<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 June 30, 1999 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
incorporation or organization) Identification No.)
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 119,845,148 shares of the registrant's common stock, par value $.01
per share, outstanding at June 30, 1999.
<PAGE>
SunGard Data Systems Inc.
And Subsidiaries
Index
Page
----
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1999
(unaudited) and December 31, 1998............................. 1
Consolidated Statements of Income for the six and three months
ended June 30, 1999 and 1998 (unaudited)...................... 2
Consolidated Statements of Cash Flows for the six months
ended June 30, 1999 and 1998 (unaudited)...................... 3
Notes to Consolidated Financial Statements (unaudited)........ 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 20
Part II. Other Information
Item 1. Legal Proceedings............................................. 20
Item 2. Changes in Securities and Use of Proceeds..................... 20
Item 3. Defaults upon Senior Securities............................... 20
Item 4. Submission of Matters to a Vote of Security Holders........... 20
Item 5. Other Information............................................. 21
Item 6. Exhibits and Reports on Form 8-K.............................. 21
Signatures............................................................. 22
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
SunGard Data Systems Inc.
Consolidated Balance Sheets
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998 (1)
-------------- --------------
<S> <C> <C>
Assets
Current:
Cash and equivalents............................................................ $ 322,693 $ 260,740
Short-term investments, at cost, which approximates market...................... 21,187 24,107
Trade receivables, less allowance for doubtful accounts of $28,806 and $28,334.. 258,160 256,126
Earned but unbilled receivables................................................. 46,292 39,719
Prepaid expenses and other current assets....................................... 30,770 31,748
Deferred income taxes........................................................... 27,423 22,315
-------------- --------------
Total current assets........................................................ 706,525 634,755
Property and equipment, less accumulated depreciation of $281,073 and $259,384..... 154,303 144,842
Software products, less accumulated amortization of $114,284 and $109,276.......... 83,062 72,250
Goodwill, less accumulated amortization of $49,964 and $46,653..................... 157,340 157,120
Deferred income taxes and other intangible assets, less accumulated
amortization of $68,242 and $60,814............................................. 239,082 138,463
-------------- --------------
$ 1,340,312 $ 1,147,430
============== ==============
Liabilities and Stockholders' Equity
Current:
Short-term and current portion of long-term debt................................ $ 12,559 $ 14,766
Accounts payable................................................................ 14,189 16,162
Accrued compensation and benefits............................................... 66,851 91,731
Other accrued expenses.......................................................... 56,635 49,254
Accrued income taxes............................................................ 5,829 22,933
Deferred revenues............................................................... 140,833 139,733
-------------- --------------
Total current liabilities................................................... 296,896 334,579
-------------- --------------
Long-term debt..................................................................... 2,883 2,816
-------------- --------------
Commitments........................................................................
Stockholders' equity:
Preferred stock, par value $.01 per share; 5,000 shares authorized.............. - -
Common stock, par value $.01 per share; 320,000 shares authorized;
119,845 and 116,031 shares issued............................................ 1,198 1,161
Capital in excess of par value.................................................. 527,886 294,743
Retained earnings............................................................... 523,901 523,738
Accumulated other comprehensive loss............................................ (10,696) (6,975)
-------------- --------------
1,040,533 811,076
Treasury stock, at cost, 0 and 45 shares......................................... - (1,041)
-------------- --------------
Total stockholders' equity.................................................... 1,040,533 810,035
-------------- --------------
$ 1,340,312 $ 1,147,430
============== ==============
</TABLE>
(1) Restated for poolings of interests with Automated Securities Clearance,
Ltd., FDP Corp. and Sterling Wentworth Corporation.
See accompanying notes
1
<PAGE>
SunGard Data Systems Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
------------------------ ------------------------
1999 1998 (1) 1999 1998 (1)
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Revenues................................................................ $ 665,224 $ 589,381 $ 333,436 $ 303,888
--------- ---------- --------- ----------
Costs and expenses:
Cost of sales and direct operating...................................... 284,421 249,530 141,690 128,263
Sales, marketing and administration..................................... 136,734 126,623 66,311 65,426
Product development..................................................... 60,304 57,467 30,075 29,829
Depreciation of property and equipment.................................. 30,456 28,416 15,327 14,483
Amortization of intangible assets....................................... 24,788 24,386 12,488 11,993
Merger costs............................................................ 86,600 8,747 5,200 600
--------- ---------- --------- ----------
623,303 495,169 271,091 250,594
--------- ---------- --------- ----------
Income from operations.................................................... 41,921 94,212 62,345 53,294
Interest income......................................................... 7,756 3,561 4,100 1,914
Interest expense........................................................ (842) (770) (461) (359)
--------- ---------- --------- ----------
Income before income taxes and extraordinary gain......................... 48,835 97,003 65,984 54,849
Income taxes............................................................ 54,581 40,328 28,570 21,896
--------- ---------- --------- ----------
Net income (loss) before extraordinary gain .............................. (5,746) 56,675 37,414 32,953
Extraordinary gain on sale of subsidiaries, net of income
taxes of $6,096...................................................... 10,371 - - -
--------- ---------- --------- ----------
Net income ............................................................... 4,625 56,675 37,414 32,953
Pro forma income tax expense (benefit) resulting from acquired
Sub S corporation (27,381) 1,318 (447) 526
--------- ---------- --------- ----------
Pro forma net income...................................................... $ 32,006 $ 55,357 $ 37,861 $ 32,427
========= ========== ========= ==========
Pro forma basic net income per common share:
Before extraordinary item.............................................. $ 0.18 $ 0.49 $ 0.32 $ 0.28
========= ========== ========= ==========
After extraordinary item............................................... $ 0.27 $ 0.49 $ 0.32 $ 0.28
========= ========== ========= ==========
Pro forma diluted net income per common share:
Before extraordinary item.............................................. $ 0.18 $ 0.47 $ 0.31 $ 0.27
========= ========== ========= ==========
After extraordinary item............................................... $ 0.26 $ 0.47 $ 0.31 $ 0.27
========= ========== ========= ==========
Shares used to compute pro forma net income per common share:
Basic.................................................................. 118,522 113,526 119,262 114,196
========= ========== ========= ==========
Diluted................................................................ 122,494 118,678 122,627 119,191
========= ========== ========= ==========
</TABLE>
(1) Restated for poolings of interests with Automated Securities Clearance,
Ltd., FDP Corp. and Sterling Wentworth Corporation.
