<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1999
--------------
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____.
Commission file number 0-15322
SYSTEM SOFTWARE ASSOCIATES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3144515
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
500 W. Madison, 32nd Floor
Chicago, Illinois 60661
- ----------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (312) 258-6000
--------------
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 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
--- ---.
At June 10, 1999, there were 47,895,426 and 10,000 shares outstanding of
the Company's Common ($.0033 par value) and Redeemable Series A Preferred ($.01
par value) Stock, respectively.
TOTAL OF SEQUENTIALLY
NUMBERED PAGES: 14
----
<PAGE>
SYSTEM SOFTWARE ASSOCIATES, INC.
INDEX
Page
No.
Part I Financial information
Consolidated Balance Sheets - 3-4
April 30, 1999 and October 31, 1998
Consolidated Statements of Operations - 5
three and six months ended April 30, 1999 and 1998
Consolidated Statements of Cash Flows - 6
six months ended April 30, 1999 and 1998
Notes to Consolidated Financial Statements 7 - 9
Management's Discussion and Analysis of Financial 9 - 12
Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk 13
Part II Other information 13
Signature Page 14
2
<PAGE>
Part I - Financial Information
Item I - Financial Statements
<TABLE>
<CAPTION>
SYSTEM SOFTWARE ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(in millions)
April 30, October 31,
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 32.1 $ 52.4
Accounts receivable, less allowance for doubtful
accounts of $16.5 and $16.5 122.9 144.4
Income taxes receivable 5.8 3.9
Deferred income taxes 38.5 31.2
Prepaid expenses and other current assets 28.0 27.6
----------- -----------
Total current assets 227.3 259.5
----------- -----------
PROPERTY and EQUIPMENT:
Data processing equipment 41.9 41.5
Furniture and office equipment 15.7 16.3
Leasehold improvements 8.3 8.4
Transportation equipment 1.7 1.7
----------- -----------
67.6 67.9
Less - Accumulated depreciation and amortization 51.8 48.8
----------- -----------
Total property and equipment 15.8 19.1
----------- -----------
OTHER ASSETS:
Software costs, less accumulated amortization of $49.7 and $42.9 35.4 39.5
Cost in excess of net assets of acquired businesses,
less accumulated amortization of $15.0 and $13.0 19.1 21.1
Deferred income taxes 17.5 16.6
Investments in associated companies - 1.0
Miscellaneous 2.1 4.0
----------- -----------
Total other assets 74.1 82.2
----------- -----------
TOTAL ASSETS $ 317.2 $ 360.8
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
SYSTEM SOFTWARE ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(in millions, except share data)
<TABLE>
<CAPTION>
April 30, October 31,
1999 1998
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accrued commissions and royalties $ 18.0 $ 20.3
Accounts payable and other accrued liabilities 68.3 77.9
Accrued compensation and related benefits 18.7 23.1
Deferred revenue 38.2 44.3
----------- -----------
Total current liabilities 143.2 165.6
----------- -----------
LONG-TERM OBLIGATIONS:
Convertible subordinated notes 137.4 137.3
Other 4.2 4.6
----------- -----------
Total long-term obligations 141.6 141.9
----------- -----------
DEFERRED REVENUE 22.0 29.9
----------- -----------
REDEEMABLE SERIES A PREFERRED STOCK, $.01 par value, convertible, 10,000
shares issued and outstanding (liquidation preference of $10.0 million) 9.4 9.3
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 100,000 shares authorized,
10,000 shares issued as Series A Preferred Stock - -
Common stock, $.0033 par value, 250,000,000 shares authorized,
47,843,000 and 47,621,000 shares issued 0.2 0.2
Capital in excess of par value 73.4 72.5
Retained earnings (deficit) (66.0) (52.9)
Accumulated other comprehensive income - cumulative
translation adjustment (6.6) (5.7)
----------- -----------
Total stockholders' equity 1.0 14.1
----------- -----------
TOTAL LIABILITIES and STOCKHOLDERS' EQUITY $ 317.2 $ 360.8
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
SYSTEM SOFTWARE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months Ended Six Months Ended
April 30, April 30,
----------------------------- -----------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
License fees $ 28.3 $ 49.7 $ 59.9 $ 110.5
Client services and other 58.4 52.7 116.5 90.8
--------- --------- --------- ---------
Total revenues 86.7 102.4 176.4 201.3
--------- --------- --------- ---------
Costs and Expenses:
Cost of license fees 13.0 22.0 26.1 40.1
Cost of client services and other 33.5 36.4 68.6 63.3
Sales and marketing 16.8 22.0 33.8 42.1
Research and development 12.7 13.5 25.4 25.8
