<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998 .
----------------------------------------
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________________ to _______________________
Commission file number 0-21705
SANCHEZ COMPUTER ASSOCIATES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 23-2161560
----------------------------------- -----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
40 Valley Stream Parkway, Malvern, PA 19355
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (610) 296-8877
N/A
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report
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
----------- -----------
As of April 30, 1998, there were outstanding 11,618,430 shares of the issuer's
Common Stock, no par value.
<PAGE>
SANCHEZ COMPUTER ASSOCIATES, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
CONSOLIDATED BALANCE SHEETS
March 31, 1998 (Unaudited) and December 31, 1997...........................3
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, 1998 and 1997.................................4
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 1998 and 1997.................................5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)..........................6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................8
PART II: OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS........................12
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.............. ..................12
SIGNATURES.....................................................................13
</TABLE>
2
<PAGE>
Sanchez Computer Associates, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents ................................. $ 14,447 $ 12,827
Receivables, less allowance of $643 and $543, respectively 7,505 8,884
Contracts in process ...................................... 6,079 6,249
Prepaid and other current assets .......................... 1,419 1,401
-------- --------
Total current assets .......................... 29,450 29,361
Property and equipment
Equipment ................................................. 3,354 3,137
Furniture and fixtures .................................... 600 579
Leasehold improvements .................................... 371 216
-------- --------
4,325 3,932
Accumulated depreciation and amortization .................... (2,342) (2,113)
-------- --------
Net property and equipment ................................ 1,983 1,819
Capitalized software costs, net of amortization of $1,704 at
March 31, 1998 and $1,610 at December 31, 1997 ............ 982 1,022
Investment in joint venture .................................. 1,020 1,020
-------- --------
Total assets .................................. $ 33,435 $ 33,222
-------- --------
-------- --------
LIABILITIES
Current liabilities
Current debt obligations .................................. $ 439 $ 440
Accounts payable, trade ................................... 724 1,279
Accrued expenses .......................................... 3,096 2,802
Deferred revenue .......................................... 3,860 4,240
-------- --------
Total current liabilities ..................... 8,119 8,761
Deferred revenue ............................................. 607 781
Long-term debt-net of current portion ........................ 54 94
Other long-term liabilities .................................. 357 353
-------- --------
Total liabilities ............................. 9,137 9,989
Commitments (Note E)
SHAREHOLDERS' EQUITY
Common stock, no par value
Authorized - 50,000,000 shares
Issued and outstanding -11,256,380 and 11,154,188 shares at
March 31, 1998 and December 31, 1997, respectively ...... 113 112
Additional paid-in capital ................................... 18,954 18,769
Retained earnings ............................................ 5,522 4,689
Notes due on common stock purchases .......................... (291) (337)
-------- --------
Total shareholders' equity .................... 24,298 23,233
-------- --------
Total liabilities and shareholders' equity .... $ 33,435 $ 33,222
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
Sanchez Computer Associates, Inc.
Consolidated Statements of Operations
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1998 1997
------------ -------------
Revenues (UNAUDITED)
<S> <C> <C>
Software license fees .............................. $ 2,587 $ 2,409
Product enhancement fees ........................... 1,750 239
Implementation and consulting services ............. 2,836 1,481
Software maintenance fees .......................... 1,455 1,251
------- -------
Total revenues .................................. 8,628 5,380
Operating expenses
Product development ................................ 2,470 1,488
Product support .................................... 871 742
Implementation and consulting ...................... 1,961 999
Sales and marketing ................................ 1,200 828
Royalties and sublicense fees ...................... 195 253
General and administrative ......................... 909 545
------- -------
Total operating expenses ......................... 7,606 4,855
------- -------
Income from operations ................................ 1,022 525
Interest income, net .................................. 203 217
------- -------
Income before income taxes ............................ 1,225 742
Income tax provision .................................. 392 241
------- -------
Net income ............................................ $ 833 $ 501
------- -------
------- -------
Basic earnings per share .............................. $ 0.07 $ 0.05
Diluted earnings per share ............................ $ 0.07 $ 0.04
Weighted-average common shares outstanding ............ 11,178 10,958
Weighted-average common and dilutive shares outstanding 12,177 11,712
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
Sanchez Computer Associates, Inc.
