<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
/x/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1993 or
-------------------------
/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to
Commission file number..............................................0-14232
SunGard(R) Data Systems Inc.
(Exact name of registrant as specified in its charter)
Delaware 51-0267091
(State of incorporation) (I.R.S. Employer Identification No.)
1285 Drummers Lane, Wayne, Pennsylvania 19087
(Address of principal executive offices, including zip code)
(610) 341-8700
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.01 Per Share
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 .
--- ---
The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant as of March 16, 1994 was $735,721,673.(1) There
were 18,803,993 shares of the registrant's Common Stock outstanding as of March
16, 1994.
Part III of this Form 10-K incorporates by reference certain information from
the registrant's definitive proxy statement, for its 1994 annual meeting of
stockholders, to be filed with the Securities and Exchange Commission not later
than 120 days after the end of the registrant's fiscal year covered by this
report.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in the definitive proxy statement
incorporated by reference into Part III of this Form 10-K. /x/
(1) This equals the number of outstanding shares of the registrant's Common
Stock, reduced by the number of shares that may be deemed beneficially
owned by the registrant's directors, nominees and officers, multiplied by
the last sale price for the registrant's Common Stock reported on March 16,
1994. This information is provided solely for record keeping purposes of
the Securities and Exchange Commission and shall not be construed as an
admission that any of the registrant's directors, nominees or officers is an
affiliate of the registrant or is the beneficial owner of any such shares.
Any such inference is hereby disclaimed.
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TABLE OF CONTENTS
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Page
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PART I
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Item 1. Business.............................................. 1
Overview........................................... 1
Investment Support Systems......................... 2
Disaster Recovery Services......................... 6
Computer Services and Other........................ 8
Product Development................................ 9
Acquisitions and Offerings......................... 10
Competition........................................ 10
Marketing.......................................... 11
Employees.......................................... 11
Proprietary Protection............................. 11
Item 2. Properties............................................ 12
Item 3. Legal Proceedings..................................... 13
Item 4. Submission of Matters to a Vote of Security Holders... 13
Item 4.1 Certain Executive Officers of the Registrant.......... 13
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters................................. 15
Item 6. Selected Financial Data............................... 15
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 15
Item 8. Financial Statements and Supplementary Data........... 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.............. 15
PART III
Item 10. Directors and Executive Officers of the Registrant.... 16
Item 11. Executive Compensation................................ 16
Item 12. Security Ownership of Certain Beneficial
Owners and Management............................... 16
Item 13. Certain Relationships and Related Transactions........ 16
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................. 17
Signatures............................................ 18
List of Exhibits...................................... 19
Consent of Independent Accountants.................... 21
Report of Independent Accountants on Schedules........ 21
Financial Statement Schedules......................... 22
Quarterly Financial Information (unaudited);
Stock Information................................... 23
Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 24
Report of Independent Accountants on
Financial Statements................................ 27
Consolidated Statements of Income..................... 28
Consolidated Balance Sheets........................... 29
Consolidated Statements of Cash Flows................. 30
Consolidated Statement of Stockholders' Equity........ 31
Notes to Consolidated Financial Statements............ 33
Selected Financial Information........................ 40
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PART I
Item 1. Business
Overview
SunGard Data Systems Inc. (the "Company") is a computer services company that
specializes in proprietary investment support systems and comprehensive computer
disaster recovery services. The Company believes that it is the only large
specialized provider of investment support systems to the financial services
industry, as well as the pioneer and a leading provider of comprehensive
computer disaster recovery services. The Company's business approach is to
focus on markets in which it has opportunities to develop or acquire leading
products and advantageous market positions.
The Company seeks to maximize recurring revenues by selling most of its
computer services under fixed-term contracts and by emphasizing customer support
and product quality in order to establish long-term relationships with
customers. The Company's recurring revenues are derived primarily under
contracts for remote processing services, disaster recovery services and
software maintenance, which together accounted for approximately 83% of the
Company's total revenues during the last three years (84% in 1993). Of the
total number of the Company's remote processing and disaster recovery services
contracts that were scheduled to expire during the last three years,
approximately 86% were renewed or replaced with new contracts (85% in 1993).
While there can be no assurance that this renewal rate will not decline, the
Company believes that it will continue to renew a high percentage of these
contracts. None of the Company's customers individually accounted for more than
two percent of the Company's revenues in 1993.
The Company's operations are decentralized, and its management philosophy is
one of "controlled entrepreneurship." The Company's services are provided
through separate business units, which are organized into five groups of related
businesses, as follows:
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Disaster Computer
Investment Support Systems Recovery Services Services and
Other
- -------------------------------------------------------------------------------------------------------------------------
SunGard SunGard SunGard SunGard SunGard
Capital Markets Financial Trust & Shareholder Recovery Computer
Group Systems Group Systems Group Services Group Services Group
- -------------------------------------------------------------------------------------------------------------------------
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Trading and Portfolio Portfolio management, Alternate site backup, Remote
accounting management, investment accounting and testing and recovery access
systems for investment investment reporting and services for IBM, computer
swaps, options, accounting and analysis systems for DEC, HP, Prime, processing,
futures and securities trading and portfolio managers; trust Stratus, Tandem and outsourcing,
other derivative accounting systems and global custody systems Unisys computer direct
instruments and for financial for financial institutions; installations, mobile marketing
securities for institutions, shareholder accounting recovery services, computer
international broker/dealers, systems for mutual funds work group recovery services, and
banks and other governments, and transfer agents; services, recovery automated
financial insurance companies participant accounting planning software mailing and
institutions. and corporations. systems for retirement plan and related consulting printing
managers. services. services.
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</TABLE>
Each group is directed by its own management team and has its own sales,
marketing, product development, operations and customer support personnel.
Overall corporate control and coordination are achieved through centralized
budgeting, financial and legal reporting, cash management and strategic
planning. The Company believes that this approach has facilitated more focused
marketing, specialized product development, responsive customer service and
highly motivated management.
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The Company is a Delaware corporation that was organized in 1982 to acquire
certain computer services companies from Sun Company, Inc. The Company's
principal executive offices are located at 1285 Drummers Lane, Wayne,
Pennsylvania, 19087, and its telephone number is (610) 341-8700.
Investment Support Systems
The Company designs, markets and maintains a comprehensive family of
proprietary investment support systems for the financial services industry. The
fundamental purpose of these systems is to automate the complex accounting
calculations, record keeping and reporting associated with investment
operations. The Company markets its investment support systems throughout the
United States and internationally.
The Company delivers its investment support systems primarily as remote data
processing services using the Company's computer equipment and also through
software licenses for use on its customers' computers. The Company provides
investment support remote processing services primarily from its computer
centers in Birmingham, Boston (two centers), Charlotte, Fairfield (New Jersey),
London, Los Angeles, Minneapolis, Sydney and Voorhees (New Jersey) (see
Properties on page 13). As of December 31, 1993, the Company had approximately
1,550 remote processing contracts in force. These contracts generally have
initial terms of one to three years and then continue for successive, one-year
renewal terms, although some allow the customer to terminate on relatively short
notice.
During the past three years, the Company's investment support systems business
has increased significantly in both size and scope, due primarily to
acquisitions (see Acquisitions and Offerings on page 10). During 1993, the
Company continued consolidating its investment support products and marketing
activities. This included ongoing product unification and enhancement to
provide customers with access to multiple systems and data through common
graphical interfaces and shared databases. The Company also continued evolving
its mainframe computer systems by converting some systems to client-server
technology and by developing sophisticated personal computer and workstation
front-end products for others. Also during 1993, the Company continued to add
multicurrency functionality to its systems and pursue opportunities to market
more of its systems internationally, especially in Europe.
Investment Accounting and Portfolio Management Systems. The Company's
investment accounting and portfolio management systems maintain the books of
record for all types of large investment portfolios such as those managed by
banks, mutual funds, employee retirement plans and insurance companies. The
primary functions of these systems are to accept investment transactions, value
portfolios using transmissions of security prices received from various
worldwide sources, perform complex accounting calculations and general ledger
postings, and generate a variety of accounting, audit, tax and regulatory
reports. In addition, some of these products are used by investment advisers
and other portfolio managers to manage large investment portfolios. These
systems track investment activities such as purchases and sales, combine these
activities with outside market data such as security prices and quality ratings,
and provide analytical models to assist with investment strategy and management
decisions.
The following table lists the Company's principal investment accounting and
portfolio management systems, the hardware systems they require, their modes of
delivery to customers and their primary markets. Some of these products can
process information in multiple foreign currencies.
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Mode of
System Hardware Platform Delivery Primary Markets
================================================================================
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INVEST ONE(R) IBM mainframe remote international
processing banks, large
service bank trust
and software departments,
license mutual funds,
insurance
---------------------------------- companies and
UNIX workstation software other financial
license institutions
- --------------------------------------------------------------------------------
</TABLE>
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ON-LINE/TM/ Bull mainframe remote investment
processing advisers,
service broker/dealers
- ------------------------------------------------------------- and other
portfolio
ON-SITE/TM/ UNIX workstation software managers
license
- -------------------------------------------------------------
MICROSHAW/TM/ microcomputer software
license
- --------------------------------------------------------------------------------
SERIES 2/TM/ IBM mainframe software banks, thrifts,
license insurance
---------------------------------- companies and
other financial
Prime remote institutions
processing
service
----------------------------------
UNIX workstation software
license and
remote
processing
service
- -------------------------------------------------------------
PMS/TM/ APS/TM/ microcomputer software
license
- --------------------------------------------------------------------------------
PRISM/TM/ IBM mainframe software insurance
license companies
- --------------------------------------------------------------------------------
MONEYMAX(R) Prime remote state, county
processing and city
service government
treasurers
- --------------------------------------------------------------------------------
</TABLE>
During 1993, the Company completed the UNIX workstation version of INVEST ONE.
The Company also developed major enhancements for INVEST ONE to account for
complex securities including multicurrency options and futures and mortgage-
backed securities. PRISM is a new product added during 1993 as a result of the
Company's acquisition of the business of Information Systems of America, Inc.
(see Acquisitions and Offerings on page 10). In 1993, ON-SITE, which provides
multicurrency functionality in a UNIX workstation version, was formally
introduced and sold as a system for client-server environments in two major
transactions, one involving a large European company.
Securities and Derivatives Trading and Accounting Systems. The Company's
securities and derivatives trading and accounting systems are used primarily by
the so-called "sell side" of the investment business. The users of these
products generally are traders or dealers of securities or derivative
instruments (including those trading for their own accounts) and their back-
office operations. In addition to performing many investment accounting
functions, the Company's securities and derivatives trading and accounting
systems maintain inventories of unsold securities, process trade activities,
provide risk management capabilities, and assist users in determining hedging
strategies and monitoring compliance with audit limits, trading limits and
government regulations. The Company's principal software products in this
category are:
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Mode of
System Hardware Platform Delivery Primary Markets
================================================================================
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BOLT 1/TM/ & BOLT 2/TM/ IBM mainframe remote capital markets
processing departments of
service domestic banks,
- ------------------------------------------------------------- broker/dealers
and other
GSM/TM/ DEC VAX, UNIX software financial
workstation license institutions
- -------------------------------------------------------------
INTRADER(R) microcomputer, software
UNIX workstation license
- -------------------------------------------------------------
MONEYMARKET II(R) DEC VAX remote
processing
service and
software
license
- -------------------------------------------------------------
PHASE3(R) SYSTEM Tandem remote
processing
service and
software
license
- -------------------------------------------------------------
TRAC /TM/ IBM mainframe software
license and
remote
processing
service
- --------------------------------------------------------------------------------
</TABLE>
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DEVON DERIVATIVES SYSTEM microcomputer, software trading rooms
SYSTEM/TM/ UNIX license and capital
workstation, DEC markets
VAX departments of
- ------------------------------------------------------------- international
banks and
DEVON FUTURES microcomputer, software trading rooms of
SYSTEM/TM/ UNIX license and other financial
workstation, DEC remote institutions
VAX processing
service
- -------------------------------------------------------------
DEVON SECURITIES microcomputer, software
SYSTEM/TM/ UNIX workstation license
- -------------------------------------------------------------
OPTAS(R) DEC VAX software
workstation license
- --------------------------------------------------------------------------------
</TABLE>
In 1993, the Company licensed GSM--GLOBAL SECURITIES MANAGER/TM/, a
multicurrency system for client-server environments designed to be used on any
platform, to several banks and continued development work on the system (see
Product Development on page 9). In 1993, the Company enhanced the BOLT product
line by adding an interface for the clearing of mutual funds. As a result of
the acquisition of Digital Solutions, Inc., the Company acquired rights to Fi-
Trac(R), consisting of on-line clearing and settlement interfaces to two major
New York clearing banks (see Acquisitions and Offerings on page 10).
The Company directly markets The Devon Derivatives, Futures and Securities
Systems--all referred to as The Devon System(R)--throughout the world, except in
Japan where the system is exclusively marketed by a representative that is
entitled to certain percentages of the license and maintenance fees generated
from sales in Japan.
The Devon Derivatives System is comprised of one or more modules depending
upon the types of derivative instruments traded. These modules include, among
others, Devon Swaps/TM/ for interest rate and currency swaps, Devon Options/TM/
for interest rate caps, floors, collars and debt options, Devon Bonds/TM/ for
bonds and floating rate notes, Devon FRAs/TM/ for forward rate agreements, loans
and deposits, and Devon FX/TM/ for spot and forward foreign currency trades and
over-the-counter foreign currency options. Several modules, including the module
with newly developed Sybase SQL client-server functionality, incorporate certain
software developed by third parties. The Company holds worldwide licensing
rights to this software and in some cases is required to pay royalties. OPTAS
provides trading and risk management of exchange-traded derivative instruments.
In 1993, several additional products were added to the Devon Futures System
product line as a result of the acquisitions of the FORTE(R) system of ICCH
Financial Markets Limited and the FIRST FUTURES(R) system of Microtech Financial
Systems (Europe) Limited. INTRADER is a new product added during 1993 as a
result of the Company's acquisition of the business of Digital Solutions, Inc.
(see Acquisitions and Offerings on page 10).
Trust and Global Custody Systems. The Company's trust systems automate the
investment operations unique to the bank trust business including cash
management, management of specialized assets such as real estate and oil wells,
preparation of tax returns for taxable trusts, payment of trust expenses,
payment of benefits to retirees, and other customer service duties. The
Company's global custody systems automate the functions associated with the
worldwide custody and safekeeping of investment assets, such as trade
settlement, investment income collection, preparation of client fee
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statements, tax reclamation, foreign exchange, and reconciliation of depository
and sub-custodian positions. The Company's principal trust and global custody
systems are:
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Mode of
System Hardware Platform Delivery Primary Markets
================================================================================
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AUTOTRUST(R) IBM mainframe remote small and
processing medium size
service bank trust
departments
- --------------------------------------------------------------------------------
OMNITRUST(R) ES IBM mainframe software large and
license and medium size
remote bank trust
processing departments
service
- --------------------------------------------------------------------------------
OMNI GS(R) IBM mainframe software large bank
license and global custody
remote departments
processing
service
- --------------------------------------------------------------------------------
MICROTRUST(R) microcomputer software small bank
license trust
departments
- --------------------------------------------------------------------------------
</TABLE>
In 1993, the Company continued selling OMNITRUST ES as a remote processing
service, including a multimillion dollar sale to a major midwest bank. The
Company offers specialized trust asset custody services to its AUTOTRUST
customers and other banks and trust companies. These services are provided
under a master contract with The Bank of New York (the "Bank"). The Bank holds
the customers' trust assets, and the Company handles account record keeping and
customer communications. The Company is liable to the Bank for any unpaid
obligations of the Company's Custody Services customers that exceed the value of
their assets held in the Bank's custody.
In 1993, the Company introduced a new product, EXPEDITER/TM/, which
facilitates the automated entry of mutual fund transactions. The first major
implementation of this product was concluded with the Company entering into an
arrangement with a major mutual fund company to provide automated entry services
for users of AUTOTRUST.
Shareholder Accounting Systems. The Company's shareholder accounting systems
automate the transfer agent process for stock, bond and mutual fund issues.
These systems maintain shareholder and bondholder positions, process dividend
and interest distributions, generate proxy materials, tabulate votes, and
produce tax reports and periodic shareholder statements. The Company's
principal software products in this category are:
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Hardware
System Platform Mode of Delivery Primary Markets
================================================================================
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INVESTAR(R) IBM mainframe remote large mutual
processing fund managers
service and transfer
agents
- --------------------------------------------------------------------------------
SUNSTAR(R) IBM mainframe remote large bank,
processing corporate and
service and utility stock
software and bond
license transfer agents
- --------------------------------------------------------------------------------
</TABLE>
In 1993, the Company signed three significant contracts with major financial
institutions for SUNSTAR and signed a multimillion dollar contract for
INVESTAR.
Participant Accounting Systems. The Company's participant accounting systems
automate the investment operations associated with defined contribution
retirement plans such as 401(k) plans. These systems maintain the books of
record for each participant's share of the cash and securities in the plan,
monitor compliance with government regulations and plan restrictions, process
payments of
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benefits to retirees, and produce tax reports for plan sponsors and
participants. The Company's principal participant accounting systems are:
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Mode of
System Hardware Platform Delivery Primary Markets
================================================================================
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OMNIPLAN(R) IBM mainframe remote corporate,
OMNIPAY(R) processing bank and other
service, retirement
software plan managers
license and
full service
bureau
processing
----------------------------------
IBM AS/400 software
license
- --------------------------------------------------------------------------------
PLAN ONE(R) IBM mainframe remote bank
processing retirement
service plan managers
and software
license
- --------------------------------------------------------------------------------
MPR/TM/ microcomputer software small and
license medium size
banks
- --------------------------------------------------------------------------------
</TABLE>
During 1993, three major corporations signed multimillion dollar contracts for
OMNIPLAN. In addition, the Company formally introduced and sold OMNIPAY, a
benefits payment system.
