<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
<TABLE>
<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 0-9900
------------------------
HBO & COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 37-0986839
(State or other (I.R.S. Employer
jurisdiction of Identification
incorporation or Number)
organization)
</TABLE>
301 PERIMETER CENTER NORTH
ATLANTA, GEORGIA
30346
(Address of principal executive offices)
(Zip Code)
(770) 393-6000
(Registrant's telephone number, including area code)
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 / /.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<S> <C>
CLASS SHARES OUTSTANDING AT APRIL 30, 1998
Common Stock, $.05 par
value 214,826,194
</TABLE>
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<PAGE>
PART 1--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS--UNAUDITED
(000 OMITTED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents.......................................................... $ 467,942 $ 432,477
Short-Term Investments............................................................. 4,987 4,981
Receivables, Net of Allowance For Doubtful Accounts of $19,571 and $20,763......... 447,121 421,876
Current Deferred Income Taxes...................................................... 27,649 36,311
Inventories........................................................................ 7,844 6,513
Prepaids and Other Current Assets.................................................. 20,738 21,515
------------ ------------
Total Current Assets............................................................. 976,281 923,673
------------ ------------
INTANGIBLES
Net of Accumulated Amortization of $51,541 and $48,559............................. 165,935 174,233
CAPITALIZED SOFTWARE
Net of Accumulated Amortization of $56,203 and $50,618............................. 72,875 69,535
PROPERTY AND EQUIPMENT
Net of Accumulated Depreciation of $109,649 and $102,295........................... 103,376 101,409
DEFERRED INCOME TAXES................................................................ 35,110 36,600
OTHER NONCURRENT ASSETS, NET......................................................... 7,642 7,136
------------ ------------
TOTAL ASSETS......................................................................... $ 1,361,219 $1,312,586
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Deferred Revenue................................................................... $ 156,016 $ 125,399
Other Current Liabilities.......................................................... 182,742 279,134
------------ ------------
Total Current Liabilities........................................................ 338,758 404,533
------------ ------------
LONG-TERM DEBT....................................................................... 922 1,022
OTHER LONG-TERM LIABILITIES.......................................................... 7,621 6,449
------------ ------------
Total Liabilities................................................................ 347,301 412,004
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, 1,000 Shares Authorized and No Shares Issued...................... -- --
Common Stock, $.05 Par Value, 250,000 Shares Authorized and 214,413 and 211,380
Shares Issued.................................................................... 10,721 10,569
Additional Paid-in Capital......................................................... 627,127 574,863
Retained Earnings.................................................................. 376,070 315,150
------------ ------------
Total Stockholders' Equity....................................................... 1,013,918 900,582
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................................... $ 1,361,219 $1,312,586
------------ ------------
------------ ------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated financial statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME--UNAUDITED
(000 OMITTED EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
REVENUE:
Systems................................................................................. $ 167,934 $ 124,493
Services................................................................................ 174,901 138,799
---------- ----------
Total Revenue......................................................................... 342,835 263,292
OPERATING EXPENSE:
Cost of Operations...................................................................... 147,769 113,032
Marketing............................................................................... 46,350 41,216
Research and Development................................................................ 22,109 21,447
General and Administrative.............................................................. 23,606 26,199
---------- ----------
Total Operating Expense............................................................... 239,834 201,894
---------- ----------
OPERATING INCOME.......................................................................... 103,001 61,398
Other Income, Net......................................................................... 5,096 2,610
---------- ----------
Income Before Income Taxes................................................................ 108,097 64,008
Provision for Income Taxes................................................................ 43,238 25,632
---------- ----------
NET INCOME................................................................................ $ 64,859 $ 38,376
---------- ----------
---------- ----------
EARNINGS PER SHARE:
Basic................................................................................... $ .30 $ .19
---------- ----------
---------- ----------
