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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, 1994 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 .
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The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant as of March 15, 1995 was $820,485,212.(1) There
were 18,750,103 shares of the registrant's Common Stock outstanding as of March
15, 1995.
Parts II and IV of this Form 10-K incorporate by reference certain information
from the registrant's annual report to stockholders for the fiscal year ended
December 31, 1994, and Part III of this Form 10-K incorporates by reference
certain information from the registrant's definitive proxy statement, for its
1995 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 15, 1995.
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..................................... 7
Computer Services.............................................. 9
Product Development............................................ 9
Acquisitions and Offerings..................................... 10
Competition.................................................... 11
Marketing...................................................... 11
Employees...................................................... 12
Proprietary Protection......................................... 12
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..................... 14
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PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters........................................................ 16
Item 6. Selected Financial Data.......................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 16
Item 8. Financial Statements and Supplementary Data...................... 16
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure......................... 16
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PART III
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Item 10. Directors and Executive Officers of the Registrant.................. 17
Item 11. Executive Compensation.............................................. 17
Item 12. Security Ownership of Certain Beneficial Owners and Management...... 17
Item 13. Certain Relationships and Related Transactions...................... 17
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PART IV
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Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K....................................................... 18
Signatures....................................................... 19
List of Exhibits................................................. 20
Consent of Independent Accountants............................... 22
Report of Independent Accountants on Schedule.................... 22
Financial Statement Schedule..................................... 23
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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 84% of the
Company's total revenues during the last three years (84% in 1994). 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 84% were renewed or replaced with new contracts (81% in 1994).
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 1994.
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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Investment Support Systems Disaster Computer
Recovery Services Services
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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, Comprehensive Remote
accounting management, investment accounting and business recovery access
systems for investment investment reporting and services for a variety computer
swaps, options, accounting and analysis systems for of mainframe and processing,
futures and other securities trading and portfolio managers; trust midrange computer outsourcing,
derivative accounting systems and global custody installations; work direct
instruments, for financial systems for financial group, mobile and marketing
foreign exchange institutions, institutions; shareholder quick ship recovery computer
and securities for broker/dealers, accounting systems for services; recovery services, and
international governments, mutual funds and transfer planning software automated
banks and other insurance companies agents; participant and related consulting mailing and
financial and corporations. accounting systems for and educational printing
institutions. retirement plan managers. services. services.
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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. 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 many are marketed internationally as well.
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 (two centers), Los Angeles, Minneapolis, Sydney and Voorhees (New Jersey)
(see Properties on page 12). As of December 31, 1994, the Company had
approximately 1,600 remote processing contracts in force. These contracts
generally have initial terms of one or more years and then continue for
successive, one-year renewal terms, although some allow the customer to
terminate on relatively short notice.
During the past four 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 1994, the
Company continued consolidating its investment support products. 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 1994, the Company continued to add multicurrency functionality to
its systems and pursue opportunities to market more of its systems
internationally.
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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System Hardware Platform Mode of Delivery Primary Markets
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INVEST ONE(R) IBM mainframe remote processing international
service and software banks, large bank
license trust departments,
--------------------------------------------- mutual funds,
UNIX workstation software license insurance
companies and
other financial
institutions
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ON-LINE(TM) Bull mainframe remote processing investment
service advisers,
------------------------------------------------------------- broker/dealers and
ON-SITE(TM) UNIX workstation software license other portfolio
managers
-------------------------------------------------------------
MICROSHAW(TM) microcomputer software license
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MONEYMAX(R)/ UNIX workstation remote processing government
SERIES 2(TM) service treasurers and
financial
institutions
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PAL(TM) IBM midrange remote processing U.K. stockbroking
service firms and fund
managers
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PMS(TM)/APS(TM) microcomputer software license small banks,
thrifts and
other financial
institutions
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PRISM(TM) IBM mainframe software license insurance
companies
-------------------------------------------------------------
SERIES 1(TM) microcomputer software license
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</TABLE>
During 1994, the Company continued to market INVEST ONE internationally by
licensing the system to financial institutions in Mexico, the Philippines and
the United Kingdom and by developing a unit trust processing enhancement to
support the mutual fund market in the United Kingdom. Also during 1994, the
Company completed SERIES 1, a Windows version of SERIES 2 for the insurance
market, and completed the conversion of MONEYMAX/SERIES 2 processing to UNIX
workstation technology. The Company expanded its portfolio management systems
product line in 1994 with the addition of PAL, which provides portfolio
valuation, management and record keeping services primarily to United Kingdom
stockbroking firms and fund managers (see Acquisitions and Offerings on
page 10).
The Company also markets certain accounting systems for insurance companies.
The current products are ABC(TM) (Accounting Budget and Cost System) and CDS(TM)
(Cash Disbursement System). In 1994, the Company signed a partnership agreement
with four major insurance companies for the joint development of the ENTERPRISE
ACCOUNTING SYSTEM(TM), a relational data base accounting system that will be a
successor product to ABC and CDS.
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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System Hardware Platform Mode of Primary Markets
Delivery
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BOLT(R) 1 & BOLT(R) 2 IBM mainframe remote capital markets
processing departments of
service domestic banks,
------------------------------------------------------------- broker/dealers
GSM(R) DEC VAX, UNIX software and other
workstation license financial
institutions
-------------------------------------------------------------
INTRADER(R) UNIX workstation software
license
-------------------------------------------------------------
MONEYMARKET II(R) DEC VAX remote
processing
service and
software
license
PHASE3(R) SYSTEM Tandem remote
processing
service and
software
license
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DEVON DERIVATIVES microcomputer, software trading room
SYSTEM(TM) UNIX workstation, DEC license and capital
VAX markets
departments of
international
banks, and
trading rooms of
other financial
institutions
-------------------------------------------------------------
DEVON FOREX UNIX workstation software
SYSTEM(TM) license
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DEVON FUTURES microcomputer, UNIX software
SYSTEM(TM) workstation, DEC license and
VAX remote
processing
service
-------------------------------------------------------------
DEVON SECURITIES microcomputer, software
SYSTEM(TM) UNIX workstation license
-------------------------------------------------------------
INTAS(TM) DEC VAX workstation, software
UNIX workstation license
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OPTAS(TM) DEC VAX workstation, software
UNIX workstation license
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In 1994, the Company licensed GSM GLOBAL SECURITIES MANAGER(R), a
multicurrency system for client-server environments designed to be used on
several platforms, to a number of new customers and continued development work
on the system. Also in 1994, the Company signed a multimillion dollar
development, license and facilities management agreement for an enhanced version
of the PHASE3 SYSTEM with a major Japanese brokerage firm (U.S. operations),
which had been a remote processing customer. The Company also entered into
an alliance with Goldman Sachs to offer mutual fund services to government,
insurance and bank capital markets customers. In February 1995, the Company
acquired the business of DML, a provider of securities lending and brokerage
accounting systems (see Acquisitions and Offerings on page 10).
The Company directly markets the DEVON DERIVATIVES, FOREX, FUTURES AND
SECURITIES SYSTEMS throughout the world, except in Japan where the systems are
exclusively marketed by a representative that is entitled to certain percentages
of the revenues generated from sales in Japan. The Company also markets DEVON
CONNECT(TM), a global trade routing, market data distribution and dealer support
system that incorporates Sybase SQL client-server technology.
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 those with
Sybase SQL client-server functionality,
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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.
The DEVON FOREX SYSTEM and INTAS are new products that were introduced in
1994. The DEVON FOREX SYSTEM is a deal capture and risk management system for
high volume foreign exchange and money market trading. INTAS provides trading,
risk management and processing for interest rate instruments. Also during 1994,
the Company released a Windows version of the DEVON DERIVATIVES SYSTEM and
several additional derivatives modules incorporating Sybase SQL client-server
technology. In addition, the Company entered into an alliance with the Chicago
Mercantile Exchange to create the world's first swaps collateral depository in
conjunction with the Society for Worldwide Interbank Financial Telecommunication
("SWIFT").
Trust and Global Custody Systems. The Company's trust systems automate the
investment, administrative and operations areas unique to the bank trust
business, including cash management, management and investment of assets,
preparation of tax returns for taxable trusts, payment of trust expenses,
payment of benefits to retirees, beneficiary distributions, customer statement
production, 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 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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System Hardware Platform Mode of Primary Markets
Delivery
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AUTOTRUST(R) IBM mainframe remote small and medium size
processing bank trust departments
service
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OMNITRUST(R) ES IBM mainframe software large and medium size
license and bank trust departments
remote
processing
service
--------------------------------------------------------------------------------
OMNI IC(TM) scalable, software bank global custody
multiplatform license departments
--------------------------------------------------------------------------------
MICROTRUST(R) microcomputer software small bank trust
license departments
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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 1994, the Company introduced OMNI IC, a scalable, multiplatform,
multicurrency, multilingual global custody system with SWIFT-access features.
The Company obtained exclusive, worldwide marketing rights to OMNI IC from the
original developer of the system and is obligated to pay certain percentages of
the revenues generated by this system to the original developer.
The Company also markets EXPEDITER(TM), a product that facilitates the
automated entry of mutual fund transactions. EXPEDITER was introduced in 1993
and, throughout 1994, it continued to expand its selection of mutual funds and
to gain market acceptance.
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,
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tabulate votes, and produce tax reports and periodic shareholder statements.
The Company's principal software products in this category are:
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SYSTEM HARDWARE PLATFORM MODE OF DELIVERY PRIMARY MARKETS
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INVESTAR(R) IBM mainframe remote processing large mutual fund
service managers and transfer
agents
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SUNSTAR(R) IBM mainframe remote processing large bank, corporate
------------------- service and and utility stock and
UNIX workstation software license bond transfer agents
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In 1994, the Company put into production a significant enhancement to INVESTAR
named the DEALER TRADE SYSTEM(SM), which further automates and improves the
system's handling of mutual fund buy and sell orders. Additionally, the Company
continued development of the UNIX version of SUNSTAR.
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 benefits to retirees, and produce tax reports for plan sponsors and
participants. The Company's principal participant accounting systems are:
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SYSTEM HARDWARE PLATFORM MODE OF DELIVERY PRIMARY MARKETS
================================================================================
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OMNIPLAN(R) IBM mainframe remote processing corporate, bank and
OMNIPAY(R) service, software other retirement plan
license and full managers
service bureau
processing
------------------------------------------
IBM AS/400 software license
------------------------------------------
microcomputer software license
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PLAN ONE(R) IBM mainframe remote processing bank retirement plan
service and managers
software license
--------------------------------------------------------------------------------
MPR(TM) microcomputer software license small and medium size
banks
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During 1994, the Company continued development of OMNIPLUS(TM), which will
succeed OMNIPLAN and be the Company's next generation participant accounting
system. Planned to be introduced during 1995, OMNIPLUS will support both defined
contribution and defined benefit retirement plans.
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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System Hardware Platform Mode of Primary Markets
Delivery
================================================================================
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DATAPREP(TM) IBM mainframe remote processing corporate, bank and
EMBERS(R) service and other retirement
software license plan managers
---------------------------------------------------------
SUPERF4(R) IBM mainframe, remote processing
UNIX workstation service and software
license
--------------------------------------------------------------------------------
OMNISTATION(TM) UNIX workstation software license large and medium
size banks
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</TABLE>
Document-Imaging and Work-Flow. During 1994, the Company acquired
PowerImage(R), a document-imaging and work-flow software system (see
Acquisitions and Offerings on page 10). PowerImage uses electronic document-
imaging in a manner that enables improved work-flow and enhanced levels of
service and efficiency. During 1994, this new product was marketed primarily to
the Company's shareholder accounting system customers. The Company believes that
document-imaging and work-flow capability is fast becoming an important tool
that will be increasingly integrated into other investment support systems.
Disaster Recovery Services
Many businesses depend upon computers to perform critical tasks and 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 installed computer equipment.
The Company also provides environmentally prepared computer centers known as
"coldsites," in which customers may install and operate their own computer
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.
The Company also provides general office space equipped with office equipment,
which customers may use alone or in conjunction with the use of a hotsite or
coldsite. This product line, known as Work Group Recovery(SM), also includes
MegaVoice(SM), a centralized voice communications recovery service that backs up
customers' automated telephone call distribution systems.
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 general office 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 provides disaster recovery services to users of IBM (and
compatible) mainframe computers and also to users of DEC, Hewlett Packard, IBM
midrange (AS/400, RS/6000 and Systems/3X), NCR, Prime, Sequent, Stratus, Sun
Microsystems, Tandem 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 1994,
the Company continued to expand its disaster recovery offerings to users of
midrange computers and
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further enlarged its midrange sales force. This effort was enhanced by two
acquisitions that increased the number of customer contracts for midrange
computer facilities (see Acquisitions and Offerings on page 10). Also in 1994,
the Company continued to expand its marketing partner program by establishing
alliances with numerous hardware providers and others and by signing certain
agreements with third parties to expand and enhance its recovery services and
capabilities.
During 1994, for the ninth consecutive year, the Company successfully
supported all customers who experienced computer center failures.
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 five MegaCenters, located in Atlanta, Chicago, Philadelphia, Scottsdale
and Warminster (see Properties on page 12). During 1994, the Company completed
major expansions of the Philadelphia and Chicago MegaCenters, including the
addition of a mainframe command center and additional space for midrange product
lines in each location. The Company believes that its Philadelphia MegaCenter,
which houses DEC, Hewlett Packard, IBM mainframe, Sequent, Stratus and Tandem
hotsites, and mobile Hewlett Packard, IBM midrange, NCR and Sun Microsystems
computer systems, is the largest commercial disaster recovery facility in the
world.
