SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1996
or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to _______ .
0-11521
(Commission File Number)
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1701520
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
Great Valley Corporate Center
4 Country View Road
Malvern, Pennsylvania 19355
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 647-5930
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.
13,995,685 Common shares, $.01 par value, as of February 10, 1997
Page 1 of 15 consecutively numbered pages
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
INDEX
PART I, UNAUDITED FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1996 and September 30, 1996
Condensed Consolidated Statements of Operations -
Three Months Ended December 31, 1996 and 1995
Condensed Consolidated Statements of Cash Flows -
Three Months Ended December 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Operations and Financial Condition
PART II, OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
December 31, September 30,
1996 1996
(UNAUDITED) (NOTE)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,074 $ 12,303
Receivables, including $52,853
and $55,146 of earned revenues
in excess of billings, net of
allowance for doubtful accounts
of $2,000 and $1,590 83,436 77,161
Prepaid expenses and other receivables 8,496 10,208
-------- --------
TOTAL CURRENT ASSETS 100,006 99,672
PROPERTY AND EQUIPMENT--net of
accumulated depreciation 35,448 35,222
CAPITALIZED COMPUTER SOFTWARE COSTS,
net of accumulated amortization 11,361 10,510
COST IN EXCESS OF FAIR VALUE OF NET
ASSETS ACQUIRED, net of accumulated
amortization 8,586 8,740
OTHER ASSETS AND DEFERRED CHARGES 8,216 9,115
-------- --------
TOTAL ASSETS $163,617 $163,259
======== ========
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
December 31, September 30,
1996 1996
(UNAUDITED) (NOTE)
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,497 $ 6,674
Current portion of long-term debt 1,105 200
Income taxes payable 357 398
Accrued expenses 13,676 12,358
Deferred revenue 11,749 12,653
-------- --------
TOTAL CURRENT LIABILITIES 31,384 32,283
LONG-TERM DEBT, less current portion 32,025 31,590
DEFERRED TAXES AND OTHER
LONG-TERM LIABILITIES 2,558 2,590
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10 per
share--authorized 3,000,000 shares,
none issued
Common stock, par value $.01 per share--
authorized 24,000,000 shares, issued
15,086,971 and 15,244,865 shares 151 152
Capital in excess of par value 57,839 60,526
Retained earnings 43,229 39,687
-------- --------
101,219 100,365
Less
Held in treasury, 1,150,941 common
shares--at cost (2,959) (2,959)
Notes receivable from stockholders (610) (610)
-------- --------
97,650 96,796
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $163,617 $163,259
======== ========
Note: The condensed consolidated balance sheet at September 30, 1996 has
been derived from the audited financial statements at that date.
See notes to condensed consolidated financial statements.
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share amounts)
For the Three Months Ended
December 31,
1996 1995
Revenues:
OnSite services $21,529 $18,042
Software sales 14,730 9,943
Maintenance and enhancements 12,011 9,810
Software services 12,135 9,888
Interest and other revenue 127 136
------- -------
60,532 47,819
Expenses:
Cost of OnSite services 17,665 14,152
Cost of software sales and
maintenance and enhancements 10,376 8,100
Cost of software services 10,071 8,851
Selling, general and administrative 15,834 12,300
Interest expense 583 543
------- -------
54,529 43,946
Income before income taxes 6,003 3,873
Provision for income taxes 2,461 1,610
------- -------
Net Income $ 3,542 $ 2,263
======= =======
Per common share:
Net income
Primary $ 0.24 $ 0.15
Fully diluted $ 0.23 $ 0.15
Common shares and equivalents outstanding
Primary 14,693,825 15,124,101
Fully diluted 16,832,656 17,284,417
See notes to condensed consolidated financial statements.
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
For the Three Months Ended
December 31,
1996 1995
OPERATING ACTIVITIES
Net income $ 3,542 $ 2,263
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 3,119 2,235
Changes in operating assets and
liabilities:
(Increase) in receivables (6,916) (4,268)
Decrease in other current assets 1,712 79
(Decrease) in accounts payable (2,177) (947)
Increase in other accrued expenses
and liabilities 1,318 431
(Decrease) in deferred revenue (904) (1,533)
Other, net 630 (767)
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 324 (2,507)
INVESTING ACTIVITIES
Purchase of property and equipment (1,700) (2,539)
Capitalized computer software costs (1,509) (1,615)
Proceeds from sale or maturity of
investments available-for-sale 0 7,003
Purchase of subsidiary assets, net of
cash acquired 0 (97)
-------- --------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (3,209) 2,752
FINANCING ACTIVITIES
Principal payments on short-term debt (160) (100)
Repurchase and retirement of Company stock (1,271) 0
Proceeds from exercise of stock options 87 188
-------- --------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (1,344) 88
(DECREASE)INCREASE IN CASH & CASH EQUIVALENTS (4,229) 333
CASH & CASH EQUIVALENTS-BEGINNING OF PERIOD 12,303 1,602
-------- --------
CASH & CASH EQUIVALENTS-END OF PERIOD $ 8,074 $ 1,935
======== ========
See notes to condensed consolidated financial statements.
