EXHIBIT 13.1
- ------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts) 1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT DATA /(1)/
- ------------------------------------------------------------------------------------------------------------------------
Revenues $283,550 $324,570 $381,372 $437,190 $532,628
- ------------------------------------------------------------------------------------------------------------------------
Income from operations 42,491 50,336 59,645 70,326 80,076
- ------------------------------------------------------------------------------------------------------------------------
Net income 21,467 25,808 38,474 43,087 48,672
- ------------------------------------------------------------------------------------------------------------------------
Net income per share: /(2)/
- ------------------------------------------------------------------------------------------------------------------------
Primary .70 .82 1.07 1.12 1.23
- ------------------------------------------------------------------------------------------------------------------------
Fully diluted .68 .79 1.04 1.12 1.23
- ------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
- ------------------------------------------------------------------------------------------------------------------------
Total assets $313,459 $365,580 $418,135 $485,740 $579,734
- ------------------------------------------------------------------------------------------------------------------------
Total short-term and long-term debt 87,820 89,790 6,523 10,567 10,002
- ------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 162,998 189,899 316,960 359,292 422,292
- ------------------------------------------------------------------------------------------------------------------------
(1) 1993 includes after-tax gain on sale of product line of $3,371, or $0.09
per share on a fully diluted basis. 1995 includes merger costs of $4,238,
or $0.10 per share on a fully diluted basis. See Note 2 of Notes to
Consolidated Financial Statements.
(2) All per share amounts have been adjusted for a July 1995 two-for-one stock
split. See Note 10 of Notes to Consolidated Financial Statements.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Quarterly Financial Information p. 40
- --------------------------------------------------------------------------------
Stock Information p. 40
- --------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations p. 41
- --------------------------------------------------------------------------------
Consolidated Statements of Income p. 45
- --------------------------------------------------------------------------------
Consolidated Balance Sheets p. 46
- --------------------------------------------------------------------------------
Consolidated Statements of Cash Flows p. 47
- --------------------------------------------------------------------------------
Consolidated Statement of Stockholders' Equity p. 48
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements p. 50
- --------------------------------------------------------------------------------
Report of Independent Accountants p. 56
- --------------------------------------------------------------------------------
- --
39 1995 Annual Report
- --
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(In thousands, except per share amounts) First Second Third Fourth
Quarter Quarter Quarter Quarter
------------------------------------------
1995 /(1)/
Revenues....................................... $121,490 $125,119 $132,114 $153,905
Income before income taxes..................... 18,850 20,707 21,292 24,263
Net income..................................... 11,121 12,218 12,008 13,325
Net income per common share: /(2)/
Primary...................................... .29 .32 .31 .31
Fully diluted................................ .29 .32 .31 .31
1994
Revenues....................................... $102,152 $104,592 $109,908 $120,538
Income before income taxes..................... 15,972 17,657 18,210 20,689
Net income..................................... 9,423 10,418 10,744 12,502
Net income per common share: /(2)/
Primary...................................... .24 .27 .28 .33
Fully diluted................................ .24 .27 .28 .32
(1) 1995 includes third-quarter merger costs of $1,351, or $0.03 per share on
a fully diluted basis, and fourth-quarter merger costs of $2,887, or
$0.07 per share on a fully diluted basis. See Note 2 of Notes to
Consolidated Financial Statements.
(2) All per share amounts have been adjusted for a July 1995 two-for-one
stock split. See Note 10 of Notes to Consolidated Financial Statements.
STOCK INFORMATION
The common stock of SunGard Data Systems Inc. trades on the National Market of
The Nasdaq Stock Market and the London Stock Exchange under the symbol SNDT. At
March 8, 1996, the Company had approximately 2,600 stockholders of record. No
dividends have ever been paid on the Company's common stock. The Company's
policy is to retain earnings for use in its business.
The following table indicates high and low sales prices per share of the
Company's common stock, as reported on Nasdaq. All prices reflect the Company's
July 1995 two-for-one stock split.
Calendar Year 1994
First Quarter.................. $20 1/2 $17 1/4
Second Quarter................. 20 3/8 15 3/4
Third Quarter.................. 19 3/8 16 3/8
Fourth Quarter................. 20 1/8 16 7/8
Calendar Year 1995
First Quarter.................. $24 3/8 $17 3/4
Second Quarter................. 26 3/4 21 5/8
Third Quarter.................. 31 3/4 26 1/8
Fourth Quarter................. 32 1/2 25 1/4
The last sale price of the Company's common stock on March 8, 1996, as reported
on Nasdaq, was $34 3/4 per share.
