("Continental") on November 2, 2009. Given the substantial amount of non-recurring revenue historically earned by PTS, gross revenue from PTS has fluctuated significantly in the past and will continue to do so in the future.

Private Sector

For the quarter ended December 31, 2012, total revenue in the private sector reportable segment increased 33%, or $18 million to $72 million, compared to $54 million for the quarter ended December 31, 2011. For the year ended December 31, 2012 total revenue increased by 27%, or $53 million to $255 million, compared to $202 million for the comparable period in 2011. Revenue growth from acquired businesses contributed approximately $14 million to our Q4 2012 revenues and $42 million to our year ended December 31, 2012 revenues compared to the same periods in 2011. We have completed 29 acquisitions since the beginning of 2011, 12 of which were acquired in fiscal year 2011. Revenues increased organically by 8% in Q4 2012 and by 6% for the year ended December 31, 2012 compared to the same periods in 2011.

Outlook

For Q1 2013, the Company expects gross revenue to be in the range of $245 million to $260 million and expects Adjusted EBITDA margin to be in the range of 14% to 18%. These statements are "forward looking statements" and are based on the following assumptions which management believes are reasonable under the current circumstances including (i) Revenue growth will be in the range of 26% to 33% for Q1 2013, which includes the impact of all companies acquired to date; (ii) the European acquisitions that the Company completed during the second half of 2012 and in the first quarter of 2013 will likely have negative Adjusted EBITDA in Q1 2013, and in aggregate, the European (including UK) operations of the Company will generate single digit Adjusted EBITDA margins during the quarter; (iii) North American hiring by the Company during Q1 2013 will be increased to provide additional professional services capacity to address backlog and to staff new investments in growth initiatives; (iv) no material acquisitions will be completed during the remainder of Q1 2013; and (iv) general economic and market conditions will remain consistent with those in effect on March 6, 2013. Although management believes these assumptions are reasonable in the current circumstances, they are subject to various risks and uncertainties and there are several factors that could cause actual results to differ materially from those specified above. See "Forward Looking Statements" below and also the Company''s Management Discussion and Analysis for the year ended December 31, 2012.

Appointment of New Board Members

The Company also announced today that it has increased the size of its board of directors to eight members and has appointed Mark Miller, Chief Operating Officer of the Company and Chief Executive Officer of the Volaris Operating Group, and Jeff Bender, Chief Executive Officer of the Harris Operating Group, as new directors of the Company. 

Conference Call and Webcast

Management will host a conference call at 9:00 a.m. (ET) on Thursday, March 7, 2013 to answer questions regarding the results. The teleconference numbers are 416-340-8061 or 866-225-0198. The call will also be webcast live and archived on Constellation''s website at www.csisoftware.com.

A replay of the conference call will be available as of 11:30 a.m. ET the same day until 11:59 p.m. ET on March 21, 2013. To access the replay, please dial 905-694-9451 or 800-408-3053 followed by the passcode 3104756.

Forward-Looking Statements

Certain statements herein including those under "Outlook" above, may be "forward-looking" statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Constellation or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Constellation assumes no obligation, except as required by law, to update any forward-looking statements to reflect new events or circumstances. 

Non-IFRS Measures

The term "Adjusted EBITDA" refers to net income before adjusting for finance income, finance costs, income taxes, equity in net income or loss of equity investees, impairment of non-financial assets, depreciation, amortization, and foreign exchange gain or loss. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company''s main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and amortization and the other items listed above. "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.

"Adjusted net income" means net income adjusted for non-cash expenses (income) such as amortization of intangible assets, deferred income taxes, and certain other expenses (income). The Company believes that Adjusted net income is useful supplemental information as it provides an indication of the results generated by the Company''s main business activities prior to taking into consideration amortization of intangible assets, deferred income taxes, and certain other non-cash expenses (income) incurred or recognized by the Company from time to time. "Adjusted net income margin" refers to the percentage that Adjusted net income for any period represents as a portion of total revenue for that period.

Adjusted EBITDA and Adjusted net income are not recognized measures under IFRS and, accordingly, readers are cautioned that Adjusted EBITDA and Adjusted net income should not be construed as alternatives to net income determined in accordance with IFRS. The Company''s method of calculating Adjusted EBITDA and Adjusted net income may differ from other issuers and, accordingly, Adjusted EBITDA and Adjusted net income may not be comparable to similar measures presented by other issuers. See "Results of Operations - Adjusted EBITDA" and "- Adjusted net income" for a reconciliation of Adjusted EBITDA and Adjusted net income to net income.