Consolidated Statements of Cash Flows
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1998 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income ..................................... $ 833 $ 501
Adjustments to reconcile net income to cash
provided by (used in) operating activities
Depreciation and amortization .................. 345 208
Other .......................................... 8 (20)
Cash provided (used) by changes in
operating assets and liabilities
Accounts receivable ............................ 1,379 4,500
Contracts in process ........................... 170 (2,371)
Prepaid and other current assets ............... (18) 742
Accounts payable and accrued expenses .......... (262) 130
Deferred revenues .............................. (554) (1,333)
-------- --------
Net cash provided by operating activities ......... 1,901 2,357
Cash flows from investing activities
Capitalized computer software costs ............ (54) (38)
Capital expenditures ........................... (419) (155)
-------- --------
Net cash used in investing activities ............. (473) (193)
Cash flows from financing activities
Repayment of notes due on common stock purchases 46 94
Principal payments on long-term debt .......... (39) (164)
Proceeds from exercise of stock options ........ 185 50
-------- --------
Net cash provided by (used in) financing activities 192 (20)
Net increase in cash and cash equivalents ......... 1,620 2,144
Cash and cash equivalents at beginning of period .. 12,827 15,531
-------- --------
Cash and cash equivalents at end of period ........ $ 14,447 $ 17,675
-------- --------
-------- --------
Supplemental cash flow information
Interest paid ..................................... $ 10 $ 17
Income taxes paid ................................. $ 230 $ 23
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
Sanchez Computer Associates, Inc.
Notes to Unaudited Consolidated Financial Statements
(in thousands, except per share amounts)
(A.) Basis of Presentation
The accompanying consolidated financial statements of Sanchez Computer
Associates, Inc. (the "Company") include the accounts of all of the
Company's wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Certain prior period amounts have been reclassified to conform with
current period presentation. In February of 1998, the Company acquired
100% of the outstanding shares of Greystone Technology Corporation
("Greystone") and its wholly owned subsidiary in exchange for 84,050
shares of Sanchez common stock. The acquisition of Greystone was
accounted for using the pooling of interest method of accounting. All
prior period consolidated financial statements presented herein have
been restated to include the financial position, results of operations,
and cash flows of the acquired company. In the opinion of management,
the consolidated financial statements reflect all normal and recurring
adjustments which are necessary for a fair presentation of the
Company's financial position, results of operations, and cash flows as
of the dates and for the periods presented. The consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information. Consequently,
these statements do not include all the disclosures normally required
by generally accepted accounting principles for annual financial
statements nor those normally made in the Company's Annual Report on
Form 10-K. Accordingly, reference should be made to the Company's
Annual Report on Form 10-K for additional disclosures, including a
summary of the Company's accounting policies, which have not changed.
The consolidated results of operations for the three months ended March
31, 1998 are not necessarily indicative of results for the full year.
(B.) Cash and Cash Equivalents
Cash and cash equivalents at March 31, 1998 included amounts on deposit
with Safeguard Scientifics, Inc. ("Safeguard"), a shareholder of the
Company, in conjunction with a note agreement dated June 12, 1997. The
demand note provides for borrowings by Safeguard from the Company of up
to a maximum of $12 million on a revolving basis at Safeguard's
effective borrowing rate minus .75%. This rate is higher than the
Company is currently earning on its money market investments. At March
31, 1998 advances to Safeguard amounted to $11.2 million. Interest
income from these advances amounted to $182 during the first quarter of
1998.
(C.) Client Revenue Data
Revenue derived from customers in various geographic regions for the
three month periods ended March 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------
1998 1997
------ ------
<S> <C> <C>
U.S. and Caribbean ........................................... $3,393 $ 570
Central Europe ............................................... 2,757 2,415
Other European ............................................... 1,360 300
Canada ....................................................... 896 1,624
Asia-Pacific Rim ............................................. 222 471
------ ------
$8,628 $5,380
------ ------
------ ------
</TABLE>
6
<PAGE>
(D.) Earnings Per Share
Basic earnings per share has been calculated as net earnings divided by
weighted-average common shares outstanding, while diluted earnings per
share has been computed as net earnings divided by weighted-average
common and diluted shares outstanding. The following table provides a
reconciliation of weighted-average common shares outstanding to
weighted-average common and dilutive shares outstanding.