The Company also operates MetroCenters(R) in strategic locations throughout
North America to provide Work Group Recovery services, enhanced remote
operations capabilities, and recovery operations and testing support for mobile
computer systems. MetroCenters are located in Boston, Dallas, Herndon
(Virginia), Jersey City (New Jersey), Los Angeles, St. Louis, St. Paul and
Toronto. The St. Paul and Toronto MetroCenters also have coldsites that can be
used in conjunction with the remote operations capability.
The Company periodically opens new facilities or expands existing 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 1994, the Company opened two new MetroCenters (in Herndon and
Jersey City), upgraded the central processing units of selected mainframe
hotsites in its Atlanta, Chicago, Philadelphia and Scottsdale MegaCenters, and
upgraded many mobile midrange systems at various facilities. New Hewlett
Packard and Tandem ("Himalaya" model) hotsites were installed in Philadelphia,
and new mobile systems were installed in Atlanta (IBM AS/400 and RS/6000, DEC
and Hewlett Packard), Chicago (IBM AS/400, Hewlett Packard and Sun
Microsystems), Dallas (IBM AS/400 and System/3X), Jersey City (IBM AS/400 and
System/3X), Philadelphia (DEC, NCR, IBM RS/6000 and Sun Microsystems) and Los
Angeles (Hewlett Packard and Sun Microsystems). 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 in Philadelphia.
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 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 generally used by its customers. During 1994, the
Company continued expanding its matrix switching capabilities to allow for more
efficient and reliable communications during customer tests and recovery
operations.
The Company markets its comprehensive disaster recovery facilities and
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's disaster recovery
equipment is covered by maintenance contracts to assure that it is properly
functioning at all times.
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Disaster Recovery Contracts. As of December 31, 1994, the Company had
approximately 5,400 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 facilities
and services selected, 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, 1994, the Company had a maximum capacity of 1,860 contracts for
large IBM mainframe hotsites, with current contracts utilizing approximately 73%
of such capacity.
Planning Services. The Company provides professional consulting and
educational 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 a Windows-based microcomputer software product
introduced during 1994, CBR(TM) Comprehensive Business Recovery, which automates
the preparation and maintenance of disaster recovery and business resumption
plans, including comprehensive company-wide planning capabilities. The Company
also continues to support its DOS-based microcomputer disaster recovery planning
software product known as DP/90 PLUS(R). In March 1995, the Company acquired the
disaster recovery planning software business of CHI/COR Information Management,
Inc. (see Acquisitions and Offerings on page 10).
Computer Services
The Company provides 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 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 1994, the Company added a new IBM ES9000 model computer at its Voorhees
facility, and implemented a centralized system for tracking requirements of its
computer services customers. The Company also expanded its international
network capabilities and implemented several improvements to its mailing and
printing services.
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 routine 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,
1994, the Company had in force approximately 1,800 software maintenance
contracts for its investment support systems.
9
<PAGE>
The Company's expenditures for software development during 1994, 1993 and
1992, including amounts that were capitalized, totalled approximately
$38,684,000, $37,581,000 and $24,899,000, respectively. These amounts do not
include routine 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 1995, the Company plans to substantially complete UNIX versions of
SUNSTAR and OMNIPLAN and Windows versions of AUTOTRUST, DEVON FOREX, MICROSHAW,
ON-SITE and PMS/APS. These developments are examples of the Company's strategy
of using the established functionality of its existing systems to develop state-
of-the-art systems for new technological environments.
Also in 1995, the Company plans to enhance the capabilities of INVEST ONE to
improve the processing of mergers, exchanges, spin-offs and other corporate
transactions, and to substantially complete the development of OMNIPLUS, its
next generation participant accounting system for employee benefit plans. In
1995, the Company will continue to expand the application of EXPEDITER, which
facilitates the automated entry of mutual fund transactions for users of
AUTOTRUST, OMNITRUST ES, OMNIPLAN, BOLT and eventually other investment support
systems. The Company will continue during 1995 to enhance the PHASE3 brokerage
accounting product to support foreign securities processing and to better
support retail brokerage. In addition, the Company plans to continue
development of SUNDIAL(TM), a centralized, multi-vendor securities pricing
database.
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. In early 1995, the Company installed IBM's largest
AS/400 midrange computer and a Sequent computer in the Philadelphia MegaCenter.
During 1995, the Company plans to add new command centers at its Chicago and
Philadelphia MegaCenters and open new MetroCenters in the Chicago and Cleveland
areas. Also during 1995, the Company plans to expand its electronic vaulting
product offerings. 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.
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 sixteen
investment support systems businesses, thirteen 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. The debentures were converted into
common stock in 1993.
During 1994, the Company spent approximately $27,927,000 in cash, net of cash
acquired, to acquire two investment support systems businesses and two disaster
recovery services businesses.
As additions to the Trust and Shareholder Systems Group, in August 1994, the
Company purchased the business of Desktop Advantage, a Massachusetts-based
provider of document-imaging and work-flow software systems, and, in September
1994, the Company purchased the business of Portfolio Administration Limited, a
London-based provider of portfolio administration, valuation and record keeping
software and services to United Kingdom stockbroking firms and fund managers.
In February 1995, the Company acquired DML, a developer and provider of
securities lending and brokerage accounting software systems.
10
<PAGE>
The Recovery Services Group increased its presence in the midrange computer
market with two acquisitions in 1994. In April 1994, the Company purchased the
disaster recovery business of XL/Datacomp, Inc., which consists primarily of
recovery services for IBM midrange platforms. In October 1994, the Company
acquired the disaster recovery business of Computervision Corporation. In March
1995, the Company acquired the disaster recovery software business of CHI/COR
Information Management, Inc.
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 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 1994, 1993 and 1992 totalled approximately
$33,505,000, $29,061,000 and $32,501,000, respectively. In addition, the
Company's foreign subsidiaries had sales that for those years totalled
approximately $26,652,000, $18,437,000 and $3,211,000, 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.
11
<PAGE>
Employees
At December 31, 1994, the Company had approximately 2,500 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
has few registrations of its copyrights and has 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.
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 44,500
(near Philadelphia) Systems Inc., and headquarters for
SunGard Recovery Services Inc. and
SunGard Planning Solutions.
Atlanta, GA Headquarters for the Insurance 26,000
Systems Division of SunGard 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 Offices of SunGard Financial Systems 12,000
(near Los Angeles) Inc. and related computer center with
one Prime computer and seven UNIX
servers.
Carshalton, England Headquarters for Portfolio 5,000
(near London) Administration Limited and related
computer center with eight IBM
midrange computers.
Charlotte, NC Headquarters for SunGard Trust 36,100
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, two DEC and one Hewlett
Packard computers.
Hinsdale, IL Headquarters for SunGard Investment 23,000
(near Chicago) Systems Inc.
Hopkins, MN Headquarters for the Securities 46,200
(near Minneapolis) Systems Division of SunGard Financial
Systems Inc. and related computer
center with two IBM or IBM-compatible
mainframe computers.
London, England Headquarters for the Global Risk and 14,500
Exchange Systems Divisions of the
SunGard Capital Markets Group.
New York, NY Headquarters for Shaw Data Services, 16,000
Inc.
New York, NY Headquarters for SunGard Capital 7,600
Markets Inc.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Location Purpose Square Feet
================================================================================
<S> <C> <C>
Northbrook, IL SunGard Recovery Services MegaCenter 84,000
(near Chicago) with two IBM mainframe and two Tandem
computers, and one Hewlett Packard,
four IBM midrange, one Sun Microsystems
and one Unisys mobile computers.
Philadelphia, PA SunGard Recovery Services MegaCenter 208,600
with four DEC, four Hewlett Packard,
three IBM or IBM-compatible
mainframe, one Sequent, three Stratus
and two Tandem computers, and two
Hewlett Packard, seven IBM midrange,
one NCR and two Sun Microsystems
mobile computers.
Roswell, GA SunGard Recovery Services MegaCenter 33,200
(near Atlanta) with nine DEC and one Prime
computers, and one DEC, one Hewlett
Packard, seven IBM midrange and one
Sun Microsystems mobile computers.
San Mateo, CA Headquarters for SunGard Shareholder 18,200
Systems Inc.
Scottsdale, AZ SunGard Recovery Services MegaCenter 13,800
with four Prime and five Unisys
computers, and one Unisys mobile
computer.
Stockholm, Sweden Headquarters for the Front Capital 40,000
Systems and Prosoftia Divisions of
the SunGard Capital Markets Group.
Voorhees, NJ Headquarters for SunGard Computer 51,000
(near Philadelphia) Services Inc. and related computer
center with three IBM or
IBM-compatible mainframe computers.
Waltham, MA Headquarters for the Brokerage 31,300
(near Boston) Systems Division of SunGard Financial
Systems Inc. and related computer
center with six Tandem computers.
Waltham, MA Headquarters for the Global Systems 16,400
(near Boston) Division of SunGard Financial Systems
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 the
MetroCenter 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 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 be material to its business or financial condition.
In February 1995, a lawsuit was initiated against the Company and its
construction contractor alleging that there have been illegal removals and
releases of asbestos during renovations at the Company's Philadelphia
MegaCenter. The suit seeks class action status and requests unspecified
compensatory and punitive damages, as well as injunctive and other relief.
Based upon testing by independent experts, the Company has determined that its
Philadelphia MegaCenter is safe. The Company intends to vigorously defend itself
and believes that this lawsuit will not be material to its business or
financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
None.
13
<PAGE>
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 59 Chief Executive Officer, SunGard Recovery
Services Group
--------------------------------------------------------------------------------
Andrew P. Bronstein 36 Vice President and Controller, SunGard Data
Systems Inc.
--------------------------------------------------------------------------------
Cristobal I. Conde 34 Chief Executive Officer, SunGard Capital
Markets Group
--------------------------------------------------------------------------------
Philip L. Dowd 53 Chief Executive Officer, SunGard Trust and
Shareholder Systems Group
--------------------------------------------------------------------------------
Lawrence A. Gross 42 Vice President and General Counsel, SunGard
Data Systems Inc.
--------------------------------------------------------------------------------
Michael K. Muratore 48 Chief Executive Officer, SunGard Computer
Services Group
--------------------------------------------------------------------------------
Donna J. Pedrick 45 Vice President-Human Resources, SunGard Data
Systems Inc.
--------------------------------------------------------------------------------
D. Bruce Peterson 48 Chief Executive Officer, SunGard Financial
Systems Group
--------------------------------------------------------------------------------
Michael J. Ruane 41 Chief Financial Officer and Vice
President-Finance, SunGard Data Systems Inc.
--------------------------------------------------------------------------------
Richard C. Tarbox 42 Vice President-Corporate Development, 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 L.L.P., Philadelphia, where he served 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 many of the Company's foreign subsidiaries.
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. 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.
14
<PAGE>
Mr. Peterson has been Chief Executive Officer and a director of SunGard
Financial Systems Inc. since October 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. Ruane has been Chief Financial Officer, Vice President-Finance and
Treasurer of the Company since April 1994. From 1992 until April 1994, Mr.
Ruane was Chief Financial Officer and Vice President-Finance of SunGard Capital
Markets Inc. Before that, he was Vice President-Controller of the Company from
1990 through 1992, and Corporate Controller of the Company from 1985 to 1990.
Mr. Ruane is a director and officer of most of the Company's domestic and
foreign subsidiaries.
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.
15
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
This information is incorporated by reference to the section entitled Stock
Information in the Company's 1994 Annual Report to Stockholders (included in
Exhibit 13.1 to this Report on Form 10-K).
Item 6. Selected Financial Data
This information is incorporated by reference to the section entitled Selected
Financial Information in the Company's 1994 Annual Report to Stockholders
(included in Exhibit 13.1 to this Report on Form 10-K).
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This information is incorporated by reference to the section entitled
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's 1994 Annual Report to Stockholders (included in
Exhibit 13.1 to this Report on Form 10-K).
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company, financial statement schedule 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.
16
<PAGE>
PART III
This Part incorporates certain information from the Company's definitive proxy
statement for its 1995 Annual Meeting of Stockholders ("1995 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 1995 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 1995 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 1995 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 1995 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 1995 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.
17
<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 incorporated by reference to the Company's 1994 Annual
Report to Stockholders (included in Exhibit 13.1 to this Report on Form 10-K):
Report of Independent Accountants on Financial Statements, dated February 8,
1995
Consolidated Statements of Income for each of the years ended December 31,
1994, 1993 and 1992
Consolidated Balance Sheets as of December 31, 1994 and 1993
Consolidated Statements of Cash Flows for each of the years ended December 31,
1994, 1993 and 1992
Consolidated Statement of Stockholders' Equity for each of the years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Quarterly Financial Information (unaudited)
(a)(2) Financial Statement Schedule
The following financial statement schedule 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 Schedule, dated February 8, 1995..... 22
Schedule II--Valuation and Qualifying Accounts............................ 23
(a)(3) Exhibits
</TABLE>
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 20 of this Report. Exhibits 10.9 through 10.17 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.
