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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, 1997 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...................................1-12989
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:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes[X]. No[ ].
--- ---
The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant as of March 16, 1998 was $3,433,753,878.(1) There
were 102,710,449 shares of the registrant's Common Stock outstanding as of March
16, 1998.
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, 1997, and Part III of this Form 10-K incorporates by reference
certain information from the registrant's definitive proxy statement, for its
1998 annual meeting of stockholders, 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. [_]
(1) This equals the number of outstanding shares of the registrant's Common
Stock, reduced by the number of shares that may be deemed beneficially owned
by the registrant's directors, nominees and officers, multiplied by the last
sale price for the registrant's Common Stock reported on March 16, 1998.
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
PAGE
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PART I
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ITEM 1. BUSINESS............................................ 1
Overview.......................................... 1
Investment Considerations......................... 2
Investment Support Systems........................ 4
Disaster Recovery Services........................ 10
Computer Services and Other....................... 12
Product Development............................... 13
Acquisitions and Offerings........................ 14
Competition....................................... 15
Marketing......................................... 16
Employees......................................... 16
Proprietary Protection............................ 17
ITEM 2. PROPERTIES.......................................... 17
ITEM 3. LEGAL PROCEEDINGS................................... 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 18
ITEM 4.1 CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT........ 18
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PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.............................. 20
ITEM 6. SELECTED FINANCIAL DATA............................ 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.............. 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........ 20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.............. 20
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PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. 21
ITEM 11. EXECUTIVE COMPENSATION............................. 21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................... 21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..... 21
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PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.............................. 22
SIGNATURES......................................... 23
LIST OF EXHIBITS................................... 24
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PART I
ITEM 1. BUSINESS
OVERVIEW
SunGard Data Systems Inc. (the "Company") is a computer services and software
company that specializes in proprietary investment support systems,
comprehensive computer disaster recovery services and proprietary healthcare
information systems. The Company believes that it is the only large specialized
provider of investment support systems to the financial services industry and
the pioneer and a leading provider of comprehensive computer disaster recovery
services. The Company's business approach is to focus on market niches in which
it has opportunities to develop or acquire leading products.
The Company seeks to maximize recurring and consulting revenues by selling
most of its 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 and consulting revenues accounted for
approximately 87% of the Company's total revenues during the last three years
(86% in 1997). The Company's recurring revenues are derived primarily from
contracts for remote processing, disaster recovery and software maintenance
services, which together accounted for approximately 76% of the Company's total
revenues during the last three years (73% in 1997) (see INVESTMENT
CONSIDERATIONS - ACQUISITIONS AND RELATED EFFECT ON OPERATIONS). 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 77% were renewed or replaced with new contracts (77% in 1997).
While there can be no assurance that the rate of contract renewals will remain
at this level, 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 1997.
The Company's operations are decentralized, and its management philosophy is
one of "managed entrepreneurship." The Company's services are provided through
separate business units. Each business 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. The Company's business units are
organized as follows:
INVESTMENT SUPPORT SYSTEMS GROUP:
SunGard Financial Systems: Portfolio management and securities trading and
-------------------------
accounting systems for financial institutions, banks, broker/dealers, insurance
companies, governments and corporations; general ledger accounting systems for
insurance companies. Business units: SunGard Brokerage Systems, SunGard
Insurance Systems, SunGard Securities Systems and Wall Street Concepts Inc.
(formerly WSC Investment Services, Inc.).
SunGard Trading Systems: Trading, risk management and accounting systems for
-----------------------
derivative instruments, securities and foreign exchange for international
financial institutions, brokerage firms and corporations. Business units: ADS
Associates, BancWare, Front Capital Systems, Infinity, May Consulting, SunGard
Dealing Systems and SunGard Futures Systems.
SunGard Trust and Shareholder Systems: Trust and investment accounting,
-------------------------------------
portfolio management and administration, securities trading, custody and
employee benefit plan systems for financial
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institutions, stockbrokers and corporations; stock and bond accounting systems
for mutual funds, transfer agents and corporations; accounting systems for
nonprofit organizations. Business units: All Solutions, Bi-Tech Software,
Corbel, Corporate Services (BondMaster), CSS, Global Plus, Portfolio
Administration Limited, Series 7, Series 11, SunGard/Shaw Data, SunGard Asset
Management Systems, SunGard/DML, SunGard Employee Benefit Systems, SunGard
Finance SAS (Paris), SunGard Investment Products, SunGard Investment Systems,
SunGard Investment Systems SA (Geneva), SunGard Investment Administration
Services, SunGard Shareholder Systems and SunGard Trust Systems.
DISASTER RECOVERY SERVICES GROUP:
SunGard Recovery Services: Comprehensive business continuity services:
-------------------------
recovery services for mainframe computing platforms, recovery services for
midrange computing platforms including mobile and quick-ship services, work-
group recovery services, electronic vaulting services, network recovery
services; business continuity planning software and related consulting and
educational services. Business units: SunGard Planning Solutions and SunGard
Recovery Services.
COMPUTER SERVICES AND OTHER:
SunGard Computer Services: Remote-access computer processing and outsourcing
-------------------------
and automated mailing services. Business units: SunGard Computer Services and
SunGard Mailing Services.
SunGard Healthcare Information Systems: A variety of software information
--------------------------------------
systems for hospitals, health maintenance organizations, health insurance
companies and workers compensation administrators. Business units: Intelus,
MACESS and Med Data.
The Company, a Delaware corporation, was organized in 1982. The Company's
executive offices are located at 1285 Drummers Lane, Suite 300, Wayne,
Pennsylvania 19087, and its telephone number is (610) 341-8700.
INVESTMENT CONSIDERATIONS
Statements about the Company's expectations and all other statements in this
Report and other Company communications other than historical facts are forward-
looking statements. Since these statements involve risks and uncertainties and
are subject to change at any time, the Company's actual results could differ
materially from expected results. The Company derives most of its forward-
looking statements from its operating budgets and forecasts, which are based
upon many detailed assumptions. While the Company believes that its assumptions
are reasonable, it cautions that there are inherent difficulties in predicting
certain important factors, especially the timing and magnitude of software
sales, the timing and scope of technological advances and year 2000 compliance,
the performance of recently acquired businesses, the prospects for future
acquisitions, and the overall condition of the financial services industry.
Certain of these factors are further discussed below and should be considered in
evaluating the Company's forward-looking statements and any investment in the
Company's common stock.
ACQUISITIONS AND RELATED EFFECT ON OPERATIONS. The Company seeks to grow both
internally and through the acquisition of complementary businesses. The
Company's growth, in part, depends upon the availability of suitable acquisition
candidates and whether acquisitions can be completed on acceptable terms.
Competition from other acquirors and the alternative of a public equity offering
may adversely affect both the availability and terms of future acquisitions.
Further acquisitions by the Company may require the use of debt or equity
financing. During 1997, the Company acquired 12 businesses (see ACQUISITIONS
AND OFFERINGS), including the acquisition of Infinity Financial Technology, Inc.
("Infinity"), which closed on January 2, 1998. Infinity derives a significantly
larger portion of its revenues from software licensing fees than does the
Company. Since there are inherent difficulties in predicting the timing and
magnitude of software sales, the potential for fluctuations in quarterly
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revenues and income is expected to be higher than in the past. Moreover, there
can be no assurance that the Company will be able to successfully integrate its
recent or future acquisitions or that any acquired business will perform as
expected. Failure to successfully integrate an acquisition or poor performance
by an acquired business could adversely affect the Company's results and cause
impairment of part of the Company's goodwill and other intangible assets
recorded in purchase transactions.
TECHNOLOGICAL CHANGES. The Company's success, in part, depends upon continued
adaptation of its proprietary software and recovery services to new computer and
telecommunications technology on a timely and cost effective basis. In
particular, rapid technological developments, which cannot be predicted, could
have a material adverse effect on the Company's business and prospects.
PRODUCT DEVELOPMENT. The Company must continually enhance and evolve its
proprietary software to keep pace with developments in the financial services
and healthcare industries. There can be no assurance that the Company will be
able to update its software or develop new systems without experiencing
unforeseen delays or that newly developed products will be successfully marketed
and sold.
YEAR 2000 COMPLIANCE. The Company has initiated a comprehensive program to
evaluate and address the impact of the year 2000 on its software systems,
computer processing and disaster recovery operations (see PRODUCT DEVELOPMENT).
The Company believes, based in part upon simulation testing and product
evaluation, that it will meet its year 2000 commitments using existing product
development and support resources, without incurring significant incremental
expenses. There can be no assurance, however, that the Company will not be
required to add personnel and accelerate purchases of third party software and
hardware upgrades in order to make the majority of its products year 2000
compliant (meaning that they can handle dates in the year 2000 and beyond).
There also can be no assurance that unanticipated year 2000 problems will not
arise, especially in connection with third party software and hardware that
interacts with the Company's products or that is otherwise used by the Company.
The failure of any of the Company's material products to be year 2000 compliant
on a timely basis may have a material adverse effect on the Company's business
and financial results. Furthermore, the advent of the year 2000 may cause an
acceleration of software buying decisions and a shortage in the availability of
experienced programmers. The Company recently has entered into agreements with
certain investment support systems customers which need to convert off of non-
year 2000 compliant systems, and some of these agreements require the Company to
meet significant development obligations and complete conversions prior to
December 31, 1999. The failure of the Company to meet these commitments could
have a material adverse impact on the Company's business and financial results.
FINANCIAL SERVICES INDUSTRY. The Company sells most of its computer services
and software to the financial services industry and is generally dependent upon
the continued vitality of that industry. A material adverse change in the
condition of the financial services industry, such as a significant decline in
securities or derivatives trading activities or in the number or value of
managed portfolios, could have a material adverse effect on the Company's
business and prospects.
HEALTHCARE INFORMATION SYSTEMS BUSINESS. Since 1995, the Company has
acquired three providers of software information systems to the healthcare
industry and anticipates acquiring additional businesses (see COMPUTER SERVICES
AND OTHER). Although the Company has experience managing software businesses,
the Company has limited experience in the healthcare information systems market.
In addition, a number of the Company's competitors in this market have
substantially greater financial, technological and marketing resources than the
Company which may limit the Company's ability to acquire additional businesses.
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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 systems also are marketed internationally.
The Company delivers its investment support systems as remote processing
services using the Company's computers and through software licenses for use on
customers' computers. The Company provides investment support remote processing
services primarily from its computer centers in Birmingham (Alabama), Charlotte
North Carolina, Fairfield (New Jersey), Hopkins (Minnesota), Voorhees (New
Jersey), and Waltham (Massachusetts) (see PROPERTIES). As of December 31, 1997,
the Company had approximately 2,300 remote processing contracts in force. These
contracts generally have initial terms of one or more years and then continue
for successive, one-year or longer renewal terms, although some allow the
customer to terminate on relatively short notice.
The Company's investment support systems business has continued to increase in
both size and scope, due primarily to acquisitions (see ACQUISITIONS AND
OFFERINGS). During 1997, the Company continued its product unification and
enhancement efforts 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 1997, the Company
continued to add multicurrency and Internet 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 Company's principal investment accounting and portfolio
management systems, some of which have multicurrency capabilities, are described
in the following table:
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SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
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APS(TM)/PMS(TM) microcomputer software license small banks, thrifts,
- -------------------------------------------------------------------- government treasurers and
SERIES2(TM) UNIX workstation remote processing service other financial institutions
- --------------------------------------------------------------------
APS2(TM) microcomputer software license and
UNIX workstation remote processing
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APSYS (TM)III IBM mainframe software license private banks in
Digital Luxembourg and
Switzerland
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GLOBAL PORTFOLIO(TM)II IBM midrange software license and large banks, employee
Digital VAX/VMS remote processing service saving schemes and stock
Digital Alpha/VMS brokers in France, Belgium
and Luxembourg
- ---------------------------------------------------------------------------------------------------
INVEST ONE(R) IBM mainframe remote processing service international banks, large
and software license bank trust departments,
--------------------------------------------- mutual funds, insurance
UNIX workstation software license companies and other
financial institutions
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ON-LINE(TM) Bull mainframe remote processing service institutional and retail
investment advisers and
other portfolio managers
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ON-SITE(TM) UNIX workstation software license
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SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
===================================================================================================
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PAL(TM) IBM midrange remote processing service United Kingdom
stockbroking firms and fund
managers
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PAR EX(R) microcomputer software license and insurance companies
remote processing service
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PRISM(TM) IBM mainframe software license
- ---------------------------------------------------------------------
SDIM(TM) microcomputer software license
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During 1997, the Company completed a new module of INVEST ONE to increase the
speed of executions and add processing features to support master/feeder
portfolio structures. In September 1997, the Company expanded its international
product offerings with the acquisition of the business of EES Finance SA, which
offers GLOBAL PORTFOLIO II, a middle- and back-office multicurrency
client/server portfolio management system sold primarily in France, Belgium and
Luxembourg (see ACQUISITIONS AND OFFERINGS). In April 1997, the Company
acquired PORT(TM), a performance measurement product obtained through the
acquisition of Premier Solutions Ltd. (see ACQUISITIONS AND OFFERINGS). The
Company also introduced APS2, a PC-based Windows NT enhanced portfolio
management and accounting system that will replace APS, PMS and SERIES 2. During
1997, the Company expanded its offerings to SunGard Insurance Systems customers
with the introduction of Portfolio Partners Services, which includes certain
statutory investment accounting services using PAR EX and custody services
through the Bank of New York. The Bank holds the customers' assets, and the
Company handles account record keeping and customer communications.
The Company also provides certain general ledger accounting systems to
insurance companies and nonprofit organizations, which are markets where the
Company has opportunities to cross-sell its investment accounting systems. The
Company's general ledger accounting products include ABC(TM) (Accounting Budget
and Cost System), CDS(TM) (Cash Disbursement System) and EAS(TM) (Enterprise
Accounting System(TM)) for insurance companies, and IFAS(TM) (Interactive Fund
Accounting System) for educational institutions, state and local governments and
other nonprofit organizations. During 1997, the Company developed and released a
Windows NT (with SQL server) version of EAS.
SECURITIES TRADING AND ACCOUNTING SYSTEMS. The Company's securities trading
and accounting systems are used primarily by the "sell side" of the investment
business. The users of these products generally are traders or dealers of
securities (including those trading for their own accounts) and their back-
office operations. In addition to performing many investment accounting
functions, the Company's securities trading and accounting systems maintain
inventories of unsold securities, process trade activities and assist users in
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 PLATFORM MODE OF DELIVERY PRIMARY MARKETS
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BOLT(R) 2 IBM mainframe remote processing service capital markets
- ------------------------------------------------------------- departments
INTRADER(R) UNIX workstation software license of domestic banks,
- ------------------------------------------------------------- broker/dealers and other
PHASE3(R) Tandem remote processing financial institutions
service and
software license
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During 1997, the Company began offering to Phase3 customers BROKERSELECT(R), a
product which provides secure access to Phase3 over the Internet. Phase3
Replication Services also were offered in 1997, providing continuous replication
of data from the Phase3 database to a customer's local servers.
DERIVATIVES TRADING AND RISK MANAGEMENT SYSTEMS. The Company provides
software applications and software development platforms that are used to handle
most aspects of risk management, trading and operations for capital markets
globally. The Company's trading systems are used by both the "sell side" and
the "buy side" of the investment business. Generally, these products are used
by traders and market-makers of over-the-counter and exchange-traded derivative
instruments, securities and foreign exchange contracts and by their middle- and
back-office operations. These systems provide trading support, risk management,
trade processing and accounting functions, and also assist users in determining
hedging strategies and monitoring compliance with capital requirements, trading
limits and government regulations. The Company's principal software products in
this category are:
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SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
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DEVON DERIVATIVES Windows NT software license trading rooms and capital
SYSTEM(TM) UNIX workstation markets departments of
INFINITY 7(TM) international banks, and
INFINITY FOREX(TM) trading rooms of other
INFINITY PANORAMA(TM) financial institutions
OPUS(TM)
- --------------------------------------------------------------
INTAS(TM) Windows NT software license
OPTAS(TM) UNIX workstation
TRADENET(TM)
- --------------------------------------------------------------------------------------------
GLOBAL TRADER(TM) Windows NT software license small- and medium-sized
international banks and
financial institutions
- --------------------------------------------------------------------------------------------
RESOURCE IQ(TM) Windows NT software license large U.S. corporations
and financial institutions
- --------------------------------------------------------------------------------------------
CONVERGENCE(TM) Windows NT software license U.S. and international
FINANCIAL CONTROLLER(TM) financial institutions
OPTION ADJUSTED VaR(TM)
- --------------------------------------------------------------------------------------------
GMI SYSTEM(TM) IBM AS 400 software license international banks and
- ---------------------------------------- and brokerage firms active in
OCTAGON(TM) UNIX workstation remote processing the futures markets for
Digital VAX service principal and customer
Open VMS business
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MICROHEDGE(R) Windows NT software license options traders, trading
rooms of large banks and
financial institutions
- --------------------------------------------------------------------------------------------
MATRIX(TM) IBM AS 400 software license capital markets
departments of
- -------------------------------------------------------------- international banks and
DYNAMIX(TM) Windows NT software license other financial institutions
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The Company expanded its product offerings in the derivatives trading and risk
management area of the business with three recent acquisitions. In October
1997, the Company further expanded its international presence with the
acquisition of ADS Associates, Inc. (see ACQUISITIONS AND OFFERINGS), which
sells GLOBAL TRADER, a front-office trading support system for institutional
traders in the foreign exchange, fixed income, derivative and international
money markets, and RESOURCE IQ, a
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treasury information management system. The acquisition of BancWare, Inc., in
December 1997, added CONVERGENCE, FINANCIAL CONTROLLER and OPTION ADJUSTED VaR,
all asset and liability management software products that will complement the
Company's existing risk management products (see ACQUISITIONS AND OFFERINGS).
On January 2, 1998, the Company acquired Infinity Financial Technology, Inc.
("Infinity"), a derivatives trading and risk management company, which
represented the largest acquisition in the Company's history (see ACQUISITIONS
AND OFFERINGS). The acquisition of Infinity brings to the Company a significant
product line, including INFINITY 7, an open system, client/server architecture
and family of applications that run on leading relational database management
systems and allow financial institutions and corporations to either build or use
turnkey applications to process, store, integrate and analyze their traded
instrument portfolios. When combined with the Company's existing products, the
addition of Infinity allows the Company to offer a complete range of front-to-
back office derivatives trading, risk management and operations control
functionality (see INVESTMENT CONSIDERATIONS - ACQUISITIONS AND RELATED EFFECT
ON OPERATIONS).
In addition, during 1997, the Company added two businesses to SunGard Futures
Systems. In January 1997, the Company acquired GMI Software, Inc., a supplier
of international financial derivatives software for global futures and
options trading, and, in December 1997, the Company acquired May Consulting
Incorporated which offers MICROHEDGE, a risk management system for exchange
traded derivatives (see ACQUISITIONS AND OFFERINGS).
TRUST, GLOBAL CUSTODY AND SECURITIES LENDING SYSTEMS. The Company's trust
systems automate the investment, administrative and operations areas unique to
the bank trust businesses, 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
securities lending systems automate the functions associated with worldwide
securities lending activities. The Company's principal trust, global custody
and securities lending systems are:
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SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
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AUTOTRUST(R) IBM mainframe remote processing service small and medium size bank
- ----------------------------------------- trust departments
CHARLOTTE(R) Windows NT
- ---------------------------------------------------------------------
TRUSTWARE(R) Digital Vax software license and
SERIES 7 Digital Alpha remote processing service
- -----------------------------------------------------------------------------------------------------
GLOBAL PLUS(R) IBM midrange software license and U.S. and international banks
remote processing service and financial institutions
- -----------------------------------------------------------------------------------------------------
OMNI ES(TM) IBM mainframe software license and large and medium size bank
remote processing service trust, custody and securities
departments
- -----------------------------------------------------------------------------------------------------
OMNI IC(R) scalable, multiplatform software license bank global custody
departments
- -----------------------------------------------------------------------------------------------------
TRUSTWARE(R) Digital Vax software license and large and medium size bank
SERIES 11 Digital Alpha remote processing service trust, custody and securities
departments and investment
management firms
- -----------------------------------------------------------------------------------------------------
WORLDLEND(TM) IBM mainframe software license and U.S. and international banks,
Windows NT remote processing service broker/dealers and other
financial institutions
- -----------------------------------------------------------------------------------------------------
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During 1997, the Company introduced CHARLOTTE, successor to AUTOTRUST. The
Company offers specialized trust asset custody services to the community bank
market served by CHARLOTTE, AUTOTRUST and SERIES 7 customers and other banks and
trust companies. These services are provided under a master contract with The
Bank of New York. The Bank holds the customers' trust assets, and the Company
handles account record keeping and customer communications.
The GLOBAL PLUS product was added to the trust and global custody product line
with the acquisition of Premier Solutions Ltd. in April 1997. GLOBAL PLUS is a
real-time, multi-currency trust and custody accounting system used primarily by
both domestic and international financial institutions (see ACQUISITIONS AND
OFFERINGS). Also in 1997, OMNILEND and OMNI IFS were replaced by the WORLDLEND
suite of products which provide, in addition to other features, enhanced
graphical user interfaces.
The Company also markets EXPEDITER(R) to its trust accounting systems
customers. EXPEDITER is a product that facilitates the automated entry of
mutual fund transactions. Since its introduction in 1993, EXPEDITER has
continued to expand its selection of mutual funds with over 80 mutual fund
families participating in 1997. EXPEDITER is marketed not only to users of the
Company's trust accounting systems, but also to users of the Company's
securities trading systems and participant accounting systems, and more
recently, for use with other vendors' software products.
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 PLATFORM MODE OF DELIVERY PRIMARY MARKETS
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OMNIPLUS(TM) IBM mainframe remote processing service, corporate, bank and other
OMNIPAY(R) software license and full retirement plan managers
OMNIDBEN(TM) service bureau processing
--------------------------------------------
UNIX workstation software license
--------------------------------------------
IBM AS 400 software license
--------------------------------------------
microcomputer software license
- ------------------------------------------------------------------------------------------
QUANTECH(TM) microcomputer software license retirement administration
firms and institutions
- ------------------------------------------------------------------------------------------
STATS(R) microcomputer software license small and medium size banks
- ------------------------------------------------------------------------------------------
</TABLE>
As a complement to the Company's participant accounting systems, the Company
offers AUTODOC (R), a documentation generation system for the creation of
retirement plan documents and forms and other complex documents.
INVESTMENT REPORTING AND ANALYSIS SYSTEMS. The Company's investment reporting
and analysis systems accept data from other investment support systems or
outside sources and perform special reporting or analyses for fund managers and
customers. Some of 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:
8
<PAGE>
<TABLE>
<CAPTION>
SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
==============================================================================================
<S> <C> <C> <C>
DATAPREP(TM) IBM mainframe remote processing corporate, bank and other
GCR(TM) service retirement plan managers
and software license
- --------------------------------------------------------------
XAMIN(TM) workstation remote processing
SUPERF4(R) -------------- service
IBM mainframe and software license
- ----------------------------------------------------------------------------------------------
OMNIVEST(TM) UNIX workstation software license investment management
departments of banks and
other financial institutions
- ----------------------------------------------------------------------------------------------
REMIC OID(TM) HP 3000 remote processing brokerage firms and banks
microcomputer
- -------------------------------------------------------------
RATES PLUS AND HP 3000 remote processing
HPS(TM)
- ----------------------------------------------------------------------------------------------
STREET NAME HP 3000 remote processing master limited partnerships
PARTNERS(TM)
- --------------------------------------------------------------------------------------------
</TABLE>
During 1997, the Company completed development of XAMIN, a client server
performance measurement and analysis system for master trusts and 401(k) plans.
The Company also expanded its product offerings through the acquisition, in
December 1997, of WSC Investment Services, Inc., which offers a suite of
products, including REMIC OID, RATES PLUS AND HPS and STREET NAME PARTNERS, that
collect, consolidate and report tax information on securities transactions on
behalf of fiduciaries for financial services firms (see ACQUISITIONS AND
OFFERINGS). The Company has also introduced INCOME REALLOCATION(TM), a system
that processes income reallocations for 1099 reporting.
SHAREHOLDER ACCOUNTING SYSTEMS. The Company's shareholder accounting systems
automate the transfer agent process for stock, bond and mutual fund issues.
These systems maintain shareholder and bondholder positions, process dividend
and interest distributions, generate proxy materials, tabulate votes, and
produce tax reports and periodic shareholder statements. The Company's
principal software products in this category are:
<TABLE>
<CAPTION>
SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
=========================================================================================
<S> <C> <C> <C>
INVESTAR(R) IBM mainframe remote processing large mutual fund managers
INVESTAR ONE(TM) UNIX workstation service and transfer agents
and software license
- -----------------------------------------------------------------------------------------
SUNSTAR(R) IBM mainframe remote processing large commercial bond and
UNIX workstation service equity transfer agents
and software license
- -----------------------------------------------------------------------------------------
BONDMASTER(R) Digital Vax remote processing large bank, corporate and
Digital Alpha service municipal bond transfer
and software license agents
- -----------------------------------------------------------------------------------------
CSSII(R) IBM mainframe software license corporate and utility
stock
transfer agents
- -----------------------------------------------------------------------------------------
</TABLE>
In August 1997 and March 1998, the Company signed multi-year software
development and services agreements for INVESTAR and INVESTAR ONE with two of
the largest mutual fund companies in the United States (see INVESTMENT
CONSIDERATIONS - YEAR 2000 COMPLIANCE). These agreements are
9
<PAGE>
the two largest customer contracts in the Company's history. The Company also
completed its final development testing for INVESTAR ONE, which will be
available during 1998.
The Company added ACCOUNTCONTROL(TM) to its corporate services product line
with the April 1997 acquisition of Stellar Technology, Inc. (see ACQUISITIONS
AND OFFERINGS). ACCOUNTCONTROL is a risk management system that is offered to
the corporate trust marketplace.
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 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. In addition, the Company provides mobile recovery resources that may
be 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 service offering, known as Work Group Recovery(SM), also includes
MegaVoice(R), a centralized voice communications recovery service that backs up
customers' automated telephone call distribution systems. The Company also
offers Program Management Services(SM), which encompasses the design,
coordination and management of all aspects of customers' disaster recovery
programs.
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, a coldsite for six months if recovery operations
must continue for more than six weeks, a hotsite to regularly test disaster
recovery procedures, and general office space during recovery operations and
tests. Technical assistance is also provided when conducting recovery operations
and tests and when 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 Data General, Digital,
Filenet, Hewlett Packard, IBM midrange (AS/400, RS/6000 and Systems/3X), NCR,
Netframe, Prime, Pyramid, Sequent, Sequoia, Silicon Graphics, Stratus, Sun
Microsystems, Tandem and Unisys computers. These services are marketed directly
and through representatives primarily to IBM (and compatible), Digital, Hewlett
Packard and Unisys mainframe and various midrange computer installations in
North America.
In 1997, the Company continued to expand its disaster recovery offerings to
users of midrange computers. This effort was enhanced by an acquisition in
February 1997 that increased the number of customer contracts for midrange
computer facilities and the types of midrange offerings (see ACQUISITIONS AND
OFFERINGS). The Company also expanded the customer base of its Unisys platform
offerings during June 1997 through an acquisition of a disaster recovery
business (see ACQUISITIONS AND OFFERINGS).
Also in 1997, the Company expanded its sales force and incorporated a
subsidiary in Mexico to enhance its marketing and sales activities in the
region. The Company continued to expand its marketing partner program by
establishing alliances with hardware providers and others and by signing certain
agreements with third parties to expand and enhance its recovery services and
capabilities.
10
<PAGE>
The Company introduced several new programs during 1997. The Company
introduced the SunGard National Network(SM), a dedicated network between the
Company's disaster recovery centers and customer locations that provides
customers with a nationwide managed recovery network utilizing synchronous
optical technology (SONET). The Company also began offering recovery services
for Silicon Graphics equipment and introduced its DR Made Simple(SM) program,
which offers recovery services to entry level customers directly over the
Internet.