See accompanying notes
2
<PAGE>
SunGard Data Systems Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1999 1998 (1)
---------- ----------
<S> <C> <C>
Cash flow from operations:
Net income ............................................................................. $ 4,625 $ 56,675
Reconciliation of net income to cash flow from operations:
Depreciation and amortization........................................................ 55,244 52,802
Extraordinary gain on sale of subsidiaries, net of income taxes...................... (10,371) -
Noncash compensation charge resulting from acquisition of ASC........................ 71,459 -
Other noncash charges................................................................ 2,041 4,956
Deferred income tax benefit.......................................................... (7,991) (2,955)
Accounts receivable and other current assets......................................... (13,783) (46,849)
Accounts payable and accrued expenses................................................ (20,582) 6,445
Deferred revenues.................................................................... 2,603 14,501
---------- ----------
Cash flow from operations.......................................................... 83,245 85,575
---------- ----------
Financing activities:
Cash received under employee stock plans................................................ 27,014 15,218
Cash received from borrowings........................................................... 3,050 106
Pre-acquisition cash distributions to shareholders of acquired corporations, net........ (2,999) (5,285)
Pre-acquisition cash received from minority shareholders of BRUT........................ - 8,500
Cash paid for debt repayments........................................................... (6,086) (6,829)
---------- ----------
Total financing activities......................................................... 20,979 11,710
---------- ----------
Investment activities:
Cash paid for acquired businesses, net of cash acquired................................. (27,599) (1,243)
Cash paid for property and equipment.................................................... (40,315) (39,443)
Cash paid for software and other assets................................................. (5,285) (4,156)
Cash paid for purchase of short-term investments........................................ - (16,478)
Cash received from sale of subsidiaries................................................. 25,000 -
Cash received from sales and maturities of short-term investments....................... 5,928 19,577
---------- ----------
Total investment activities........................................................ (42,271) (41,743)
---------- ----------
Increase in cash and equivalents.......................................................... 61,953 55,542
Beginning cash and equivalents............................................................ 260,740 88,196
---------- ----------
Ending cash and equivalents............................................................... $ 322,693 $ 143,738
========== ==========
Supplemental information:
Acquired businesses:
Property and equipment............................................................... 884 380
Software products.................................................................... 17,306 145
Goodwill and other intangible assets................................................. 11,593 2,412
Deferred income taxes................................................................ 103,004 -
Purchase price obligations and debt assumed.......................................... (943) (901)
Net current liabilities assumed...................................................... (973) (2,088)
Common stock issued and net equity acquired in poolings of interests................. (103,272) 1,295
---------- ----------
Cash paid for acquired businesses, net of cash acquired................................... $ 27,599 $ 1,243
========== ==========
</TABLE>
(1) Restated for poolings of interests with Automated Securities Clearance,
Ltd., FDP Corp. and Sterling Wentworth Corporation.
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 six and three
month periods ended June 30, 1999 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999. 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, 1998.
2. Acquisitions, Merger Costs and Sale of Subsidiaries:
Pooling-of-Interests Transactions:
During the first six months of 1999, the Company completed the acquisitions
of Automated Securities Clearance, Ltd. (ASC), DollarMark Solutions, Inc.
(DollarMark), FDP Corp. (FDP), Objective Resource Group, Inc. (ORG), Sterling
Wentworth Corporation (SWC), and Tiger Systems, Inc. (Tiger). A total of
11,665,000 shares of common stock were issued in connection with these
acquisitions, and all issued and outstanding options to buy common stock were
converted into options to buy 1,600,000 shares of the Company's common stock.
Except for the merger costs described below, the Company does not expect that
these acquisitions, individually or in the aggregate, will have a material
effect on its 1999 financial condition or results of operations.
The six acquisitions described above have been accounted for as poolings of
interests. All historical financial information of the Company has been restated
to include the historical financial information of ASC, FDP and SWC. Historical
financial information has not been restated for the acquisitions of DollarMark,
ORG and Tiger due to immateriality. Each acquisition was recorded as of the
beginning of the quarter during which it was completed.
The Company and the former shareholder of ASC have agreed, for federal
income tax purposes, to treat the Company's acquisition of ASC stock as an
acquisition of assets pursuant to Section 338 (h)(10) of the Internal Revenue
Code of 1986. The primary effect of this election enables the Company to deduct,
as amortization expense against taxable income over the next fifteen years, the
fair value of the intangible assets acquired. While the tax deduction will
reduce current income taxes payable over that fifteen year period, it will not
reduce the Company's overall effective income tax rate since it arose in
connection with a pooling-of-interests transaction, and generally accepted
accounting principles require that such benefit be credited to additional paid-
in-capital. The deferred income tax asset recorded in connection with this
transaction was $103,000,000.
4
<PAGE>
SUNGARD DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
2. Acquisitions, Merger Costs and Sale of Subsidiaries, continued:
Pooling-of-Interests Transactions, continued:
ASC was an "S" corporation before the Company acquired it; therefore,
all income passed through directly to and substantially all income taxes were
paid directly by the former shareholder of ASC. Net income and all net income
per share amounts are presented on a pro forma basis since generally accepted
accounting principles require that pro forma income taxes which would have been
incurred by ASC if ASC had been a "C" corporation be reflected in the
Consolidated Statements of Income for all periods presented.
A reconciliation of 1998 revenues, pro forma net income and pro forma
net income per common share from those amounts originally reported to the
amounts presented in the accompanying Consolidated Statements of Income follows
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
Six Months Three Months
Ended Ended
June 30, 1998 June 30, 1998
------------- -------------
<S> <C> <C>
Revenues:
SunGard, as originally reported $ 546,900 $ 282,347
ASC, FDP and SWC 42,481 21,541
-------- --------
Combined $ 589,381 $ 303,888
======== ========
Pro forma net income:
SunGard, as originally reported $ 49,518 $ 29,722
ASC, FDP and SWC 5,839 2,705
-------- --------
Combined $ 55,357 $ 32,427
======== ========
Pro forma basic net income per common
share:
SunGard, as originally reported $ 0.48 $ 0.29
======== ========
Combined $ 0.49 $ 0.28
======== ========
Pro forma diluted net income per common
share:
SunGard, as originally reported $ 0.46 $ 0.28
======== ========
Combined $ 0.47 $ 0.27
======== ========
</TABLE>
5
<PAGE>
SunGard Data Systems Inc.
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
2. Acquisitions, Merger Costs and Sale of Subsidiaries, continued:
Purchase Transactions:
During the first six months of 1999, the Company completed five
acquisitions accounted for by the purchase method. Total cash paid in
connection with these acquisitions was $27,445,000. Goodwill recorded in
connection with these acquisitions was $5,684,000.
Merger Costs:
During the six and three months ended June 30, 1999, the Company recorded
merger costs of $86,600,000 ($58,725,000 pro forma after-tax, or $0.48 per pro
forma diluted share) and $5,200,000 ($3,765,000 pro forma after-tax, or $0.03
per pro forma diluted share), respectively.
During the six and three months ended June 30, 1998, the Company recorded
merger costs of $8,747,000 and $600,000 ($7,648,000 pro forma after-tax, or
$0.06 per pro forma diluted share, and $600,000 pro forma after-tax, or less
than $0.01 per pro forma diluted share), respectively.