The following table reconciles Adjusted EBITDA to net income:

  Three months ended     Fiscal year ended  
  December 31,     December 31,  
  2012     2011     2012     2011  
  ($000, except percentages)     ($000, except percentages)  
                       
Total revenue $ 260,999     $ 198,357     $ 891,226     $773,341  
                             
Net income   40,051       19,395       92,632     157,174  
Adjusted for:                            
Income tax expense (recovery)   6,240       5,085       18,050     (75,203 )
Foreign exchange (gain) loss   1,152       364       822     3,392  
Equity in net (income) loss of equity investees   (36 )     -       839     -  
Finance income   (19,649 )     (1,100 )     (23,178 )   (7,267 )
Finance costs   1,078       986       4,001     5,575  
Impairment of non-financial assets   -       (29 )     -     489  
Amortization of intangible assets   23,499       20,917       85,142     76,650  
Depreciation   2,010       1,829       7,643     7,868  
                             
Adjusted EBITDA   54,345       47,447       185,951     168,678  
Adjusted EBITDA margin   21 %     24 %     21 %   22 %
                             

The following table reconciles Adjusted net income to net income:

   
  Three months ended     Fiscal year ended  
  December 31,     December 31,  
  2012     2011     2012     2011  
  ($000, except percentages)     ($000, except percentages)  
                       
Total revenue $ 260,999     $ 198,357     $ 891,226     $ 773,341  
                               
Net income   40,051       19,395       92,632       157,174  
Adjusted for:                              
Amortization of intangible assets   23,499       20,917       85,142       76,650  
Impairment of non-financial assets   -       (29 )     -       489  
Deferred income tax (recovery) expense   (1,299 )     (54 )     (5,576 )     (93,818 )
                               
Adjusted net income   62,251       40,229       172,198       140,495  
Adjusted net income margin   24 %     20 %     19 %     18 %

The following tables provide supplemental statement of operations and cash flow information for PTS:

  For the three months ended December 31, 2012   For the year ended December 31, 2012  
(Unaudited) Constellation Software Inc. (excluding PTS)     PTS     Consolidated   Constellation Software Inc. (excluding PTS)     PTS     Consolidated  
                                 
Revenue $ 225,766     $ 35,233     $ 260,999   $ 760,865     $ 130,361     $ 891,226  
Adjusted EBITDA   48,750       5,595       54,345     162,383       23,568       185,951  
  EBITDA as % Total Revenue   22 %     16 %     21 %   21 %     18 %     21 %
                                             
Net Income $ 35,291     $ 4,760     $ 40,051   $ 73,185     $ 19,447     $ 92,632  
                                             
                                             
Cash flows from operating activities:                                            
  Net income $ 35,291     $ 4,760     $ 40,051   $ 73,185     $ 19,447     $ 92,632  
  Adjustments to reconcile net income to net cash flows from operations, including taxes paid:   11,663       (2,828 )     8,835     69,435       114       69,549  
                                             
  Change in non-cash operating working capital   (3,946 )     15,903       11,957     (13,263 )     (4,127 )     (17,390 )
  Cash flows from operating activities $ 43,008     $ 17,835     $ 60,843   $ 129,357     $ 15,434     $ 144,791  

The following table reconciles Adjusted EBITDA to net income for PTS:

  For the three months ended December 31, 2012   For the year ended December 31, 2012  


(Unaudited)
Constellation
 Software Inc.
(excluding PTS)
   

PTS
   

Consolidated
  Constellation
 Software Inc.
(excluding PTS)
   

PTS
   

Consolidated
 
                                 
                                 
Total revenue $ 225,766     $ 35,233     $ 260,999   $ 760,865     $ 130,361     $ 891,226  
                                             
Net income    35,291       4,760        40,051      73,185       19,447        92,632  
Adjusted for:                                            
Income tax expense   6,516       (276 )     6,240     16,151       1,899       18,050  
Other expenses (income)   (18,374 )     919       (17,455 )   (19,052 )     1,536       (17,516 )
Amortization of intangible assets   23,499       -       23,499     85,142       -       85,142  
Depreciation   1,818       192       2,010     6,957       686       7,643  
                                             
Adjusted EBITDA   48,750       5,595       54,345     162,383       23,568       185,951  
Adjusted EBITDA margin   22 %     16 %     21 %   21 %     18 %     21 %

About Constellation Software Inc.

Constellation Software acquires, manages and builds vertical market software businesses that provide mission-critical software solutions.