General and administrative 19.9 20.9 39.4 41.1
Special charges - - - 1.1
--------- --------- --------- ---------
Total costs and expenses 95.9 114.8 193.3 213.5
--------- --------- --------- ---------
Operating income (loss) (9.2) (12.4) (16.9) (12.2)
Non-operating income (expense), net (2.4) (2.3) (5.4) (4.6)
Gain on sale of investment - - 2.8 -
--------- --------- --------- ---------
Income (loss) before income taxes (11.6) (14.7) (19.5) (16.8)
Provision (benefit) for income taxes (4.2) (5.3) (7.0) (6.0)
--------- --------- --------- ---------
Net income (loss) (7.4) (9.4) (12.5) (10.8)
Preferred dividends 0.3 0.3 0.6 0.6
--------- --------- --------- ----------
Net income (loss) available for common stockholders $ (7.7) $ (9.7) $ (13.1) $ (11.4)
========= ========= ========= ==========
Basic and diluted earnings (loss) per share
of common stock $ (0.16) $ (0.20) $ (0.27) $ (0.25)
========= ========= ========= ==========
Weighted average common shares outstanding 47.8 47.4 47.7 45.5
========= ========= ========= ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
SYSTEM SOFTWARE ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
------------------------------
1999 1998
----------- ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (12.5) $ (10.8)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and equipment 3.8 4.6
Amortization of other assets 9.1 18.8
Provision for doubtful accounts - 0.2
Gain on sale of investment (2.8) -
Deferred income taxes (8.2) (6.0)
Deferred revenue (12.6) (3.1)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable 18.3 16.6
Prepaid expenses and other current assets (0.8) 1.5
Miscellaneous assets 1.9 0.2
Accrued commissions and royalties (1.6) (1.4)
Accounts payable and other accrued liabilities (8.6) (9.7)
Accrued compensation and related benefits (3.9) (3.5)
Income taxes (1.9) (1.5)
----------- ------------
Net cash provided by (used in) operating activities (19.8) 5.9
----------- ------------
Cash Flows From Investing Activities:
Purchases of property and equipment (0.1) (0.5)
Software costs (2.8) (19.5)
Acquisition, net of cash acquired - (2.0)
Proceeds from sale of investment 3.8 -
----------- ------------
Net cash provided by (used in) investing activities 0.9 (22.0)
----------- ------------
Cash Flows From Financing Activities:
Principal payments under financing obligations (1.0) (1.6)
Proceeds from stock option and stock purchase plans 0.9 1.5
Dividends paid (0.6) (0.6)
----------- ------------
Net cash used in financing activities (0.7) (0.7)
----------- ------------
Effect of exchange rate changes on cash (0.7) (1.0)
----------- ------------
Net decrease in cash and equivalents (20.3) (17.8)
Cash and equivalents:
Beginning of year 52.4 83.3
----------- ------------
End of period $ 32.1 $ 65.5
============ =============
Non-cash investing and financing activities:
Leases capitalized $ 0.7 $ 0.5
Shares issued in business combination $ - $ 5.9
Issuance of common stock purchase warrants $ - $ 3.5
Conversion of private convertible subordinated note $ - $ 12.0
Cash paid during the period for:
Interest $ 5.0 $ 5.2
Income taxes $ 3.1 $ 1.8
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 -- Basis of Presentation
The consolidated financial statements include the accounts of System Software
Associates, Inc. and its majority owned subsidiaries ("SSA", or the "Company").
Except for the consolidated balance sheet at October 31, 1998, the financial
information included herein is unaudited. However, such information reflects
all adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair statement of results for the interim
periods. Results shown for interim periods are not necessarily indicative of
the results to be obtained for a full fiscal year.
These interim financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1998.
Note 2 -- Revenue Recognition Policy
American Institute of Certified Public Accountants Statement of Position 97-2,
"Software Revenue Recognition" (SOP 97-2) was issued in October 1997 and is
effective for transactions entered into in fiscal years beginning after December
15, 1997. SOP 97-2 addresses various aspects of the recognition of revenues on
software transactions and supersedes SOP 91-1, the policy previously followed by
the Company. SOP 97-2 provides guidance on software arrangements consisting of
multiple elements, evidence of fair value, delivery of elements, accounting for
service elements, and software arrangements requiring significant production,
modification, or customization of software. The Company adopted this statement
in fiscal year 1999, beginning November 1, 1998. The adoption of this statement
has not resulted in a material impact on the Company's financial statements.