The 1999 merger costs are associated with poolings of interests, and
include a noncash compensation charge of $71,459,000 ($0.37 per pro forma
diluted share) in connection with a pre-existing employment agreement with an
executive of ASC, which obligated ASC to issue to the executive 25% of the
shares issued in the merger. The fair value of those shares and related payroll
costs were recorded as one-time costs associated with the merger.
6
<PAGE>
SunGard Data Systems Inc.
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
2. Acquisitions, Merger Costs and Sale of Subsidiaries, continued:
Merger Costs, continued:
The 1998 merger costs are also associated with poolings of interests, and
include restructuring costs of $2,700,000 ($0.01 per pro forma diluted share)
related to the merger with Infinity Financial Technology, Inc. Approximately
$1,500,000 of these costs were severance payments associated with twenty-seven
employees in duplicate software development and administrative functions (all of
whom have been terminated), and approximately $1,200,000 of these costs were
associated with the closing of duplicate office facilities.
The balance of the 1999 and 1998 merger costs consists primarily of
investment banking, legal, accounting and printing fees that generally are not
deductible for income tax purposes.
Sale of Subsidiaries:
On March 31, 1999, the Company sold two wholly owned subsidiaries which
provided healthcare information systems. Total cash received in connection with
the sale was $25,000,000, resulting in an after-tax gain of $10,371,000 ($0.08
per pro forma diluted share). The gain on sale was reflected on the
Consolidated Statements of Income as an extraordinary item since generally
accepted accounting principles require that a sale of assets following a
recently completed business combination that was accounted for as a pooling of
interests be reported as an extraordinary item. The Company does not expect that
the sale of the two subsidiaries described above will have a material effect on
its financial condition or results of operations.
3. Subsequent Event:
On July 13, 1999, the Company completed the acquisition of Oshap
Technologies Ltd. (Oshap). Oshap is an Israeli-based technology company which
has two principal majority-owned subsidiaries, MINT Software Technologies Ltd.
(MINT) and Decalog N.V.(Decalog). Mint is a provider to the financial services
industry of software solutions that enable the integration of disparate
applications and networks. Decalog provides comprehensive software solutions
that enable global asset management organizations to automate critical steps in
the investment management process. A total of 5,128,000 shares were issued in
connection with the acquisition, which has been accounted for as a pooling of
interests. In addition, the Company also acquired the minority interests in MINT
and Decalog, which resulted in the issuance of 407,000 shares of the Company's
common stock, a cash payment of approximately $26,000,000 and the conversion
of unvested stock options in MINT and Decalog into options to acquire 435,000
shares of the Company's common stock. The acquisition of the minority interests
resulted in the Company recording intangible assets of approximately $51,000,000
in the third quarter of 1999.
7
<PAGE>
SunGard Data Systems Inc.
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
3. Subsequent Event, continued:
Total merger costs in connection with the acquisition of Oshap, consisting
primarily of investment banking, legal, accounting, and printing fees, are
estimated to be approximately $6,500,000. These merger costs, which generally
are not deductible for income tax purposes, will be recorded as an operating
expense during the third quarter of 1999.
During the year ended December 31, 1998, Oshap recorded total revenues of
$32,319,000, and a net loss of $1,902,000 (before an extraordinary gain, which
totalled $3,074,000 after-tax). During the six months ended June 30, 1999, Oshap
recorded total revenues of $21,166,000, and a net loss of $4,415,000. The net
loss during the six months ended June 30, 1999 includes a write-off of
approximately $2,020,000 (both before and after-tax) for fees incurred in
connection with the aborted initial public offerings of MINT and Decalog, which
had been planned prior to the Company signing an agreement to acquire Oshap, and
$1,505,000 for Oshap's proportional share of one-time after-tax items incurred
by Tecnomatix Technologies Ltd., a minority-owned investment. During the six
months ended June 30, 1998, Oshap recorded total revenues of $13,910,000 and a
net loss of $456,000, including a $1,803,000 one-time charge related to Oshap's
minority-owned investment in iKnowledge, Inc.
4. Comprehensive Income:
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. The
calculation of comprehensive income for each of the six and three months ended
June 30, 1999 and 1998 follows (in thousands):
<TABLE>
<CAPTION>
Six Months Three Months
Ended Ended
June 30, June 30,
------------------- --------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Pro forma net income $32,006 $55,357 $37,861 $32,427
Foreign currency translation gain (3,721) 181 (1,172) 531
Estimated income tax benefit (expense) 1,494 (74) 473 (216)
------- ------- ------- -------
Comprehensive pro forma net income $29,779 $55,464 $37,162 $32,742
======= ======= ======= =======
</TABLE>
8
<PAGE>
SunGard Data Systems Inc.
Notes to Consolidated Financial Statements (Unaudited)
(Continued)
5. Shares Used in Computing Pro Forma Net Income Per Common Share:
The computation of the number of shares used in computing pro forma basic
and diluted net income per common share for each of the six and three
months ended June 30, 1999 and 1998 follows (in thousands):
<TABLE>
<CAPTION>
Six Months Three Months
Ended Ended
June 30, June 30,
------------------- -----------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted-average number of common shares
outstanding 118,308 113,483 119,129 114,196
Contingent shares 214 43 133 -
------- ------- ------- -------
Total shares used for calculation of pro
forma basic net income per common share 118,522 113,526 119,262 114,196
Employee stock options 3,972 5,083 3,365 4,927
Contingent stock options - 69 - 68
------- ------- ------- -------
Total shares used for calculation of pro
forma diluted net income per common share 122,494 118,678 122,627 119,191
======= ======= ======= =======
</TABLE>
9
<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 1999 and 1998, the Company completed certain acquisitions accounted
for as poolings of interests, which required restatement of prior period
results. Also during 1999 and 1998, the Company recorded merger costs associated
with poolings of interests. In addition, on March 31, 1999, the Company sold two
wholly owned healthcare information systems businesses. See Note 2 of Notes to
Unaudited Consolidated Financial Statements.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(Continued)
The following supplemental unaudited income statement information should be
read along with the consolidated unaudited financial statements and notes
thereto included in this report.
11
<PAGE>
SunGard Data Systems Inc.