CONSTELLATION SOFTWARE INC.
Consolidated Statements of Financial Position
(In thousands of U.S. dollars)
  December 31,   December 31,
  2012   2011
Assets          
           
Current assets:          
  Cash $ 41,313   $ 33,492
  Equity securities available-for-sale   470     21,222
  Accounts receivable   126,987     96,259
  Work in progress   36,926     26,244
  Inventories   18,739     13,539
  Other assets   29,178     29,772
    253,613     220,528
           
Non-current assets:          
  Property and equipment   21,300     14,591
  Deferred income taxes   104,307     99,659
  Other assets   31,104     28,005
  Intangible assets   402,355     267,792
    559,066     410,047
           
Total assets $ 812,679   $ 630,575
           
Liabilities and Shareholders'' Equity          
           
Current liabilities:          
  Bank indebtedness $ 44,356   $ -
  Accounts payable and accrued liabilities   147,559     114,952
  Dividends payable   20,945     -
  Deferred revenue   224,049     181,450
  Provisions   6,396     3,555
  Acquired contract liabilities   3,535     4,750
  Acquisition holdback payments   20,635     11,378
  Income taxes payable   5,066     4,751
    472,541     320,836
           
Non-current liabilities:          
  Deferred income taxes   29,283     11,259
  Acquired contract liabilities   26,073     28,051
  Acquisition holdback payments   5,973     2,474
  Other liabilities   20,005     11,675
    81,334     53,459
           
Total liabilities   553,875     374,295
           
           
Shareholders'' equity:          
  Capital stock   99,283     99,283
  Accumulated other comprehensive income   1,621     6,961
  Retained earnings   157,900     150,036
    258,804     256,280
           
Total liabilities and shareholders'' equity $ 812,679   $ 630,575
           
CONSTELLATION SOFTWARE INC.  
Consolidated Statements of Comprehensive Income  
(In thousands of U.S. dollars, except per share amounts)  
Years ended December 31, 2012 and 2011  
  2012     2011  
               
               
Revenue $ 891,226     $ 773,341  
               
Expenses              
  Staff   469,677       401,379  
  Hardware   61,446       60,854  
  Third party license, maintenance and professional services   61,469       51,066  
  Occupancy   21,023       18,918  
  Travel   35,967       30,038  
  Telecommunications   10,996       9,992  
  Supplies   15,308       15,314  
  Professional fees   15,031       8,623  
  Other, net   14,358       8,479  
  Depreciation   7,643       7,868  
  Amortization of intangible assets   85,142       76,650  
    798,060       689,181  
               
Impairment of non-financial assets   -       489  
Foreign exchange loss   822       3,392  
Equity in net loss of equity investees   839       -  
Finance income   (23,178 )     (7,267 )
Finance costs   4,001       5,575  
    (17,516 )     2,189  
               
Profit before income tax   110,682       81,971  
               
Current income tax expense   23,626       18,615  
Deferred income tax recovery   (5,576 )     (93,818 )
Income tax expense (recovery)   18,050       (75,203 )
               
Net income   92,632       157,174  
               
Net change in fair value of available-for-sale financial assets during the period   13,968       5,773  
               
Net unrealized foreign exchange gain (loss) on available-for-sale financial assets during the period   45       (31 )
               
Amounts reclassified to profit during the period related to realized gains on available-for-sale financial assets   (21,735 )    
(6,253
)
               
Foreign currency translation differences from foreign operations   1,164       (1,188 )
               
Current income tax recovery (expense)   104       (34 )
               
Deferred income tax recovery   1,114       172  
               
Other comprehensive loss for the period, net of income tax   (5,340 )     (1,561 )
               
Total comprehensive income for the period $ 87,292     $ 155,613  
               
Earnings per share              
  Basic and diluted $ 4.37     $ 7.42  
                 
                 
CONSTELLATION SOFTWARE INC.
Consolidated Statements of Changes in Equity
(In thousands of U.S. dollars)
   
   
Year ended December 31, 2012   Capital stock

  Accumulated other comprehensive income/(loss)   Total accumulated other comprehensive income/(loss)     Retained earnings     Total  
                           
        Cumulative translation account   Amounts related to gains/losses on available-
for-sale financial assets
                 
                               
Balance at January 1, 2012   $ 99,283   $ 182   $ 6,779   $ 6,961     $ 150,036     $ 256,280  
                                           
Total comprehensive income for the period                                          
                                           
Net income     -     -     -     -       92,632       92,632  
                                           
Other comprehensive income (loss)                                          
                                           
Net change in fair value of available-for-sale financial assets during the period     -     -     13,968     13,968       -       13,968  
                                           
Net unrealized foreign exchange adjustment gain (loss) on available-for-sale financial assets during the period     -     -     45     45       -       45  
                                           
Amounts reclassified to profit during the period related to realized gains on available-for-sale investments     -     -     (21,735 )   (21,735 )     -       (21,735 )
                                           
Foreign currency translation differences from foreign operations     -     1,164     -     1,164       -       1,164  
                                           
Current tax recovery     -     104     -     104       -       104  
                                           
Deferred tax recovery     -     -     1,114     1,114       -       1,114  
                                           
Total other comprehensive income (loss) for the period     -     1,268     (6,608 )   (5,340 )     -       (5,340 )
                                           