As of December 31, 1997, the Company had approximately 11,000 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. Many customers have multiple contracts
covering different types of facilities and services.
During 1997, for the twelfth consecutive year, the Company successfully
supported all customers who experienced computer related 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
(Arizona) and Warminster (Pennsylvania) (see PROPERTIES). The Philadelphia,
Scottsdale and Atlanta MegaCenters also provide Work Group Recovery services.
The Company believes that its Philadelphia MegaCenter, which houses Digital,
Filenet, Hewlett Packard, Hitachi, Netframe, IBM mainframe, Pyramid, Sequent,
Stratus and Tandem hotsites, and mobile Hewlett Packard, IBM midrange, NCR,
Sequoia, Silicon Graphics and Sun Microsystems computer systems, is the world's
largest commercial facility dedicated to disaster recovery.
The Company also operates MetroCenter(R) facilities 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 Beachwood (Ohio), Bellevue
(Washington), Boston, Chicago, Dallas, Denver, Herndon (Virginia), Jersey City
(New Jersey), Los Angeles, Northville (Michigan), St. Louis, St. Paul, San Ramon
(California) and Mississagua (Toronto). The Denver, 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 and service offerings. Also, the Company
regularly upgrades its systems to offer the most advanced computer equipment
generally used by its customers. During 1997, the Company opened one new
MetroCenter outside of Seattle in Bellevue, Washington and added a Denver
MetroCenter as part of the Company's acquisition of Data Assurance Corporation
(see ACQUISITIONS AND OFFERINGS). In addition, during 1997, the Company
relocated its MetroCenter in Santa Ana to Irvine, California in order to expand
its workgroup recovery capabilities in the Los Angeles area, expanded its
Philadelphia MegaCenter and Jersey City MetroCenter, and added a new Mobile Data
Center. The Company continued during 1997 to expand its midrange system product
offerings at various facilities and, in addition, expanded its electronic
vaulting operations, which include remote journaling, hot storage, shadowing and
customer support services. The disk access, tape cartridge and other peripheral
equipment at all facilities were upgraded or augmented, and the capabilities of
storage and retrieval systems were increased. Also, in January 1998, the
Company installed an Hitachi Data Systems HDS Skyline Series processor Model 827
in its Philadelphia MegaCenter.
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 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-optic applications. The Company
regularly upgrades this network to offer the
11
<PAGE>
communications technology generally used by its customers. During 1997, 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.
PLANNING SERVICES. The Company provides professional consulting and
educational services to develop comprehensive, business-wide continuity plans.
The services performed by the Company include risk analyses and audits to
determine exposure to the disruption of critical operations, business and
application impact analyses to prioritize recovery strategies, and the
development of enterprise recovery plans. The Company also designs testing and
maintenance programs to verify that customers' plans reflect the most current
operational conditions. 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 named
CBR(R) Comprehensive Business Recovery, which automates the preparation and
maintenance of disaster recovery and business resumption plans, including
comprehensive company-wide planning capabilities. During 1997, the Company
released CBR version 3.0, an enhanced system, which, in addition to other
features, enables users to validate and test their disaster recovery plans. The
Company also continues to support its DOS-based microcomputer disaster recovery
planning software product known as DP/90 PLUS(R).
In January 1998, the Company expanded its contingency planning services as a
result of its acquisition of a disaster recovery consulting business (see
ACQUISITIONS AND OFFERINGS).
COMPUTER SERVICES AND OTHER
COMPUTER SERVICES. The Company provides remote-access computer services
primarily to software developers, financial institutions 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), which also are used to provide remote
processing services for several of the Company's investment support systems
business units.
In 1997, the Company upgraded and expanded its Voorhees, data center facility
to support the addition of new mainframe processors and related peripherals. In
addition, the Company began marketing its services to companies which require
significant testing resources to evaluate year 2000 compliance. Also in 1997,
the Company introduced a new service to provide full computer-center support to
customers using Unix and Windows NT systems.
HEALTHCARE INFORMATION SYSTEMS. Certain of the Company's healthcare
information systems focus on hospital electronic medical records and clinical
data management. Other healthcare information systems assist health maintenance
organizations (HMO's) and other companies with high volume claims processing in
reducing costs and improving service to their customers. The Company's
healthcare information systems use proprietary work-flow management and
document-imaging to increase efficiency and flexibility for users. The
Company's principal systems of this type are:
12
<PAGE>
<TABLE>
<CAPTION>
SYSTEM PLATFORM MODE OF DELIVERY PRIMARY MARKETS
======================================================================================================
<S> <C> <C> <C>
I-MAX(TM) Windows NT software license HMO's, health insurance
Netware servers companies and workers compensation
administrators
- ------------------------------------------------------------------------------------------------------
RMS(TM) Windows NT software license state pension administration
Netware servers agencies
- ------------------------------------------------------------------------------------------------------
CHARTFFLO(R) 2000 Windows NT software license hospitals, healthcare
ACCOUNTFLO(TM) Unix servers institutions
CDM(TM) and medical clinics
- -------------------------------------------------------------
ENTERPRISE 2OOO(TM) Windows NT software license
UNIX servers
- -------------------------------------------------------------
MEDREC(TM)II Windows NT software license
- ------------------------------------------------------------------------------------------------------
</TABLE>
In 1997, the Company acquired Med Data Systems, Inc., which offers MEDREC II,
a PC network-based system specializing in patient chart-tracking for the medical
records departments of hospitals and healthcare institutions. Also in 1997, the
Company's I-MAX product was configured for implementation within the workers
compensation market.
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 technology and increased
competition. For these reasons, the Company believes that it is important to
continually maintain, enhance and evolve its proprietary investment support
systems (see INVESTMENT CONSIDERATIONS - PRODUCT DEVELOPMENT). 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, 1997, the Company had
in force approximately 8,100 remote processing and software maintenance
contracts for its investment support systems.
The Company's expenditures for software development during 1997, 1996 and
1995, including amounts that were capitalized, totalled approximately
$79,816,000, $65,101,000 and $53,908,000, 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.
The Company will continue its comprehensive program to evaluate and address
the impact of the year 2000 on its software systems, computer processing and
disaster recovery operations. This program includes steps to identify each item
or element that will require modification and to establish a plan to complete
and test all required modifications. The assessment, identification and
planning phases are substantially complete. Modification and testing of many of
the Company's software products are completed and substantially all of the
remaining modification and testing activity is expected to be completed during
1998. The Company also is evaluating its third-party hardware and software
systems, many of which are an integral part of its products or operations. For
these systems, the Company is relying upon its outside vendors to meet year 2000
commitments. The Company expects to meet year 2000 operation commitments and
expects to complete this effort on a timely basis, without significant
disruption to its customers or operations (see INVESTMENT CONSIDERATIONS - YEAR
2000 COMPLIANCE).
During 1998, the Company expects to develop Windows NT and UNIX versions of
many products and to provide greater Internet capabilities. 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.
13
<PAGE>
Also in 1998, the Company plans to develop enhancements to INVEST ONE to
support the European Monetary Union and a front-end relational database for ON-
LINE. The Company plans to continue to enhance the functionality of EXPEDITER
by providing sub-accounting and automated reconciliation as a client server
application and developing an interface with National Securities Clearing
Corporation's Fund/Serv system. Developments to PHASE3 include an
internationalization project to add multicurrency functionality and to make the
system calendar independent, enhanced SQL capabilities and Internet access. The
Company also plans to release a new version of I-MAX with significantly enhanced
functionality, including integration with SQL. The Company will continue
developing functionality for its derivatives trading, foreign exchange and
consolidated risk management systems. In particular, during 1998, the Company
plans to enhance and build upon its Infinity product line in order to offer
next-generation software for front-to-back office derivatives trading, risk
management and operations control.
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 1998, the Company plans to add mainframe disk
storage capacity, expand its midrange product lines, and increase marketing
efforts in Mexico. During 1998, the Company plans to upgrade its Unisys
mainframe capability with the addition of a Unisys "ClearPath" NX4802 mainframe
processor at its Warminster MegaCenter. The Company also plans in 1998, as
demand requires, to expand its electronic vaulting product offerings, upgrade
its disk storage, tape cartridge and other peripheral hotsite equipment, open
new MetroCenters, upgrade its communications equipment and expand the SunGard
National Network.
Also during 1998, the Company plans to release a new contingency planning
software product named PreCovery(TM), a client/server SQL database application
running on Windows NT. This expanded product offering will integrate business
analysis and testing tools with automated plan development and reporting
features, and offer Internet browser capability.
ACQUISITIONS AND OFFERINGS
The Company seeks to grow through internal development and the acquisition of
businesses that broaden or complement its existing product lines (see INVESTMENT
CONSIDERATIONS - ACQUISITIONS AND RELATED EFFECT ON OPERATIONS). Since its
initial public offering in 1986, the Company has acquired thirty-five
investment support systems businesses, twenty disaster recovery businesses, two
computer services businesses and three healthcare information systems businesses
(see INVESTMENT CONSIDERATIONS - HEALTHCARE INFORMATION SYSTEMS BUSINESS). 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 1997, the Company spent approximately $57,457,000 in cash, net of cash
acquired, to acquire three investment support systems businesses and two
disaster recovery services businesses. The Company also issued during 1997 a
total of 3,682,000 shares of its common stock to acquire five investment support
systems businesses and one healthcare information systems business in
transactions that were accounted for as poolings-of-interests. In addition, the
Company issued approximately 13,223,000 shares of its common stock to acquire
Infinity Financial Technology, Inc. ("Infinity"), which closed on January 2,
1998 and was accounted for as a pooling-of-interests.
SunGard Financial Systems expanded its product offerings in December 1997 by
acquiring WSC Investment Services, Inc., a New York-based business that provides
tax-information data processing to financial services firms.
14
<PAGE>
SunGard Trading Systems expanded its derivatives trading and risk management
business through the October 1997 acquisition of ADS Associates, Inc., a
California-based provider of trading support systems to small-to-medium size
institutions, and the December 1997 acquisition of BancWare, Inc., a provider of
asset and liability management software with comprehensive risk management and
performance measurement solutions.
On January 2, 1998, the Company acquired Infinity, a public company that,
before being acquired by the Company, traded on The Nasdaq Stock Market.
Infinity develops, markets and supports enterprise software solutions for
financial trading and risk management with a suite of off-the-shelf
applications.
In addition, SunGard Trading Systems expanded its Futures Systems business
unit by acquiring, in January 1997, GMI Software, Inc., a provider of software
and services to financial institutions worldwide for the processing of exchange-
traded futures and options and other securities, and by acquiring, in December
1997, May Consulting Incorporated, a supplier of comprehensive options analysis
and risk management software for professional option traders, large banks and
financial institutions.
SunGard Trust and Shareholder Systems also grew by acquisition. In April
1997, the Company expanded its Asset Management Systems product line with the
acquisition of Premier Solutions Ltd., a provider of global trust, custody
accounting and portfolio management systems used by domestic and international
banks and other financial institutions. The Company also acquired, in April
1997, the business of Stellar Technology, Inc. and its ACCOUNTCONTROL product,
which complements the Company's BONDMASTER product. In September 1997, the
Company purchased the business of EES Finance SA, a Paris-based provider of
portfolio management software sold in France, Belgium and Luxembourg.
SunGard Recovery Services acquired two disaster recovery businesses during
1997. In February 1997, the Company acquired the business of Data Assurance
Corporation, which provides, among other offerings, recovery services to the
credit union industry operating on Data General platforms. In June 1997, the
Company acquired the business of Recovery Business Services, Inc., a provider of
recovery services to users of Unisys and Unisys-compatible mainframe computers.
In addition, in January 1998, the Company acquired the business of Raymond
Professional Management, an Atlanta-based provider of disaster recovery planning
services to the healthcare and telecommunications industries.
SunGard Healthcare Information Systems also expanded in 1997 with the
acquisition of Med Data Systems, Inc., a California-based patient record
management software and services company.
On June 4, 1997, the Company's common stock began trading on the New York
Stock Exchange and, in September 1997, the Company's common stock split two-for-
one.
COMPETITION
Since most of the Company's computer services and software are specialized and
technical in nature, the various market-niches 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 group is comprised of specialized investment
support
15
<PAGE>
systems companies, most of which are much smaller than the Company. The other
group is comprised of large computer services companies whose principal
businesses are not in the investment support systems area, such as Automatic
Data Processing, Inc., The Thomson Corporation, and First Data Corporation, all
of whom are also active acquirors. The Company also faces competition from the
internal processing and development capabilities of its customers and prospects.
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, Inc. and IBM
Corporation, each 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.
The Company's healthcare information systems business competes primarily with
companies that provide imaging systems through vertical market resellers that
focus on hospitals and HMO's. The Company believes that it competes effectively
as to the key competitive factors in marketing its applications software to
healthcare institutions. These factors include features and adaptability of the
software for specific market segments, knowledge of the healthcare industry,
level and quality of customer support, level of software development expertise
and overall net cost.
MARKETING
Most 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 1997, 1996 and 1995 totalled approximately
$94,318,000, $58,019,000 and $51,273,000, respectively. In addition, the
Company's foreign subsidiaries had sales for those years totalling approximately
$71,217,000, $57,457,000 and $43,612,000, respectively. Combined export and
foreign sales during 1997 totalled $166 million and increased by 43% over 1996
combined export and foreign sales. As a percentage of total revenues, combined
export and foreign sales have grown from 12% in 1993 to 19% in 1997.
The Company develops and maintains proprietary marketing information by
identifying prospective customers through a variety of data bases and other
sources, and then canvassing the prospects by direct mail, telephone calls and
personal visits. The Company also attempts to identify and attract customers by
conducting seminars and participating in industry conferences. Customer
references have been an important aid in obtaining new business.
EMPLOYEES
At December 31, 1997, the Company had approximately 4,500 full-time employees.
The Company believes that its success, in part, depends 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.
16
<PAGE>
PROPRIETARY PROTECTION
The Company owns registered marks for the SUNGARD name and owns or has applied
for registration 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, although the Company intends to consider the advisability of
software patents in view of ongoing developments in that area. 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 and size of the Company's principal
computer facilities and disaster recovery MegaCenters.
<TABLE>
<CAPTION>
LOCATION PURPOSE SQUARE FEET
====================================================================================================
<S> <C> <C>
Birmingham, AL SunGard Asset Management Systems, SunGard Employee Benefit 86,000
Systems and SunGard Mailing Services computer center.
- ----------------------------------------------------------------------------------------------------
Charlotte, NC SunGard Trust Systems computer center. 36,100
- ----------------------------------------------------------------------------------------------------
Fairfield, NJ SunGard/Shaw Data computer center. 22,000
(near New York)
- ----------------------------------------------------------------------------------------------------
Hopkins, MN SunGard Securities Systems computer center. 46,200
(near Minneapolis)
- ----------------------------------------------------------------------------------------------------
Northbrook, IL SunGard Recovery Services MegaCenter. 84,000
(near Chicago)
- ----------------------------------------------------------------------------------------------------
Philadelphia, PA SunGard Recovery Services MegaCenter. 339,830
- ----------------------------------------------------------------------------------------------------
Roswell, GA SunGard Recovery Services MegaCenter. 37,800
(near Atlanta)
- ----------------------------------------------------------------------------------------------------
Scottsdale, AZ SunGard Recovery Services MegaCenter. 13,800
- ----------------------------------------------------------------------------------------------------
Voorhees, NJ SunGard Computer Services computer center. 51,000
(near Philadelphia)
- ----------------------------------------------------------------------------------------------------
Waltham, MA SunGard Brokerage Systems computer center. 31,300
(near Boston)
- ----------------------------------------------------------------------------------------------------
Warminster, PA SunGard Recovery Services MegaCenter. 20,000
(near Philadelphia)
- ----------------------------------------------------------------------------------------------------
</TABLE>
The Company leases all of its offices and facilities, with the exception of
its Birmingham, Voorhees and Warminster facilities, which are owned, and its
Hopkins facility, which consists of two connected buildings, one leased and the
other owned. The Company also owns its MetroCenters in St. Paul, Minnesota and
Northbrook, Illinois. In addition, the Company 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.
17
<PAGE>
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4.1 CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company who are not also directors are listed
below.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITIONS WITH THE COMPANY
===========================================================================================================
<S> <C> <C>
Kenneth R. Adams 62 Chief Executive Officer, SunGard Healthcare Information Systems Group
- -----------------------------------------------------------------------------------------------------------
Bruce H. Battjer 47 Chief Executive Officer, SunGard Computer Services Group
- -----------------------------------------------------------------------------------------------------------
Andrew P. Bronstein 39 Vice President and Controller, SunGard Data Systems Inc.
- -----------------------------------------------------------------------------------------------------------
Cristobal I. Conde 37 Chief Executive Officer, SunGard Trading Systems Group
- -----------------------------------------------------------------------------------------------------------
Philip L. Dowd 56 Chief Executive Officer, SunGard Trust and Shareholder Systems Group
- -----------------------------------------------------------------------------------------------------------
Lawrence A. Gross 45 Vice President and General Counsel, SunGard Data Systems Inc.
- -----------------------------------------------------------------------------------------------------------
Michael F. Mulholland 48 Chief Executive Officer, SunGard Recovery Services Group
- -----------------------------------------------------------------------------------------------------------
Michael K. Muratore 51 Chief Executive Officer, SunGard Financial Systems Group
- -----------------------------------------------------------------------------------------------------------
Donna J. Pedrick 48 Vice President-Human Resources, SunGard Data Systems Inc.
- -----------------------------------------------------------------------------------------------------------
Michael J. Ruane 44 Chief Financial Officer and Vice President-Finance, SunGard Data Systems Inc.
- -----------------------------------------------------------------------------------------------------------
Richard C. Tarbox 45 Vice President-Corporate Development, SunGard Data Systems Inc.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Mr. Adams has been Chairman and Chief Executive Officer of Intelus Corporation
and of MACESS Corporation since 1995 and Chairman and Chief Executive Officer of
Med Data Systems, Inc. since July 1997. Before that, he was 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. Battjer has been Chief Executive Officer and a director of SunGard
Computer Services Inc. since 1995. Before that, Mr. Battjer served in various
executive positions in SunGard's Recovery Services Group, most recently as
President of Planning Solutions.
Mr. Bronstein has been Vice President and Controller of the Company since
1994. Before that, he was Corporate Controller since 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.
18
<PAGE>
Mr. Conde has been Chief Executive Officer and a director of SunGard Systems
International Inc. (formerly named 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 Systems International Inc., originally named Devon Systems
International, Inc., was an independent software company. Mr. Conde is a
director and/or officer of some of the Company's domestic subsidiaries and many
of its 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 is a director and/or
officer of many of the Company's investment support systems subsidiaries.
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. Mulholland has been Chairman and Chief Executive Officer of SunGard
Recovery Services Inc. since 1995 and was its President and Chief Operating
Officer since 1992. From 1987 to 1992, Mr. Mulholland served in various
executive capacities in the Company and the Recovery Services Group.
Mr. Muratore has been Chief Executive Officer and a director of SunGard
Financial Systems Inc. since 1995. Before that, he was 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.
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 1994. From 1992 until 1994, Mr. Ruane was Chief
Financial Officer and Vice President-Finance of SunGard's Trading Systems Group.
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.
19
<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 1997 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 1997 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 1997 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, 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.
20
<PAGE>
PART III
This Part incorporates certain information from the Company's definitive proxy
statement for its 1998 Annual Meeting of Stockholders ("1998 Proxy Statement")
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 1998 Proxy
Statement entitled REPORT OF THE COMPENSATION COMMITTEE AND EQUITY AWARD
SUBCOMMITTEE 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 1998 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 1998 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 1998 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 1998 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.
21
<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 1997 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 12,
1998
Consolidated Statements of Income for each of the years ended December 31,
1997, 1996 and 1995
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Cash Flows for each of the years ended December 31,
1997, 1996 and 1995
Consolidated Statement of Stockholders' Equity for each of the years ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Quarterly Financial Information (unaudited)
(a)(2) FINANCIAL STATEMENT SCHEDULES
None.
(a)(3) EXHIBITS
The Exhibits that are incorporated by reference in this Report on Form 10-K,
or are filed with this Report, are listed in the LIST OF EXHIBITS beginning on
page 24 of this Report. Exhibits 10.14 through 10.25 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
Form 8-K (dated October 17, 1997) filed on October 27, 1997, relating to the
Company's entering into a definitive agreement to acquire Infinity Financial
Technology, Inc.
22
<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 30, 1998 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 30, 1998
- --------------------------------------
JAMES L. MANN President, and Chairman
of the Board of Directors
(principal executive officer)
s/ Michael J. Ruane Chief Financial Officer and March 30, 1998
- --------------------------------------
MICHAEL J. RUANE Vice President-Finance
(principal financial officer)
s/ Andrew P. Bronstein Vice President and Controller March 30, 1998
- --------------------------------------
ANDREW P. BRONSTEIN (principal accounting officer)
s/ Gregory S. Bentley Director March 30, 1998
- --------------------------------------
GREGORY S. BENTLEY
s/ Michael C. Brooks Director March 30, 1998
- --------------------------------------
MICHAEL C. BROOKS
s/ Albert A. Eisenstat Director March 30, 1998
- --------------------------------------
ALBERT A. EISENSTAT
s/ Bernard Goldstein Director March 30, 1998
- --------------------------------------
BERNARD GOLDSTEIN
s/ Michael Roth Director March 30, 1998
- --------------------------------------
MICHAEL ROTH
s/ Malcolm I. Ruddock Director March 30, 1998
- --------------------------------------
MALCOLM I. RUDDOCK
s/ Lawrence J. Schoenberg Director March 30, 1998
- --------------------------------------
LAWRENCE J. SCHOENBERG
</TABLE>
23
<PAGE>
LIST OF EXHIBITS
NUMBER DOCUMENT
- ------ ---------------------------------------------------------------------
3.1 Restated Certificate of Incorporation of the Company (filed with this
Report).
3.2/1/ Amended and Restated Bylaws of the Company.
4.1/1/ Specimen Common Stock Certificate of the Company.
10.1/1/ 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").
10.2/2/ Amendment to the First Northbrook Lease, dated September 16, 1986.
10.3/3/ Amendment to the First Northbrook Lease, dated October 14, 1987.
10.4/4/ Amendment to the First Northbrook Lease, dated October 1, 1988.
10.5/4/ 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").
10.6/5/ Amendment to the Second Northbrook Lease, dated September 15, 1989.
10.7/6/ 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
("401 Lease").
10.8/7/ Amendment to 401 Lease, dated October 9, 1995.
10.9/8/ Amendment to 401 Lease, dated December 23, 1996.
10.10 Amendment to 401 Lease, dated March 1997 (filed with this
Report).
10.11 Amendment to 401 Lease, dated December 18, 1997 (filed with this
Report).
10.12/9/ 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.
10.13/10/ Credit Agreement, dated August 29, 1996, among the Company, certain
banks and other financial institutions and PNC Bank, National
Association, as Agent.
10.14/9/ The Company's 1982 Incentive Stock Option Plan and Amendments
thereto, dated January 1, 1987 and November 8, 1991./15/
10.15/11/ 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./15/
24
<PAGE>
NUMBER DOCUMENT
- ------ ---------------------------------------------------------------------
10.16/9/ The Company's 1988 Nonqualified Stock Option Plan and Amendment
thereto, dated October 30, 1990./15/
10.17/5/ The Company's 1990 Amended and Restated Restricted Stock Incentive
Plan./15/
10.18/12/ The Company's Restricted Stock Award Plan for Outside Directors./15/
10.19/13/ The Company's 1994 Equity Incentive Plan./15/
10.20/7/ The Company's 1996 Equity Incentive Plan./15/
10.21/8/ The United Kingdom Addendum to the Company's 1996 Equity Incentive
Plan./15/
10.22 The Company's 1998 Equity Incentive Plan (filed with this
Report)./15/
10.23/8/ Summary Description of the Company's Annual Executive Incentive
Compensation Program./15/
10.24/7/ Summary Description of the Company's Long-Term Executive Incentive
Compensation Plan./15/
10.25/9/ Form of Indemnification Agreement entered into by the Company with
its directors and officers./15/
10.26/14/ Agreement and Plan of Merger and Reorganization entered into by an
among the Company, Information Data Inc. and Infinity Financial
Technology, Inc., dated October 17, 1997.
13.1 Portions of the Company's Annual Report to Stockholders for the
fiscal year ended December 31, 1997 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 (filed with this Report).
27.1 Financial Data Schedule for the year ended December 31, 1997 (filed
with this Report).
27.2 Financial Data Schedule for the quarter ended September 30, 1997
(restated) (filed with this Report).
27.3 Financial Data Schedule for the quarter ended June 30, 1997
(restated) (filed with this Report).
27.4 Financial Data Schedule for the quarter ended March 31, 1997
(restated) (filed with this Report).
27.5 Financial Data Schedule for the year ended December 31, 1996
(restated) (filed with this Report).
27.6 Financial Data Schedule for the quarter ended September 30, 1996
(restated) (filed with this Report).
27.7 Financial Data Schedule for the quarter ended June 30, 1996
(restated) (filed with this Report).
25
<PAGE>
27.8 Financial Data Schedule for the quarter ended March 31, 1996
(restated) (filed with this Report).
27.9 Financial Data Schedule for the year ended December 31, 1995
(restated) (filed with this Report).
__________
(1) 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).
(2) 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).
(3) 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).
(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, 1988 (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, 1989 (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, 1992 (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, 1995 (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, 1996 (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, 1991 (Commission
File No. 0-14232).
(10) Incorporated by reference to the Exhibits filed with the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1996 (Commission File No. 0-14232).
(11) Incorporated by reference to the Exhibits filed with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 (Commission
File No. 0-14232).
(12) 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).
(13) 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).
(14) Incorporated by reference to the Exhibits filed with the Company's
Registration Statement on Form S-4 and Amendment No. 1 thereto
(Registration No. 333-40053).
(15) Management contract or compensatory plan or arrangement.
26
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REPORT
NUMBER DOCUMENT
- ------ -----------------------------------------------------------------------
3.1 Restated Certificate of Incorporation of the Company.
10.10 Amendment to 401 Lease, dated March 1997.
10.11 Amendment to 401 Lease, dated December 18, 1997.
10.22 The Company's 1998 Equity Incentive Plan./(1)/
13.1 Portions of the Company's Annual Report to Stockholders for the fiscal
year ended December 31, 1997 expressly incorporated herein by
reference.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants regarding the Company's consolidated
financial statements.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the quarter ended September 30, 1997
(restated).
27.3 Financial Data Schedule for the quarter ended June 30, 1997 (restated).
27.4 Financial Data Schedule for the quarter ended March 31, 1997
(restated).
27.5 Financial Data Schedule for the year ended December 31, 1996
(restated).
27.6 Financial Data Schedule for the quarter ended September 30, 1996
(restated).
27.7 Financial Data Schedule for the quarter ended June 30, 1996 (restated).
27.8 Financial Data Schedule for the quarter ended March 31, 1996
(restated).
27.9 Financial Data Schedule for the year ended December 31, 1995
(restated).
_______________
(1) Management contract or compensatory plan or arrangement.
<PAGE>
Exhibit 3.1
Restated Certificate of Incorporation
of
SunGard(R) Data Systems Inc.
SunGard Data Systems Inc., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies that:
1. The present name of the Corporation is SunGard Data Systems Inc. The name
under which the Corporation was originally incorporated is SIS CORPORATION,
and the date of filing of its original certificate of incorporation with the
Secretary of State of the State of Delaware is June 29, 1982.
2. The only amendment effected by this Restated Certificate of Incorporation is
an amendment to the first sentence of ARTICLE FOURTH, increasing the number
of authorized shares of the Corporation's Common Stock by 60,000,000 shares.