Supplemental Income Statement Information
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended Ended
June 30, June 30,
---------- ------------
1999 1998 1999 1998
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Investment support systems $ 474,466 $ 419,099 $ 235,567 $ 217,924
Disaster recovery services 155,839 129,759 81,120 67,183
Computer services and other 34,919 40,523 16,749 18,781
-------- --------- -------- --------
$ 665,224 $ 589,381 $ 333,436 $ 303,888
======== ========= ======== ========
Income from operations:
Investment support systems $ 94,903 $ 80,512 $ 44,773 $ 41,593
Disaster recovery services 36,056 23,241 22,854 13,028
Computer services and other 5,715 5,389 3,974 2,418
Corporate administration (8,153) (6,183) (4,056) (3,145)
Merger costs (86,600) (8,747) (5,200) (600)
-------- -------- -------- --------
$ 41,921 $ 94,212 $ 62,345 $ 53,294
======== ========= ======== ========
Operating margin, excluding merger costs:
Investment support systems 20.0% 19.2% 19.0% 19.1%
======== ========= ======== ========
Disaster recovery services 23.1% 17.9% 28.2% 19.4%
======== ========= ======== ========
Computer services and other 16.4% 13.3% 23.7% 12.9%
======== ========= ======== ========
Total 19.3% 17.5% 20.3% 17.7%
======== ========= ======== ========
</TABLE>
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Continued)
Income from Operations:
Investment Support Systems (ISS):
The Company's ISS business is comprised of more than forty-five operating
units organized into twelve groups of businesses. 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 20.0% and 19.0% for the six and three month
periods ended June 30, 1999, as compared with 19.2% and 19.1% for the comparable
periods in 1998. The increase in the operating margin during the six month
period is due primarily to an increase in professional services revenues,
partially offset by a decline in the percentage of software license revenues to
total revenues. The slight decline in the operating margin during the three
month period is due primarily to lower software license revenues.
The Company expects that the full-year 1999 ISS operating margin will
approximate the full-year 1998 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.
Disaster Recovery Services (DRS):
The DRS operating margin was 23.1% and 28.2% during the six and three month
periods ended June 30, 1999, as compared with 17.9% and 19.4% for the comparable
periods in 1998. The increases in the operating margins are due primarily to
increases in revenues, especially in connection with mid-range, work-group
recovery and network services, and the favorable settlement of a contract
dispute. The increases in the operating margins were partially offset by
equipment additions and upgrades, increases in commission expenses resulting
from new contract signings, and severance costs.
The Company expects that the 1999 full-year DRS operating margin will
approximate the 1998 full-year DRS operating margin. The most important factors
affecting the DRS operating margin are the rate of new contract signings and
contract renewals, and the timing and magnitude of equipment and facilities
expenditures.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Continued)
Income from Operations, continued:
Computer Services and Other (CS):
The CS operating margin was 16.4% and 23.7% during the six and three month
periods ended June 30, 1999, as compared with 13.3% and 12.9% for the comparable
periods in 1998. The increases in the operating margins are due to the sale of
two healthcare information systems businesses on March 31, 1999 (see Note 2 of
Notes to Unaudited Consolidated Financial Statements) and an increase in
revenues in the Company's remote-access computer processing business, partially
offset by lower revenues in the Company's automated mailing services business
and an increase in operating costs associated with equipment upgrades in the
Company's remote-access computer processing business.
The Company expects that the 1999 full-year CS operating margin will
approximate the 1998 full-year CS operating margin. The most important factors
affecting the CS operating margin continue to be the timing and magnitude of
software license revenues related to the Company's work-flow productivity
product, and revenue variability and timing of computer upgrades in both remote-
access computer processing and automated mailing services businesses.
Revenues:
Total revenues for the six and three month periods ended June 30, 1999
increased $75.8 million, or 13%, and $29.5 million, or 10%, as compared with the
corresponding periods in 1998. Excluding acquired businesses, revenues increased
approximately 11% and 8% during the six and three month periods compared with
18% during the six and three month periods in 1998. The decline in the internal
growth rate was due primarily to lower risk management and derivatives-related
software license revenues, to the effect of a large shareholder accounting
systems conversion in 1998, and, to a lesser extent, a decline in revenues
resulting from the sale of two healthcare information systems businesses.
Excluding the restatement of revenues for the poolings of interests with ASC,
FDP and SWC, total revenues increased 19% and 18% during the six and three month
periods ended June 30, 1999 compared with the corresponding periods in 1998.
During the six and three month periods ended June 30, 1999, recurring
revenues derived from computer processing, disaster recovery fees, professional
services, software maintenance, and software and hardware rentals were $560.4
million, or 84% of total revenues, and $281.4 million, or 84% of total revenues,
respectively, as compared with $475.7 million, or 81% of total revenues, and
$243.6 million, or 80% of total revenues, respectively, during the comparable
periods in 1998.
Professional services revenues totaled $121.5 million and $57.3 million
during the six and three month periods ended June 30, 1999, respectively, as
compared with $97.7 million and $52.6 million during the comparable periods in
1998. The increases in professional services revenues are due primarily to an
increase in risk integration and brokerage system professional services, as well
as
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Continued)
acquired businesses and installations and conversions of non-profit enterprise
resource planning systems, partially offset by a large shareholder accounting
system conversion in 1998.
Nonrecurring revenues, derived from software licenses and sales of third-
party software and hardware, were $104.8 million and $52.1 million during the
six and three month periods ended June 30, 1999, respectively, as compared with
$113.7 million and $60.3 million during the comparable periods in 1998. Software
license revenues totaled $94.1 million and $47.1 million during the six and
three month periods ended June 30, 1999, respectively, as compared with $93.6
million and $49.3 million during the comparable periods in 1998. The relatively
flat software license revenues during the six month period, and the small
decline during the three month period, were due primarily to a decline in risk
management and derivatives-related software license revenues, as well as a
decline in software revenues resulting from the sale of two of the Company's
healthcare information systems businesses, partially offset by software license
revenues from acquired businesses. The decline in revenues from third-party
software and hardware is primarily related to the sale of two of the Company's
healthcare information systems businesses, and, to a lesser extent, a decline in
sales of hardware associated with large trust and custody systems.
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 six and three month periods ended June 30, 1999
increased $55.4 million and $17.6 million, or 13% and 8%, respectively, as
compared with the corresponding periods in 1998. The increases in ISS revenues
during the six and three month periods are attributable to increases in
recurring revenues of $58.9 million and $24.0 million, respectively, partially
offset by declines in nonrecurring revenues of $3.5 million and $6.4 million
during the six and three months ended June 30, 1999, respectively. The increases
in recurring revenues are due primarily to growth in brokerage systems and
investment systems, and to acquired businesses. The increases were partially
offset by a large shareholder system conversion in 1998. The decline in
nonrecurring revenues is due to lower risk management and derivatives-related
software license revenues, partially offset by acquired businesses.
Excluding acquired businesses, ISS revenues increased approximately 10% and
5% during the six and three month periods ended June 30, 1999, respectively,
compared with 18% during the six and three month periods in 1998. The decline in
the internal growth rate was due primarily to lower risk management and
derivatives-related software license revenues and the effect of a large
shareholder accounting systems conversion in 1998. Excluding the restatement of
revenues for the poolings of interests with ASC, FDP and SWC, ISS revenues
increased 23% and 20% during the six and three months ended June 30, 1999,
respectively, as compared with the corresponding periods in 1998.
15
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Continued)
Revenues, continued:
Disaster Recovery Services:
DRS revenues for the six and three month periods ended June 30, 1999
increased $26.1 million, or 20%, and $13.9 million, or 21%, respectively, as
compared with the corresponding periods in 1998. The increases, virtually all of
which is internal growth, are attributable primarily to increases in revenues
resulting from new contract signings and contract renewals, growth in mid-range,
work-group recovery and network services, and an increase in both professional
services and software licenses in the Company's Disaster Recovery Planning
Solutions business.