Diluted................................................................................. $ .30 $ .18
---------- ----------
---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic................................................................................... 212,814 205,584
---------- ----------
---------- ----------
Diluted................................................................................. 218,882 213,509
---------- ----------
---------- ----------
CASH DIVIDENDS DECLARED PER SHARE......................................................... $ .02 $ .01
---------- ----------
---------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS--UNAUDITED
(000 OMITTED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income for the Period............................................................... $ 64,859 $ 38,376
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization......................................................... 17,911 14,672
Provision for Noncurrent Deferred Income Taxes........................................ 1,472 1,597
Changes in Assets and Liabilities, Net of Acquisitions:
Receivables......................................................................... (25,950) 16,002
Current Deferred Income Taxes....................................................... 8,662 (244)
Inventories......................................................................... (1,331) (2,702)
Prepaids and Other Current Assets................................................... 771 (1,145)
Noncurrent Deferred Income Tax...................................................... 18 (186)
Other Noncurrent Assets............................................................. (646) (892)
Deferred Revenue.................................................................... 30,586 6,626
Other Current Liabilities........................................................... (74,284) (29,056)
Other, Net............................................................................ 349 (726)
---------- ----------
Total Adjustments................................................................. (42,442) 3,946
---------- ----------
Net Cash Provided by Operating Activities......................................... 22,417 42,322
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of Property and Equipment.......................................................... 50 3
Capital Expenditures.................................................................... (9,925) (7,155)
Capitalized Software.................................................................... (9,104) (7,332)
Proceeds from Sale of Investments....................................................... -- 5,737
Purchase of Investments................................................................. -- (4,914)
Other................................................................................... (160) (287)
---------- ----------
Net Cash Used in Investing Activities............................................. (19,139) (13,948)
---------- ----------
Net Cash Provided Before Financing Activities..................................... 3,278 28,374
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock.................................................. 37,523 18,504
Repayment of Long-Term Debt............................................................. (15) (36)
Repayment of Capital Leases............................................................. (113) (273)
Purchase of Treasury Stock.............................................................. (980) (401)
Payment of Dividends.................................................................... (4,228) (1,812)
---------- ----------
Net Cash Provided by Financing Activities......................................... 32,187 15,982
---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS..................................................... 35,465 44,356
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......................................... 432,477 204,952
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................................ $ 467,942 $ 249,308
---------- ----------
---------- ----------
CASH PAID DURING THE PERIOD FOR:
Interest................................................................................ $ 16 $ 64
Income Taxes............................................................................ $ 31,268 $ 16,213
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements include all adjustments that, in
the opinion of management, are necessary for a fair presentation of the results
for the periods indicated. All such adjustments are of a normal recurring
nature. Quarterly results of operations are not necessarily indicative of annual
results. Certain previously reported amounts have been reclassified to conform
to the current presentation. These statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in the HBO
& Company (the "Company" or "HBOC") 1997 Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
2. As of March 31, 1998, there was no outstanding balance on the Company's
$50 million long-term revolving credit agreement. Interest is payable at the
Company's option of prime or LIBOR plus 0.5% (6.1875% as of March 31, 1998). A
commitment fee of 0.25% per annum is payable quarterly on the unused portion of
the commitment. The agreement, which expires June 30, 1999, contains certain net
worth, cash flow and financial ratio covenants. The Company is in compliance
with these covenants at March 31, 1998.
3. During the first quarter of 1998, the Company utilized $8.1 million and
$9.3 million of severance and product-related acquisition reserves,
respectively. As of March 31, 1998, remaining severance and product-related
acquisition reserves were $5.8 million and $11.7 million, respectively.