Note 3 -- Comprehensive Income
As of November 1, 1998, the Company adopted Financial Accounting Standards Board
Statement 130 (FAS 130), "Reporting Comprehensive Income." FAS 130 establishes
new standards for the reporting and display of comprehensive income and its
components. However, it has no impact on the Company's net income/(loss) or
stockholders' equity. FAS 130 requires foreign currency translation adjustments
and changes in fair value for available-for-sale securities, which prior to
adoption were reported separately in stockholders' equity, to be included in
comprehensive income. The components of comprehensive net income (loss), are as
follows:
7
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
April 30, April 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C> <C>
Net income (loss) $(7.4) $ (9.4) $(12.5) $(10.8)
Change in cumulative translation
adjustment (1.1) (0.9) (0.9) (3.2)
- --------------------------------------------------------------------------------------------------------
Comprehensive net income (loss) $(8.5) $(10.3) $(13.4) $(14.0)
========================================================================================================
</TABLE>
Note 4 -- Restructuring and other
The Company announced a restructuring and other charge of $122.5 million in the
third quarter ending July 31, 1998. The charge includes a write-down of
capitalized and locally developed software products, a write-down of goodwill
and equipment, certain warranty commitments, a 25% reduction of office space and
severance benefits for approximately 300 employees. The reduction in workforce
represents approximately 12% of June 30, 1998, world-wide employees.
Restructuring costs in the first six months of 1999 were $12.5 million. The
following table summarizes the significant components of the restructuring
reserve at April 30, 1999.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Restructuring Remaining
Accrual Adjustments to Restructuring Balance
Balance at October 31, 1998 Costs at April 30,
October 31, 1998 Balance Incurred 1999
- -----------------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C> <C>
Severance and benefits $ 1.8 $(0.7) $ 0.4 $ 0.7
Write-down of assets 0.7 (0.7) - -
Office space 8.4 0.1 1.5 7.0
Warranty 28.0 1.3 10.5 18.8
Other 0.1 - 0.1 -
- -----------------------------------------------------------------------------------------------------------
$39.0 $ 0.0 $12.5 $26.5
===========================================================================================================
</TABLE>
The original restructuring balance of $122.5 million was based on estimates made
at the time. Adjustments between categories are made to reflect the Company's
current assessment of the category balances at April 30, 1999. The Company
expects to incur a significant amount of the remaining $26.5 million of accrued
restructuring costs during the remainder of fiscal 1999 and the first half of
fiscal 2000.
Note 5 - Line of Credit
On March 25, 1999, the Company secured a $5 million committed revolving line of
credit and a $10 million uncommitted revolving line of credit. Both agreements
mature on January 31, 2000, and borrowings under the agreements bear interest at
the prime or LIBOR rate. At April 30, 1999, there were no borrowings under the
line of credit agreements.
8
<PAGE>
Note 6 - Redeemable Series A Preferred Stock
As a result of the third quarter 1998 $122.5 million restructuring and other
charge, the Company has not complied with the fixed charge coverage ratio and
debt to capital ratio covenants since October 31, 1998. The Company received a
waiver from its preferred stockholder on November 19, 1998, waiving compliance
for October 31, 1998, and January 31, 1999. This waiver has been extended
through April 30, 1999. The Company was in compliance with all other covenants
at April 30, 1999.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto.
Results of Operations
Comparison of the Three Months Ended April 30, 1999
to the Three Months Ended April 30, 1998
----------------------------------------
Total revenues decreased 15.3% to $86.7 million during the second quarter of
1999 versus total revenues of $102.4 million recorded during the second quarter
of 1998. License fees were $28.3 million, a 43.1% decline when compared to the
same period of 1998. The decrease in license fee revenues was due to the
continued slowdown in demand for software in the ERP market as clients have
temporarily postponed contract decisions due to a variety of factors, including
final remediation of year 2000 issues. Client services revenues for the quarter
were $58.4 million, an increase of 10.8% when compared to the same prior year
period. The increase in services revenues is attributable to an increase in the
number of billable services personnel in response to continuing demand for
implementation services as well as an increase in productivity of services
personnel.
Cost of license fees as a percentage of related revenues was 45.9% for the
second quarter of 1999, up from 44.3% for the corresponding prior year period.
The increase is due to a significant decline in BPCS license fees sold,
resulting in a greater proportion of second quarter 1999 revenues being
generated by the sale of third party software products and hardware. In
addition, a significant fixed component of cost of license fee revenues is
amortization of capitalized software.