Computer Services and Other:
CS revenues for the six and three month periods ended June 30, 1999
decreased $5.6 million, or 14%, and $2.0 million, or 11%, respectively, as
compared with the corresponding periods in 1998. Excluding the sale of two
healthcare information systems businesses, revenues declined 3% during the six
month period, and increased 17% during the three month period. The decrease
during the six month period is due to a decline in healthcare information
systems revenues during the first quarter of 1999 and a decline in revenues in
the Company's automated mailing services business, partially offset by an
increase in remote access computer services. The increase during the three month
period is due to an increase in revenues from the Company's remote access
computer services business, partially offset by a decline in revenues from
automated mailing services.
Costs and Expenses:
Cost of sales and direct operating expenses for the six and three month
periods ended June 30, 1999 increased $34.9 million, or 14%, and $13.4 million,
or 10%, as compared with the corresponding periods in 1998. The increases are
due primarily to DRS and ISS equipment upgrades and DRS facilities improvements,
acquired businesses, and an increase in costs associated with professional
services provided to customers, partially offset by lower costs resulting from
the sale of two of the Company's healthcare information systems businesses.
Sales, marketing and administration expenses for the six and three month
periods ended June 30, 1999 increased $10.1 million, or 8%, and $0.9 million, or
1%, as compared with the corresponding periods in 1998. The increases are due
primarily to acquired businesses, DRS severance costs and additional sales
employees hired during the past year, partially offset by a reduction in
expenses associated with the Company's long-term incentive plan, a favorable
settlement of a DRS contract dispute, and lower costs resulting from the sale of
two of the Company's healthcare information systems businesses.
Product development expenses for the six and three month periods ended June
30, 1999 increased $2.8 million, or 5%, and $0.2 million, or less than 1%, as
compared with the corresponding periods in 1998. The increases are due
primarily to acquired businesses, partially offset by a decline
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Continued)
Costs and Expenses, continued:
in development spending associated with risk management and derivatives-related
software products and lower costs resulting from the sale of two of the
Company's healthcare information systems businesses. Development costs
capitalized during the six and three month periods ended June 30, 1999 were $0.2
million and $0.1 million, respectively, as compared with $1.3 million and $0.7
million during the comparable periods in 1998.
Depreciation of property and equipment for the six and three month periods
ended June 30, 1999 increased $2.0 million, or 7%, and $0.8 million, or 6%, as
compared with the corresponding periods in 1998. The increases are due
primarily to purchases of computer and telecommunications equipment, DRS
facility improvements and acquired businesses.
Amortization of intangible assets for the six and three month periods ended
June 30, 1999 increased $0.4 million, or 2%, and $0.5 million, or 4%, as
compared with the corresponding periods in 1998. The increases are due to
recently acquired businesses, partially offset by fully amortized intangible
assets of previously acquired businesses.
Interest income for the six and three month periods ended June 30, 1999
increased $4.2 million, or 118%, and $2.2 million, or 114%, as compared with the
corresponding periods in 1998. The increases are due to higher cash and short-
term investment balances.
Excluding the effect of merger costs, which are generally nondeductible,
and the extraordinary gain resulting from the sale of two healthcare information
systems businesses, the Company's pro forma effective income tax rate was 40.3%
for the six month period ended June 30, 1999, as compared with a pro forma
effective income tax rate of 40.4% during the six month period ended June 30,
1998.
Due to the pooling of interests with ASC (an "S" corporation prior to the
merger with the Company), net income and all net income per share amounts are
presented on a pro forma basis since generally accepted accounting principles
require that pro forma income taxes, which would have been incurred by ASC if
ASC had been a "C" corporation, be reflected on the Statements of Income for all
periods presented. The pro forma income tax benefit during the six month period
ended June 30, 1999 is primarily attributable to the one-time noncash
compensation charge in connection with the ASC acquisition (see Note 2 of Notes
to Unaudited Consolidated Financial Statements).
Liquidity and Capital Resources:
Cash and short-term investments were $343.9 million at June 30, 1999, an
increase of $59.0 million from December 31, 1998. At June 30, 1999, short and
long-term debt totalled $15.4 million, a decrease of $2.1 million from December
31, 1998.
17
<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 business acquisitions, 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 Issues:
The Company has a comprehensive program to evaluate and address the impact
of the year 2000 issues on its software products, processing services and
disaster recovery operations. As part of this program, each of the Company's
operating units was required to identify each item that had to be modified or
replaced, established a plan to complete and test all required modifications and
replacements, and then implemented that plan. This program encompasses the
Company's products that are sold to its customers, as well as third-party
products that are resold to customers or are used internally by the Company. The
Company has been closely monitoring the progress of each of its operating units
with their year 2000 compliance plans. The Company believes that it will
successfully complete its year 2000 compliance program on a timely basis,
without significant disruption to its customers or operations.
Substantially all of the Company's software and other products already are
year 2000 compliant, so that they can handle dates in the year 2000 and beyond.
The Company, however, is still working on year 2000 compliance projects for some
of its important products. The Company estimates that modification and testing
for over 95% of its software products were substantially completed as of June
30, 1999. The Company's goal is to substantially complete modification and
testing for all of its software products during the third quarter of 1999.
Nevertheless, year 2000 compliance testing will continue throughout 1999 for
many of its products, which may uncover the need for additional modifications.
In addition to its internal testing, the Company is participating in certain
industry-wide year 2000 compliance tests such as those being conducted by the
Securities Industry Association.
The Company will carefully monitor its year 2000 compliance projects
throughout 1999 and will continue to develop and refine contingency plans for
these projects as testing results are analyzed. If the Company fails to make
any of its significant products year 2000 compliant, or fails to meet its
commitments to customers to complete major conversions to year 2000 compliant
systems during 1999, then its business and financial results may be materially
and adversely affected.
The Company believes that year 2000 compliance issues have caused some
acceleration of software buying and conversion activity in 1998 and delays in
certain software buying decisions in 1999. The Company expects its rate of
internal growth to be lower in the second half of 1999 as compared to 1998.
18
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Continued)
Year 2000 Issues, continued:
Many third-party computer hardware, network, telecommunications, software
and other products, services, and utilities interact with the Company's products
and services, or are used by the Company as an integral part of its operations.
The Company continues to evaluate these third-party products for year 2000
compliance, so that non-compliant products may be modified or replaced in a
timely manner. In doing so, the Company is working with, and must rely upon,
its outside vendors to meet year 2000 requirements. If any of the Company's
important vendors fails to meet its year 2000 requirements, then the Company
will switch to another vendor as soon as possible, which may have a material and
adverse impact on the Company's business and financial results. Although the
Company believes that all of its important vendors eventually will meet their
year 2000 requirements, the Company cannot determine at this time whether or
when year 2000 related problems will arise with its third-party products or
whether any problems that do arise will have a material and adverse impact on
the Company's business or financial results.