4. Effective January 1, 1998, HBOC adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income", which requires interim
disclosure of total comprehensive income. The Company believes that the adoption
of SFAS No. 130 will have no material impact on its financial statements as
there are no material differences between net income and comprehensive income.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1998, COMPARED TO QUARTER ENDED MARCH 31, 1997:
SUMMARY
For the quarter ended March 31, 1998, the Company achieved earnings per
share of $.30, a 67% increase over earnings per share of $.18 for the first
quarter of 1997. Total HBOC revenue for the first quarter of 1998 increased 30%
to $342.8 million from $263.3 million in the first quarter of 1997. Operating
expense increased 19% for the first quarter of 1998 compared to the same period
in 1997. The Company continues to make progress in the area of employee
productivity, with revenue per average employee at March 31, 1998, of $211,000,
up from $188,000 at March 31, 1997. These changes in revenue and expense
combined to boost net income for the quarter ended March 31, 1998, by 69% to
$64.9 million from $38.4 million for the first quarter 1997.
REVENUE
Software license fee revenue grew 14% to $101.2 million for the first
quarter of 1998 compared to the same period in 1997. Contributing to this
increase was the continuing strong demand for Pathways
2000-Registered Trademark- and STAR 2000 solutions, as well as demand for
products from recently acquired companies including Enterprise Systems, Inc.,
National Health Enhancement Systems, Inc., and HPR Inc. The continued growth in
sales from developed and acquired products validates the integration strategy of
the Company as customers look for a vendor with an enterprisewide solution set
to meet their ever expanding needs.
Hardware revenue increased 88% to $66.8 million for the first quarter
compared to $35.6 million for the same period in 1997. This increase was
primarily due to strong hardware sales of enterprise and connect technology
equipment and a continuing effort to increase sales of add-on hardware to
existing customers through the HBOC Sales Center. Hardware margins improved
slightly for the first quarter of 1998 compared to the same period in 1997.
Implementation and one-time services revenue for the quarter ended March 31,
1998, increased 28% to $56.5 million, from $44.1 million for the same period in
1997. This increase was primarily due to the numerous implementations resulting
from strong 1997 system sales of the Company's STAR 2000 and Pathways 2000
products as well as payor market products. Installation and implementation
services are offered to purchasers of all HBOC software products, and the
Company continues to focus on increasing the efficiency of the implementation
process utilizing such things as standard project plans and best practices
service methodologies.
Maintenance and support revenue increased 21% to $70.0 million for the first
quarter of 1998 compared to $57.9 million for the same period in 1997. This
increase was primarily the result of new maintenance contracts from increased
software sales and the expansion of the customer base.
Outsourcing revenue increased 45% for the first quarter of 1998, compared to
the same period in 1997. This increase was mainly the result of international
outsourcing revenue from HBOC UK's purchase acquisition of AT&T's UK Specialist
Healthcare Services Division (AT&T Healthcare). AT&T Healthcare expands HBOC's
role as a provider of software solutions and remote processing services for the
financial and payroll needs of healthcare providers in the United Kingdom. This
acquisition also makes the Company the largest healthcare information technology
vendor in the UK.
EXPENSE
Cost of operations as a percent of revenue remained constant at 43% for the
first quarter of 1998, compared to the same period in 1997, despite strong
hardware sales in the quarter. The gross margin for the first quarter of 1998
and 1997 was 57%. Cost of operations expense increased in 1998 compared to
6
<PAGE>
1997 primarily due to increased personnel expense as a result of the overall
growth of the Company and increased hardware costs associated with the growth in
hardware sales.
Marketing expense as a percent of revenue decreased to 14% for the first
quarter of 1998 compared to 16% for the same period in 1997. Actual marketing
expense increased primarily due to higher personnel and commission expense
related to the growth in size and revenue of the Company.
Research and development (R&D) expense as a percent of revenue decreased to
6% from 8% for the quarter ended March 31, 1998, compared to the same period in
1997. The R&D capitalization rate increased to 29% from 26% for the quarter
ended March 31, 1998, compared to the same period in 1997. The R&D
capitalization rate increased as a result of projects which focus on the
integration of acquired products and the continued new development of
enterprisewide solutions. The increase in actual R&D expense is mainly due to
increases in personnel costs associated with growth in the Company.