18
<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 29, 1995 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.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ James L. Mann Chief Executive Officer, March 29, 1995
-------------------------------- President, and Chairman
James L. Mann of the Board of Directors
(principal executive officer)
/s/ Michael J. Ruane Chief Financial Officer and March 29, 1995
-------------------------------- Vice President-Finance
Michael J. Ruane (principal financial officer)
/s/ Andrew P. Bronstein Vice President and Controller March 29, 1995
-------------------------------- (principal accounting officer)
Andrew P. Bronstein
/s/ Gregory S. Bentley Director March 29, 1995
--------------------------------
Gregory S. Bentley
/s/ Michael C. Brooks Director March 29, 1995
--------------------------------
Michael C. Brooks
/s/ Albert A. Eisenstat Director March 29, 1995
--------------------------------
Albert A. Eisenstat
/s/ Bernard Goldstein Director March 29, 1995
--------------------------------
Bernard Goldstein
/s/ Michael Roth Director March 29, 1995
--------------------------------
Michael Roth
/s/ Malcolm I. Ruddock Director March 29, 1995
--------------------------------
Malcolm I. Ruddock
/s/ Lawrence J. Schoenberg Director March 29, 1995
--------------------------------
Lawrence J. Schoenberg
</TABLE>
19
<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/(1)/ The Company's 1982 Incentive Stock Option Plan and Amendments
thereto, dated January 1, 1987 and November 8, 1991./(10)/
10.10 The Company's 1986 Stock Option Plan, Amendments thereto, dated
January 1, 1987, November 1, 1988, February 6, 1990, November 8,
1991, February 16, 1993 and February 13, 1995, and United Kingdom
Addendum thereto, dated February 12, 1991 (filed with this
Report)./(10)/
10.11/(1)/ The Company's 1988 Nonqualified Stock Option Plan and Amendment
thereto, dated October 30, 1990./(10)/
10.12/(6)/ The Company's 1990 Amended and Restated Restricted Stock Incentive
Plan./(10)/
10.13/(8)/ The Company's Restricted Stock Award Plan for Outside Directors.
/(10)/
10.14/(9)/ The Company's 1994 Equity Incentive Plan./(10)/
10.15/(9)/ Summary Description of the Company's Annual Executive Incentive
Compensation Program.(/10/)
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Number Document
------ ---------------------------------------------------------------------
<S> <C>
10.16 Summary Description of the Company's Long-Term Executive Incentive
Compensation Plan (filed with this Report)./(10)/
10.17/(1)/ Form of Indemnification Agreement entered into by the Company with
its directors and officers./(10)/
11.1 Statement Re Computation of Per Share Earnings (filed with this
Report).
13.1 Portions of the Company's Annual Report to Stockholders for the
fiscal year ended December 31, 1994 expressly incorporated herein by
reference (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 schedule
(included at page 22 of this Report).
27.1 Financial Data Schedule for the year ended December 31, 1994 (filed
with 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 31, 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)/ Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993
(Commission File No. 0-14232).
/(10)/ Management contract or compensatory plan or arrangement.
21
<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 8, 1995 on our audits of the
consolidated financial statements and consolidated financial statement schedules
of SunGard Data Systems Inc. and subsidiaries as of December 31, 1994 and 1993,
and for each of the years in the three-year period ended December 31, 1994,
which report on the consolidated financial statements is incorporated by
reference in this Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 24, 1995
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE
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 incorporated by reference in this Report on Form 10-K
from page 46 of the 1994 Annual Report to Stockholders of SunGard Data Systems
Inc. In connection with our audit of such consolidated financial statements, we
also have audited the related consolidated financial statement schedule listed
in Item 14(a)(2), Part IV, of this Report on Form 10-K.
In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 8, 1995
22
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Financial Statement Schedule
SCHEDULE II
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Allowance for Doubtful Accounts
-------------------------------
Year Ended Beginning Charged Ending
December 31, Balance to Expense Other/(1)/ Write-offs Balance
-------------- ---------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
1994.......... $6,969,000 $4,014,000 $ 71,000 ($3,778,000) $7,276,000
1993.......... 4,491,000 4,963,000 (21,000) (2,464,000) 6,969,000
1992.......... 3,441,000 2,839,000 357,000 (2,146,000) 4,491,000
</TABLE>
/(1)/ Net impact of acquired companies, foreign currency translation, and, in
1993, the sale of a product line.
23
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REPORT
Number Document
------ ------------------------------------------------------------------------
10.10 The Company's 1986 Stock Option Plan, Amendments thereto, dated January
1, 1987, November 1, 1988, February 6, 1990, November 8, 1991, February
16, 1993 and February 13, 1995, and United Kingdom Addendum thereto,
dated February 12, 1991./(1)/
10.16 Summary Description of the Company's Long-Term Executive Incentive
Compensation Plan./(1)/
11.1 Statement Re Computation of Per Share Earnings.
13.1 Portions of the Company's Annual Report to Stockholders for the fiscal
year ended December 31, 1994 expressly incorporated herein by reference.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants, regarding the Company's consolidated
financial statements and financial statement schedule (included at page
22 of this Report).
27.1 Financial Data Schedule for the year ended December 31, 1994.
----------------
(1) Management contract or compensatory plan or arrangement.
<PAGE>
Exhibit 10.10
SUNGARD DATA SYSTEMS INC.
1986 STOCK OPTION PLAN
1. Purpose of Plan
---------------
The purpose of the 1986 Stock Option Plan (the "Plan") contained herein is
to provide additional incentive to key employees of SunGard Data Systems Inc. or
of any other corporation permitted by Section 422A(a)(2) of the Internal Revenue
Code of 1954, as amended (the "Code"), including current or future parent or
subsidiary corporations (the "Company") by encouraging those employees to invest
in shares of the Company's stock and thereby acquire a proprietary interest in
the business of the Company and an increased personal interest in their
continued success and progress to the mutual benefit of employees and
shareholders.
2. Aggregate Number of Shares
--------------------------
The aggregate number of shares of the Company's Common Stock, par value
$.01 per share, which may be issued under this Plan shall be 300,000 shares.
Notwithstanding the foregoing, in the event of any change in the capitalization
of the Company such as by stock dividend, stock split or what the Compensation
Committee, as hereinafter defined, deems in its sole discretion to be similar
circumstances, the aggregate number and kind of shares which may be issued under
this Plan shall be appropriately adjusted in a manner determined in the sole
discretion of the Compensation Committee; provided, however, that such
adjustment shall be approved by the shareholders of the Company if required by
Section 422A of the Code and the regulations thereunder. Reacquired shares of
the Company's Common Stock as well as unissued shares may be used for the
purpose of this Plan. Shares of Common Stock subject to options which have
terminated unexercised, either in whole or in part, shall be available for
future options granted under this plan.
3. Class of Employees Eligible to Receive Options
----------------------------------------------
All officers and key employees of the Company are eligible to receive an
option or options under this Plan. The officers and key employees who shall, in
fact, receive an option or options shall be selected by the Compensation
Committee, as hereinafter defined, in its sole discretion, except as otherwise
specified in Section 4 hereof. No director who is not also an employee of the
Company shall be eligible to be granted an option or options under the Plan.
4. Administration of Plan
----------------------
(a) This Plan shall be administered by the Compensation Committee (the
"Committee") appointed by the Board of Directors. The Committee shall consist
of a minimum of three members of the Board of Directors, each of whom shall be a
"disinterested person" as defined in Rule 16B-3 under the Securities Exchange
Act of 1934, as amended. The Committee shall, in addition to its other
authority and subject to the provision of this Plan, have authority in its sole
discretion to determine the officers and key employees of the Company and any
current or future parent or subsidiary corporation who are eligible to receive
options under this Plan, the officers and key employees who shall in fact be
granted an option or options, whether the option shall be an incentive stock
option or a non-qualified stock option (as hereinafter defined), the number of
shares to be subject to an option, the time or times at which an option shall be
granted, the rate at which an option shall be exercisable, and, subject to
Section 5 hereof, the price at which an option shall be exercisable and the
duration of the option.
<PAGE>
(b) The Committee shall adopt such rules for the conduct of its business
and administration of this Plan as it considers desirable. A majority of the
members of the Committee shall constitute a quorum for all purposes. 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 such matter. The Committee
shall have the exclusive right to construe the Plan and the options issued
pursuant to it, correct defects and omissions and reconcile inconsistencies to
the extent necessary to effectuate the Plan and the options issued pursuant to
it, and such action shall be final, binding and conclusive upon all parties
concerned. No member of the Committee or the Board of Directors shall be liable
for any act or omission (whether or not negligent) taken or omitted in good
faith, or for the exercise of an authority or discretion granted in connection
with the Plan to the Committee or the Board of Directors, or for the acts or
omissions of any other members of the Committee or the Board of Directors.
Subject to the numerical limitation on Committee memberships set forth in
Section 4(a) hereof, the Board of Directors may at any time appoint additional
members to the Committee and may at any time remove any member of the Committee
with or without cause. Vacancies in the Committee, however caused, may be
filled by the Board of Directors, if it so desires.
5. Incentive Stock Options and Nonqualified Stock Options
------------------------------------------------------
(a) Options issued pursuant to this Plan may be either incentive stock
options granted pursuant to Section 5(b) hereof ("Incentive Stock Options") or
nonqualified stock options granted pursuant to Section 5(c) hereof
("Nonqualified Stock Options"), as determined by the Committee. An Incentive
Stock Option is an option which satisfies all of the requirements of Section
422A of the Code and the regulations thereunder, and a Nonqualified Stock Option
is an option which does not satisfy certain of those requirements. The
Committee may grant both an Incentive Stock Option and a Nonqualified Stock
Option to the same person, or more than one of each type of option to the same
person. The option price for the Incentive Stock Options and Nonqualified Stock
Options granted under this Plan shall be equal to at least 100% of the fair
market value, as determined by the Committee in accordance with its
interpretation of the requirements of Section 422A of the Code and the
regulations thereunder, of the Company's Common Stock on the date of the grant
of the option; provided, however, that if an Incentive Stock Plan is granted to
an individual who, at the time the option is granted, owns shares possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporation, the option price shall not be
less than 110% of the fair market value, as determined by the Committee in
accordance with its interpretation of the requirements of Section 422A of the
Code and the regulations thereunder, of the Company's Common Stock on the date
of the grant of the option, and such option shall not be exercisable after the
expiration of five years from the date such option is granted.
(b) Incentive Stock Options granted pursuant to this Plan shall be granted
substantially in the form set forth in Appendix I hereof, which form is hereby
incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. Notwithstanding any
other provisions hereof, the aggregate fair market value (determined as of the
time an Incentive Stock Option is granted) of the stock for which any employee
may be granted Incentive Stock Options in any calendar year (under all Incentive
Stock Option plans of the Company and any parent and subsidiary corporation as
defined in Section 425(e) and (f) of the Code and the regulations thereunder)
shall not exceed $100,000, plus any unused limit carryover to such year. The
unused limit carryover available in any calendar year to any employee shall be
determined in accordance with Section 422A(c)(4) of the Code and the regulations
thereunder. Incentive Stock Options shall not be exercisable after the
expiration of ten years from the date such options are granted, unless
terminated earlier under the terms of the option or pursuant to the terms of
Section 5(a) above. At the time of the grant of an Incentive Stock Option
hereunder the Committee may, in its discretion, modify or amend any of the
option terms contained in Appendix I for any particular optionee, provided that
the option as modified or amended satisfies the requirements of Section 422A of
the Code and the regulations thereunder. Each of the options granted pursuant
to this Section 5(b) is intended, if possible, to be an Incentive Stock Option
as that term is defined in Section 422A of the Code and the regulations
thereunder. In
<PAGE>
the event this Plan or any option granted pursuant to this Section 5(B) is in
any way inconsistent with the applicable legal requirements of the Code or the
regulations thereunder for an incentive stock option, this Plan and such option
shall be deemed automatically amended as of the date hereof to conform to such
legal requirements, if such conformity may be achieved by amendment.
(c) Nonqualified Stock Options granted pursuant to this Plan shall be
granted substantially in the form set forth in Appendix II hereof, which form is
hereby incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. Nonqualified Stock
Options shall not be exercisable after the expiration of ten years and five days
after the date such options are granted, unless terminated earlier under the
option terms. At the time of the grant of a Nonqualified Stock Option
hereunder, the Committee may, in its discretion, modify and amend any of the
option terms contained in Appendix II for any particular optionee, provided that
the option as modified or amended does not expire more than ten years and five
days from the date of its grant and the option price is not less than 100% of
the fair market value of the Company's Common Stock on the date of such grant.
(d) Neither the Company nor any of its current or future parents,
subsidiaries or affiliates, nor their officers, directors, shareholders, stock
option plan committees, employees or agents shall have any liability to any
optionee in the event (i) an option granted pursuant to Section 5(b) hereof does
not qualify as an Incentive Stock Option as that term is used in Section 422A of
the Code and the regulations thereunder, (ii) any optionee does not obtain the
tax benefits of such an Incentive Stock Option, or (iii) any option granted
pursuant to Section 5(c) hereof is determined to be an Incentive Stock Option.