Investment Reporting and Analysis Systems. The Company's investment reporting
and analysis systems accept accounting data from other investment support
systems and perform special analyses for fund managers and customers. These
systems analyze the performance of portfolios, perform other types of investment
measurement and analysis, and produce regulatory reports for retirement plan
sponsors and participants. The Company's principal software products in this
category are:
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<CAPTION>
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Mode of
System Hardware Platform Delivery Primary Markets
================================================================================
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DATAPREP/TM/ IBM mainframe remote corporate,
EMBERS(R) processing bank and other
service and retirement
software plan managers
license
- -------------------------------------------------------------
SUPERF4(R) IBM mainframe, remote
UNIX workstation processing
service and
software
license
- --------------------------------------------------------------------------------
OMNISTATION/TM/ UNIX workstation software large and
license medium size
banks
- --------------------------------------------------------------------------------
</TABLE>
During 1993, the Company concluded a license and development contract with a
major bank for SUPERF4 and developed a UNIX workstation version of SUPERF4.
Also in 1993, a high-volume bridge between customer trust accounting systems and
SUPERF4 was developed, making it possible for customers to compute investment
performance statistics on thousands of trust accounts. Also in 1993, the
Company, as an enhancement to EMBERS, developed a global client statement
reporting subsystem.
Disaster Recovery Services
Many businesses depend upon computers to perform critical tasks. Many
companies use communications networks to transmit data between a centralized
computer facility and distant offices. If a natural disaster, fire, power
failure or other emergency disrupts a company's computer operations or
interrupts communications between its data processing center and remote
locations, its ability to stay in business may be jeopardized. To address this
problem, the Company maintains alternate data processing sites for use by
customers whenever they are unable to operate or communicate with their own
computer systems.
The primary alternate sites provided by the Company are fully equipped and
operational computer centers known as "hotsites," where customers may restore
their critical applications using the Company's computer equipment. The Company
also provides environmentally prepared computer centers known as "coldsites," in
which customers may install and operate their own computer
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equipment, and remote operations centers for using the Company's alternate sites
from long distance. In addition, the Company provides mobile recovery resources
that are delivered or shipped directly to customer-specified locations. Most of
the Company's larger disaster recovery customers purchase a basic package of
services that includes use of a hotsite for six weeks to recover from any
computer center failure, use of a coldsite for six months if recovery operations
must continue for more than six weeks, use of a hotsite to regularly test
disaster recovery procedures, use of adjacent office and terminal space during
recovery operations and tests, technical assistance when conducting recovery
operations and tests, and technical assistance with designing and implementing a
backup communications network.
The Company also provides WGR--Work Group Recovery/SM/ services through
MetroCenter(R) facilities that provide customers with the use of general office
space and office equipment, as well as enhanced remote operations capabilities
for using the Company's disaster recovery systems for tests or recovery
operations without traveling to a Company hotsite. This product line also
includes MegaVoice/SM/, a centralized voice communications recovery service
that backs up customers' automated telephone call distribution systems.
The Company provides disaster recovery services to users of IBM (and
compatible) mainframe computers and also to users of DEC, Hewlett Packard, IBM
midrange, Prime, Stratus, Tandem, Texas Instruments and Unisys computers. These
services are marketed, directly and through representatives, primarily to IBM
(and compatible), DEC and Unisys mainframe and midrange computer installations
in North America. In 1993, the Company developed a new sales force directed at
marketing disaster recovery services, including mobile recovery services, to
users of smaller computer installations. This effort was enhanced by several
acquisitions that increased the number of customer contracts for smaller,
midrange computer facilities (see Acquisitions and Offerings on page 10). Also
in 1993, the Company established two major marketing alliances and signed
certain agreements with third parties to expand and enhance its recovery
services and capabilities.
During 1993, for the eighth consecutive year, the Company successfully
supported all customers who experienced computer center failures, including
five customers with operations disrupted by the World Trade Center bombing.
Disaster Recovery Facilities. The Company believes that it conceived and
first implemented the concept of the MegaCenter(R), a multiple hotsite and
coldsite facility that customers may use directly or remotely. The Company
operates four MegaCenters, located in Atlanta, Chicago, Philadelphia and
Warminster (see Properties on page 12). The Company believes that its
Philadelphia MegaCenter, which houses six IBM mainframe hotsites, three DEC,
five mobile IBM midrange, three Stratus, one Tandem hotsite, and three
stationary and four mobile Hewlett Packard computer systems, is the largest
commercial disaster recovery facility in the world. The Company also operates
three combined coldsite and remote operations centers, located in Honolulu, St.
Paul and Toronto. The Company has established MetroCenters in strategic
locations throughout North America, including Atlanta, Boston, Dallas, Los
Angeles, St. Louis and Toronto, and plans to open a new MetroCenter in
Washington, D.C. in the second quarter of 1994. As a result of acquisitions in
1993, the Company also operates computer centers in Solon, Ohio and Phoenix,
Arizona (see Acquisitions and Offerings on page 10).
Each of the Company's hotsite systems includes, in addition to the central
processing unit, a complete set of peripheral equipment. The Company markets its
multiple recovery centers and comprehensive hotsite services on a component
pricing basis, allowing each customer to select the specific items of equipment
and other recovery services needed to satisfy its individual disaster recovery
requirements.
The Company periodically opens new facilities to accommodate both the growth
in its customer base and the addition of different types of computer systems.
Also, the Company regularly upgrades its systems to offer the most advanced
computer equipment generally used by its customers. During
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1993, the Company upgraded hotsites at all four MegaCenters. In addition to
computer equipment added with acquisitions in 1993, a new IBM midrange system
was offered in Philadelphia and in Atlanta. The disk access, tape cartridge and
other peripheral equipment at all facilities were upgraded or augmented,
including the addition of a state-of-the-art storage and retrieval system for
mainframe customers.
The Company leases most of its disaster recovery computer equipment under
operating leases. The duration of these leases, generally two to four years, is
based largely upon the Company's strategy to reduce the risks associated with
the potential obsolescence of its disaster recovery computer systems. The
Company's disaster recovery equipment is covered by maintenance contracts to
assure that it is properly functioning at all times.
The Company believes that, by operating a relatively small number of large
facilities linked by a comprehensive communications network, it can provide
superior disaster recovery services in the most effective manner. All
MegaCenters and MetroCenters, as well as coldsites and other remote operations
centers, are linked by a communications network that is capable of handling a
full range of digital and analog data transmission methods, including satellite
and fiber optics applications. The Company regularly upgrades this network to
offer the communications technology used by its customers. During 1993, the
Company continued expanding its matrix switching capabilities to allow for more
efficient and reliable communications during customer tests and recovery
operations.
Disaster Recovery Contracts. As of December 31, 1993, the Company had
approximately 3,300 disaster recovery contracts in force. These contracts
generally require the payment of monthly fees and range in duration from one to
five years. The amount of the monthly fees depends upon the type of alternate
site selected, any additional services provided, contract duration and
competitive factors.
The Company's disaster recovery contracts limit the number of computer centers
that may be serviced by each of the Company's large IBM mainframe hotsites. As
of December 31, 1993, the Company had a maximum capacity of 1090 contracts for
large IBM mainframe hotsites, with current contracts utilizing approximately 85%
of such capacity. The Company manages this capacity and, when necessary, opens
new hotsites to accommodate the anticipated continued growth in its customer
base (see Product Development on page 9).
Planning Services. The Company provides professional consulting services for
disaster recovery and business resumption planning, not only for computer
operations, but also for company-wide purposes encompassing all important
business operations. This includes the development of customized disaster
recovery and business resumption plans for customers. The Company also performs
risk analyses to determine customers' exposure to the disruption or loss of
critical operations and resources, audits customers' disaster recovery and
business resumption procedures, and recommends improvements. In addition, the
Company conducts regular seminars on disaster recovery, business resumption and
related topics.
The Company also markets microcomputer software, known as DP/90 PLUS(R), that
automates the preparation and maintenance of disaster recovery and business
resumption plans, including comprehensive company-wide planning capabilities.
This software is marketed throughout the world, directly and through
distributors. There also is a customized version for financial institutions.
In 1994, the Company plans to introduce a new business recovery planning product
entitled CBR--Comprehensive Business Recovery/TM/ that is compatible with
Microsoft Windows.
Computer Services and Other
The Company provides nonproprietary, remote-access computer services
primarily to software developers and government agencies and also provides
outsourcing services. In addition, the Company provides direct marketing
computer services and automated mass mailing and printing services. These
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activities are supported at the Company's computer centers in Voorhees and
Birmingham (see Properties on page 12), which also are used to provide remote
processing services for several of the Company's investment support systems
business units.
In 1993, the Company purchased a state-of-the-art data processing facility in
Voorhees, New Jersey and moved its Philadelphia computer services operations to
the new facility. Also, in the first quarter of 1993, the Company sold its
CARS(R) automotive dealership systems product line, resulting in a one-time,
after-tax gain of $3,371,000.
Product Development
The investment support systems needs of the financial services industry are
complex and substantial, and continually evolve as a result of changes in laws,
introductions of new types of investment vehicles and increased competition.
For these reasons, the Company believes that it is important to continually
maintain, enhance and evolve its proprietary investment support systems. The
Company funds most of its ongoing software maintenance and support activities
through the software maintenance fees paid by its investment support systems
license customers and a portion of the monthly fees paid by its investment
support systems remote processing customers. As of December 31, 1993, the
Company had in force approximately 1,850 software maintenance contracts for its
investment support systems.
The Company's expenditures for software development during 1993, 1992 and
1991, including amounts that were capitalized, totalled approximately
$37,581,000, $24,899,000 and $13,745,000, respectively. These amounts do not
include certain software maintenance and support costs that are included in cost
of sales, nor do they include costs incurred in performing certain custom
development projects for individual customers in the ordinary course of
business.
During 1994, the Company plans to continue its development work on GSM--GLOBAL
SECURITIES MANAGER and to develop UNIX versions of SUNSTAR and OMNIPLAN.
Microsoft Windows versions of AUTOTRUST and PMS also are planned in 1994. These
developments are examples of the Company's strategy of using the established
functionality of its mainframe systems to develop state-of-the-art systems for
new technological environments.
Also in 1994, the Company plans to enhance the capabilities of INVEST ONE to
include corporate action processing, reversal processing and UK unit trust
processing. The Company plans to develop software for defined benefit plans
that will interface with the Company's OMNIPLAN software for defined
contribution plans. In 1994, the Company will continue to expand the
application of EXPEDITER, which facilitates the automated entry of mutual fund
transactions for users of AUTOTRUST, OMNITRUST, OMNIPLAN, BOLT and eventually
other investment support systems. In 1994, the Company plans to continue the
development of DEVON CONNECT/TM/ to enhance data distribution and exchange
among The Devon Derivatives System, real-time price data and customer systems,
and to provide a digital platform for order trading, routing and monitoring.
The Company expands its disaster recovery services by adding new hotsites at
existing facilities, upgrading its computer equipment, developing new services
and opening new facilities. During 1994, the Company plans to upgrade its IBM
ES9000-720 to an IBM ES9000-942 mainframe, IBM's newest H5 technology, at its
Philadelphia MegaCenter. Also during 1994, the Company plans to add new IBM
command centers at its MegaCenters to provide additional testing and recovery
capability. The Company also plans to continue upgrading its disk storage, tape
cartridge and other peripheral hotsite equipment and to continue opening new
MetroCenters where the demand exists.
The Company expands its disaster recovery communications network by upgrading
its communications equipment, adding new communications capabilities and
establishing additional remote operations centers where the demand exists.
9
<PAGE>
Acquisitions and Offerings
The Company seeks to grow through both internal development and the
acquisition of businesses that broaden or complement its existing product lines.
Since its initial public offering in 1986, the Company has acquired thirteen
investment support systems businesses, ten disaster recovery businesses and two
computer services businesses. Also during this period, the Company completed
two additional public offerings, a common stock offering in 1987 and a
convertible debenture offering in 1990.
In May 1993, the Company converted $86,055,000 of its $86,250,000 8 1/4%
Convertible Subordinated Debentures due 2015, into 3,309,803 shares of common
stock. The $195,000 balance of the debentures was redeemed at face value plus
a premium of 5.78%.
During 1993, the Company spent approximately $30,808,000 in cash, net of cash
acquired, to acquire four investment support systems businesses and four
disaster recovery businesses.
In January 1993, the Company enhanced its Capital Markets Group by purchasing
the London-based capital markets business of ICCH Financial Markets Limited.
The primary product line of the acquired business, FORTE, is a back-office
trading, clearing and administration system for exchange-traded derivative
instruments. Also in January 1993, the Company purchased the FIRST FUTURES
product line of London-based Microtech Financial Systems (Europe) Limited.
FIRST FUTURES is an analysis system for exchange-traded and equity derivative
instruments.
As additions to the Financial Systems Group, in May 1993, the Company
purchased the business of Information Systems of America, Inc. Based in Atlanta,
ISA's major products include PRISM, a portfolio management, investment
accounting and reporting system, and ABC/TM/ and CDS/TM/, general accounting and
financial management systems, for insurance companies. In October 1993, the
Company purchased the business of Digital Solutions, Inc., headquartered in
Minneapolis. DSI's major product, INTRADER, is a portfolio management,
investment accounting and securities trading system for bank capital market
departments and other financial institutions.
The Recovery Services Group increased its presence in the midrange computer
market with four acquisitions in 1993. In May 1993, the Company purchased the
disaster recovery business of LDI Corporation, which consists primarily of
recovery services for midrange IBM platforms. In June 1993, the acquisition of
the disaster recovery business of Uptime Disaster Recovery, Inc. increased the
Hewlett Packard product line and enhanced the Company's mobile recovery
offerings. The acquisition of the disaster recovery business of Sun Data, Inc.
in October 1993 resulted in the addition of approximately 1,200 contracts in
the IBM AS/400 market. In November 1993, the acquisition of the disaster
recovery business of Computer Recovery Services, Inc. increased the Company's
services in Unisys A and V platforms.
In June 1993, the Company's common stock was listed on the London Stock
Exchange.
Competition
Since most of the Company's computer services and software are specialized and
technical in nature, the various markets in which the Company competes have a
relatively small number of significant competitors. Some of the Company's
existing competitors and some potential competitors have substantially greater
financial, technological and marketing resources than the Company. The Company
believes that, for most of its businesses, service, quality and reliability are
more important competitive factors than price.
In its investment support systems business, the Company competes with numerous
other data processing and financial software vendors, which may be broadly
categorized into two groups. One
10
<PAGE>
is comprised of specialized investment support systems companies, most of which
are much smaller than the Company. The other is comprised of large computer
services companies whose principal businesses are not in the investment support
systems area. The Company also faces competition from the internal processing
and development capabilities of its potential customers.
The key competitive factors in marketing investment support systems are the
accuracy and timeliness of processed information provided to customers, features
and adaptability of the software, level and quality of customer support, level
of software development expertise and overall net cost. The Company believes
that it competes effectively as to each of these factors and that its reputation
and experience in these markets are important competitive advantages.
The computer disaster recovery business remains highly competitive. The
Company's principal competitors in this business are Comdisco Disaster Recovery
Services, Inc., Digital Equipment Corporation and IBM Corporation, all of which
have substantially greater financial and other resources than the Company. The
Company also faces potential competition from major companies that have computer
facilities that could be made available for disaster recovery use. The Company
believes that it competes effectively as to the key competitive factors in this
market, namely quality of facilities, scope and quality of services, level and
quality of customer support, level of technical expertise and price. The
Company also believes that its experience and reputation as the innovator in
this business are important competitive advantages.
Marketing
All of the Company's specialized computer services and software are marketed
throughout the United States, and many are marketed internationally as well.
The Company's export sales during 1993, 1992 and 1991 totalled approximately
$29,061,000, $32,501,000 and $28,177,000, respectively. In addition, the
Company's foreign subsidiaries had sales that for those years totalled
approximately $18,437,000, $3,211,000 and $1,123,000, respectively.
The Company develops and maintains proprietary marketing information by
identifying prospective customers through a variety of data bases and other
sources, and then canvassing the prospects by direct mail, telephone calls and
personal visits. The Company also attempts to identify and attract customers by
conducting seminars and participating in industry conferences. Customer
references have been an important aid in obtaining new business.
Employees
At December 31, 1993, the Company had approximately 2,276 full-time employees.
The Company believes that its success depends, in part, on its continuing
ability to attract and retain skilled technical, marketing and management
personnel. While data processing professionals and software developers are in
high demand, the Company believes that, to date, it has been able to attract and
retain highly qualified personnel. None of the Company's employees is covered
by a collective bargaining contract. The Company believes that its employee
relations are excellent.
Proprietary Protection
The Company owns registered marks for the SunGard name and owns or has applied
for registered marks for many of its service and software names. The Company
owns few registered copyrights and no patents. The Company believes that
registered copyrights and patents are of less significance in its business than
software development skills, technological expertise and marketing capabilities.
The Company relies primarily on contractual restrictions and trade secret laws
for the protection of its proprietary services and software. The Company also
has established policies requiring its personnel to maintain the confidentiality
of the Company's proprietary property.