Total comprehensive income (loss) for the period     -     1,268     (6,608 )   (5,340 )     92,632       87,292  
                                           
Transactions with owners, recorded directly in equity                                          
Dividends to shareholders of the Company     -     -     -     -       (84,768 )     (84,768 )
                                           
Balance at December 31, 2012   $ 99,283   $ 1,450   $ 171   $ 1,621     $ 157,900     $ 258,804  
                                           
CONSTELLATION SOFTWARE INC.
Consolidated Statements of Changes in Equity
(In thousands of U.S. dollars)
Year ended December 31, 2011
         
  Capital stock
  Accumulated other comprehensive income/(loss) 
  Total accumulated other comprehensive income/(loss)     Retained
earnings
    Total
 
                               
      Cumulative translation account     Amounts related to gains/losses on available-
for-sale financial assets
                 
                               
Balance at January 1, 2011 $ 99,283   $ 1,379     $ 7,143   $ 8,522     $ 35,246     $ 143,051  
                                           
Total comprehensive income for the period                                          
                                           
Net income   -     -       -     -       157,174       157,174  
                                           
Other comprehensive income (loss)                                          
                                           
Net change in fair value of available-for-sale financial assets during the period  

-
   

-
     

5,773
   

5,773
     

-
     

5,773
 
                                           
Net unrealized foreign exchange adjustment gain (loss) on available-for-sale financial assets during the period  

-
   

-
     

(31
)  

(31
)    

-
     

(31
)
                                           
Amounts reclassified to profit during the period related to realized gains on available-for-sale investments  

-
   

-
     

(6,253
)  

(6,253
)    

-
     

(6,253
)
                                           
Foreign currency translation differences from foreign operations  
-
   
(1,188
)    
-
   
(1,188
)    
-
     
(1,188
)
                                           
Current tax expense   -     (34 )     -     (34 )     -       (34 )
                                           
Deferred tax recovery   -     25       147     172       -       172  
                                           
Total other comprehensive loss for the period   -     (1,197 )     (364 )   (1,561 )     -       (1,561 )
                                           
Total comprehensive income (loss) for the period   -     (1,197 )     (364 )   (1,561 )     157,174       155,613  
                                           
Transactions with owners, recorded directly in equity                                          
Dividends to shareholders of the Company   -     -       -     -       (42,384 )     (42,384 )
                                           
Balance at December 31, 2011 $ 99,283   $ 182     $ 6,779   $ 6,961     $ 150,036     $ 256,280  
                                           
CONSTELLATION SOFTWARE INC.  
Consolidated Statements of Cash Flows  
(In thousands of U.S. dollars)   
Years ended December 31, 2012 and 2011  
   
  2012     2011  
Cash flows from operating activities:              
  Net income $ 92,632     $ 157,174  
  Adjustments for:              
    Depreciation   7,643       7,868  
    Amortization of intangible assets   85,142       76,650  
    Impairment of non-financial assets   -       489  
    Equity in net loss of equity investees   839       -  
    Finance income   (23,178 )     (7,267 )
    Finance costs   4,001       5,575  
    Income tax expense (recovery)   18,050       (75,203 )
    Foreign exchange loss   822       3,392  
  Change in non-cash operating working capital exclusive of effects of business combinations   (17,390 )     (15,896 )
  Income taxes paid   (23,770 )     (15,249 )
  Net cash flows from operating activities   144,791       137,533  
               
Cash flows from (used in) financing activities:              
  Interest paid   (1,761 )     (4,979 )
  Increase (decrease) in other non current liabilities   (973 )     3,720  
  Increase (decrease) in bank indebtedness, net   41,052       (47,877 )
  Credit facility transaction costs   (2,077 )     -  
  Dividends paid   (63,576 )     (42,384 )
  Net cash flows used in financing activities   (27,335 )     (91,520 )
               
Cash flows from (used in) investing activities:              
  Acquisition of businesses, net of cash acquired   (121,154 )     (40,511 )
  Post-acquisition settlement payments, net of receipts   (17,445 )     (5,345 )
  Purchases of equity securities available-for-sale   (211 )     (5,944 )
  Proceeds from sale of equity securities available-for-sale   34,977       14,268  
  Proceeds from sale of intangible assets   101       -  
  Decrease in restricted cash   -       557  
  Interest received   5       1,113  
  Property and equipment purchased   (6,100 )     (7,350 )
  Cash flows used in investing activities   (109,827 )     (43,212 )
                 
Effect of foreign currency on cash and cash equivalents   192       (220 )
Increase in cash and cash equivalents   7,821       2,581  
               
Cash, beginning of period   33,492       30,911  
               
Cash, end of period $ 41,313     $ 33,492