Such amendment was duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
3. Other than such amendment, this Restated Certificate of Incorporation only
restates and integrates and does not further amend the provisions of the
Corporation's certificate of incorporation as heretofore amended or
supplemented, and there is no discrepancy between those provisions and the
provisions of this Restated Certificate of Incorporation. This Restated
Certificate of Incorporation was duly adopted in accordance with the
provisions of Section 245 of the General Corporation Law of the State of
Delaware.
4. The Corporation's certificate of incorporation is hereby restated in its
entirety as follows:
FIRST: The name of the corporation is SunGard Data Systems Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the State
of Delaware is No. 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of the Corporation's registered agent at such address
is The Corporation Trust Company.
THIRD: The purposes for which the Corporation was formed are to engage in
any lawful act or activity for which corporations may be organized under the
Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 125,000,000 shares, consisting
of 5,000,000 shares of Preferred Stock, par value $0.01 per share, as more
fully described in Section A. below (the "Preferred Stock"), and 120,000,000
shares of Common Stock, par value $0.01 per share, as more fully described in
Section B. below (the "Common Stock").
A. Preferred Stock. The shares of Preferred Stock may be divided and
---------------
issued from time to time in one or more series as may be designated by the
Board of Directors of the Corporation, each such series to be distinctly
titled and to consist of the number of shares
<PAGE>
designated by the Board of Directors. All shares of any one series of
Preferred Stock so designated by the Board of Directors shall be alike in
every particular, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon (if any) shall
accrue or be cumulative (or both). The designations, preferences and
relative, participating, optional or other special rights (if any), and the
qualifications, limitations or restrictions thereof (if any), of any series
of Preferred Stock may differ from those of any and all other series at any
time outstanding. The Board of Directors of the Corporation is hereby
expressly vested with authority to fix by resolution the powers,
designations, preferences and relative, participating, optional or other
special rights (if any), and the qualifications, limitations or restrictions
thereof (if any), of the Preferred Stock and each series thereof which may be
designated by the Board of Directors, including, but without limiting the
generality of the foregoing, the following:
(1) The voting rights and powers (if any) of the Preferred Stock and
each series thereof;
(2) The rates and times at which, and the terms and conditions on
which, dividends (if any) on the Preferred Stock, and each series thereof,
will be paid and any dividend preferences or rights of cumulation;
(3) The rights (if any) of holders of the Preferred Stock, and each
series thereof, to convert the same into, or exchange the same for, shares of
other classes (or series of classes) of capital stock of the Corporation and
the terms and conditions for such conversion or exchange, including
provisions for adjustment of conversion or exchange prices or rates in such
events as the Board of Directors shall determine;
(4) The redemption rights (if any) of the Corporation and of the
holders of the Preferred Stock, and each series thereof, and the times at
which, and the terms and conditions on which, the Preferred Stock, and each
series thereof, may be redeemed; and
(5) The rights and preferences (if any) of the holders of the
Preferred Stock, and each series thereof, upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
B. Common Stock. All shares of Common Stock shall be identical and shall
------------
entitle the holders thereof to the same rights and privileges.
(1) Dividends. When and as dividends are declared upon the Common
---------
Stock, whether payable in cash, in property or in shares of stock of the
Corporation, the holders of Common Stock shall be entitled to share equally,
share for share, in such dividends.
(2) Voting Rights. Each holder of Common Stock shall be entitled to
-------------
one vote per share.
(3) Liquidation. In the event of any liquidation, dissolution or
-----------
winding up of the Corporation, whether voluntary or involuntary, after
payment shall have been made to holders of the Preferred Stock of the full
amounts to which they shall be entitled as stated and expressed herein or as
may be stated and expressed pursuant hereto, the holders of Common Stock
shall be entitled, to the exclusion of the holders of the Preferred Stock,
-2-
<PAGE>
to share ratably according to the number of shares of the Common Stock held
by them in all remaining assets of the Corporation available for distribution
to its stockholders.
C. Other Provisions. No holder of any of the shares of any class or
----------------
series of stock or of options, warrants or other rights to purchase shares of
any class or series of stock or of other securities of the Corporation shall
have any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for stock of
the Corporation of any class or series, or carrying any right to purchase
stock of any class or series, but any such unissued stock, additional
authorized shares of any class or series of stock or securities convertible
into or exchangeable for stock, or carrying any right to purchase stock, may
be issued and disposed of pursuant to resolution of the Board of Directors to
such persons, firms, corporations or associations, whether any such persons,
firms, corporations or associations are holders or others, and upon such
terms as may be deemed advisable by the Board of Directors in exercise of its
sole discretion.
FIFTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors of the Corporation is
expressly authorized and empowered to make, alter or repeal the By-laws of
the Corporation, subject to the power of the stockholders of the Corporation
to alter or repeal any By-law made by the Board of Directors.
SIXTH: The Corporation reserves the right at any time and from time to time
to amend, alter, change or repeal any provisions contained in this
Certificate of Incorporation; and other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation
in its present form or as hereafter amended are granted subject to the right
reserved in this Article.
SEVENTH: To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
In witness whereof, SunGard Data Systems Inc. has caused its corporate seal
to be hereunto affixed and this Restated Certificate of Incorporation to be
signed by its President and attested by its Secretary this 9th day of May, 1997.
SunGard Data Systems Inc.
By: /s/ James L. Mann
-------------------------------
James L. Mann, President
[SEAL]
Attest: /s/ Lawrence A. Gross
-----------------------------------
Lawrence A. Gross, Secretary
-3-
<PAGE>
Exhibit 10.10
401 NORTH BROAD STREET
PHILADELPHIA, PENNSYLVANIA
AMENDMENT TO LEASE
AMENDMENT TO LEASE made as of this _____ day of March, 1997, by and between
BROAD AND NOBLE ASSOCIATES, INC., having its principal office at 401 North
Broad Street, Philadelphia, Pennsylvania 19108 ("Landlord") and SUNGARD SERVICES
COMPANY, having its principal office at 1285 Drummers Lane, Wayne, Pennsylvania
19087 ("Tenant").
W I T N E S S E T H:
-------------------
WHEREAS, reference is made to the Agreement of Lease, dated September 1,
1986 for certain space on the Mezzanine (the "Mezzanine"), and the Agreement of
Lease, dated April 12, 1984 for certain space on the sixth (6th) floor (the
"Sixth Floor"), and the Amendment to Lease, dated October 1989 for certain space
on the seventh (7th) floor (the "Seventh Floor"), the Amendment to Lease dated
September 30, 1991, for certain other space on the seventh (7th) floor (the
"Seventh Floor First Expansion Space"), and the Amendment to Lease, dated
November 19, 1992, for certain other space on the seventh (7th) floor (the
"Seventh Floor Second Expansion Space", the "Seventh Floor Third Expansion
Space", and "All Remaining Seventh Floor Space"), and the Amendment to Lease,
Dated November 22, 1996, for certain space on the eighth (8th) floor (the "Suite
816"), and the Amendment to Lease, dated December 23, 1996, for certain space on
the eighth (8th) floor (the "Eighth Floor First Expansion Space" and the "Eighth
Floor Second Expansion Space"), with the respective Riders attached thereto
(hereinafter collectively referred to as the "Leases"), demising certain
premises in the building known as 401 North Broad Street, Philadelphia,
Pennsylvania (the "Building"); and
WHEREAS, Tenant finds the present space inadequate for its needs; and
WHEREAS, Landlord is willing to accommodate expansion requirements of
Tenant on the tenth (10th) floor of Building.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledge, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. (a) Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord 7,500 square feet of space, located on the tenth floor of 401 North
Broad Street, Philadelphia, Pennslyvania (the "Tenth Floor First Expansion
Space") as shown on the Tenth Floor plan, marked as area 1, attached hereto and
made a part hereof as Exhibit "A", for a term beginning March 1, 1997 and ending
December 31, 2004; and (b) Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord an additional 6,500 square feet of space located on the
tenth floor of 401 North Broad Street, Philadelphia, Pennsylvania (the "Tenth
Floor Second Expansion Space"), as shown on the Tenth Floor plan, marked as
area 2, attached hereto and made a part hereof as Exhibit "A", for a term
beginning January 1, 1998 and ending December 31, 2004, all on the same terms
and conditions as are in existence for the Sixth Floor, Mezzanine, Seventh
Floor, Suite 816, and Eighth Floor Leases except as modified by and as
specifically set forth in this Amendment. Tenant will have access to and the
right to condition, improve,
1
<PAGE>
fixture, alter, decorate and the like, the entire space, and not just the Tenth
Floor First Expansion Space, immediately.
2. For the period commencing March 1, 1997 and expiring December 31, 1997
Tenant shall pay, as basic rent for the Tenth Floor First Expansion Space, the
sum of fifty-six thousand two hundred fifty and 00/100 dollars ($56,250.00)
annually, payable in equal monthly installments, in advance, of four thousand
six hundred eighty-seven and 50/100 dollars ($4,687.500) each; and, for the
period commencing January 1, 1998 and expiring December 31, 2004 Tenant shall
pay, as basic rent for the Tenth Floor First Expansion Space and the Tenth Floor
Second Expansion Space, the sum of one hundred five thousand and 00/100 dollars
($105,000.00) annually, payable in equal monthly installments, in advance, of
eight thousand seven hundred fifty and 00/100 dollars ($8,750.00) each.
3. With respect to the Tenth Floor First Expansion Space and the Tenth
Floor Second Expansion Space only, Paragraphs 3(b) and 3(c) of the Leases are
hereby amended to provide that the Base Real Estate Taxes and Base Operating
Charges for these tenth floor expansion spaces shall each be based on the
calendar year 1997. The percentage of increases in the Real Estate Taxes and
increases in the Operating Costs over the base year allocable to these
expansion spaces will be "one and eight one hundredths of a percent" (1.08%).
The method of computation will be the same as stated in Paragraphs 3(b) and 3(c)
of the Leases.
4. Landlord hereby grants Tenant the "Right of First Offer" on the
adjoining 18,294 square feet of office space. If, during the term of this
Lease, Landlord shall receive a bona fide letter of intent acceptable to it for
the leasing of the adjoining 18,294 square feet, or any part thereof ("Right of
First Offer Space"). Tenant shall have a continuing right to lease the same
upon the terms and conditions as are contained in the said offer, such right to
be exercised in the manner provided for herein. Landlord shall notify Tenant in
writing of the receipt of such letter, together with a copy thereof. Within
seven (7) business days after the receipt of such notice (such time to be of the
essence) Tenant shall, if it desires to lease the space, deliver to Landlord
Tenant's letter binding Tenant to make such lease on such terms. Tenant's
failure to make and deliver such letter within such seven (7) business days
shall result in the termination of this Right of First Offer and Landlord may
consummate the transaction in accordance with the terms of the bona fide letter
of intent submitted to Tenant. If Tenant delivers such letter, Landlord and
Tenant shall thereafter negotiate in good faith a lease amendment containing,
inter alia, the terms contained in the bona fide letter of intent. However, if
a lease agreement is not executed under the bona fide letter of intent Landlord
shall be obligated to follow the procedures and provisions of this Paragraph 4
with respect to any subsequent bona fide letter of intent to lease the Right of
First Offer Space acceptable to Landlord.
5. Tenant shall have the right to the non-exclusive use, in common with
other Tenants, of the transformer located on the 10th floor and Tenant shall be
charged at the General Service Rate for all electricity consumed in this
expansion space, and acknowledges that the transformer being used to provide
electrical current to the space may be jointly used by other tenants of the
Building.
6. Except as herein expressly modified, all of the terms, covenants and
conditions of the Leases shall remain in full force and effect.
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IN WITNESS WHEREOF, THE PARTIES HAVE DULY EXECUTED THIS Amendment to Lease
as of the day and year first above written.
BROAD AND NOBLE ASSOCIATES, INC.
a ______________________ corporation
By: /s/ Allan Stillman
----------------------------------------
Title:
(Corporate Seal)
SUNGARD SERVICES COMPANY
By: /s/ William J. Flounders
----------------------------------------
Title: SR. VP Finance, Chief Financial Officer
Attest: /s/ Paul Loveland Jr.
-------------------------------------
Title: Assistant Controller
(Corporate Seal)
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<PAGE>
CONSENT
-------
The following parties hereby acknowledge, consent and agree to all of the
terms and conditions contained in the Amendment to Lease for 401 North Broad
Street, Philadelphia, PA, dated as of March ___, 1997 between Broad and Noble
Associates, Inc., as Landlord, and SunGard Services Company, as Tenant, to which
this Consent is attached, for all purposes contained in the Leases, as that term
is defined in the attached Amendment to Lease, and for all purposes contained in
each and every Subordination, Non-Disturbance and Attornment Agreement, and all
amendments thereto, executed by any of the undersigned in favor of Tenant.
OWNER AND MASTER LESSOR
-----------------------
Gerald S. Kaufman, Nominee for
Nathan P. Jacobs, Samuel A.
Seaver, Philip Kessler and
Arthur S. Mandelbaum
/s/ Gerald S. Kaufman, Nominee
-----------------------------------
Gerald S. Kaufman, Nominee
FIRST MORTGAGEE:
----------------
Jacobs Family, LLC and The
Nathan P. Jacobs Foundation
By: [SIGNATURE ILLEGIBLE]
--------------------------------
By:________________________________
MASTER LESSEE:
--------------
440 East 62nd Street Co., a
New York limited partnership,
by its sole general partner,
Allan Stillman
/s/ Allan Stillman, Gen Partner
-----------------------------------
Allan Stillman, Gen Partner
LEASEHOLD MORTGAGEE:
--------------------
401 North Associates, an
Illinois limited partnership,
by its Authorized General
Partner General S. Kaufman
/s/ Gerald S. Kaufman, Gen Partner
-----------------------------------
Gerald S. Kaufman, Gen Partner
4
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SUNGARD PHILADELPHIA
10TH FLOOR
[FLOOR PLAN APPEARS HERE]
<PAGE>
Exhibit 10.11
AGREEMENT OF LEASE
This Agreement of Lease made as of the 18th day of December, 1997, by and
between Parkway Corporation, a Pa. Corp (hereafter "Lessor") and Sungard
Recovery Services Inc., a Pennsylvania Corp. (hereafter "Lessee").
The parties hereto, for good and valuable consideration and intending to be
legally bound hereby, agree as follows:
1. LEASED PREMISES AND CONDITION. Lessor hereby leases to Lessee all
those certain parcels of real property known as 1217 through 1245 Callowhill
Street, Philadelphia, Pennsylvania, being one contiguous open air lot of 28,706
square feet (the "Leased Premises").
2. USE OF PREMISES. Lessee shall use and occupy the Leased Premises as
and for the housing of generators and other items shown on Exhibit "A" hereto
and with some Lessee employee parking and including construction by Lessee as
also shown on Exhibit "A" hereto. Lessee shall not use or allow the Leased
Premises or any part thereof to be used for public parking, parking for a fee or
charge, or for any other purposes except as herein stated, except with Lessor's
prior written consent.
3. TERM. The term of this Lease shall commence on January 1, 1998 (the
"Commencement Date"). Rent shall commence on the Commencement Date and Lessee
may take possession of the Leased Premises on the Commencement Date. The Lease
shall, subject to the terms of paragraph 8 hereof below, continue to, and
absolutely terminate and end, without need for notice from either party, on
December 31, 2004. Lessee agrees to pursue all permits, approvals,
authorizations and ordinances from any applicable federal, state, city or local
laws, ordinances, rules, regulations and the like to enable and permit Lessee to
construct, install, maintain and use the diesel backup capability in accordance
with Lessee's design and plans and
<PAGE>
specifications (collectively, the "Permits") with due diligence until all
Permits are granted, issued or passed, as the case may be, in final,
unappealable form. In the event that any Permit is not granted, issued or
passed, Lessee shall send written notice of same to Lessor immediately
indicating Lessee's intention to terminate the Lease. If Lessee shall so
terminate, Lessee shall restore the Leased Premises in accordance with the
provisions of paragraph 15(b) hereof, shall pay to Lessee rent and other charges
in accordance with this Lease to the date the Leased Premises are returned to
Lessor, whereupon Lessee shall pay an additional two (2) months' rent at the
then current rate and thereupon, this Lease shall be null and void and of no
further force and effect. Rent shall be paid by Lessee to Lessor until
possession of the Leased Premises is returned to Lessor with all restoration in
accordance with paragraph 15(b) completed; all rent paid by Lessee to Lessor to
the date possession is returned to Lessor shall be and remain Lessor's property.
4. RENT. The basic annual rent paid by Lessee hereunder shall be as
follows: From Commencement Date hereof through December 31, 1998 basic annual
rent shall be $2.50 per square foot, or the sum of $71,765.00 per annum, payable
monthly in sums of $5980.42 each in advance on the first day of each month, with
the first month's rent to be paid to Lessor upon Lessee's execution of this
Lease, but same shall be refunded to Lessee if the Lease terminates before the
Commencement Date under the terms of paragraph 3 above. After December 31, 1998,
the rent under this Lease will increase on January 1 of each year, starting with
January 1, 1999, and shall be as follows:
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<PAGE>
DATE SQUARE FOOT ANNUAL RENT MONTHLY RENT
January 1, 1999 $2.59 $74,348.54 $6195.00
January 1, 2000 $2.68 $76,932.08 $6411.00
January 1, 2001 $2.77 $79,515.62 $6626.31
January 1, 2002 $2.88 $82,673.28 $6889.44
January 1, 2003 $2.97 $85,256.82 $7104.74
January 1, 2004 $3.07 $88,127.42 $7343.96
5. PLACE OF PAYMENT OF RENT AND OTHER CHARGES. All rent and other charges
shall be paid to Lessor on a timely basis at its office at 150 N. Broad Street,
Philadelphia, PA 19102.
6. USE AND OCCUPANCY TAXES. Lessee shall promptly pay to Lessor each
month with each payment of rent such amount as Lessor shall notify Lessee is due
for Use and Occupancy taxes at or applicable to this Lease and/or the Leased
Premises.
7. TRIPLE NET LEASE. This is intended to be a triple net or net, net, net
Lease and Lessee will without limitation, pay all real estate taxes, all use and
occupancy taxes and any other similar taxes, all assessments, all utility
charges, all insurances, all maintenance costs and charges, all repair costs and
charges, and all other costs, charges and expenses involved in, applicable to,
or resulting from, the said Leased Premises and/or Lessee's use thereof.
8. LESSEE'S RENEWAL OPTIONS. Notwithstanding anything to the contrary
contained in this Lease, Lessee is hereby granted the option, provided Lessee is
not then in default, to extend this Lease on the same terms and conditions
except for rent, for an additional five (5) year term at the end of the initial
Lease term, that is, for five (5) years commencing from January 1, 2005,
3
<PAGE>
such option to be exercised by Lessee by giving to Lessor notice in writing of
exercise of the option at least six (6) months before the end of the initial
term which ends on December 31, 2004. Further, if Lessee is not then in default
and, if it exercised the first five (5) year option term as in this paragraph 8
stated above, then Lessee is hereby granted a further and second option to
extend this Lease on the same terms and conditions except for rent, for another
five (5) year term by giving Lessor at least six (6) months prior written notice
before the end of the first five (5) year option term ending on December 31,
2009, of its exercise of the second option to extend for a further five (5)
years. If Lessee is then not in default during the second five (5) year option
term, and provided Lessee had exercised both the first and second option terms,
then Lessee is also hereby granted a further and final third option to extend
this Lease on the same terms and conditions except for rent, for a third (3rd)
additional five (5) year term, by Lessee giving to Lessor at least six (6)
months prior written notice before the end of the second five (5) year option
term ending on December 31, 2014, of its exercise of the option to extend for
another or third (3rd) five (5) years. The basic annual rental to be paid by
Lessee to Lessor during each five (5) year renewal option term and for the
entire term of each renewal term, without increase or decrease during such
renewal term, shall be the then fair market rental value of the Leased Premises
agreed upon by Lessor and Lessee as determined during the last two (2) months of
the lease term then expiring, each time, based on leases for similar or
comparable leased space (in all major respects) in the same or basically similar
(in all respects) areas of Philadelphia, Pennsylvania, and if the parties cannot
agree on the fair market value at any time by at least the commencement of the
last two (2) weeks before the commencement date of any new renewal option term,
then such rent shall be determined by values meeting the above criteria as
4
<PAGE>
established by two (2) senior officers of recognized Philadelphia leasing
brokerage firms, one to be selected and paid for by Lessor and one to be
selected and paid for by Lessee. The officers selected by the parties shall have
at least ten (10) years experience in (i) leasing of vacant land in Center City
Philadelphia or (ii) the appraisal of vacant land in Center City Philadelphia.
The determination of the parties so selected shall be in writing and shall be
the amount of rent payable during the applicable renewal term. If such officers
are unable to agree on such fair market value, they shall select another officer
who shall have the same qualifications as set forth in this paragraph 8 and such
third officer shall determine if one of the two original determinations shall be
the fair market value or if another determination of fair market value shall be
made. The determination of such third officer shall be binding and shall be the
amount of rent payable during the applicable renewal term. The fee of the third
officer selected pursuant to this paragraph 8 shall be shared equally by Lessor
and Lessee. If, as of the commencement date of the applicable renewal term, the
amount of rent to be paid during such renewal term shall not have been
determined, then, pending such determination, Lessee shall pay rent equal to the
amount paid immediately prior to the commencement of the applicable renewal
term. After the final determination of the rent payable for the applicable
renewal term, the parties promptly and appropriately shall adjust the rental
payments theretofore made during the renewal term to reflect the amount of rent
to be paid during such renewal term as determined in accordance with this
paragraph and shall execute a written agreement specifying the amount of the
rent as so determined. Any failure of the parties to execute such a written
agreement shall not affect the validity of the rent so determined. In no event
shall the new basic annual rent paid during any renewal option term be less than
the basic annual rent paid during the last term of the Lease
5
<PAGE>
ended just prior to the commencement of that renewal option term. Lessee will
with each notice of its exercise of a renewal option for another term provide a
copy thereof to Julien J. Studley, Inc., Suite 2775, 1650 Market Street,
Philadelphia, PA 19103, attention: Office Manager.
9. OBLIGATION OF LESSOR TO PROVIDE SERVICES, FACILITIES, MAINTENANCE,
MAKE REPAIRS, ETC.
(a) Except as may otherwise be specifically in this Lease provided,
or as is or may be mandated by law to be only done by Lessor, Lessor shall not
during the term of this Lease or any extension or renewal thereof be required to
furnish any permits, licenses, insurances, services, utilities or facilities to,
or for, or to maintain, or to make alterations or repairs in, on, or to, the
Leased Premises, and Lessee hereby assumes the full and sole responsibility as
to and for the Leased Premises, including without limitation compliance with all
laws, regulations and codes, compliance with all safety requirements, all
responsibility for the proper insuring of, and condition of, and the repair,
maintenance and management of, and protection of the environment at, and control
and elimination of all hazardous and toxic wastes, fluids and materials, on, in
and from, and payment of all costs for, by reason of or arising therefrom, and
all costs of utilities to or used at, the Leased Premises. Should any billings
for any thereof be received by Lessor, same will then be reasonably promptly
provided to Lessee. If Lessee shall fail to perform as above, including doing
maintenance and repairs at said premises, or fail to maintain safety,
environmental safety, healthful conditions, freedom from toxic or hazardous
wastes, fluids, materials and/or emissions at and/or from, or fail in compliance
with, all codes, regulations and laws at, or shall fail to provide and pay for
needed insurances, or to pay any utilities, and/or to provide any pay for water
and sewer rents and/or real estate or use and occupancy or other taxes,
6
<PAGE>
or shall otherwise fail to perform any act or make any payments with respect to
the Leased Premises and/or their use, as required or intended to be made or done
by Lessee under this Lease, then Lessor may, and without waiver of rights or of
default (but it shall not be obligated hereunder to), make such payments or
perform such obligations of Lessee, and in which event Lessor may, in addition
to all other remedies, and all of which are reserved and retained by Lessor and
may be used successively or concurrently, recover and collect all amounts so
paid by Lessor as well as the costs and expenses of undertaking or doing all or
any of same, and also all fees and costs of collecting same, and also all liens,
fines, interest and/or penalties, levied or resulting from any thereof, and all
as fully and to the same effect as if each thereof was specified as rent due
hereunder and which all will be deemed to be. Nothing herein, however, is a
waiver of any default of Lessee or of any right otherwise available to Lessor.
(b) Notwithstanding anything in hereinafter this paragraph 9 to the
contrary, should compliance with any one or more federal, state, city or local
law, code, ordinance, rule or regulation now or hereafter enacted or amended
(excluding as to payment of real estate and/or use and occupancy or similar
taxes), cause Lessee to expend a sum in excess of $100,000 over that which
Lessee was theretofore obligated to expend in any one (1) lease year to comply
with this Lease prior to such enactment or amendment or $500,000 in the
aggregate, then Lessee shall have the right, to be exercised by at least thirty
(30) days prior written notice to Lessor to cancel and terminate this Lease,
effective as of the date Lessee completes its restoration of the Leased Premises
in accordance with paragraph 15(b) herein whereupon Lessee shall pay to Lessor a
sum equal to two (2) months' of the then current rent and the Lease shall end
and no further obligations of the parties under this Lease, except as may be
otherwise specifically provided in
7
<PAGE>
this Lease to the contrary, shall arise or exist from or as to occurrences
happening after such date.
(c) Anything herein to the contrary notwithstanding, should any
environmental condition existing at the time of commencement of this Lease as
set forth in the phase I environmental study prepared by Alden Environmental
Management, Inc., dated September 30, 1997, (the "Environmental Study"), a copy
of which Study Lessor acknowledges has been provided to Lessor, which does not
require correction or remediation as of the date of such Environmental Study,
thereafter requires remediation, Lessee shall only be required to correct or
remediate same if the reason such remediation is required was caused by Lessee's
use of the Leased Premises or actually caused by Lessee, its agents, employees
or invitees to or on the Leased Premises.
(d) Lessor represents and warrants to Lessee that the last use of the
Leased Premises was as and for a public parking lot and, to the best of its
knowledge, all taxes, utility costs and/or other lienable charges, due to the
Commencement Date and applicable to the Leased Premises, have been paid, and
that there are no uncorrected notices of outstanding, environmental conditions
or hazards or notices of violation of Philadelphia or other governmental codes
applicable thereto. Notwithstanding the foregoing, Lessor shall be responsible
for and shall pay all installments of such damages and/or charges as they become
due and payable which apply to periods prior to the Commencement Date. Lessor
shall be responsible for and indemnify, defend and hold harmless Lessee from all
actions, claims or demands made as a result of a breach of the Lessor's
representations and warranties contained in this subparagraph (d).
10. AFFIRMATIVE COVENANTS OF LESSEE. Lessee covenants and agrees at
Lessee's expense, to do the following:
8
<PAGE>
(a) LESSEE'S IMPROVEMENTS. Make those improvements and alterations to
the Leased Premises so as to cause the Leased Premises to be legally and
physically suitable for Lessee's intended use as above herein set out and so as
same are in compliance with all applicable laws, codes, regulations, licenses
and permits. All work shall be completed in a good and workmanlike manner.
Lessee shall first obtain all required licenses and permits at Lessee's cost
and expense and shall comply therewith. The parties agree all work done and
materials purchased are for the benefit of Lessee only and not Lessor. Lessee
also agrees that no materialman, mechanic, contractor or other person or entity
shall have the right to file any lien against Lessor or the Leased Premises or
part thereof by reason of work or labor done or materials sold or supplied, to
or for Lessee, including what is known as a mechanic's lien, and this Lease
Agreement shall also act as a waiver of such liens by Lessee for itself, its
employees, its architects, engineers, contractors, subcontractors and
materialmen, and in the event that any lien is filed, Lessee must cause each
lien to be removed by bonding or otherwise or discharged or satisfied of record
in accordance with paragraph 15(d) hereof.