6. Stock Appreciation Rights
-------------------------
The Compensation Committee may grant an optionee a stock appreciation right
at the time of the grant of an option under this Plan, or at any time
thereafter. Such right shall entitle the optionee to elect to surrender a
Nonqualified Stock Option with respect to unpurchased shares currently
exercisable at any time (subject to such terms and conditions as may be imposed
by the Compensation Committee at the time of the grant) during the life of the
option, and to receive therefor payment in the form of cash, shares of the
Company's Common Stock, or any combination of shares and cash, as determined by
the Compensation Committee in its discretion. The amount of such payment shall
be equal to the difference between the fair market value of the shares with
respect to which the stock appreciation right is exercised and the option price
of those shares. For the purposes of this section, the fair market value of
shares shall be determined by the Committee as of the last trading day prior to
the date the notice of exercise of the stock appreciation right is received by
the Compensation Committee. The Compensation Committee may establish such
reasonable restrictions and conditions on exercise (including, but not limited
to, waiting periods and exercise dates) of a stock appreciation right granted
under this Plan as the Committee, in its discretion, shall determine.
7. Modification, Amendment, Suspension and Termination
---------------------------------------------------
No option shall be granted pursuant to this Plan after the expiration of
ten years from and after the earlier of the date (i) the Plan is adopted, or
(ii) the Plan is approved by the shareholders of the Company. The Board of
Directors reserves the right at any time, and from time to time, to modify or
amend this Plan in any way, or to suspend or terminate it, effective as of such
date, which date may be either before or after the taking of such action, as may
be specified by the Board of Directors; provided, however, that such action
shall not affect options granted under the Plan prior to the actual date on
which such action occurred. If a modification or amendment of this Plan is
required by the Code or the regulations thereunder to be approved by the
shareholders of the Company in order to permit the granting of Incentive Stock
Options, as that term is defined in Section 422A of the Code and regulations
thereunder, pursuant to the modified or amended Plan, such modification or
amendment shall also be approved by the shareholder of the Company in such
manner as is prescribed
<PAGE>
by the Code and the regulations thereunder. If the Board of Directors
voluntarily submits a proposed modification, amendment, suspension or
termination for shareholder approval, such submission shall not require any
future modifications, amendments (whether or not relating to the same provision
or subject matter), suspensions or terminations to be similarly submitted for
shareholder approval.
8. Effectiveness of Plan
---------------------
The effective date of the Plan shall be January 31, 1986. The Plan is
subject to approval by the holders of the Company's Common Stock in the manner
as prescribed in the Code and the regulations thereunder. Options may be
granted under this plan prior to obtaining shareholder approval, provided such
options shall not be exercisable until shareholder approval is obtained.
9. General Conditions
------------------
(a) Nothing contained in this Plan or any option granted pursuant to this
Plan shall confer upon any employee the right to continue in the employ of the
Company or any parent, subsidiary or affiliated corporation, or interfere in any
way with the rights of the Company or any parent, subsidiary or affiliated
corporation to terminate his employment in any way.
(b) Corporate action constituting an offer of stock for sale to any
employee under the terms of an option to be granted hereunder shall be deemed
completed as of the date the Committee authorizes the grant of such option to
the employee, regardless of when such option is actually delivered to the
employee or acknowledged or agreed to by him.
(c) As a condition to the receipt of a grant of an option under this Plan,
an optionee must execute an Incentive Stock Option Agreement and/or a
Nonqualified Stock Option Agreement pursuant to which the optionee agrees, inter
-----
alia, to the terms and conditions imposed by the Compensation Committee upon his
----
exercise of options granted under this Plan. Such terms and conditions may
include a requirement that, upon his separation from the service of the Company
prior to attaining a specified period of service, the optionee must resell to
the Company any stock acquired pursuant to this Plan at a price equal to the
original exercise price paid by the optionee for the shares in question. The
stock option agreement may contain additional terms and conditions as determined
by the Compensation Committee in its discretion.
(d) The terms "parent corporation" and "subsidiary corporation" as used
throughout this Plan shall (except as otherwise provided in the option form)
have the meaning ascribed to those terms in Sections 422A(b), 425(e) and 425(f),
respectively, of the code and the regulations thereunder, and the Company shall
be deemed to be the grantor corporation for purposes of applying such meaning.
(e) References in this Plan to the Code shall be deemed to also refer to
the corresponding provisions of any future United States revenue law.
(f) The use of the masculine pronoun shall include the feminine gender
whenever appropriate.
<PAGE>
SUNGARD DATA SYSTEMS INC.
-------------------------
AMENDMENT NO. 1
TO
1986 STOCK OPTION PLAN
----------------------
In accordance with the resolutions adopted by the Board of Directors at its
meeting on February 4, 1987, the SunGard Data Systems Inc. 1986 Stock Option
Plan ("Plan") is amended as follows:
1. Except as otherwise provided herein, (a) any reference in the Plan to
the Internal Revenue Code of 1954, as amended, or to the Code shall be deemed to
be a reference to the Internal Revenue Code of 1986, as amended, and (b) any
reference in the Plan to any section of the Internal Revenue Code of 1954, as
amended, or of the Code shall be deemed to be a reference to the appropriate
corresponding section of the Internal Revenue Code of 1986, as amended.
2. Section 5(b) of the Plan is amended in its entirety to read as follows:
"(b) Incentive Stock Options issued pursuant to this Plan shall be
issued substantially in the form set forth in Appendix I hereof, which
form is hereby incorporated by reference and made a part hereof, and
shall contain substantially the terms and conditions set forth therein.
Incentive Stock Options shall expire ten years after the date they are
granted, unless terminated earlier under the option terms. With respect
to Incentive Stock Options granted hereunder before January 1, 1987,
the aggregate fair market value (determined as of the time the
Incentive Stock Options are granted) of the stock for which any
employee may be granted Incentive Stock Options in any calendar year
(under all Incentive Stock Option plans of the Company and any parent
and subsidiary corporations) shall not exceed $100,000 plus any unused
limit carryover to such year. With respect to Incentive Stock Options
granted hereunder before January 1, 1987, the unused limit carryover
available in any calendar year to any employee shall be determined in
accordance with Section 422A(c)(4) of the Internal Revenue Code of
1954, as amended, and the regulations thereunder, as such existed
before the enactment of the Tax Reform Act of 1986. With respect to
Incentive Stock Options granted on and after January 1, 1987, the
aggregate fair market value (determined as of the time the Incentive
Stock Options are granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by an optionee during
any calendar year (under all plans of the optionee's employer
corporation and its parent and subsidiary corporations which permit the
granting of Incentive Stock Options) shall not exceed $100,000. At the
time of granting an Incentive Stock Option hereunder, the Committee
may, in its discretion, modify or amend any of the option terms
contained in Appendix I for any particular optionee, provided that the
option as modified or amended continues to be an Incentive Stock
Option. Each of the options granted pursuant to this Section 5(b) is
intended, if possible, to be an "Incentive Stock Option" as that term
is defined in Section 422A of the Code and the regulations thereunder.
In the event this plan or any option granted pursuant to this Section
5(b) is in any way inconsistent with the applicable legal requirements
of the Code or the regulations thereunder for an Incentive Stock
Option, this Plan and such option shall be deemed automatically amended
as of the date hereof to conform to such legal requirements, if such
conformity may be achieved by amendment."
3. Appendix I to the Plan is amended in its entirety to conform to the
attachment to this Amendment.
<PAGE>
4. This amendment shall be effective as of January 1,1987, and reflects
the manner in which the Plan has operated since December 31, 1986.
Date: February 4, 1987 SunGard Data Systems Inc.
By:____________________________
James L. Mann, President and
Chief Executive Officer
<PAGE>
SUNGARD DATA SYSTEMS INC.
-------------------------
AMENDMENT NO. 2
TO
1986 STOCK OPTION PLAN
----------------------
In accordance with the resolutions adopted by the Board of Directors of
SunGard Data Systems Inc., a Delaware corporation, at its meeting duly held on
November 1, 1988, the SunGard Data Systems Inc. 1986 Stock Option Plan, as
previously amended by Amendment No. 1 thereto ("Plan"), is amended as follows:
1. The first sentence of Section 2 of the Plan is amended in its entirety
to read as follows:
"The aggregate number of shares of the Company's Common Stock, par
value $0.01 per share, which may be issued under this Plan shall be
500,000 shares."
2. This amendment shall be effective as of November 1, 1988; provided
however, that this amendment shall be subject to approval by the stockholders of
the corporation at the corporation's 1989 annual meeting of stockholders. If
such approval of the stockholders is not obtained at the corporation's 1989
annual meeting of stockholders, then, without any further action by the
corporation or its Board of Directors, this Amendment shall be treated as having
never become effective and shall be of no force or effect.
Date: November 1, 1988 SunGard Data Systems Inc.
By:__________________________________
James L. Mann, President, Chairman
and Chief Executive Officer
<PAGE>
SUNGARD DATA SYSTEMS INC.
-------------------------
AMENDMENT NO. 3
TO
1986 STOCK OPTION PLAN
----------------------
In accordance with the resolutions adopted by the Board of Directors of
SunGard Data Systems Inc., a Delaware corporation (the "Company"), at its
meeting duly held on February 6, 1990, the SunGard Data Systems Inc. 1986 Stock
Option Plan, as previously amended ("Plan"), is amended as follows:
1. The first sentence of Section 2 of the Plan is amended in its entirety
to read as follows:
"The aggregate number of shares of the Company's Common Stock, par
value $0.01 per share, which may be issued under this Plan shall be
750,000 shares."
2. This amendment shall not become effective unless and until it is
approved by the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock represented and entitled to vote at a duly convened
meeting of the Company's stockholders. If this amendment is so approved by the
Company's stockholders, then the date of such approval shall be the effective
date of this amendment.
3. This amendment shall be submitted to the Company's stockholders for
approval at the Company's 1990 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 amendment may be
re-submitted to the Company'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).
4. Unless and until the approval of the Company's stockholders to this
amendment is obtained, this amendment shall have no force and effect, and the
Plan shall continue in effect in accordance with its terms without regard to
this amendment.
Date: February 6, 1990 SunGard Data Systems Inc.
By:__________________________________
James L. Mann, President, Chairman
and Chief Executive Officer
<PAGE>
SunGard(R) Data Systems Inc.
Amendment No. 4
to
1986 Stock Option Plan
In accordance with the resolutions adopted by the Board of Directors of SunGard
Data Systems Inc., a Delaware corporation ("Company"), at its meeting held on
November 8, 1991, the SunGard Data Systems Inc. 1986 Stock Option Plan, as
previously amended ("Plan"), is amended as follows:
NEW SECTION 10. Effective on the Effective Date (as defined below), new Section
10 is added to the Plan as follows:
10. Change in Control Provisions
----------------------------
(a) With respect to each option granted under this Plan, whether
granted before, on or after the Effective Date, if a Change in Control of
the Company (as defined in Section 10(b) hereof) occurs, then all unvested
shares under such option (if any are then unvested) shall automatically
vest, without further action by the Company or the optionee, six months
after the Change in Control of the Company occurred or, if sooner, upon a
termination of the optionee's employment with the Company for any reason
other than for Cause (as defined in Section 10(c) hereof). This provision
shall not prevent the earlier vesting of any shares that otherwise would
have vested during such period.
(b) For purposes of this Section 10, a "Change in Control of the
Company" means: (i) the occurrence of an event that would, if known to the
management of SunGard Data Systems Inc. ("SunGard"), be required to be
reported by SunGard under Item 1(a) of Form 8-K pursuant to the Securities
Exchange Act of 1934 ("Exchange Act"); or (ii) the acquisition or receipt,
--
in any manner, by any person (as defined for purposes of the Exchange Act)
or any group of persons acting in concert, of direct or indirect beneficial
ownership (as defined for purposes of the Exchange 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 of Directors of SunGard ("Board") with the result that
individuals (the "Incumbent Directors") who are members of the Board on the
date of this Amendment 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 date of this Amendment 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) For purposes of this Section 10, a termination by the Company of
an optionee's employment with the Company shall be for "Cause" only if:
(i) at least two-thirds of the members of the board of directors of the
optionee's employer-company ("Employer-Board") determined that the optionee
(x) was guilty of gross negligence or
<PAGE>
willful misconduct in the performance of his or her duties for the Company,
or (y) breached or violated, in a material respect, any agreement between
the optionee and the Company or any of the Company's policy statements
regarding conflicts-of-interest, insider trading or confidentiality, or (z)
committed a material act of dishonesty or breach of trust; and (ii) such
---
determination was made at a duly convened meeting of the Employer-Board
with respect to which the optionee received at least 10 days prior written
notice, had a reasonable opportunity to attend (with counsel of his or her
choice), and had a reasonable opportunity to make a statement and answer
the allegations against him or her; and (iii) either (x) the optionee was
---
given a reasonable opportunity to take remedial action but failed or
refused to do so, or (y) at least two-thirds of the members of the
Employer-Board also determined, at such meeting, that an opportunity to
take remedial action would not have been meaningful under the
circumstances.
(d) For all purposes of this Section 10: (i) if an optionee is
employed by a subsidiary of SunGard and such subsidiary ceases to be a
subsidiary of SunGard, then the optionee's employment with the Company will
be deemed to have been terminated by the Company without Cause, unless the
optionee is transferred to SunGard or another subsidiary of SunGard; (ii)
an optionee's employment with the Company will not be deemed to have been
terminated if the optionee is transferred from SunGard to a subsidiary of
SunGard, or vice versa, or from one subsidiary of SunGard to another; and
(iii) if an optionee terminates his or her employment with the Company
following a reduction in his or her rate of compensation, then the
optionee's employment with the Company will be deemed to have been
terminated by the Company without Cause.