- --
40 SunGard Data Systems Inc.
- --
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Statements about the Company's expectations and all other statements in this
Annual Report other than historical facts are forward-looking statements. Since
these statements involve risks and uncertainties and are subject to change at
any time, the Company's actual results could differ materially from expected
results. The Company derives most of its forward-looking statements from its
operating budgets and forecasts, which are based upon many detailed assumptions.
While the Company believes that its assumptions are reasonable, it cautions that
there are inherent difficulties in predicting certain important factors,
especially the timing and magnitude of software sales, the timing and scope of
technological advances, the 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
Form 10-K for the year ended December 31, 1995, a copy of which may be obtained
from the Company without charge.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain amounts
included in the Consolidated Statements of Income of SunGard Data Systems Inc.,
the relative percentage that those amounts represent to consolidated revenues
(unless otherwise indicated), and the percentage change in those amounts from
period to period.
Year Ended December 31, Percent of Revenues /(1)/ Percent
(in millions) Year Ended December 31, Increase (Decrease) /(1)/
----------------------- ----------------------- -----------------------------
1995 1994 1993 1995 1994 1993 1995 vs. 1994 1994 vs. 1993
----------------------- ----------------------- -----------------------------
Revenues
Investment support systems............. $330.6 $271.1 $243.0 62% 62% 64% 22% 12%
Disaster recovery services............. 162.3 138.7 113.2 31 32 30 17 23
Computer services and other............ 39.7 27.4 25.2 7 6 6 45 9
------------------------- -----------------------
$532.6 $437.2 $381.4 100% 100% 100% 22 15
========================= =======================
Costs and Expenses
Cost of sales and direct operating..... $234.0 $194.8 $173.1 44% 45% 46% 20% 13%
Sales, marketing and
administration...................... 109.2 89.6 76.9 21 20 20 22 16
Product development.................... 50.4 36.8 35.1 9 8 9 37 5
Depreciation........................... 30.8 24.3 20.4 6 6 5 27 19
Amortization........................... 23.9 21.4 16.2 4 5 4 12 32
Merger costs........................... 4.2 -- -- 1 -- -- -- --
------------------------- -----------------------
$452.5 $366.9 $321.7 85% 84% 84% 23 14
========================= =======================
Operating Income
Investment support systems /(2)/....... $ 51.7 $ 43.9 $ 38.5 16% 16% 16% 18% 14%
Disaster recovery services /(2)/....... 34.9 29.2 25.0 22 21 22 20 17
Computer services and other /(2)/...... 5.1 4.8 3.2 13 18 13 6 50
Corporate administration............... (7.4) (7.6) (7.1) (1) (2) (2) (3) 6
Merger costs........................... (4.2) -- -- (1) -- -- -- --
-------------------------
$ 80.1 $ 70.3 $ 59.6 15 16 16 14 18
=========================
(1) All percentages are calculated using actual amounts rounded to the nearest
$1,000.
(2) Percent of revenues is calculated as a percent of investment support
systems, disaster recovery services, and computer services and other revenues,
respectively.
- --
41 1995 Annual Report
- --
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 twenty operating units of
various sizes and complexities. 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.
The ISS operating margin was 16% for the years 1993 through 1995. The Company
expects that the full-year 1996 ISS operating margin will remain approximately
16%. The most important factors affecting the ISS operating margin continue to
be the timing and magnitude of software license revenues, the performance of
recently acquired businesses and the level of spending on product development.
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.
Disaster Recovery Services (DRS)
The small increase in the DRS operating margin in 1995 compared to 1994 is
attributable primarily to an increase in revenues resulting from new contract
signings, contract renewals and the results of cost-containment efforts related
to selling, marketing and administrative costs. The increase is net of the
impact of an increase in operating costs due to equipment and facilities
improvements. The small decline in the DRS operating margin in 1994 compared to
1993 is attributable primarily to increased spending on computer system upgrades
and new marketing programs. The decline is net of the positive impacts of
acquired businesses, new contract signings and contract renewals. The absence of
higher disaster fees earned in 1993, primarily in connection with the World
Trade Center bombing in February 1993, also contributed to the decline in the
1994 DRS operating margin compared to 1993.
The Company expects that the full-year 1996 DRS operating margin will remain
the same as in 1995. The most important factors affecting the DRS operating
margin continue to be the rate of new contract signings, contract renewals and
the timing and magnitude of equipment and facilities expenditures.