11. REPAIRS AND MAINTENANCE. Lessee shall at all times clean, maintain and
repair the entire Leased Premises as well as all pavements, driveways,
sidewalks, curbs and other access ways at or on the Leased Premises, and shall
also at all times, keep all thereof safe and free from refuse, debris, trash,
ice and snow, and in reasonably good order, repair and condition. Lessee shall
also, as applicable, keep all waste and drain pipes open and in repair. Lessee
further agrees to surrender the Leased Premises with all thereof in good order
and repair, reasonable wear and tear excepted.
12. NOTICE OF INJURIES, DEATH OR DAMAGE. Lessee shall give Lessor prompt,
written
9
<PAGE>
notice of any of the following documented by or for Lessee: (i) any personal
injury or death occurring on or at the Leased Premises, (ii) any occurrence
causing any part of such premises to violate any code, regulation or law, and
(iii) any accident or other occurrence causing any injuries or death, or causing
property damage at, to or on the Leased Premises exceeding $5,000.00 in cost to
correct, but regardless of cost, Lessee must upon receipt of any such notice
and/or learning of and thereafter documenting same, give Lessor notice of any
thereof which cause or are a violation of any Code, Regulation or Law or which
create an unsafe or unhealthy condition or which, if uncorrected, will cause
harm or loss to Lessor.
13. INSURANCE.
(a) Lessee shall at its expense provide and maintain in force at all
times, the following insurances insuring Lessee and naming Lessor as an
additional insured thereon, and covering the Leased Premises, comprehensive
general liability insurance against claims for personal injury, death and/or
property damage, at or about the Leased Premises, and including use of
automobiles, in a sum of at least $5,000,000.00 per occurrence. Same shall be
issued by an insurance company or companies licensed to do business in the
Commonwealth of Pennsylvania and rated "A" or better in Best. Further, Premiums
therefor shall be paid so as to keep such insurance from being terminated or
cancelled or lapsing at any time. Such insurance must remain in force at all
times and all must be timely renewed before expiration, at all times. Prior to
the Commencement Date of this Lease, a Certificate or Certificates of insurance
shall be provided by Lessee to Lessor showing that the required coverage is
provided, and showing the parties insured, and establishing that all is in
force. Such certificate or certificates must also establish that each policy
will not be cancelled or suspended by the Insurer without at least thirty
10
<PAGE>
(30) days prior written notice thereof to both Lessor and Lessee. A renewal
certificate for each insurance policy will also be timely provided to Lessor
each time before expiration of any then existing insurance. If Lessee fails to
supply, pay for, and/or maintain insurance coverage required by this Section
and/or fails at any time to timely provide required certificates of insurance,
then in addition to all other rights of Lessor, Lessor shall have the right
after ten (10) days written notice to Lessee and Lessee's failure to cure in
such ten (10) days, to purchase such insurance or any part thereof, without
including Lessee as a party insured thereon; the cost of such insurance shall in
such event become due and payable by Lessee to Lessor as additional rent and
will promptly be paid by Lessee to Lessor on billing of Lessee for same.
(b) Notwithstanding the foregoing, so long as Lessee is not in
default Lessee, at Lessee's sole cost and at no cost to Lessor, may settle all
claims covered by the above insurances without Lessor's consent. Lessor will
join in and execute such documents as may be necessary to effectuate such
settlement, all at Lessee's expense.
14. NEGATIVE AGREEMENTS OF LESSEE. Lessee agrees that it will not do any
of the following things without the prior written consent of the Lessor, which
consent shall not be unreasonably withheld or delayed:
(a) ENCUMBRANCES, ASSIGNMENTS, ETC. Assign, transfer, mortgage,
pledge or otherwise encumber this Lease or part hereof or sublet the Leased
Premises or any part thereof; however, Lessee may assign the Lease or sublet
under same to a person or entity controlled by or under common control with,
Lessee, or to any corporation resulting from a merger or consolidation with, or
reorganization of, Lessee, or to a person or entity which acquires substantially
all of Lessee's assets. No such assignment or sub-lease shall without a release
from
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Lessor, act as a release of or cause the release of, Lessee from its obligations
under this Lease, including during any option, extension or renewal terms.
(b) ALTERATIONS, ADDITIONS, IMPROVEMENTS. Except as set forth on
Exhibit A or as have been approved at or prior to execution hereof by Lessor and
including modifications thereof and improvements thereto in such exception,
and/or except as may be specifically provided herein to the contrary, make any
alterations, additions or improvements to or on the Leased Premises without
Lessor's prior written approval not to be unreasonably withheld or delayed. Upon
termination of this Lease or any extension or renewal thereof, all permitted
alterations, improvements or additions, as made to the Leased Premises (except
for (i) the generators installed by Lessee, (ii) the electrical housing prefab
unit, together with all of the contents thereof, and (iii) all personal property
and trade fixtures of Lessee, all of which shall remain as Lessee's property and
shall be promptly removed by Lessee together with any items installed and not
authorized herein or by Lessor to be installed, if any) shall remain as Lessor's
property except to the extent Lessor shall then direct Lessee to remove any
thereof (it being agreed Lessee will not be required to remove anything
installed by Lessee below the concrete surface, including, without limitation,
underground pipes, cabling, conduit and wire unless and to the extent such
removal shall be required by law to be done), and all of which removals Lessee
will, upon such termination, then do at its expense and also then repairing all
damage resulting from installation or removal thereof;
(c) DISCONTINUE USE. Discontinue using the Leased Premises;
(d) NO LIENS. Create, permit, cause or allow to be created, permitted
or, if occurring, to remain, at any time, any lien on or affecting the Leased
Premises or part thereof,
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<PAGE>
and if any nonetheless occur, Lessee will each time cause each lien to be
removed by bonding or otherwise, or to be discharged or satisfied, within thirty
(30) days after receipt of notice by Lessee of the filing thereof.
15. LESSOR'S RIGHTS.
(a) INSPECTIONS. At all reasonable times during regular business
hours from 7:00 a.m. to 7:00 p.m. ("Business Hours") Lessor shall have the right
after reasonable notice to Lessee, but in no event less than twenty-four (24)
hours notice, (except in cases of emergency during non-Business Hours and Lessor
is unsuccessful in notifying a representative of Lessee or Lessee's security
person at 401 N. Broad Street) for Lessor or its duly authorized employees or
agents, to go on and inspect the Leased Premises and/or any part thereof, and if
Lessee is in default of any covenant hereunder as to or applicable to, the
condition of, or conditions on, the Leased Premises, then Lessor at its option
and upon ten (10) days written notice to Lessee to cure, if the default is not
cured in such ten (10) days unless such default cannot be practicably cured in
such ten (10) days, so long as said cure is being diligently pursued, then such
longer period as is required or necessary to cure such default (except there
shall be required in case of emergency), and without waiving any other right or
any default, may go upon the Leased Premises or send its employees or agents
thereon, to make repairs, alterations and/or corrections on or to the Leased
Premises as needed or required, and Lessee will then promptly upon receipt of
billing therefor, pay to Lessor all costs and expenses of same as additional
rent. Lessor shall be required in all instances except when there are
emergencies and Lessor has been unsuccessful in notifying Lessee or Lessee's
representative, to have Lessee personnel accompany Lessor, its employees or
agents, each time; this shall not restrict Lessee from having personnel present
in an emergency,
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<PAGE>
however.
(b) SALE/RENT SIGNS. Lessor shall have the right to display a "For
Sale" sign or any other sign indicating that the Leased Premises are available
for sale or development, at any time, and/or a "For Rent" sign, but the latter
shall be only during the final six (6) months of the term of this Lease or of
any renewal or extension term thereof. Said signs shall be placed upon such
parts of the Leased Premises as shall minimize interference with Lessee's uses
thereof, and may contain such matter as Lessor may elect. Prospective purchasers
or tenants, if authorized by Lessor, may inspect the Leased Premises at any
reasonable time during Business Hours upon not less than twenty-four (24) hours
prior notice and only if accompanied by a representative of Lessee.
16. RENT CREDIT. Lessor and Lessee agree that Lessee shall be entitled to
a credit against the first month's rent in the amount of Three Thousand Dollars
($3,000.00).
17. INDEMNIFICATION. Lessee expressly agrees to and does hereby indemnify
and hold Lessor, its agents and employees, free of, and harmless from and
against, any and all claims, losses, damages, costs and expenses made by or on
behalf of, or resulting from, any persons, or entities, and/or arising out of,
from, by reason of, or as a result of, this Lease and/or Lessee's use,
occupancy, conduct, operation, management, acts and/or omissions, at, on, in or
about the Leased Premises, as well as all work and/or labor done for, in, to or
at, and all materials supplied for, to, in or at the Leased Premises, and/or
resulting or arising from, any breach or default on the part of Lessee in the
performance or failure to perform any covenant or agreement on the part of
Lessee to be performed pursuant to the terms this Lease, or under the law, and
including without limitation, except as provided herein, all environmental laws,
and also including any
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failure to maintain the Leased Premises in such condition as is or may be
required by and under all environmental laws, codes and regulations, including
those laws relating to tanks, hazardous or toxic wastes and/or fluids and/or
materials, and/or emissions therefrom or from the Leased Premises, and as to and
against claims, citations, litigation, fines and penalties resulting from the
use of the Leased Premises in contravention or violation of this Lease or any
law, code or regulation applicable to Lessee's use, occupancy or possession of
the Leased Premises and/or arising from any accident, injury, death and/or
property damage whatsoever on the Leased Premises, caused to any person or
entity and occurring during the term of this Lease and all extensions and
renewals thereof, on, in, from or about the Leased Premises, unless same or the
claim thereof results (i) solely from the negligence or wilful misconduct of
Lessor, its agents or employees, (ii) from any condition identified in the
Environmental Study unless such remediation is caused by Lessee's use of the
Leased Premises or actually caused by Lessee, its agents, employees or invitees
to or on the Leased Premises, or (iii) from any environmental condition or
hazard which affects the Leased Premises as a result of any off-site condition,
act or omission of a party other than Lessee, its agents, employees or invitees.
Lessor shall indemnify, defend and hold harmless Lessee from and against any
claims, citations, litigation, fines, penalties or damages resulting from (i),
(ii) or (iii) hereof. Acts or omissions of Lessee shall include those of its
employees and agents. Except as hereinbefore provided, Lessee hereby indemnifies
and holds Lessor free of and harmless from, any and all costs, expenses and
liabilities incurred in connection with any of such claims and/or action or
proceeding brought thereon (including without limitation costs, expenses,
attorney fees, and investigators and experts charges and fees) as well as all
Judgments, damages, fees, costs and losses resulting from any thereof, and
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including in any event where any action or proceeding is brought against Lessor
by reason of any thereof. Lessee covenants that, upon notice from Lessor, Lessee
at its sole cost and expense will protect and defend Lessor, its agents and
employees in each such claim, action or proceeding or, if applicable, will at
its expense cause each to be processed, protected and defended by an insurer,
and in each event, with attorneys reasonably acceptable to Lessor. Nothing
herein is intended to obligate Lessee as to costs, fines, remediation or
otherwise in connection with environmental conditions identified in Lessee's
Environmental Study, including any not requiring remediation, except to the
extent Lessee's use, occupancy or possession of the Leased Premises, or the acts
or omissions of Lessee or those acting by, under or for Lessee cause the need
for remediation thereof in which event Lessee will remediate same at its
expense, otherwise, Lessor shall remediate same at its expense.
18. LEASED PREMISES; CONDITION, PERMITS, ETC.
(a) ACCEPTANCE OF LEASED PREMISES. Lessee hereby accepts the Leased
Premises in its present condition, as a result of Lessee's inspections, and
except as may specifically in this Lease be set out to the contrary, without
representations or warranties by or for Lessor. Lessee agrees that prior to the
Commencement Date, Lessor, at Lessor's expense, shall remove the ticket payment
booth situated on the Leased Premises and except as may be specifically set out
to the contrary in this Lease, Lessor is under no duty to do maintenance, make
repairs or replacements or do alterations at or to the Leased Premises now or at
any time during the term of this Lease and all renewals or extensions thereof.
(b) PERMITS, LICENSES, ETC. Lessee shall promptly apply for and
diligently pursue and obtain, at and for the Leased Premises, at its expense,
all zoning, use and other licenses,
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permits and governmental and other authorizations and approvals necessary or
required for Lessee's uses and purposes at and on the Leased Premises.
19. REPAIR, RESTORATION OF THE LEASED PREMISES. In the event that the
Leased Premises or any improvements or fixtures thereon shall be damaged or
destroyed by fire or other casualty, Lessee, at Lessee's sole option and
expense, shall either (i) restore the Leased Premises only to the level
necessary for Lessee to lawfully use same as a private employee and/or customer
parking area, or (ii) restore the Leased Premises so that the same may be used
by Lessee as permitted by this Lease.
20. EMINENT DOMAIN. If the Leased Premises or any part thereof is taken or
condemned for a public or quasi-public use, this Lease shall, as to the part so
taken, terminate as of the date title or possession (whichever occurs first)
shall vest in the Condemnor, and the rent shall be reduced proportionally to the
square feet of the Leased Premises taken. In the event that any partial taking
or condemnation shall render the Leased Premises no longer reasonably suitable
for Lessee's permitted uses, then Lessee shall have the right to terminate this
Lease within thirty (30) days after the actual date of taking by giving written
notice of such termination to Lessor within such thirty (30) day period. In the
event of any such taking, Lessee waives all claims against Lessor and agrees
that Lessee's claim against the condemning authority shall be limited to such
items and sums as may be both, (1) permitted by law, and (2) which shall not
diminish the award to Lessor.
21. DEFAULTS AND REMEDIES. Subject to any cure rights specifically set out
in this Lease, if Lessee, (1) does not pay in full when due, any monies due or
to be paid under this Lease, or within ten (10) days after the date of a written
notice from Lessor to Lessee of a failure
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to timely pay any thereof, or (2) except as otherwise in this paragraph 22 below
provided, violates any other covenant or agreement contained in this Lease and
does not cure same within thirty (30) days after written notice from Lessor to
Lessee of such violation; or, if same cannot be reasonably cured in such time,
if Lessee does not commence such cure within ten (10) days of receipt of written
notice of such default and complete same within ninety (90) days thereafter. If
such default cannot be cured within such 90 day period and so long as Lessee is
diligently pursuing such cure, Lessee shall have such additional time as may be
reasonably necessary to complete the cure of same, or (3) files a petition in
bankruptcy or of insolvency, or for reorganization or for the appointment of a
receiver or trustee for it, or (4) makes an assignment for the benefit of
creditors, or (5) takes advantage of any insolvency act, or (6) if a petition
in bankruptcy or for reorganization or for the appointment of a receiver or
trustee is filed against Lessee and Lessee within sixty (60) days thereafter
fails to secure a discharge of such appointment or proceeding, then and in any
of such foregoing events (each being hereinafter designated "an event of
default"), Lessor shall have the right to do, once or more often as necessary,
any one or more of the following, without notice to Lessee:
(a) Immediately declare due and payable, and/or bring appropriate
action to recover, all unpaid rent, additional rent, and other sums to be paid
by Lessee under this Lease, including overdue rent and other sums and rent due
to the end of the then current term of this Lease, together with reasonable
attorney and other fees, costs and expenses, provided for or permitted by law.
(b) Declare this Lease terminated upon five days from the written
notice thereof to Lessee.
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(c) Lease the Leased Premises or part thereof to any other person or
entity with or without first altering or repairing the same, on such terms,
conditions and rental as Lessor shall deem proper, and the rent received
therefrom shall be applied, first to the payment of costs and expenses of
reletting, including without limitation reasonable brokerage and attorney's fees
and costs and also the costs of any alterations and/or repairs done; and second,
to the payment of any rent and/or additional rent and other costs and charges
then due hereunder and unpaid; and third, to payment of rent, additional rent
and other sums to be paid under this Lease for the balance of the then current
Lease term; and, fourth, the balance, if any, shall be retained by and belong
solely to, Lessor.
(d) Avail itself of all other remedies as permitted by law and all of
which may be exercised concurrently or separately.
(e) In addition to (a) above, if Lessee shall be in default in
performance of any of its obligations hereunder Lessor may (but shall not be
obliged to do so), in addition to all other rights it may have in law or equity,
cure such default on behalf of Lessee and whereupon Lessee shall then reimburse
Lessor promptly on demand, for all such sums paid and/or costs incurred, by
Lessor in curing such default; Lessor in such event shall provide Lessee with
reasonable evidence of such sums paid and costs incurred.
(f) Notwithstanding the foregoing, Lessor shall have the right in its
sole discretion, to waive any default or defaults and the doing thereof shall
not be a waiver of any other default.
22. REMEDIES CUMULATIVE, ETC.. All remedies available to Lessor hereunder,
and those available at law and in equity, shall be cumulative and may be
exercised concurrently or separately. Neither the termination of this Lease nor
the taking or recovering of possession of
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the Leased Premises by or for Lessor shall deprive Lessor of other remedies or
actions against Lessee, including for rent or other sums due hereunder or for
damages or losses from the breach of any covenant or condition contained herein,
nor shall the bringing of any action for rent and/or for damages, or the resort
to any other remedy for recovery of rent and/or damages, be construed as a
waiver or release of any other right of Lessor, including any right to obtain
possession of Leased Premises.
23. LATE CHARGES. In the event that any monthly rental payment or any
other monetary payment to be made hereunder shall become overdue for a period in
excess of ten (10) days, Lessee shall, in addition to all other of Lessor's
remedies, pay to Lessor an additional charge to defray expenses incidental to
handling, processing and collecting each such overdue payment, in an amount of
five percent (5%) per month of the amount of each such overdue payment, until
same is fully paid. Such additional sum or sums shall be paid by Lessee on
demand of Lessor and will be deemed additional rent. Acceptance by Lessor of any
overdue payment of rent or other sums or of such late charge or charges shall
not be construed as a waiver of any default or of any of Lessee's obligations
under this Lease including, without limitation, the obligation of Lessee to pay
each installment of rent and Use and Occupancy Tax in advance on the first day
of each calendar month, all as in this Lease set forth.
24. CONFESSION OF JUDGMENT FOR MONEY. LESSEE COVENANTS AND AGREES THAT IF
RENT AND/OR ANY OTHER COSTS OR CHARGES RESERVED IN THIS LEASE AS RENT OR
OTHERWISE, INCLUDING ACCELERATIONS OF RENT, OR OTHER ITEMS ALLOWED HEREUNDER,
SHALL REMAIN UNPAID FOR TEN (10) DAYS AFTER THE TIME THAT SAME IS REQUIRED TO BE
PAID, THEN AFTER LESSOR
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GIVING ANY REQUIRED NOTICES TO LESSEE AS SET FORTH IN PARAGRAPH 22 AND PARAGRAPH
28 HEREOF AND UPON FAILURE TO PAY IN THE TIME ALLOWED UPON GIVING SUCH NOTICES,
IN SUCH EVENTS AND IN ADDITION TO ANY AND ALL OTHER REMEDIES, LESSOR MAY CAUSE
JUDGEMENT TO BE ENTERED AGAINST LESSEE AND FOR THAT PURPOSE LESSEE HEREBY
AUTHORIZES AND EMPOWERS LESSOR OR ANY PROTHONOTARY, CLERK OF COURT OR ATTORNEY
OF ANY COURT OF RECORD, TO APPEAR FOR AND CONFESS JUDGMENT AGAINST LESSEE, AND
LESSEE AGREES THAT LESSOR MAY COMMENCE AN ACTION PURSUANT TO PENNSYLVANIA RULES
OF CIVIL PROCEDURE NO. 2950 ET SEQ. FOR THE RECOVERY BY LESSEE OF ALL RENT AND
OTHER SUMS OR CHARGES TO BE PAID HEREUNDER, INCLUDING ALL ACCELERATIONS
PERMISSIBLE UNDER THIS LEASE, AS WELL AS INTEREST, ACTUAL COSTS AND A REASONABLE
ATTORNEY'S FEE OR COMMISSION, AND FOR WHICH AUTHORIZATION TO CONFESS JUDGMENT
THIS LEASE, OR A TRUE AND CORRECT COPY THEREOF, SHALL BE SUFFICIENT WARRANT.
NEITHER THE RIGHT TO INSTITUTE AN ACTION PURSUANT TO PENNSYLVANIA RULES OF CIVIL
PROCEDURE NO. 2950 ET. SEQ. NOR THE AUTHORITY TO CONFESS JUDGMENT GRANTED HEREIN
SHALL BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, BUT SUCCESSIVE COMPLAINTS
MAY BE FILED AND SUCCESSIVE JUDGMENTS MAY BE ENTERED FOR ALL HEREIN STATED SUMS
ELEVEN OR MORE DAYS AFTER THEY BECOME DUE AS WELL AS AFTER THE EXPIRATION OF THE
ORIGINAL TERM AND/OR DURING OR AFTER EXPIRATION OF ANY EXTENSION OR RENEWAL TERM
OF THIS LEASE.
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25. CONFESSION OF JUDGMENT FOR POSSESSION OF REAL PROPERTY. LESSEE
COVENANTS AND AGREES THAT IF THIS LEASE SHALL BE TERMINATED EITHER BECAUSE OF
CONDITION BROKEN DURING THE TERM OF THIS LEASE OR DURING ANY RENEWAL OR
EXTENSION THEREOF AND/OR WHEN THE TERM HEREBY CREATED OR ANY EXTENSION OR
RENEWAL THEREOF SHALL HAVE EXPIRED, THEN AND IN ANY SUCH EVENT, LESSOR MAY IN
ADDITION TO ALL OTHER REMEDIES AND UPON GIVING ANY NOTICES REQUIRED AS SET
FORTH IN PARAGRAPH 22 AND PARAGRAPH 28 HEREOF AND UPON EXPIRATION THEREAFTER OF
ANY CURE PERIOD PROVIDED IN SUCH NOTICE, CAUSE A JUDGMENT IN EJECTMENT TO BE
ENTERED AGAINST LESSEE FOR POSSESSION OF THE LEASED PREMISES AND FOR A
REASONABLE ATTORNEY'S COMMISSION OR FEE AND FOR THAT PURPOSE LESSEE HEREBY
AUTHORIZES AND EMPOWERS ANY PROTHONOTARY, CLERK OF COURT OR ATTORNEY OF ANY
COURT OF RECORD TO APPEAR FOR LESSEE AND TO CONFESS JUDGMENT AGAINST LESSEE IN
EJECTMENT FOR POSSESSION OF THE HEREIN LEASED PREMISES AND AGREES THAT LESSOR
MAY COMMENCE AN ACTION PURSUANT TO THE PENNSYLVANIA RULES OF CIVIL PROCEDURE
THEN IN FORCE FOR THE ACTION IN EJECTMENT AND/OR THE ENTRY OF AN ORDER IN
EJECTMENT FOR POSSESSION OF REAL PROPERTY OR IN ANY REPLACEMENT ACTION THEREFOR,
AND LESSEE FURTHER AGREES THAT A WRIT OF POSSESSION OR OTHER APPROPRIATE
INSTRUMENT VALID AT SUCH TIME PURSUANT THERETO MAY ISSUE FORTHWITH AND FOR WHICH
AUTHORIZATION TO CONFESS JUDGMENT AND FOR THE ISSUANCE OF A
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WRIT OR WRITS OF POSSESSION PURSUANT THERETO OR OTHER APPROPRIATE WRIT, ORDER OR
INSTRUMENT, THIS LEASE, OR A TRUE AND CORRECT COPY THEREOF SHALL BE SUFFICIENT
WARRANT. LESSEE FURTHER COVENANTS AND AGREES THAT IF FOR ANY REASON WHATSOEVER
AFTER THE SAID ACTION SHALL HAVE BEEN COMMENCED SAME SHALL BE TERMINATED AND
POSSESSION OF THE LEASED PREMISES REMAIN IN OR BE RESTORED TO LESSEE, LESSOR
SHALL HAVE THE RIGHT UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS OR UPON TERMINATION
OF THIS LEASE AS ABOVE SET FORTH TO COMMENCE SUCCESSIVE ACTIONS FOR POSSESSION
OF REAL PROPERTY AND TO CAUSE ENTRY OF SUCCESSIVE JUDGMENTS BY CONFESSION IN
EJECTMENT OR OTHER APPROPRIATE ACTION FOR POSSESSION OF THE LEASED PREMISES,
INCLUDING DURING AND AFTER ANY EXTENSION OR RENEWAL OF THE INITIAL TERM HEREOF.
26. AFFIDAVIT OF DEFAULT. In any action to enter judgment by confession
for money pursuant to paragraph 24 hereof, or to enter judgement by confession
in ejectment or other appropriate action for possession of real property for the
Leased Premises pursuant to paragraph 25 hereof, if Lessor shall first cause to
be filed in such action an affidavit or averment of the facts constituting the
default or defaults, or occurrence or occurrences of the condition or conditions
precedent, or event or events, the happening of which default or defaults,
occurrence or occurrences or event or events authorizes or empowers Lessor to
cause entry of judgement by confession, such affidavit or averment shall be
conclusive evidence of such facts, defaults, occurrences, conditions precedent
and/or events, and if a true copy of this Lease (and of the truth of which such
affidavit or averment shall be sufficient evidence) be filed in such action it
shall
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not be necessary to file the original as a Warrant of Attorney, any Rule of
Court, custom or practice to the contrary, notwithstanding.
27. WAIVER OF ERRORS, ETC. Lessee hereby releases to Lessor and to any
and all attorneys or others who may appear for Lessee all errors in any
procedure or action to enter judgment by confession by virtue of the warrants of
attorney contained in this Lease and all liability therefor, and Lessee
authorizes the Prothonotary and/or any Clerk of any Court of Record to issue a
Writ of Execution or other process and further agrees that any real or personal
property of Lessee may be sold under or by reason of such process. Further,
Lessor shall before filing for any confessed judgment each time, first give
Lessee notice of intent to do so unless defaults as stated in the notice are
cured within ten (10) days of the date of the notice. Lessee, however
specifically waives the right to any other notice not required in this Lease,
unless required by law to be given prior to Entry of Judgment. Nothing in this
paragraph shall in any event restrict Lessee from filing to open or strike any
confessed judgment obtained hereunder.
28. WAIVER OF SECURITY DEPOSIT. Lessor and Lessee agree that by reason of
the financial strength of Lessee based on financial data provided by Lessee to
Lessor and which Lessee represents is true and correct, a security deposit from
Lessee is hereby waived.
29. RIGHT OF FIRST REFUSAL. During the term of this Lease or any renewal
or extension thereof, should Lessor received a bonafide offer to purchase the
Leased Premises from any third party, a copy thereof with names and addresses
deleted will be provided by Lessor to Lessee, and Lessee shall then have thirty
(30) days from the date of its receipt thereof to accept or reject the right to
buy on the same terms and conditions as in the offer submitted. Upon Lessee's
rejection thereof, or upon the failure of Lessee to have provided a reply to
Lessor within such thirty (30)
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days, then Lessor may sell to such third party with whom it is dealing in such
bona fide offer on the same terms and conditions as set out in such offer, and
upon the completion of such sale this right of first refusal shall thereupon be
deemed fully deleted from this Lease, even if the Lease thereafter remains in
force. Notwithstanding the foregoing, if the Leased Premises is part of an
assembly or package of sites, buildings or interests and in which the proposed
purchase price by the Buyer is a lump sum including other then the Leased
Premises alone, the right of first refusal shall only apply to the Leased
Premises and the value thereof for purposes of the right of first refusal will
be based on a majority determination made by three, independent, qualified
appraisers, licensed to do business in Pennsylvania, and who regularly appraise
commercial real estate in and around Center City Philadelphia and who has at
least ten (10) years of experience doing so. One appraiser shall be selected and
paid for by Lessor, one appraiser shall be selected and paid for by Lessee and
the third appraiser shall be selected by the two selected appraisers and the
cost of the third appraiser shall be shared equally between Lessor and Lessee.
Quality of title to be conveyed, time and date of closing and prorations, if not
otherwise set forth in the bona fide offer, shall be in accordance with the
provisions of paragraph 31. If the sale is not completed in accordance with the
terms of the bona fide offer communicated to Lessee, then Lessee shall have a
continuing right of first refusal on all subsequent bona fide offers.