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollars in thousands, except per share amounts)
December 31, 1996
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 1O-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year
ended September 30, 1996. Operating results for the three month period ended
December 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1997.
NOTE A--RECLASSIFICATION
Certain prior year information has been reclassified to conform with current
year format.
NOTE B--CASH AND CASH EQUIVALENTS
Cash equivalents--Cash equivalents are defined as short-term highly liquid
investments with a maturity of three months or less at the date of purchase.
NOTE C--INCOME PER SHARE
Primary income per share is computed using the weighted average number of
common shares outstanding, plus, to the extent dilutive, common stock
equivalents. Fully diluted income per share is based on an increased
number of shares that would be outstanding assuming the exercise of stock
options when the Company's stock price at the end of the period is higher than
the average stock price within the respective period, plus to the extent
dilutive, the increased number of shares that would be outstanding, assuming
conversion of the 6 1/4% convertible subordinated debentures. Net income
used in the calculation of fully diluted income per share is adjusted for
interest expense (net of tax) on the convertible subordinated debentures.
NOTE D--STOCK REPURCHASE
In October 1996, the Company repurchased 184,757 shares of common stock at
$15 per share, originally issued in the acquisition of Adage Systems
International, Inc. in June 1995. The purchase of treasury stock reduced
stockholders' equity. All of these shares have subsequently been retired.
Pursuant to the stock repurchase, the Company agreed to pay $1,271
immediately, and signed a note for $1,500 with amounts payable in October
1997 and 1998.
NOTE E--NEW ACCOUNTING STANDARDS
On October 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" (SFAS 121). The Statement requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
SFAS 121 also addresses the accounting for long-lived assets that are expected
to be sold or discarded. As the Company's accounting policies prior to the
adoption of SFAS 121 have provided for similar accounting treatment, the
effect of adoption was not material to the Company's financial condition or
results of operations.
Also on October 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation". The Statement
requires that companies with stock-based compensation plans either recognize
compensation expense based on new fair-value accounting methods or continue
to apply the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and disclose pro forma net income
and earnings per share assuming the fair value method had been applied. The
Company has elected to adopt the disclosure alternative, which will be
presented in its year-end financial statements, and continue accounting for
its stock-based compensation plans under the provisions of APB 25.
NOTE F--OTHER
Product development expenses (which are included in cost of software
sales and maintenance and enhancements) not capitalized aggregated
$4,338 and $2,833 in the three-month periods ending December 31,
1996 and 1995, respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
The purpose of this section is to give interpretive guidance to the reader of
the financial statements.
RESULTS OF OPERATIONS
The following table sets forth: (a) certain income statement items as a
percentage of total revenues and (b) for revenues, the percentage change
for each item from the prior year comparative period.
% of Total Revenues % Change from
Prior Year
Three Months Ended
December 31,
1996 1995
Revenues:
OnSite services 36% 38% 19%
Software sales 24% 21% 48%
Maintenance and enhancements 20% 21% 22%
Software services 20% 21% 23%
Interest and other revenue 0% 0% (7)%
----- ----- -----
Total 100% 100% 27%
Expenses:
Cost of services, sales and
maintenance and enhancements 63% 65%
Selling, general and
administrative 26% 26%
Interest expense 1% 1%
Income before income taxes 10% 8%
The following table sets forth the gross profit for each of the following
revenue categories as a percentage of revenue for each such category and the
total gross profit as a percentage of total revenue (excluding interest and
other revenue). The Company does not separately present the cost of
maintenance and enhancements revenue as it is impracticable to separate such
cost from the cost of software sales and services.
Three Months Ended
December 31,
1996 1995
Gross Profit:
OnSite services 18% 22%
Software sales and maintenance
and enhancements 61% 59%
Software services 17% 10%
---- ----
Total 46% 44%
<PAGE>
Revenues
The 19% increase in OnSite services revenues in the first quarter of fiscal
year 1996 is primarily the result of an agreement with the City of
Indianapolis/Marion County, which commenced in December 1995. The agreement
with the City of Indianapolis could result in average annual revenues of up to
$11.5 million for up to seven years from the start of the contract. The City
has the option to cancel the agreement after three years from the start of the
contract, provided the Company is given six months notice and a termination
fee. Also adding to the increase were smaller new contracts with Raritan
Valley Community College and the University of Memphis.