EFFECTIVE DATE OF NEW SECTION 10. The "Effective Date" of New Section 10 of the
Plan shall be November 8, 1991, unless postponed as follows:
(1) The addition of New Section 10 to the Plan has been under consideration
by the Board since at least February 1991. The Company was not during that
period, and the Company is not on the date of this Amendment, planning,
negotiating or consummating any plan of combination (as defined in A.P.B. 16)
that was or is intended to be accounted for as a pooling-of-interests. The
addition of new Section 10 to the Plan, therefore, has not been adopted in
contemplation of any pooling-of-interests transaction.
(2) It is the Company's express intention that the addition of new Section
10 to the Plan will not, by itself, prohibit the use of pooling-of-interests
accounting treatment for any plan of combination in which the Company desires to
participate and as to which the parties desire to use pooling-of-interests
accounting treatment.
(3) If, within two years after the date of this Amendment, any such plan of
combination in which the Company desires to participate is initiated (as defined
in A.P.B. 16), but the independent auditors of the Company or of a party that
intends to acquire control of the Company will not approve pooling-of-interests
accounting treatment for the sole reason that new Section 10 was added to the
----
Plan within the two years preceding the initiation of such plan of combination,
then the Company shall in good faith use its best efforts to secure such
approval of such independent auditors by, for example, seeking an appropriate
no-action letter or other consent from the Securities and Exchange Commission or
taking such other appropriate actions, if any are reasonably possible, that will
secure such approval.
<PAGE>
(4) If, despite such efforts, such independent auditors remain unable to
approve the use of pooling-of-interests accounting treatment for such plan of
combination for the sole reason that new Section 10 was added to the Plan within
----
the two years preceding the initiation of such plan of combination, then the
"Effective Date" of new Section 10 of the Plan shall be postponed until the
earliest date that will permit such independent auditors to approve the use of
pooling-of-interests accounting treatment for such plan of combination, but not
later than November 8, 1993.
Date: November 8, 1991 SunGard Data Systems Inc.
By:
------------------------------------
James L. Mann, Chairman, President
and Chief Executive Officer
<PAGE>
SunGard(R) Data Systems Inc.
Amendment No. 5
to
1986 Stock Option Plan
In accordance with the resolutions adopted by the Board of Directors of SunGard
Data Systems Inc., a Delaware corporation ("Company"), at its meeting held on
February 16, 1993, the SunGard Data Systems Inc. 1986 Stock Option Plan, as
previously amended ("Plan"), is amended as follows:
1. The first sentence of Section 2 of the Plan is amended in its entirety to
read as follows:
"The aggregate number of shares of the Company's Common Stock, par
value $0.01 per share, which may be issued under this Plan shall be
1,000,000 shares."
2. This amendment shall not become effective unless and until it is approved
by the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock represented and entitled to vote at a duly convened
meeting of the Company's stockholders. If this amendment is so approved by
the Company's stockholders, then the date of such approval shall be the
effective date of this amendment.
3. This amendment shall be submitted to the Company's stockholders for
approval at the Company's 1993 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
amendment may be re-submitted to the Company'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).
4. Unless and until the approval of the Company's stockholders to this
amendment is obtained, this amendment shall have no force and effect, and
the Plan shall continue in effect in accordance with its terms without
regard to this amendment.
Date: February 16, 1993 SunGard Data Systems Inc.
By:
----------------------------------
James L. Mann, Chairman, President
and Chief Executive Officer
SunGard(R) Data Systems Inc.
<PAGE>
SunGard(R) Data Systems Inc.
Amendment No. 6
to
1986 Stock Option Plan
In accordance with the resolutions adopted by the Board of Directors of SunGard
Data Systems Inc., a Delaware corporation ("Company"), at its meeting held on
February 13, 1995, the SunGard Data Systems Inc. 1986 Stock Option Plan, as
previously amended ("Plan"), is amended as follows:
1. The first sentence of Section 2 of the Plan is amended in its entirety to
read as follows:
"The aggregate number of shares of the Company's Common Stock, par
value $0.01 per share, which may be issued under this Plan shall be
1,000,000 shares, with an individual limit of 100,000 shares per
optionee per year."
2. The first sentence of Section 7 of the Plan is amended in its entirety to
read as follows:
"No option shall be granted pursuant to this Plan after February 13,
1998."
3. This amendment shall, for federal tax law purposes, result in the adoption
of a new stock option plan.
4. This amendment shall not become effective unless and until it is approved
by the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock represented and entitled to vote at a duly convened
meeting of the Company's stockholders. If this amendment is so approved by
the Company's stockholders, then the date of such approval shall be the
effective date of this amendment.
5. This amendment shall be submitted to the Company's stockholders for
approval at the Company's 1995 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
amendment may be re-submitted to the Company'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).
6. Unless and until the approval of the Company's stockholders to this
amendment is obtained, this amendment shall have no force and effect, and
the Plan shall continue in effect in accordance with its terms without
regard to this amendment.
Date: February 13, 1995 SunGard Data Systems Inc.
By:
----------------------------------
James L. Mann, Chairman, President
and Chief Executive Officer
<PAGE>
ADDENDUM TO
SUNGARD DATA SYSTEMS INC.
1986 STOCK OPTION PLAN
FOR
UNITED KINGDOM OPTIONEES
------------------------
Solely for the purposes of options to be granted in the United Kingdom ("UK")
the SunGard Data Systems Inc. 1986 Stock Option Plan, as amended ("the US
Plan"), is hereby amended as follows:
1. Preamble
--------
a. This Addendum adapts the terms of the US Plan in order to render the US
Plan capable of approval as an Approved Share Option Scheme under
Section 185 and Schedule 9 of the Income and Corporation Taxes Act
1988.
b. The adapted Plan ("the UK Plan") is for the benefit only of UK resident
employees to SunGard Data Systems Inc. and all current or future
companies of which it has control (the "Company").
c. The UK Plan is an Addendum to the US Plan, must be read and construed
in conjunction with the US Plan, and is subject to the terms and
conditions of the US Plan except to the extent that such terms and
conditions differ from, or conflict with, the terms set out herein.
2. Definitions
-----------
For the UK Plan purposes, the following terms in the UK Plan including for
the avoidance of doubt the US Plan shall have the following meanings.
Unless otherwise defined herein or unless the context clearly requires
otherwise, capitalised terms used herein shall have the meanings given to
them in the US Plan.
a. Plan
----
The Company's 1986 Incentive Stock Option Plan, as amended, including
the UK Addendum.
b. Fair Market Value
-----------------
The value of a share of the Company's common stock as determined by the
Board in accordance with Part VIII of the Capital Gains Tax Act 1979
and agreed in advance by the
<PAGE>
Inland Revenue Shares Valuation Division, but in no event shall such
value be less than the fair market value determined for United States
income tax purposes.
c. Stock Option
------------
An option to purchase shares of the stock granted under the Plan, as
specified in paragraph 5 of the US Plan.
d. Key Employees
-------------
Employees, including officers and directors, who, in the opinion of the
Board of Directors or the Committee, can make significant contributions
to the Company, as defined in paragraph 4a of the US Plan.
e. Qualifying Employee
-------------------
An employee other than a director of the Company who is required under
the terms of his employment to work for at least twenty hours a week
for the Company, excluding meal breaks.
f. Material Interest
-----------------
In respect of a person's shareholdings beneficially owned, or owned
indirectly by the person and his associates (as defined in Section 417
Income and Corporation Taxes Act 1988) which enable the person,
together with his associates to control more than 10% of the Company's
stock.
g. Date of Grant
-------------
The date on which an option is granted.
h. Option Price
------------
The price at which a participant may exercise an Option in accordance
with the rules of the Plan.
i. Participant
-----------
A qualifying employee.
j. Relevant Emoluments
-------------------
The meaning which the terms bears in sub-paragraph (2) of paragraph 28
of Schedule 9 by
<PAGE>
virtue of sub-paragraph (5) of that paragraph.
k. Schedule 9
----------
Schedule 9 to the Income and Corporation Taxes Act 1988.
l. Subsisting Option
-----------------
An Option which has neither lapsed or been exercised.
m. Associated Company
------------------
Has the same meaning as in Section 416 of the Income and Corporation
Taxes Act 1988.
3. Eligibility of Employees
------------------------
The conditions set out in paragraph 3 of the US Plan should be taken to be
expanded as below for UK purposes.
a. All participants must be qualifying employees of the Company or any of
its affiliates; provided, however, that all participants must also meet
the requirements for participation under the US Internal Revenue Code.
b. Also, in the UK no participant may have, or have had within the
preceding twelve months, a material interest in a close company within
the meaning of Chapter I or Part XI of the Income and Corporation Taxes
Act 1988, which is:
(i) A company the shares of which may be acquired pursuant to the
exercise of rights obtained under the Plan; or
(ii) A company which has control of such a company or is a member of a
consortium which owns such a company.
c. For the avoidance of doubt, any person precluded by paragraph 8 of
Schedule 9 Income and Corporation Taxes Act 1988 may not be granted or
exercise an option while so precluded.
4. Stock Option
------------
The nature of the Stock Options is covered by paragraph 5 of the US Plan,
with the following amendments:
a. For UK purposes, payment or exercise will only be in cash.
<PAGE>
b. Notwithstanding the conditions of the US Plan regarding the timing of
the exercising of options, options shall only be exercisable after the
first anniversary of the grant of the relevant options and prior to the
tenth anniversary thereof or the earlier expiration thereof. Where an
individual exercises any option before three years from the date the
option was granted he shall not receive the UK tax advantages
prescribed in Section 185 (2) and (3) of the UK Income and Corporation
Taxes Act 1988.
Furthermore, if an option is exercised as provided in the US plan and
such exercise is within three years of the exercise of an option which
is approved under Section 185, the second option only will not receive
the UK tax advantages prescribed in Section 185 (2) and (3) of the
Income and Corporation Taxes Act 1988.
c. The provisions of the Appendix I of the US plan relating to the
Company's repurchase rights do not apply in the UK. For UK purposes
only vested shares may be acquired upon exercise of options granted
under the plan.
d. Any adjustment to the Option Shares and Option Price as a result of a
stock dividend, stock split, recapitalization or other variation in
share capital will only be made following UK Inland Revenue approval.
5. Limitation of Rights
--------------------
The conditions of paragraph 5 of the US Plan are expanded to contain the
following:
a. Notwithstanding paragraph 5(b), as amended, of the US Plan, stock
options may not be granted if they exceed the lower of the limits set
out in (i) paragraph 5(b) of the US Plan or, (ii) the UK limits set out
below.
b. Options may not be granted to the participant in the UK at any time if
to do so would cause the aggregate of the Option Price for all
subsisting Options granted to the Participant under the UK Plan or any
other share option scheme approved by the Board of Inland Revenue under
the provisions of Schedule 9, established by the Company or by any
associated company of the company to exceed a sum equal to the greater
of 100,000 pounds in sterling or four times the Participant's relevant
emoluments at the exchange rate ruling on the date of the grant.
c. No additional conditions restricting exercise will be imposed without
prior Inland Revenue approval.
6. Amendments
----------
No amendments shall have effect for the purposes of the UK Plan until
approved by the UK Inland Revenue. Conditions imposed under Clause 9(c) of
the US Plan shall not be effective for
<PAGE>
the purposes of the UK Plan prior to UK Inland Revenue approval.
7. Scheme Shares
-------------
a. For the avoidance of doubt, it is confirmed that the scheme shares
described in Appendix I of the US Plan will satisfy the provisions of
paragraph 10 to 14 of the Schedule 9.
b. Shares will be allotted within the thirty (30) days of the date of
exercise, subject to clause 3 of Appendix I of the US Scheme
8. Stock Appreciation Rights
-------------------------
Clause 6 of the US Plan shall not apply for the purposes of the UK Plan.
THE UNDERSIGNED CERTIFIES THAT THIS ADDENDUM WAS DULY ADOPTED BY THE BOARD OF
DIRECTORS OF SUNGARD DATA SYSTEMS INC. ON THE TWELFTH DAY OF FEBRUARY, 1991.
-------------------------------
Lawrence A. Gross, Secretary of
SunGard Data Systems Inc.
<PAGE>
Exhibit 10.16
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 Company currently plans, but will have no legal obligation or commitment, to
continue granting such long-term executive incentive compensation 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.
<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,
------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
PRIMARY:
Average common shares outstanding....... 18,835 17,494 15,175
Dilutive stock options, net
of treasury shares................... 414 464 472
------- ------ ------
Adjusted common shares outstanding...... 19,249 17,958 15,647
======= ====== ======
Net income.............................. $43,087 $38,474 $25,808
======= ====== ======
Net income per common share............. $2.24 $2.14 $1.65
======= ====== ======
FULLY DILUTED:
Average common shares outstanding....... 18,835 17,494 15,175
Assumed conversion of 8 1/4%
subordinated debentures.............. -- 1,206 3,317
Dilutive stock options, net
of treasury shares................... 416 476 499
------- ------ ------
Adjusted common shares outstanding...... 19,251 19,176 18,991
======= ====== ======
Net income.............................. $43,087 $38,474 $25,808
Assumed interest expense savings
on subordinated debentures,
net of related income taxes.......... -- 1,565 4,337
------- ------ ------
Adjusted net income..................... $43,087 $40,039 $30,145
======= ====== ======
Net income per common share............. $ 2.24 $ 2.09 $ 1.59
======= ====== ======
</TABLE>
<PAGE>
EXHIBIT 13.1
Selected Financial Information*
<TABLE>
<CAPTION>
(In thousands, except per share amounts) 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Income Statement Data
Revenues $262,108 $283,550 $324,570 $381,372 $437,190
Income from operations 40,330 42,491 50,336 59,645 70,326
Net income 20,480 21,467 25,808 38,474 43,087
Net income per share:
Primary 1.35 1.40 1.65 2.14 2.24
Fully diluted 1.34 1.36 1.59 2.09 2.24
Balance Sheet Data
Total assets $302,687 $313,459 $365,580 $418,135 $485,740
Total short-term and long-term debt 109,232 87,820 89,790 6,523 10,567
Stockholders' equity 140,266 162,998 189,899 316,960 359,292
</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.