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1998 1997
----------- ---------
<S> <C> <C>
Common shares outstanding .................................... 11,178 10,958
Diluted shares outstanding
Warrants ................................................... 339 288
Options .................................................... 660 466
------ ------
Total common and dilutive shares ............................. 12,177 11,712
------ ------
------ ------
</TABLE>
Shares outstanding are computed using the weighted-average number of
shares of common and common equivalent shares (stock options and
warrants) for each period.
(E.) Commitments
Commitments at March 31, 1998 were substantially the same as those
disclosed in Note 8 of the Notes to Consolidated Financial Statements
as of December 31, 1997.
(F.) Recently Issued Accounting Standards
Effective January 1, 1998, the Company adopted Statement of Position
97-2, "Software Revenue Recognition," which is effective for all
transactions the Company enters into subsequent to December 31, 1997.
The adoption of this statement is not expected to have a material
effect on the Company's financial position or results of operations.
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131")
establishes new standards for reporting about operating segments and
products and services, geographic areas and major customers. Under SFAS
131, segments are to be defined consistent with the basis management
uses internally to assess performance and allocate resources.
Implementing SFAS 131 will have no impact on the consolidated amounts
reported by the Company, and the Company does not expect any
significant changes to our segment disclosures. SFAS 131 is effective
for the Company's December 31, 1998 financial statements. In addition,
several other new accounting standards have been recently adopted and
become effective during 1998, including SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits". The adoption of these
statements is not expected to have a material impact on the Company's
1998 financial statement disclosures.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The Company designs, develops, markets, implements and supports comprehensive
banking software, called PROFILE(R), for financial services organizations
worldwide. Sanchez's highly flexible PROFILE family of products is comprised of
three integrated modules which operate on open, client/server platforms. The
primary module, called PROFILE/Anyware, is a multi-currency transaction
processing system which supports deposit, loan, customer and bank management
requirements through multiple distribution channels, including the Internet. The
other modules are PROFILE/FMS, a multi-company, multi-currency, financial
management and accounting system and PROFILE for Windows ("PFW"), a graphical
user interface for PROFILE/Anyware. The PROFILE system is currently licensed to
34 clients in 13 countries serving in excess of 350 financial institutions.
The Company derives its revenues from license fees, recurring maintenance fees
and professional services fees related to its software products. License and
service fees are paid in stages upon the completion by the Company of certain
defined deliverables. The Company recognizes revenue from these fees using the
percentage-of-completion contract accounting method. Typically, the client
implementation projects to which these fees relate have a 10 to 15-month
duration. Recurring maintenance fees are normally billed annually in advance and
recognized into revenue ratably over the period covered.
The Company's operating results for the first quarter ended March 31, 1998
reflected significant increases in both revenues and net income compared to the
same period in 1997. During the quarter, contracts were signed with three
significant financial institutions: Bankers Trust Company, InterAdvies N.V., a
subsidiary of ING Group N.V., and Federal Home Loan Bank of Pittsburgh. Revenues
for the first quarter of 1998 increased by 60.4% to $8.6 million compared to
$5.4 million for the same period in 1997. Net income for the quarter ended March
31, 1998, increased 66.3% to $833,000 or $.07 per diluted share compared to
$501,000, or $.04 per diluted share for the same period in 1997. First quarter
1998 results reflect increased activity relative to PROFILE implementation
projects throughout the Company's various geographic markets. In particular,
significant revenue contributions were derived from both funded evaluation
activities with global banking organizations as well as from license fee
revenues generated from contracts executed both during the last quarter of 1997,
as well as contracts closed during the first quarter of 1998 as described above.