11
<PAGE>
Item 2. Properties
The following table indicates the location, purpose and size of the Company's
principal offices, principal computer facilities, business unit headquarters and
disaster recovery MegaCenters.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Location Purpose Square Feet
=================================================================================
<S> <C> <C>
Wayne, PA Executive offices of SunGard Data 42,000
(near Philadelphia) Systems Inc., and headquarters for
SunGard Recovery Services Inc. and
SunGard Planning Solutions Inc.
- ---------------------------------------------------------------------------------
Atlanta, GA Southern headquarters for SunGard 26,000
Financial Systems Inc.
- ---------------------------------------------------------------------------------
Birmingham, AL Headquarters for SunGard Asset 85,000
Management Systems, SunGard Employee
Benefit Systems and SunGard Mailing
Services, and related computer center
with one IBM-compatible mainframe
computer.
- ---------------------------------------------------------------------------------
Canoga Park, CA Western headquarters for SunGard 12,000
(near Los Angeles) Financial Systems Inc. and related
computer center with four Prime
computers and five IBM midrange
computers.
---------------------------------------------------------------------------------
Charlotte, NC Headquarters for SunGard Trust 34,000
Systems Inc. and related computer
center with one IBM-compatible
mainframe computer.
- ---------------------------------------------------------------------------------
Fairfield, NJ Computer center for Shaw Data 22,000
(near New York) Services, Inc. with four Bull
mainframe, one Hewlett Packard and
two DEC computers.
- ---------------------------------------------------------------------------------
Hinsdale, IL Headquarters for SunGard Investment 23,000
(near Chicago) Systems Inc.
- ---------------------------------------------------------------------------------
Hopkins, MN Central headquarters for SunGard 46,200
(near Minneapolis) Financial Systems Inc. and related
computer center with two IBM or
IBM-compatible mainframe computers.
- ---------------------------------------------------------------------------------
London, England European headquarters for SunGard 14,500
Capital Markets Group
- ---------------------------------------------------------------------------------
New York, NY Headquarters for Shaw Data Services, 14,000
Inc.
- ---------------------------------------------------------------------------------
New York, NY Headquarters for SunGard Capital 7,600
Markets Inc.
- ---------------------------------------------------------------------------------
Northbrook, IL SunGard Recovery Services MegaCenter 84,000
(near Chicago) with two IBM mainframe, three mobile
IBM midrange, two Tandem and one
mobile Unisys computer.
- ---------------------------------------------------------------------------------
Philadelphia, PA SunGard Recovery Services MegaCenter 208,600
with three DEC, three IBM mainframe,
three Stratus, one Tandem, three
Hewlett Packard, five mobile IBM
midrange and four mobile Hewlett
Packard computers.
- ---------------------------------------------------------------------------------
Roswell, GA SunGard Recovery Services MegaCenter 33,200
(near Atlanta) with nine DEC, one Prime, seven
mobile IBM midrange, one mobile DEC
and one TI computer.
- ---------------------------------------------------------------------------------
San Mateo, CA Headquarters for SunGard Shareholder 18,200
Systems Inc.
- ---------------------------------------------------------------------------------
Voorhees, NJ Headquarters of SunGard Computer 51,000
(near Philadelphia) Services Inc. and related computer
center with four IBM mainframe
computers.
- ---------------------------------------------------------------------------------
Waltham, MA Eastern headquarters for SunGard 31,300
(near Boston) Financial Systems Inc. and related
computer center with five Tandem
computers.
- ---------------------------------------------------------------------------------
Waltham, MA Offices for SunGard Financial Systems 16,400
(near Boston) Inc. and related computer center with
thirteen DEC computers and two IBM
RS-6000 workstations.
- ---------------------------------------------------------------------------------
Warminster, PA SunGard Recovery Services MegaCenter 20,000
(near Philadelphia) with four Unisys computers.
- --------------------------------------------------------------------------------
</TABLE>
The Company leases all of the offices and facilities listed in the preceding
table, with the exception of its Birmingham, Voorhees and Warminster facilities,
which are owned, and its Hopkins facility, which consists of two connected
buildings, one leased and the other owned. The Company also owns its disaster
recovery facility in St. Paul, Minnesota. The Company also leases space,
primarily for sales offices, customer support offices, MetroCenters and remote
operations centers, in many locations in
12
<PAGE>
the United States and internationally. The Company believes that its leased and
owned facilities are adequate for the Company's present operations.
Item 3. Legal Proceedings
The Company is presently a party to certain lawsuits arising in the ordinary
course of its business. The Company believes that none of its current legal
proceedings will have a material adverse effect on its business or financial
condition.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 4.1 Certain Executive Officers of the Registrant
The executive officers of the Company who are not also directors are listed
below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Age Principal Positions with the Company
================================================================================
<S> <C> <C>
Kenneth R. Adams 58 Chief Executive Officer, SunGard Recovery
Services Group
- --------------------------------------------------------------------------------
Andrew P. Bronstein 35 Vice President and Controller, SunGard Data
Systems Inc.
- --------------------------------------------------------------------------------
Cristobal I. Conde 33 Chief Executive Officer, SunGard Capital
Markets Group
- --------------------------------------------------------------------------------
Philip L. Dowd 52 Chief Executive Officer, SunGard Trust and
Shareholder Systems Group
- --------------------------------------------------------------------------------
David D. Gathman 46 Chief Financial Officer and Vice
President-Finance, SunGard Data Systems Inc.
- --------------------------------------------------------------------------------
Lawrence A. Gross 41 Vice President and General Counsel, SunGard
Data Systems Inc.
- --------------------------------------------------------------------------------
Michael K. Muratore 47 Chief Executive Officer, SunGard Computer
Services Group
- --------------------------------------------------------------------------------
Donna J. Pedrick 44 Vice President-Human Resources, SunGard Data
Systems Inc.
- --------------------------------------------------------------------------------
D. Bruce Peterson 47 Chief Executive Officer, SunGard Financial
Systems Group
- --------------------------------------------------------------------------------
Richard C. Tarbox 41 Vice President-Corporate Development, SunGard
Data Systems Inc.
- --------------------------------------------------------------------------------
David A. Wismer 56 Executive Vice President, SunGard Data
Systems Inc.
- --------------------------------------------------------------------------------
</TABLE>
Mr. Adams has been Chairman and Chief Executive Officer of SunGard Recovery
Services Inc. since 1988 and was its President from 1990 to 1992. From 1983 to
1988, Mr. Adams was President and a director of SunGard Trust Systems Inc.
Mr. Bronstein became Vice President and Controller of the Company in February
1994. Before that, he was Corporate Controller from 1992. From 1985 to 1992,
he was a manager with Coopers & Lybrand, Philadelphia, where he served most
recently as senior manager on the Company's account and as director of the
firm's Philadelphia high technology group. Mr. Bronstein is a director and
officer of most of the Company's domestic subsidiaries.
Mr. Conde has been Chief Executive Officer and a director of SunGard Capital
Markets Inc. since 1991. He was one of the founders of that company in 1983 and
was its Executive Vice President from 1983 to 1991. Before it was acquired by
the Company in 1987, SunGard Capital Markets Inc., originally named Devon
Systems International, Inc., was an independent software company. Mr. Conde is
a director and/or officer of most of the Company's foreign subsidiaries.
13
<PAGE>
Mr. Dowd has been Chief Executive Officer of SunGard Investment Systems Inc.
since 1990 and one of its directors since 1982. He was President of SunGard
Investment Systems Inc. from 1982 to 1990. Mr. Dowd has been Chief Executive
Officer and a director of SunGard Shareholder Systems Inc. since 1989,
President-Software Divisions of SunGard Business Systems Inc. since 1990, Chief
Executive Officer and a director of SunGard Trust Systems Inc. since 1991, and a
director of Shaw Data Services, Inc. since 1992.
Mr. Gathman has been Chief Financial Officer and Treasurer of the Company
since 1987 and Vice President-Finance of the Company since 1985. From 1982 to
1985, he was Corporate Controller of the Company. Mr. Gathman is a director and
officer of most of the Company's domestic subsidiaries. Mr. Gathman has resigned
from his various positions with the Company effective April 1, 1994. Michael J.
Ruane, age 40, will succeed Mr. Gathman as Vice President-Finance and Chief
Financial Officer. Since 1992, Mr. Ruane has served as Chief Financial Officer
and Vice President-Finance of SunGard Capital Markets Inc. Before that, he was
Corporate Controller of the Company from 1985 to 1990 and then Vice President-
Controller from 1990 through 1992.
Mr. Gross has been Vice President and General Counsel of the Company since
1986 and Secretary of the Company since 1987. From 1979 to 1986, he was a
lawyer with Blank, Rome, Comisky & McCauley, Philadelphia, and he has
represented the Company since 1983. Mr. Gross is a director and officer of most
of the Company's domestic subsidiaries and some of its foreign subsidiaries.
Mr. Muratore has been Chief Executive Officer and a director of SunGard
Computer Services Inc. since 1989 and President-Processing Divisions of SunGard
Business Systems Inc. since 1990. From 1985 to 1988, Mr. Muratore was President
of the Company's Central Computer Facility, which was consolidated with SunGard
Computer Services Inc. at the end of 1988.
Mr. Peterson has been Chief Executive Officer and a director of SunGard
Financial Systems Inc. since October of 1993. From 1990 to 1993, Mr. Peterson
was Chief Executive Officer of EJV Partners, L.P., a financial information firm.
Before that, he was an executive at SEI Corporation, a trust system and mutual
fund company, for seven years, where his last position was Executive Vice
President.
Ms. Pedrick has been Vice President-Human Resources of the Company since 1988.
From 1983 to 1988, she was Director-Human Resources of the Company.
Mr. Tarbox has been Vice President-Corporate Development of the Company since
1987. He is an officer of several of the Company's domestic subsidiaries.
Dr. Wismer has been Executive Vice President of SunGard Data Systems Inc.
since October 1993. Before that, he was Chief Executive Officer and a director
of SunGard Financial Systems Inc. from 1990. Dr. Wismer was the founder of
Wismer Associates, Inc. in 1975 and was its President and one of its directors
from 1975 until the beginning of 1992, when Wismer Associates, Inc. was merged
into SunGard Financial Systems Inc. Before it was acquired by the Company in
1986, Wismer Associates, Inc. was an independent computer services company.
14
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
This information is presented under the caption, Stock Information, on page 23
of this Report on Form 10-K.
Item 6. Selected Financial Data
This information is presented under the caption, Selected Financial
Information, on page 40 of this Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This information is presented under the caption, Management's Discussion and
Analysis of Financial Condition and Results of Operations, on pages 24 through
27 of this Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company, financial statement schedules of the
Company, supplementary data and related documents that are included in this
Report on Form 10-K are listed in Item 14(a), Part IV, of this Report.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
15
<PAGE>
PART III
This Part incorporates certain information from the Company's definitive proxy
statement for its 1994 Annual Meeting of Stockholders ("1994 Proxy Statement")
to be filed with the Securities and Exchange Commission not later than 120 days
after the end of the Company's fiscal year covered by this Report on Form 10-K.
Notwithstanding such incorporation, the sections of the Company's 1994 Proxy
Statement entitled Compensation Committee Report and Performance Graph shall not
be deemed to be "filed" as part of this Report.
Item 10. Directors and Executive Officers of the Registrant
Information concerning the directors of the Company is incorporated by
reference to the Company's 1994 Proxy Statement including but not necessarily
limited to the section of such proxy statement entitled Election of Directors.
Information concerning executive officers of the Company who are not also
directors is included in Item 4.1, Part I, of this Report on Form 10-K.
Item 11. Executive Compensation
This information is incorporated by reference to the Company's 1994 Proxy
Statement including but not necessarily limited to the section of such proxy
statement entitled Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is incorporated by reference to the Company's 1994 Proxy
Statement including but not necessarily limited to the section of such proxy
statement entitled Beneficial Ownership of Common Stock.
Item 13. Certain Relationships and Related Transactions
This information is incorporated by reference to the Company's 1994 Proxy
Statement including but not necessarily limited to the sections of such proxy
statement entitled Executive Compensation, Beneficial Ownership of Common Stock
and Election of Directors.
16
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements
The following financial statements of the Company, supplementary data and
related documents are included in this Report on Form 10-K:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants on Financial
Statements, dated February 10, 1994............. 27
Consolidated Statements of Income for each of
the years ended December 31, 1993, 1992
and 1991........................................ 28
Consolidated Balance Sheets as of December 31,
1993 and 1992................................... 29
Consolidated Statements of Cash Flows for each
of the years ended December 31, 1993, 1992
and 1991........................................ 30
Consolidated Statement of Stockholders' Equity
for each of the years ended December 31, 1993,
1992 and 1991................................... 31
Notes to Consolidated Financial Statements....... 33
Quarterly Financial Information (unaudited)...... 23
</TABLE>
(a)(2) Financial Statement Schedules
The following financial statement schedules of the Company and related
documents are included in this Report on Form 10-K:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants on Schedules,
dated February 10, 1994......................... 21
Schedule II--Amounts Receivable from Related
Parties and Underwriters, Promoters and
Employees (other than related parties).......... 22
Schedule VIII--Valuation and Qualifying
Accounts........................................ 22
</TABLE>
(a)(3) Exhibits
The Exhibits that are incorporated by reference in this Report on Form 10-K,
or are filed with this Report, are listed in the List of Exhibits beginning on
page 19 of this Report. Exhibits 1011 through 1019 are the management
contracts and compensatory plans and arrangements that are required to be filed
as Exhibits to this Report.
(b) Reports on Form 8-K
None.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SunGard Data Systems Inc.
Date: March 28, 1994 By: s/ James L. Mann
------------------------------------------
James L. Mann,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
s/ James L. Mann Chief Executive Officer, March 28, 1994
- -------------------------------- President, and Chairman
James L. Mann of the Board of Directors
(principal executive officer)
s/ David D. Gathman Chief Financial Officer and March 28, 1994
- -------------------------------- Vice President-Finance
David D. Gathman (principal financial officer)
s/ Andrew P. Bronstein Vice President and Controller March 28, 1994
- -------------------------------- (principal accounting officer)
Andrew P. Bronstein
s/ Gregory S. Bentley Director March 28, 1994
- --------------------------------
Gregory S. Bentley
s/ Michael C. Brooks Director March 28, 1994
- --------------------------------
Michael C. Brooks
s/ Albert A. Eisenstat Director March 28, 1994
- --------------------------------
Albert A. Eisenstat
s/ Michael Roth Director March 28, 1994
- --------------------------------
Michael Roth
s/ Malcolm I. Ruddock Director March 28, 1994
- --------------------------------
Malcolm I. Ruddock
s/ Lawrence J. Schoenberg Director March 28, 1994
- --------------------------------
Lawrence J. Schoenberg
18
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Number Document
- ------ --------------------------------------------------------------------
<S> <C>
3.1/(1)/ Amended and Restated Certificate of Incorporation of the Company.
3.2/(2)/ Amended and Restated Bylaws of the Company.
4.1/(2)/ Specimen Common Stock Certificate of the Company.
10.1/(2)/ Lease, dated June 18, 1981, between the Company and American National
Bank and Trust Company of Chicago, relating to the Company's facility in
Northbrook, Illinois ("First Northbrook Lease").
10.2/(3)/ Amendment to the First Northbrook Lease, dated September 16, 1986.
10.3/(4)/ Amendment to the First Northbrook Lease, dated October 14, 1987.
10.4/(5)/ Amendment to the First Northbrook Lease, dated October 1, 1988.
10.5/(5)/ Lease, dated October 1, 1988, between the Company and American National
Bank and Trust Company of Chicago, relating to the Company's facility in
Northbrook, Illinois ("Second Northbrook Lease").
10.6/(6)/ Amendment to the Second Northbrook Lease, dated September 15, 1989.
10.7/(7)/ Lease, dated April 12, 1984, between the Company and Broad and Noble
Associates, Inc., relating to the Company's facility at 401 North Broad
Street, Philadelphia, Pennsylvania, and Amendments thereto, dated October
18, 1989, September 30, 1991 and November 19, 1992.
10.8/(1)/ Lease, dated May 19, 1989, between the Company and Northmeadow
Associates, relating to the Company's facility in Roswell, Georgia,
Amendment thereto, dated June 1989, and Assignment and Assumption
thereof, dated December 31, 1990.
10.9/(3)/ Lease, dated October 1, 1986, between the Company and David A. Wismer
and Mary Anne Wismer, as Lessors, relating to the Company's facility in
Canoga Park, California ("Canoga Park Lease").
10.10/(1)/ Amendment to the Canoga Park Lease, dated October 1, 1991.
10.11/(1)/ The Company's 1982 Incentive Stock Option Plan and Amendments thereto,
dated January 1, 1987 and November 8, 1991./(9)/
10.12/(7)/ The Company's 1986 Stock Option Plan, Amendments thereto, dated
January 1, 1987, November 1, 1988, February 6, 1990, November 8, 1991 and
February 16, 1993, and United Kingdom Addendum thereto, dated February
12, 1991./(9)/
10.13/(1)/ The Company's 1988 Nonqualified Stock Option Plan and Amendment
thereto, dated October 30, 1990./(9)/
10.14/(6)/ The Company's 1990 Amended and Restated Restricted Stock Incentive
Plan./(9)/
10.15/(8)/ The Company's Restricted Stock Award Plan for Outside Directors./(9)/
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Number Document
- ------ --------------------------------------------------------------------
<S> <C>
10.16 The Company's 1994 Equity Incentive Plan (filed with this Report)./(9)/
10.17 Summary Description of the Company's Annual Executive Incentive
Compensation Program (filed with this Report)./(9)/
10.18 Summary Description of the Company's Long-Term Executive Incentive
Compensation Plan (filed with this Report)./(9)/
10.19/(1)/ Form of Indemnification Agreement entered into by the Company with its
directors and officers./(9)/
11.1 Statement Re Computation of Per Share Earnings (filed with this Report).
21.1 Subsidiaries of the Registrant (filed with this Report).
23.1 Consent of Independent Accountants, regarding the Company's consolidated
financial statements and financial statement schedules (included at page
21 of this Report).