Software sales increased 48% in the first quarter of fiscal year 1997 compared
with the first quarter of fiscal year 1996 due primarily to increased licenses
of BANNER Customer Information System (CIS) software to the utility market.
Additional increases resulted from increased licenses of BANNER to the higher
education market. These increases were off-set by decreases, compared to the
prior year period, in software licenses in the local government market.
The 22% increase in maintenance and enhancements revenues in the first quarter
of fiscal year 1997 is the result of continued high annual renewal rates and
the growing installed base of clients primarily in the higher education
market.
Software services revenue increased 23% in the first quarter of fiscal year
1997 compared with the first quarter of fiscal year 1996 primarily as the
result of increases in ADAGE Enterprise Resource Planning (ERP)
implementations and support services to the manufacturing market as well as
increases in BANNER implementations in the higher education and utility
markets. These increases were off-set by decreases, compared to the prior-year
period, in implementation services in the local government market.
Gross Profit
Gross profit increased as a percentage of total revenue (excluding interest
and other revenue) from 44% in the first quarter of fiscal year 1996 to 46%
for the first quarter of fiscal year 1997. The OnSite services gross profit
decrease from 22% to 18% is the result of lower margins on new contract
signings compared with older contracts. The increase in the software sales and
maintenance and enhancements gross profit was the result of increased license
fee revenue, which is a higher margin product. Additionally, the software
services margin increased primarily as a result of increases in the utility
business gross margin. In the first quarter of fiscal year 1996, the cost of
software services reflected increased expenditures in the utility business. In
the second quarter of fiscal year 1996, the Company recorded a contract loss
provision of $1.25 million to reflect the cost of satisfyig certain
obligations relating to the CIS product for U.S. utilities. These
obligations were satisfied in the first quarter of fiscal year 1997.
Seasonality
Certain factors have resulted in quarterly fluctuations in operating results,
including variability of software license fee revenues, seasonal patterns of
capital spending by clients, the timing and receipt of orders, competition,
pricing, new product introductions by the Company or its competitors, levels
of market acceptance for new products, and general economic and political
conditions. While the Company has historically generated a greater portion of
license fees in total revenue in the last two fiscal quarters, the
non-seasonal factors cited above may have a greater effect than seasonality on
the Company's results of operations.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
The Company's cash and cash equivalents balance was $8.1 million and $12.3
million at December 31, 1996 and September 30, 1996, respectively.
The cash and cash equivalents balances are derived from operations. Cash
provided by operating activities was $324,000 for the first quarter of fiscal
year 1997 compared to cash used of $2.5 million for the prior-year period.
Operating cash flows have increased primarily due to an increase in income
before depreciation and amortization. The decrease in other current assets at
December 31, 1996 is primarily the result of decreases in prepaid tax
balances. The increases in accounts receivable at December 31, 1996 are due to
increases in revenues and the timing of billings on the Company's software
services contracts and software licenses.
The Company provides OnSite services and software-related services, including
systems implementation and integration services.
Contract fees from OnSite services are typically based on multi-year contracts
ranging from five to 10 years and provide a recurring revenue stream
throughout the term of the contract. Software services contracts generally
have shorter terms than OnSite services contracts, and billings are often
milestone based. During the beginning of a typical OnSite services contract,
services are performed and expenses are incurred by the Company at a greater
rate than in the later part of the contract. Billings usually remain constant
during the term of the contract and, in some cases, when a contract term is
extended, the billing period is also extended over the new life of the
contract. Revenue is usually recognized as work is performed. The resulting
excess of revenues over billings is reflected on the Company's Consolidated
Balance Sheet as unbilled accounts receivable. As an OnSite contract
proceeds, services are performed and expenses are incurred at a lesser rate,
resulting in billings exceeding revenue recognized, which causes a decrease in
the unbilled accounts receivable, as will the achievement of a milestone in a
software services contract.
During the first quarter of fiscal year 1997, the Company's primary use of
$3.2 million cash for investing activities was the purchase of equipment and
capitalization of newly developed software. During the first quarter of
fiscal year 1996, the uses of cash for equipment purchases and software
capitalization were offset by the proceeds from the sale or maturity of
available-for-sale investments, which provided a net of $2.8 million in the
first quarter of fiscal year 1996.