<PAGE>
<TABLE>
<S> <C> <C>
TABLE OF CONTENTS Quarterly Financial Information 30
Stock Information 30
Management's Discussion and 31
Analysis of Financial Condition
and Results of Operations
Consolidated Statements of Income 35
Consolidated Balance Sheets 36
Consolidated Statements of 37
Cash Flows
Consolidated Statement of 38
Stockholders' Equity
Notes to Consolidated Financial 40
Statements
Report of Independent Accountants 46
</TABLE>
<PAGE>
Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share amounts) First Second Third Fourth
Quarter Quarter Quarter Quarter
--------------------------------------------
<S> <C> <C> <C> <C>
1994
Revenues....................................... $102,152 $104,592 $109,908 $120,538
Income before income taxes..................... 15,972 17,657 18,210 20,689
Net income..................................... 9,423 10,418 10,744 12,502
Net income per common share:
Primary...................................... .49 .54 .56 .65
Fully diluted................................ .49 .54 .56 .65
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
</TABLE>
*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. trades on The Nasdaq Stock
Market and the London Stock Exchange under the symbol SNDT. At March 9, 1995,
the Company had approximately 2,200 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 of the
Company's common stock, as reported on The Nasdaq Stock Market.
<TABLE>
<CAPTION>
Calendar Year 1993
<S> <C> <C>
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
Calendar Year 1994
First Quarter . . . . . . . . . . . . . $41 $34 1/2
Second Quarter . . . . . . . . . . . . . 40 3/4 31 1/2
Third Quarter . . . . . . . . . . . . . 38 3/4 32 3/4
Fourth Quarter . . . . . . . . . . . . . 40 1/4 33 3/4
</TABLE>
The last sale price of the Company's common stock on March 9, 1995, as reported
on Nasdaq, was $43 per share.
30
<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>
Year Ended December 31, Percent of Revenues/(1)/ Percent
(in millions) Year Ended December 31, Increase (Decrease)/(1)/
---------------------- -------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 vs.1993 1993 vs.1992
---------------------- -------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Investment support systems. . . . . . $271.1 $243.0 $195.9 62% 64% 60% 12% 24%
Disaster recovery services. . . . . . 138.7 113.2 94.7 32 30 29 23 20
Computer services . . . . . . . . . . 27.4 25.2 34.0 6 6 11 9 (26)
---------------------- --------------------
$437.2 $381.4 $324.6 100% 100% 100% 15 18
---------------------- --------------------
Costs and Expenses
Cost of sales and direct operating. . $194.8 $173.1 $152.8 45% 46% 47% 13% 13%
Sales, marketing and
administration. . . . . . . . . . . 89.6 76.9 67.1 20 20 21 16 15
Product development . . . . . . . . . 36.8 35.1 23.4 8 9 7 5 50
Depreciation. . . . . . . . . . . . . 24.3 20.4 16.7 6 5 5 19 22
Amortization . . . . . . . . . . . . 21.4 16.2 14.2 5 4 4 32 14
---------------------- --------------------
$366.9 $321.7 $274.2 84% 84% 84% 14 17
---------------------- --------------------
Operating Income
Investment support systems/(2)/ . . . $ 43.9 $ 38.5 $ 40.3 16% 16% 21% 14% (4)%
Disaster recovery services/(2)/ . . . 29.2 25.0 12.7 21 22 13 17 97
Computer services/(2)/. . . . . . . . 4.8 3.2 3.5 18 13 10 50 (8)
Corporate administration. . . . . . . (7.6) (7.1) (6.2) (2) (2) (2) 6 16
----------------------
$70.3 $ 59.6 $ 50.3 16 16 16 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 revenues,
respectively.
Income from Operations
Investment Support Systems (ISS)
The ISS operating margin improved slightly in 1994 compared to 1993 due
primarily to internal growth of software license revenues. The improvement is
net of the initial negative impact of acquired businesses. The operating margin
declined in 1993 compared to 1992 due primarily to the initial impact of
acquired businesses and, to a lesser extent, software license revenues
comprising a smaller portion of total ISS revenues. The Company expects that the
full-year 1995 ISS operating margin will continue to increase modestly.
Disaster Recovery Services (DRS)
The small decline in the DRS operating margin in 1994 compared to 1993
is attributable primarily to increased spending on computer system upgrades and
new marketing programs. The decline is net of the positive impacts of acquired
businesses, new contract signings and contract renewals. Higher disaster fees
earned in 1993 in connection with the World Trade Center bombing in February
1993 contributed to the decline in the 1994 DRS operating margin. The
improvement in the DRS operating margin in 1993 compared to 1992 is attributable
primarily to a deferral of computer system upgrades until 1994 and the positive
31
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations continued
impacts of acquired businesses, new contract signings and contract renewals.
The Company expects that the full-year 1995 DRS operating margin will remain
the same as in 1994.
Computer Services (CS)
The improvement in the CS operating margin in 1994 compared to 1993 is
due primarily to an increase in revenues. The improvement is net of the impact
of lower royalties associated with the 1986 sale of certain product rights.
Additionally, the 1993 operating margin was lower due to costs associated with a
relocation of the CS data center to a new facility in Voorhees, NJ. Despite
these fourth-quarter 1993 relocation costs and lower royalties in 1993 compared
to 1992, the CS operating margin improved in 1993 due to the addition of new
processing customers in the second half of the year and the positive impact of
the February 1993 sale of the Company's automotive dealership-systems product
line, which had a lower operating margin. The Company expects that the CS
operating margin will decline slightly for the full year 1995 compared to 1994.
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.
Revenues
Total revenues increased $55.8 million and $56.8 million in 1994 and
1993, respectively. Excluding acquired businesses and the product line sold,
revenues increased $36.6 million and $20.3 million, or 10% and 7%, in 1994
and 1993, respectively. Recurring revenues derived from remote processing
services, disaster recovery services and software maintenance are
approximately $367.3 million, $321.0 million and $267.0 million in 1994, 1993
and 1992, respectively, representing 84% of consolidated revenues in 1994 and
1993 and 82% of consolidated revenues in 1992.
Investment Support Systems
ISS revenues increased $28.1 million and $47.1 million in 1994 and 1993,
respectively. Acquired businesses account for approximately $9.8 million and
$44.3 million of the 1994 and 1993 increases, respectively. The balance of the
1994 increase is attributable to a $12.8 million increase in remote processing
and software maintenance revenues and a $5.5 million increase in software
license and professional services revenues. The balance of the 1993 increase is
attributable to the net impact of a $6.8 million increase in remote processing
and software maintenance revenues and a $4.0 million decrease in software
license and professional services revenues.
The Company expects that ISS revenues will increase in 1995 compared to
1994 due primarily to continued expansion of its existing businesses and
geographical markets and to the inclusion of businesses acquired in 1994 for a
full year. The Company believes that the consolidation trend in the financial
services industry will continue, but is unable to predict what effect, if any,
this trend may have.
Disaster Recovery Services
DRS revenues increased $25.5 million and $18.6 million in 1994 and 1993,
respectively. Acquired businesses account for approximately $10.4 million and
$5.4 million of the 1994 and 1993 increases, respectively. The balance of the
1994 increase is due to a $13.3 million increase in revenues primarily from new
contract signings and contract renewals and a $1.8 million increase in software
license and professional services revenues. The balance of the 1993 increase is
due to an increase in revenues primarily from new contract signings and contract
renewals. The Company expects that DRS revenues will increase in 1995 due
primarily to new contract signings and contract renewals and, to a lesser
extent, the inclusion of businesses acquired in 1994 for a full year.
32
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
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, midrange offerings (including client-server
technology) have become a significant part of the Company's DRS business. The
Company believes that the demand for these offerings will continue to represent
a significant market opportunity.
Computer Services
CS revenues increased $2.2 million in 1994 compared to 1993.
Excluding 1993 revenues attributable to the product line sold in February
1993, 1994 revenues increased $3.3 million, or 13.6%. The 1994 increase is
due to increased volume in both the Company's remote-access computer services
and mailing services businesses. CS revenues decreased $8.9 million in 1993
compared to 1992. The sale of the product line accounts for a decrease in
revenues of approximately $13.3 million. This decrease was offset by a $4.4
million increase in revenues derived primarily from remote-access computer
services. The Company expects that CS revenues will increase slightly during
1995.
Costs and Expenses
Cost of sales and direct operating expenses increased $21.7 million and
$20.3 million in 1994 and 1993, respectively. The 1994 increase is due primarily
to acquired businesses, equipment upgrades and the servicing of remote-access
customers. The 1993 increase is due primarily to acquired businesses, net of the
product line sold. The decrease from 1993 to 1994 in cost of sales and direct
operating expenses as a percentage of revenues is due primarily to the 1993
acquisition of the CS data center and the fact that in 1994 leased equipment
represented a lower percentage of total capital requirements for midrange DRS
offerings. These factors caused depreciation expense to increase at a faster
rate than cost of sales and direct operating expenses. During 1993, the decrease
in cost of sales and direct operating expenses as a percentage of revenues is
due primarily to increased product development costs and, to a lesser extent,
DRS cost of sales and direct operating costs increasing at a slower rate than
DRS revenues.
Sales, marketing and administration expenses increased $12.6 million
and $9.9 million in 1994 and 1993, respectively. The 1994 increase is due
primarily to acquired businesses and increased sales activity in the DRS
business. The 1993 increase is due primarily to acquired businesses, net of
the product line sold.
Product development expenses increased $1.7 million and $11.7 million in
1994 and 1993, respectively. The 1994 increase is due primarily to development
spending in connection with various ISS products. The 1993 increase is primarily
due to acquired businesses. In addition, development costs capitalized were $1.9
million and $2.5 million in 1994 and 1993, respectively.
Depreciation of property and equipment increased $3.9 million and
$3.6 million in 1994 and 1993, respectively. The 1994 increase is due to
disaster recovery telecommunication and midrange computer equipment upgrades,
the new CS data center and acquired businesses. The 1993 increase is due to
acquired businesses, net of the product line sold, and DRS capital spending.
Amortization of intangible assets increased $5.2 million and $2.0
million in 1994 and 1993, respectively. Acquired businesses account for the
increases.
33
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations continued
Interest expense declined $2.7 million and $4.4 million in 1994 and
1993, respectively, due primarily to the conversion of the Company's $86.25
million subordinated debentures on May 12, 1993 (see Note 4 of Notes to
Consolidated Financial Statements).
The Company's effective income tax rate was 40.6% and 39.1% in 1994
and 1993, respectively. The 1993 effective income tax rate was lower than in
1994 due primarily to the product-line sale.
Liquidity and Capital Resources
At December 31, 1994, cash and short-term investments increased $17.8
million to $102.6 million. Cash equivalents and short-term investments are
invested primarily in institutional money-market funds and short-term
municipal bonds. By policy the Company places its investments with
institutions of high credit-quality and limits the amount of credit exposure
to any one issuer.
Cash flow from operations increased $29.4 million to $89.8 million in
1994. During 1994, cash paid for acquired businesses was $28.1 million. Capital
expenditures in 1994 declined slightly compared to 1993. Capital expenditures in
1993 include approximately $7.5 million in connection with the purchase of the
data center facility for the CS operations. The Company expects that capital
spending for property and equipment during 1995 will approximate 1994 spending
levels.
On November 16, 1994, the Company announced a program permitting the
purchase of up to 1,000,000 shares of its common stock by December 31, 1995.
Shares purchased under the plan will be used for the Company's stock option
and award plans and other general corporate purposes. As of December 31,
1994, the Company had spent approximately $5.8 million for approximately
150,000 shares purchased in connection with this program.
On April 15, 1993, the Company established two revolving credit
agreements for an aggregate of $25.0 million. In order to remain eligible for
borrowing under the agreements, the Company must, among other requirements,
maintain a defined minimum tangible net worth and limit its total debt. There
had been no borrowing under these agreements through December 31, 1994.
At December 31, 1994, the Company's remaining commitments consisted
primarily of operating leases for computer equipment and facilities
aggregating $133.7 million, of which $43.0 million will be paid in 1995. The
Company believes that its existing cash resources and cash generated from
operations will be sufficient to meet its operating requirements and ordinary
capital spending needs for the foreseeable future. Furthermore, the Company
believes that it has the capacity to borrow funds and issue equity to finance
additional capital needs.