Computer Services and Other (CS)
The decline in the CS operating margin in 1995 compared to 1994 is due to the
initial effect of acquired businesses. Excluding acquired businesses, which were
accounted for as poolings-of-interests, the 1995 CS operating margin was 18%.
The improvement in the CS operating margin in 1994 compared to 1993 is due
primarily to an increase in revenues. The improvement is net of the impact of
lower royalties associated with certain product rights. Additionally, the 1993
operating margin was affected negatively by costs associated with a relocation
of the principal CS data center to a new facility in Voorhees, New Jersey.
The Company expects that the CS operating margin will improve for the full-
year 1996 compared to 1995. The most important factors affecting the CS
operating margin are the performance of acquired businesses, which are primarily
dependent upon the timing and magnitude of software license revenues, and
revenue growth in remote-access computer processing and automated mailing
services.
REVENUES
Total revenues increased $95.4 million and $55.8 million in 1995 and 1994,
respectively. Excluding acquired businesses, revenues increased $62.6 million
and $36.6 million, or 15% and 10%, in 1995 and 1994, respectively. Recurring
revenues derived from remote processing, disaster recovery and software
maintenance services are approximately $425.6 million, $367.3 million and $321.0
million in 1995, 1994 and 1993, respectively, representing 80% of consolidated
revenues in 1995 and 84% of consolidated revenues in 1994 and 1993. The decline
in the percentage of recurring revenues during 1995 compared to 1994 and 1993 is
due to an increase in the percentage of software license revenues, which
increased to 12% of total revenues in 1995 from 8% of total revenues in 1994.
This increase was due primarily to strong growth in software license revenues
from both the Trading Systems Group's products and acquired businesses.
The Company expects total revenues to increase in 1996 due primarily to an
expected increase in software license revenues, although at a lower rate than in
1995, a full year of operations from acquired businesses, and continued growth
in DRS revenues, especially from midrange platforms, although also at a lower
rate than in 1995.
- --
42 SunGard Data Systems Inc.
- --
The Company sells a significant portion of its products and services to the
financial services industry and could be directly affected by the overall
condition of that industry. The Company expects that the consolidation trend in
the financial services industry will continue, but it is unable to predict what
effect, if any, this trend may have.
Investment Support Systems
ISS revenues increased $59.5 million and $28.1 million in 1995 and 1994,
respectively. Excluding acquired businesses, revenues increased $39.7 million
and $18.3 million, or 15% and 8%, in 1995 and 1994, respectively. The 1995
increase is attributable to a $23.6 million, or 37%, increase in software
license and professional services revenues and a $16.1 million, or 8%, increase
in remote processing and software maintenance revenues. The 1994 increase is
attributable to a $12.8 million increase in remote processing and software
maintenance revenues and a $5.5 million increase in software license and
professional services revenues.
Disaster Recovery Services
DRS revenues increased $23.6 million and $25.5 million in 1995 and 1994,
respectively. Excluding acquired businesses, revenues increased $20.3 million
and $15.1 million, or 15% and 14%, in 1995 and 1994, respectively. The increases
in 1995 and 1994 are due to $18.7 million and $13.3 million respective increases
in revenues primarily from new contract signings and contract renewals, a
significant portion of which were in the Company's midrange platforms, and $1.6
million and $1.8 million respective increases in software license and
professional services revenues.
Computer Services and Other
CS revenues increased $12.3 million and $2.2 million in 1995 and 1994,
respectively. Excluding acquired businesses, 1995 revenues increased $2.5
million, or 9%, compared to 1994. Excluding 1993 revenues attributable to a
product line sold in February 1993, 1994 revenues increased $3.3 million, or
14%. The 1995 and 1994 increases are due to increased volume in the Company's
remote-access computer services business and, to a lesser extent, increased
revenues in the Company's mailing services business.
COSTS AND EXPENSES
Cost of sales and direct operating expenses increased $39.2 million and $21.7
million in 1995 and 1994, respectively. The increases are due primarily to
acquired businesses and computer and facilities improvements. The 1995 decrease
in cost of sales and direct operating expenses as a percentage of revenues is
due primarily to increased product development spending. The 1994 decrease is
due primarily to the 1993 purchase of the CS data center and the fact that in
1994 leased equipment represented a lower percentage of total capital
requirements for midrange DRS offerings. These factors caused depreciation
expense to increase at a faster rate than cost of sales and direct operating
expenses during 1994.
Sales, marketing and administration expenses increased $19.6 million and
$12.6 million in 1995 and 1994, respectively. The 1995 increase is due
primarily to acquired businesses and increased sales activity, particularly in
the Trading Systems Group. The 1994 increase is due primarily to acquired
businesses and increased sales activity in the DRS business.