Cost of client services and other as a percentage of related revenues was 57.4%
and 69.1% for the second quarter of 1999 and 1998, respectively. The
improvement is primarily due to increased productivity of client services
personnel.
9
<PAGE>
Sales and marketing expenses decreased $5.2 million in the second quarter of
1999 to $16.8 million from $22.0 million in the second quarter of 1998. The
decrease in the current quarter was primarily due to a reduction of direct sales
incentives as a result of lower direct license fee revenues as well as the
positive impact of the third quarter 1998 restructuring initiatives.
Gross research and development (R&D) expenditures in the second quarter of 1999
decreased $7.6 million or 35% when compared to the second quarter of 1998. The
reduction is due, primarily, to reduced development activities related to BPCS
Client/Server Version 6.0 as well as the positive impact of the third quarter
1998 restructuring initiatives.
The Company capitalizes software development costs once technological
feasibility is established, in accordance with Statement of Financial Accounting
Standard (SFAS) No. 86. In connection with a restructuring of operations, the
Company determined that it was more appropriate to begin capitalization of
software development costs subsequent to a working model being developed.
Accordingly, the Company capitalized $1.4 million of software development costs
in the second quarter of 1999 compared to $8.2 million in the second quarter of
1998. The capitalization ratio (capitalized software as a percentage of gross
R&D) in the second quarters of 1999 and 1998 was 10% and 38%, respectively.
The following table sets forth R&D expenditures and related capitalized amounts
for the periods indicated.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Percentage
Three Months Ended Change
April 30, 1999 April 30, 1998 1999 vs. 1998
- --------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C>
Gross R&D expenditures $14.1 $21.7 (35%)
Less amount capitalized (1.4) (8.2) (83%)
- --------------------------------------------------------------------------------------------------
Net R&D expenses $12.7 $13.5 (6%)
==================================================================================================
</TABLE>
General and administrative expenses were $19.9 million and $20.9 million in the
second quarter of 1999 and 1998, respectively.
Operating loss in the second quarter of 1999 was ($9.2) million, a $3.2 million
improvement when compared to the operating loss of ($12.4) million recorded in
the second quarter of 1998. Major reasons for the improvement were increased
gross profit margins of client services revenues and the positive impact of the
third quarter 1998 restructuring initiatives.
Non-operating expenses, which primarily represent interest expense, were $2.4
million and $2.3 million in the second quarter of 1999 and 1998, respectively.
The tax benefit rate of approximately 36% is consistent with the prior year
quarter.
10
<PAGE>
Comparison of the Six Months Ended April 30, 1999
to the Six Months Ended April 30, 1998
--------------------------------------
The principle variations for the six months ended April 30, 1999, when
supplemented with the following comments, are relatively consistent with the
discussion of the second quarter results.
Total revenues decreased 12.4% to $176.4 million for the first six months of
1999 over total revenues of $201.3 million recorded during the first six months
of 1998. The revenue decrease was attributable to a decline in license fees
revenues of 45.8% when compared to the prior year, however, offset by an
increase in client services revenues of 28.3%.
Cost of license fees as a percentage of related revenues increased to 43.6% in
1999 as compared to 36.3% for the first six months of 1998.
Cost of client services and other as a percentage of related revenues was 58.9%
and 69.7% for the first six months of 1999 and 1998, respectively.
The following table sets forth R&D expenditures and related capitalized amounts
for the first six months of 1999 and 1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Percentage
Six Months Ended Change
April 30, 1999 April 30, 1998 1999 vs. 1998
- --------------------------------------------------------------------------------------------------
(in millions)
<S> <C> <C> <C>
Gross R&D expenditures $28.2 $ 43.5 (35%)
Less amount capitalized (2.8) (17.7) (84%)
- --------------------------------------------------------------------------------------------------
Net R&D expenses $25.4 $ 25.8 (2%)
==================================================================================================
</TABLE>
The special charge of $1.1 million in the first six months of 1998 related to
the final settlement of the Bain Investors lawsuit.
Operating loss in the first six months of 1999 was ($16.9) million compared to
an operating loss of ($12.2) million recorded in the first six months of 1998.
The major reason for the increased loss was significantly lower license fee
revenues.
The gain on sale of investment of $2.8 million in the first six months of 1999
resulted from the sale of the Company's 25% ownership of CS Controlling Software
Systeme. The cash proceeds were $3.8 million.
Year 2000
BPCS product line - The Company offers comprehensive services, education,
project management and migration strategies to ready clients for the Year 2000.
