<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1998 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 or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1285 DRUMMERS LANE, WAYNE, PENNSYLVANIA 19087
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(610) 341-8700
----------------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
There were 102,883,018 shares of the registrant's common stock, par value $.01
per share, outstanding at March 31, 1998.
<PAGE>
SUNGARD DATA SYSTEMS INC.
AND SUBSIDIARIES
INDEX
PAGE
----
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1998
(unaudited) and December 31, 1997.......................... 1
Consolidated Statements of Income for the three months
ended March 31, 1998 and 1997 (unaudited).................. 2
Supplemental Income Statement Information for the three
months ended March 31, 1998 and 1997 (unaudited)........... 2
Consolidated Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 (unaudited).................. 3
Notes to Consolidated Financial Statements (unaudited)..... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7
Part II. Other Information
Item 1. Legal Proceedings.......................................... 12
Item 2. Changes in Securities...................................... 12
Item 3. Defaults upon Senior Securities............................ 12
Item 4. Submission of Matters to a Vote of Security Holders........ 12
Item 5. Other Information.......................................... 12
Item 6. Exhibits and Reports on Form 8-K........................... 12
Signatures ........................................................ 13
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
SunGard Data Systems Inc.
Consolidated Balance Sheets
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31,
1998 December 31,
(Unaudited) 1997(1)
------------- -------------
<S> <C> <C>
Assets
Current:
Cash and equivalents ................................................................. $ 104,250 $ 81,185
Short-term investments, at cost, which approximates market ........................... 22,657 24,970
Trade receivables, less allowance for doubtful accounts of $20,161 and $19,702 ....... 197,574 183,757
Earned but unbilled receivables ...................................................... 44,788 40,951
Prepaid expenses and other current assets ............................................ 22,483 24,269
Deferred income taxes ................................................................ 22,209 21,163
------------- -------------
Total current assets ............................................................... 413,961 376,295
Property and equipment, less accumulated depreciation of $214,432 and $202,336 ......... 132,002 123,261
Software products, less accumulated amortization of $94,798 and $89,022 ................ 72,837 75,634
Goodwill, less accumulated amortization of $32,822 and $32,660 ........................ 159,111 160,109
Other intangible assets, less accumulated amortization of $48,617 and $45,451 .......... 120,178 121,649
------------- -------------
$ 898,089 $ 856,948
============= =============
Liabilities and Stockholders' Equity
Current:
Short-term and current portion of long-term debt ..................................... $ 15,763 $ 16,996
Accounts payable ..................................................................... 20,380 19,105
Accrued compensation and benefits .................................................... 47,273 58,592
Other accrued expenses ............................................................... 34,510 30,552
Accrued income taxes ................................................................. 19,783 6,736
Deferred revenues .................................................................... 120,017 111,666
------------- -------------
Total current liabilities .......................................................... 257,726 243,647
------------- -------------
Long-term debt ......................................................................... 2,835 3,080
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;
102,883 and 102,085 shares issued .................................................. 1,029 1,021
Capital in excess of par value ....................................................... 236,041 228,333
Notes receivable for common stock .................................................... (485) (500)
Restricted stock plans ............................................................... (1,393) (1,532)
Retained earnings .................................................................... 409,341 389,545
Accumulated other comprehensive loss ................................................. (7,005) (6,646)
------------- -------------
Total stockholders' equity ......................................................... 637,528 610,221
------------- -------------
$ 898,089 $ 856,948
============= =============
</TABLE>
(1)Restated for pooling-of-interests with Infinity Financial Technology, Inc.
See accompanying notes
1
<PAGE>
SunGard Data Systems Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1998 1997 (1)
-------------- ---------------
<S> <C> <C>
Revenues...................................................................... $ 264,553 $ 201,039
-------------- ---------------
Costs and expenses:
Cost of sales and direct operating ......................................... 112,211 84,168
Sales, marketing and administration ........................................ 57,543 42,380
Product development ........................................................ 24,857 19,359
Depreciation of property and equipment ..................................... 13,327 11,668
Amortization of intangible assets .......................................... 12,269 10,583
Merger and restructuring costs ............................................. 8,147 -
--------- ---------
228,354 168,158
--------- ---------
Income from operations ....................................................... 36,199 32,881
Interest income ............................................................ 1,320 923
Interest expense ........................................................... (396) (585)
--------- ---------
Income before income taxes ................................................... 37,123 33,219
Income taxes ............................................................... 17,327 13,330
--------- ---------
Net income ................................................................... $ 19,796 $ 19,889
========= =========
Basic net income per common share ............................................ $ 0.19 $ 0.20
========= =========
Shares used to compute basic net income per common share ..................... 102,485 98,204
========= =========
Diluted net income per common share .......................................... $ 0.19 $ 0.19
========= =========
Shares used to compute diluted net income per common share ................... 106,601 102,221
========= =========
</TABLE>
================================================================================
SunGard Data Systems Inc.