Product development expenses increased $13.6 million and $1.7 million in 1995
and 1994, respectively. The 1995 increase is due primarily to acquired
businesses and increased development spending in connection with various ISS
products. The 1994 increase is due primarily to development spending in
connection with various ISS products. In addition, development costs capitalized
were $3.6 million and $1.9 million in 1995 and 1994, respectively.
Depreciation of property and equipment increased $6.5 million and $3.9
million in 1995 and 1994, respectively. The 1995 increase is due to acquired
businesses and purchases of disaster recovery computer and telecommunications
equipment. The 1994 increase is due to purchases of disaster recovery
telecommunications and midrange computer equipment, the new CS data center and
acquired businesses.
Merger costs of $4.2 million ($0.10 per fully diluted share) were incurred
during the third and fourth quarters of 1995 in connection with three
acquisitions accounted for as poolings-of-interests (see Note 2 of Notes to
Consolidated Financial Statements). These costs consist primarily of investment
banking, legal and accounting fees that are not deductible for income tax
purposes.
- --
43 1995 Annual Report
- --
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
Net interest income increased $2.8 million and $2.7 million in 1995 and 1994,
respectively. The 1995 increase is due primarily to a change in mix between
taxable and tax-exempt instruments and an increase in average cash and
investment balances. The 1994 increase is due primarily to the conversion of the
Company's subordinated debentures on May 12, 1993.
The Company's effective income tax rate was 42.8% and 40.6% in 1995 and 1994,
respectively. The 1995 effective income tax rate was higher than in 1994 due to
nondeductible merger costs associated with 1995 acquisitions accounted for as
poolings-of-interests (see Note 2 of Notes to Consolidated Financial
Statements). Excluding merger costs, the 1995 effective income tax rate
approximates the 1994 effective income tax rate. The 1993 effective income tax
rate was lower than in 1994 due primarily to the sale of a product line.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments as of December 31, 1995 increased $12.6 million
from December 31, 1994, to $115.2 million. Cash flow from operations increased
slightly in 1995 compared to 1994. The increase in accounts receivable and other
current assets is due primarily to an increase in software license sales in
December 1995 and acquired businesses. The Company expects that capital spending
for property and equipment during 1996 will increase from $31.7 million in 1995
to approximately $37.0 million due to businesses acquired in 1995 and
anticipated equipment and facilities improvements.
During the year ended December 31, 1995, as adjusted for a two-for-one stock
split (see Note 10 of Notes to Consolidated Financial Statements), the Company
paid $10.0 million for 400,000 shares of its common stock, which were
repurchased under a previously announced stock repurchase plan. During 1996, the
Company expects to continue its systematic pattern of stock repurchases in order
to satisfy the needs of its employee stock purchase, equity incentive and other
stock award plans.
The Company has two revolving credit agreements for an aggregate of $25.0
million. In order to remain eligible for borrowing under the agreements, the
Company must, among other requirements, maintain a defined minimum tangible net
worth and limit its total debt. There had been no borrowing under these
agreements through December 31, 1995.
At December 31, 1995, the Company's remaining commitments consist primarily of
operating leases for computer equipment and facilities aggregating $144.4
million, of which $45.0 million will be paid in 1996. The Company expects that
its existing cash resources and cash generated from operations will be
sufficient for the foreseeable future to meet its operating requirements,
contingent payments in connection with business acquisitions, and ordinary
capital spending needs. Furthermore, the Company believes that it has the
capacity to borrow funds and issue equity to finance additional capital needs.
- --
44 SunGard Data Systems Inc.
- --
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts) Year Ended December 31,
----------------------------------------------------
1995 1994 1993
----------------------------------------------------
Revenues......................................................... $532,628 $437,190 $381,372
----------------------------------------------------
Costs and expenses:
Cost of sales and direct operating.......................... 234,011 194,838 173,111
Sales, marketing and administration......................... 109,226 89,579 76,968
Product development......................................... 50,338 36,741 35,071
Depreciation of property and equipment...................... 30,807 24,268 20,383
Amortization of intangible assets........................... 23,932 21,438 16,194
Merger costs................................................ 4,238 -- --
----------------------------------------------------
452,552 366,864 321,727
----------------------------------------------------
Income from operations........................................... 80,076 70,326 59,645
Gain on sale of product line................................ -- -- 4,071
Interest income (expense), net.............................. 5,036 2,202 (525)
----------------------------------------------------
Income before income taxes....................................... 85,112 72,528 63,191
Income taxes................................................ 36,440 29,441 24,717
----------------------------------------------------
Net income....................................................... $ 48,672 $ 43,087 $ 38,474
====================================================
Net income per common share:
Primary..................................................... $1.23 $1.12 $1.07
====================================================
Fully diluted............................................... $1.23 $1.12 $1.04
====================================================
Shares used to compute net income per common share:
Primary..................................................... 39,636 38,498 35,916
====================================================
Fully diluted............................................... 39,668 38,502 38,352
====================================================
The accompanying notes are an integral part of these financial statements.