The Company's estimated backlog at March 31, 1998 amounted to $36.3 million. The
components of the backlog were $12.9 million for software license, product
enhancement and implementation and consulting revenues and $23.4 million for
maintenance and support. At December 31, 1997, the Company's estimated backlog
amounted to $34.7 million, consisting of $12.4 million for software license,
product enhancement and implementation and consulting revenues and $22.3 million
for maintenance and support.
8
<PAGE>
Results of Operations
The following table sets forth for the periods indicated selected statement of
operations data:
<TABLE>
<CAPTION>
Quarter Ended March 31,
Dollars in thousands 1998 1997
-------------- --------------
<S> <C> <C>
Revenues
Software license fees ................................................... $ 2,587 $ 2,409
Product enhancement fees ................................................ 1,750 239
Implementation and consulting services .................................. 2,836 1,481
Software maintenance fees ............................................... 1,455 1,251
-------------- --------------
Total revenues .......................................................... $ 8,628 $ 5,380
-------------- --------------
-------------- --------------
Percentage Relationship to Total Revenues
Revenues
Software license fees ................................................... 30.0% 44.8%
Product enhancement fees ................................................ 20.3 4.4
Implementation and consulting services .................................. 32.9 27.5
Software maintenance fees ............................................... 16.8 23.3
-------------- --------------
Total revenues .......................................................... 100.0 100.0
Operating expenses
Product development ..................................................... 28.6 27.6
Product support ......................................................... 10.1 13.8
Implementation and consulting ........................................... 22.7 18.6
Sales and marketing ..................................................... 13.9 15.4
Royalties and sublicense fees ........................................... 2.3 4.7
General and administrative .............................................. 10.6 10.1
-------------- --------------
Total operating expenses ................................................ 88.2 90.2
Income from operations .................................................. 11.8 9.8
Interest income, net .................................................... 2.4 4.0
-------------- --------------
Income before income taxes .............................................. 14.2 13.8
Income tax provision .................................................... 4.5 4.5
-------------- --------------
Net income .............................................................. 9.7 9.3
-------------- --------------
-------------- --------------
</TABLE>
Three Months Ended March 31, 1998, Compared to Three Months Ended March 31, 1997
Revenues. Revenues increased $3.2 million, or 60.4%, in the first quarter of
1998, as each revenue category improved over the same period in the prior year.
In particular, both implementation and enhancement service fee revenues
increased substantially in the 1998 first quarter. Implementation and consulting
revenues increased by $1.4 million, or 91.5% in 1998 compared to 1997. During
the first quarter of 1998, there were 14 active PROFILE implementation projects
in process throughout the world, as compared to eight during the first quarter
of 1997. Product enhancement fee revenues showed the highest growth of any
revenue category, increasing by more than $1.5 million, or 632%, relative to the
first quarter of 1997. This growth in enhancement fee revenue is attributable to
increases in both funded evaluation activities with global banking organizations
as well as the previously discussed increases in active PROFILE implementation
projects. License fee revenues increased by 7.4%, or $178,000 in the 1998 period
with most of the growth being derived from European based clients, offset
substantially by reduced 1998 license fee recognition from the Canadian
marketplace. Software maintenance fees increased by 16.3%, or $204,000, with
most of the growth attributable to the increased number of converted clients in
the Canadian marketplace.
9
<PAGE>
Product development. Product development expenses increased $982,000 or 66% in
1998, due to costs associated with increased staffing, recruiting costs and
associated overhead levels. The substantial growth in staffing in this area is
due to the ongoing impact of the Company's strategic decision to increase
investment in development for various technology projects, including system
performance improvements and certain other enhancements to PROFILE/Anyware.
Product Support. Product support expenses increased by $129,000 or 17.4%, in the
quarter ended March 31, 1998, primarily due to an increase in the average number
of employees required to support the larger converted client base in 1998
relative to 1997.