30. RIGHT OF RECAPTURE BY LESSOR; LESSEE'S OPTION TO PURCHASE. After the
expiration of the initial term of this Lease, which ends December 31, 2004, in
the event that Lessor shall have a developmental opportunity (being one that is
economically feasible, legally permissible and physically possible) for the
Leased Premises, and which is for use of the Leased Premises
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for other than an open air parking lot or as a lot with no structures thereon,
then Lessor, subject to the provisions of this paragraph 31, shall have the
right to recapture the Leased Premises by providing notice to Lessee of its
intent to recapture the Leased Premises one year from the date of Lessee's
receipt of the notice, or, if the time to exercise a renewal option has expired
without exercise thereof, and if the remaining balance of the then current term
is less than six (6) months, then no notice to Lessee shall be required, it
being understood and agreed that Lessee must vacate the Leased Premises and
deliver possession thereof to Lessor under the terms of this Lease at the end of
any Lease term where the Lease has not been timely renewed or extended for a
further term. Notwithstanding anything set out above in this paragraph 31,
however, it is agreed that upon any exercise by Lessor of this right to
recapture done by the giving of one (1) year's notice as in this paragraph 31
set out, and where the remaining period of the then current Lease term is six
(6) months or more, Lessee, upon receipt of such notice from Lessor to
recapture, shall have the option, which must be exercised by Lessee within
thirty (30) days of Lessee's receipt of such notice from Lessor, by notice
provided by Lessee to Lessor of exercise of its option to purchase the Leased
Premises for a sale price based on the then current net annual rent for the
Leased Premises, capitalized at a rate of seven percent (7%). In such event of
purchase of the Leased Premises by Lessee, the title to be conveyed to Lessee by
Lessor shall be good and marketable title, free and clear of mortgages, ground
rents, municipal and mechanic's liens and liens of judgments, subject, however
only to those items listed on Exhibit "B" attached hereto and by reference made
a part hereof, title shall be such as will be insured by a reputable title
insurance company of Lessee's choice, licensed to do business in Pennsylvania,
at its regular rates by an ALTA Owner's form policy of title insurance insuring
Lessee's fee simple interest in the
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Leased Premises, dated the date of closing with liability in the amount of the
purchase price, together with such endorsements as Lessee may reasonably
require, to be as above in this paragraph 31 required. Closing shall take place
at a time and place designated by Lessee within 120 days of the date Lessee
exercises such option to purchase. Realty transfer taxes shall be borne one-half
by Lessee and one-half by Lessor. Rent shall be apportioned to the date of
closing. Lessor covenants and agrees that it will not encumber the Leased
Premises or grant any easements or agree to any restrictions or other covenants
affecting the Leased Premises (other than in connection with any financing done
by Lessor in which the Leased Premises or any part thereof is used as
collateral) from and after the date of this Lease. Lessee agrees that it will
use its best efforts to clear title in order to comply with the requirements
herein, including clearing any defect or exception that can be cleared by the
payment of money or by indemnification of the title company by Lessor. If Lessor
is unable to deliver title as required herein, Lessee's sole remedy will be to
cancel its election to so purchase or to take such title as Lessor can give. In
the event that Lessee chooses to cancel its election to purchase the Leased
Premises, Lessee's then current term shall end and a two (2) year term shall
commence as of the date that the uncurable title defect is discovered (the
"Recapture Term"). Lessee may terminate the Recapture Term at any time upon
sixty (60) days prior written notice to Lessor. At the time of termination of
the Recapture Term, Lessee shall, at its sole cost and expense, and
notwithstanding the provisions of paragraph 15(b) hereof, restore the Leased
Premises only to a safe condition that is in compliance with all applicable laws
and thereupon this Lease shall be null and void and of no further force and
effect.
31. DELIVERY OF POSSESSION ON TERMINATION. Lessee agrees to promptly
deliver
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possession of the Leased Premises to Lessor without necessity of notice to
Lessee of termination, upon termination of this Lease after the original or any
extension or renewal term thereof, and without the Lease term being timely
renewed or extended under the terms of this Lease Agreement.
32. ENTIRE AGREEMENT; LEGAL ADVICE. Each party agrees that it has read and
fully understands this Lease and its terms and has had full opportunity to seek
legal advice thereon. The parties hereto expressly agree that this Lease and the
exhibits attached hereto (if any), set forth all of the promises, agreements,
conditions, inducements, covenants and representations between them with
reference to the Leased Premises and the leasing thereof and that except as
herein set out there are no other or further understandings or agreements
between them with respect thereto.
33. MODIFICATIONS. This Lease and its terms shall not be modified or
changed in any way except by a written notice given pursuant to an express
provision of this Lease, calling for or allowing same, and otherwise only by a
written amendment of the Lease signed by both Lessor and Lessee.
34. PARTIES BOUND. This Lease and its covenants, terms, and conditions
shall be binding on and extend to, and be in favor of, the parties hereto and
their respective heirs, administrators, executors, successors and assigns (but
this is not permission for Lessee to assign this Lease or its rights hereunder).
35. NOTICES. All notices required or to be given under this Lease shall be
in writing and sent by receipted, overnight postal service or private national
delivery firm, and the only admissible evidence that the notice has been given
shall be by such receipt or evidence thereof
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from the delivering entity or upon proof by such entity of the failure or
refusal of the addressee to accept same or to respond after notice to it of the
attempt to deliver or notice by it to claim same, and all of which shall for
purposes of this Lease be deemed proof of delivery. Notices shall be sent to
each party at the addresses stated below, or to such other addresses as either
party hereto may, in writing, hereafter provide from time to time to the other,
in the manner set out above:
To Lessor: Parkway Corporation
150 N. Broad Street
Philadelphia, PA 19102
ATTN: Anna Z. Boni
Copy to: Parkway Corporation
150 N. Broad Street
Philadelphia, PA 19102
ATTN: Susan J. Costello, Esq.
To Lessee: Sungard Recovery Services, Inc.
1285 Drummers Lane
Wayne, PA 19807
ATTN: General Counsel
Copy to: Blank, Rome, Comisky & McCauley
One Logan Square
Philadelphia, PA 19103
ATTN: Donna U. Sternberg, Esq.
36. PARTIAL INVALIDITY. If any term or provision of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the balance of this Lease shall not be affected
thereby, and each term and provision of this Lease shall be deemed valid and
enforceable to the fullest extent permitted by law.
37. HEADINGS. Any headings preceding the text of the various sections and
subsections hereof are inserted solely for convenience and shall not constitute
a part of this
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Lease, nor shall they affect its meaning, construction or effect.
38. RECORDING. Either party may record this Lease or a memorandum thereof,
signed by both parties, at its own expense. The other party shall join in
executing any document necessary for such recording provided it does not set
forth matter not in this Lease. In event of termination of this Lease or any
extensions or renewals thereof, same may be removed from record by an
appropriate instrument executed and acknowledged only by Lessor and therein so
stating.
39. BROKER'S COMMISSIONS. The parties agree that Julien J. Studley, Inc.
and Gelcor Realty, Inc. (the "Brokers") were and are the only Real Estate
Brokers consulted or involved in this transaction and each will receive such
commission and at such time as is separately agreed to in writing between each
such Broker and Lessor. Each party represents to the other that such party has
not dealt with any Broker other than the Brokers set out above in this paragraph
40 in connection with this transaction, and that no other person or entity is
entitled to a commission, finder's fee or other brokerage compensation based
upon that party retaining or inducing such a claimant to be involved in or with
respect to obtaining or making of this Lease. Each party hereto does hereby
indemnify and hold the other party hereto free of and harmless from, any and all
loss, cost, damage, or expense (including reasonable attorney's fees) incurred
as a result of any representation made by the indemnifying party in this
paragraph being untrue.
40. QUIET ENJOYMENT. Lessor represents that it has full right and power to
execute and perform this Lease and to grant the estate herein granted to Lessee,
and Lessor for itself, and its successors and assigns, including without
limitation any Grantee of the Leased Premises from Lessor, covenants with Lessee
that so long as Lessee is not in default and timely performs all of
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its obligations hereunder, it shall have the right to peacefully and quietly
have, hold, use and enjoy the Leased Premises under the covenants of, and during
the term of, this Lease and during all extensions and renewals thereof, without
interference from Lessor or its successors or assigns. Further, Lessor covenants
to obtain a Non-Disturbance Agreement from each future mortgagee of all or any
part of the Leased Premises, in favor of Lessee, for so long as this Lease
(including extensions or renewals as herein authorized) remains in force.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed and sealed the day and year first above first written.
PARKWAY CORPORATION
Lessor
BY: /s/ Jacob S. Winigrad
------------------------------------
Jacob S. Winigrad
Vice President
ATTEST: /s/ Susan J. Costello
------------------------------------
Assistant Secretary
(corporate seal)
SUNGARD RECOVERY SERVICES INC.
Lessee
BY: /s/ Debra A. Stehman
------------------------------------
Vice President, Controller
ATTEST: /s/ Andrew P. Bronstein
------------------------------------
Assistant Secretary
(corporate seal)
December 17, 1997/879.lea
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SUNGARD DATA SYSTEMS INC.
1998 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of the SunGard Data Systems Inc. 1998 Equity Incentive Plan
(the "Plan") is to promote the long-term retention of key employees of SunGard
Data Systems Inc., ("SunGard") and its current and future subsidiaries
(collectively, the "Company") who are in a position to make significant
contributions to the success of the Company, to further reward these employees
for their contributions to the Company's success, to provide additional
incentive to these employees to continue to make similar contributions in the
future, and to further align the interests of these employees with those of
SunGard's stockholders. These purposes will be achieved by granting to such
employees, in accordance with the provisions of this Plan, Options, Restricted
Stock or Unrestricted Stock Awards or Performance Awards, for shares of
SunGard's common stock, $0.01 par value per share ("Common Stock"), or Loans or
Supplemental Grants, or combinations thereof ("Awards").
2. AGGREGATE NUMBER OF SHARES
2.1 The aggregate number of shares of Common Stock for which Awards may be
granted under the Plan will be 3,000,000 shares, with an individual limit of
250,000 shares per Participant (as defined in Section 3.1 below) per year,
subject to adjustment in accordance with this Section 2.1 and in accordance with
Section 2.2 below. If there is any change in the capitalization of SunGard,
such as by stock dividend, stock split, combination of shares, exchange of
securities, recapitalization or other event which the Compensation Committee
(the "Committee") of the Board of Directors (the "Board") of SunGard deems, in
its sole discretion, to be similar circumstances, the aggregate number and/or
kind of shares for which Awards may be granted under the Plan and such
individual limit shall be appropriately adjusted in a manner determined by the
Committee. No fractional shares of Common Stock will be delivered under the
Plan.
2.2 On January 1 of each year, commencing with January 1, 1999, the
aggregate number of shares of Common Stock for which Awards may be granted under
the Plan shall automatically be increased by the number of shares of Common
Stock exercised during the previous fiscal year pursuant to stock options
granted under the Company's stock option and award plans with a maximum annual
increase of two percent (2%) of the Company's outstanding shares of Common Stock
on that date; provided that no more than 3,000,000 shares (subject to adjustment
in accordance with Section 2.1) of the shares eligible for issuance under the
Plan shall be issued upon the exercise of ISOs (as defined in Section 5.1) under
the Plan.
2.3 Treasury shares, reacquired shares and unissued shares of Common Stock
may be used for purposes of the Plan, at SunGard's sole discretion.
2.4 Shares of Common Stock that were issuable pursuant to an Award that
has terminated but with respect to which such Award had not been exercised,
shares of Common Stock that are issued pursuant to an Award but that are
subsequently forfeited, and shares of Common Stock that were issuable pursuant
to an Award that was payable in Common Stock or cash but that was satisfied in
cash, shall be available for future Awards under the Plan.
<PAGE>
3. ELIGIBLE EMPLOYEES AND PARTICIPANTS
3.1 All current and future key employees of the Company, including
officers and directors who are employed by the Company ("Employees"), shall be
eligible to receive Awards under the Plan. Neither members of the Committee nor
any other directors who are not Employees shall be eligible to receive Awards.
No eligible Employee (a "Participant") shall have any right to receive an Award
except as expressly provided in the Plan.
3.2 The Participants who shall actually receive Awards under the Plan
shall be determined by the Committee in its sole discretion. In making such
determinations, the Committee shall consider the positions and responsibilities
of eligible employees, their past performance and contributions to the Company's
growth and expansion, the value of their services to the Company, the difficulty
of finding qualified replacements, and such other factors as the Committee deems
pertinent in its sole discretion.
4. ADMINISTRATION
4.1 The Plan shall be administered by the Committee. The Committee may
delegate all or any portion of its authority hereunder to a subcommittee
consisting of at least two Committee members (and references in this Plan to the
"Committee" shall thereafter be to the Committee or such subcommittee). The
Committee may consist solely of two or more "non-employee directors" within the
meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as
amended (the "1934 Act") or any future corresponding rule, provided that the
failure of the Committee or of the Board for any reason to be composed solely of
non-employee directors shall not prevent an Award from being considered granted
under this Plan. In addition to its other authority and subject to the
provisions of the Plan, the Committee shall have the authority to determine, in
its sole discretion, the Participants who shall be eligible to receive Awards,
the Participants who shall actually receive Awards, the size of each Award,
including the number of shares of Common Stock subject to the Award, the type or
types of each Award, the date on which each Award shall be granted, the terms
and conditions of each Award, whether to waive compliance by a Participant with
any obligations to be performed by the Participant under an Award or waive any
term or condition of an Award, whether to amend or cancel an existing Award in
whole or in part (except that the Committee may not, other than as specifically
authorized herein, change the exercise price of an Award or cancel an existing
Award in exchange for a new Award with a lower exercise price, and may not,
without the consent of the holder of an Award or unless specifically authorized
by the terms of an Award, take any action under this clause with respect to such
Award if such action would adversely affect the rights of such holder), and the
form or forms of instruments that are required or deemed appropriate under the
Plan, including any written notices and elections required of Participants.
4.2 The Committee may adopt such rules for the administration of the Plan
as it deems necessary or advisable, in its sole discretion. For all purposes of
the Plan, a majority of the members of the Committee shall constitute a quorum,
and the vote or written consent of a majority of the members of the Committee on
a particular matter shall constitute the act of the Committee on that matter.
The Committee shall have the exclusive right to construe the Plan and any Award,
to settle all controversies regarding the Plan or any Award, to correct defects
and omissions in the Plan and in any Award, and to take such further actions as
the Committee deems necessary or advisable, in its sole discretion, to carry out
the purpose and intent of the Plan. Such actions shall be final, binding and
conclusive upon all parties concerned.
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<PAGE>
4.3 No member of the Committee or the Board shall be liable for any act or
omission (whether or not negligent) taken or omitted in good faith, or for the
good faith exercise of any authority or discretion granted in the Plan to the
Committee or the Board, or for any act or omission of any other member of the
Committee or the Board.
4.4 All costs incurred in connection with the administration and operation
of the Plan shall be paid by the Company. Except for the express obligations of
the Company under the Plan and under Awards granted in accordance with the
provisions of the Plan, the Company shall have no liability with respect to any
Award, or to any Participant or any transferee of shares of Common Stock from
any Participant, including, but not limited to, any tax liabilities, capital
losses, or other costs or losses incurred by any Participant or any such
transferee.
5. TYPES OF AWARDS
5.1 OPTIONS.
(a) An Option is an Award entitling the recipient on exercise thereof
to purchase Common Stock at a specified exercise price. Both "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") (any Option intended to qualify as an incentive stock
option being hereinafter referred to as an "ISO"), and Options that are not
incentive stock options ("non-ISO"), may be granted under the Plan.
(b) The exercise price of an Option will be determined by the
Committee subject to the following:
(1) The exercise price of an ISO shall not be less than 100% (110%
in the case of an ISO granted to a ten percent shareholder) of the fair market
value (as defined in Section 11.9) of the Common Stock subject to the ISO,
determined as of the time the ISO is granted. A "ten-percent shareholder" is any
person who at the time of grant owns, directly or indirectly, or is deemed to
own by reason of the attribution rules of Section 424(d) of the Code, stock
possessing more than 10% of the total combined voting power of all classes of
stock of SunGard or of any of its subsidiaries.
(2) The exercise price of a non-ISO shall not be less than 100% of
the fair market value of the Common Stock subject to the non-ISO, determined as
of the time the non-ISO is granted, except that:
(A) the exercise price of a non-ISO may be equal to or greater
than 85% of the fair market value of the Common Stock subject to the non-ISO, if
the discount is granted in lieu of a reasonable amount of cash compensation; or
(B) the exercise price of a non-ISO granted pursuant to a
Performance Award may be (i) 100% of the fair market value of the Common Stock
subject to the non-ISO, determined either as of the time the Performance Award
is granted or as of the time the non-ISO is granted pursuant to the Performance
Award; or (ii) an amount less than such fair market value if the discount is
granted in lieu of a reasonable amount of cash compensation as consideration for
exceeding the goal(s) set forth in the Performance Award.
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<PAGE>
(3) In no case may the exercise price paid for Common Stock
which is part of an original issue of authorized Common Stock be less than the
par value per share of the Common Stock.
(c) The period during which an Option may be exercised will be
determined by the Committee, except that the period during which an ISO may be
exercised will not exceed ten years (five years, in the case of an ISO granted
to a ten-percent shareholder) from the day immediately preceding the date the
Option was granted.
(d) An Option will become vested and/or exercisable at such time or
times, and on such terms and conditions, as the Committee may determine, but in
no event shall an Option granted to a person subject to Section 16 of the 1934
Act be exercisable within the first six months after the date of grant except as
otherwise provided in the Award or the Plan. The Committee may at any time
accelerate the time at which all or any part of an Option becomes vested and/or
exercisable. Any exercise of an Option must be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (1) any documents
required by the Committee and (2) payment in full in accordance with Section
5.1(e) below for the number of shares for which the Option is exercised.
(e) Stock purchased on exercise of an Option must be paid for as
follows: (1) in cash or by check (acceptable to SunGard in accordance with
guidelines established for this purpose), bank draft or money order payable to
the order of SunGard or (2) if so permitted by the instrument evidencing the
Option (or in the case of an Option which is not an ISO, by the Committee at or
after grant of the Option), (i) through the delivery of shares of Common Stock
which have been outstanding for at least six months (unless the Committee
expressly approves a shorter period) and which have a fair market value on the
last business day preceding the date of exercise equal to the exercise price, or
(ii) by delivery of a promissory note of the Option holder to SunGard, payable
on such terms and conditions as the Committee may determine, or (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to SunGard sufficient funds to pay the exercise price, or (iv) by any
combination of the permissible forms of payment; provided, that if the Common
Stock delivered upon exercise of the Option is an original issue of authorized
Common Stock, at least so much of the exercise price as represents the par value
of such Common Stock must be paid other than by the Option holder's promissory
note.
(f) If the market price of shares of Common Stock subject to an Option
exceeds the exercise price of the Option at the time of its exercise, the
Committee may cancel the Option and cause SunGard to pay in cash or in shares of
Common Stock (at a price per share equal to the fair market value per share) to
the person exercising the Option an amount equal to the difference between the
fair market value of the Common Stock which would have been purchased pursuant
to the exercise (determined on the date the Option is canceled) and the
aggregate exercise price which would have been paid. The Committee may exercise
its discretion to take such action only if it has received a written request
from the person exercising the Option, but such a request will not be binding on
the Committee.
5.2 RESTRICTED AND UNRESTRICTED STOCK.
(a) A Restricted Stock Award entitles the recipient to acquire, for a
purchase price not less than the par value, shares of Common Stock subject to
the restrictions described in Section 5.2(d) below ("Restricted Stock").
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<PAGE>
(b) A Participant who is granted a Restricted Stock Award shall have
no rights with respect to such Award unless the Participant accepts the Award by
written instrument delivered or mailed to SunGard accompanied by payment in full
of the specified purchase price, if any, of the shares covered by the Award.
Payment may be by certified or bank check or other instrument acceptable to the
Committee.
(c) A Participant who receives Restricted Stock shall have all the
rights of a stockholder with respect to such stock, including voting and
dividend rights, subject to the restrictions described in paragraph (d) below
and any other conditions imposed by the Committee at the time of grant. Unless
the Committee otherwise determines, certificates evidencing shares of Restricted
Stock will remain in the possession of the Company until such shares are free of
all restrictions under the Plan.
(d) Except as otherwise specifically provided by the Plan or the
Award, Restricted Stock may not be sold, assigned, exchanged, pledged, gifted or
otherwise disposed of, or transferred, and if a Participant suffers a Status
Change (as defined in Section 6.1 below) for any reason, must be offered to
SunGard for purchase for the amount of cash paid for the such stock, or
forfeited to the Company if no cash was paid. These restrictions will lapse and
the shares will become unrestricted ("Unrestricted Stock") at such time or
times, and on such terms and conditions, as the Committee may determine;
provided, however, that these restrictions will apply ratably for a minimum
period of three years, unless the Restricted Stock is subject to a Performance
Award, in which case these restrictions will apply for a minimum period of one
year. In the event of a Status Change, the Committee may accelerate the time at
which the restrictions on all or any part of the shares will lapse.
(e) Any Participant making, or required by an Award to make, an
election under Section 83(b) of the Code with respect to Restricted Stock shall
deliver to SunGard, within 10 days of the filing of such election with the
Internal Revenue Service, a copy of such election.
(f) The Committee may, at the time any Award described in this Section
5 is granted, provide that any or all the Common Stock delivered pursuant to the
Award will be Restricted Stock.
(g) The Committee may, in its sole discretion, approve the sale to any
Participant of shares of Common Stock free of restrictions under the Plan for a
price which is not less than the par value of the Common Stock, provided that
the value of such Award, which equals the difference between the price and the
fair market value of such shares on the date of grant, is in lieu of a
reasonable amount of cash compensation.
5.3 PERFORMANCE AWARDS. A Performance Award entitles the recipient to
receive, without payment, an Award or Awards described in this Section 5
following the attainment of such performance goals, during such measurement
period or periods (which must be at least one year), and on such other terms and
conditions, all as the Committee may determine. Performance goals may be
related to overall corporate performance, operating group or business unit
performance, personal performance or such other category of performance as the
Committee may determine. Financial performance may be measured by revenue,
operating income, net income, earnings per share, number of days sales
outstanding in accounts receivable, productivity, return on equity, common stock
price, price-earnings multiple, or such
5
<PAGE>
other financial factors as the Committee may determine. Performance goals also
may be included as terms and conditions of other types of Awards.
5.4 LOANS AND SUPPLEMENTAL GRANTS.
(a) The Company may make a loan to a Participant ("Loan"), either in
connection with the purchase of Common Stock under the Award or the payment of
any Federal, state and local income tax with respect to income recognized as a
result of the Award. The Committee shall have the authority, in its sole
discretion, to determine whether to make a Loan, the amount, terms and
conditions of the Loan, including the interest rate (which may be zero), whether
the Loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid and the terms and
conditions, if any, under which the Loan may be forgiven. In no event shall any
Loan have a term (including extensions) in excess of ten years.
(b) In connection with any Award, the Committee may grant a cash award
to the Participant ("Supplemental Grant") not to exceed an amount equal to (1)
the amount of any Federal, state and local income tax on ordinary income for
which the Participant may be liable with respect to the Award, determined by
assuming taxation at the highest marginal rate, plus (2) an additional amount on
a grossed-up basis intended to make the Participant whole on an after-tax basis
after discharging all the Participant's income tax liabilities arising from all
payments under this Section 5. Any payments under this Section 5(b) shall be
made at the time the Participant incurs Federal income tax liability with
respect to the Award.
(c) In connection with any Performance Award or any Award that depends
in whole or in part upon the attainment of performance goals, the Committee may
grant a cash award to the Participant for exceeding the performance goals set
forth in such Award.
6. EVENTS AFFECTING OUTSTANDING AWARDS
6.1 TERMINATION OF SERVICE BY DEATH OR DISABILITY. If a Participant
ceases to be an Employee (such termination of employment being hereinafter
referred to as a "Status Change") by reason of death or permanent disability (as
determined by the Committee), the following rules shall apply, unless otherwise
determined by the Committee:
(a) All Options held by the Participant at the time of such Status
Change, to the extent then exercisable, will continue to be exercisable by the
Participant's heirs, executor, administrator or other legal representative, for
a period of one year after the Participant's Status Change. After the
expiration of such one-year period, all such Options shall terminate. In no
event, however, shall an Option remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section 6. All
Options held by a Participant at the time of such Status Change that are not
then exercisable shall terminate upon such Status Change.
(b) All Restricted Stock held by the Participant at the time of such
Status Change shall immediately become free of all restrictions and conditions.
(c) Any payment or benefit under a Performance Award or Supplemental
Grant to which the Participant was not irrevocably entitled at the time of such
Status Change shall be forfeited and the Award canceled as of the time of such
Status Change.
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6.2 TERMINATION OF SERVICE OTHER THAN BY DEATH OR DISABILITY. If a
Participant suffers a Status Change other than by reason of death or permanent
disability (as determined by the Committee), the following rules shall apply,
unless otherwise determined by the Committee at the time of grant of an Award:
(a) All Options held by the Participant at the time of such Status
Change, to the extent then exercisable, will continue to be exercisable by the
Participant for a period of three months after the Participant's Status Change,
provided that no Option shall terminate earlier than three months after the date
the Option first becomes exercisable. After the expiration of such period, such
Options shall terminate. In no event, however, shall an Option remain
exercisable beyond the latest date on which it could have been exercised without
regard to this Section 6. All Options held by a Participant at the time of such
Status Change that are not then exercisable shall terminate upon such Status
Change.
(b) All Restricted Stock held by the Participant at the time of such
Status Change shall immediately become free of all restrictions and conditions,
unless such Status Change results from a voluntary resignation or termination
for Cause (as defined in Section 6.2(d)), in which event all Restricted Stock
held by the Participant at the time of the Status Change shall be transferred to
the Company (and, in the event the certificates representing such Restricted
Stock are held by the Company, such Restricted Stock shall be so transferred
without any further action by the Participant) in accordance with Section 5.2
above.
(c) Any payment or benefit under a Performance Award or Supplemental
Grant to which the Participant was not irrevocably entitled at the time of such
Status Change shall be forfeited and the Award canceled as of the date of such
Status Change.
(d) A termination by the Company of a Participant's employment with or
service to the Company shall be for "Cause" only if: (1) at least 75% of the
members of the Board determined that the Participant (i) was guilty of gross
negligence or willful misconduct in the performance of his or her duties for the
Company, or (ii) breached or violated, in a material respect, any agreement
between the Participant and the Company or any of the Company's policy
statements regarding conflicts-of-interest, insider trading or confidentiality,
or (iii) committed a material act of dishonesty or breach of trust; (2) such
determination was made at a duly convened meeting of the Board with respect to
which the Participant received at least 10 days prior written notice, had a
reasonable opportunity to make a statement and answer the allegations against
him or her; and (3) either (i) the Participant was given a reasonable
opportunity to take remedial action but failed or refused to do so, or (ii) at
least 75% of the members of the Board also determined, at such meeting, that an
opportunity to take remedial action would not have been meaningful under the
circumstances.
(e) For all purposes of this Section 6.2 and Section 6.3, (1) if a
Participant is an Employee of a subsidiary of SunGard and such subsidiary ceases
to be a subsidiary of SunGard, then the Participant's employment with the
Company will be deemed to have been terminated by the Company without Cause,
unless the Participant is transferred to SunGard or another subsidiary of
SunGard; (2) the employment with the Company of a Participant will not be deemed
to have been terminated if the Participant is transferred from SunGard to a
subsidiary of SunGard, or vice versa, or from one subsidiary of SunGard to
another; and (3) if a Participant terminates his or her employment with the
Company following a reduction in his or her rate of compensation, then the
Participant's employment with the Company will be deemed to have been terminated
by the Company without Cause.