The Company's overall year 2000 compliance program is on schedule, and the
Company has paid and believes that it will continue to pay the expenses of this
program using existing product development and support resources, without
incurring significant incremental development expense, and using budgeted
capital expenditures. Nevertheless, year 2000 modification and testing
activities have required the deferral of lower priority development projects.
The Company does not maintain detailed accounting records that separately
identify all of the costs associated with its year 2000 activities. In response
to recent disclosure requirements regarding year 2000 matters, the Company has
reviewed its accounting and product development records for the period beginning
January 1, 1996 in an effort to estimate the costs of its year 2000 compliance
program. The Company currently estimates that the total costs of its year 2000
compliance program since January 1, 1996 will be approximately $27.4 million in
direct labor and benefit costs for modification and testing activities, plus
approximately $8.9 million in capital expenditures. Through June 30, 1999, the
Company has spent approximately $22.1 million in direct labor and benefit costs
for modification and testing, plus approximately $3.5 million in capital
expenditures. The remaining estimated direct labor and benefit costs for
modification and testing activities of approximately $5.3 million include, in
part, rough estimates to cover unanticipated modification work that may arise as
a result of continued testing activity throughout 1999. The remaining estimated
capital expenditures of approximately $5.4 million are to replace non-compliant
computer and communications equipment, principally in the Company's DRS
business.
THE FOREGOING IS A YEAR 2000 READINESS DISCLOSURE MADE PURSUANT TO THE
TERMS AND PROTECTIONS OF THE YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT.
19
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company does not use derivative financial instruments to manage risk
exposures or for trading or speculative purposes. The Company invests available
cash in short-term, highly liquid financial instruments, with a substantial
portion of such investments having initial maturities of three months or less.
While changes in interest rates could decrease the Company's interest income,
the Company does not consider the interest rate risk for these investments to be
material.
While approximately 25% of the Company's revenues come from sales to
customers located outside of the United States, approximately one-half of those
sales are U.S. dollar-denominated sales by the Company's U.S.- based operations.
For the Company's foreign operations, the Company generally matches local
currency revenues with local currency costs. For these reasons, the Company does
not believe that it has a material exposure to changes in foreign currency
exchange rates.
Part II. Other Information:
Item 1. Legal Proceedings: None
Item 2. Changes in Securities and Use of Proceeds:
(a) Not applicable.
(b) Not applicable.
(c) During 1999, the Company issued the below number of unregistered
shares of the Company's common stock in connection with the
acquisitions listed below:
On February 2, 1999, the Company issued 200,003 shares of the
Company's common stock in exchange for the outstanding capital
stock of DollarMark Solutions, Inc.
On February 18, 1999, the Company issued 562,972 shares of the
Company's common stock (excluding shares issuable upon excercise
of stock options) in exchange for the outstanding capital stock of
Sterling Wentworth Corporation.
On March 1, 1999, the Company issued 7,278,486 shares of the
Company's common stock in exchange for the outstanding capital
stock of Automated Securities Clearance, Ltd.
On March 1, 1999, the Company issued 455,726 shares of the
Company's common stock in exchange for the outstanding capital
stock of Tiger Systems, Inc.
On June 25, 1999, the Company issued 326,525 shares of the
Company's common stock in exchange for the outstanding capital
stock of Objective Resources Group, Inc.
All of the above shares were issued in connection with
transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act"), pursuant to
Section 4(2) of the Act, which exempts transactions by an issuer
not involving any public offering. Each purchaser was a
shareholder of the company being acquired and was an accredited
investor or a sophisticated investor with access to all relevant
information necessary. The Company has filed or intends to file a
Registration Statement on Form S-3 covering the resale of such
shares (excluding those shares held in escrow by the Company).
(d) Not applicable.
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders:
(a) The 1999 Annual Meeting of Stockholders of the registrant was
held on May 14, 1999.
(b) At the 1999 Annual Meeting, the following were elected as
directors:
For Withheld
--- --------
Gregory S. Bentley 100,409,184 364,406
Michael C. Brooks 100,408,961 364,629
Albert A. Eisenstat 100,408,561 365,029
Bernard Goldstein 100,386,063 387,527
James L. Mann 100,408,302 365,288
Michael Roth 100,408,961 364,629
Malcolm I. Ruddock 100,409,817 363,773
Lawrence J. Schoenberg 100,408,961 364,629
(c) The only matter voted upon at the 1999 Annual Meeting was the
election of directors.
(d) None.
20
<PAGE>
Part II. Other Information, continued:
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 June 30, 1999
27.2 Financial Data Schedule for the quarter ended March 31, 1999
(restated)
27.3 Financial Data Schedule for the quarter ended September 30, 1998
(restated)
27.4 Financial Data Schedule for the quarter ended June 30, 1998
(restated)
27.5 Financial Data Schedule for the quarter ended March 31, 1998
(restated)
27.6 Financial Data Schedule for the year ended December 31, 1998
(restated)
27.7 Financial Data Schedule for the year ended December 31, 1997
(restated)
27.8 Financial Data Schedule for the year ended December 31, 1996
(restated)
(b) Reports on Form 8-K: None
21
<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: August 16, 1999 By: s/Michael J. Ruane
-----------------------------------------
Michael J. Ruane
Vice President-Finance and Chief Financial
Officer (Principal Financial Officer)
22
<PAGE>
LIST OF EXHIBITS
NUMBER EXHIBIT
- ------ -------
27.1 Financial Data Schedule for the quarter ended June 30, 1999
27.2 Financial Data Schedule for the quarter ended March 31, 1999
(restated)
27.3 Financial Data Schedule for the quarter ended September 30, 1998
(restated)
27.4 Financial Data Schedule for the quarter ended June 30, 1998
(restated)
27.5 Financial Data Schedule for the quarter ended March 31, 1998
(restated)
27.6 Financial Data Schedule for the year ended December 31, 1998
(restated)
27.7 Financial Data Schedule for the year ended December 31, 1997
(restated)
27.8 Financial Data Schedule for the year ended December 31, 1996
(restated)
23
<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,
1999 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1999 BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-Q OF
SUNGARD DATA SYSTEMS INC. FOR THE SIX MONTHS ENDED JUNE 30, 1999, 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 322,693
<SECURITIES> 21,187
<RECEIVABLES> 333,258
<ALLOWANCES> 28,806
<INVENTORY> 0
<CURRENT-ASSETS> 706,525
<PP&E> 435,376
<DEPRECIATION> 281,073
<TOTAL-ASSETS> 1,340,312
<CURRENT-LIABILITIES> 296,896
<BONDS> 2,883
0
0
<COMMON> 1,198
<OTHER-SE> 1,039,355
<TOTAL-LIABILITY-AND-EQUITY> 1,340,312
<SALES> 0
<TOTAL-REVENUES> 665,224
<CGS> 0
<TOTAL-COSTS> 399,969 <F1>
<OTHER-EXPENSES> 86,600 <F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842
<INCOME-PRETAX> 48,835
<INCOME-TAX> 54,581
<INCOME-CONTINUING> 21,635 <F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 10,371 <F4>
<CHANGES> 0
<NET-INCOME> 32,006 <F3>
<EPS-BASIC> 0.27 <F5>
<EPS-DILUTED> 0.26 <F5>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER COSTS.