Implementation and consulting. Implementation and consulting expenses increased
by $962,000 or 96.3% during the first quarter of 1998, in conjunction with a
corresponding increase in implementation and consulting revenues of $1.4
million. The primary reasons for this increase were the increased utilization of
third party consultants and subcontractors required to support the increased
revenue levels and increased internal staffing and related overhead. The gross
margin relative to associated revenues decreased in the 1998 quarter to 30.9%
from 32.5% in the 1997 first quarter, due primarily to more extensive
utilization of more costly third party resources.
Sales and marketing. Sales and marketing expenses increased by $372,000, or
44.9% in the 1998 period, as the Company continued to increase its direct
coverage in this area, primarily via staffing increases in selected foreign
market locations. Also contributing to the 1998 increase were additional
marketing expenses related to the promotion and advertising campaign for
PROFILE/Anyware compared to the same period in 1997.
Royalties and sublicense fees. The Company is obligated to pay royalties based
on the collection of certain license fees. These obligations have varying
expiration terms. The Company also is obligated to pay sublicense and
maintenance fees to certain third party licensors, primarily related to treasury
and trade finance product offerings. These amounts will vary depending on the
applicable revenue components subject to such fees. The $58,000 decrease in this
expense caption for the 1998 period compared to 1997 is primarily attributable
to a lower level of third-party sublicense fees due to lower third-party
sublicense revenues.
General and administrative. These expenses increased by $364,000, or 66.8% in
1998, due to a number of factors which include increased costs related to the
growth of the business including increased staffing, increased costs related to
employee recruitment and training and the costs of adding a second facility in
Malvern, Pennsylvania.
Interest income, net. Interest income, net, decreased $14,000 in 1998 due to
lower average cash balances.
Income tax provision. The Company's effective tax rate in the first quarter of
1998 decreased to 32% from 32.5% during the same period in 1997. The Company's
effective tax rate may vary from period to period based on the Company's
expansion into areas of varying country, state and local statutory income tax
rates.
Liquidity and Capital Resources
Cash and cash equivalents were $14.4 million at March 31, 1998. Cash flow from
operations for the three months ended March 31, 1998 was $1.9 million as
compared to $2.4 million for the same period in 1997. The decreased rate of cash
flow in the 1998 period was primarily attributable to variability in the timing
of major contract milestone payments which may impact cash flow from operations
during any given quarter. The Company's days sales in accounts receivable and
contracts in process (unbilled receivables) was 142 during the first quarter of
1998 as compared to 156 for the quarter ended December 31, 1997. The Company is
continuing to focus efforts on improving its receivable turnaround by involving
its project management staff in the collection process, as well as executive
management when appropriate.
The Company's business is not capital intensive and capital asset expenditures
for the March 1998 quarter amounted to $419,000 as compared to $155,000 during
the same period in 1997. The increased level of 1998 expenditures is
attributable to the significant growth in the employee base as well as certain
expenditures related to the outfitting of a second Malvern, Pennsylvania office
facility which was occupied as of the last quarter of 1997.
10
<PAGE>
The Company currently anticipates that cash generated from operations and
existing cash balances will be sufficient to satisfy its operating cash needs
for the foreseeable future and at a minimum for the next year. Should the
Company's business expand more rapidly than expected, the Company believes that
additional bank credit, if necessary, would be available to fund such operating
and capital requirements. In addition, the Company could consider seeking
additional public or private debt or equity financing to fund future growth
opportunities.
The Company believes that its business is generally not seasonal; however, the
Company has historically experienced, and can be expected to continue to
experience, a certain degree of variability in its quarterly revenue and
earnings patterns. This variability is typically driven by significant events
which directly impact the recognition of project related revenues. Examples of
such events include the timing of new business contract closings and the
initiation of license and service fee revenue recognition, "one-time" payments
from existing clients relative to license expansion rights (required to process
a greater number of customer accounts or expand the number of permitted users),
and completion of a significant implementation project roll out and the related
revenue recognition. The timing of revenues is difficult to forecast because the
Company's sales cycle is relatively long in the case of new clients and may
depend on factors such as the size and scope of the project, length of contract
negotiations, and general economic conditions in a particular sales prospect's
country of origin. Because a high percentage of the Company's expenses are
relatively fixed, a variation in the timing of the initiation or the completion
of client projects, particularly at or near the end of any quarter, can cause
significant variations in operating results from quarter to quarter.