General and administrative (G&A) expense as a percent of revenue decreased
to 7% in the first quarter of 1998 from 10% in the first quarter of 1997. Actual
G&A expense decreased slightly for the period primarily due to cost savings
realized from the integration of operations of acquired companies.
Operating expense grew at a slower rate than revenue for the quarter ended
March 31, 1998, compared to the same period in 1997, due to strong system
revenue, successful cost control programs and productivity enhancements. Total
operating income increased 68% for the quarter ended March 31, 1998, compared to
the same period in 1997. In addition, operating income as a percent of revenue
increased to 30% for the first quarter of 1998 from 23% for the first quarter of
1997.
The tax rate remained constant at 40% for the quarters ended March 31, 1998,
and 1997.
LIQUIDITY AND CAPITAL RESOURCES
MARCH 31, 1998, COMPARED TO DECEMBER 31, 1997:
The Company continues to improve the strength and quality of its balance
sheet. At March 31, 1998, with $473 million in cash and short-term investments,
no bank debt and an improving current ratio, the Company remains well-positioned
for continued growth.
During the three-month period ended March 31, 1998, the Company generated
$22.4 million in cash flow from operations. During the first quarter of 1998,
the Company used cash of $19.1 million in investing activities, primarily
consisting of $9.9 million used for capital expenditures and $9.1 million used
for software development capitalization. An additional $32.2 million was
provided from financing activities, primarily related to proceeds from the
issuance of common stock pursuant to employee benefit plans which were partially
offset by the payment of dividends. As a result, the Company's cash balance
increased to $468 million at March 31, 1998, from $432 million at December 31,
1997.
The Company's current ratio increased to 2.9:1 at March 31, 1998, from 2.3:1
at December 31, 1997. Current assets increased $53 million, primarily reflecting
a large increase in cash. Receivables increased as well, but as a percent of
current assets remained constant at 46% at March 31, 1998, and December 31,
1997. The Company's management places a high priority on the area of
receivables, and the Company continues to monitor receivables performance
closely. Current liabilities decreased $66 million, mainly due to the pay-down
of year-end accruals and the utilization of acquisition reserves.
The Company has access to several financing sources, including a $5 million
line of credit and a $50 million revolving credit agreement. As of March 31,
1998, there were no outstanding balances on either. Management believes that the
Company's existing cash and short-term investment balances, anticipated future
cash flow from operations and amounts available under existing credit
arrangements are sufficient to meet ongoing operational and capital expenditure
requirements, as well as to fund costs associated with future equity
acquisitions and small acquisitions for cash.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements, which are qualified
by the risks and uncertainties described from time to time in HBOC's reports
filed with the Securities and Exchange Commission, including the Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
7
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
HBO & Company:
We have reviewed the accompanying consolidated condensed balance sheet of
HBO & COMPANY (a Delaware corporation) AND SUBSIDIARIES as of March 31, 1998 and
the related statement of income for the three-month periods ended March 31, 1998
and 1997, and the statement of cash flows for the three-month periods ended
March 31, 1998 and 1997. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
May 6, 1998
8
<PAGE>
PART II--OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) On January 22, 1998, HBOC issued 2,736 shares of common stock upon the
cashless exercise of a warrant issued by National Health Enhancement Systems,
Inc. (which was acquired by HBOC) in reliance upon the exemption in Section
3(a)(9) of the Securities Act of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<C> <S> <C>
11 Statement regarding computation of per share earnings.........................
15 Letter re: unaudited interim financial information............................
27 Financial Data Schedule.......................................................
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended March 31, 1998, or
subsequent to that date but prior to the filing date of this Form 10-Q:
FORM 8-K DATED FEBRUARY 10, 1998:
Reporting under Item 5 that on February 10, 1998, the Board of Directors of
HBO & Company declared a quarterly cash dividend of $0.02 per share payable on
April 22, 1998, to stockholders of record on March 31, 1998.