The Company anticipates a fiscal year 1997 decrease in capital expenditures
for investing activities compared with fiscal year 1996, without taking into
consideration any possible business acquisitions. Expenditures for property
and equipment are expected to be lower during fiscal year 1997 as a result of
no new facility or significant facility improvement projects. Fiscal year
1997 capitalized software expenditures are expected to remain at approximately
the same level as fiscal year 1996 expenditures. Although there has been a
reduction in the capitalization of costs related to ADAGE ERP software, which
was completed and released in November 1996, these reductions should be
offset by an increase in the higher education software capitalization rate
and the development activities of the Object Technology Center (OTC).
The OTC was formed to focus on innovative approaches to delivering high
quality products that require less end user training and reduce development
and maintenance costs. The OTC will develop software modules that integrate
"best practices" for the markets served by the Company. This technology
developed by the OTC should help the Company's software businesses respond
more effectively to their customers' constant business changes.
Cash used in financing activities was $1.3 million for the first quarter of
fiscal year 1997 compared with cash provided by financing activities in the
first quarter of 1996. Cash was used in the first quarter of 1997 to
repurchase and subsequently retire 184,000 shares of stock originally issued
in connection with the purchase of Adage Systems International, Inc. in June
1995. Pursuant to the stock repurchase, the Company signed a note for
$1,500,000 with amounts payable in October 1997 and 1998.
The Company has outstanding $31.3 million of convertible subordinated
debentures bearing interest at 6 1/4% and maturing on September 1, 2003. The
debentures are convertible into common stock of the Company any time prior to
redemption or maturity at a conversion price of $15 per share. The debentures
are redeemable at any time after September 10, 1996 at prices decreasing from
104.2% of the principal amount at September 1, 1996, to par on September 1,
2002.
The Company has a $20 million senior revolving credit facility, available for
general corporate purposes which expires in June 1998 with optional annual
extensions. At December 31, 1996 and September 30, 1996, there were no
borrowings outstanding. As long as borrowings are outstanding and as a
condition precedent to new borrowings, the Company must comply with certain
covenants, and the Company is prohibited from paying any dividends other than
stock dividends.
The Company believes that its cash and cash equivalents, cash provided by
operations, and borrowing arrangements should satisfy its needs for the
foreseeable future.
Primary common shares and equivalents used in the income per share calculation
decreased as a result of lower common stock prices during the quarter ended
December 31, 1996 compared with the quarter ended December 31, 1995 and the
aforementioned common stock repurchase and retirement of 184,000 shares in
October 1996.
Contingencies
A purported class action complaint was filed against the Company and certain
of its officers and directors on October 4, 1995. The plaintiff filed an
amended complaint on November 28, 1995. The amended complaint alleged
violations of certain disclosure and related provisions of the Federal
Securities Laws. The amended complaint sought damages in unspecified amounts
as well as equitable relief. In April 1996 the Company's motion to dismiss
the amended complaint was granted in part and denied in part. On February 3,
1997, the plaintiff filed a Second Amended Complaint alleging violations of
certain disclosure and related provisions of the Federal Securities Laws and
negligent misrepresentation. Management believes the claims in the Second
Amended Complaint are without merit and intends to contest the allegations
vigorously. While management, based on its investigation to date, believes
that resolution of this action will not have a materially adverse effect on
the Company's consolidated financial position, the ultimate outcome of this
matter cannot presently be determined.
New Accounting Standards
On October 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS 121). The Statement requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
SFAS 121 also addresses the accounting for long-lived assets that are expected
to be sold or discarded. As the Company's accounting policies prior to the
adoption of SFAS 121 have provided for similar accounting treatment, the
effect of adoption was not material to the Company's financial condition or
results of operations.
Also on October 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation". The Statement
requires that companies with stock-based compensation plans either recognize
compensation expense based on new fair-value accounting methods or continue to
apply the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and disclose pro forma net income
and earnings per share assuming the fair value method had been applied. The
Company has elected to adopt the disclosure alternative, which will be
presented in its year-end financial statements, and continue accounting for
its stock-based compensation plans under the provisions of APB 25.
Cautionary Statement
The matters discussed herein and elsewhere that are forward-looking statements
are based on current management expectations that involve risks and
uncertainties which could cause actual results to differ materially from those
anticipated. Potential risks and uncertainties that could affect the
Company's future operating results include without limitation, the effect of
publicity on demand for the Company's products and services, general economic
conditions, the Company's ability to attract and retain highly skilled
technical, managerial, sales and marketing personnel, continued market
acceptance of the Company's products and services, the timing of the receipt
of software licenses, the timing of services contracts and renewals, the
timing and complexity of large transactions, continued competitive and pricing
pressures in the marketplace, the Company's ability to develop and market new
and updated products and enhancements cost effectively and on a timely basis,
and the Company's ability to complete fixed-price contracts profitably. The
Company is investing in the development of new products and in improvements to
existing products; however, software development is a complex and creative
process that can be difficult to accurately schedule and predict.
