<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 1997
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from __________ to __________
COMMISSION FILE NO. 1-14196
STERLING COMMERCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2623341
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 CRESCENT COURT, SUITE 1200
DALLAS, TEXAS 75201
(Address of principal executive offices, including zip code)
(214) 981-1100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title Shares Outstanding as of February 6, 1998
---------------------------- -----------------------------------------
Common Stock, $.01 par value 89,959,111
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Index to Financial Statements
Page
----
Sterling Commerce, Inc. Consolidated Balance Sheets at December 31, 1997 and
September 30, 1997........................................................ 3
Sterling Commerce, Inc. Consolidated Statements of Income for the Three
Months Ended December 31, 1997 and 1996................................... 4
Sterling Commerce, Inc. Consolidated Statements of Stockholders' Equity for
the Three Months Ended December 31, 1997 and 1996......................... 5
Sterling Commerce, Inc. Consolidated Statements of Cash Flows for the Three
Months Ended December 31, 1997 and 1996................................... 6
Sterling Commerce, Inc. Notes to Consolidated Financial Statements.......... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..................................................... 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................. 14
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<PAGE>
STERLING COMMERCE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
A S S E T S
DECEMBER 31 SEPTEMBER 30
1997 1997
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................... $254,076 $250,348
Marketable securities....................................................... 256,188 234,314
Accounts and notes receivable, net.......................................... 115,882 103,692
Deferred income taxes....................................................... 10,931 10,431
Prepaid expenses and other current assets................................... 13,680 16,332
-------- --------
Total current assets...................................................... 650,757 615,117
Property and equipment, net of accumulated depreciation of $48,205 at
December 31, 1997 and $42,986 at September 30, 1997......................... 63,773 59,723
Computer software, net of accumulated amortization of $54,898 at
December 31, 1997 and $51,306 at September 30, 1997......................... 49,078 48,163
Excess cost over net assets acquired, net of accumulated amortization of
$4,548 at December 31, 1997 and $4,212 at September 30, 1997................ 16,463 17,156
Other assets................................................................. 8,100 8,407
-------- --------
$788,171 $748,566
======== ========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current liabilities:
Accounts payable and accrued liabilities.................................... $55,102 $57,397
Income taxes payable........................................................ 14,724 5,919
Deferred revenue............................................................ 60,762 60,000
-------- --------
Total current liabilities................................................. 130,588 123,316
Deferred income taxes........................................................ 16,233 13,592
Other noncurrent liabilities................................................. 10,571 10,796
Stockholders' equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized; no shares
issued and outstanding.....................................................
Common stock, $.01 par value; 150,000,000 shares authorized; 89,860,000 and
89,644,000 shares issued and outstanding at December 31 and September 30,
1997, respectively......................................................... 899 896
Additional paid-in capital.................................................. 512,081 505,855
Retained earnings........................................................... 117,799 94,111
-------- --------
Total stockholders' equity................................................ 630,779 600,862
-------- --------
$788,171 $748,566
======== ========
</TABLE>
See accompanying notes.
-3-
<PAGE>
STERLING COMMERCE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
(UNAUDITED)
THREE MONTHS
ENDED DECEMBER 31
--------------------------
1997 1996
-------- --------
Revenue:
Products...................................... $39,882 $22,189
Product support............................... 21,994 15,549
Services...................................... 44,407 32,417
Royalties from Sterling Software.............. 4,614
-------- --------
106,283 74,769
Costs and expenses:
Cost of sales:
Products and product support................. 9,356 7,992
Services..................................... 11,105 7,743
-------- --------
20,461 15,735
Product development and enhancement........... 7,648 5,071
Selling, general and administrative........... 45,577 28,950
-------- --------
73,686 49,756
Income before other income and income taxes.... 32,597 25,013
Other income................................... 5,744 1,058
-------- --------
Income before income taxes..................... 38,341 26,071
Provision for income taxes..................... 14,138 10,011
-------- --------
Net income..................................... $24,203 $16,060
======== ========
Income per common share:
Net income:
Basic........................................ $0.27 $0.21
======== ========
Diluted...................................... $0.26 $0.21
======== ========
Weighted average common shares outstanding..... 89,752 75,000
======== ========
See accompanying notes.