Supplemental Income Statement Information
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
<S> <C> <C>
1998 1997 (1)
-------------- ---------------
Revenues:
Investment support systems ............................................. $ 180,235 $ 133,644
Disaster recovery services ............................................. 62,576 52,826
Computer services and other ............................................ 21,742 14,569
------------- -------------
$ 264,553 $ 201,039
============= =============
Income from operations:
Investment support systems ............................................. $ 34,200 $ 23,368
Disaster recovery services ............................................. 10,213 9,735
Computer services and other ............................................ 2,971 1,825
Corporate administration ............................................... (3,038) (2,047)
Merger and restructuring costs ......................................... (8,147) -
------------- -------------
$ 36,199 $ 32,881
============= =============
Operating margin:
Investment support systems ............................................. 19.0% 17.5%
============= =============
Disaster recovery services ............................................. 16.3% 18.4%
============= =============
Computer services and other ............................................ 13.7% 12.5%
============= =============
Total .................................................................. 13.7% 16.4%
============= =============
Total, excluding merger and restructuring costs ........................ 16.8% 16.4%
============= =============
</TABLE>
(1)Restated for pooling-of-interests with Infinity Financial Technology, Inc.
See accompanying notes
2
<PAGE>
SunGard Data Systems Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1998 1997 (1)
-------- --------
<S> <C> <C>
Cash flow from operations:
Net income ......................................................................... $ 19,796 $ 19,889
Reconciliation of net income to cash flow from operations:
Depreciation and amortization ................................................... 25,596 22,252
Other noncash charges ........................................................... 3,373 892
Deferred income tax benefit ..................................................... (2,688) (4,197)
-------- --------
46,077 38,836
Cash provided by (used for) working capital, net of effect of acquired
businesses:
Accounts receivable and other current assets .................................... (18,609) 1,282
Accounts payable and accrued expenses ........................................... 6,627 1,905
Deferred revenues ............................................................... 7,573 (5,155)
-------- --------
Cash flow from operations ..................................................... 41,668 36,868
-------- --------
Financing activities:
Cash received under employee stock plans ........................................... 6,324 2,944
Cash received under revolving line of credit and other borrowings .................. 50 30,000
Repayments of debt ................................................................. (1,500) (26,957)
-------- --------
Total financing activities .................................................... 4,874 5,987
-------- --------
Long-term investment activities:
Cash paid for acquired businesses, net of cash acquired ............................ (1,288) (14,874)
Cash paid for property and equipment ............................................... (22,318) (15,365)
Cash paid for software and other long-term assets .................................. (2,186) (2,642)
-------- --------
Total long-term investment activities ......................................... (25,792) (32,881)
-------- --------
Increase in cash and equivalents before short-term investment activities.............. 20,750 9,974
Short-term investment activities:
Purchase of short-term investments ................................................. (5,856) --
Maturities of short-term investments ............................................... 8,171 --
-------- --------
Increase in cash and equivalents ..................................................... 23,065 9,974
Beginning cash and equivalents ....................................................... 81,185 83,024
-------- --------
Ending cash and equivalents .......................................................... $ 104,250 $ 92,998
======== ========
Supplemental information:
Acquired businesses:
Property and equipment .......................................................... 24 2,267
Software products ............................................................... -- 147
Goodwill and other intangible assets ............................................ 2,025 16,474
Purchase price obligations and debt assumed ..................................... -- (1,635)
Net current assets acquired (liabilities assumed) ............................... (761) 214
Common stock issued ............................................................. -- (2,593)
-------- --------
Cash paid for acquired businesses, net of cash acquired............................... $ 1,288 $ 14,874
======== ========
</TABLE>
(1) Restated for pooling-of-interests with Infinity Financial Technology, Inc.