- ------
45 1995 Annual Report
- ------
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts) December 31,
--------------------------------------
1995 1994
--------------------------------------
Assets
Current:
Cash and equivalents..................................................... $ 79,091 $ 68,491
Short-term investments, at cost, which approximates market............... 36,066 34,107
Trade receivables, less allowance for
doubtful accounts of $6,426 and $7,276................................ 118,169 85,339
Earned but unbilled receivables.......................................... 25,090 13,488
Prepaid expenses and other current assets................................ 16,020 14,380
Deferred income taxes.................................................... 6,727 6,490
--------------------------------------
Total current assets.................................................. 281,163 222,295
Property and equipment, less accumulated depreciation
of $126,580 and $105,036................................................. 95,745 90,436
Software products, less accumulated amortization
of $59,033 and $46,943................................................... 35,375 23,964
Goodwill, less accumulated amortization of $19,658 and $15,035................ 116,455 95,822
Other intangible assets, less accumulated amortization
of $27,015 and $20,452................................................... 50,996 53,223
--------------------------------------
$579,734 $485,740
======================================
Liabilities and Stockholders' Equity
Current:
Short-term and current portion of long-term debt......................... $ 6,761 $ 5,673
Accounts payable......................................................... 12,428 7,628
Accrued compensation and benefits........................................ 29,330 22,354
Other accrued expenses................................................... 15,773 14,214
Accrued income taxes..................................................... 10,639 6,049
Deferred revenues........................................................ 72,642 57,492
--------------------------------------
Total current liabilities............................................. 147,573 113,410
--------------------------------------
Long-term debt................................................................ 3,241 4,894
--------------------------------------
Deferred income taxes......................................................... 6,628 8,144
--------------------------------------
Commitments
Stockholders' equity:
Preferred stock, par value $.01 per share; 5,000 shares authorized....... -- --
Common stock, par value $.01 per share; 60,000 shares authorized;
42,111 and 18,898 shares issued....................................... 421 189
Capital in excess of par value........................................... 171,558 162,235
Notes receivable for common stock........................................ (2,817) --
Restricted stock plans................................................... (220) (858)
Retained earnings........................................................ 260,172 205,121
Foreign currency translation adjustment.................................. (1,279) (2,366)
--------------------------------------
427,835 364,321
Treasury stock, at cost, 189 and 131 shares.............................. (5,543) (5,029)
--------------------------------------
Total stockholders' equity............................................ 422,292 359,292
--------------------------------------
$579,734 $485,740
======================================
The accompanying notes are an integral part of these financial statements.
- ------
46 SunGard Data Systems Inc.
- ------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Year Ended December 31,
---------------------------------------------
1995 1994 1993
---------------------------------------------
Cash Flow From Operations
Net income........................................................ $ 48,672 $ 43,087 $ 38,474
Reconciliation of net income to cash flow from operations:
Depreciation and amortization................................... 54,739 45,706 36,577
Charges for stock option and award plans........................ 1,886 1,462 1,432
Net gain on sale of product line
and other noncash credits...................................... -- (176) (3,643)
Deferred income tax provision (benefit)......................... (1,374) (3,668) 710
--------------------------------------------
103,923 86,411 73,550
Cash provided by (used for) working capital, net of effect of
acquired businesses and sale of product line:
Accounts receivable and other current assets................... (30,650) (11,536) (19,574)
Accounts payable and accrued expenses.......................... 9,729 4,594 (190)
Deferred revenues.............................................. 7,007 10,300 6,590
--------------------------------------------
Cash flow from operations.................................... 90,009 89,769 60,376
--------------------------------------------
Financing Activities
Cash received under employee stock plans....................... 5,999 3,687 4,034
Cash paid for treasury stock................................... (10,029) (7,979) (2,406)
Repayments of debt............................................. (8,594) (2,121) (2,530)
--------------------------------------------
Total financing activities................................... (12,624) (6,413) (902)
--------------------------------------------
Long-Term Investment Activities
Cash paid for acquired businesses, net of cash acquired........ (27,294) (28,061) (30,808)