<F2>MERGER COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>AFTER-TAX GAIN ON SALE OF TWO SUBSIDIARIES.
<F5>INCLUDES MERGER COSTS TOTALING $0.50 PER PRO FORMA BASIC
SHARE AND $0.48 PER PRO FORMA DILUTED SHARE, AND AN EXTRAORDINARY GAIN ON SALE
OF TWO SUBSIDIARIES TOTALING $0.08 PER PRO FORMA 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, 1999 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1999 BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-Q OF
SUNGARD DATA SYSTEMS INC. FOR THE THREE MONTHS ENDED MARCH 31, 1999, AS ADJUSTED
TO RESTATE FOR THE POOLING OF INTERESTS WITH FDP CORP. ON APRIL 28, 1999, 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 338,996
<SECURITIES> 22,110
<RECEIVABLES> 315,917
<ALLOWANCES> 26,189
<INVENTORY> 0
<CURRENT-ASSETS> 712,912
<PP&E> 421,284
<DEPRECIATION> 274,809
<TOTAL-ASSETS> 1,317,745
<CURRENT-LIABILITIES> 343,498
<BONDS> 2,563
0
0
<COMMON> 1,179
<OTHER-SE> 970,504
<TOTAL-LIABILITY-AND-EQUITY> 1,317,745
<SALES> 0
<TOTAL-REVENUES> 331,788
<CGS> 0
<TOTAL-COSTS> 200,389 <F1>
<OTHER-EXPENSES> 81,400 <F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 381
<INCOME-PRETAX> (17,149)
<INCOME-TAX> 26,011
<INCOME-CONTINUING> (16,226)<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 10,371 <F4>
<CHANGES> 0
<NET-INCOME> (5,855)<F3>
<EPS-BASIC> (0.05)<F5>
<EPS-DILUTED> (0.05)<F5>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER COSTS.
<F2>MERGER COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>AFTER-TAX GAIN ON SALE OF TWO SUBSIDIARIES.
<F5>INCLUDES MERGER COSTS TOTALING $0.47 PER PRO FORMA BASIC
SHARE AND $0.45 PER PRO FORMA DILUTED SHARE, AND AN EXTRAORDINARY GAIN ON SALE
OF TWO SUBSIDIARIES TOTALING $0.09 PER PRO FORMA 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
SEPTEMBER 30, 1998 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998, BOTH INCORPORATED BY REFERENCE INTO THE
FORM 10-Q OF SUNGARD DATA SYSTEMS INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998, AS ADJUSTED TO RESTATE FOR THE POOLINGS OF INTERESTS WITH STERLING
WENTWORTH CORPORATION ON FEBRUARY 18, 1999, AUTOMATED SECURITIES CLEARANCE,
LTD. ON MARCH 1, 1999 AND FDP CORP. ON APRIL 28, 1999 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 191,864
<SECURITIES> 25,682
<RECEIVABLES> 322,755
<ALLOWANCES> 34,756
<INVENTORY> 0
<CURRENT-ASSETS> 560,183
<PP&E> 397,477
<DEPRECIATION> 254,554
<TOTAL-ASSETS> 1,075,467
<CURRENT-LIABILITIES> 303,962
<BONDS> 3,002
0
0
<COMMON> 1,158
<OTHER-SE> 767,345
<TOTAL-LIABILITY-AND-EQUITY> 1,075,467
<SALES> 0
<TOTAL-REVENUES> 904,085
<CGS> 0
<TOTAL-COSTS> 547,415<F1>
<OTHER-EXPENSES> 11,847<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,110
<INCOME-PRETAX> 155,685
<INCOME-TAX> 64,057
<INCOME-CONTINUING> 89,701<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,701<F3>
<EPS-BASIC> 0.79<F4>
<EPS-DILUTED> 0.75<F4>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER AND
RESTRUCTURING COSTS.
<F2>MERGER AND RESTRUCTURING COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>INCLUDES MERGER AND RESTRUCTURING COSTS TOTALING $0.09 PER PRO FORMA 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 JUNE 30,
1998 AND THE UNAUDITED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED
JUNE 30, 1998 BOTH INCORPORATED BY REFERENCE INTO THE FORM 10-Q OF SUNGARD DATA
SYSTEMS INC. FOR THE SIX MONTHS ENDED JUNE 30, 1998 AS ADJUSTED TO RESTATE FOR
THE POOLINGS OF INTERESTS WITH STERLING WENTWORTH CORPORATION ON FEBRUARY 18,
1999, AUTOMATED SECURITIES CLEARANCE, LTD. ON MARCH 1, 1999 AND FDP CORP. ON
APRIL 28, 1999, 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 143,738
<SECURITIES> 27,892
<RECEIVABLES> 305,162
<ALLOWANCES> 25,643
<INVENTORY> 0
<CURRENT-ASSETS> 501,941
<PP&E> 382,266
<DEPRECIATION> 238,917
<TOTAL-ASSETS> 1,000,470
<CURRENT-LIABILITIES> 273,753
<BONDS> 2,769
0
0
<COMMON> 1,144
<OTHER-SE> 722,804
<TOTAL-LIABILITY-AND-EQUITY> 1,000,470
<SALES> 0
<TOTAL-REVENUES> 589,381
<CGS> 0
<TOTAL-COSTS> 359,799<F1>
<OTHER-EXPENSES> 8,747<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 770
<INCOME-PRETAX> 97,003
<INCOME-TAX> 40,328
<INCOME-CONTINUING> 55,357<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,357<F3>
<EPS-BASIC> 0.49<F4>
<EPS-DILUTED> 0.47<F4>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER AND
RESTRUCTURING COSTS.