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<PAGE>
STERLING COMMERCE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------
NUMBER ADDITIONAL TOTAL
OF PAR PAID-IN RETAINED STOCKHOLDERS'
SHARES VALUE CAPITAL EARNINGS EQUITY
--------- --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1996......... 75,000 $750 $98,111 $39,326 $138,187
Net income........................... 16,060 16,060
Other................................ (331) (53) (384)
--------- --------- ---------- -------- -------------
Balance at December 31, 1996.......... 75,000 $750 $97,780 $55,333 $153,863
========= ========= ========== ======== =============
Balance at September 30, 1997......... 89,644 $896 $505,855 $94,111 $600,862
Issuance of common stock pursuant
to stock options including tax
benefit of $947..................... 216 3 6,226 6,229
Net income........................... 24,203 24,203
Other................................ (515) (515)
--------- --------- ---------- -------- -------------
Balance at December 31, 1997.......... 89,860 $899 $512,081 $117,799 $630,779
========= ========= ========== ======== =============
</TABLE>
See accompanying notes.
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<PAGE>
STERLING COMMERCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED DECEMBER 31
-----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Operating activities:
Net income.................................................................. $24,203 $16,060
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................. 9,410 6,747
Provision for losses on accounts receivable............................... 860 743
Provision for deferred income taxes....................................... 2,141 865
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes receivable................... (12,938) 366
Decrease in amounts due from Sterling Software......................... 32,084
(Increase) decrease in prepaids and other assets....................... 3,430 (2,279)
Increase in accounts payable, accrued liabilities and income taxes
payable............................................................... 6,510 3,713
Increase (decrease) in deferred revenue................................ 762 (1,355)
Other.................................................................. (225) 18
---------- ----------
Net cash provided by operating activities............................. 34,153 56,962
Investing activities:
Purchases of property and equipment......................................... (10,040) (7,584)
Purchases and capitalized cost of development of computer software.......... (4,225) (3,257)
Maturities (purchases) of investments, net.................................. (21,874) 10,003
---------- ----------
Net cash used in investing activities................................. (36,139) (838)
Financing activities:
Proceeds from stock issuances............................................... 6,229
Other....................................................................... (515) (548)
---------- ----------
Net cash (used in) provided by financing activities.................. 5,714 (548)
Increase in cash and cash equivalents........................................ 3,728 55,576
Cash and cash equivalents at beginning of period............................. 250,348 23,484
---------- ----------
Cash and cash equivalents at end of period................................... $254,076 $79,060
========== ==========
</TABLE>
See accompanying notes.
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<PAGE>
STERLING COMMERCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Sterling
Commerce, Inc. and its wholly owned subsidiaries (collectively the "Company")
after elimination of all significant intercompany balances and transactions.
Certain amounts for periods ended prior to December 31, 1997 have been
reclassified to conform to the current year presentation. The financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
While management has based its assumptions and estimates on the facts and
circumstances currently known, final amounts may differ from such estimates.
Revenue
Revenue from license fees for software products is recognized when the
software is delivered, provided no significant future vendor obligations exist
and collection is probable. If software product transactions include the right
to receive future products, a portion of the software product revenue is
deferred and recognized as products are delivered. Services revenue and revenue
from products involving installation or other services are recognized as the
services are performed. Royalties revenue represents royalties earned from
Sterling Software, Inc. ("Sterling Software") which acted as the exclusive
distributor of certain of the Company's products outside of the United States
and Canada prior to June 30, 1997 (see Note 3).
Earnings Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings per Share" ("FAS 128"). FAS
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. Earnings per share
amounts for all periods presented have been restated to conform with the
requirements of FAS 128.
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<PAGE>
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Basic:
Average shares outstanding............................ 89,752 75,000
============ ============
Net income............................................ 24,203 16,060
============ ============
Per share amount...................................... $0.27 $0.21
============ ============
Diluted:
Average shares outstanding............................ 89,752 75,000
Net effect of dilutive stock options.................. 3,248 1,855
------------ ------------
Total................................................. 93,000 76,855
============ ============
Net income............................................ 24,203 16,060
============ ============
Per share amount...................................... $0.26 $0.21
============ ============
</TABLE>
2. UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim consolidated financial information contained herein is
unaudited but, in the opinion of management, includes all adjustments
(consisting only of normal recurring entries) necessary for a fair presentation
of the financial position and results of operations for the periods presented.
Results of operations for the periods presented herein are not necessarily
indicative of results of operations for the entire year. The information
included in this report should be read in conjunction with the information
presented under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1997.
3. GENERAL INFORMATION
Initial Public Offering and Distribution
The Company was incorporated in December 1995 as a wholly owned subsidiary
of Sterling Software. The Company completed its initial public offering (the
"Offering") on March 13, 1996. Pursuant to the Offering, the Company sold to the
public 1,800,000 previously unissued shares of Common Stock, $0.01 par value, of
the Company ("Common Stock"), and Sterling Software sold to the public
12,000,000 of the 73,200,000 shares of Common Stock then owned by it.