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6.3 CHANGE IN CONTROL
(a) In the event of a Change in Control (as defined in Section
6.3(b)), the following rules will apply, unless otherwise expressly provided by
the Committee at the time of the grant of an Award or unless otherwise
determined by the Board in accordance with Section 6.3(c):
(1) Each outstanding Option shall automatically become
exercisable in full six months after the occurrence of such Change in Control
or, if sooner, upon a termination by the Company of the Participant's employment
with or service to the Company for any reason other than for Cause (as defined
in Section 6.2(d)). This provision shall not prevent an Option from becoming
exercisable sooner as to Common Stock or cash that would otherwise have become
available under such Option or Right during such period.
(2) Each outstanding share of Restricted Stock shall
automatically become free of all restrictions and conditions six months after
the occurrence of such Change in Control or, if sooner, upon a termination by
the Company of the Participant's employment with or service to the Company for
any reason other than for Cause (as defined in Section 6.2(d)). This provision
shall not prevent the earlier lapse of any restrictions or conditions on
Restricted Stock that would otherwise have lapsed during such period.
(3) Conditions on Performance Awards and Supplemental Grants
which relate only to the passage of time and continued employment shall
automatically terminate six months after the occurrence of such Change in
Control or, if sooner, upon a termination by the Company of the Participant's
employment with or service to the Company for any reason other than for Cause
(as defined in Section 6.2(d)). This provision shall not prevent the earlier
lapse of any conditions relating to the passage of time and continued employment
that would otherwise have lapsed during such period. Performance or other
conditions (other than conditions relating only to the passage of time and
continued employment) shall continue to apply unless otherwise provided in the
instrument evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed to by the Committee.
(b) A "Change in Control" means: (i) the occurrence of an event that
would, if known to SunGard's management, be required to be reported by SunGard
under Item 1(a) of Form 8-K pursuant to the 1934 Act; or (ii) the acquisition or
receipt, in any manner, by any person (as defined for purposes of the 1934 Act)
or any group of persons acting in concert, of direct or indirect beneficial
ownership (as defined for purposes of the 1934 Act) of 20% or more of the
combined voting securities ordinarily having the right to vote for the election
of directors of SunGard; or (iii) a change in the constituency of the Board with
the result that individuals (the "Incumbent Directors") who are members of the
Board on the Effective Date (as specified in Section 9) cease for any reason to
constitute at least a majority of the Board, provided that any individual who is
elected to the Board after the Effective Date and whose nomination for election
was unanimously approved by the Incumbent Directors shall be considered an
Incumbent Director beginning on the date of his or her election to the Board; or
(iv) the sale, exchange or other disposition of all or a significant portion of
the Company's business or assets, or the execution by the Company of a binding
agreement providing for such a transaction.
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(c) The provisions of Section 6.3(a) shall not apply to the extent
expressly determined by at least 75% of the Incumbent Directors at a duly
convened meeting of the Board held before the occurrence of a Change in Control.
7. GRANT AND ACCEPTANCE OF AWARDS
7.1 The Committee's approval of a grant of an Award under the Plan,
including the names of Participants and the size of the Award, including the
number of shares of Common Stock subject to the Award, shall be reflected in
minutes of meetings held by the Committee or the Board or in written consents
signed by members of the Committee or the Board. Once approved by the
Committee, each Award shall be evidenced by such written instrument, containing
such terms as are required by the Plan and such other terms, consistent with the
provisions of the Plan, as may be approved from time to time by the Committee.
7.2 Each instrument may be in the form of agreements to be executed by
both the Participant and the Company, or certificates, letters or similar
instruments, which need not be executed by the Participant but acceptance of
which shall evidence agreement to the terms thereof. The receipt of an Award
shall not impose any obligation on the Participant to accept the Award.
7.3 Except as specifically provided by the Plan or the instrument
evidencing an Award, a Participant shall not become a stockholder of SunGard
until (i) the Participant makes any required payments in respect of the Common
Stock issued or issuable pursuant to the Award, (ii) the Participant furnishes
SunGard with any required agreements, certificates, letters or other
instruments, and (iii) the Participant actually receives the shares of Common
Stock. Subject to any terms and conditions imposed by the Plan or the
instrument evidencing an Award, upon the occurrence of all of the conditions set
forth in the immediately preceding sentence, a Participant shall have all rights
of a stockholder with respect to shares of Common Stock, including, but not
limited to, the right to vote such shares and to receive dividends and other
distributions paid with respect to such shares. The Committee may, upon such
conditions as it deems appropriate, provide that a Participant will receive a
benefit in lieu of cash dividends that would have been payable on any and all
Common Stock subject to the Participant's Award, had such Common Stock been
outstanding. Without limitation, the Committee may provide for payment to the
Participant of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Participant.
7.4 Notwithstanding any other provision of the Plan, the Company shall not
be obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove any restriction from shares of Common Stock previously delivered under
the Plan (a) until all conditions to the Award have been satisfied or removed,
(b) until, in the opinion of SunGard's General Counsel, all applicable Federal
and state laws and regulations have been complied with, (c) if the outstanding
Common Stock is at the time listed on any stock exchange or included for
quotation on an inter-dealer system, until the shares to be delivered have been
listed or included or authorized to be listed or included on such exchange or
system upon official notice of notice of issuance, (d) if it might cause SunGard
to issue or sell more shares of Common Stock than SunGard is then legally
entitled to issue or sell, and (e) until all other legal matters in connection
with the issuance and delivery of such shares have been approved by SunGard's
General Counsel. If the sale of Common Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise
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of an Award, such representations or agreements as SunGard's General Counsel may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Common Stock bear an appropriate legend restricting
transfer. If an Award is exercised by the Participant's legal representative,
the Company shall be under no obligation to deliver Common Stock pursuant to
such exercise until the Company is satisfied as to the authority of such
representative.
8. TAX WITHHOLDING
The Company shall withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all Federal, state and local withholding tax
requirements (the "withholding requirements"). In the case of an Award pursuant
to which Common Stock may be delivered, the Committee shall have the right to
require that the Participant or other appropriate person remit to the Company an
amount sufficient to satisfy the withholding requirements, or make other
arrangements satisfactory to the Committee with regard to such requirements,
prior to the delivery of any Common Stock. If and to the extent that such
withholding is required, the Committee may permit a Participant to elect at such
time and in such manner as the Committee may determine to have the Company hold
back from the shares of Common Stock to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the withholding
requirement. If at the time an ISO is exercised, the Committee determines that
the Company could be liable for withholding requirements with respect to a
disposition of the Common Stock received upon exercise, the Committee may
require as a condition of exercise that the person exercising the ISO agree (a)
to inform the Company promptly of any disposition (within the meaning of Section
424(c) of the Code) of Common Stock received upon exercise, and (b) to give such
security as the Committee deems adequate to meet the potential liability of the
Company for the withholding requirements and to augment such security from time
to time in any amount reasonably deemed necessary by the Committee to preserve
the adequacy of such security.
9. STOCKHOLDER APPROVAL, EFFECTIVE DATE AND TERM OF PLAN
The Plan was adopted by the Board on February 27, 1998, subject to the
approval of SunGard's stockholders. The Plan shall be submitted to SunGard's
stockholders for approval at SunGard's 1998 annual meeting of stockholders. If
such approval is not obtained at such meeting (or at any subsequent meeting at
which such approval is sought), then, at the discretion of the Board, this Plan
may be re-submitted to SunGard's stockholders for approval at any subsequent
annual meeting of stockholders or at any special meeting of stockholders
(including a special meeting that may be called solely for that purpose). The
Plan shall not become effective unless and until it is approved by the
affirmative vote of the holders of a majority of the outstanding shares of
SunGard's Common Stock represented and entitled to vote at a duly convened
meeting of SunGard's stockholders. If this Plan is so approved by SunGard's
stockholders, then the date of such approval shall be the effective date of this
Plan ("Effective Date"). No Award shall be granted more than ten years after
the Effective Date.
10. EFFECT, AMENDMENT, SUSPENSION AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock may
be issued to Employees or other persons or
10
<PAGE>
entities. The Board reserves the right, at any time and from time to time, to
amend the Plan in any way, or to suspend or terminate the Plan, effective as of
the date specified by the Board when it takes such action, which date may be
before or after the date the Board takes such action; provided that any such
action shall not affect any Awards granted before the actual date on which such
action is taken by the Board; and further provided that the approval of
SunGard's stockholders shall be required whenever necessary for the Plan to
continue to satisfy the conditions of Rule 16b-3 under the 1934 Act, Section 422
of the Code with respect to the award of ISOs (unless the Board determines that
ISOs shall no longer be granted under the Plan), any bylaw, rule or regulation
of the primary market system or stock exchange on which SunGard's Common Stock
is then listed or admitted to trading, or any other applicable law, rule or
regulation.
11. OTHER PROVISIONS
11.1 Nothing contained in the Plan or any Award shall confer upon any
Employee or other Participant the right to continue in the employ of, or to
continue to provide service to, the Company or any affiliated corporation, or
interfere in any way with the right of the Company or any affiliated corporation
to terminate the employment or service of any Employee or other Participant for
any reason.
11.2 Corporate action constituting an offer by SunGard of Common Stock to
any Participant under the terms of an Award shall be deemed completed as of the
date of grant of the Award, regardless of when the instrument, certificate, or
letter evidencing the Award is actually received or accepted by the Participant.
11.3 None of a Participant's rights under any Award or under the Plan may
be assigned or transferred in any manner other than by will or under the laws of
descent and distribution. The foregoing shall not, however, restrict a
Participant's rights with respect to Unrestricted Stock or the outright transfer
of cash, nor shall it restrict the ability of a Participant's heirs, estate,
beneficiaries, or personal or legal representatives to enforce the terms of the
Plan with respect to Awards granted to the Participant. Notwithstanding the
foregoing, at the discretion of the Committee, an Award (other than an ISO) may
permit the transferability of such Award by a Participant solely to members of
the Participant's immediate family or trusts or family partnerships for the
benefit of the Participant and/or members of the Participant's immediate family
to the extent provided in such Award.
11.4 The Plan, and all Awards granted hereunder, shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. The
headings of the Sections of the Plan are for convenience of reference only and
shall not affect the interpretation of the Plan. All pronouns and similar
references in the Plan shall be construed to be of such number and gender as the
context requires or permits. If any provision of the Plan is determined to be
unenforceable for any reason, then that provision shall be deemed to have been
deleted or modified to the extent necessary to make it enforceable, and the
remaining provisions of the Plan shall be affected.
11.5 All notices with respect to the Plan shall be in writing and shall be
hand delivered or sent by certified mail or reputable overnight delivery
service, expenses prepaid. Notices to the Company or the Committee shall be
delivered or sent to SunGard's headquarters to the attention of its General
Counsel. Notices to any Participant or holder of shares of Common
11
<PAGE>
Stock issued pursuant to an Award shall be sufficient if delivered or sent to
such person's address as it appears in the regular records of the Company or
SunGard's transfer agent.
11.6 If there is any change in the capitalization of SunGard, such as by
stock dividend, stock split, combination of shares, exchange of securities,
recapitalization or other event which the Committee deems, in its sole
discretion, to be similar circumstances, the Committee may make such adjustments
to the number and/or kind of shares of stock or securities subject to Awards
then outstanding or subsequently granted, any exercise prices relating to such
Awards and any other provision of such Awards affected by such change, as the
Committee may determine in its sole discretion. The Committee may also make
such adjustments to take into account material changes in law or in accounting
practices or principles, mergers, consolidations, acquisitions, dispositions or
similar corporate transactions, or any other event, as the Committee may
determine in its sole discretion.
11.7 The Committee may agree at any time, upon request of a Participant, to
defer the date on which any payment under an Award shall be made.
11.8 In any case that a Participant purchases Common Stock under an Award
for a price equal to the par value of the Common Stock, the Committee may
determine, in its sole discretion, that such price has been satisfied by past
services rendered by the Participant.
11.9 For the purposes of the Plan and any Award granted hereunder, unless
otherwise determined by the Committee, the term "fair market value" of Common
Stock on or as of a specified date shall mean either (i) in the case of an
Option not granted under a Performance Award, the last sale price (as defined
below in this Section) for one share of Common Stock on the last trading day on
or before the specified date, or, if the foregoing does not apply, the market
value determined by the Committee; or (ii) in the case of an Option granted
under a Performance Award, the average of the last sale prices during the first
ten trading days beginning on or after the specified date, or the average of the
last sale prices during such other period of time beginning on or after the
specified date as is determined by the Committee, or, if the foregoing does not
apply, the market value determined by the Committee. "Last sale price" means
the last sale price reported on the New York Stock Exchange or on such other
primary market system or stock exchange on which SunGard's Common Stock is then
listed or admitted to trading.
THE UNDERSIGNED CERTIFIES THAT THIS PLAN WAS DULY APPROVED BY THE EQUITY AWARD
SUBCOMMITTEE OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF SUNGARD
DATA SYSTEMS INC., AND WAS DULY ADOPTED BY THE BOARD OF DIRECTORS OF SUNGARD
DATA SYSTEMS INC., AT MEETINGS DULY HELD ON THE TWENTY-SEVENTH DAY OF FEBRUARY,
1998.
------------------------------------
LAWRENCE A. GROSS, SECRETARY
OF SUNGARD DATA SYSTEMS INC.
12
<PAGE>
Exhibit 13.1
Portions of the Company's Annual Report to Stockholders
for the fiscal year ended December 31, 1997
<TABLE>
<CAPTION>
Pro Forma Net Income in Pro Forma Diluted Net
Revenues in Millions of Dollars Millions of Dollars/(1)/ Income per Share in Dollars /(1)(3)/
<S> <C> <C> <C>
93 381 35.1 .48
94 437 43.1 .56
95 533 52.9 .67
96 670 68.4 .79
97 862 86.5 .97
</TABLE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELECTED FINANCIAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per-share amounts) 1993 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data/(2)(3)/
REVENUES $ 381,372 $ 437,190 $ 532,628 $ 670,309 $ 862,151
INCOME FROM OPERATIONS 59,645 70,326 80,076 59,786 134,045
NET INCOME 38,474 43,087 48,672 34,901 77,546
BASIC NET INCOME PER SHARE 0.55 0.57 0.63 0.41 0.89
DILUTED NET INCOME PER SHARE 0.52 0.56 0.61 0.41 0.87
PRO FORMA NET INCOME/(1)/ 35,103 43,087 52,910 68,369 86,541
PRO FORMA DILUTED NET INCOME PER SHARE/(1)/ 0.48 0.56 0.67 0.79 0.97
Balance Sheet Data
TOTAL ASSETS $ 418,135 $ 485,740 $ 579,734 $ 679,318 $ 786,334
TOTAL SHORT-TERM AND LONG-TERM DEBT 6,523 10,567 10,002 39,346 19,429
STOCKHOLDERS' EQUITY 316,960 359,292 422,292 464,638 559,046
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes all items described in footnote 2.
(2) 1993 includes after-tax gain on sale of product line of $3,371 ($0.04 per
diluted share). 1995 includes merger costs of $4,238 ($0.05 per diluted
share). 1996 includes charges for purchased in-process research and
development and other costs of $51,083 ($33,468 after tax; $o.39 per diluted
share). 1997 includes charges for purchased in-process research and
development and merger costs of $12,808 ($8,995 after tax; $0.10 per diluted
share). See Note 2 of Notes to Consolidated Financial Statements.
(3) All per-share amounts have been adjusted for September 1997 and July 1995
two-for-one stock splits. See Note 3 of Notes to Consolidated Financial
Statements.
<PAGE>
FINANCIAL TABLE OF CONTENTS
28 Quarterly Financial Information
28 Stock Information
29 Management's Discussion and Analysis of Financial Condition and Results of
Operations
33 Consolidated Statements of Income
34 Consolidated Balance Sheets
35 Consolidated Statements of Cash Flows
36 Consolidated Statement of Stockholders' Equity
38 Notes to Consolidated Financial Statements
44 Report of Independent Accountants
<PAGE>
28.) 29 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>
1997: /(1)/
REVENUES $187,421 $207,651 $214,485 $252,594
INCOME BEFORE INCOME TAXES 30,461 24,352 38,826 40,065
NET INCOME 18,124 14,085 22,769 22,568
DILUTED NET INCOME
PER COMMON SHARE /(3)/ .21 .16 .26 .25
1996: /(2)/
REVENUES $149,798 $155,568 $171,646 $193,297
INCOME (LOSS) BEFORE INCOME TAXES 24,592 27,258 (14,078) 25,797
NET INCOME (LOSS) 14,632 16,219 (10,465) 14,515
DILUTED NET INCOME (LOSS)
PER COMMON SHARE /(3)/ .17 .19 (.12) .17
</TABLE>
/(1)/ Includes second-quarter charges of $9,618 ($5,805 after tax; $0.07 per
diluted share) comprised of purchased in-process research and development
of $9,300 and merger costs associated with a pooling of interests of $318,
third-quarter merger costs associated with a pooling of interests of $338
(less than $0.01 per diluted share), and fourth-quarter merger costs
associated with poolings of interests of $2,852 ($0.03 per diluted share).
/(2)/ Includes third-quarter charges for purchased in-process research and
development and other costs of $44,032 ($28,287 after tax; $0.33 per
diluted share) and fourth-quarter charges for purchased in-process
research and development of $7,051 ($5,181 after tax; $0.06 per diluted
share).
/(3)/ All per-share amounts have been adjusted for a September 1997 two-for-one
stock split.
STOCK INFORMATION
The common stock of SunGard Data Systems Inc. is listed on the New York Stock
Exchange under the symbol SDS. At March 9, 1998, the Company had approximately
3,500 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 National Market of The Nasdaq Stock
Market through June 3, 1997 and the New York Stock Exchange thereafter. All
prices reflect the Company's September 1997 two-for-one stock split.
CALENDAR YEAR 1997
First Quarter $25 3/8 $18 1/2
Second Quarter 24 3/4 20 3/4
Third Quarter 27 1/8 23
Fourth Quarter 31 7/16 22 1/2
CALENDAR YEAR 1996
First Quarter $19 $13 3/4
Second Quarter 20 1/2 15 5/8
Third Quarter 23 3/8 17 11/16
Fourth Quarter 23 3/4 19 1/8
The last sale price of the Company's common stock on March 9, 1998, as
reported on the New York Stock Exchange, was $33 1/2 per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Statements about the Company's expectations and all other statements in this
Annual Report other than historical facts are forward-looking statements. Since
these statements involve risks and uncertainties and are subject to change at
any time, the Company's actual results could differ materially from expected
results. The Company derives most of its forward-looking statements from its
operating budgets and forecasts, which are based upon many detailed assumptions.
While the Company believes that its assumptions are reasonable, it cautions that
there are inherent difficulties in predicting certain important factors,
especially the timing and magnitude of software sales, the timing and scope of
technological advances and year 2000 compliance, the integration and performance
of acquired businesses, the prospects for future acquisitions, and the overall
condition of the financial services industry. These factors, as and when
applicable, are discussed in the Company's filings with the Securities and
Exchange Commission, including its Form 10-K for the year ended December 31,
1997, a copy of which may be obtained from the Company without charge.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
amounts included in the Consolidated Statements of Income of SunGard Data
Systems Inc., the relative percentage that those amounts represent to
consolidated revenues (unless otherwise indicated), and the percentage change in
those amounts from period to period.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERCENT OF REVENUES /(1)/ PERCENT
(IN MILLIONS) YEAR ENDED DECEMBER 31, INCREASE (DECREASE) /(1)/
1997 1996 1995 1997 1996 1995 1997 1996
vs.1996 vs.1995
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
INVESTMENT SUPPORT SYSTEMS $ 566.1 $ 412.3 $ 330.6 66% 61% 62% 37% 25%
DISASTER RECOVERY SERVICES 228.2 193.8 162.3 26 29 31 18 19
COMPUTER SERVICES AND OTHER 67.8 64.2 39.7 8 10 7 6 62
----------------------------------------------------------
$ 862.1 $ 670.3 $ 532.6 100% 100% 100% 29 26
----------------------------------------------------------
COSTS AND EXPENSES
COST OF SALES AND
DIRECT OPERATING $ 365.4 $ 291.6 $ 234.0 42% 43% 44% 25% 25%
SALES, MARKETING AND
ADMINISTRATION 176.6 135.4 109.2 21 20 21 30 24
PRODUCT DEVELOPMENT 78.5 61.5 50.4 9 9 9 28 22
DEPRECIATION 48.7 37.3 30.8 6 6 6 31 21
AMORTIZATION 46.1 33.6 23.9 5 5 4 37 41
PURCHASED IN-PROCESS
RESEARCH AND DEVELOPMENT
AND OTHER COSTS 12.8 51.1 4.2 1 8 1 -- --
----------------------------------------------------------
$ 728.1 $ 610.5 $ 452.5 84% 91% 85% 19 35
----------------------------------------------------------
OPERATING INCOME
INVESTMENT SUPPORT SYSTEMS/(2)/ $ 100.8 $ 68.1 $ 51.7 18% 17% 16% 48% 32%
DISASTER RECOVERY SERVICES/(2)/ 49.2 42.6 34.9 22 22 22 15 22
COMPUTER SERVICES AND OTHER/(2)/ 10.3 9.5 5.1 15 15 13 8 86
CORPORATE ADMINISTRATION (13.5) (9.3) (7.4) (2) (1) (1) 45 26
-------------------------------
146.8 110.9 84.3 17 17 16 32 32
PURCHASED IN-PROCESS
RESEARCH AND DEVELOPMENT
AND OTHER COSTS (12.8) (51.1) (4.2) (1) (8) (1) -- --
-------------------------------
$ 134.0 $ 59.8 $ 80.1 16 9 15 124 (25)
-------------------------------
</TABLE>
(1) All percentages are calculated using actual amounts rounded to the nearest
$1,000.
(2) Percent of revenues is calculated as a percent of investment support
systems, disaster recovery services, and computer services and other revenues,
respectively.
<PAGE>
30.) 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS CONTINUED
INCOME FROM OPERATIONS
During 1997 and 1996, the Company recorded $9.3 million and $44.5 million of
charges to operations ($0.06 and $0.32 per diluted share), respectively, for
purchased in-process research and development primarily associated with the 1997
acquisition of certain assets of Premier Solutions Ltd. and the 1996 acquisition
of NCS Financial Systems, Inc. (NCS). During 1996, the Company also recorded
$6.6 million of other charges ($0.07 per diluted share) primarily associated
with the impairment of the remaining intangible assets related to a business
acquired more than ten years ago. The following discussion of income from
operations excludes these charges, as well as merger costs associated with
poolings of interests of $3.5 million ($0.04 per diluted share) recorded during
1997 and $4.2 million ($0.05 per diluted share) recorded during 1995.
On January 2, 1998, the Company issued approximately 13.2 million shares of
its common stock in exchange for all of the outstanding shares of common stock
of Infinity Financial Technology, Inc. (Infinity) (See Note 2 of Notes to
Consolidated Financial Statements). Infinity derives a significantly larger
portion of its revenues from software license sales than does the Company. Since
there are inherent difficulties in predicting the timing and magnitude of
software sales, the potential for fluctuations in quarterly revenues and income
is expected to be greater than in the past.
Investment Support Systems (ISS)
The Company's ISS business is comprised of more than thirty-five operating units
of various size and complexity. Historically, most operating units have met or
exceeded expectations, while some have not, yielding overall results for the
entire business at approximately the levels expected. Since overall ISS results
reflect the sum of the diverse results of individual operating units, there
could be an adverse impact on ISS revenues and margins if too many individual
units are unable to meet expectations.
The ISS operating margin was 18% in 1997, compared with 17% in 1996 and 16%
in 1995. Both higher margins are due primarily to an increase in software
license revenues and cost reductions in three ISS businesses, which are net of
an overall increase in product development expense.
The Company expects that the full-year 1998 ISS operating margin will
increase slightly. The most important factors affecting the ISS operating margin
continue to be the timing and magnitude of software license revenues, the
operating margin of recently acquired businesses and the level of product
development spending.
Disaster Recovery Services (DRS)
The DRS operating margin remained at 22% in 1997, which is consistent with the
prior two years. Increased costs during 1997 were offset by an increase in
revenues resulting from new contract signings and contract renewals.
The Company expects the full-year 1998 DRS operating margin to remain
relatively consistent with the prior three years. The most important factors
affecting the DRS operating margin continue to be the rate of new contract
signings and contract renewals, the timing and magnitude of equipment and
facilities expenditures, and the performance of recently acquired businesses.
Computer Services and Other (CS)
The CS operating margin was 15% in both 1997 and 1996. The 1997 operating margin
reflects an increase in remote processing computer services revenues and cost
reductions in the Company's healthcare information systems (HIS) businesses that
were offset by higher operating costs due to computer services equipment
upgrades and, to a lesser extent, a decline in HIS revenues. The 1996 operating
margin increased from 13% in 1995 due primarily to an increase in remote-access
computer processing revenues and improved performance by the Company's HIS
businesses.
The Company expects that the full-year 1998 CS operating margin will increase
slightly. The most important factors affecting the CS operating margin are the
timing and magnitude of software license revenues related to the HIS businesses
and revenue variability in both remote-access computer processing and automated
mailing services.
REVENUES
Total revenues increased $191.8 million and $137.7 million in 1997 and 1996,
respectively. Excluding acquired businesses, total revenues increased
approximately 13% and 10% in 1997 and 1996, respectively. Recurring revenues
derived from remote processing, disaster recovery, and software maintenance and
rentals are approximately $629.5 million, $516.5 million and $425.6 million in
1997, 1996 and 1995, respectively, representing 73%, 77% and 80% of consolidated
revenues, respectively, for those years. The declining percentage of recurring
revenues for the three
<PAGE>
years 1995 through 1997 is due primarily to an increase in the percentage of
professional services and third-party equipment revenues to total revenues,
which increased to 13% in 1997, compared to 9% in 1996 and 8% in 1995. The
portion of the increase attributable to professional services is related largely
to conversion and implementation work for a large mutual fund shareholder
accounting installation. The increase in third-party equipment revenues is
largely a result of recent acquisitions, including the 1996 acquisition of NCS.
Software license revenues were $119.2 million, $93.0 million and $64.1
million in 1997, 1996 and 1995, respectively, representing 14% of total revenues
in 1997 and 1996 and 12% in 1995. As a result of the acquisition of Infinity,
the Company expects software license revenues to increase as a percentage of
total revenues.
The Company sells a significant portion of its products and services to the
financial services industry and could be directly affected by the overall
condition of that industry. The Company expects that the consolidation trend in
the financial services industry will continue, but it is unable to predict what
effect, if any, this trend may have.
Investment Support Systems
ISS revenues increased $153.8 million, or 37%, and $81.7 million, or 25%, in
1997 and 1996, respectively. The respective increases in revenues during 1997
and 1996 are attributable to increases in data processing, software maintenance
and software rental revenues of $77.2 million and $42.4 million and increases in
software license, professional services and equipment revenues of $76.6 million
and $39.3 million. Excluding acquired businesses, revenues increased
approximately 14% and 7% in 1997 and 1996, respectively.
Disaster Recovery Services
DRS revenues increased $34.4 million, or 18%, and $31.5 million, or 19%, in 1997
and 1996, respectively. Excluding acquired businesses, revenues increased
approximately 14% and 15% in 1997 and 1996, respectively. The increases are
attributable primarily to increases in revenues resulting from new contract
signings and contract renewals and to continued growth in midrange and
open-systems platforms.
Computer Services and Other
CS revenues increased $3.6 million, or 6%, and $24.5 million, or 62%, in 1997
and 1996, respectively. Excluding acquired businesses, 1997 and 1996 revenues
increased approximately 3% and 10%, respectively. The 1997 increase is due to an
increase in the Company's remote-access computer processing business. The
increase is net of a decline in revenues in the Company's HIS businesses that is
due primarily to the timing and magnitude of software license revenues. The 1996
increase is due to increased volume in the Company's remote-access computer
services business and, to a lesser extent, increased revenues in the Company's
HIS and mailing services businesses.