</TABLE>
_____________
(1) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December, 1991 (Commission
File No. 0-14232).
(2) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-1 and Amendments No. 1, No. 2, and No. 3
thereto (Registration No. 33-3181).
(3) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-1 and Amendment No. 1 thereto (Registration
No. 33-12536).
(4) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987 (Commission
File No. 0-14232).
(5) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1988 (Commission
File No. 0-14232).
(6) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989 (Commission
File No. 0-14232).
(7) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission
File No. 0-14232).
(8) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission
File No. 0-14232).
(9) Management contract or compensatory plan or arrangement.
20
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the Company's Registration
Statements on Form S-8 (Registration Nos. 33-6425, 33-14984, 33-33602, 33-42345
and 33-69650) of our reports dated February 10, 1994 on our audits of the
consolidated financial statements and consolidated financial statement schedules
of SunGard Data Systems Inc. and subsidiaries as of December 31, 1993 and 1992,
and for each of the years in the three-year period ended December 31, 1993,
which reports are included in this Report on Form 10-K.
COOPERS & LYBRAND
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 25, 1994
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULES
To the Board of Directors and Stockholders
SunGard Data Systems Inc.
Our report on the consolidated financial statements of SunGard Data Systems
Inc. and subsidiaries is included in this Report on Form 10-K. In connection
with our audit of such consolidated financial statements, we also have audited
the related consolidated financial statement schedules listed in Item 14(a)(2),
Part IV, of this Report on Form 10-K.
In our opinion, the consolidated financial statement schedules referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 10, 1994
21
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Financial Statement Schedules
SCHEDULE II
Amounts Receivable from Related Parties and
Underwriters, Promoters and Employees (other than related parties)
<TABLE>
<CAPTION>
Year Ended Beginning Ending
December 31, Name of Debtor Balance Additions Collections Balance
- -------------- ------------------ ---------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
1993.......... James L. Mann/(1)/ $499,750 $ -- $ -- $499,750
1992.......... James L. Mann/(1)/ 499,750 -- -- 499,750
James L. Mann/(2)/ -- 75,000 75,000 --
1991.......... Gregory S. Bentley -- 500,000 500,000 --
James L. Mann/(1)/ -- 499,750 -- 499,750
</TABLE>
(1) Loan made under the Company's restricted stock incentive plan; bears
interest at the prime rate, is due May 2, 1995, and is secured by shares of
the Company's common stock but is otherwise non-recourse.
(2) Personal loan that was repaid in two weeks together with $200 interest,
which was calculated at the prime rate.
- --------------------------------------------------------------------------------
SCHEDULE VIII
Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
-------------------------------
<TABLE>
<CAPTION>
Year Ended Beginning Charged Ending
December 31, Balance to Expense Other Write-offs Balance
- -------------- ---------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1993.......... $4,491,000 $4,963,000 ($21,000)/(1)/ ($2,464,000) $6,969,000
1992.......... 3,441,000 2,839,000 357,000/(1)/ (2,146,000) 4,491,000
1991.......... 2,711,000 2,789,000 -- (2,059,000) 3,441,000
</TABLE>
(1) Net impact of acquired companies, foreign currency translation, and, in
1993, the sale of a product line.
Accumulated Amortization of Software
------------------------------------
<TABLE>
<CAPTION>
Year Ended Beginning Charged Sales or Ending
December 31, Balance to Expense Other Retirements Balance
- -------------- ----------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1993.......... $32,908,000 $8,564,000 ($47,000) ($3,494,000) $37,931,000
1992.......... 25,914,000 7,227,000 (233,000)/(1)/ -- 32,908,000
1991.......... 19,760,000 6,955,000 -- (801,000) 25,914,000
</TABLE>
(1) Principally represents reclassifications.
Accumulated Amortization of Goodwill
------------------------------------
<TABLE>
<CAPTION>
Year Ended Beginning Charged Sales or Ending
December 31, Balance to Expense Other Retirements Balance
- -------------- ----------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
1993.......... $11,625,000 $3,309,000 ($87,000) ($2,959,000) $11,888,000
1992.......... 8,647,000 2,979,000 ( 1,000) -- 11,625,000
1991.......... 5,825,000 2,822,000 -- -- 8,647,000
</TABLE>
Accumulated Amortization of Other Intangible Assets
---------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Beginning Charged Sales or Ending
December 31, Balance to Expense Other Retirements Balance
- -------------- ----------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
1993.......... $10,416,000 $4,321,000 ($62,000) ($140,000) $14,535,000
1992.......... 6,530,000 3,961,000 -- ( 75,000) 10,416,000
1991.......... 4,666,000 2,538,000 -- ( 674,000) 6,530,000
</TABLE>
22
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Quarterly Financial Information [Unaudited]
In thousands, except per share amounts
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- -------- --------
<S> <C> <C> <C> <C>
1993*
Revenues $87,514 $94,653 $94,031 $105,174
Income before income taxes 15,642 14,119 15,819 17,611
Net income 10,141 8,388 9,332 10,613
Net income per common share:
Primary .64 .48 .49 .55
Fully diluted .59 .46 .49 .55
1992
Revenues $73,910 $75,785 $82,534 $ 92,341
Income before income taxes 10,228 11,039 11,722 12,426
Net income 5,779 6,237 6,623 7,169
Net income per common share:
Primary .37 .40 .42 .46
Fully diluted .36 .38 .40 .44
</TABLE>
* First quarter includes after-tax gain on sale of product line of $3,371, or
$0.18 per share, on a fully diluted basis. See Note 2 of Notes to Consolidated
Financial Statements.
- --------------------------------------------------------------------------------
Stock Information
The common stock of SunGard Data Systems Inc. is traded in the National Over-
the-Counter (OTC) Market and is reported on the NASDAQ National Market System
and the London Stock Exchange under the symbol SNDT. At March 10, 1994, the
Company had approximately 2,040 stockholders of record. No dividends have ever
been paid on the Company's common stock. The Company's policy is to retain
earnings for use in its business.
The following table indicates high and low sales prices per share for the
Company's common stock, as reported by NASDAQ.
<TABLE>
<S> <C> <C>
Calendar Year 1992
First Quarter $24 1/4 $18
Second Quarter 26 1/4 20 3/4
Third Quarter 30 22 1/2
Fourth Quarter 31 1/4 23 3/4
Calendar Year 1993
First Quarter $33 3/4 $28 1/2
Second Quarter 32 3/4 28
Third Quarter 40 3/4 30
Fourth Quarter 42 3/4 34
</TABLE>
The last sale price for the Company's common stock on
March 10, 1994, as reported by NASDAQ, was $39 3/4 per share.
23
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
The following table sets forth, for the periods indicated, certain amounts
included in the Consolidated Statements of Income of SunGard Data Systems
Inc., the relative percentage that those amounts represent to consolidated
revenues (unless otherwise indicated), and the percentage change in those
amounts from period to period.
<TABLE>
<CAPTION>
Year Ended December 31, Percent of Revenues (1) Percent
(in millions) Year Ended December 31, Increase (Decrease) (1)
--------------------------- ----------------------- ----------------------------
1993 1992 1991 1993 1992 1991 1993 vs.1992 1992 vs.1991
--------------------------- ----------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Investment support systems $ 243.0 $ 195.9 $ 165.4 64% 60% 58% 24% 18%
Disaster recovery services 113.2 94.7 83.5 30 29 29 20 13
Computer services and other 25.2 34.0 34.6 6 11 13 (26) (2)
--------------------------- -------------------
$ 381.4 $ 324.6 $ 283.5 100% 100% 100% 18 14
=========================== ===================
Costs and Expenses
Cost of sales and direct operating $ 173.1 $ 152.8 $ 140.5 46% 47% 50% 13% 9%
Sales, marketing and administration 76.9 67.1 59.6 20 21 21 15 13
Product development 35.1 23.4 13.4 9 7 5 50 74
Depreciation 20.4 16.7 15.2 5 5 5 22 10
Amortization 16.2 14.2 12.3 4 4 4 14 15
--------------------------- -------------------
$ 321.7 $ 274.2 $ 241.0 84% 84% 85% 17 14
=========================== ===================
Operating Income
Investment support systems (2) $ 38.5 $ 40.3 $ 36.0 16% 21% 22% (4)% 12%
Disaster recovery services (2) 25.0 12.7 8.0 22 13 10 97 59
Computer services and other (2) 3.2 3.5 4.4 13 10 13 (8) (21)
Corporate administration (7.1) (6.2) (5.9) (2) (2) (2) 16 3
---------------------------
$ 59.6 $ 50.3 $ 42.5 16 16 15 18 18
===========================
</TABLE>
(1) All percentages are calculated using actual amounts rounded to the nearest
$1,000.
(2) Percent of revenues is calculated as a percent of investment support
systems, disaster recovery services and computer services and other
revenues, respectively.
Income from Operations
Investment Support Systems (ISS)
The ISS operating margin declined in 1993 compared to 1992 due primarily to the
initial effect of acquired businesses and, to a lesser extent, to software
license revenues comprising a smaller portion of total ISS revenues. The
businesses acquired during 1993 and 1992 have historically lower operating
margins than the rest of the Company's ISS businesses. The Company expects that
the full year 1994 ISS operating margin will increase slightly compared to 1993
as a result of a combination of continued improvement in operating margins of
acquired businesses and an expected increase in software license revenues.
Disaster Recovery Services (DRS)
The improvement in the DRS operating margin in 1993 is attributable primarily to
deferral of equipment expenditures, the positive effect of businesses acquired
during 1993 and the signing of new contracts and contract renewals. The Company
expects that the DRS operating margin will decline during the full year 1994
compared to 1993 due principally to an increase in spending in connection with
disaster recovery computer system upgrades.
Computer Services and Other (CS)
The CS operating margin improved during 1993 due to the addition of new
processing customers in the second half of
24
<PAGE>
1993 and the effect of the sale of the Company's automotive dealership systems
product line in February 1993. This improvement is net of the impact of lower
royalties earned in connection with the 1986 sale of certain product rights
and costs associated with data center consolidations. The Company expects that
the CS operating margin will increase for the full year 1994 compared to 1993.
Revenues
Total revenues increased $56.8 million and $41.0 million, or 18% and 14%, in
1993 and 1992, respectively. Acquired businesses, net of the sale of the
Company's automotive dealership systems product line in February 1993, account
for approximately $36.5 million of the 1993 increase. Acquired businesses
account for $14.4 million of the 1992 increase. Recurring revenues derived from
remote-processing services, alternate-site services and software maintenance are
approximately $321.0 million, $267.0 million and $235.0 million in 1993, 1992
and 1991, respectively, representing 84%, 82% and 83% of consolidated revenues,
respectively.
Investment Support Systems
ISS revenues increased $47.1 million and $30.4 million in 1993 and 1992,
respectively. Acquired businesses account for approximately $44.3 million and
$14.4 million of the respective 1993 and 1992 increases. The balance of the 1993
revenue increase is attributable to the net impact of a $6.8 million increase in
data processing and software maintenance revenues and a $4.0 million decrease in
software license and professional services revenues. The balance of the 1992
revenue increase is attributable to increases in data processing and software
maintenance revenues of $7.2 million and software license and professional
services revenues of $8.8 million.
The Company expects that ISS revenues will increase in 1994 compared to 1993.
The Company believes that the trend of mergers in the financial services
industry will continue, but it is unable to predict what effect, if any, future
mergers may have.
Disaster Recovery Services
DRS revenues increased $18.6 million and $11.2 million in 1993 and 1992,
respectively. Acquired businesses account for $5.4 million of the 1993 increase,
and alternate-site service revenues resulting primarily from new contract
signings and renewals account for the balance of the 1993 revenue increase. The
1992 increase is comprised of the net impact of an $11.8 million increase in
alternate-site service revenues and a $0.6 million decrease in software
maintenance, license and professional services revenues. The Company expects
that DRS revenues will increase in 1994 due primarily to new contracts and
businesses acquired in 1993.
The Company believes that mainframe computer platforms will continue to play an
integral role in data processing solutions for the foreseeable future and,
therefore, will continue to provide a market for the Company's principal DRS
services. In addition, the Company believes that midrange systems and client-
server and local- and wide-area-network technologies increasingly will become
components of distributed data processing systems, and that they represent
continuing market opportunities for the DRS business.
Computer Services and Other
CS revenues decreased $8.9 million and $0.6 million in 1993 and 1992,
respectively. The February 1993 sale of the Company's automotive dealership
systems product line accounts for a decrease of approximately $13.3 million in
1993 revenue. This decrease was partially offset by a $4.4 million increase in
revenue due primarily to an increase in remote-access computer services. The
1992 decrease is attributable primarily to the net impact of the September 1991
sale of a small, unprofitable product line, a $0.7 million decrease in
royalties, an increase in license fees from the Company's automotive dealership
systems and, to a lesser extent, an increase in remote-access computer services.
The Company expects that CS revenues will increase slightly during 1994 as a
result of the net impact of both new contracts signed and the product line sold
in 1993.
25
<PAGE>
Costs and Expenses
Total costs and expenses increased $47.5 million and $33.2 million, or 17% and
14%, in 1993 and 1992, respectively. Acquired businesses, net of the product
line sold, account for $34.0 million of the 1993 increase. Acquired businesses
account for $13.9 million of the 1992 increase. Excluding the effect of acquired
businesses and, in 1993, the product line sold, total costs and expenses
increased 5% in 1993 and 8% in 1992.
Cost of sales and direct operating expenses increased $20.3 million and $12.3
million in 1993 and 1992, respectively. Acquired businesses, net of the product
line sold, account for approximately $12.5 million of the 1993 increase.
Acquired businesses account for $8.2 million of the 1992 increase. The decrease
in cost of sales and direct operating expenses as a percentage of 1993 and 1992
revenues is due primarily to a shift of resources to product development efforts
and, to a lesser extent, to DRS cost of sales and direct operating costs
increasing at a slower rate than DRS revenues.
Sales, marketing and administration expenses increased $9.9 million and $7.5
million in 1993 and 1992, respectively. Acquired businesses, net of the product
line sold, account for approximately $6.3 million of the 1993 increase. Acquired
businesses account for $2.6 million of the 1992 increase. Sales, marketing and
administration expenses as a percentage of revenues declined slightly in 1993
and remained unchanged during 1992 compared to 1991.
Product development expenses increased $11.7 million and $10.0 million in 1993
and 1992, respectively. Acquired businesses account for approximately $9.8
million of the 1993 increase and $1.7 million of the 1992 increase. The balance
of the 1993 and 1992 increases is attributable primarily to increased
development spending in connection with the Company's employee benefit systems
products and, in 1992, the Company's derivative systems products. In addition,
development costs capitalized were $2.5 million and $1.5 million in 1993 and
1992, respectively.
Depreciation of property and equipment increased $3.6 million and $1.5 million
in 1993 and 1992, respectively. Acquired businesses, net of the product line
sold, account for approximately $1.8 million of the 1993 increase. Acquired
businesses account for approximately $0.6 million of the 1992 increase. The
balance of the 1993 and 1992 increases is attributable primarily to DRS capital
expenditures.
Amortization of intangible assets increased $2.0 million and $1.9 million in
1993 and 1992, respectively. The 1993 increase is comprised of the net impact of
acquired businesses, the product line sold and intangible assets that became
fully amortized. The 1992 increase is due to acquired businesses and accelerated
amortization of certain intangible assets.
Interest income in 1993 was approximately the same as in 1992 because the
average amount of cash and short-term investments was comparable in both years.
During 1993, the Company continued to invest a portion of excess cash and
investments in tax-free instruments. Interest expense declined in 1993 by $4.4
million due to the conversion of the Company's subordinated convertible
debentures (Debentures) on May 12, 1993 (see Note 4 of Notes to Consolidated
Financial Statements).
The Company's effective tax rate was 39.1% and 43.2% in 1993 and 1992,
respectively. The 1993 effective tax rate was lower than in 1992 due primarily
to a lower effective tax rate associated with the gain on the sale of the
product line.
The Company believes that its business is not seasonal; nevertheless, the timing
and magnitude of software sales, commitments for equipment and facilities,
product development efforts and disaster recovery activities may cause
profitability to fluctuate from one quarter to another.
The Company believes that inflation has not had a material impact on its results
of operations to date.
26
<PAGE>
Liquidity and Capital Resources
At December 31, 1993, cash and short-term investments increased $1.4 million, to
$84.8 million from $83.4 million at December 31, 1992. Cash flow from operations
decreased approximately $2.1 million in 1993 due primarily to an increase in
working capital requirements.
During 1993, cash paid for acquired businesses was approximately $30.8 million.
Cash received from the sale of assets includes $11.1 million received in
connection with the sale of the product line.
Capital expenditures in 1993 increased approximately $11.1 million from 1992 due
primarily to capital requirements for the Company's DRS and CS businesses,
including approximately $7.5 million in connection with the purchase of a data
center facility to house the CS business operations. The Company's capital
spending for property and equipment during 1994 is expected to be slightly lower
than 1993 spending.
On May 12, 1993, $86.1 million of the Company's $86.25 million Debentures were
converted into 3,309,803 shares of common stock of the Company. On May 24, 1993,
the remainder of the Debentures was redeemed at par plus a premium of 5.78%.