Reporting under Item 5 the unaudited combined operations for the first month
subsequent to the December 23, 1997, pooling acquisition of HPR Inc., and the
December 29, 1997, pooling acquisition of National Health Enhancement Systems,
Inc., as follows: revenue and net income for January 1998 was $100.0 million and
$10.5 million, respectively; revenue and net income for January 1997 was $65.4
million and $5.5 million, respectively.
FORM 8-K DATED FEBRUARY 12, 1998:
Reporting under Item 5 that on February 10, 1998, the Board of Directors of
HBO & Company elected Charles W. McCall, HBOC president and chief executive
officer to replace Holcombe T. Green as chairman of the board.
Reporting under Item 5 that the Company announced the formation of HBOC
Ventures, Inc., an organization designed to provide venture capital to small
companies with promising healthcare technologies. In conjunction with this, HBOC
has entered into a letter agreement with The Ohio Partners, LLC, an Ohio based
venture capital fund, whereby the companies plan to initially invest up to $30
million in several companies over the next three years. The funds will be
jointly managed by The Ohio Partners, LLC and HBOC.
9
<PAGE>
SIGNATURE
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.
<TABLE>
<S> <C> <C>
HBO & COMPANY
(Registrant)
Date: May 8, 1998 By: /s/ JAY P. GILBERTSON
------------------------------------
Jay P. Gilbertson
PRESIDENT, CO-CHIEF OPERATING OFFICER,
CHIEF FINANCIAL OFFICER, TREASURER,
PRINCIPAL ACCOUNTING OFFICER AND
SECRETARY
</TABLE>
10
<PAGE>
EXHIBIT 11
HBO & COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(000 OMITTED EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Weighted Average Number of Common Shares Outstanding........................................ 212,814 205,584
ADD--Shares of common stock assumed issued upon exercise of stock options using the
"treasury stock" method as it applies to the computation of primary earnings per share.... 6,068 7,925
--------- ---------
Number of Common and Common Equivalent Shares Outstanding................................... 218,882 213,509
--------- ---------
--------- ---------
Net Earnings for Basic and Diluted Earnings Per Share....................................... $ 64,859 $ 38,376
--------- ---------
--------- ---------
Earnings Per Share:
Basic..................................................................................... $ .30 $ .19
--------- ---------
--------- ---------
Diluted................................................................................... $ .30 $ .18
--------- ---------
--------- ---------
</TABLE>
11
<PAGE>
EXHIBIT 15
ARTHUR ANDERSEN LLP
To HBO & Company:
We are aware that HBO & Company has incorporated by reference in its
previously filed registration statements on Form S-8 its Form 10-Q for the
quarter ended March 31, 1998, which includes our report dated May 5, 1998
covering the unaudited interim consolidated financial information contained
therein. Pursuant to Regulation C of the Securities Act of 1933 (the "Act"),
that report is not considered a part of the registration statement prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
May 6, 1998
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HBO &
COMPANY CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED 3/31/98 AND
HBO & COMPANY CONSOLIDATED BALANCE SHEET AT 3/31/98 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 467,942
<SECURITIES> 4,987
<RECEIVABLES> 466,692
<ALLOWANCES> 19,571
<INVENTORY> 7,844
<CURRENT-ASSETS> 976,281
<PP&E> 213,025
<DEPRECIATION> 109,649
<TOTAL-ASSETS> 1,361,219
<CURRENT-LIABILITIES> 338,758
<BONDS> 922
0
0
<COMMON> 10,721
<OTHER-SE> 1,003,197
<TOTAL-LIABILITY-AND-EQUITY> 1,361,219
<SALES> 167,934
<TOTAL-REVENUES> 342,835
<CGS> 63,928
<TOTAL-COSTS> 239,834
<OTHER-EXPENSES> (5,096)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 108,097
<INCOME-TAX> 43,238
<INCOME-CONTINUING> 64,859
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,859
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