See accompanying notes
3
<PAGE>
SUNGARD DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, and have been prepared in accordance with
generally accepted accounting principles for interim financial reporting and
with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
All significant intercompany transactions and accounts have been eliminated. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included in the
accompanying financial statements. Operating results for the three month period
ended March 31, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1997.
2. ACQUISITIONS:
On January 2, 1998, the Company issued 13,223,000 shares of common stock in
connection with a merger with Infinity Financial Technology, Inc. (Infinity).
Infinity develops, markets and supports enterprise software solutions for
financial trading and risk management. The merger has been accounted for as a
pooling-of-interests. Therefore, in accordance with generally accepted
accounting principles, all historical financial information of the Company has
been restated to include the historical financial information of Infinity.
Also during the first quarter, the Company acquired certain assets of a
disaster recovery professional services business in the Atlanta, GA area.
3. MERGER AND RESTRUCTURING COSTS:
During the three months ended March 31, 1998, the Company recorded merger
and restructuring costs of $8,147,000 ($7,048,000 after-tax, or $0.06 per
diluted share). Merger costs, which are generally nondeductible for income tax
purposes, are comprised of $4,131,000 for costs associated with the merger with
Infinity, and $1,316,000 for costs associated with the Company's expired offer
to acquire Rolfe & Nolan Plc. Merger costs consist of investment banking,
legal, accounting and printing fees. Also, the Company recorded $2,700,000 for
restructuring costs associated with the closure of certain office facilities and
severance costs resulting from the merger with Infinity.
4
<PAGE>
SUNGARD DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
4. 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 for the
three months ended March 31, 1998 and 1997 (in thousands):
1998 1997
-------- --------
Net income $ 19,796 $ 19,889
======== ========
Weighted-average common shares
outstanding 102,398 98,120
Contingent shares 87 84
-------- --------
Total shares used for calculation of
basic net income per common share 102,485 98,204
Employee stock options 4,063 3,957
Contingent stock options 53 60
-------- --------
Total shares used for calculation of
diluted net income per common share 106,601 102,221
======== ========
COMMON STOCK SPLIT:
On August 14, 1997, the Company's Board of Directors authorized a two-for-
one split of the Company's common stock. The stock split was effective for
stockholders of record on September 2, 1997, and shares were issued on September
22, 1997. 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 the stock split.
5. COMPREHENSIVE INCOME:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." The
statement, which became effective January 1, 1998, establishes rules for the
reporting of comprehensive income and its components in financial statements.
Comprehensive income consists of net income, adjusted for other increases and
decreases affecting stockholders' equity that, under generally accepted
accounting principles, are excluded from the determination of net income.
5
<PAGE>
SUNGARD DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
5. COMPREHENSIVE INCOME, CONTINUED:
The calculation of comprehensive income for the three months ended March
31, 1998 and 1997 follows (in thousands):
1998 1997
-------- --------
Net income $19,796 $19,889
Foreign currency translation losses,
net of estimated tax benefits of
$126 and $1,501, respectively (233) (2,788)
------- -------
Comprehensive income $19,563 $17,101
======= =======
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Statements about the Company's expectations and all other statements in
this quarterly report on Form 10-Q 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 recently 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 most recent
Form 10-K, a copy of which may be obtained from the Company without charge.
During the three months ended March 31, 1998, the Company recorded merger
and restructuring costs of $8,147,000 ($7,048,000 after-tax, or $0.06 per
diluted share). Merger costs, which are generally nondeductible for income tax
purposes, are comprised of $4,131,000 for costs associated with the merger with
Infinity, and $1,316,000 for costs associated with the Company's expired offer
to acquire Rolfe & Nolan Plc. Merger costs consist of investment banking,
legal, accounting and printing fees. Also, the Company recorded $2,700,000 for
restructuring costs associated with the closure of certain office facilities and
severance costs resulting from the merger with Infinity. The following
discussion of income from operations excludes these charges.
INCOME FROM OPERATIONS:
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 19.0% and 17.5% for the three month periods
ended March 31, 1998 and 1997, respectively. The increase in the operating
margin is due primarily to an increase in software license revenues compared to
the first three months of 1997, despite an increase in overall product
development expense.