-8-
<PAGE>
On September 23, 1996, the Board of Directors of Sterling Software declared
a special dividend consisting of the distribution of all shares of Common Stock
held by Sterling Software on September 30, 1996, payable pro rata to the holders
of record of Sterling Software's common stock, $0.10 par value, as of the close
of business on such date. As a result, effective September 30, 1996, the Company
ceased to be a subsidiary of Sterling Software.
Follow-On Public Offering
On February 28, 1997, the Company completed a public offering (the "Follow-
On Offering") of 14,375,000 previously unissued shares of Common Stock. The net
proceeds of $400,145,000 were added to the Company's working capital and are
being used for general corporate purposes, including acquisitions. Pending such
use, the funds are being invested in investment grade debt securities and other
marketable securities.
Termination of International Marketing Agreement
In contemplation of the Offering, the Company entered into an International
Distributor Agreement dated March 4, 1996 (as amended, the "International
Marketing Agreement") with Sterling Software pursuant to which Sterling Software
acted as the exclusive distributor of certain of the Company's products in
markets outside the United States and Canada. In June 1997, the Company entered
into an agreement (the "Termination Agreement") with Sterling Software
terminating effective as of June 30, 1997, the International Marketing
Agreement. Under the Termination Agreement, the Company also acquired certain
assets and assumed certain liabilities associated with the distribution of
certain of the Company's products by Sterling Software outside the United States
and Canada. The Company also hired certain Sterling Software employees, most of
whom had been dedicated to the sales and marketing of the Company's products.
Under the terms of the Termination Agreement, the Company (i) paid Sterling
Software $5,226,000 for the early termination of the International Marketing
Agreement, (ii) paid Sterling Software approximately $10,076,000, which amount
was equal to the net book value of certain assets acquired from Sterling
Software (principally accounts receivable) and (iii) assumed certain liabilities
related to the international distribution of certain of the Company's products.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
Total revenue increased $31,514,000 or 42% in the first quarter of fiscal 1998
over the same period in fiscal 1997. Products revenue increased $17,693,000 or
80%, product support revenue increased $6,445,000 or 41% and services revenue
increased $11,990,000 or 37%. The increases in products and product support
revenues were primarily due to increased licenses of communications and
electronic commerce translation and message management software products. In
addition, as a result of the termination of the International Marketing
Agreement in June 1997 (see Note 3 of consolidated financial statements), the
Company received 100% of the revenues from the licensing of these products
outside of the United States and Canada in the first quarter of fiscal 1998 as
opposed to a 50% royalty on such revenues from Sterling Software in the same
period of fiscal 1997. The increase in services revenue was primarily from
growth in existing commerce services customer volume, the addition of new
customers and additional revenues from electronic product catalogs and
information databases resulting from the Company's acquisition of Automated
Catalogue Services L.P. in May 1997.
The Company's recurring revenue includes revenue from annual and multi-year
product support agreements having terms ranging generally from one to three
years, fixed term product lease and rental agreements having terms ranging
generally from month-to-month to year-to-year and electronic commerce services
agreements cancelable upon 30 days notice. The Company includes the entire
portion of the recognized revenue from commerce services agreements in recurring
revenue, although no assurances can be given that such agreements will not be
canceled. Recurring revenue increased $12,809,000 or 28% in the first quarter of
fiscal 1998 over the first quarter of fiscal 1997 and represented 55% of total
revenue in the first quarter of fiscal 1998 compared to 62% in the same period
of the prior year. The decrease in the relative percentage is due primarily to
the Company receiving 100% of the revenues from the licensing of products
outside the United States and Canada in the first quarter of fiscal 1998 as
opposed to a 50% royalty on such revenues from Sterling Software in the same
period of fiscal 1997. For the three months ended December 31, 1997, 56% of the
Company's products revenue was derived from products designed for operating
platforms other than mainframe operating platforms, as compared to 53% for the
three months ended December 31, 1996. The Company's revenue from outside the
United States represented 22% of total revenue in the first quarter of fiscal
1998 as compared to 12% for the same period of fiscal 1997. The increase is
primarily due to an increase in international licenses of communications and
electronic commerce translation and message management software products as well
as to the termination of the International Marketing Agreement.
