10-K/A: Altair Engineering Files Amendment No. 1 to Form 10-K Amidst Pending Merger with Siemens

Altair Engineering Inc. files an amendment to its annual report on Form 10-K to include previously omitted information and certifications, amidst an ongoing merger with Siemens Industry Software Inc.

Summary

• Altair Engineering Inc. has filed Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
• The amendment includes information required by Part III of Form 10-K, which was previously omitted, and restates Items 10, 11, 12, 13, and 14 of the original Form 10-K.
• The filing also includes new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the principal executive officer and principal financial officer.
• Altair entered into a merger agreement with Siemens Industry Software Inc. on October 30, 2024, where Altair will become a wholly-owned subsidiary of Siemens Industry.
• Each share of Altair's Class A and Class B Common Stock will be converted into the right to receive $113.00 in cash.
• Stockholders adopted the Merger Agreement on January 22, 2025.
• Following the merger, Altair intends to file a Form 15 to terminate the registration of its securities and suspend its reporting obligations under the Exchange Act.
• The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant on June 30, 2024 was $5.8 billion.
• On February 3, 2025, there were 60,401,224 shares of Class A common stock and 25,393,574 shares of Class B common stock outstanding.
• Total software product revenue for 2024 was $611.9 million, and total revenue was $665.8 million.
• Net income for 2024 was $14.2 million, or $0.16 per diluted share, while adjusted EBITDA was $149.9 million.
• Non-GAAP net income was $119.6 million, or $1.35 per diluted share, and free cash flow was $140.0 million.
• The company's executive compensation program includes base salary, an executive bonus program, and long-term incentive compensation in the form of restricted stock units (RSUs) and stock options.
• In 2024, the CEO's base salary was $860,000, and a performance-based bonus of $610,000 was approved.
• Long-term incentive compensation included RSU awards for 41,000 shares and stock options for 123,000 shares for the CEO.
• The board of directors approved the acceleration of certain annual bonus payments and the vesting of certain RSU awards to mitigate the potential impact of Sections 280G and 4999 of the Internal Revenue Code in connection with the Merger.
• The median of the annual total compensation of all of the company's employees was $95,251, and the annual total compensation of the CEO was $9,050,451, resulting in a pay ratio of 95 to 1.

Sentiment

Score: 7

Explanation: The document is factual and reports on the merger and financial performance. The sentiment is neutral to positive due to the merger agreement and solid financial results.

Positives

• Stockholders approved the merger with Siemens Industry Software Inc.
• The merger provides a cash payment of $113.00 per share for Altair stockholders.
• The company achieved solid financial results in 2024, including $611.9 million in software product revenue and $665.8 million in total revenue.
• Adjusted EBITDA was $149.9 million, and free cash flow was $140.0 million.
• The company is taking steps to mitigate potential tax implications for executives related to the merger.

Negatives

• The company will be delisted and will no longer be required to file reports under Sections 13 and 15(d) of the Exchange Act after the merger.
• Certain executive officers may be subject to excise taxes as a result of change in control payments related to the merger.

Risks

• The merger is subject to the terms and conditions set forth in the Merger Agreement.
• The company's future performance and operations will be determined by Siemens Industry Software Inc. after the merger.
• Executive officers may be terminated without cause (as determined by the surviving corporation) or for good reason (to the extent such holder has an agreement or participates in an Altair employee benefit plan (an Altair plan) that provides for severance benefits upon a resignation for good reason, and as defined in such agreement or Altair plan).

Future Outlook

Following the merger with Siemens, Altair intends to file a Form 15 to terminate the registration of its securities and suspend its reporting obligations under the Exchange Act.

Management Comments

• We believe a critical component of our success has been our company culture, based on our core values of innovation, envisioning the future, communicating honestly and broadly, seeking technology and business firsts, and embracing diversity and risk-taking.
• This culture is important because it helps attract and retain top talent, encourages innovation and teamwork, and enhances our focus on achieving Altairs corporate objectives.

Industry Context

The merger with Siemens Industry Software Inc. reflects a trend of consolidation in the software and engineering solutions industry, as larger companies seek to expand their capabilities and market reach through acquisitions.

Comparison to Industry Standards

• Comparable companies in the technology sector, such as Alteryx, Aspen Technology, and PTC, are often evaluated based on revenue growth, profitability, and market capitalization.
• The $113.00 per share merger consideration represents a premium for Altair's shareholders, which is a common feature in M&A transactions within the technology industry.
• The executive compensation structure, including base salary, bonus, and equity awards, aligns with industry standards for attracting and retaining talent in competitive technology markets.
• The median employee compensation of $95,251 and CEO compensation of $9,050,451 results in a pay ratio of 95:1, which is within the range observed in similar technology companies.

Related Party Transactions

• Stephanie Buckner (Mr. Scapas daughter), our Chief Operating Officer and one of our Named Executive Officers, received a base salary of $260,000 in 2024, a bonus of $220,000 for 2024 and received grants of 5,625 restricted stock unit awards and 14,063 options to purchase shares of our Class A common stock in 2024.
• Thomas Leemhuis (Mr. Scapas son-in-law), a Regional Manager, received a base salary of $150,000 in 2024, a commission of $250,880 in 2024, a car allowance of $6,000 for 2024 and received a grant of 354 restricted stock unit awards and 1,062 options to purchase shares of our Class A common stock in 2024.
• Christian Buckner (Mr. Scapas son-in-law and the husband of Stephanie Buckner), a Director of Product Management, received a base salary of $240,733 in 2024, a bonus of $11,191 for 2024, and received a grant of 446 restricted stock unit awards in 2024.

Stakeholder Impact

• Shareholders will receive $113.00 per share in cash upon completion of the merger.
• Employees' roles and responsibilities may change following the merger with Siemens.
• Customers will likely see continued support and development of Altair's software solutions under Siemens' ownership.

Next Steps

• Complete the merger with Siemens Industry Software Inc.
• File Form 15 to terminate security registrations and suspend reporting obligations.
• Integrate Altair's operations into Siemens Industry Software Inc.

Key Dates

Keywords

merger, Altair, Siemens, Form 10-K, executive compensation, financial results, stock options, RSUs, Sarbanes-Oxley, reporting obligations