The Company expects that the full-year 1998 ISS operating margin will be
slightly higher than the full-year 1997 ISS operating margin. 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.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Continued)
INCOME FROM OPERATIONS, CONTINUED:
Disaster Recovery Services (DRS):
The DRS operating margin was 16.3% and 18.4% during the three month periods
ended March 31, 1998 and 1997, respectively. The decrease in the operating
margin is due primarily to expenses resulting from a 28% expansion (representing
an additional 64,000 square feet) of the Philadelphia MegaCenter, equipment
additions and upgrades, an increase in bad debt expense, and an increase in
commission expenses resulting from new contract signings.
The Company expects that the 1998 full-year DRS operating margin will
approximate the 1997 full-year DRS operating margin. 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 13.7% and 12.5% during the three month periods
ended March 31, 1998 and 1997, respectively. The increase in the operating
margin is due to an increase in revenues in the Company's healthcare information
systems (HIS) businesses.
The Company expects that the CS operating margin will continue to improve
as compared to 1997. 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 for the three month period ended March 31, 1998 increased
$63.5 million, or 32%, compared to the corresponding period in 1997. Excluding
acquired businesses, revenues increased approximately 19% during the three month
period compared to the corresponding period in 1997.
Recurring revenues derived from computer processing, software maintenance,
software and hardware rentals, disaster recovery fees, and professional services
were $215.0 million and $170.6 million for the three month periods ended March
31, 1998 and 1997, respectively, representing 81% and 85% of total revenues,
respectively, for those periods. The decline in the percentage of recurring
revenues to total revenues is due primarily to an increase in software license
revenues. Professional services revenues totaled $37.6 million and $20.7
million during the three month periods ended March 31, 1998 and 1997,
respectively. The increase in professional services revenues was due primarily
to large shareholder accounting and not-for-profit accounting system
installations and
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Continued)
REVENUES, CONTINUED:
conversions.
Non-recurring revenues, derived from software licenses and sales of third-
party software and hardware, were $49.6 million and $30.4 million during the
three month periods ended March 31, 1998 and 1997, respectively, representing
19% and 15% of total revenues, respectively, for those periods. Software
license revenues totaled $41.1 million and $26.0 million during the three month
periods ended March 31, 1998 and 1997, respectively. The increase in software
license revenues was due primarily to investment support systems businesses
acquired in 1997, and an increase in revenues from the Company's derivative
trading and global risk management software products.
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 on the Company.
Investment Support Systems:
ISS revenues for the three month period ended March 31, 1998 increased
$46.6 million, or 35%, compared to the corresponding period in 1997. The
increase in ISS revenues is attributable to increases in data processing and
software maintenance revenues of $15.7 million, and an increase in software
license, professional services and equipment revenues of $30.9 million.
Excluding acquired businesses, revenues increased approximately 17% during the
three month period ended March 31, 1998 compared to the corresponding period in
1997.
Disaster Recovery Services:
DRS revenues for the three month period ended March 31, 1998 increased $9.7
million, or 18%, compared to the corresponding period in 1997. The increase is
attributable primarily to increases in revenues resulting from new contract
signings and contract renewals, growth in work-group recovery, mid-range
platforms, and the SunGard National Network. Excluding acquired businesses,
revenues increased approximately 17% during the three month period ended March
31, 1998, compared to the corresponding period in 1997.
Computer Services and Other:
CS revenues for the three month period ended March 31, 1998 increased $7.2
million, or 49%, compared to the corresponding period in 1997. The increase is
due primarily to an increase in revenues in the Company's HIS businesses.
Excluding acquired businesses, revenues increased approximately 45% during the
three month period ended March 31, 1998 compared to the corresponding period in
1997.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Continued)
COSTS AND EXPENSES:
Cost of sales and direct operating expenses for the three month period
ended March 31, 1998 increased $28.0 million, or 33%, compared to the
corresponding period in 1997. The increase is due primarily to acquired
businesses, DRS facility expansion and equipment upgrades.
Sales, marketing and administration expenses for the three month period
ended March 31, 1998 increased $15.2 million, or 36%, compared to the
corresponding period in 1997. The increases are due primarily to acquired
businesses, an expansion in the sales force, particularly in the DRS Group, and
an increase in non-cash expenses associated with the Company's long-term
incentive plan.
Product development expenses for the three month period ended March 31,
1998 increased $5.5 million, or 28%, compared to the corresponding period in
1997. The increase is due primarily to acquired businesses and an increase in
development spending in connection with various ISS products. Development costs
capitalized were $0.7 million and $1.2 million for the three months ended March
31, 1998 and 1997, respectively.