Total costs and expenses increased $23,930,000 or 48% on revenue growth of
42%. The percentage increase in total costs and expenses is primarily due to a
57% increase in selling,
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<PAGE>
general and administrative costs, a 30% increase in cost of sales and to a
lesser extent a 51% increase in product development and enhancement expense.
Total cost of sales in the first quarter of fiscal 1998 increased $4,726,000
or 30% when compared with the same period last year. Cost of sales for products
and product support increased $1,364,000 or 17% due to increased costs to
support expanding software licenses, a larger installed customer base and higher
amortization costs of capitalized development of software products. Cost of
sales for services increased $3,362,000 or 43% due to higher network services
costs to support a growing customer base and greater customer volume, as well as
additional costs associated with providing electronic product catalogs and
information databases. Cost of sales includes $6,336,000 and $4,976,000 of
depreciation and amortization for the first quarters of fiscal 1998 and fiscal
1997, respectively.
Product development and enhancement expense for the first quarter of fiscal
1998 of $7,648,000, net of $3,903,000 capitalized pursuant to FAS No. 86,
increased $2,577,000 or 51% compared to product development and enhancement
expense of $5,071,000, net of $3,232,000 capitalized for the first quarter of
fiscal 1997. The increase was primarily due to the higher gross product
development expense relating to products under development during the first
quarter of fiscal 1998. Total capitalized costs represented 34% and 39% of total
development and enhancement expense for the quarters ended December 31, 1997 and
1996, respectively. Product development expense and the capitalization rates
fluctuate from period to period depending in part upon the number and status of
software development projects in process.
Selling, general and administrative expense increased $16,627,000 or 57% when
compared with the same period of last year primarily due to an increase in
sales, marketing and administrative support activities needed to support the
domestic revenue growth and also due to an increase in such activities to
support the Company's direct operations outside the United States and Canada
following the termination of the International Marketing Agreement in June 1997.
Income before other income and income taxes was $32,597,000 for the first
quarter of fiscal 1998 as compared to income before other income and income
taxes of $25,013,000 for the same period of fiscal 1997 due to the $31,514,000
increase in revenues offset by the $23,930,000 increase in total costs. Other
income increased $4,686,000 in the first quarter of fiscal 1998 over the same
period of fiscal 1997 primarily due to an increase in investment income
resulting from a higher average balance of investments in cash, cash equivalents
and marketable securities.
Provision for income taxes increased $4,127,000 for the first quarter of
fiscal 1998 over the same period of fiscal 1997 primarily due to the increase
in income before taxes for the 1998 period.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $520,169,000 of working capital at December 31, 1997,
including $254,076,000 of cash and cash equivalents and $256,188,000 of
marketable securities. Days sales outstanding, measured on a quarterly basis,
increased to 98 days for the quarter ended
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<PAGE>
December 31, 1997, compared with 86 days for the quarter ended September 30,
1997. The increase was due to the increase in revenues and resulting accounts
receivable primarily from customers outside the United States and Canada due to
the termination of the International Marketing Agreement.
Net cash flows from operations decreased $22,809,000 to $34,153,000 in the
first three months of fiscal 1998 as compared to the first three months of
fiscal 1997 primarily due to collection of amounts due from Sterling Software in
the first quarter of fiscal 1997. Excluding this one-time collection, net cash
flow from operations increased $9,275,000 primarily as a result of higher
operating profits and non-cash charges and increases in accounts payable,
accrued liabilities and income taxes, partially offset by an increase in
accounts receivable. A portion of the Company's cash flow from operations
during the first quarters of fiscal 1998 and 1997 was used to fund software
additions and capital expenditures. Property and equipment purchases of
$10,040,000 in the first quarter of fiscal 1998, as compared to $7,584,000 in
the same period of fiscal 1997, included purchases made for equipment upgrades
for processing systems and computer equipment purchases to support the
continuing growth in revenue. Software expenditures in the first quarter of
fiscal 1998 were $4,225,000 compared to $3,257,000 of software expenditures in
the same quarter of the prior year. The expenditures during the first quarter
of fiscal 1998 were primarily for new products and enhancements of existing
products.
The Company maintains a Revolving Credit and Term Loan Agreement ("Credit
Agreement") which provides for a domestic borrowing capacity of $20,000,000 and
an additional $10,000,000 international borrowing capacity. An underlying letter
of credit facility provides for letters of credit up to the full domestic
borrowing capacity. The Credit Agreement, with a stated maturity of October 1,
1999, is unsecured and contains various restrictive covenants including
restrictions on certain additional borrowings, payment of cash dividends and
certain acquisitions without the lender's consent. The Credit Agreement also
requires that the Company maintain certain financial ratios. Borrowings under
the Credit Agreement bear interest at the higher of the lender's prime rate, the
Federal Funds Effective Rate plus one-half percent or, for borrowings obtained
for fixed periods of time, LIBOR plus one-half percent. There were no amounts
borrowed under the Credit Agreement as of December 31, 1997.