Operating Leverage
Since a significant part of the Company's business results from software
licensing , the Company's business is characterized by a high degree of
operating leverage. The Company's expense levels are based, in significant
part, on the Company's expectations as to future revenues and are therefore
relatively fixed in the short term. If software licensing revenues do not
meet expectations, net income is likely to be disproportionately adversely
affected. There can be no assurance that the Company will be able to increase
or even maintain its current level of profitability on a quarterly or annual
basis in the future. It is therefore possible that in one or more future
quarters the Company's operating results will be below expectations. In such
event, the price of the Company's common stock could be adversely affected.
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
PART II
Item 1. Legal Proceedings
On October 4, 1995, John J. Wallace filed a purported class action lawsuit in
the United States District Court for the Eastern District of Pennsylvania
against the Company; Michael J. Emmi, Chairman of the Board, President and
Chief Executive Officer of the Company; Michael D. Chamberlain, Senior Vice
President and a director of the Company; and Eric Haskell, Senior Vice
President, Finance and Administration, Treasurer and Chief Financial Officer
of the Company. The plaintiff filed an amended complaint on November 28,
1995. The amended complaint alleged that the defendants violated sections 10
(b) and 20 (a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder by making misstatements and omissions regarding the
Company's financial performance in the second half of fiscal year 1995. The
class period alleged is from June 5, 1995 through October 2, 1995. The
amended complaint seeks damages in unspecified amounts as well as equitable
relief.
In April 1996, the Company's Motion to Dismiss the Amended Complaint was
granted in part and denied in part. On February 3, 1997, the
plaintiff filed a Second Amended Complaint alleging violations of
certain disclosure and related provisions of the Federal Securities
Laws and negligent misrepresentation. Management believes the claims
in the Second Amended Complaint are without merit and intends to
contest the allegations vigorously. While management, based on its
investigation to date, believes that resolution of this action will not have a
materially adverse effect on the Company's consolidated financial position,
the ultimate outcome of this matter cannot be presently determined.
Item 6(b). Reports on Form 8-K
The registrant did not file any current reports on Form 8-K during the three
months ended December 31, 1996.
<PAGE>
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
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.
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
(Registrant)
Date: 02/14/97 /s/
________________________________
Eric Haskell
Senior Vice President, Finance and Administration,
Treasurer and Chief Financial Officer
EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
Three months ended
Dec. 31, 1996 Dec. 31, 1995
PRIMARY
Average shares outstanding 13,953,392 14,050,674
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 586,469 1,073,427
----------- -----------
Total 14,539,861 15,124,101
=========== ===========
Net income $ 3,542,000 $ 2,263,000
=========== ===========
Net income per share $0.24 $0.15
===== =====
FULLY DILUTED
Average shares outstanding 13,953,392 14,050,674
Net effect of dilutive stock options--
based on the treasury stock method
using the end of period market price,
if higher than average market price 640,300 1,148,743
Assumed conversion of 6 1/4 % convertible
subordinated debentures 2,085,000 2,085,000
----------- -----------
Total 16,678,692 17,284,417
=========== ===========
Net Income $ 3,542,000 $ 2,263,000
Add 6 1/4 % convertible subordinated
debenture interest, net of income
tax effect 311,000 308,000
----------- -----------
Net income, as adjusted $ 3,853,000 $ 2,571,000
=========== ===========
Net income per share $0.23 $0.15
===== =====
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
December 31, 1996 financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000707606
<NAME> SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 8,074,000
<SECURITIES> 0
<RECEIVABLES> 85,436,000
<ALLOWANCES> 2,000,000
<INVENTORY> 0
<CURRENT-ASSETS> 100,006,000
<PP&E> 58,816,000
<DEPRECIATION> 23,368,000
<TOTAL-ASSETS> 163,617,000
<CURRENT-LIABILITIES> 31,384,000
<BONDS> 32,025,000
0
0
<COMMON> 151,000
<OTHER-SE> 97,499,000
<TOTAL-LIABILITY-AND-EQUITY> 163,617,000
<SALES> 60,405,000
<TOTAL-REVENUES> 60,532,000
<CGS> 38,112,000
<TOTAL-COSTS> 53,946,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 583,000
<INCOME-PRETAX> 6,003,000
<INCOME-TAX> 2,461,000
<INCOME-CONTINUING> 3,542,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,542,000
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.23
</TABLE>