Also, on April 15, 1993, the Company established $25.0 million of revolving
credit facilities. As of December 31, 1993, no borrowings had been made under
these facilities.
At December 31, 1993, the Company's remaining commitments consisted primarily of
operating leases for computer equipment and facilities aggregating $112.6
million, of which $38.0 million will be paid in 1994. The Company believes that
its existing cash resources, cash generated from operations and borrowing
capacity will be sufficient to meet its operating, capital spending and debt
service requirements.
- --------------------------------------------------------------------------------
Report of Independent Accountants
To The Board of Directors and Stockholders
SunGard Data Systems Inc.
We have audited the accompanying consolidated balance sheets of SunGard Data
Systems Inc. and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of SunGard
Data Systems Inc. and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 10, 1994
27
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Consolidated Statements of Income
In thousands, except per share amounts
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenues $381,372 $324,570 $283,550
-------- -------- --------
Costs and expenses:
Cost of sales and direct operating 173,111 152,853 140,541
Sales, marketing and administration 76,968 67,117 59,638
Product development 35,071 23,361 13,400
Depreciation of property and equipment 20,383 16,736 15,165
Amortization of intangible assets 16,194 14,167 12,315
-------- -------- --------
321,727 274,234 241,059
-------- -------- --------
Income from operations 59,645 50,336 42,491
Gain on sale of product line 4,071 - -
Interest income 2,850 2,899 3,903
Interest expense (3,375) (7,820) (8,060)
-------- -------- --------
Income before income taxes 63,191 45,415 38,334
Provision for income taxes 24,717 19,607 16,867
-------- -------- --------
Net income $ 38,474 $ 25,808 $ 21,467
======== ======== ========
Net income per common share:
Primary $ 2.14 $ 1.65 $ 1.40
======== ======== ========
Fully diluted $ 2.09 $ 1.59 $ 1.36
======== ======== ========
Shares used to compute net income per common share:
Primary 17,958 15,647 15,375
======== ======== ========
Fully diluted 19,176 18,991 18,720
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Consolidated Balance Sheets
In thousands, except per share amounts
<TABLE>
<CAPTION>
December 31,
------------------------
1993 1992
--------- ---------
<S> <C> <C>
Assets
Current:
Cash and equivalents $ 51,955 $ 60,097
Short-term investments 32,824 23,312
Trade receivables, less allowance for
doubtful accounts of $6,969 and $4,491 74,053 59,016
Earned but unbilled receivables 12,213 9,133
Prepaid expenses and other current assets 13,895 12,970
Deferred income taxes 5,690 6,327
-------- --------
Total current assets 190,630 170,855
Property and equipment, less accumulated depreciation of
$85,098 and $77,863 77,556 59,577
Software products, less accumulated amortization of
$37,931 and $32,908 27,615 27,452
Goodwill, less accumulated amortization of
$11,888 and $11,625 84,852 84,271
Other intangible assets, less accumulated amortization of
$14,535 and $10,416 37,482 23,425
-------- --------
$418,135 $365,580
======== ========
Liabilities and Stockholders' Equity
Current:
Short-term and current portion of long-term debt $ 3,162 $ 3,147
Accounts payable 7,191 8,256
Accrued compensation and benefits 19,466 17,335
Other accrued expenses 11,528 9,616
Accrued income taxes 4,069 6,017
Deferred revenues 45,633 33,369
-------- --------
Total current liabilities 91,049 77,740
-------- --------
Long-term debt 3,361 86,643
-------- --------
Deferred income taxes 6,765 11,298
-------- --------
Commitments
Stockholders' equity:
Preferred stock, par value $.01 per share; 5,000
shares authorized - -
Common stock, par value $.01 per share; 30,000
shares authorized; 18,801 and 15,264 issued 188 153
Capital in excess of par value 161,149 72,345
Restricted stock plans (2,156) (3,443)
Retained earnings 162,034 123,560
Foreign currency translation adjustment (4,041) (2,714)
-------- --------
317,174 189,901
Treasury stock, at cost, 6 shares and 1 share (214) (2)
-------- --------
Total stockholders' equity 316,960 189,899
-------- --------
$418,135 $365,580
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Consolidated Statements of Cash Flows
In thousands
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash Flow From Operations
Net income $ 38,474 $ 25,808 $ 21,467
Reconciliation of net income to cash flow from
operations:
Depreciation and amortization 36,577 30,903 27,480
Net gain on sale of product line (3,371) - -
Charges for stock incentive plans 1,432 2,678 1,450
Accretion of imputed interest and other
noncash charges (272) 816 287
Deferred income tax provision 710 (2,948) (3,295)
-------- -------- --------
73,550 57,257 47,389
Cash provided by (used for) working capital, net
of effect of acquired businesses and sale of
product line:
Accounts receivable and other current assets (19,574) (4,902) (11,136)
Accounts payable and accrued expenses (190) 7,538 2,749
Deferred revenues 6,590 2,559 6,878
-------- -------- --------
Cash flow from operations 60,376 62,452 45,880
-------- -------- --------
Financing Activities
Proceeds from employee stock plans 4,034 2,977 241
Purchase of treasury stock (2,406) (1,469) (604)
Repayments of short-term and long-term debt (2,530) (1,076) (22,034)
-------- -------- --------
Total financing activities (902) 432 (22,397)
-------- -------- --------
Long-Term Investment Activities
Cash paid for acquired businesses, net (30,808) (22,370) (8,914)
Cash paid for property and equipment (35,079) (24,017) (15,294)
Cash paid for software and other intangible assets (4,139) (3,192) (2,044)
Cash received from sale of assets 11,923 605 779
-------- -------- --------
Total long-term investment activities (58,103) (48,974) (25,473)
-------- -------- --------
Increase (decrease) in cash and equivalents
before short-term investment activities 1,371 13,910 (1,990)
Short-Term Investment Activities
Purchase of short-term investments (31,140) (28,536) (28,597)
Maturities of short-term investments 21,627 18,595 15,226
-------- -------- --------
Increase (decrease) in cash and equivalents (8,142) 3,969 (15,361)
Beginning cash and equivalents 60,097 56,128 71,489
-------- -------- --------
Ending cash and equivalents $ 51,955 $ 60,097 $ 56,128
======== ======== ========
Supplemental Disclosure of Cash Flow Information
Reduction in long-term debt, net of debt
issuance costs, resulting from conversion of
subordinated convertible debentures into
common stock $(83,993) - -
======== ======== ========
Interest paid $ 4,369 $ 7,758 $ 7,637
======== ======== ========
Income taxes paid $ 24,431 $ 20,188 $ 20,187
======== ======== ========
Acquired businesses:
Property and equipment $ 4,843 $ 2,939 $ 4,683
Software products 4,872 8,547 2,781
Goodwill and other intangible assets 30,596 16,574 2,523
Debt assumed or created (2,963) (2,914) (172)
Deferred income taxes - (4,311) -
Net current assets acquired (liabilities assumed) (6,540) 1,535 (901)
-------- -------- --------
Cash paid for acquired businesses,
net of cash acquired $ 30,808 $ 22,370 $ 8,914
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
In thousands, except per share amounts
<TABLE>
<CAPTION>
Common Stock Foreign Treasury Stock
--------------- Capital in Restricted Currency ------------------
Number of Par Excess of Stock Retained Translation Number of
Shares Value Par Value Plans Earnings Adjustment Shares Cost Total
---------- ----- --------- ----- -------- ----------- --------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1990 15,093 $151 $ 69,592 $(5,735) $ 76,285 $ - (2) $ (27) $140,266
Net income - - - - 21,467 - - - 21,467
Shares issued under restricted
stock plans 33 - 572 (572) - - - - -
Restricted stock incentive plan
shares repurchased to satisfy
tax withholding - - - - - - (1) (16) (16)
Purchase of common stock - - - - - - (35) (588) (588)
Shares issued under stock option
and stock purchase plans, net 11 - (39) - - - 17 280 241
Compensation expense related to
restricted stock plans - - - 1,450 - - - - 1,450
Foreign currency translation
adjustment - - - - - 178 - - 178
------ ---- -------- ------- -------- ------- --- ------- --------
Balances, December 31, 1991 15,137 151 70,125 (4,857) 97,752 178 (21) (351) 162,998
Net income - - - - 25,808 - - - 25,808
Purchase of common stock - - - - - - (58) (1,469) (1,469)
Shares issued under stock option
and stock purchase plans 127 2 1,630 - - - 78 1,818 3,450
Compensation expense related to
restricted stock plans - - - 1,414 - - - - 1,414
Income tax benefit arising from
transactions in common stock
options - - 590 - - - - - 590
Foreign currency translation
adjustment - - - - - (2,892) - - (2,892)
------ ---- -------- ------- -------- ------- --- ------- --------
Balances, December 31, 1992 15,264 153 72,345 (3,443) 123,560 (2,714) (1) (2) 189,899
Net income - - - - 38,474 - - - 38,474
Shares issued upon conversion
of convertible subordinated
debentures 3,310 33 84,167 - - - - - 84,200
Shares issued under restricted
stock plans 5 - 145 (145) - - - - -
Purchase of common stock - - - - - - (69) (2,406) (2,406)
Shares issued under stock option
and stock purchase plans 222 2 3,310 - - - 64 2,194 5,506
Compensation expense related to
restricted stock plans - - - 1,432 - - - - 1,432
Income tax benefit arising from
transactions in common stock
options - - 1,182 - - - - - 1,182
Foreign currency translation
adjustment - - - - - (1,327) - - (1,327)
------ ---- -------- ------- -------- ------- --- ------- --------
Balances, December 31, 1993 18,801 $188 $161,149 $(2,156) $162,034 $(4,041) (6) $ (214) $316,960
====== ==== ======== ======= ======== ======= === ======= ========
</TABLE>
31
<PAGE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation
SunGard Data Systems Inc. (the Company), through its wholly owned subsidiaries,
operates in a single industry segment providing computer services, principally
proprietary processing services and software to the financial services industry
and computer disaster recovery services. The consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany transactions and accounts have been eliminated.
Revenue Recognition
Revenues from disaster recovery, software maintenance and remote processing
services are recognized as the related service is provided. License fee revenues
from proprietary products are generally recognized upon the signing of a
contract and delivery of the product. In those instances where the Company
provides training, installation and other post-delivery services, a portion of
the contract price is deferred and recognized as the services are provided.
Revenues from fixed-fee contracts requiring a significant amount of program
modification or customization are recognized based on the estimated percentage
of completion. Changes in estimated costs during the course of the contract are
reflected in the period in which the facts become known.
Cash Equivalents and Short-Term Investments
Cash in excess of daily requirements is invested primarily in institutional
money market funds, commercial paper, time deposits, certificates of deposit and
short-term bonds. Investments purchased with a maturity of three months or less
are considered cash equivalents. Investments purchased with a maturity of more
than three months are considered short-term investments. All investments are
stated at cost, which approximates fair value.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist of temporary cash and short-term investments and trade
receivables. The Company places its temporary cash and short-term investments
with institutions of high credit quality and, by policy, limits the amount of
credit exposure to any one institution and industry. The Company sells a
significant portion of its products and services to the U.S. banking industry
and, although the Company could be directly affected by the well-being of the
U.S. banking industry in general, the Company does not believe significant
credit risk existed at December 31, 1993. Trade receivables are stated at
estimated net realizable value, which approximates fair value.
Property and Equipment
Property and equipment are recorded at cost, and depreciation is provided on the
straight-line method over the estimated useful lives of the related assets (two
to eight years for equipment and ten to forty years for buildings and
improvements). Leasehold improvements are amortized ratably over their remaining
lease term or useful life, if shorter.
Foreign Currency Translation
The functional currency of each of the Company's foreign operations is the local
currency of the country in which the operation is headquartered. Accordingly,
all assets and liabilities are translated into U.S. dollars using exchange rates
in effect at the balance sheet date. Revenues and expenses are translated using
average exchange rates during the period. Increases and decreases in net assets
resulting from foreign currency translation are reported as a separate component
of stockholders' equity. Transaction gains and losses are included in the
results of operations and are not material.
33
<PAGE>
Software Development and Product Costs
Product development costs are charged to expense as incurred and consist
primarily of design and development costs of new products and significant
enhancements incurred prior to the establishment of a product's technological
feasibility and of routine maintenance of proprietary software products.
Costs associated with purchased software, software acquired through business
acquisitions, and new products and enhancements to existing products that meet
technological feasibility and recoverability tests are capitalized and amortized
over the estimated useful lives of the related products, generally five to ten
years, using the straight-line method or the ratio of current revenues to
current and anticipated revenues from such software, whichever provides the
greater amortization. Amortization of all software products aggregated
$8,564,000,$7,227,000 and $6,955,000 during 1993, 1992 and 1991, respectively.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets
acquired and is amortized on the straight-line method over periods ranging from
ten to forty years.
Other Intangible Assets
Other intangible assets consist primarily of certain acquired contract rights,
which are amortized on the straight-line method over their estimated remaining
lives, not exceeding twenty years.
Income Taxes
Effective January 1, 1992, the Company implemented Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial and tax bases of assets
and liabilities using the currently enacted tax rates in effect during the years
in which the differences are expected to reverse. The impact of implementing the
provisions of Statement No. 109 did not have a material effect upon the
Company's financial position or its results of operations.
Prior to 1992, the provision for income taxes was computed based on income and
expenses included in the accompanying Consolidated Statements of Income.
Differences between taxes computed based on financial statement income and taxes
payable under applicable tax regulations were recorded as deferred tax assets
and liabilities arising from timing differences.
Net Income Per Share
Primary net income per share is computed by dividing net income by the weighted-
average number of common and common-equivalent shares outstanding.
Fully diluted net income per share is computed based on the assumption that
all of the Company's convertible subordinated debentures were converted into
common shares on the date of issue (see Note 4). For purposes of calculating
fully diluted net income per share, net income is increased by the assumed
incremental after-tax interest savings, and the weighted-average number of
shares outstanding is increased by the additional common shares assumed to be
issued upon conversion of the subordinated debentures.
2. Acquisitions and Dispositions
Purchase Transactions and Product Line Sale
During 1993, the Company completed eight business acquisitions. Four
acquisitions were in the Company's investment support systems business and four
were in its disaster recovery services business. Total cash paid in connection
with the acquisitions was approximately $30,808,000, subject to certain
adjustments. Goodwill recorded in connection with these acquisitions was
approximately $11,700,000.
On February 5, 1993, the Company sold its automotive dealership systems product
line, resulting in an after-tax gain of $3,371,000, or $0.18 per share, on a
fully diluted basis.
34
<PAGE>
Effective October 31, 1992, the Company completed the acquisition of AJL
Holding AB (AJL), of Stockholm, Sweden, whose subsidiary Front Capital Systems
AB is a developer and marketer of one of the world's leading front-office and
analysis systems for exchange-traded and equity derivatives. The purchase
price was approximately $7,900,000 in cash, plus a contingent payment of up to
50,000,000 Swedish Kronor (approximately $6,000,000 at December 31, 1993)
depending upon AJL achieving certain financial results during the forty-two-
month period ending April 30, 1996. The Consolidated Statements of Income
include the results of AJL from November 1, 1992. Goodwill recorded in
connection with this acquisition was approximately $4,200,000.
On July 31, 1992, the Company completed the acquisition of Shaw Data Services,
Inc. and its affiliates (Shaw), the largest domestic provider of portfolio
management and performance measurement systems and computer services to
institutional investment organizations and investment advisors. The initial
purchase price was approximately $14,500,000 in cash, subject to certain
adjustments, plus a contingent payment of up to $15,000,000 depending upon Shaw
achieving certain financial results during the three-year period ending July 31,
1995. The Consolidated Statements of Income include the results of Shaw from
August 1, 1992. Goodwill recorded in connection with this acquisition was
approximately $5,300,000.
During 1991, the Company paid a total of approximately $8,900,000 in connection
with three acquisitions, one for each of its product groups.
Pro forma combined results of operations are not presented since the results of
operations as reported in the accompanying Consolidated Statements of Income
would not be materially different.
3. Property and Equipment
Property and equipment consist of the following at
December 31 (in thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Computer and telecommunications
equipment $101,543 $ 86,937
Leasehold improvements 21,771 20,031
Office furniture and equipment 19,102 17,266
Buildings and improvements 14,071 9,549
Land 2,491 1,427
Construction in progress 3,676 2,230
-------- --------
162,654 137,440
Accumulated depreciation and
amortization (85,098) (77,863)
-------- --------
$ 77,556 $ 59,577
======== ========
</TABLE>
4. Long-Term Debt
Long-term debt consists of the following at December 31
(in thousands):
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Convertible subordinated debentures,
net of unamortized debt issue
costs $ -- $ 84,141
Amount due former owners of
acquired businesses 2,705 2,857
Other, primarily capital lease
obligations for computer equip-
ment and buildings, interest
ranging from 5.3% to 11% 3,818 2,792
------- --------
6,523 89,790
Less current maturities (3,162) (3,147)
------- --------
$ 3,361 $ 86,643
======= ========
</TABLE>
On April 22, 1993, the Company issued a Notice of Redemption for all of its
$86,250,000 convertible subordinated debentures (Debentures). On May 12, 1993,
$86,055,000 of the Debentures were converted into 3,309,803 shares of common
35
<PAGE>
stock of the Company at a conversion price of $26.00 per share. On May 24,
1993, the balance of $195,000 was redeemed at par plus a premium of 5.78%. On
a pro forma basis, had the Debentures been converted on January 1, 1993,
primary earnings per share would have approximated earnings per share on a
fully diluted basis.