Depreciation of property and equipment for the three month period ended
March 31, 1998 increased $1.7 million, or 14%, compared to the corresponding
period in 1997. The increase is due primarily to purchases of computer and
telecommunications equipment and acquired businesses.
Amortization of intangible assets for the three month period ended March
31, 1998 increased $1.7 million, or 16%, due primarily to acquired businesses.
Interest income for the three month period ended March 31, 1998 increased
$0.4 million, or 43%, and interest expense decreased $0.2 million, or 32%,
compared to the corresponding period in 1997, due to higher cash and short-term
investment balances and a decrease in short-term debt.
The Company's effective income tax rate was 46.7% during the three month
period ended March 31, 1998. Excluding the effect of merger costs, which are
generally nondeductible, the Company's effective income tax rate was 40.7% for
the three month period ended March 31, 1998, as compared with an effective
income tax rate of 40.1% during the three month period ended March 31, 1997, and
a full-year 1997 effective income tax rate, excluding merger costs, of 40.6%.
LIQUIDITY AND CAPITAL RESOURCES:
At March 31, 1998, cash and short-term investments increased $20.7 million
to $126.9 million from $106.2 million at December 31, 1997. The increase in cash
and equivalents is net of a decrease in short and long-term debt from $20.1
million at December 31, 1997 to $18.6 million at March 31, 1998. At March 31,
1998, there were no outstanding borrowings under the Company's credit agreement.
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED:
The Company expects that its existing cash resources and cash generated
from operations will be sufficient to meet its operating requirements,
contingent payments in connection with previously acquired businesses, and
ordinary capital spending needs for at least the next twelve months.
Furthermore, the Company has a $150.0 million credit agreement, and believes it
has the capacity to secure additional credit or issue equity to finance
additional capital needs.
YEAR 2000 SYSTEMS EVALUATION:
The Company has 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 by the end of
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 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
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.
11
<PAGE>
Part II. OTHER INFORMATION:
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
(a) EXHIBITS:
27.1 Financial Data Schedule for the quarter ended March 31, 1998
27.2 Financial Data Schedule for the quarter ended March 31, 1997
(restated)
27.3 Financial Data Schedule for the quarter ended June 30, 1997
(restated)
27.4 Financial Data Schedule for the quarter ended Sept. 30, 1997
(restated)
27.5 Financial Data Schedule for the year ended Dec. 31, 1997
(restated)
27.6 Financial Data Schedule for the year ended Dec. 31, 1996
(restated)
27.7 Financial Data Schedule for the year ended Dec. 31, 1995
(restated)
(b) REPORTS ON FORM 8-K:
Form 8-K (dated January 2, 1998) filed on January 16, 1998,
relating to the consummation of the Company's acquisition by
merger of Infinity Financial Technology, Inc.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SunGard Data Systems Inc.
Date: May 14, 1998 By: /s/ Michael J. Ruane
---------------------------------------------
Michael J. Ruane
Vice President-Finance and Chief Financial
Officer
(Principal Financial Officer)
13
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ------ -------
<S> <C>
27.1 Financial Data Schedule for the quarter ended March 31, 1998
27.2 Financial Data Schedule for the quarter ended March 31, 1997 (restated)
27.3 Financial Data Schedule for the quarter ended June 30, 1997 (restated)
27.4 Financial Data Schedule for the quarter ended Sept. 30, 1997 (restated)
27.5 Financial Data Schedule for the year ended December 31, 1997 (restated)
27.6 Financial Data Schedule for the year ended December 31, 1996 (restated)
27.7 Financial Data Schedule for the year ended December 31, 1995 (restated)
</TABLE>
14
<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, 1998 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1998, BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-Q OF
SUNGARD DATA SYSTEMS INC. FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 104,250
<SECURITIES> 22,657
<RECEIVABLES> 262,523
<ALLOWANCES> 20,161
<INVENTORY> 0
<CURRENT-ASSETS> 413,961
<PP&E> 346,434
<DEPRECIATION> 214,432
<TOTAL-ASSETS> 898,089
<CURRENT-LIABILITIES> 257,726
<BONDS> 2,835
0
0
<COMMON> 1,029
<OTHER-SE> 636,499
<TOTAL-LIABILITY-AND-EQUITY> 898,089
<SALES> 0
<TOTAL-REVENUES> 264,553
<CGS> 0
<TOTAL-COSTS> 162,664<F1>
<OTHER-EXPENSES> 8,147<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 396
<INCOME-PRETAX> 37,123
<INCOME-TAX> 17,327
<INCOME-CONTINUING> 19,796
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,796
<EPS-PRIMARY> 0.19<F3>
<EPS-DILUTED> 0.19<F3>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER AND
RESTRUCTURING COSTS.