Cash paid for property and equipment........................... (31,652) (34,286) (35,079)
Cash paid for software and other assets........................ (5,879) (3,191) (4,139)
Cash received from sale of assets.............................. -- -- 11,923
---------------------------------------------
Total long-term investment activities....................... (64,825) (65,538) (58,103)
---------------------------------------------
Increase in cash and equivalents before short-term
investment activities........................................... 12,560 17,818 1,371
Short-Term Investment Activities
Purchase of short-term investments.............................. (56,188) (48,775) (31,140)
Maturities of short-term investments............................ 54,228 47,493 21,627
---------------------------------------------
Increase (decrease) in cash and equivalents......................... 10,600 16,536 (8,142)
Beginning cash and equivalents...................................... 68,491 51,955 60,097
---------------------------------------------
Ending cash and equivalents......................................... $ 79,091 $ 68,491 $ 51,955
==============================================
Noncash Activities
Reduction of long-term debt, net of debt issuance costs,
resulting from conversion of subordinated debentures
into common stock.......................................... $ -- $ -- $ (83,993)
==============================================
Supplemental Information
Interest paid.................................................. $ 919 $ 703 $ 4,369
==============================================
Income taxes paid.............................................. $ 33,556 $ 30,405 $ 24,431
==============================================
Acquired businesses:
Property and equipment....................................... $ 4,719 $ 2,250 $ 4,843
Software products............................................ 14,597 2,620 4,872
Goodwill and other intangible assets......................... 31,933 38,274 30,596
Purchase price obligations and debt assumed.................. (7,796) (5,184) (2,963)
Deferred income taxes........................................ 379 (3,234) --
Net current liabilities assumed.............................. (1,117) (6,665) (6,540)
Common stock issued.......................................... (15,421) -- --
----------------------------------------------
Cash paid for acquired businesses, net of cash acquired of
$8,077 and $12,777 in 1995 and 1994, respectively...... $ 27,294 $ 28,061 $ 30,808
==============================================
The accompanying notes are an integral part of these financial statements.
- ------
47 1995 Annual Report
- ------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands) Common Stock
---------------------------- Capital in
Number of Par Excess of
Shares Value Par Value
------------------------------------------------------------------
Balances, December 31, 1992................................ 15,264 $153 $ 72,345
Net income.............................................. -- -- --
Shares issued upon conversion of subordinated
debentures............................................ 3,310 33 84,167
Purchase of common stock................................ -- -- --
Shares issued under restricted stock plans.............. 5 -- 145
Shares issued under stock purchase, option
and award plans....................................... 222 2 3,310
Compensation expense related to restricted
stock plans........................................... -- -- --
Income tax benefit arising from transactions in
common stock options.................................. -- -- 1,182
Foreign currency translation adjustment................. -- -- --
------------------------------------------------------------------
Balances, December 31, 1993................................ 18,801 188 161,149
Net income.............................................. -- -- --
Purchase of common stock................................ -- -- --
Shares issued under restricted stock plans, net......... 5 -- 164
Shares issued under stock purchase, option
and award plans....................................... 92 1 522
Compensation expense related to restricted
stock plans........................................... -- -- --
Income tax benefit arising from transactions
in common stock options............................... -- -- 400
Foreign currency translation adjustment................. -- -- --
------------------------------------------------------------------
Balances, December 31, 1994................................ 18,898 189 162,235
Poolings-of-interests................................... 4,253 43 8,878
Net income.............................................. -- -- --
Two-for-one common stock split.......................... 18,898 189 (189)
Purchase of common stock................................ -- -- --
Note repayments......................................... -- -- --
Shares issued under stock purchase, option
and award plans....................................... 62 -- 84
Compensation expense related to restricted
stock plans........................................... -- -- --
Income tax benefit arising from transactions
in common stock options............................... -- -- 550
Foreign currency translation adjustment................. -- -- --
------------------------------------------------------------------
Balances, December 31, 1995................................ 42,111 $421 $171,558
===================================================================
The accompanying notes are an integral part of these financial statements.