<F2>MERGER AND RESTRUCTURING COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>INCLUDES MERGER AND RESTRUCTURING COSTS TOTALING $0.07 PER PRO FORMA BASIC
SHARE AND $0.06 PER PRO FORMA DILUTED 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, 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 AS ADJUSTED
TO RESTATE FOR THE POOLINGS OF INTERESTS WITH STERLING WENTWORTH CORPORATION ON
FEBRUARY 18, 1999, AUTOMATED SECURITIES CLEARANCE, LTD. ON MARCH 1, 1999 AND
FDP CORP. ON APRIL 28, 1999, 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> 111,486
<SECURITIES> 29,179
<RECEIVABLES> 280,143
<ALLOWANCES> 20,625
<INVENTORY> 0
<CURRENT-ASSETS> 446,619
<PP&E> 364,520
<DEPRECIATION> 222,270
<TOTAL-ASSETS> 952,468
<CURRENT-LIABILITIES> 271,356
<BONDS> 2,835
0
0
<COMMON> 1,132
<OTHER-SE> 677,122
<TOTAL-LIABILITY-AND-EQUITY> 952,468
<SALES> 0
<TOTAL-REVENUES> 285,493
<CGS> 0
<TOTAL-COSTS> 175,231<F1>
<OTHER-EXPENSES> 8,147<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 411
<INCOME-PRETAX> 42,154
<INCOME-TAX> 18,432
<INCOME-CONTINUING> 22,930<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,930<F3>
<EPS-BASIC> 0.20<F4>
<EPS-DILUTED> 0.19<F4>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER AND
RESTRUCTURING COSTS.
<F2>MERGER AND RESTRUCTURING COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>INCLUDES MERGER AND RESTRUCTURING COSTS TOTALING $0.06 PER PRO FORMA SHARE.
</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, 1998
AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998,
BOTH INCLUDED IN THE FORM 10-K OF SUNGARD DATA SYSTEMS INC. FOR THE YEAR ENDED
DECEMBER 31, 1998, AS ADJUSTED TO RESTATE FOR THE POOLINGS OF INTERESTS
WITH STERLING WENTWORTH CORPORATION ON FEBRUARY 18, 1999, AUTOMATED SECURITIES
CLEARANCE, LTD. ON MARCH 1, 1999 AND FDP CORP. ON APRIL 28, 1999 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 260,740
<SECURITIES> 24,107
<RECEIVABLES> 324,179
<ALLOWANCES> 28,334
<INVENTORY> 0
<CURRENT-ASSETS> 634,755
<PP&E> 404,226
<DEPRECIATION> 259,384
<TOTAL-ASSETS> 1,147,430
<CURRENT-LIABILITIES> 334,579
<BONDS> 2,816
0
0
<COMMON> 1,161
<OTHER-SE> 808,874
<TOTAL-LIABILITY-AND-EQUITY> 1,147,430
<SALES> 0
<TOTAL-REVENUES> 1,252,591
<CGS> 0
<TOTAL-COSTS> 754,286<F1>
<OTHER-EXPENSES> 11,847<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,762
<INCOME-PRETAX> 223,115
<INCOME-TAX> 93,147
<INCOME-CONTINUING> 128,574<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 128,574<F3>
<EPS-BASIC> 1.12<F4>
<EPS-DILUTED> 1.07<F4>
<FN>
<F1>EXCLUDES SELLING, MARKETING AND ADMINISTRATIVE COSTS, AND MERGER AND
RESTRUCTURING COSTS.
<F2>MERGER AND RESTRUCTURING COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>INCLUDES MERGER AND RESTRUCTURING COSTS TOTALING $0.08 PER PRO FORMA SHARE.
</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 YEAR ENDED DECEMBER 31, 1997,
BOTH INCORPORATED BY REFERENCE IN THE FORM 10-K OF SUNGARD DATA SYSTEMS INC. FOR
THE YEAR ENDED DECEMBER 31, 1997, AS ADJUSTED TO RESTATE FOR THE POOLINGS OF
INTERESTS WITH STERLING WENTWORTH CORPORATION ON FEBRUARY 18, 1999, AUTOMATED
SECURITIES CLEARANCE, LTD. ON MARCH 1, 1999 AND FDP CORP. ON APRIL 28, 1999, 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> 88,196
<SECURITIES> 31,264
<RECEIVABLES> 254,534
<ALLOWANCES> 20,219
<INVENTORY> 0
<CURRENT-ASSETS> 405,593
<PP&E> 341,816
<DEPRECIATION> 210,127
<TOTAL-ASSETS> 906,165
<CURRENT-LIABILITIES> 255,134
<BONDS> 3,080
0
0
<COMMON> 1,124
<OTHER-SE> 646,827
<TOTAL-LIABILITY-AND-EQUITY> 906,165
<SALES> 0
<TOTAL-REVENUES> 996,242
<CGS> 0
<TOTAL-COSTS> 608,272<F1>
<OTHER-EXPENSES> 13,669<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,578
<INCOME-PRETAX> 156,382
<INCOME-TAX> 62,528
<INCOME-CONTINUING> 92,022<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,022<F3>
<EPS-BASIC> 0.84<F4>
<EPS-DILUTED> 0.80<F4>
<FN>
<F1>EXCLUDES SELLING, MARKETING, AND ADMINISTRATIVE COSTS, PURCHASED IN-PROCESS
RESEARCH AND DEVELOPMENT AND MERGER COSTS.
<F2>PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT AND MERGER COSTS.
<F3>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT AND MERGER COSTS
TOTALING $0.09 PER PRO FORMA BASIC SHARE AND $0.08 PER PRO FORMA DILUTED SHARE.
ALSO REFLECTS THE 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 INCLUDED IN THE FORM 10-K OF SUNGARD DATA SYSTEMS INC. FOR THE YEAR ENDED
DECEMBER 31, 1996, AS ADJUSTED TO RESTATE FOR THE POOLINGS OF INTERESTS WITH
STERLING WENTWORTH CORPORATION ON FEBRUARY 18, 1999, AUTOMATED SECURITIES
CLEARANCE, LTD. ON MARCH 1, 1999 AND FDP CORP. ON APRIL 28, 1999, 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> 93,865
<SECURITIES> 7,053
<RECEIVABLES> 199,006
<ALLOWANCES> 11,090
<INVENTORY> 0
<CURRENT-ASSETS> 322,801
<PP&E> 282,940
<DEPRECIATION> 166,152
<TOTAL-ASSETS> 781,075
<CURRENT-LIABILITIES> 233,644
<BONDS> 5,767
0
0
<COMMON> 656
<OTHER-SE> 536,008
<TOTAL-LIABILITY-AND-EQUITY> 781,075
<SALES> 0
<TOTAL-REVENUES> 765,979
<CGS> 0
<TOTAL-COSTS> 472,881<F1>
<OTHER-EXPENSES> 51,083<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,227
<INCOME-PRETAX> 83,231
<INCOME-TAX> 33,856
<INCOME-CONTINUING> 47,433<F3>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,433<F3>
<EPS-BASIC> 0.45<F4>
<EPS-DILUTED> 0.43<F4>
<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>REPRESENTS PRO FORMA INCOME DUE TO PRO FORMA INCOME TAXES RESULTING FROM A
POOLING OF INTERESTS WITH AN "S" CORPORATION.
<F4>INCLUDES PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT COSTS TOTALING $0.32
PER PRO FORMA BASIC SHARE AND $0.30 PER PRO FORMA DILUTED SHARE. ALSO REFLECTS
THE SEPTEMBER 1997 TWO-FOR-ONE STOCK SPLIT.
</FN>
</TABLE>