<F2>MERGER AND RESTRUCTURING COSTS.
<F3>INCLUDES MERGER AND RESTRUCTURING COSTS TOTALING 0.06 PER SHARE.
</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, AS ADJUSTED
TO RESTATE FOR THE POOLING-OF-INTERESTS MERGER WITH INFINITY FINANCIAL
TECHNOLOGY, INC. ON JANUARY 2, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 92,998
<SECURITIES> 0
<RECEIVABLES> 190,051
<ALLOWANCES> 13,039
<INVENTORY> 0
<CURRENT-ASSETS> 306,941
<PP&E> 289,267
<DEPRECIATION> 171,956
<TOTAL-ASSETS> 767,578
<CURRENT-LIABILITIES> 235,670
<BONDS> 5,154
0
0
<COMMON> 497
<OTHER-SE> 526,257
<TOTAL-LIABILITY-AND-EQUITY> 767,578
<SALES> 0
<TOTAL-REVENUES> 201,039
<CGS> 0
<TOTAL-COSTS> 125,778<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 585
<INCOME-PRETAX> 33,219
<INCOME-TAX> 13,330
<INCOME-CONTINUING> 19,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,889
<EPS-PRIMARY> 0.20<F2>
<EPS-DILUTED> 0.19<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 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, AS ADJUSTED TO RESTATE FOR
THE POOLING-OF-INTERESTS MERGER WITH INFINITY FINANCIAL TECHNOLOGY, INC. ON
JANUARY 2, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 75,924
<SECURITIES> 0
<RECEIVABLES> 200,910
<ALLOWANCES> 13,997
<INVENTORY> 0
<CURRENT-ASSETS> 300,261
<PP&E> 303,547
<DEPRECIATION> 183,528
<TOTAL-ASSETS> 779,718
<CURRENT-LIABILITIES> 228,718
<BONDS> 5,447
0
0
<COMMON> 498
<OTHER-SE> 545,055
<TOTAL-LIABILITY-AND-EQUITY> 779,718
<SALES> 0
<TOTAL-REVENUES> 424,125
<CGS> 0
<TOTAL-COSTS> 265,339<F1>
<OTHER-EXPENSES> 10,479<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,321
<INCOME-PRETAX> 59,796
<INCOME-TAX> 24,398
<INCOME-CONTINUING> 35,398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,398
<EPS-PRIMARY> 0.36<F3>
<EPS-DILUTED> 0.35<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 $0.06
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
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, AS ADJUSTED TO RESTATE FOR THE POOLING-OF-INTERESTS MERGER WITH INFINITY
FINANCIAL TECHNOLOGY, INC. ON JANUARY 2, 1998, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 51,052
<SECURITIES> 22,869
<RECEIVABLES> 228,854
<ALLOWANCES> 17,689
<INVENTORY> 0
<CURRENT-ASSETS> 327,526
<PP&E> 314,945
<DEPRECIATION> 194,804
<TOTAL-ASSETS> 805,106
<CURRENT-LIABILITIES> 228,318
<BONDS> 3,500
0
0
<COMMON> 999
<OTHER-SE> 572,289
<TOTAL-LIABILITY-AND-EQUITY> 805,106
<SALES> 0
<TOTAL-REVENUES> 655,766
<CGS> 0
<TOTAL-COSTS> 405,180<F1>
<OTHER-EXPENSES> 10,817<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,015
<INCOME-PRETAX> 102,037
<INCOME-TAX> 41,684
<INCOME-CONTINUING> 60,353
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,353
<EPS-PRIMARY> 0.61<F3>
<EPS-DILUTED> 0.59<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
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, AS ADJUSTED TO RESTATE FOR THE
POOLING-OF-INTERESTS MERGER WITH INFINITY FINANCIAL TECHNOLOGY, INC. ON
JANUARY 2, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 81,185
<SECURITIES> 24,970
<RECEIVABLES> 244,410
<ALLOWANCES> 19,702
<INVENTORY> 0
<CURRENT-ASSETS> 376,295
<PP&E> 325,597