At December 31, 1997, the Company's capital resource commitments consisted
primarily of commitments under lease arrangements for office space and
equipment. The Company presently intends to meet such obligations from cash
flows from operations. No significant commitments exist for future capital
expenditures. The Company believes available balances of cash, cash equivalents
and short-term investments combined with cash flows from operations and amounts
available under the Credit Agreement are sufficient to meet the Company's
working capital requirements for the foreseeable future.
OTHER MATTERS
Demand for many of the Company's products tends to improve with increases in
the rate of inflation as customers strive to increase employee productivity and
reduce costs. However, the effect of inflation on the Company's relatively
labor-intensive cost structure could adversely
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<PAGE>
affect its results of operations to the extent the Company is not able to
recover increased operating costs through increased prices and product
licensing.
The assets and liabilities of the Company's foreign operations are translated
into U.S. dollars at exchange rates in effect as of the respective balance sheet
dates, and revenue and expense accounts of these operations are translated at
average exchange rates during the month the transactions occur. Unrealized
translation gains and losses are included as an adjustment to retained earnings.
The Company has mitigated a portion of its currency exposure through
decentralized sales, marketing and support operations in which all costs are
local currency based. In addition, the Company may from time to time employ
external hedging strategies. The Company believes that its results of operations
and financial position will not be materially affected by the recent decrease in
the relative value of certain Asian currencies as compared to the U.S. dollar.
The Company maintains a strategy of seeking to acquire businesses and products
to fill strategic market niches. This acquisition strategy has contributed to
the Company's growth in revenue and operating profit. The impact of any future
acquisitions on continued growth in revenue and operating profit cannot
presently be determined.
FORWARD-LOOKING INFORMATION
This report and other reports and statements published by the Company from
time to time (collectively, "Published Reports") contain, or may contain,
certain forward-looking statements and information that are based on the beliefs
of, and information currently available to, the Company's management, as well as
estimates and assumptions made by the Company's management. When used in
Published Reports, words such as "anticipate," "believe," "estimate," "expect,"
"future," "intend," "plan" and similar expressions, as they relate to the
Company or the Company's management, identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions relating
to the Company's operations and results of operations, competitive factors and
pricing pressures, shifts in market demand, the performance and needs of the
industries served by the Company, the costs of product development and other
risks and uncertainties, including, in addition to any uncertainties
specifically identified in the text surrounding such statements, uncertainties
with respect to changes or developments in social, economic, business, industry,
market, legal and regulatory circumstances and conditions and actions taken or
omitted to be taken by third parties, including the Company's stockholders,
customers, suppliers, business partners, competitors and legislative,
regulatory, judicial and other governmental authorities and officials. Should
one or more of these risks or uncertainties materialize, or should the
underlying estimates or assumptions prove incorrect, actual results or outcomes
may vary significantly from those anticipated, believed, estimated, expected,
intended or planned.
-13-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed as part of this Quarterly Report
on Form 10-Q:
27.1 -- Financial Data Schedule
(b) Reports on Form 8-K. - None
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STERLING COMMERCE, INC.
Date: February 10, 1998 By /s/ Steven P. Shiflet
--------------------------------------------
Steven P. Shiflet
Senior Vice President and
Chief Financial Officer
/s/ Steven P. Shiflet
--------------------------------------------
Steven P. Shiflet
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
-15-
<PAGE>
INDEX TO EXHIBITS
27.1 -- Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 254,076
<SECURITIES> 256,188
<RECEIVABLES> 115,882
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 650,757
<PP&E> 111,978
<DEPRECIATION> 48,205
<TOTAL-ASSETS> 788,171
<CURRENT-LIABILITIES> 130,588
<BONDS> 0
0
0
<COMMON> 899
<OTHER-SE> 629,880
<TOTAL-LIABILITY-AND-EQUITY> 788,171
<SALES> 106,283
<TOTAL-REVENUES> 106,283
<CGS> 20,461
<TOTAL-COSTS> 73,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,341
<INCOME-TAX> 14,138
<INCOME-CONTINUING> 24,203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,203
<EPS-PRIMARY> $.27
<EPS-DILUTED> $.26
</TABLE>