11
<PAGE>
Century date options include BPCS Client/Server Version 6.0, BPCS Century Dated
("CD"), or BPCS Millennium Toolset. All versions of BPCS Client/Server V6.0 are
Year 2000 compliant, BPCS CD century dates V4.05 and the BPCS Millennium Toolset
will century date client's current version of BPCS Client/Server, modifications
and related applications.
Third parties - Identification of areas of third party risk is complete. Plans
to mitigate risk should be developed and implemented by the second calendar
quarter of 1999.
Internal systems - The Company has identified and established remediation plans
for all affected information technology and non-information technology systems.
The remediation plans target the successful development, implementation, and
testing of each affected system. The majority of the affected systems should be
Year 2000 compliant by the end of the third calendar quarter of 1999.
In addition, the remediation plan will identify areas of risk to the Company if
the Year 2000 plan fails and will identify contingency plans for critical
processes. Risk assessment and contingency plans should be completed in the
second calendar quarter of 1999.
At this time, the Company believes that there will be minimal cost associated
with ensuring Year 2000 compliance of its internal systems.
Liquidity and Capital Resources
Cash and equivalents at April 30, 1999 totaled $32.1 million, a decrease of
$20.3 million when compared to October 31, 1998 cash balance of $52.4 million.
Cash usage was primarily due to operating losses, payments related to the
Company's third quarter 1998 restructuring activities and biannual interest
payment on the Company's convertible subordinated notes.
On March 25, 1999 the Company secured a $5 million committed revolving line of
credit and a $10 million uncommitted line of credit. The Company is presently
exploring additional committed external financing possibilities and as a result
has received financing proposals. However, there can be no assurance at this
time that the Company's efforts will prove successful. Management believes that,
if the Company returns to profitability, cash generated from operations combined
with current working capital and its ability to attract third party financing
will provide sufficient liquidity to meet the Company's capital requirements for
the foreseeable future.
On June 14, 1999 the Company announced a series of actions which will facilitate
its transition from a global provider of enterprise resource planning (ERP)
software and services to a portfolio solutions provider. The Company intends to
take a restructuring charge in its fiscal third quarter after estimating the
financial impact related to these actions, including a reduction in staff of 15
to 20%.
12
<PAGE>
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in the Company's market risk during the six
month period ended April 30, 1999. For additional information refer to Item 7A
in the Company's Annual Report on Form 10-K for the fiscal year ended October
31, 1998.
Part II - Other Information
Item 1. Legal Proceeding 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
(a) On April 6, 1999, the Company held its
Annual Meeting of Stockholders.
(b) At the meeting, all current directors were reelected to the
Board. Those directors are Casey Cowell, Andrew Filipowski,
Douglas Smith, William Stuek, William Weaver and Lawrence
Zimmerman. Each director received at least 29,111,459 votes in
favor of his reelection.
(c) The other item voted upon at the meeting was a proposal to amend
the Company's Long-Term Incentive Plan. The proposal was
defeated, receiving 4,286,302 votes in favor and 24,429,568 votes
opposed, with 991,225 abstentions and 13,277,405 broker non-
votes.
(d) Not Applicable.
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits are required to be filed.
(b) The Company filed a Report on Form 8-K on February 18,1999. The
Report discussed, under Item 5, the Company's adoption of a
Stockholder Rights Plan and the related dividend distribution of
Stock Purchase Rights.
13
<PAGE>
Signature Page
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.
Date June 14, 1999
-------------
System Software Associates, Inc.
/s/ William M. Stuek
------------------------------
William M. Stuek
Chief Executive Officer and
President
/s/ Lawrence A. Zimmerman
----------------------------------
Lawrence A. Zimmerman
Executive Vice President and
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> FEB-01-1999
<PERIOD-END> APR-30-1999
<CASH> 32,100
<SECURITIES> 0
<RECEIVABLES> 139,400
<ALLOWANCES> 16,500
<INVENTORY> 0
<CURRENT-ASSETS> 227,300
<PP&E> 67,600
<DEPRECIATION> 51,800
<TOTAL-ASSETS> 317,200
<CURRENT-LIABILITIES> 143,200
<BONDS> 137,400
9,400
0
<COMMON> 200
<OTHER-SE> 800
<TOTAL-LIABILITY-AND-EQUITY> 317,200
<SALES> 86,700
<TOTAL-REVENUES> 86,700
<CGS> 0
<TOTAL-COSTS> 95,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,400
<INCOME-PRETAX> (11,600)
<INCOME-TAX> (4,200)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,700)
<EPS-BASIC> (.16)
<EPS-DILUTED> (.16)
</TABLE>