On April 15, 1993, the Company entered into two unsecured revolving credit
agreements (Credit Agreements) that provide for up to $25,000,000 of revolving
credit for a three-year period (renewable on an annual basis at the lenders'
option) at an interest rate based upon LIBOR plus 0.75%, the CD rate plus
0.875%, or the Prime rate, at the Company's option. In order to remain
eligible for borrowing under the Credit Agreements, the Company must, among
other requirements, maintain a defined minimum tangible net worth and limit
its other unsubordinated debt. There has been no borrowing under the Credit
Agreements through December 31, 1993.
Annual maturities of long-term debt during the next five years are as follows:
1994-$3,162,000; 1995-$374,000; 1996-$358,000; 1997-$365,000 and 1998-
$365,000.
5. Stock Option and Award Plans
Employee Stock Purchase Plan
Under the Company's Employee Stock Purchase Plan, a maximum of 600,000 shares
of common stock may be issued to substantially all full-time employees.
Eligible employees may purchase a limited number of shares of common stock
each quarter through payroll deductions at a purchase price equal to 85% of
the closing price of the Company's common stock on the last business day of
each calendar quarter. During 1993, 1992 and 1991, employees purchased 64,000,
63,000 and 71,000 shares, respectively, at average purchase prices of $30.06,
$22.21 and $13.95 per share, respectively. At December 31, 1993, 269,000
common shares were reserved for issuance under this plan.
Restricted Stock Plans
On April 30, 1991, the stockholders approved the Company's Restricted Stock
Award Plan for Outside Directors (RSAP). The RSAP provides for awards of up to
100,000 shares of the Company's common stock. Each outside director will
automatically receive an initial award of 5,000 shares of the Company's common
stock upon election to the Company's Board of Directors and, upon reelection
as an outside director every fifth year thereafter, will automatically receive
another 5,000 shares. Shares awarded under the RSAP are subject to certain
transfer and forfeiture restrictions that lapse over a five-year vesting
period. During 1993 and 1991, RSAP awards of 5,000 and 29,000 shares,
respectively, were granted at weighted-average market values of $29.00 and
$17.02 per share, respectively. There were no awards during 1992.
On May 1, 1990, the stockholders approved the Company's Restricted Stock
Incentive Plan (RSIP). The RSIP provides for awards of up to 400,000 shares of
the Company's common stock to key management employees. Shares awarded under
the RSIP are subject to certain transfer and forfeiture restrictions that
lapse over a five-year vesting period. During 1991, RSIP awards of 4,000
shares were granted at a weighted-average market value of $17.75 per share.
There were no awards during 1993 or 1992.
Unearned compensation expense related to the restricted stock plans is
reported as a reduction of stockholders' equity in the accompanying
consolidated financial statements. For accounting purposes, compensation
expense is recorded ratably over the five-year period during which the shares
are subject to transfer and forfeiture restrictions and is based on the market
value on the award date less the par value of the shares awarded. Compensation
expense related to these plans aggregated $1,432,000, $1,414,000 and
$1,450,000 for the years ended December 31, 1993, 1992 and 1991, respectively.
36
<PAGE>
Stock Option Plans
Under the Company's 1986 Stock Option Plan, options to purchase up to
1,000,000 shares of the Company's common stock may be issued to officers and
key employees. These options may be either incentive stock options or
nonqualified stock options, and the option price must be at least equal to the
fair value of the Company's common stock on the date of grant. Options are
granted for a ten-year term and become fully exercisable one year from the
date of grant, subject to five-year vesting schedules.
Under the Company's 1982 Incentive Stock Option Plan, employees were granted
options to purchase up to 1,047,000 shares of the Company's common stock at
100% of the fair value of the stock on the date of grant. Options were granted
for a ten-year term and became exercisable in five cumulative annual
installments of 20%, commencing one year from the date of grant.
The table below summarizes transactions under the Company's 1986 and 1982
stock option plans.
<TABLE>
<CAPTION>
Shares
-----------------------
Under
Available Option
--------- --------
<S> <C> <C>
Balances at December 31, 1990 ($0.70 - $22.38 per share) 197,000 779,000
Canceled ($14.00 - $22.38 per share) 281,000 (281,000)
Granted ($14.00 - $17.75 per share) (288,000) 288,000
Exercised ($4.17 - $13.25 per share) - (11,000)
-------- --------
Balances at December 31, 1991 ($0.70 - $18.00 per share) 190,000 775,000
Expired (43,000) -
Granted ($22.38-$28.38 per share) (95,000) 95,000
Exercised ($4.17 - $18.00 per share) - (88,000)
-------- --------
Balances at December 31, 1992 ($0.70 - $28.38 per share) 52,000 782,000
Authorized 250,000 -
Canceled ($10.00 - $29.00 per share) 40,000 (40,000)
Granted ($29.00 - $39.00 per share) (65,000) 65,000
Exercised ($0.70 - $23.38 per share) - (123,000)
-------- --------
Balances at December 31, 1993 ($5.00 - $39.00 per share) 277,000 684,000
======== ========
Options exercisable at December 31, 1993 561,000
========
</TABLE>
Under the Company's 1988 Non-Qualified Stock Option Plan (the 1988 Plan),
options to purchase up to 200,000 shares of the Company's common stock may be
issued to officers and key employees of the Company at a price equal to the
lower of $8.00 per share or 50% of the fair value of the Company's common
stock on the date of grant. Stock appreciation rights may be granted with
respect to options granted or outstanding. Upon exercise of stock appreciation
rights, the holder will receive cash, common stock or a combination thereof,
as determined by the Compensation Committee of the Board of Directors, equal
to the difference between the increase in the market value and the underlying
option price. Options and stock appreciation rights granted under the 1988
Plan expire ten years and five days from the date of grant.
37
<PAGE>
Under a compensation arrangement with an executive officer of the Company, the
executive had the right to receive options to purchase common stock of the
Company under the 1988 Plan based on performance during the four-year period
ended December 31, 1992. Based upon achieving the goals which were established
in 1988, the executive received options to purchase a total of approximately
159,000 shares of the Company's common stock at $8.00 per share. Compensation
expense related to this agreement was charged to income over the period earned
and aggregated $1,264,000 and $467,000 for the years ended December 31, 1992
and 1991, respectively. There were no options granted during 1993.
6. Savings Plans
The Company and its subsidiaries maintain savings plans that cover
substantially all employees. These plans generally provide that the Company
will contribute a certain percentage of employee compensation or contributions
up to a specified level. Company contributions charged to income under these
plans aggregated $3,092,000, $2,466,000 and $1,972,000 for the years ended
December 31, 1993, 1992 and 1991, respectively.
7. Income Taxes
Effective January 1, 1992, the Company implemented Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." The
implementation of the provisions of Statement No. 109 did not have a material
effect upon the Company's financial position or results of operations. Prior-
year financial statements have not been restated to apply the provisions of
Statement No. 109.
Statement No. 109 requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements or tax returns. Deferred tax assets and liabilities
are determined based on the difference between financial and tax bases of
assets and liabilities using currently enacted tax rates in effect during the
years in which the differences are expected to reverse.
The provisions for income taxes for the years ended December 31, 1993, 1992
and 1991 consist of the following (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current
Federal $18,592 $17,425 $16,285
State 5,415 5,130 3,877
------- ------- -------
24,007 22,555 20,162
------- ------- -------
Deferred
Federal 479 (2,306) (2,680)
State 231 (642) (615)
------- ------- -------
710 (2,948) (3,295)
------- ------- -------
$24,717 $19,607 $16,867
======= ======= =======
</TABLE>
The principal sources of temporary differences for 1993 and 1992 and timing
differences for 1991 that gave rise to deferred taxes and their tax effects
for the years ended December 31, 1993, 1992 and 1991 follow (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Accrued liabilities not currently
deductible $ 1,982 $(1,619) $(1,632)
Restricted stock plans (541) (509) (502)
Software development costs 360 76 (414)
Depreciation and amortization (3) (500) (449)
Allowance for doubtful accounts (1,041) (376) (302)
Other, net (47) (20) 4
------- ------- -------
$ 710 $(2,948) $(3,295)
======= ======= =======
</TABLE>
38
<PAGE>
Differences between income tax expense at the statutory U.S. federal income
tax rate and the Company's effective tax rate are as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Tax at federal statutory rate $22,117 $15,441 $13,034
State income taxes, net of federal benefit 3,670 2,962 2,153
Amortization of intangible assets 1,009 1,013 1,089
Tax-free interest (817) (818) --
Foreign taxes 210 160 80
Product line sale (1,013) -- --
Other, net (459) 849 511
------- ------- -------
$24,717 $19,607 $16,867
======= ======= =======
Effective income tax rate 39.1% 43.2% 44.0%
======= ======= =======
</TABLE>
Deferred taxes are recorded based upon differences between financial statement
and tax bases of assets and liabilities. The following deferred taxes were
recorded as of December 31, 1993 and 1992 (in thousands):
<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Current
Accounts receivable $ 2,927 $ 1,796
Accrued compensation and benefits 2,572 3,228
Other accrued expenses 797 1,868
Restricted stock plans (606) (565)
------- -------
$ 5,690 $ 6,327
======= =======
Long-Term
Property and equipment $ (654) $ (141)
Intangible assets (5,811) (10,342)
Restricted stock plans (300) (815)
------- --------
$(6,765) $(11,298)
======= ========
</TABLE>
8. Royalty Income
In 1986, the Company sold a software product to Electronic Data Systems
Corporation (EDS). Under the terms of the agreement, EDS made an initial
payment of $2,000,000 and agreed to pay additional royalties of $10,000 per
system installation licensed by EDS, up to a maximum of $15,000,000.
The accompanying Consolidated Statements of Income include revenues of
$632,000, $1,189,000 and $1,911,000 derived from EDS for the years ended
December 31, 1993, 1992 and 1991, respectively. Cumulative royalties
recognized under this agreement were $8,670,000 at December 31, 1993.
9. Export Sales
The Company's domestic operations recorded revenues from international
software license, maintenance and professional services of approximately
$29,061,000, $32,501,000 and $28,177,000 for the years ended December 31,
1993, 1992 and 1991, respectively.
10. Commitments
The Company leases a substantial portion of its computer equipment and
facilities under operating leases. Future minimum rentals under operating
leases with initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1993 follow (in thousands):
<TABLE>
<S> <C>
1994 $ 38,012
1995 29,817
1996 17,467
1997 10,841
1998 7,053
Thereafter 9,441
--------
$112,631
========
</TABLE>
Rent expense aggregated $40,914,000, $38,130,000 and $37,923,000 for the years
ended December 31, 1993, 1992 and 1991, respectively.
Equipment and software maintenance expense aggregated $15,117,000, $11,763,000
and $9,953,000 for the years ended December 31, 1993, 1992 and 1991,
respectively.
39
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Selected Financial Information *
In thousands, except per share amounts
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data
Revenues $201,093 $262,108 $283,550 $324,570 $381,372
Income from operations 28,022 40,330 42,491 50,336 59,645
Net income 17,119 20,480 21,467 25,808 38,474
Dividends on preferred stock 32 -- -- -- --
Net income per share:
Primary 1.22 1.35 1.40 1.65 2.14
Fully diluted 1.22 1.34 1.36 1.59 2.09
Balance Sheet Data
Total assets $193,430 $302,687 $313,459 $365,580 $418,135
Total notes payable and long-term debt 37,287 109,232 87,820 89,790 6,523
Stockholders' equity 116,178 140,266 162,998 189,899 316,960
</TABLE>
*See Note 2 of Notes to Consolidated Financial Statements. 1993 includes after-
tax gain on sale of product line of $3,371, or $0.18 per share, on a fully
diluted basis.
40
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REPORT
<TABLE>
<CAPTION>
NUMBER DOCUMENT
- ------ ---------------------------------------------------------------------
<S> <C>
10.16 The Company's 1994 Equity Incentive Plan./(1)/
10.17 Summary Description of the Company's Annual Executive Incentive
Compensation Program./(1)/
10.18 Summary Description of the Company's Long-Term Executive Incentive
Compensation Plan./(1)/
11.1 Statement Re Computation of Per Share Earnings.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants, regarding the Company's
consolidated financial statements and financial statement schedules
(included at page 21 of this Report).
</TABLE>
- -----------
(1) Management contract or compensatory plan or arrangement.
<PAGE>
Exhibit 10.16
SunGard Data Systems Inc.
1994 Equity Incentive Plan
- -------------------------------------------------------------------------------
1. Purpose
The purpose of the SunGard Data Systems Inc. Equity Incentive Plan (the
"Plan") is to promote the long-term retention of key employees of SunGard Data
Systems Inc., ("SunGard") and its current and future subsidiaries (collectively,
the "Company") and other persons or entities who are in a position to make
significant contributions to the success of the Company, to further reward these
employees and other persons and entities for their contributions to the
Company's success, to provide additional incentive to these employees and other
persons and entities to continue to make similar contributions in the future,
and to further align the interests of these employees and other persons and
entities with those of SunGard's stockholders. These purposes will be achieved
by granting to such employees and other persons or entities, in accordance with
the provisions of this Plan, Options, Stock Appreciation Rights, Restricted
Stock or Unrestricted Stock Awards, Deferred Stock Awards or Performance Awards,
for shares of SunGard's common stock, $0.01 par value per share ("Common
Stock"), or Loans or Supplemental Grants, or combinations thereof ("Awards").
2. Aggregate Number of Shares
2.1 The aggregate number of shares of Common Stock for which Awards may be
granted under the Plan will be 500,000 shares, with an individual limit of
100,000 shares per Participant per year. Notwithstanding the foregoing, if
there is any change in the capitalization of SunGard, such as by stock dividend,
stock split, combination of shares, exchange of securities, recapitalization or
other event which the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of SunGard deems, in its sole discretion, to be similar
circumstances, the aggregate number and/or kind of shares for which Awards may
be granted under the Plan shall be appropriately adjusted in a manner determined
by the Committee. No fractional shares of Common Stock will be delivered under
the Plan.
2.2 Treasury shares, reacquired shares and unissued shares of Common Stock
may be used for purposes of the Plan, at SunGard's sole discretion.
2.3 Shares of Common Stock that were issuable pursuant to an Award that
has terminated but with respect to which such Award had not been exercised,
shares of Common Stock that are issued pursuant to an Award but that are
subsequently forfeited, and shares of Common Stock that were issuable pursuant
to an Award that was payable in Common Stock or cash but that was satisfied in
cash, shall be available for future Awards under the Plan.
3. Eligible Employees and Participants
3.1 All current and future key employees of the Company, including
officers and directors who are employed by the Company ("Employees"), and all
other persons or entities, including directors of the Company who are not
Employees, who, in the opinion of the Committee, are in a position to make a
significant contribution to the success of the Company,
<PAGE>
shall be eligible to receive Awards under the Plan. Members of the Committee
shall not be eligible to receive Awards. No eligible Employee or other person
or entity (a "Participant") shall have any right to receive an Award except as
expressly provided in the Plan.
3.2 The key employees and other persons or entities who shall actually
receive Awards under the Plan shall be determined by the Committee in its sole
discretion. In making such determinations, the Committee shall consider the
positions and responsibilities of eligible employees and other persons or
entities, their past performance and contributions to the Company's growth and
expansion, the value of their services to the Company, the difficulty of finding
qualified replacements, and such other factors as the Committee deems pertinent
in its sole discretion.
4. Administration
4.1 The Plan shall be administered by the Committee. Each member of the
Committee shall be a "disinterested person" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "1934 Act"). In
addition to its other authority and subject to the provisions of the Plan, the
Committee shall have the authority to determine, in its sole discretion, the
Participants who shall be eligible to receive Awards, the Participants who shall
actually receive Awards, the size of each Award, including the number of shares
of Common Stock subject to the Award, the type or types of each Award, the date
on which each Award shall be granted, the terms and conditions of each Award,
whether to waive compliance by a Participant with any obligations to be
performed by the Participant under an Award or waive any term or condition of an
Award, whether to amend or cancel an existing Award in whole or in part (except
that the Committee may not, without the consent of the holder of an Award or
unless specifically authorized by the terms of an Award, take any action under
this clause with respect to such Award if such action would adversely affect the
rights of such holder), and the form or forms of instruments that are required
or deemed appropriate under the Plan, including any written notices and
elections required of Participants.
4.2 The Committee may adopt such rules for the administration of the Plan
as it deems necessary or advisable, in its sole discretion. For all purposes of
the Plan, a majority of the members of the Committee shall constitute a quorum,
and the vote or written consent of a majority of the members of the Committee on
a particular matter shall constitute the act of the Committee on that matter.
The Committee shall have the exclusive right to construe the Plan and any Award,
to settle all controversies regarding the Plan or any Award, to correct defects
and omissions in the Plan and in any Award, and to take such further actions as
the Committee deems necessary or advisable, in its sole discretion, to carry out
the purpose and intent of the Plan. Such actions shall be final, binding and
conclusive upon all parties concerned.
4.3 No member of the Committee or the Board shall be liable for any act or
omission (whether or not negligent) taken or omitted in good faith, or for the
good faith exercise of any authority or discretion granted in the Plan to the
Committee or the Board, or for any act or omission of any other member of the
Committee or the Board.
4.4 All costs incurred in connection with the administration and operation
of the Plan shall be paid by the Company. Except for the express obligations of
the Company under the
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Plan and under Awards granted in accordance with the provisions of the Plan, the
Company shall have no liability with respect to any Award, or to any Participant
or any transferee of shares of Common Stock from any Participant, including, but
not limited to, any tax liabilities, capital losses, or other costs or losses
incurred by any Participant or any such transferee.