COSTS AND EXPENSES
Cost of sales and direct operating expenses increased $73.8 million and $57.6
million in 1997 and 1996, respectively. The increases are due primarily to
acquired businesses and computer and facilities improvements. The percentage of
cost of sales and direct operating expenses to total revenues decreased to 42%
in 1997, from 43% in 1996 and 44% in 1995. The decrease is due primarily to an
increase in higher-margin software license revenues and cost reductions in
certain ISS and HIS businesses.
Sales, marketing and administration expenses increased $41.2 million and
$26.2 million in 1997 and 1996, respectively. The increases are due primarily to
acquired businesses, a DRS sales force expansion and increased commissions
associated with the increase in ISS software license fees.
Product development expenses increased $17.0 million and $11.1 million in
1997 and 1996, respectively. The increases are due primarily to acquired
businesses and increased development spending in connection with various ISS
products. Development costs capitalized were $1.3 million and $3.6 million in
1997 and 1996, respectively.
Depreciation of property and equipment increased $11.4 million and $6.5
million in 1997 and 1996, respectively. The increases are due primarily to
purchases of computer and telecommunications equipment and acquired businesses.
Amortization of intangible assets increased $12.5 million and $9.7 million in
1997 and 1996, respectively, due to acquired businesses.
<PAGE>
32.) 33 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS CONTINUED
As explained above, purchased in-process research and development and other
costs of $12.8 million ($0.10 per diluted share), $51.1 million ($0.39 per
diluted share) and $4.2 million ($0.05 per diluted share) were incurred in 1997,
1996 and 1995, respectively. (See Notes 1 and 2 of Notes to Consolidated
Financial Statements).
Net interest decreased $4.1 million and $1.3 million in 1997 and 1996,
respectively. The declines are both due to lower cash and short-term investment
balances and higher borrowings under the Company's line of credit. By the end of
1997, the Company had fully paid its balance under the line of credit, and cash
balances had increased to $64.9 million.
The Company's effective income tax rate was 42.0%, 45.1% and 42.8% in 1997,
1996 and 1995, respectively. The decrease in the rate from 1996 to 1997 is due
to a significantly higher amount of nondeductible costs associated with a
portion of purchased in-process research and development and other costs
incurred in 1996 than the amount of nondeductible merger costs incurred in 1997.
Excluding these nondeductible costs, the Company's 1997, 1996 and 1995 effective
income tax rates were 40.9%, 40.4% and 40.8%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments as of December 31, 1997 increased $18.9 million
from December 31, 1996, to $64.9 million. An increase in accounts receivable and
other current assets as of December 31, 1997 is due primarily to an increase in
software license sales in December 1997 and to acquired businesses.
At December 31, 1997, the Company's remaining commitments consist primarily
of operating leases for computer equipment and facilities aggregating $184.3
million, of which $63.6 million will be paid in 1998. The Company expects that
its existing cash resources (including $41.2 million of cash and short-term
investments held by Infinity at December 31, 1997) and cash generated from
operations will be sufficient for the foreseeable future to meet its operating
requirements, contingent payments in connection with business acquisitions, and
ordinary capital spending needs. Furthermore, the Company has a $150.0 million
credit agreement and believes that it has the capacity to secure additional
credit or issue equity to finance additional capital needs.
YEAR 2000 SYSTEMS EVALUATION
The Company has initiated a comprehensive program to evaluate and address the
impact of the year 2000 on its software systems, computer processing and
disaster recovery operations. This program includes steps to identify each item
or element that will require modification and to establish a plan to complete
and test all required modifications. The assessment, identification and planning
phases are substantially completed. Modification and testing of many of the
Company's software products are completed and substantially all of the remaining
modification and testing activity is expected to be completed during 1998. The
Company is continuing to evaluate its third-party hardware and software systems,
many of which are an integral part of its operations. For these systems, the
Company is relying upon its outside vendors to meet year 2000 requirements.
The Company believes that it will meet its year 2000 commitments using
existing product development and support resources, without incurring
significant incremental expense. To the extent additional modifications and
enhancements become necessary for software products for which modification and
testing for the year 2000 have not been completed, the Company may have to seek
additional staffing resources. Also, certain third-party hardware and operating
system software upgrades may be accelerated in order to meet the Company's year
2000 requirements.
The Company is closely monitoring the progress of each of its businesses to
prepare its systems and operations for the year 2000 and beyond. The Company
expects to meet year 2000 operation commitments and expects to complete this
effort on a timely basis, without significant disruption to its customers or
operations.
The Company believes that year 2000 issues may cause both an acceleration of
software buying decisions and a shortage in the availability of experienced
programmers during the next several years. While the Company cannot predict the
impact of these factors on its business, it does not currently believe that any
such impact will be material.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C>
REVENUES $ 862,151 $ 670,309 $ 532,628
---------------------------------------------
COSTS AND EXPENSES:
COST OF SALES AND DIRECT OPERATING 365,352 291,580 234,011
SALES, MARKETING AND ADMINISTRATION 176,634 135,403 109,226
PRODUCT DEVELOPMENT 78,549 61,474 50,338
DEPRECIATION OF PROPERTY AND EQUIPMENT 48,661 37,356 30,807
AMORTIZATION OF INTANGIBLE ASSETS 46,102 33,627 23,932
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
AND OTHER COSTS 12,808 51,083 4,238
---------------------------------------------
728,106 610,523 452,552
---------------------------------------------
INCOME FROM OPERATIONS 134,045 59,786 80,076
INTEREST INCOME 2,243 5,007 6,054
INTEREST EXPENSE (2,584) (1,224) (1,018)
---------------------------------------------
INCOME BEFORE INCOME TAXES 133,704 63,569 85,112
INCOME TAXES 56,158 28,668 36,440
---------------------------------------------
NET INCOME $ 77,546 $ 34,901 $ 48,672
---------------------------------------------
BASIC NET INCOME PER COMMON SHARE $ 0.89 $ 0.41 $ 0.63
---------------------------------------------
SHARES USED TO COMPUTE BASIC NET INCOME
PER COMMON SHARE 86,819 84,176 77,624
---------------------------------------------
DILUTED NET INCOME PER COMMON SHARE $ 0.87 $ 0.41 $ 0.61
---------------------------------------------
SHARES USED TO COMPUTE DILUTED NET INCOME
PER COMMON SHARE 89,335 86,122 79,336
---------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
34.) 35 CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) 1997 1996
-----------------------------
<S> <C> <C>
Assets
CURRENT:
CASH AND EQUIVALENTS $ 64,938 $ 46,072
TRADE RECEIVABLES, LESS ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $17,895 AND $10,391 166,204 130,404
EARNED BUT UNBILLED RECEIVABLES 36,578 27,842
PREPAID EXPENSES AND OTHER CURRENT ASSETS 22,731 18,507
DEFERRED INCOME TAXES 19,628 13,632
-----------------------------
TOTAL CURRENT ASSETS 310,079 236,457
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION OF $199,589 AND $158,214 119,996 109,523
SOFTWARE PRODUCTS, LESS ACCUMULATED
AMORTIZATION OF $88,489 AND $68,780 75,129 71,917
GOODWILL, LESS ACCUMULATED AMORTIZATION OF $32,660 AND $23,444 160,109 156,796
OTHER INTANGIBLE ASSETS, LESS ACCUMULATED
AMORTIZATION OF $45,451 AND $34,590 121,021 104,625
-----------------------------
$ 786,334 $ 679,318
-----------------------------
Liabilities and Stockholders' Equity
CURRENT:
SHORT-TERM AND CURRENT PORTION OF LONG-TERM DEBT $ 16,664 $ 34,932
ACCOUNTS PAYABLE 15,063 13,531
ACCRUED COMPENSATION AND BENEFITS 53,693 41,581
OTHER ACCRUED EXPENSES 29,193 24,004
ACCRUED INCOME TAXES 6,534 5,873
DEFERRED REVENUES 103,376 90,345
-----------------------------
TOTAL CURRENT LIABILITIES 224,523 210,266
-----------------------------
LONG-TERM DEBT 2,765 4,414
-----------------------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, PAR VALUE $.01 PER SHARE; 5,000 SHARES AUTHORIZED -- --
COMMON STOCK, PAR VALUE $.01 PER SHARE; 120,000 SHARES AUTHORIZED;
88,862 AND 42,300 SHARES ISSUED 889 423
CAPITAL IN EXCESS OF PAR VALUE 192,525 175,937
NOTES RECEIVABLE FOR COMMON STOCK (80) (559)
RESTRICTED STOCK PLANS (1,180) (1,535)
RETAINED EARNINGS 373,543 292,113
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (6,651) (266)
-----------------------------
559,046 466,113
TREASURY STOCK, AT COST, 0 AND 43 SHARES -- (1,475)
-----------------------------
TOTAL STOCKHOLDERS' EQUITY 559,046 464,638
-----------------------------
$ 786,334 $ 679,318
-----------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(IN THOUSANDS) 1997 1996 1995
--------------------------------------------
<S> <C> <C> <C>
Cash Flow From Operations
NET INCOME $ 77,546 $ 34,901 $ 48,672
RECONCILIATION OF NET INCOME TO CASH FLOW FROM OPERATIONS:
DEPRECIATION AND AMORTIZATION 94,763 70,983 54,739
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
AND OTHER COSTS 9,300 51,083 --
OTHER NONCASH CHARGES 8,339 2,529 1,886
DEFERRED INCOME TAX BENEFIT (14,519) (21,921) (1,374)
--------------------------------------------
175,429 137,575 103,923
CASH PROVIDED BY (USED FOR) WORKING CAPITAL, NET OF EFFECT
OF ACQUIRED BUSINESSES:
ACCOUNTS RECEIVABLE AND OTHER CURRENT ASSETS (34,453) (9,669) (30,650)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 9,970 863 9,729
DEFERRED REVENUES 602 5,396 7,007
--------------------------------------------
CASH FLOW FROM OPERATIONS 151,548 134,165 90,009
--------------------------------------------
Financing Activities
CASH RECEIVED UNDER EMPLOYEE STOCK PLANS 10,441 12,246 5,999
CASH PAID FOR TREASURY STOCK (140) (4,221) (10,029)
BORROWINGS UNDER LINE OF CREDIT 168,122 18,000 --
REPAYMENTS OF DEBT (194,325) (9,274) (8,594)
--------------------------------------------
TOTAL FINANCING ACTIVITIES (15,902) 16,751 (12,624)
--------------------------------------------
Long-Term Investment Activities
CASH PAID FOR ACQUIRED BUSINESSES, NET OF CASH ACQUIRED (54,069) (165,682) (27,294)
CASH PAID FOR PROPERTY AND EQUIPMENT (54,428) (41,347) (31,652)
CASH PAID FOR SOFTWARE AND OTHER ASSETS (8,283) (12,972) (5,879)
--------------------------------------------
TOTAL LONG-TERM INVESTMENT ACTIVITIES (116,780) (220,001) (64,825)
--------------------------------------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
BEFORE SHORT-TERM INVESTMENT ACTIVITIES 18,866 (69,085) 12,560
Short-Term Investment Activities
PURCHASE OF SHORT-TERM INVESTMENTS -- (2,660) (56,188)
MATURITIES OF SHORT-TERM INVESTMENTS -- 38,726 54,228
--------------------------------------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 18,866 (33,019) 10,600
BEGINNING CASH AND EQUIVALENTS 46,072 79,091 68,491
--------------------------------------------
ENDING CASH AND EQUIVALENTS $ 64,938 $ 46,072 $ 79,091
--------------------------------------------
Supplemental Information
INTEREST PAID $ 2,591 $ 1,213 $ 919
--------------------------------------------
INCOME TAXES PAID $ 66,689 $ 50,140 $ 33,556
--------------------------------------------
ACQUIRED BUSINESSES:
PROPERTY AND EQUIPMENT $ 5,681 $ 11,690 $ 4,719
SOFTWARE PRODUCTS 17,396 42,110 14,597
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT 9,300 44,451 --
GOODWILL AND OTHER INTANGIBLE ASSETS 33,735 98,320 31,933
DEFERRED INCOME TAXES 1,738 9,447 379
PURCHASE PRICE OBLIGATIONS AND DEBT ASSUMED (6,406) (20,217) (7,796)
NET CURRENT LIABILITIES ASSUMED (954) (20,119) (1,117)
COMMON STOCK ISSUED (6,421) -- (15,421)
--------------------------------------------
CASH PAID FOR ACQUIRED BUSINESSES, NET OF
CASH ACQUIRED OF $4,606, $132 AND $8,077 IN
1997, 1996 AND 1995, RESPECTIVELY $ 54,069 $ 165,682 $ 27,294
--------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
36.) 37 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
NUMBER OF PAR EXCESS OF
(IN THOUSANDS) SHARES VALUE PAR VALUE
----------------------------------------------
<S> <C> <C> <C>
BALANCES, DECEMBER 31, 1994 18,898 $ 189 $ 162,235
POOLINGS OF INTERESTS 4,253 43 8,878
NET INCOME -- -- --
TWO-FOR-ONE COMMON STOCK SPLIT 18,898 189 (189)
PURCHASE OF COMMON STOCK -- -- --
NOTE REPAYMENTS -- -- --
SHARES ISSUED UNDER STOCK PLANS 62 -- 84
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- -- --
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- 550
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- --
----------------------------------------------
BALANCES, DECEMBER 31, 1995 42,111 421 171,558
NET INCOME -- -- --
PURCHASE OF COMMON STOCK -- -- --
NOTE REPAYMENTS -- -- --
SHARES ISSUED UNDER RESTRICTED STOCK PLANS 50 -- 1,687
SHARES ISSUED UNDER STOCK PLANS 139 2 1,520
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- -- --
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- 1,172
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- --
----------------------------------------------
BALANCES, DECEMBER 31, 1996 42,300 423 175,937
POOLINGS OF INTERESTS 2,796 28 2,574
NET INCOME -- -- --
TWO-FOR-ONE COMMON STOCK SPLIT 43,353 433 (433)
PURCHASE OF COMMON STOCK -- -- --
NOTE REPAYMENTS -- -- --
SHARES ISSUED UNDER STOCK PLANS 413 5 8,624
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- -- --
OPTIONS EARNED UNDER LONG-TERM INCENTIVE PLAN -- -- 4,230
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- 1,593
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- --
----------------------------------------------
BALANCES, DECEMBER 31, 1997 88,862 $ 889 $ 192,525
----------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
FOREIGN
NOTES RESTRICTED CURRENCY
RECEIVABLE FOR STOCK RETAINED TRANSLATION
(IN THOUSANDS) COMMON STOCK PLANS EARNINGS ADJUSTMENT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1994 $ -- $ (858) $ 205,121 $ (2,366)
POOLINGS OF INTERESTS (3,332) -- 9,800 32
NET INCOME -- -- 48,672 --
TWO-FOR-ONE COMMON STOCK SPLIT -- -- -- --
PURCHASE OF COMMON STOCK -- -- -- --
NOTE REPAYMENTS 515 -- -- --
SHARES ISSUED UNDER STOCK PLANS -- -- (3,421) --
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- 638 -- --
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- 1,055
-----------------------------------------------------------
BALANCES, DECEMBER 31, 1995 (2,817) (220) 260,172 (1,279)
NET INCOME -- -- 34,901 --
PURCHASE OF COMMON STOCK -- -- -- --
NOTE REPAYMENTS 2,258 -- -- --
SHARES ISSUED UNDER RESTRICTED STOCK PLANS -- (1,687) -- --
SHARES ISSUED UNDER STOCK PLANS -- -- (2,960) --
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- 372 -- --
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- 1,013
-----------------------------------------------------------
BALANCES, DECEMBER 31, 1996 (559) (1,535) 292,113 (266)
POOLINGS OF INTERESTS -- -- 3,884 (65)
NET INCOME -- -- 77,546 --
TWO-FOR-ONE COMMON STOCK SPLIT -- -- -- --
PURCHASE OF COMMON STOCK -- -- -- --
NOTE REPAYMENTS 479 -- -- --
SHARES ISSUED UNDER STOCK PLANS -- -- -- --
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- 355 -- --
OPTIONS EARNED UNDER LONG-TERM INCENTIVE PLAN -- -- -- --
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- (6,320)
-----------------------------------------------------------
BALANCES, DECEMBER 31, 1997 $ (80) $ (1,180) $ 373,543 $ (6,651)
-----------------------------------------------------------
<CAPTION>
TREASURY STOCK
NUMBER OF
SHARES COST TOTAL
-------------------------------------
<S> <C> <C> <C>
BALANCES, DECEMBER 31, 1994 (131) $ (5,029) $ 359,292
POOLINGS OF INTERESTS -- -- 15,421
NET INCOME -- -- 48,672
TWO-FOR-ONE COMMON STOCK SPLIT (91) -- --
PURCHASE OF COMMON STOCK (400) (10,029) (10,029)
NOTE REPAYMENTS -- -- 515
SHARES ISSUED UNDER STOCK PLANS 433 9,515 6,178
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- -- 638
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- 550
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- 1,055
-------------------------------------
BALANCES, DECEMBER 31, 1995 (189) (5,543) 422,292
NET INCOME -- -- 34,901
PURCHASE OF COMMON STOCK (131) (4,221) (4,221)
NOTE REPAYMENTS -- -- 2,258
SHARES ISSUED UNDER RESTRICTED STOCK PLANS -- -- --
SHARES ISSUED UNDER STOCK PLANS 277 8,289 6,851
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- -- 372
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- 1,172
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- 1,013
-------------------------------------
BALANCES, DECEMBER 31, 1996 (43) (1,475) 464,638
POOLINGS OF INTERESTS -- -- 6,421
NET INCOME -- -- 77,546
TWO-FOR-ONE COMMON STOCK SPLIT (11) -- --
PURCHASE OF COMMON STOCK (17) (140) (140)
NOTE REPAYMENTS -- -- 479
SHARES ISSUED UNDER STOCK PLANS 71 1,615 10,244
COMPENSATION EXPENSE RELATED TO RESTRICTED STOCK PLANS -- -- 355
OPTIONS EARNED UNDER LONG-TERM INCENTIVE PLAN -- -- 4,230
INCOME TAX BENEFIT ARISING FROM EMPLOYEE STOCK OPTIONS -- -- 1,593
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- (6,320)
-------------------------------------
BALANCES, DECEMBER 31, 1997 -- $ -- $ 559,046
-------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
38.)39 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, principally in the
United States, providing computer services, principally proprietary
processing services and software to the financial services industry,
computer disaster recovery services and healthcare information systems.
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany transactions
and accounts have been eliminated.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Future events could cause actual results to
differ from those estimates.
The Company amortizes intangible assets, including software product
costs, over periods that it believes approximate the related useful
lives of those assets based upon estimated future operating results and
cash flows of the underlying business operations. The Company closely
monitors estimates of those lives. Those estimates could change due to
numerous factors, including product demand, market conditions,
technological developments, economic conditions and competitor
activities.
Revenue Recognition
Revenues from remote processing, disaster recovery and software
maintenance 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, except in those instances where
the Company provides training, installation and other significant
postdelivery services. In those instances, a portion of the contract
price is deferred and recognized as the related services are provided.
License-fee revenues from proprietary products that are paid for over
an extended period of time and are bundled together with computer
equipment and other postdelivery services, and for which significant
credit, technology or service risks exist, are recorded ratably over the
contract period. Revenues from fixed-fee contracts requiring a
significant amount of program modification or customization,
installation, systems integration and/or related services are recognized
based upon the estimated percentage of completion. Changes in estimated
costs during the course of a 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 affected directly by the
overall condition of that industry. The Company believes that any credit
risk associated with receivables is substantially mitigated by a
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.
Software Development and Product Costs
Product development costs are expensed as incurred and consist primarily
of design and development costs of new products and significant
enhancements incurred prior to the establishment of technological
feasibility.
<PAGE>
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
$20,093,000, $15,358,000 and $9,601,000 during 1997, 1996 and 1995,
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 twelve 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 that the acquired
businesses contribute to existing and related products, services and
markets. After consideration of these factors, the Company determines
whether a reduction in amortizable life or charge for impairment is
appropriate.
In 1997 and 1996, the Company reduced the remaining amortizable life
of goodwill for two acquisitions. Additionally in 1997, the Company
wrote off the remaining $1,467,000 of goodwill associated with the
acquisition of an Australian investment support systems business that
provides investment accounting software and processing services. In
1996, the Company wrote off the remaining $5,157,000 of goodwill
associated with a business that was acquired more than ten years ago.
The Company believes that no further impairment of goodwill existed at
December 31, 1997.
Other Intangible Assets
Other intangible assets consist primarily of contract rights, customer
bases and noncompetition agreements obtained in business acquisitions.
Contract rights and customer bases 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 three to seven
years.
Income Taxes
The Company recognizes 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.
2. ACQUISITIONS AND SUBSEQUENT EVENT
Purchase Transactions
During 1997, the Company completed five business acquisitions accounted
for as purchase transactions. Three 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
$57,457,000, subject to certain adjustments. Goodwill recorded in
connection with these acquisitions was approximately $13,724,000. In
addition, contingent payments of up to $4,147,000 may be paid in
connection with two acquisitions, depending upon the achievement of
certain future financial results.
Also during 1997, the Company paid $727,000 as the contingent portion
of the purchase price related to a business acquired in 1996.
During 1996, the Company completed eight business acquisitions
accounted for as purchase transactions. Five acquisitions were in the
Company's investment support systems business and three were in its
disaster recovery services business.
Total cash paid in connection with the 1996 acquisitions was
$158,807,000, subject to certain adjustments. Goodwill recorded in
connection with these acquisitions was approximately $42,681,000. In
addition, a contingent payment of up to $6,856,000 (including 7,500,000
Australian dollars) may be paid in connection with two of these
acquisitions, depending upon the achievement of certain future financial
results.
During 1997 and 1996, the Company recorded charges of $9,300,000 and
$44,451,000 ($0.06 and $0.32 per diluted share), respectively, for
purchased in-process research and development primarily associated with
the acquisitions of certain assets of Premier Solutions Ltd. (Premier)
in 1997 and of NCS Financial Systems, Inc. (NCS) in 1996. These charges
represent, as of the date of each acquisition, the value of software
products still in development, but not considered to have reached
technological feasibility or to have any alternative future use.
In connection with the acquisitions of Premier and NCS, the Company
engaged a nationally recognized, independent appraisal firm to express
an opinion on the fair market value of the assets acquired to serve as
the basis of allocation of the purchase price to the various classes of
assets acquired.
<PAGE>
40.) 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Also during 1996, the Company paid an additional 50,000,000 Swedish
Kronor (approximately $7,452,000) as the contingent portion of the
purchase price related to a 1992 acquisition. Goodwill was increased by
the amount of that payment.
During 1995, the Company completed six business acquisitions
accounted for as purchase transactions. Four 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 the 1995 acquisitions was
approximately $23,962,000, subject to certain adjustments. Goodwill
recorded in connection with these acquisitions was approximately
$13,838,000. In addition, contingent payments of up to $10,500,000 may
be paid in connection with two of these acquisitions, depending upon the
achievement of certain future financial results.
Also during 1995, the Company paid $11,179,000 as the contingent
portion of the purchase price in connection with a 1992 acquisition.
Goodwill was increased by the amount of that payment.
The results of operations of these acquired businesses have been
included in the accompanying Consolidated Statements of Income from the
date of acquisition. 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.
Pooling-of-Interests Transactions
During 1997, the Company issued a total of 3,682,000 shares of common
stock (adjusted for a September 1997 two-for-one stock split) in
connection with six business combinations accounted for as a pooling of
interests. Five of the business combinations were in the Company's
investment support systems business and one was in the Company's
healthcare information systems business.
During 1995, the Company issued a total of 8,506,000 shares of common
stock (adjusted for the September 1997 two-for-one stock split) in
connection with three business combinations accounted for as a pooling
of interests. Two of the combinations form the nucleus of the Company's
healthcare information systems business. The remaining combination was
in the Company's investment support systems business.
During 1997 and 1995, the Company recorded merger costs of $3,508,000
and $4,238,000 ($0.04 and $0.05 per diluted share), respectively, in
connection with these transactions. These costs consist primarily of
investment banking, legal and accounting fees that generally are not
deductible for income tax purposes.
The consolidated results of operations for the years ended December
31, 1997 and 1995 include the operations of each of these businesses
from the beginning of the quarter in which the business combination was
completed. The consolidated financial statements for prior periods have
not been restated since the impact of such restatement would not be
material.
Subsequent Event
On January 2, 1998, the Company issued a total of 13,223,000 shares of
common stock in connection with a business combination with Infinity
Financial Technology, Inc. (Infinity). Infinity develops, markets and
supports enterprise software solutions for financial trading and risk
management. The transaction will be accounted for as a pooling of
interests, which requires all historical financial information to be
restated.
The following pro forma combined results of operations (in thousands,
except for per-share amounts) is provided for illustrative purposes only
and assumes that the merger with Infinity had occurred as of the
beginning of each of the periods presented. The following pro forma
information should not be relied upon as necessarily being indicative of
the historical results that would have been obtained if the companies
had actually been combined during those periods or the results that may
be obtained in the future.
1997 1996 1995
------------------------------------------------------------------------
REVENUES $925,029 $711,857 $557,366
NET INCOME 83,975 40,306 50,845
EARNINGS PER SHARE:
BASIC 0.84 0.43 0.59
DILUTED 0.81 0.41 0.55
3. NET INCOME PER COMMON SHARE
Calculation of Basic and Diluted Net
Income per Common Share
The following table sets forth the computation of the number of shares
used in the computation of basic and diluted net income per common share
(in thousands):
1997 1996 1995
------------------------------------------------------------------------
NET INCOME $77,546 $34,901 $48,672
------------------------------------------------------------------------
WEIGHTED-AVERAGE
COMMON SHARES
OUTSTANDING 86,798 84,176 77,624
CONTINGENT SHARES 21 -- --
TOTAL SHARES USED
FOR CALCULATION OF
BASIC NET INCOME
PER COMMON SHARE 86,819 84,176 77,624
EMPLOYEE STOCK OPTIONS 2,461 1,927 1,712
CONTINGENT STOCK
OPTIONS 55 19 --
TOTAL SHARES USED FOR
CALCULATION OF
DILUTED NET INCOME
PER COMMON SHARE 89,335 86,122 79,336
<PAGE>
Common Stock Splits
On August 14, 1997 and June 2, 1995, the Company's Board of Directors
authorized two-for-one stock splits of the Company's common stock. The
stock splits were effective for stockholders of record on September 2,
1997 and June 15, 1995, and shares were issued on September 22, 1997 and
July 7, 1995. The number of shares used for purposes of calculating net
income per common share and all per-share data have been adjusted for
all periods presented to reflect both of these stock splits.
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31 (in
thousands):
1997 1996
--------------------
COMPUTER AND
TELECOMMUNICATIONS
EQUIPMENT $208,501 $ 166,934
LEASEHOLD IMPROVEMENTS 42,680 38,403
OFFICE FURNITURE
AND EQUIPMENT 38,350 38,292
BUILDINGS AND
IMPROVEMENTS 19,335 18,490
LAND 2,547 2,285
CONSTRUCTION IN PROGRESS 8,172 3,333
--------------------
319,585 267,737
ACCUMULATED DEPRECIATION
AND AMORTIZATION (199,589) (158,214)
--------------------
$119,996 $ 109,523
--------------------
5. LONG-TERM DEBT
Long-term debt consists of the following at December 31
(in thousands):
1997 1996
--------------------
BANK CREDIT AGREEMENT
(5.7% INTEREST RATE) $ -- $ 15,000
OTHER BANK DEBT
(8.0% INTEREST RATE) 10,204 16,813
PURCHASE PRICE OBLIGATIONS
DUE FORMER OWNERS
OF ACQUIRED BUSINESSES 6,523 5,302
OTHER, PRIMARILY CAPITAL
LEASE OBLIGATIONS FOR
COMPUTER EQUIPMENT
AND BUILDINGS 2,702 2,231
--------------------
19,429 39,346
LESS CURRENT MATURITIES (16,664) (34,932)
--------------------
$ 2,765 $ 4,414
--------------------
The Company has an unsecured revolving credit agreement (Credit
Agreement) that provides for up to $150,000,000 of borrowings for a
period ending August 2002, which may be extended for one year, on an
annual basis, at the lender's option. The Company may borrow at LIBOR
plus a margin, depending upon certain financial ratios at the time of
the borrowing, or a base rate, generally the Prime rate, at the
Company's option. In order to remain eligible to borrow under the Credit
Agreement, the Company must, among other requirements, maintain a
defined minimum net worth and fixed-charge coverage ratio and limit its
total debt. There were no borrowings under the Credit Agreement at
December 31, 1997.