34
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
(In thousands, except per share amounts) Year Ended December 31,
----------------------------------------
1994 1993 1992
----------------------------------------
<S> <C> <C> <C>
Revenues................................................. $437,190 $381,372 $324,570
----------------------------------------
Costs and expenses:
Cost of sales and direct operating................... 194,838 173,111 152,853
Sales, marketing and administration.................. 89,579 76,968 67,117
Product development.................................. 36,741 35,071 23,361
Depreciation of property and equipment............... 24,268 20,383 16,736
Amortization of intangible assets.................... 21,438 16,194 14,167
----------------------------------------
366,864 321,727 274,234
----------------------------------------
Income from operations 70,326 59,645 50,336
Gain on sale of product line......................... -- 4,071 --
Investment income, net............................... 2,874 2,850 2,899
Interest expense..................................... (672) (3,375) (7,820)
----------------------------------------
Income before income taxes............................... 72,528 63,191 45,415
Income taxes......................................... 29,441 24,717 19,607
----------------------------------------
Net income............................................... $ 43,087 $ 38,474 $ 25,808
----------------------------------------
Net income per common share:
Primary.............................................. $ 2.24 $ 2.14 $ 1.65
----------------------------------------
Fully diluted........................................ $ 2.24 $ 2.09 $ 1.59
----------------------------------------
Shares used to compute net income per common share:
Primary.............................................. 19,249 17,958 15,647
----------------------------------------
Fully diluted........................................ 19,251 19,176 18,991
----------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In thousands, except per share amounts) December 31,
-----------------------
1994 1993
-----------------------
<S> <C> <C>
Assets
Current:
Cash and equivalents............................................................. $ 68,491 $ 51,955
Short-term investments, at cost, which approximates market....................... 34,107 32,824
Trade receivables, less allowance for doubtful accounts of $7,276 and $6,969..... 85,339 74,053
Earned but unbilled receivables.................................................. 13,488 12,213
Prepaid expenses and other current assets........................................ 14,380 13,895
Deferred income taxes............................................................ 6,490 5,690
-----------------------
Total current assets........................................................... 222,295 190,630
Property and equipment, less accumulated depreciation of $105,036 and $85,098........ 90,436 77,556
Software products, less accumulated amortization of $46,943 and $37,931.............. 23,964 27,615
Goodwill, less accumulated amortization of $15,035 and $11,888....................... 95,822 84,852
Other intangible assets, less accumulated amortization of $20,452 and $14,535........ 53,223 37,482
-----------------------
$485,740 $418,135
=======================
Liabilities and Stockholders' Equity
Current:
Short-term and current portion of long-term debt................................. $ 5,673 $ 3,162
Accounts payable................................................................. 7,628 7,191
Accrued compensation and benefits................................................ 22,354 19,466
Other accrued expenses........................................................... 14,214 11,528
Accrued income taxes............................................................. 6,049 4,069
Deferred revenues................................................................ 57,492 45,633
-----------------------
Total current liabilities...................................................... 113,410 91,049
-----------------------
Long-term debt....................................................................... 4,894 3,361
-----------------------
Deferred income taxes................................................................ 8,144 6,765
-----------------------
Commitments
Stockholders' equity:
Preferred stock, par value $.01 per share; 5,000 shares authorized............... -- --
Common stock, par value $.01 per share; 60,000 shares authorized;
18,898 and 18,801 shares issued................................................ 189 188
Capital in excess of par value................................................... 162,235 161,149
Restricted stock plans........................................................... (858) (2,156)
Retained earnings................................................................ 205,121 162,034
Foreign currency translation adjustment.......................................... (2,366) (4,041)
-----------------------
364,321 317,174
Treasury stock, at cost, 131 and 6 shares........................................ (5,029) (214)
-----------------------
Total stockholders' equity..................................................... 359,292 316,960
-----------------------
$485,740 $418,135
-----------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Year Ended December 31,
-----------------------------------------
1994 1993 1992
-----------------------------------------
<S> <C> <C> <C>
Cash Flow From Operations
Net income........................................................................ $ 43,087 $ 38,474 $ 25,808
Reconciliation of net income to cash flow from operations:
Depreciation and amortization................................................... 45,706 36,577 30,903
Net gain on sale of product line................................................ -- (3,371) --
Charges for incentive stock plans............................................... 1,462 1,432 2,678
Other noncash charges (credits)................................................. (176) (272) 816
Deferred income tax provision (benefit)......................................... (3,668) 710 (2,948)
------------------------------------------
86,411 73,550 57,257
Cash provided by (used for) working capital, net of effect of
acquired businesses and sale of product line:
Accounts receivable and other current assets................................... (11,536) (19,574) (4,902)
Accounts payable and accrued expenses.......................................... 4,594 (190) 7,538
Deferred revenues.............................................................. 10,300 6,590 2,559
------------------------------------------
Cash flow from operations.................................................... 89,769 60,376 62,452
------------------------------------------
Financing Activities
Cash received under employee stock plans.......................................... 3,687 4,034 2,977
Cash paid for treasury stock...................................................... (7,979) (2,406) (1,469)
Repayments of debt................................................................ (2,121) (2,530) (1,076)
------------------------------------------
Total financing activities...................................................... (6,413) (902) 432
------------------------------------------
Long-Term Investment Activities
Cash paid for acquired businesses, net of cash acquired........................... (28,061) (30,808) (22,370)
Cash paid for property and equipment.............................................. (34,286) (35,079) (24,017)
Cash paid for software and other assets........................................... (3,191) (4,139) (3,192)
Cash received from sale of assets................................................. -- 11,923 605
------------------------------------------
Total long-term investment activities........................................... (65,538) (58,103) (48,974)
------------------------------------------
Increase in cash and equivalents before short-term investment activities.............. 17,818 1,371 13,910
Short-Term Investment Activities
Purchase of short-term investments................................................ (48,775) (31,140) (28,536)
Maturities of short-term investments.............................................. 47,493 21,627 18,595
------------------------------------------
Increase (decrease) in cash and equivalents........................................... 16,536 (8,142) 3,969
Beginning cash and equivalents........................................................ 51,955 60,097 56,128
------------------------------------------
Ending cash and equivalents........................................................... $ 68,491 $ 51,955 $ 60,097
------------------------------------------
Noncash Activities
Reduction of long-term debt, net of debt issuance costs, resulting from
conversion of subordinated debentures into common stock......................... -- $(83,993) --
------------------------------------------
Supplemental Information
Interest paid..................................................................... $ 703 $ 4,369 $ 7,758
------------------------------------------
Income taxes paid................................................................. $ 30,405 $ 24,431 $ 20,188
------------------------------------------
Acquired businesses:
Property and equipment.......................................................... $ 2,250 $ 4,843 $ 2,939
Software products............................................................... 2,620 4,872 8,547
Goodwill and other intangible assets............................................ 38,274 30,596 16,574
Purchase price obligations and debt assumed..................................... (5,184) (2,963) (2,914)
Deferred income taxes........................................................... (3,234) -- (4,311)
Net current assets acquired (liabilities assumed)............................... (6,665) (6,540) 1,535
------------------------------------------
Cash paid for acquired businesses, net of cash acquired..................... $ 28,061 $ 30,808 $ 22,370
------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
Common Stock
-----------------
Number of Par
Shares Value
-----------------
<S> <C> <C>
Balances, December 31, 1991................................. 15,137 $151
Net income................................................ -- --
Purchase of common stock.................................. -- --
Shares issued under stock option and stock purchase plans. 127 2
Compensation expense related to restricted stock plans.... -- --
Income tax benefit arising from transactions in common
stock options........................................... -- --
Foreign currency translation adjustment................... -- --
---------------
Balances, December 31, 1992................................. 15,264 153
Net income................................................ -- --
Shares issued upon conversion of subordinated debentures.. 3,310 33
Purchase of common stock.................................. -- --
Shares issued under restricted stock plans................ 5 --
Shares issued under stock option and stock purchase plans. 222 2
Compensation expense related to restricted stock plans.... -- --
Income tax benefit arising from transactions in common
stock options........................................... -- --
Foreign currency translation adjustment................... -- --
---------------
Balances, December 31, 1993................................. 18,801 188
Net income................................................ -- --
Purchase of common stock.................................. -- --
Shares issued under restricted stock plans, net........... 5 --
Shares issued under stock option and stock purchase plans. 92 1
Compensation expense related to restricted stock plans.... -- --
Income tax benefit arising from transactions in common
stock options........................................... -- --
Foreign currency translation adjustment................... -- --
---------------
Balances, December 31, 1994................................. 18,898 $189
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
<TABLE>
<CAPTION>
Foreign
Capital in Restricted Currency
Excess of Stock Retained Translation
Par Value Plans Earnings Adjustment
----------------------------------------------
<S> <C> <C> <C> <C>
Balances, December 31, 1991................................. $ 70,125 $(4,857) $ 97,752 $ 178
Net income................................................ -- -- 25,808 --
Purchase of common stock.................................. -- -- -- --
Shares issued under stock option and stock purchase plans. 1,630 -- -- --
Compensation expense related to restricted stock plans.... -- 1,414 -- --
Income tax benefit arising from transactions in common
stock options........................................... 590 -- -- --
Foreign currency translation adjustment................... -- -- -- (2,892)
------------------------------------------
Balances, December 31, 1992................................. 72,345 (3,443) 123,560 (2,714)
Net income................................................ -- -- 38,474 --
Shares issued upon conversion of subordinated debentures.. 84,167 -- -- --
Purchase of common stock.................................. -- -- -- --
Shares issued under restricted stock plans................ 145 (145) -- --
Shares issued under stock option and stock purchase plans. 3,310 -- -- --
Compensation expense related to restricted stock plans.... -- 1,432 -- --
Income tax benefit arising from transactions in common
stock options........................................... 1,182 -- -- --
Foreign currency translation adjustment................... -- -- -- (1,327)
------------------------------------------
Balances, December 31, 1993................................. 161,149 (2,156) 162,034 (4,041)
Net income................................................ -- -- 43,087 --
Purchase of common stock.................................. -- -- -- --
Shares issued under restricted stock plans, net........... 164 (164) -- --
Shares issued under stock option and stock purchase plans. 522 -- -- --
Compensation expense related to restricted stock plans.... -- 1,462 -- --
Income tax benefit arising from transactions in common
stock options........................................... 400 -- -- --
Foreign currency translation adjustment................... -- -- -- 1,675
------------------------------------------
Balances, December 31, 1994................................. $162,235 $ (858) $205,121 $(2,366)
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock
----------------
Number of
Shares Cost Total
---------------------------
<S> <C> <C> <C>
Balances, December 31, 1991................................. (21) $ (351) $162,998
Net income................................................ -- -- 25,808
Purchase of common stock.................................. (58) (1,469) (1,469)
Shares issued under stock option and stock purchase plans. 78 1,818 3,450
Compensation expense related to restricted stock plans.... -- -- 1,414
Income tax benefit arising from transactions in common
stock options........................................... -- -- 590
Foreign currency translation adjustment................... -- -- (2,892)
-------------------------
Balances, December 31, 1992................................. (1) (2) 189,899
Net income................................................ -- -- 38,474
Shares issued upon conversion of subordinated debentures.. -- -- 84,200
Purchase of common stock.................................. (69) (2,406) (2,406)
Shares issued under restricted stock plans................ -- -- --
Shares issued under stock option and stock purchase plans. 64 2,194 5,506
Compensation expense related to restricted stock plans.... -- -- 1,432
Income tax benefit arising from transactions in common
stock options........................................... -- -- 1,182
Foreign currency translation adjustment................... -- -- (1,327)
-------------------------
Balances, December 31, 1993................................. (6) (214) 316,960
Net income................................................ -- -- 43,087
Purchase of common stock.................................. (212) (7,979) (7,979)
Shares issued under restricted stock plans, net........... -- -- --
Shares issued under stock option and stock purchase plans. 87 3,164 3,687
Compensation expense related to restricted stock plans.... -- -- 1,462
Income tax benefit arising from transactions in common
stock options........................................... -- -- 400
Foreign currency translation adjustment................... -- -- 1,675
-------------------------
Balances, December 31, 1994................................. (131) $(5,029) $359,292
-------------------------
</TABLE>
39
<PAGE>
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 over the terms of the related contracts or
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 related 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 at the date of purchase are considered to be cash equivalents;
those with maturities greater than three months are considered to be short-term
investments.
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 receivables. By policy the Company places its temporary cash
and short-term investments with institutions of high credit-quality and
limits the amount of credit exposure to any one issuer. The Company sells a
significant portion of its products and services to the financial services
industry and could be directly affected by the well-being of the financial
services industry in general. The Company believes that any credit risk
associated with receivables is substantially mitigated by the relatively
large number of customer accounts and reasonably short collection terms.
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
accumulated as a separate component of stockholders' equity.
40
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
Software Development and Product Costs
Product development costs are expensed as incurred and consist
primarily of design and development costs of new products and costs
associated with significant enhancements incurred prior to the establishment
of a product's technological feasibility.
Costs associated with purchased software, software obtained 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 $9,778,000, $8,564,000 and $7,227,000 during 1994, 1993 and 1992,
respectively.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets
acquired and is amortized using the straight-line method over periods ranging
from twenty to forty years. The recoverability of goodwill is periodically
reviewed by the Company. In assessing recoverability, many factors are
considered, including operating results and cash flows of the acquired
businesses, as well as benefits the acquired businesses contribute to existing
and related products, services and markets. The Company believes that no
impairment of goodwill existed at December 31, 1994.