5. Types of Awards
5.1 Options.
(a) An Option is an Award entitling the recipient on exercise thereof
to purchase Common Stock at a specified exercise price. Both "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") (any Option intended to qualify as an incentive stock
option being hereinafter referred to as an "ISO"), and Options that are not
incentive stock options, may be granted under the Plan. ISOs shall be awarded
only to Employees.
(b) The exercise price of an Option will be determined by the
Committee subject to the following:
(1) The exercise price of an ISO shall not be less than
100% (110% in the case of an ISO granted to a ten percent shareholder) of the
fair market value of the Stock subject to the Option, determined as of the
time the Option is granted. A "ten-percent shareholder" is any person who at
the time of grant owns, directly or indirectly, or is deemed to own by reason
of the attribution rules of Section 424(d) of the Code, stock possessing more
than 10% of the total combined voting power of all classes of stock of SunGard
or of any of its subsidiaries.
(2) In no case may the exercise price paid for Common Stock
which is part of an original issue of authorized Common Stock be less than the
par value per share of the Common Stock.
(3) The Committee may reduce the exercise price of an
option at any time after the time of grant, but in the case of an Option
originally awarded as an ISO, only with the consent of the Participant.
(c) The period during which an Option may be exercised will be
determined by the Committee, except that the period during which an ISO may be
exercised will not exceed ten years (five years, in the case of an ISO granted
to a ten-percent shareholder) from the day immediately preceding the date the
Option was granted.
(d) An Option will become exercisable at such time or times, and on
such terms and conditions, as the Committee may determine. The Committee may at
any time accelerate the time at which all or any part of the Option may be
exercised. Any exercise of an Option must be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (1) any documents
required by the Committee and (2) payment in full in accordance with Section
5.1(e) below for the number of shares for which the Option is exercised.
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(e) Stock purchased on exercise of an Option must be paid for as
follows: (1) in cash or by check (acceptable to SunGard in accordance with
guidelines established for this purpose), bank draft or money order payable to
the order of SunGard or (2) if so permitted by the instrument evidencing the
Option (or in the case of an Option which is not an ISO, by the Committee at or
after grant of the Option), (i) through the delivery of shares of Common Stock
which have been outstanding for at least six months (unless the Committee
expressly approves a shorter period) and which have a fair market value on the
last business day preceding the date of exercise equal to the exercise price, or
(ii) by delivery of a promissory note of the Option holder to SunGard, payable
on such terms and conditions as the Committee may determine, or (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to SunGard sufficient funds to pay the exercise price, or (iv) by any
combination of the permissible forms of payment; provided, that if the Common
Stock delivered upon exercise of the Option is an original issue of authorized
Common Stock, at least so much of the exercise price as represents the par value
of such Common Stock must be paid other than by the Option holder's promissory
note.
(f) If the market price of shares of Stock subject to an Option
(other than an Option which is in tandem with a Stock Appreciation Right as
described in Section 6.2 below) exceeds the exercise price of the Option at the
time of its exercise, the Committee may cancel the Option and cause SunGard to
pay in cash or in shares of Common Stock (at a price per share equal to the fair
market value per share) to the person exercising the Option an amount equal to
the difference between the fair market value of the Common Stock which would
have been purchased pursuant to the exercise (determined on the date the Option
is canceled) and the aggregate exercise price which would have been paid. The
Committee may exercise its discretion to take such action only if it has
received a written request from the person exercising the Option, but such a
request will not be binding on the Committee.
5.2 Stock Appreciation Rights.
(a) A Stock Appreciation Right is an Award entitling the recipient on
exercise of the Right to receive an amount, in cash or Common Stock or a
combination thereof (such form to be determined by the Committee), determined in
whole or in part by reference to appreciation in Common Stock value. In general,
a Stock Appreciation Right entitles the Participant to receive, with respect to
each share of Common Stock as to which the Right is exercised, the excess of the
share's fair market value on the date of exercise over its fair market value on
the date the Right was granted. However, the Committee may provide at the time
of grant that the amount the recipient is entitled to receive will be adjusted
upward or downward under rules established by the Committee to take into account
the performance of the Common Stock in comparison with the performance of other
stocks or an index or indices of other stocks. The Committee may also grant
Stock Appreciation Rights that provide that following a Change in Control (as
defined in Section 6.3(b) hereof) the holder of such Right will be entitled to
receive, with respect to each share of Common Stock subject to the Right, an
amount equal to the excess of a specified value (which may include an average of
values) for a share of Common Stock during a period preceding such Change in
Control over the fair market value of a share of Common Stock on the date the
Right was granted.
(b) Stock Appreciation Rights may be granted in tandem with, or
independently of, Options granted under the Plan. A Stock Appreciation Right
granted in
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tandem with an Option which is not an ISO may be granted either at or after the
time the Option is granted. A Stock Appreciation Right granted in tandem with an
ISO may be granted only at the time the Option is granted.
(c) When Stock Appreciation Rights are granted in tandem with
Options, the following rules will apply:
(1) The Stock Appreciation Right will be exercisable only
at such time or times, and to the extent, that the related Option is
exercisable and will be exercisable in accordance with the procedure required
for exercise of the related Option.
(2) The Stock Appreciation Right will terminate and no
longer be exercisable upon the termination or exercise of the related Option,
except that a Stock Appreciation Right granted with respect to less than the
full number of shares covered by an Option will not be reduced until the
number of shares as to which the related Option has been exercised or has
terminated exceeds the number of shares not covered by the Stock Appreciation
Right.
(3) The Option will terminate and no longer be exercisable upon
the exercise of the related Stock Appreciation Right.
(4) The Stock Appreciation Right will be transferable only with
the related Option.
(5) A Stock Appreciation Right granted in tandem with an
ISO may be exercised only when the market price of the Stock subject to the
Option exceeds the exercise Price of such option.
(d) A Stock Appreciation Right not granted in tandem with an Option
will become exercisable at such time or times, and on such terms and conditions,
as the Committee may specify. The Committee may at any time accelerate the time
at which all or any part of the Right may be exercised. Any exercise of an
independent Stock Appreciation Right must be in writing, signed by the proper
person and delivered or mailed to SunGard, accompanied by any other documents
required by the Committee.
5.3 Restricted and Unrestricted Stock.
(a) A Restricted Stock Award entitles the recipient to acquire, for a
purchase price not less than the par value, shares of Common Stock subject to
the restrictions described in Section 5.3(d) below ("Restricted Stock").
(b) A Participant who is granted a Restricted Stock Award shall have
no rights with respect to such Award unless the Participant accepts the Award by
written instrument delivered or mailed to SunGard accompanied by payment in full
of the specified purchase price, if any, of the shares covered by the Award.
Payment may be by certified or bank check or other instrument acceptable to the
Committee.
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(c) A Participant who receives Restricted Stock shall have all the
rights of a stockholder with respect to the Stock, including voting and dividend
rights, subject to the restrictions described in paragraph (d) below and any
other conditions imposed by the Committee at the time of grant. Unless the
Committee otherwise determines, certificates evidencing shares of Restricted
Stock will remain in the possession of the Company until such shares are free of
all restrictions under the Plan.
(d) Except as otherwise specifically provided by the Plan or the
Award, Restricted Stock may not be sold, assigned, exchanged, pledged, gifted or
otherwise disposed of, or transferred, and if a Participant suffers a Status
Change (as defined in Section 6.1 below) for any reason, must be offered to
SunGard for purchase for the amount of cash paid for the Stock, or forfeited to
the Company if no cash was paid. These restrictions will lapse and the shares
will become unrestricted ("Unrestricted Stock") at such time or times, and on
such terms and conditions, as the Committee may determine. The Committee may at
any time accelerate the time at which the restrictions on all or any part of the
shares will lapse.
(e) Any Participant making, or required by an Award to make, an
election under Section 83(b) of the Code with respect to Restricted Stock shall
deliver to SunGard, within 10 days of the filing of such election with the
Internal Revenue Service, a copy of such election.
(f) The Committee may, at the time any Award described in this
Section 5 is granted, provide that any or all the Common Stock delivered
pursuant to the Award will be Restricted Stock.
(g) The Committee may, in its sole discretion, approve the sale to
any Participant of shares of Common Stock free of restrictions under the Plan
for a price which is not less than the par value of the Common Stock.
5.4 Deferred Stock. A Deferred Stock Award entitles the recipient to
receive shares of Common Stock to be delivered in the future. Delivery of the
Common Stock will take place at such time or times, and on such terms and
conditions, as the Committee may determine. The Committee may at any time
accelerate the time at which delivery of all or any part of the Common Stock
will take place. At the time any Award described in this Section 5 is
granted, the Committee may provide that, at the time Common Stock would
otherwise be delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the Participant's right to future delivery of
Deferred Stock.
5.5 Performance Awards. A Performance Award entitles the recipient to
receive, without payment, an Award or Awards described in this Section 5
following the attainment of such performance goals, during such measurement
period or periods, and on such other terms and conditions, all as the Committee
may determine. Performance goals may be related to overall corporate
performance, operating group or business unit performance, personal performance
or such other category of performance as the Committee may determine. Financial
performance may be measured by revenue, operating income, net income, earnings
per share, number of days sales outstanding in accounts receivable,
productivity, return on equity, common stock price, price-earnings multiple, or
such other financial factors as the Committee may determine.
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5.6 Loans and Supplemental Grants.
(a) The Company may make a loan to a Participant ("Loan"), either in
connection with the purchase of Common Stock under the Award or the payment of
any Federal, state and local income tax with respect to income recognized as a
result of the Award. The Committee shall have the authority, in its sole
discretion, to determine whether to make a Loan, the amount, terms and
conditions of the Loan, including the interest rate (which may be zero), whether
the Loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid and the terms and
conditions, if any, under which the Loan may be forgiven. In no event shall any
Loan have a term (including extensions) in excess of ten years.
(b) In connection with any Award, the Committee may grant a cash
award to the Participant ("Supplemental Grant") not to exceed an amount equal to
(1) the amount of any Federal, state and local income tax on ordinary income for
which the Participant may be liable with respect to the Award, determined by
assuming taxation at the highest marginal rate, plus (2) an additional amount on
a grossed-up basis intended to make the Participant whole on an after-tax basis
after discharging all the Participant's income tax liabilities arising from all
payments under this Section 5. Any payments under this Section 5(b) shall be
made at the time the Participant incurs Federal income tax liability with
respect to the Award.
6. Events Affecting Outstanding Awards
6.1. Termination of Service by Death or Disability. If a Participant who
is an Employee ceases to be an Employee, or if there is a termination of the
consulting, service or other relationship in respect of which a non-Employee
Participant was granted an Award hereunder (such termination of employment or
other relationship being hereinafter referred to as a "Status Change") by reason
of death or permanent disability (as determined by the Committee), the following
rules shall apply, unless otherwise determined by the Committee:
(a) All Options and Stock Appreciation Rights held by the Participant
at the time of such Status Change, to the extent then exercisable, will continue
to be exercisable by the Participant's heirs, executor, administrator or other
legal representative, for a period of one year after the Participant's Status
Change. After the expiration of such one-year period, all such Options and
Stock Appreciation Rights shall terminate. In no event, however, shall an
Option or Stock Appreciation Right remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section 6. All
Options and Stock Appreciation Rights held by a Participant at the time of such
Status Change that are not then exercisable shall terminate upon such Status
Change.
(b) All Restricted Stock held by the Participant at the time of such
Status Change shall immediately become free of all restrictions and conditions.
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award or Supplemental Grant to which the Participant was not irrevocably
entitled at the time of such Status Change shall be forfeited and the Award
canceled as of the time of such Status Change.
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6.2 Termination of Service Other Than by Death or Disability. If a
Participant suffers a Status Change other than by reason of death or permanent
disability (as determined by the Committee), the following rules shall apply,
unless otherwise determined by the Committee at the time of grant of an Award.
(a) All Options and Stock Appreciation Rights held by the Participant
at the time of such Status Change, to the extent then exercisable, will continue
to be exercisable by the Participant for a period of three months after the
Participant's Status Change. After the expiration of such three-month period,
all such Options and Stock Appreciation Rights shall terminate. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable beyond
the latest date on which it could have been exercised without regard to this
Section 6. All Options and Stock Appreciation Rights held by a Participant at
the time of such Status Change that are not then exercisable shall terminate
upon such Status Change.
(b) All Restricted Stock held by the Participant at the time of such
Status Change shall immediately become free of all restrictions and conditions,
unless such Status Change results from a voluntary resignation or termination
for Cause (as defined in Section 6.2(d)), in which event all Restricted Stock
held by the Participant at the time of the Status Change shall be transferred to
the Company (and, in the event the certificates representing such Restricted
Stock are held by the Company, such Restricted Stock shall be so transferred
without any further action by the Participant) in accordance with Section 5.3
above.
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant was not irrevocably
entitled at the time of such Status Change shall be forfeited and the Award
canceled as of the date of such Status Change.
(d) A termination by the Company of a Participant's employment with
or service to the Company shall be for "Cause" only if: (a) at least 75% of the
members of the Board determined that the Participant (i) was guilty of gross
negligence or willful misconduct in the performance of his or her duties for the
Company, or (ii) breached or violated, in a material respect, any agreement
between the Participant and the Company or any of the Company's policy
statements regarding conflicts-of-interest, insider trading or confidentiality,
or (iii) committed a material act of dishonesty or breach of trust; and (b) in
the case of a Participant who is an Employee, (i) such determination was made at
a duly convened meeting of the Board with respect to which the Participant
received at least 10 days prior written notice, had a reasonable opportunity to
make a statement and answer the allegations against him or her; and (ii) either
(A) the Participant was given a reasonable opportunity to take remedial action
but failed or refused to do so, or (B) at least 75% of the members of the Board
also determined, at such meeting, that an opportunity to take remedial action
would not have been meaningful under the circumstances.
(e) For all purposes of this Section 6.2 and Section 6.3, (a) if a
Participant is an Employee of a subsidiary of SunGard and such subsidiary ceases
to be a subsidiary of SunGard, then the Participant's employment with the
Company will be deemed to have been terminated by the Company without Cause,
unless the Participant is transferred to SunGard or another subsidiary of
SunGard; (b) the employment with the Company of a Participant who is an Employee
will not be deemed to have been terminated if the Participant is transferred
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from SunGard to a subsidiary of SunGard, or vice versa, or from one subsidiary
of SunGard to another; and (c) if a Participant who is an Employee terminates
his or her employment with the Company following a reduction in his or her rate
of compensation, then the Participant's employment with the Company will be
deemed to have been terminated by the Company without Cause.
6.3 Change in Control
(a) In the event of a Change in Control (as defined in Section
6.3(b)), the following rules will apply, unless otherwise expressly provided by
the Committee at the time of the grant of an Award or unless otherwise
determined by the Board in accordance with Section 6.3(c):
(1) Each outstanding Option and Stock Appreciation Right
shall automatically become exercisable in full six months after the occurrence
of such Change in Control or, if sooner, upon a termination by the Company of
the Participant's employment with or service to the Company for any reason
other than for Cause (as defined in Section 6.2(d)). This provision shall not
prevent an Option or Stock Appreciation Right from becoming exercisable sooner
as to Common Stock or cash that would otherwise have become available under
such Option or Right during such period.
(2) Each outstanding share of Restricted Stock shall
automatically become free of all restrictions and conditions six months after
the occurrence of such Change in Control or, if sooner, upon a termination by
the Company of the Participant's employment with or service to the Company for
any reason other than for Cause (as defined in Section 6.2(d)). This provision
shall not prevent the earlier lapse of any restrictions or conditions on
Restricted Stock that would otherwise have lapsed during such period.
(3) Conditions on Deferred Stock Awards, Performance
Awards and Supplemental Grants which relate only to the passage of time and
continued employment shall automatically terminate six months after the
occurrence of such Change in Control or, if sooner, upon a termination by the
Company of the Participant's employment with or service to the Company for any
reason other than for Cause (as defined in Section 6.2(d)). This provision
shall not prevent the earlier lapse of any conditions relating to the passage
of time and continued employment that would otherwise have lapsed during such
period. Performance or other conditions (other than conditions relating only
to the passage of time and continued employment) shall continue to apply
unless otherwise provided in the instrument evidencing the Awards or in any
other agreement between the Participant and the Company or unless otherwise
agreed to by the Committee.
(b) A "Change in Control" means: (i) the occurrence of an event that
would, if known to SunGard's management, be required to be reported by SunGard
under Item 1(a) of Form 8-K pursuant to the 1934 Act; or (ii) the acquisition or
receipt, in any manner, by any person (as defined for purposes of the 1934 Act)
or any group of persons acting in concert, of direct or indirect beneficial
ownership (as defined for purposes of the 1934 Act) of 20% or more of the
combined voting securities ordinarily having the right to vote for the election
of directors of SunGard; or (iii) a change in the constituency of the Board with
the result that individuals (the "Incumbent Directors") who are members of the
Board on the Effective Date
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(as specified in Section 9) cease for any reason to constitute at least a
majority of the Board, provided that any individual who is elected to the Board
after the Effective Date and whose nomination for election was unanimously
approved by the Incumbent Directors shall be considered an Incumbent Director
beginning on the date of his or her election to the Board; or (iv) the sale,
exchange or other disposition of all or a significant portion of the Company's
business or assets, or the execution by the Company of a binding agreement
providing for such a transaction.
(c) The provisions of Section 6.3(a) shall not apply to the extent
expressly determined by at least 75% of the Incumbent Directors at a duly
convened meeting of the Board held before the occurrence of a Change in Control.