Annual maturities of long-term debt during the next five years are as
follows: 1998-$16,664,000; 1999- $1,068,000; 2000-$184,000; 2001-
$101,000; and 2002-$102,000.
6. STOCK OPTION AND AWARD PLANS
Employee Stock Purchase Plans
Under the Company's Employee Stock Purchase Plans, a maximum of
4,400,000 shares of common stock may be issued to substantially all
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 1997, 1996 and
1995, employees purchased 345,000, 304,000 and 312,000 shares,
respectively, at average purchase prices of $20.94, $16.75 and $11.24
per share, respectively. At December 31, 1997, 1,768,000 shares of
common stock were reserved for issuance under these plans.
Equity Incentive Plans
Under the Company's 1994 and 1996 Equity Incentive Plans, awards or
options to purchase up to 5,500,000 shares of common stock may be
granted to key employees of the Company, with an individual limit of
400,000 shares per participant per year under each plan. Options may be
either incentive stock options or nonqualified stock options, and the
option price generally must be at least equal to the fair value of the
Company's common stock on the date of award or grant. Generally, options
are granted for a ten-year term and become fully exercisable one year
from the date of grant, subject to a four- or five-year vesting
schedule.
During 1997, 1996 and 1995, long-term incentive awards (LTIP awards)
were granted for future options of up to an aggregate of 415,000,
588,000 and 176,000 shares, respectively. The actual number of shares
and the exercise price per share are contingent upon achieving certain
cumulative financial results over a three-year period, beginning on
January 1 of the year of each LTIP award. If and when the option shares
are earned, the exercise price per share will be $19.88, $14.27 and
$9.52, respectively, but could be reduced to a minimum of $1.99, $8.24
and $6.04, respectively, if actual operating results during the three-
year period exceed targeted operating results. Compensation expense, if
any, is estimated initially at the
<PAGE>
42.) 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
time the achievement of the cumulative financial results becomes
probable and is recorded over the remaining three-year period of each
LTIP award, based upon the difference between the market value and
exercise price of the shares earned. During the years ended December 31,
1997, 1996 and 1995, compensation expense of $5,805,000, $1,875,000 and
$631,000, respectively, was recorded in connection with certain 1996,
1995 and 1994 LTIP awards. No compensation expense has been recorded for
the 1997 LTIP award. During 1997, 102,000 option shares were issued
under the 1994 LTIP award, at exercise prices ranging from $6.18 to
$9.66 per share.
Under the Company's 1986 and 1982 Stock Option Plans, options to
purchase up to 8,188,000 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. Generally, options are granted for a ten-
year term and become fully exercisable one year from the date of grant,
subject to a four- or five-year vesting schedule.
The table on page 43 summarizes transactions under these equity
incentive and stock option plans. All share and per-share amounts have
been restated to reflect the July 1995 and September 1997 two-for-one
stock splits (see Note 3).
At December 31, 1997, 8,434,000 shares of common stock were reserved
for issuance under the Company's equity incentive and stock option
plans.
Restricted Stock Plans
The Company's Restricted Stock Award Plan for Outside Directors (RSAP)
provides for awards of up to 400,000 shares of the Company's common
stock. Each outside director automatically receives an initial award of
20,000 shares of the Company's common stock upon election to the
Company's Board of Directors and, upon re-election as an outside
director every fifth year thereafter, automatically receives another
20,000 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 100,000 shares were granted during 1996, at a
market value of $16.87 per share. There were no awards during 1997 or
1995. At December 31, 1997, 142,000 shares of common stock were reserved
for issuance under this plan.
The Company's Restricted Stock Incentive Plan (RSIP) provides for
awards of up to 1,600,000 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, 1997, 214,000 shares of common stock 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 the RSAP and RSIP aggregated
$355,000, $372,000 and $638,000 for the years ended December 31, 1997,
1996 and 1995, respectively.
Pro Forma Information
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," in accounting for its stock option and award plans.
Accordingly, compensation expense has been recorded for its LTIP, RSAP
and RSIP awards, and no expense has been recorded for its other stock-
based plans. FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), changes the method for recognition of cost on
stock option and award plans. Adoption of the cost-recognition
requirements under SFAS 123 is optional; however, pro forma information
is presented in the following paragraph.
Had compensation cost for the Company's stock option and award plans
been determined based upon the fair value at the date of grant, as
prescribed under SFAS 123, the Company's net income and diluted net
income per share would have been reduced by approximately $2,964,000,
$5,110,000 and $1,185,000 ($0.03, $0.06 and $0.02 per share) in 1997,
1996 and 1995, respectively. The fair value of the options granted
during 1997, 1996 and 1995 is estimated to be $10.84, $8.36 and $6.06
per share, respectively, on the date of grant using the Black-Scholes
pricing model with the following assumptions: volatility of 36% in 1997
and 37% in 1996 and 1995; expected term of six years; risk-free interest
rate of 5.75% in 1997 and 6.5% in 1996 and 1995; and no dividend yield.
The effects of applying SFAS 123 in this pro forma disclosure are not
necessarily indicative of the impact on future years, since SFAS 123
does not apply to grants and awards made prior to 1995 and the Company's
options and awards generally vest over five years. The Company also
anticipates that additional options and awards will be made in future
years.
<PAGE>
<TABLE>
<CAPTION>
Shares (in thousands)
------------------------------------- -------------
Under Weighted
Available Under Option LTIP Award Average Price
------------------------------------- -------------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1994 2,920 2,604 168 $ 4.18
POOLINGS OF INTERESTS -- 178 -- 2.70
LTIP AWARDS (176) -- 176 --
CANCELED 112 (112) -- 5.38
GRANTED (1,458) 1,458 -- 12.49
EXERCISED -- (678) -- 2.79
-------------------------------------
BALANCES AT DECEMBER 31, 1995 1,398 3,450 344 7.79
AUTHORIZED 3,500 -- -- --
LTIP AWARDS (588) -- 588 --
CANCELED 306 (350) -- 13.28
GRANTED (3,108) 3,108 -- 17.60
EXERCISED -- (526) -- 5.96
-------------------------------------
BALANCES AT DECEMBER 31, 1996 1,508 5,682 932 13.11
POLLINGS OF INTERESTS -- 674 -- 3.90
LTIP AWARDS (415) -- 415 --
LTIP MATURITY 66 102 (168) 7.32
CANCELED 249 (260) (50) 17.63
GRANTED (768) 768 -- 23.05
EXERCISED -- (356) -- 7.67
-------------------------------------
BALANCES AT DECEMBER 31, 1997 640 6,610 1,129 13.35
-------------------------------------
</TABLE>
The following table summarizes information concerning outstanding and
exercisable options (in thousands) as of December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- -------------------------------------------------------------------------- -----------------------------------------
Weighted average
Range of Exercise Remaining Weighted average
Prices Number of Options Life (years) Exercise Price Number of Options Exercise Price
- -------------------------------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C>
$0.01 to $5.00 1,391 3.4 $ 2.87 1,391 $ 2.87
$5.01 to $10.00 530 6.5 7.79 516 7.78
$10.01 to $15.00 1,491 7.7 12.66 1,474 12.66
$15.01 to $20.00 1,952 8.1 17.12 1,952 17.12
over $20.00 1,246 9.1 22.27 563 20.50
</TABLE>
7. SAVINGS PLAN
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
$8,445,000, $6,125,000 and $5,338,000 for the years ended December 31, 1997,
1996 and 1995, respectively.
8. INCOME TAXES
The provisions for income taxes for the years ended December 31, 1997, 1996 and
1995 consist of the following (in thousands):
1997 1996 1995
--------------------------------
CURRENT
FEDERAL $ 51,761 $37,460 $ 26,112
STATE 12,126 8,973 6,708
FOREIGN 6,790 4,156 4,994
--------------------------------
70,677 50,589 37,814
--------------------------------
DEFERRED
FEDERAL (12,409) (19,639) (1,376)
STATE (1,665) (2,680) (216)
FOREIGN (445) 398 218
--------------------------------
(14,519) (21,921) (1,374)
--------------------------------
$ 56,158 $ 28,668 $ 36,440
--------------------------------
Differences between income tax expense at the United States federal statutory
income tax rate and the Company's effective income tax rate for the years ended
December 31, 1997, 1996 and 1995 are as follows (in thousands):
1997 1996 1995
-------------------------------
TAX AT FEDERAL
STATUTORY RATE $46,796 $22,249 $29,789
STATE INCOME
TAXES, NET OF
FEDERAL BENEFIT 6,216 4,090 4,393
PURCHASED IN-PROGRESS
RESEARCH AND
DEVELOPMENT AND
OTHER COSTS 1,234 2,656 1,524
INTANGIBLE
AMORTIZATION 1,819 1,365 1,039
TAX-EXEMPT INTEREST
INCOME -- (234) (648)
FOREIGN TAXES (512) (444) (120)
OTHER, NET 605 (1,014) 463
-------------------------------
$56,158 $28,668 $36,440
-------------------------------
EFFECTIVE INCOME
TAX RATE 42.0% 45.1% 42.8%
-------------------------------
<PAGE>
44.) 45 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS continued
Deferred income taxes are recorded based upon differences between
financial statement and tax bases of assets and liabilities. The
following deferred income taxes were recorded as of December 31, 1997
and 1996 (in thousands):
1997 1996
----------------------
CURRENT:
ACCOUNTS RECEIVABLE $ 7,004 $ 3,799
ACCRUED COMPENSATION
AND BENEFITS 4,547 5,692
OTHER ACCRUED EXPENSES 2,319 2,554
DEFERRED REVENUES AND
ACQUISITION-RELATED ITEMS 5,758 1,587
----------------------
$ 19,628 $ 13,632
----------------------
LONG-TERM:*
PROPERTY AND EQUIPMENT $ 6,072 $ 1,334
INTANGIBLE ASSETS (606) (9,807)
LONG-TERM INCENTIVE PLAN 2,952 --
PURCHASED IN-PROCESS
RESEARCH AND DEVELOPMENT
AND OTHER ACQUISITION-
RELATED ITEMS 17,854 23,360
----------------------
$ 26,272 $ 14,887
----------------------
* INCLUDED IN OTHER INTANGIBLE ASSETS.
9. EXPORT SALES
The Company's domestic operations recorded revenues, primarily from
international software licenses, maintenance and professional services,
of approximately $94,318,000, $58,019,000 and $51,273,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. During 1997,
export revenues were made to the following regions of the world: Europe-
$63,878,000; Asia Pacific-$21,029,000; Canada and other-$9,411,000.
10. COMMITMENTS
The Company leases a substantial portion of its computer equipment and
facilities under operating leases. Future minimum rentals under
operating leases with initial or remaining noncancelable lease terms in
excess of one year as of December 31, 1997 follow (in thousands):
1998 $ 63,571
1999 49,347
2000 30,188
2001 19,905
2002 9,822
THEREAFTER 11,443
--------
$184,276
--------
Rent expense aggregated $65,535,000, $56,451,000 and $52,359,000 for
the years ended December 31, 1997, 1996 and 1995, 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 as of December 31, 1997 and 1996, and
the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31,
1997. 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, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 12, 1998
<PAGE>
EXHIBIT 21.1
SUNGARD DATA SYSTEMS INC.
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
<S> <C>
ADS Associates, Inc./1//2/ California
BancWare, Inc. /1/ Massachusetts
Bi-Tech Software Inc./1/ Delaware
Corbel & Co./1//3/ Florida
FPH, Front & Prosoftia Holding AB/4//5/ Sweden
Infinity Financial Technology, Inc./1//7/ Delaware
Intelus Corporation/1/ Delaware
MACESS Corporation/1/ Alabama
May Consulting Incorporated/1/ Illinois
Med Data Systems, Inc./1/ California
Portfolio Administration Limited/5//8/ United Kingdom
Renaissance Software Inc./1//5/ California
Shaw Data Inc./1//9/ Delaware
SIS Europe Holdings Inc./1//6/ Delaware
SSI 2 Inc./1//6/ Delaware
SunGard Asset Management Systems Inc./1/ Delaware
SunGard Business Systems Inc./1//10/ Delaware
SunGard Computer Services Inc./1/ Pennsylvania
SunGard CSS Inc./1/ Delaware
SunGard Dealing Systems Pty Limited/11//12/ Australia
SunGard DIS Inc./1//6/ Delaware
SunGard/DML Inc./1/ Delaware
SunGard Finance SAS/13/ France
SunGard Financial Systems Inc./1//14/ Delaware
SunGard Holdings Limited/6//15/ United Kingdom
SunGard Insurance Systems Inc./1/ Delaware
SunGard Investment Systems Inc./1//16/ Delaware
SunGard Investment Ventures, Inc./6//17/ Delaware
SunGard Recovery Services Inc./1//5//18/ Pennsylvania
SunGard Shareholder Systems Inc./1/ Delaware
SunGard Software, Inc./4//6/ Delaware
SunGard Systems International Inc./1//19/ Pennsylvania
SunGard Systems Limited/8/ United Kingdom
SunGard Systems Pty Limited/4//20/ Australia
SunGard Trust Systems Inc./1/ North Carolina
Wall Street Concepts Inc./1/ New York
- ----------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Wholly owned subsidiary of SunGard Investment Ventures, Inc.
(2) Conducts certain operations through three wholly owned foreign
subsidiaries.
(3) Conducts certain operations through one wholly owned domestic subsidiary.
(4) Wholly owned subsidiary of SunGard Systems International Inc.
(5) Conducts certain operations through two wholly owned foreign subsidiaries.
(6) Not an operating company.
(7) Conducts certain operations through one wholly owned domestic subsidiary
and six wholly owned foreign subsidiaries.
(8) Wholly owned subsidiary of SunGard Holdings Limited.
(9) Conducts certain operations through two wholly owned foreign subsidiaries
and SunGard Systems Limited.
(10) Organized into, and conducts business under the names of, three operating
divisions--SunGard Asset Management Systems ("SAMS"), SunGard Employee
Benefit Systems ("SEBS") and SunGard Mailing Services. SAMS conducts
certain operations through SunGard Systems Limited, and SEBS conducts
certain operations through SunGard Systems Limited and SunGard Systems Pty
Limited.
(11) Wholly owned subsidiary of SunGard DIS Inc.
(12) Conducts certain operations through three foreign sister corporations, all
of which are wholly owned subsidiaries of SunGard DIS Inc.
(13) Owned by SunGard Investment Ventures, Inc. and SIS Europe Holdings Inc.
(14) Organized into, and conducts business under the names of, two operating
divisions -- SunGard Brokerage Systems and SunGard Securities Systems.
Sometimes conducts business under the names Money Management Systems,
Phase3 Systems, Warrington Financial Systems and Wismer Associates.
(15) Owned by SunGard Investment Ventures, Inc. and SunGard Systems
International Inc.
(16) Conducts certain operations through SunGard Systems Limited and SunGard
Systems Pty Limited.
(17) Wholly owned subsidiary of SunGard Data Systems Inc.
(18) Organized into, and conducts business under the names of, two operating
divisions--SunGard Recovery Services and SunGard Planning Solutions.
(19) Organized into two operating divisions--SunGard Capital Markets (whose
business is in the process of merging with Infinity Financial Technology,
Inc. and Renaissance Software Inc. under the name "Infinity") and SunGard
Futures Systems. Conducts certain operations through ten wholly owned
foreign subsidiaries including FPH, Front & Prosoftia Holding AB, SunGard
Systems Limited and SunGard Systems Pty Limited.
(20) Conducts certain operations through one wholly owned foreign subsidiary.
2
<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,
33-69650, 33-58515, 33-64901, 333-15641, 333-39151, 333-43969 and 333-46187) and
Registration Statements on Form S-3 (333-45541 and 333-48259) of our report
dated February 12, 1998 on our audits of the consolidated financial statements
of SunGard Data Systems Inc. and subsidiaries as of December 31, 1997 and 1996,
and for each of the years in the three-year period ended December 31, 1997,
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 27, 1998
<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, 1997
AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER
31, 1997, BOTH INCLUDED IN THE FORM 10-K OF SUNGARD DATA SYSTEMS, INC. FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1997 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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 64,938
<SECURITIES> 0
<RECEIVABLES> 220,677
<ALLOWANCES> 17,895
<INVENTORY> 0
<CURRENT-ASSETS> 310,079
<PP&E> 319,585
<DEPRECIATION> 199,589
<TOTAL-ASSETS> 786,334
<CURRENT-LIABILITIES> 224,523
<BONDS> 2,765
0
0
<COMMON> 889
<OTHER-SE> 558,157
<TOTAL-LIABILITY-AND-EQUITY> 862,151
<SALES> 0
<TOTAL-REVENUES> 862,151
<CGS> 0
<TOTAL-COSTS> 538,664<F1>
<OTHER-EXPENSES> 12,808<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,584
<INCOME-PRETAX> 133,704
<INCOME-TAX> 56,158
<INCOME-CONTINUING> 77,546
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,546
<EPS-PRIMARY> 0.89<F3>
<EPS-DILUTED> 0.87<F3>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND PURCHASED IN-
PROCESS RESEARCH AND DEVELOPMENT AND MERGER COSTS.
<F2>PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS AND MERGER COSTS.
<F3>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT AND MERGER COSTS
TOTALING $0.10 PER SHARE. ALSO, REFLECTS SEPTEMBER 1997 TWO-FOR-ONE STOCK
SPLIT.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF
SEPTEMBER 30, 1997 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997, BOTH INCORPORATED BY REFERENCE INTO THE
FORM 10-Q OF SUNGARD DATA SYSTEMS INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 32,841
<SECURITIES> 0
<RECEIVABLES> 207,538
<ALLOWANCES> 17,266
<INVENTORY> 0
<CURRENT-ASSETS> 264,156
<PP&E> 308,700
<DEPRECIATION> 192,027
<TOTAL-ASSETS> 737,341
<CURRENT-LIABILITIES> 208,481
<BONDS> 3,037
0
0
<COMMON> 868
<OTHER-SE> 524,955
<TOTAL-LIABILITY-AND-EQUITY> 737,341
<SALES> 0
<TOTAL-REVENUES> 609,557
<CGS> 0
<TOTAL-COSTS> 386,493<F1>
<OTHER-EXPENSES> 9,956<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,015
<INCOME-PRETAX> 93,639
<INCOME-TAX> 38,661
<INCOME-CONTINUING> 54,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,978
<EPS-PRIMARY> 0.64<F3>
<EPS-DILUTED> 0.62<F3>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND PURCHASED IN-
PROCESS RESEARCH AND DEVELOPMENT AND MERGER COSTS.
<F2>PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS AND MERGER COSTS.
<F3>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT AND MERGER COSTS
TOTALING $0.07 PER SHARE. ALSO, REFLECTS SEPTEMBER 1997 TWO-FOR-ONE STOCK
SPLIT.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF JUNE 30,
1997 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED
JUNE 30, 1997, BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-Q OF SUNGARD DATA
SYSTEMS INC. FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 31,184
<SECURITIES> 0
<RECEIVABLES> 187,082
<ALLOWANCES> 13,633
<INVENTORY> 0
<CURRENT-ASSETS> 240,453
<PP&E> 297,682
<DEPRECIATION> 181,137
<TOTAL-ASSETS> 715,649
<CURRENT-LIABILITIES> 209,938
<BONDS> 4,950
0
0
<COMMON> 432
<OTHER-SE> 500,329
<TOTAL-LIABILITY-AND-EQUITY> 715,649
<SALES> 0
<TOTAL-REVENUES> 395,072
<CGS> 0
<TOTAL-COSTS> 253,912<F1>
<OTHER-EXPENSES> 9,618<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,321
<INCOME-PRETAX> 54,813
<INCOME-TAX> 22,604
<INCOME-CONTINUING> 32,209
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,209
<EPS-PRIMARY> 0.37<F3>
<EPS-DILUTED> 0.37<F3>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND PURCHASED IN-
PROCESS RESEARCH AND DEVELOPMENT COSTS.
<F2>PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS.
<F3>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS TOTALLING $0.07
PER SHARE. ALSO REFLECTS SEPTEMBER 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF MARCH
31, 1997 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1997, BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-Q OF
SUNGARD DATA SYSTEMS INC. FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 49,998
<SECURITIES> 0
<RECEIVABLES> 177,251
<ALLOWANCES> 12,729
<INVENTORY> 0
<CURRENT-ASSETS> 250,224
<PP&E> 284,159
<DEPRECIATION> 169,955
<TOTAL-ASSETS> 707,361
<CURRENT-LIABILITIES> 218,421
<BONDS> 4,655
0
0
<COMMON> 431
<OTHER-SE> 483,854
<TOTAL-LIABILITY-AND-EQUITY> 707,361
<SALES> 0
<TOTAL-REVENUES> 187,421
<CGS> 0
<TOTAL-COSTS> 120,698<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 585
<INCOME-PRETAX> 30,461
<INCOME-TAX> 12,337
<INCOME-CONTINUING> 18,124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,124
<EPS-PRIMARY> 0.21<F2>
<EPS-DILUTED> 0.21<F2>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS.
<F2>REFLECTS SEPTEMBER 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
<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, 1996
AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996,
BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-K OF SUNGARD DATA SYSTEMS INC.
FOR THE YEAR ENDED DECEMBER 31, 1996 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-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 46,072
<SECURITIES> 0
<RECEIVABLES> 168,637
<ALLOWANCES> 10,391
<INVENTORY> 0
<CURRENT-ASSETS> 236,457
<PP&E> 267,737
<DEPRECIATION> 158,214
<TOTAL-ASSETS> 679,318
<CURRENT-LIABILITIES> 210,266
<BONDS> 4,414
0
0
<COMMON> 423
<OTHER-SE> 464,215
<TOTAL-LIABILITY-AND-EQUITY> 679,318
<SALES> 0
<TOTAL-REVENUES> 670,309
<CGS> 0
<TOTAL-COSTS> 424,037<F1>
<OTHER-EXPENSES> 51,083<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,224
<INCOME-PRETAX> 63,569
<INCOME-TAX> 28,668
<INCOME-CONTINUING> 34,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,901
<EPS-PRIMARY> 0.41<F3>
<EPS-DILUTED> 0.41<F3>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND PURCHASED IN-
PROCESS RESEARCH AND DEVELOPMENT COSTS.
<F2>PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS.
<F3>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS TOTALING $0.39
PER DILUTED SHARE AND $0.40 PER BASIC SHARE. ALSO REFLECTS SEPTEMBER 1997 TWO-
FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF
SEPTEMBER 30, 1996 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996, INCLUDED IN THE FORM FORM 10-Q OF SUNGARD
DATA SYSTEMS INC. FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 36,469
<SECURITIES> 0
<RECEIVABLES> 163,856
<ALLOWANCES> 10,658
<INVENTORY> 0
<CURRENT-ASSETS> 223,314
<PP&E> 251,503
<DEPRECIATION> 148,221
<TOTAL-ASSETS> 613,791
<CURRENT-LIABILITIES> 162,766
<BONDS> 3,413
0
0
<COMMON> 424
<OTHER-SE> 447,188
<TOTAL-LIABILITY-AND-EQUITY> 613,791
<SALES> 0
<TOTAL-REVENUES> 477,012
<CGS> 0
<TOTAL-COSTS> 304,059<F1>
<OTHER-EXPENSES> 44,032<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 37,772
<INCOME-TAX> 17,386
<INCOME-CONTINUING> 20,386
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,386
<EPS-PRIMARY> 0.24<F3>
<EPS-DILUTED> 0.24<F3>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND PURCHASED IN-
PROCESS RESEARCH AND DEVELOPMENT AND OTHER CHARGES.
<F2>PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT AND OTHER CHARGES.
<F3>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT AND OTHER CHARGES
TOTALING $0.33 PER DILUTED SHARE AND $0.34 PER BASIC SHARE. ALSO INCLUDES
SEPTEMBER 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF JUNE 30,
1996 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED
JUNE 30, 1996, INCLUDED IN THE FORM 10-Q OF SUNGARD DATA SYSTEMS INC. FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 106,800
<SECURITIES> 11,323
<RECEIVABLES> 141,490
<ALLOWANCES> 10,589
<INVENTORY> 0
<CURRENT-ASSETS> 281,234
<PP&E> 239,469
<DEPRECIATION> 141,972
<TOTAL-ASSETS> 597,590
<CURRENT-LIABILITIES> 134,641
<BONDS> 3,290
0
0
<COMMON> 422
<OTHER-SE> 454,723
<TOTAL-LIABILITY-AND-EQUITY> 597,590
<SALES> 0
<TOTAL-REVENUES> 305,366
<CGS> 0
<TOTAL-COSTS> 195,111<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51,850
<INCOME-TAX> 20,999
<INCOME-CONTINUING> 30,851
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,851
<EPS-PRIMARY> 0.37<F2>
<EPS-DILUTED> 0.36<F2>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS.
<F2>REFLECTS SEPTEMBER 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF MARCH
31, 1996 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1996, INCLUDED IN THE FORM 10-Q OF SUNGARD DATA SYSTEMS INC. FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 103,201
<SECURITIES> 33,038
<RECEIVABLES> 139,701
<ALLOWANCES> 7,866
<INVENTORY> 0
<CURRENT-ASSETS> 294,803
<PP&E> 228,974
<DEPRECIATION> 134,282
<TOTAL-ASSETS> 589,609
<CURRENT-LIABILITIES> 144,490
<BONDS> 3,349
0
0
<COMMON> 421
<OTHER-SE> 435,778
<TOTAL-LIABILITY-AND-EQUITY> 589,609
<SALES> 0
<TOTAL-REVENUES> 149,798
<CGS> 0
<TOTAL-COSTS> 95,822<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,592
<INCOME-TAX> 9,960
<INCOME-CONTINUING> 14,632
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,632
<EPS-PRIMARY> 0.17<F2>
<EPS-DILUTED> 0.17<F2>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS.
<F2>REFLECTS SEPTEMBER 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
<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, 1995
AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995,
BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-K OF SUNGARD DATA SYSTEMS INC.
FOR THE YEAR ENDED DECEMBER 31, 1995, 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 79,091
<SECURITIES> 36,066
<RECEIVABLES> 149,685
<ALLOWANCES> 6,426
<INVENTORY> 0
<CURRENT-ASSETS> 281,163
<PP&E> 222,325
<DEPRECIATION> 126,580
<TOTAL-ASSETS> 579,734
<CURRENT-LIABILITIES> 147,573
<BONDS> 3,241
0
0
<COMMON> 421
<OTHER-SE> 421,871
<TOTAL-LIABILITY-AND-EQUITY> 579,734
<SALES> 0
<TOTAL-REVENUES> 532,628
<CGS> 0
<TOTAL-COSTS> 339,088
<OTHER-EXPENSES> 4,238<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,018
<INCOME-PRETAX> 85,112
<INCOME-TAX> 36,440
<INCOME-CONTINUING> 48,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,672
<EPS-PRIMARY> 0.63<F2>
<EPS-DILUTED> 0.61<F2>
<FN>
<F1>Merger costs associated with poolings-of-interests
<F2>Includes merger costs totaling $0.05 per share. Also reflects September 1997
two-for-one stock split.
</FN>
</TABLE>