Other Intangible Assets
Other intangible assets consist primarily of contract rights and
noncompetition agreements obtained in business acquisitions. Contract rights are
amortized using the straight-line method over their estimated useful lives,
ranging from five to thirty years. Noncompetition agreements are amortized using
the straight-line method over the term of such agreements, ranging from four to
seven years.
Income Taxes
The Company follows Financial Accounting Standards No. 109, "Accounting
for Income Taxes," which requires recognition of deferred tax assets and
liabilities based upon the expected future tax consequences of events that have
been included in the financial statements or tax returns. Deferred tax assets
and liabilities are calculated 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.
Net Income Per Common Share
Primary and fully diluted net income per common share are calculated
using the weighted-average number of common shares and common-equivalent shares
outstanding during the year. Common-equivalent shares are attributable to
unexercised stock options. Prior to May 12, 1993, fully diluted net income per
common share was calculated based on the assumption that all of the Company's
$86,250,000 convertible subordinated debentures (Debentures), which carried an
interest rate of 8.25%, were converted into common stock on the date of issue
(see Note 4). For purposes of calculating fully diluted net income per common
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
Debentures.
41
<PAGE>
Notes to Consolidated Financial Statements continued
2. Acquisitions and Dispositions
Purchase Transactions and Product-Line Sale
During 1994, the Company completed four business acquisitions. Two
acquisitions were in the Company's investment support systems business and
two were in its disaster recovery services business. Total cash paid in
connection with these acquisitions was approximately $27,927,000, subject to
certain adjustments. Goodwill recorded in connection with these acquisitions
was approximately $12,806,000.
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 these acquisitions was approximately $32,258,000, subject to
certain adjustments. Goodwill recorded in connection with these acquisitions
was approximately $13,284,000.
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.
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 $7,920,000 in cash, plus a contingent
payment of up to 50,000,000 Swedish Kronor (approximately $6,700,000 at
December 31, 1994) 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
$4,093,000.
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 purchase
price was approximately $16,884,000 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
$5,211,000.
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>
1994 1993
-----------------------
<S> <C> <C>
Computer and telecommunications
equipment................................... $ 121,691 $ 101,543
Leasehold improvements........................... 28,302 21,771
Office furniture and equipment................... 22,413 19,102
Buildings and improvements....................... 15,672 14,071
Land............................................. 2,491 2,491
Construction in progress......................... 4,903 3,676
-----------------------
195,472 162,654
Accumulated depreciation and
amortization................................. (105,036) (85,098)
-----------------------
$ 90,436 $ 77,556
-----------------------
</TABLE>
4. Long-Term Debt
Long-term debt consists of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------------------
<S> <C> <C>
Purchase price obligations due former
owners of acquired businesses....................... $ 7,944 $ 2,705
Other, primarily capital lease
obligations for computer equipment
and buildings, interest ranging
from 4.3% to 8.6%................................... 2,623 3,818
-------------------
10,567 6,523
Less current maturities................................. (5,673) (3,162)
-------------------
$ 4,894 $ 3,361
-------------------
</TABLE>
42
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
On May 12, 1993, substantially all of the Company's Debentures were
converted into 3,309,803 shares of common stock of the Company at a
conversion price of $26.00 per share. 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.
The Company has two unsecured revolving credit agreements (Credit
Agreements) that provide for up to an aggregate $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 to borrow under
the Credit Agreements, the Company must, among other requirements, maintain a
defined minimum tangible net worth and limit its total debt. There had been no
borrowing under the Credit Agreements through December 31, 1994.
Annual maturities of long-term debt during the next five years are as
follows: 1995-$5,673,000; 1996-$2,160,000; 1997-$371,000; 1998-$358,000 and
1999-$421,000.
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 1994, 1993 and 1992, employees purchased 87,000, 64,000
and 63,000 shares, respectively, at average purchase prices of $30.98, $30.06
and $22.21 per share, respectively. At December 31, 1994, 182,000 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.
RSAP awards for 5,000 shares were granted during 1994 and 1993 at market values
of $34.63 and $29.00 per share, respectively. There were no awards during 1992.
At December 31, 1994, 61,000 common shares were reserved for issuance under this
plan.
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. There have been no awards granted since
1991. At December 31, 1994, 54,000 common shares were reserved for issuance
under this plan.
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 $1,462,000, $1,432,000
and $1,414,000 for the years ended December 31, 1994, 1993 and 1992,
respectively.
43
<PAGE>
Notes to Consolidated Financial Statements continued
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 a five-year vesting schedule.
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
----------------------------
Available Under Option
----------------------------
<S> <C> <C>
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
Canceled ($14.00 and $23.38 per share).................................................. 5,000 (5,000)
Granted ($38.50 and $38.75 per share)................................................... (51,000) 51,000
Exercised ($5.00 - $23.38 per share).................................................... -- (92,000)
----------------------------
Balances at December 31, 1994 ($5.00 - $39.00 per share).................................... 231,000 638,000
----------------------------
Options exercisable at December 31, 1994.................................................... 533,000
-------
</TABLE>
Equity Incentive Plan
On May 9, 1994, the stockholders approved the Company's 1994 Equity
Incentive Plan (EIP). Under the terms of the EIP, awards for up to 500,000
shares of common stock may be granted to key employees of the Company, with an
individual limit of 100,000 shares per participant per year. During 1994, awards
for up to an aggregate of 42,000 shares were granted to the five group chief
executives (the 1994 awards). The actual number of shares and the exercise price
per share are contingent upon achieving certain cumulative financial results
over a three-year period ending December 31, 1996. The maximum number of shares
that may be earned under the 1994 awards is 42,000 shares. The exercise price
per share is $38.65, but could be reduced to a minimum of $24.74 if actual
operating results during the three-year period exceed targeted operating
results. Compensation expense, if any, will be determined initially at the time
the achievement of the cumulative financial results becomes probable and will be
recorded over the remaining three-year period, based upon the difference between
the market value and exercise price of the shares earned. During the year ended
December 31, 1994, no expense was recorded in connection with the 1994
awards.
44
<PAGE>
SunGard Data Systems Inc. and Subsidiaries
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 $3,800,000, $3,092,000 and $2,466,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.
7. Income Taxes
The provisions for income taxes for the years ended December 31,
1994, 1993 and 1992 consist of the following (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . $22,251 $17,013 $16,773
State . . . . . . . . . . . . . . . 6,810 5,415 5,130
Foreign . . . . . . . . . . . . . . 4,048 1,579 652
--------------------------------
33,109 24,007 22,555
--------------------------------
Deferred:
Federal . . . . . . . . . . . . . . (2,579) 432 (2,221)
State . . . . . . . . . . . . . . . (603) 231 (642)
Foreign . . . . . . . . . . . . . . (486) 47 (85)
--------------------------------
(3,668) 710 (2,948)
--------------------------------
$29,441 $24,717 $19,607
--------------------------------
</TABLE>
The principal sources of temporary differences that gave rise to
deferred taxes and their tax effects for the years ended December 31, 1994,
1993 and 1992 follow (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------
<S> <C> <C> <C>
Accrued liabilities not currently
deductible . . . . . . . . . . . . $ (158) $ 1,982 $(1,619)
Restricted stock plans . . . . . . . . (547) (541) (509)
Software development costs . . . . . . 14 360 76
Depreciation and
amortization . . . . . . . . . . . (2,802) (3) (500)
Allowance for doubtful
accounts . . . . . . . . . . . . . (154) (1,041) (376)
Other, net . . . . . . . . . . . . . . (21) (47) (20)
-------------------------------
$(3,668) $ 710 $(2,948)
-------------------------------
</TABLE>
Differences between income tax expense at the statutory United States
federal income tax rate and the Company's effective income tax rate for the
years ended December 31, 1994, 1993 and 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------
<S> <C> <C> <C>
Tax at federal statutory rate . . . . . . $25,385 $22,117 $15,441
State income taxes, net of
federal benefit . . . . . . . . . . . 4,034 3,670 2,962
Nondeductible amortization. . . . . . . . 1,142 1,009 1,013
Tax-exempt interest income. . . . . . . . (859) (817) (818)
Foreign taxes . . . . . . . . . . . . . . 196 210 160
Product-line sale . . . . . . . . . . . . -- (1,013) --
Other, net. . . . . . . . . . . . . . . . (457) (459) 849
--------------------------------
$29,441 $24,717 $19,607
--------------------------------
Effective income tax rate . . . . . . . . 40.6% 39.1% 43.2%
--------------------------------
</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, 1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
1994 1993
----------------------
<S> <C> <C>
Current:
Accounts receivable . . . . . . . . . . . $ 2,868 $ 2,927
Accrued compensation and benefits . . . . 2,632 2,572
Other accrued expenses. . . . . . . . . . 1,361 797
Restricted stock plans. . . . . . . . . . (371) (606)
----------------------
$ 6,490 $ 5,690
----------------------
Long-Term:
Property and equipment . . . . . . . . . . $ (77) $ (654)
Intangible assets. . . . . . . . . . . . . (8,067) (5,811)
Restricted stock plans . . . . . . . . . . -- (300)
----------------------
$(8,144) $(6,765)
----------------------
</TABLE>
8. Export Sales
The Company's domestic operations recorded revenues from
international software license, maintenance and professional services of
approximately $33,505,000, $29,061,000 and $32,501,000 for the years ended
December 31, 1994, 1993 and 1992, respectively.
45
<PAGE>
Notes to Financial Statements continued
9. 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, 1994 follow (in thousands):
1995 . . . . . . . . . . . . . . . . . . $ 42,995
1996 . . . . . . . . . . . . . . . . . . 31,017
1997 . . . . . . . . . . . . . . . . . . 22,663
1998 . . . . . . . . . . . . . . . . . . 15,339
1999 . . . . . . . . . . . . . . . . . . 6,803
Thereafter . . . . . . . . . . . . . . . 14,884
--------
$133,701
========
Rent expense aggregated $45,923,000, $40,914,000 and $38,130,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.
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 of December 31, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1994. 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, 1994 and 1993, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 8, 1995
46
<PAGE>
Exhibit 21.1
SunGard Data Systems Inc.
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Name of Subsidiary Jurisdiction of Incorporation
----------------------------------------------------------------------------
<S> <C>
Portfolio Administration Limited/(1)(2)/ England
----------------------------------------------------------------------------
Shaw Data Securities, Inc./(1)/ New York
----------------------------------------------------------------------------
Shaw Data Services, Inc./(1)(3)/ New York
----------------------------------------------------------------------------
SunGard Business Systems Inc./(1)(4)/ Alabama
----------------------------------------------------------------------------
SunGard Capital Markets Inc./(1)(5)/ Pennsylvania
----------------------------------------------------------------------------
SunGard Computer Services Inc./(6)/ Pennsylvania
----------------------------------------------------------------------------
SunGard Financial Systems Inc./(1)(7)/ Delaware
----------------------------------------------------------------------------
SunGard Institutional Investments Inc./(8)/ North Carolina
----------------------------------------------------------------------------
SunGard Investment Systems Inc./(1)/ Delaware
----------------------------------------------------------------------------
SunGard Investment Ventures, Inc./(9)(10)/ Delaware
----------------------------------------------------------------------------
SunGard Management Inc./(1)(10)/ Delaware
----------------------------------------------------------------------------
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 foreign subsidiaries.
(3) Conducts certain operations through two wholly owned domestic subsidiaries
and two wholly owned foreign subsidiaries.
(4) Organized into, and conducts business under the names of, three operating
divisions--SunGard Asset Management Systems, SunGard Employee Benefit
Systems, and SunGard Mailing Services.
(5) Conducts certain operations through three wholly owned domestic
subsidiaries and fourteen wholly owned foreign subsidiaries.
(6) Wholly owned subsidiary of SunGard Management Inc.
(7) Sometimes conducts business under the names Money Management Systems,
Phase3 Systems, SunGard Brokerage Systems, SunGard Global Systems, SunGard
Insurance Systems, SunGard Securities Systems, Warrington Financial
Systems and Wismer Associates; conducts certain operations through one
wholly owned domestic subsidiary which sometimes conducts business under
the names Information Systems of America and SunGard Insurance Systems.
(8) Wholly owned subsidiary of SunGard Trust Systems Inc.
(9) Wholly owned subsidiary of SunGard Data Systems Inc.
(10) Not an operating company.
(11) Conducts certain operations through one wholly owned foreign subsidiary.
Sometimes conducts business under the name SunGard Planning Solutions.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of SunGard Data Systems Inc. as of December 31, 1994
and the consolidated statement of income for the year ended December 31, 1994,
both incorporated by reference into the Form 10-K of SunGard Data Systems Inc.
for the year ended December 31, 1994, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 68,491
<SECURITIES> 34,107
<RECEIVABLES> 98,827
<ALLOWANCES> 7,276
<INVENTORY> 0
<CURRENT-ASSETS> 222,295
<PP&E> 195,472
<DEPRECIATION> 105,036
<TOTAL-ASSETS> 485,740
<CURRENT-LIABILITIES> 113,410
<BONDS> 4,894
<COMMON> 189
0
0
<OTHER-SE> 359,103
<TOTAL-LIABILITY-AND-EQUITY> 485,740
<SALES> 0
<TOTAL-REVENUES> 437,190
<CGS> 0
<TOTAL-COSTS> 366,864
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 672
<INCOME-PRETAX> 72,528
<INCOME-TAX> 29,441
<INCOME-CONTINUING> 43,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,087
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.24
</TABLE>