7. Grant and Acceptance of Awards
7.1 The Committee's approval of a grant of an Award under the Plan,
including the names of Participants and the size of the Award, including the
number of shares of Common Stock subject to the Award, shall be reflected in
minutes of meetings held by the Committee or the Board or in written consents
signed by members of the Committee or the Board. Once approved by the
Committee, each Award shall be evidenced by such written instrument, containing
such terms as are required by the Plan and such other terms, consistent with the
provisions of the Plan, as may be approved from time to time by the Committee.
7.2 Each instrument may be in the form of agreements to be executed by
both the Participant and the Company, or certificates, letters or similar
instruments, which need not be executed by the Participant but acceptance of
which shall evidence agreement to the terms thereof. The receipt of an Award
shall not impose any obligation on the Participant to accept the Award.
7.3 Except as specifically provided by the Plan or the instrument
evidencing an Award, a Participant shall not become a stockholder of SunGard
until (i) the Participant makes any required payments in respect of the Common
Stock issued or issuable pursuant to the Award, (ii) the Participant furnishes
SunGard with any required agreements, certificates, letters or other
instruments, and (iii) the Participant actually receives the shares of Common
Stock. Subject to any terms and conditions imposed by the Plan or the
instrument evidencing an Award, upon the occurrence of all of the conditions set
forth in the immediately preceding sentence, a Participant shall have all rights
of a stockholder with respect to shares of Common Stock, including, but not
limited to, the right to vote such shares and to receive dividends and other
distributions paid with respect to such shares. The Committee may, upon such
conditions as it deems appropriate, provide that a Participant will receive a
benefit in lieu of cash dividends that would have been payable on any and all
Common Stock subject to the Participant's Award, had such Common Stock been
outstanding. Without limitation, the Committee may provide for payment to the
Participant of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Participant.
7.4 Notwithstanding any other provision of the Plan, the Company shall not
be obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove any restriction from shares of Common Stock previously delivered under
the Plan (a) until all
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conditions to the Award have been satisfied or removed, (b) until, in the
opinion of SunGard's General Counsel, all applicable Federal and state laws and
regulations have been complied with, (c) if the outstanding Common Stock is at
the time listed on any stock exchange or included for quotation on an inter-
dealer system, until the shares to be delivered have been listed or included or
authorized to be listed or included on such exchange or system upon official
notice of notice of issuance, (d) if it might cause SunGard to issue or sell
more shares of Common Stock than SunGard is then legally entitled to issue or
sell, and (e) until all other legal matters in connection with the issuance and
delivery of such shares have been approved by SunGard's General Counsel. If the
sale of Common Stock has not been registered under the Securities Act of 1933,
as amended, the Company may require, as a condition to exercise of an Award,
such representations or agreements as SunGard's General Counsel may consider
appropriate to avoid violation of such Act and may require that the certificates
evidencing such Common Stock bear an appropriate legend restricting transfer.
If an Award is exercised by the Participant's legal representative, the Company
shall be under no obligation to deliver Common Stock pursuant to such exercise
until the Company is satisfied as to the authority of such representative.
8. Tax Withholding
The Company shall withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all Federal, state and local withholding tax
requirements (the "withholding requirements"). In the case of an Award pursuant
to which Stock may be delivered, the Committee shall have the right to require
that the Participant or other appropriate person remit to the Company an amount
sufficient to satisfy the withholding requirements, or make other arrangements
satisfactory to the Committee with regard to such requirements, prior to the
delivery of any Common Stock. If and to the extent that such withholding is
required, the Committee may permit a Participant or such other person or entity
to elect at such time and in such manner as the Committee may determine to have
the Company hold back from the shares of Common Stock to be delivered, or to
deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement. If at the time an ISO is exercised, the Committee
determines that the Company could be liable for withholding requirements with
respect to a disposition of the Common Stock received upon exercise, the
Committee may require as a condition of exercise that the person exercising the
ISO agree (a) to inform the Company promptly of any disposition (within the
meaning of section 424(c) of the Code) of Common Stock received upon exercise,
and (b) to give such security as the Committee deems adequate to meet the
potential liability of the Company for the withholding requirements and to
augment such security from time to time in any amount reasonably deemed
necessary by the Committee to preserve the adequacy of such security.
9. Stockholder Approval, Effective Date and Term of Plan
The Plan was adopted by the Board on February 15, 1994, subject to the
approval of SunGard's stockholders. The Plan shall be submitted to SunGard's
stockholders for approval at SunGard's 1994 annual meeting of stockholders. If
such approval is not obtained at such meeting (or at any subsequent meeting at
which such approval is sought), then, at the discretion of the Board, this Plan
may be re-submitted to SunGard's stockholders for approval at any subsequent
annual meeting of stockholders or at any special meeting of stockholders
(including a special meeting that may be called solely for that purpose). The
Plan shall not
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become effective unless and until it is approved by the affirmative vote of the
holders of a majority of the outstanding shares of SunGard's Common Stock
represented and entitled to vote at a duly convened meeting of SunGard's
stockholders. If this Plan is so approved by SunGard's stockholders, then the
date of such approval shall be the effective date of this Plan ("Effective
Date"). No Award shall be granted more than ten years after the Effective Date.
10. Effect, Amendment, Suspension and Termination
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock may
be issued to Employees or other persons or entities. The Board reserves the
right, at any time and from time to time, to amend the Plan in any way, or to
suspend or terminate the Plan, effective as of the date specified by the Board
when it takes such action, which date may be before or after the date the Board
takes such action; provided that any such action shall not affect any Awards
granted before the actual date on which such action is taken by the Board; and
further provided that the approval of SunGard's stockholders shall be required
whenever necessary for the Plan to continue to satisfy the conditions of Rule
16b-3 under the 1934 Act, Section 422 of the Code with respect to the award of
ISO's (unless the Board determines that ISO's shall no longer be granted under
the Plan), any bylaw, rule or regulation of the primary market system or stock
exchange on which SunGard's Common Stock is then listed or admitted to trading,
or any other applicable law, rule or regulation.
11. Other Provisions
11.1 Nothing contained in the Plan or any Award shall confer upon any
Employee or other Participant the right to continue in the employ of, or to
continue to provide service to, the Company or any affiliated corporation, or
interfere in any way with the right of the Company or any affiliated corporation
to terminate the employment or service of any Employee or other Participant for
any reason.
11.2 Corporate action constituting an offer by SunGard of Common Stock to
any Participant under the terms of an Award shall be deemed completed as of the
date of grant of the Award, regardless of when the instrument, certificate, or
letter evidencing the Award is actually received or accepted by the Participant.
11.3 None of a Participant's rights under any Award or under the Plan may
be assigned or transferred in any manner other than by will or under the laws or
descent and distribution. The foregoing shall not, however, restrict a
Participant's rights with respect to Unrestricted Stock or the outright transfer
of cash, nor shall it restrict the ability of a Participant's heirs, estate,
beneficiaries, or personal or legal representatives to enforce the terms of the
Plan with respect to Awards granted to the Participant.
11.4 The Plan, and all Awards granted hereunder, shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. The
headings of the Sections of the Plan are for convenience of reference only and
shall not affect the interpretation of the Plan. All pronouns and similar
references in the Plan shall be construed
12
<PAGE>
to be of such number and gender as the context requires or permits. If any
provision of the Plan is determined to be unenforceable for any reason, then
that provision shall be deemed to have been deleted or modified to the extent
necessary to make it enforceable, and the remaining provisions of the Plan shall
be affected.
11.5 All notices with respect to the Plan shall be in writing and shall be
hand delivered or sent by certified mail or reputable overnight delivery
service, expenses prepaid. Notices to the Company or the Committee shall be
delivered or sent to SunGard's headquarters to the attention of its General
Counsel. Notices to any Participant or holder of shares of Common Stock issued
pursuant to an Award shall be sufficient if delivered or sent to such person's
address as it appears in the regular records of the Company or SunGard's
transfer agent.
11.6 If there is any change in the capitalization of SunGard, such as by
stock dividend, stock split, combination of shares, exchange of securities,
recapitalization or other event which the Committee deems, in its sole
discretion, to be similar circumstances, the Committee may make such adjustments
to the number and/or kind of shares of stock or securities subject to Awards
then outstanding or subsequently granted, any exercise prices relating to such
Awards and any other provision of such Awards affected by such change, as the
Committee may determine in its sole discretion. The Committee may also make
such adjustments to take into account material changes in law or in accounting
practices or principles, mergers, consolidations, acquisitions, dispositions or
similar corporate transactions, or any other event, as the Committee may
determine in its sole discretion.
11.7 The Committee may agree at any time, upon request of a Participant, to
defer the date on which any payment under an Award shall be made.
11.8 In any case that a Participant purchases Common Stock under an Award
for a price equal to the par value of the Common Stock, the Committee may
determine, in its sole discretion, that such price has been satisfied by past
services rendered by the Participant.
11.9 For the purposes of the Plan and any Award granted hereunder, unless
otherwise determined by the Committee, the term "fair market value" of Common
Stock on a specified date shall mean the last sale price for one share of Common
Stock on the last trading day on or before the specified date, as reported on
the National Association of Securities Dealers Automated Quotation
System/National Market System, or on such other primary market system or stock
exchange on which SunGard's Common Stock is then listed or admitted to trading,
or, if the foregoing does not apply, the market value determined by the
Committee.
THE UNDERSIGNED CERTIFIES THAT THIS PLAN WAS DULY APPROVED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS OF SUNGARD DATA SYSTEMS INC., AND WAS DULY
ADOPTED BY THE BOARD OF DIRECTORS OF SUNGARD DATA SYSTEMS INC., AT MEETINGS DULY
HELD ON THE FIFTEENTH DAY OF FEBRUARY, 1994.
/s/Lawrence A. Gross
----------------------------
LAWRENCE A. GROSS, SECRETARY
OF SUNGARD DATA SYSTEMS INC.
13
<PAGE>
Exhibit 10.17
SunGard Data Systems Inc.
Summary Description of the Company's
Annual Executive Incentive Compensation Program
SunGard Data Systems Inc. has an annual executive incentive compensation ("EIC")
program for its executive officers and other key management employees. The
principal purpose of this program is to link a significant portion of annual
cash compensation to financial results and other goals, so as to reward
successful performance.
Each participant's EIC program contains certain financial and/or business goals
as targets. These targets are established at the beginning of each year and
take into account the Company's overall financial and business goals for the
year. The EIC program for corporate officers generally is based upon targeted
rates of increase in the Company's net income over the previous year and,
sometimes, additional performance goals specific to the officer's function. For
the chief executive officers of the Company's operating business groups, the EIC
program targets generally are based upon budgeted operating income and average
number of days sales outstanding in accounts receivable of the business units
managed by the group chief executive officers. For other key management
employees, the EIC program targets are based upon financial and/or business
goals related to the business units they manage and, sometimes, additional
performance goals specific to their individual functions.
Generally, the EIC programs contain an incentive compensation amount related to
each target. If the target is achieved, then the related incentive compensation
amount is earned. For most financial goals, there are minimum, midpoint and
goal targets. The incentive amount related to the minimum and midpoint targets
usually are 25% and 50%, respectively, of the incentive amount related to the
goal target. If the actual result is less than the minimum target, then no
incentive amount is earned. If the actual result is between the minimum and
midpoint targets, or between the midpoint and goal targets, then the incentive
amount earned is calculated by interpolation. If the actual result is more than
the goal target, then the incentive amount earned is equal to the amount related
to the goal target plus, in some cases, an additional incentive amount based
upon the extent to which the goal was exceeded.
<PAGE>
Exhibit 10.18
SunGard Data Systems Inc.
Summary Description of the Company's
Long-Term Executive Incentive Compensation Plan
In 1994, SunGard Data Systems Inc. established a long-term incentive
compensation plan for the chief executive officers of its operating business
groups. The principal purposes of this plan are to further align the interests
of the group chief executive officers with those of the Company's stockholders
and to further reward successful performance. The scope of the plan may be
expanded in future years to include other executive officers and key employees.
The plan involves the grant of long-term executive incentive compensation awards
that will allow each group chief executive officer to earn options to purchase
shares of the Company's common stock, based upon the cumulative growth in his
group's operating income over three years. Stock options earned under the
awards will be nonqualified options (i.e., will not qualify as incentive stock
options for tax purposes), will be granted as of the first trading day after the
end of the three-year incentive period, will have a term of ten years beginning
on the date of grant, and will be fully vested beginning on the date of grant.
The number of stock options that may be earned under each award will depend upon
whether the cumulative operating income growth during the three-year incentive
period reaches certain minimum or goal targets. If the minimum target is not
achieved, then no options will be earned. If actual results are between the
minimum and goal targets, then the number of option shares will be determined by
interpolation, and the exercise price will equal the average of the last
reported sale prices of the Company's common stock on the first ten trading days
of the incentive period. If the goal target is exceeded, then the number of
option shares will be the goal amount, and the exercise price will be reduced
depending upon the amount by which the goal target was exceeded, subject to a
minimum price.
The initial long-term executive incentive compensation awards granted to the
group chief executive officers at the beginning of 1994 are subject to
stockholder approval of the Company's 1994 Equity Incentive Plan ("Incentive
Plan"), the plan under which the awards were granted. The Incentive Plan is
being submitted to the Company's stockholders for approval at the Company's 1994
annual meeting. If the Incentive Plan is approved by the stockholders, then the
Company currently plans, but will have no legal obligation or commitment, to
continue granting long-term executive incentive compensation awards, similar to
the initial awards, to the group chief executive officers on an annual basis,
subject to approval by the Compensation Committee of the Company's Board of
Directors. Like the initial awards, each of these annual awards would cover a
three-year incentive period. No other awards under the Incentive Plan are
currently planned, but others may be granted as determined by the Compensation
Committee of the Company's Board of Directors.
<PAGE>
Exhibit 11.1
SunGard Data Systems Inc.
Statement Re Computation of Per Share Earnings
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
PRIMARY:
Average shares outstanding........ 17,494 15,175 15,112
Dilutive stock options, net
of treasury shares.............. 464 472 263
------ ------ ------
Adjusted shares outstanding....... 17,958 15,647 15,375
====== ====== ======
Net income available to
common stockholders........... $38,474 $25,808 $21,467
======= ======= =======
Net income per share............. $2.14 $1.65 $1.40
===== ===== =====
FULLY DILUTED:
Average shares outstanding........ 17,494 15,175 15,112
Assumed conversion of 8 1/4%
subordinated debentures......... 1,206 3,317 3,317
Dilutive stock options, net
of treasury shares.............. 476 499 291
------- ------- -------
Adjusted shares outstanding....... 19,176 18,991 18,720
======= ======= =======
Net income available to
common stockholders............. $38,474 $25,808 $21,467
Assumed interest expense savings
on subordinated debentures,
net of related income taxes..... 1,565 4,337 4,065
------- ------- -------
Adjusted net income available
to common stockholders.......... $40,039 $30,145 $25,532
======= ======= =======
Net income per share............. $2.09 $1.59 $1.36
===== ===== =====
</TABLE>
<PAGE>
Exhibit 21.1
SunGard Data Systems Inc.
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Name of Subsidiary State of Incorporation
====================================================================
<S> <C>
Shaw Data Securities, Inc./(1)/ New York
- --------------------------------------------------------------------
Shaw Data Services, Inc./(1)(2)/ New York
- --------------------------------------------------------------------
SunGard Business Systems Inc./(1)(3)/ Alabama
- --------------------------------------------------------------------
SunGard Capital Markets Inc./(1)(4)/ Pennsylvania
- --------------------------------------------------------------------
SunGard Computer Services Inc./(5)/ Pennsylvania
- --------------------------------------------------------------------
SunGard Financial Systems Inc./(1)(6)/ Delaware
- --------------------------------------------------------------------
SunGard Institutional Investments Inc./(7)/ North Carolina
- --------------------------------------------------------------------
SunGard Investment Systems Inc./(1)/ Delaware
- --------------------------------------------------------------------
SunGard Investment Ventures, Inc./(8)(9)/ Delaware
- --------------------------------------------------------------------
SunGard Management Inc./(1)(9)/ Delaware
- --------------------------------------------------------------------
SunGard Planning Solutions Inc./(10)/ Pennsylvania
- --------------------------------------------------------------------
SunGard Recovery Services Inc./(1)(11)/ Pennsylvania
- --------------------------------------------------------------------
SunGard Shareholder Systems Inc./(1)/ Delaware
- --------------------------------------------------------------------
SunGard Trust Systems Inc./(1)/ North Carolina
- --------------------------------------------------------------------
</TABLE>
(1) Wholly owned subsidiary of SunGard Investment Ventures, Inc.
(2) Conducts certain operations through two wholly owned domestic subsidiaries
and two wholly owned foreign subsidiaries.
(3) Organized into, and conducts business under the names of, three operating
divisions--SunGard Asset Management Systems, SunGard Employee Benefit
Systems, and SunGard Mailing Services.
(4) Conducts certain operations through two wholly owned domestic subsidiaries
and fourteen wholly owned foreign subsidiaries.
(5) Wholly owned subsidiary of SunGard Management Inc.
(6) Sometimes conducts business under the names Money Management Systems, Phase3
Systems, Warrington Financial Systems and Wismer Associates; conducts
certain operations through two wholly owned domestic subsidiaries which
conduct business under the names Information Systems of America and SunGard
Digital Solutions Inc., respectively.
(7) Wholly owned subsidiary of SunGard Trust Systems Inc.
(8) Wholly owned subsidiary of SunGard Data Systems Inc.
(9) Not an operating company.
(10) Wholly owned subsidiary of SunGard Recovery Services Inc.
(11) Conducts certain operations through one wholly owned foreign subsidiary.