<DEPRECIATION> 202,336
<TOTAL-ASSETS> 856,948
<CURRENT-LIABILITIES> 243,647
<BONDS> 3,080
0
0
<COMMON> 1,021
<OTHER-SE> 609,200
<TOTAL-LIABILITY-AND-EQUITY> 856,948
<SALES> 0
<TOTAL-REVENUES> 925,030
<CGS> 0
<TOTAL-COSTS> 565,323<F1>
<OTHER-EXPENSES> 13,669<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,584
<INCOME-PRETAX> 143,750
<INCOME-TAX> 59,775
<INCOME-CONTINUING> 83,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,975
<EPS-PRIMARY> 0.84<F3>
<EPS-DILUTED> 0.81<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 $0.09 PER DILUTED SHARE AND $ 0.10 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
CONSOLIDATED BALANCE SHEET OF SUNGARD DATA SYSTEMS INC. AS OF DECEMBER 31, 1996
AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER
31, 1996, BOTH INCLUDED IN THE FORM 10-K OF SUNGARD DATA SYSTEMS, INC. FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1996, AS ADJUSTED TO RESTATE FOR THE POOLING-
OF-INTERESTS MERGER WITH INFINITY FINANCIAL TECHNOLOGY, INC. ON JANUARY 2, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 83,024
<SECURITIES> 0
<RECEIVABLES> 187,689
<ALLOWANCES> 10,641
<INVENTORY> 0
<CURRENT-ASSETS> 293,435
<PP&E> 272,287
<DEPRECIATION> 159,868
<TOTAL-ASSETS> 739,622
<CURRENT-LIABILITIES> 229,592
<BONDS> 4,967
0
0
<COMMON> 554
<OTHER-SE> 504,509
<TOTAL-LIABILITY-AND-EQUITY> 739,622
<SALES> 0
<TOTAL-REVENUES> 711,857
<CGS> 0
<TOTAL-COSTS> 438,955<F1>
<OTHER-EXPENSES> 51,083<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,224
<INCOME-PRETAX> 72,286
<INCOME-TAX> 31,980
<INCOME-CONTINUING> 40,306
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,306
<EPS-PRIMARY> 0.43<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 $0.34 PER
DILUTED SHARE AND 0.35 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
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 IN THE FORM 10-K OF SUNGARD DATA SYSTEMS, INC.
FOR THE YEAR ENDED DECEMBER 31, 1995, AS ADJUSTED TO RESTATE FOR THE POOLING-OF-
INTERESTS MERGER WITH INFINITY FINANCIAL TECHNOLOGY, INC. ON JANUARY 2, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<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> 82,608
<SECURITIES> 36,066
<RECEIVABLES> 156,547
<ALLOWANCES> 6,621
<INVENTORY> 0
<CURRENT-ASSETS> 292,147
<PP&E> 224,696
<DEPRECIATION> 127,502
<TOTAL-ASSETS> 592,582
<CURRENT-LIABILITIES> 154,285
<BONDS> 3,611
0
0
<COMMON> 552
<OTHER-SE> 427,506
<TOTAL-LIABILITY-AND-EQUITY> 592,582
<SALES> 0
<TOTAL-REVENUES> 557,366
<CGS> 0
<TOTAL-COSTS> 348,843<F1>
<OTHER-EXPENSES> 4,238<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,178
<INCOME-PRETAX> 90,819
<INCOME-TAX> 38,698
<INCOME-CONTINUING> 50,845<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,845<F3>
<EPS-PRIMARY> 0.59<F4>
<EPS-DILUTED> 0.55<F4>
<FN>
<F1>EXCLUDES SELLING, MARKETING, AND ADMINISTRATIVE COSTS, AND MERGER COSTS.
<F2>MERGER COSTS ASSOCIATED WITH POOLINGS-OF-INTERESTS.
<F3>INCLUDES CHARGE OF $1,276 IN CONNECTION WITH REDEMPTION OF PREFERRED STOCK.
<F4>INCLUDES MERGER COSTS TOTALING $0.05 PER SHARE. ALSO REFLECTS SEPTEMBER 1997
TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