- ----
48 SunGard Data Systems Inc.
- ----
Foreign Treasury Stock
Notes Restricted Currency --------------------------
Receivable for Stock Retained Translation Number of
Common Stock Plans Earnings Adjustment Shares Cost Total
- -----------------------------------------------------------------------------------------------------------------------------------
$ -- $(3,443) $123,560 $(2,714) (1) $ (2) $189,899
-- -- 38,474 -- -- -- 38,474
-- -- -- -- -- -- 84,200
-- -- -- -- (69) (2,406) (2,406)
-- (145) -- -- -- -- --
-- -- -- -- 64 2,194 5,506
-- 1,432 -- -- -- -- 1,432
-- -- -- -- -- -- 1,182
-- -- -- (1,327) -- -- (1,327)
- -----------------------------------------------------------------------------------------------------------------------------------
-- (2,156) 162,034 (4,041) (6) (214) 316,960
-- -- 43,087 -- -- -- 43,087
-- -- -- -- (212) (7,979) (7,979)
-- (164) -- -- -- -- --
-- -- -- -- 87 3,164 3,687
-- 1,462 -- -- -- -- 1,462
-- -- -- -- -- -- 400
-- -- -- 1,675 -- -- 1,675
- -----------------------------------------------------------------------------------------------------------------------------------
-- (858) 205,121 (2,366) (131) (5,029) 359,292
(3,332) -- 9,800 32 -- -- 15,421
-- -- 48,672 -- -- -- 48,672
-- -- -- -- (91) -- --
-- -- -- -- (400) (10,029) (10,029)
515 -- -- -- -- -- 515
-- -- (3,421) -- 433 9,515 6,178
-- 638 -- -- -- -- 638
-- -- -- -- -- -- 550
-- -- -- 1,055 -- -- 1,055
- -----------------------------------------------------------------------------------------------------------------------------------
$(2,817) $ (220) $260,172 $(1,279) (189) $ (5,543) $422,292
===================================================================================================================================
- ----
49 1995 Annual Report
- ----
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
SunGard Data Systems Inc. (the Company), through its wholly owned subsidiaries,
operates in a single industry segment, principally in the United States,
providing computer services, principally proprietary processing services and
software to the financial services industry, computer disaster recovery services
and healthcare information systems. The consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany transactions and accounts have been eliminated.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Future events
could cause actual results to differ from those estimates.
The Company amortizes intangible assets, including software product costs,
over periods that it believes approximate the related useful lives of those
assets based upon estimated future operating results and cash flows of the
underlying business operations. It is possible that the Company's estimates of
those lives could change based upon changes in numerous factors, including
product demand, market conditions, technological developments, economic
conditions and competitor activities.
Revenue Recognition
Revenues from remote processing, disaster recovery and software maintenance
services are recognized over the terms of the related contracts or as the
related service is provided. License-fee revenues from proprietary products are
generally recognized upon the signing of a contract and delivery of the product,
except in those instances where the Company provides training, installation and
other significant post-delivery services. In those instances, a portion of the
contract price is deferred and recognized as the related services are provided.
Revenues from fixed-fee contracts requiring a significant amount of program
modification or customization, installation, systems integration and/or related
services are recognized based upon the estimated percentage of completion.
Changes in estimated costs during the course of a contract are reflected in the
period in which the facts become known.
Cash Equivalents and Short-Term Investments
Cash in excess of daily requirements is invested primarily in institutional
money-market funds, commercial paper, time deposits, certificates of deposit and
short-term bonds. Investments purchased with a maturity of three months or less
at the date of purchase are considered to be cash equivalents; those with
maturities greater than three months are considered to be short-term
investments.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist of temporary cash and short-term investments and
receivables. By policy the Company places its temporary cash and short-term
investments with institutions of high credit-quality and limits the amount of
credit exposure to any one issuer. The Company sells a significant portion of
its products and services to the financial services industry and could be
directly affected by the overall condition of that industry. The Company
believes that any credit risk associated with receivables is substantially
mitigated by a relatively large number of customer accounts and reasonably short
collection terms. Receivables are stated at estimated net realizable value,
which approximates fair value.
Property and Equipment
Property and equipment are recorded at cost, and depreciation is provided on the
straight-line method over the estimated useful lives of the related assets (two
to eight years for equipment and ten to forty years for buildings and
improvements). Leasehold improvements are amortized ratably over their remaining
lease term or useful life, if shorter.
- ----
50 SunGard Data Systems Inc.
- ----
Foreign Currency Translation
The functional currency of each of the Company's foreign operations is the local
currency of the country in which the operation is headquartered. Accordingly,
all assets and liabilities are translated into U.S. dollars using exchange rates
in effect at the balance sheet date. Revenues and expenses are translated using
average exchange rates during the period. Increases and decreases in net assets
resulting from foreign currency translation are accumulated as a separate
component of stockholders' equity.