The Company's forward-looking statements about its revenues, earnings, and
business development have been derived from its operating budgets and forecasts,
which are based upon detailed assumptions about many important factors. Several
important factors may cause the Company's actual results to differ materially
from those contemplated by any forward-looking statements made by the Company.
These factors include the course of business in the financial services industry,
competition among software companies serving that industry, the Company's
management of the long sales cycle for its products, the timing of new contract
closings and other significant events of revenue recognition affecting the
Company's quarterly results, the development of the Direct, Emerging and
Top-tier Banking Markets and market acceptance of the Company's products within
these markets, and the Company's ability to continue to improve its products.
11
<PAGE>
SANCHEZ COMPUTER ASSOCIATES, INC.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 5, 1998, the registrant issued 84,050 shares of the registrant's
common stock as consideration for the acquisition of Greystone Technology
Corporation ("Greystone") through a merger of a wholly-owned subsidiary of the
registrant with and into Greystone. The registrant believes that the sale was
exempt from registration under Section 4(2) of the Securities Act of 1933, as
amended, because such sale was made to a limited group of persons, each of whom
was believed to have been a sophisticated investor and was purchasing for
investment without a view to further distribution. Restrictive legends were
place on stock certificates evidencing the shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K, dated February 5, 1998, was filed
during the three months ended March 31, 1998, reporting the
acquisition by the Company of Greystone Technology
Corporation. This item was reported under Item 2 of such
Form 8-K. An amended 8-K/A was filed relative to this
transaction effective April 20, 1998.
No other applicable items.
12
<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.
SANCHEZ COMPUTER ASSOCIATES, INC.
/s/ Joseph F. Waterman
------------------------------------------------
Joseph F. Waterman
Senior Vice-President & Chief Financial Officer
Date: May 14, 1998
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 14,447
<SECURITIES> 0
<RECEIVABLES> 14,227
<ALLOWANCES> 643
<INVENTORY> 0
<CURRENT-ASSETS> 29,450
<PP&E> 4,325
<DEPRECIATION> 2,342
<TOTAL-ASSETS> 33,435
<CURRENT-LIABILITIES> 8,119
<BONDS> 0
0
0
<COMMON> 113
<OTHER-SE> 24,185
<TOTAL-LIABILITY-AND-EQUITY> 33,435
<SALES> 0
<TOTAL-REVENUES> 8,628
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (203)
<INCOME-PRETAX> 1,225
<INCOME-TAX> 392
<INCOME-CONTINUING> 833
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 833
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-01-1995 JAN-01-1997
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995 MAR-31-1997
<CASH> 12,827 15,531 5,690 17,675
<SECURITIES> 0 0 0 0
<RECEIVABLES> 15,676 9,064 4,685 6,935
<ALLOWANCES> 543 43 43 43
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 29,450 26,550 11,300 25,823
<PP&E> 3,932 2,617 2,063 2,659
<DEPRECIATION> 2,113 1,599 1,131 1,640
<TOTAL-ASSETS> 33,222 28,243 12,593 27,494
<CURRENT-LIABILITIES> 8,761 7,785 7,295 6,675
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 112 109 85 110
<OTHER-SE> 23,121 18,281 4,557 18,925
<TOTAL-LIABILITY-AND-EQUITY> 33,222 28,243 12,593 27,494
<SALES> 0 0 0 0
<TOTAL-REVENUES> 28,891 18,513 18,497 5,380
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 24,683 16,763 16,509 4,855
<LOSS-PROVISION> 500 0 0 0
<INTEREST-EXPENSE> (863) (269) (43) (217)
<INCOME-PRETAX> 5,071 2,019 2,031 742
<INCOME-TAX> 1,572 609 871 241
<INCOME-CONTINUING> 3,499 1,410 1,160 501
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 3,499 1,410 1,160 501
<EPS-PRIMARY> 0.32 0.16 0.14 0.05
<EPS-DILUTED> 0.29 0.15 0.12 0.04
</TABLE>