Software Development and Product Costs
Product development costs are expensed as incurred and consist primarily of
design and development costs of new products and significant enhancements
incurred prior to the establishment of technological feasibility.
Costs associated with purchased software, software obtained through business
acquisitions, and new products and enhancements to existing products that meet
technological feasibility and recoverability tests are capitalized and amortized
over the estimated useful lives of the related products, generally five to ten
years, using the straight-line method or the ratio of current revenues to
current and anticipated revenues from such software, whichever provides the
greater amortization. Amortization of all software products aggregated
$9,601,000, $9,778,000 and $8,564,000 during 1995, 1994 and 1993, respectively.
Goodwill
Goodwill represents the excess of cost over the fair value of net assets
acquired and is amortized using the straight-line method over periods ranging
from twenty to forty years. The recoverability of goodwill is periodically
reviewed by the Company. In assessing recoverability, many factors are
considered, including operating results and cash flows of the acquired
businesses, as well as benefits that the acquired businesses contribute to
existing and related products, services and markets. The Company believes that
no impairment of goodwill existed at December 31, 1995.
Other Intangible Assets
Other intangible assets consist primarily of contract rights, customer bases and
noncompetition agreements obtained in business acquisitions. Contract rights and
customer bases are amortized using the straight-line method over their estimated
useful lives, ranging from five to thirty years. Noncompetition agreements are
amortized using the straight-line method over the term of such agreements,
ranging from three to seven years.
Income Taxes
The Company recognizes deferred tax assets and liabilities based upon the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred tax assets and liabilities are
calculated based on the difference between the financial and tax bases of assets
and liabilities using the currently enacted tax rates in effect during the years
in which the differences are expected to reverse.
Net Income Per Common Share
Primary and fully diluted net income per common share are calculated using the
weighted-average number of common and common-equivalent shares outstanding
during the year. Common-equivalent shares are attributable to unexercised stock
options. Prior to May 12, 1993, fully diluted net income per common share was
calculated based on the assumption that all of the Company's convertible
subordinated debentures (Debentures) were converted into common stock on the
date of issue. For purposes of calculating fully diluted net income per common
share, net income was increased by the assumed incremental after-tax interest
savings, and the weighted-average number of shares outstanding was increased by
the additional common shares assumed to be issued, upon conversion of the
Debentures.
- ------
51 1995 Annual Report
- ------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
2. Acquisitions and Dispositions
Pooling-of-Interests Transactions
During 1995, the Company issued a total of 4,253,000 shares of common stock in
connection with three business combinations accounted for as poolings-of-
interests. Two of the combinations form the nucleus of a new business that
provides work-flow management and document-imaging systems primarily to the
healthcare industry. The remaining combination was in the Company's investment
support systems business and provides trading, risk management and accounting
systems primarily to the financial services industry.
During 1995, the Company recorded merger costs of $4,238,000 ($0.10 per fully
diluted share) in connection with these transactions. These costs consist
primarily of investment banking, legal and accounting fees that are not
deductible for income tax purposes. In addition, the Company acquired $3.3
million of notes receivable for common stock in connection with these
transactions.
The consolidated results of operations for the year ended December 31, 1995
include the operations of each of these businesses from the beginning of the
quarter in which each business combination was completed. The consolidated
financial statements for prior periods have not been restated since the impact
of such restatement would not be material.
Purchase Transactions and Product-Line Sale
During 1995, the Company completed six business acquisitions accounted for as
purchase transactions. Four acquisitions were in the Company's investment
support systems business and two were in its disaster recovery services
business.
Total cash paid in connection with these acquisitions was approximately
$23,962,000, subject to certain adjustments. Goodwill recorded in connection
with these acquisitions was approximately $13,838,000. In addition, contingent
payments of up to $10,500,000 may be paid in connection with two of these
acquisitions, depending upon each business achieving certain financial results
during the three-year period subsequent to the date of acquisition.
Also during 1995, the Company paid $11,179,000 as the contingent portion of a
purchase price in connection with a 1992 acquisition. Goodwill was increased by
the amount of the payment.
During 1994, the Company completed four business acquisitions. Two
acquisitions were in the Company's investment support systems business and two
were in its disaster recovery services business. Total cash paid in connection
with these acquisitions was approximately $28,157,000, subject to certain
adjustments. Goodwill recorded in connection with these acquisitions was
approximately $12,806,000.
During 1993, the Company completed eight business acquisitions. Four
acquisitions were in the Company's investment support systems business and four
were in its disaster recovery services business. Total cash paid in connection
with these acquisitions was approximately $32,258,000, subject to certain
adjustments. Goodwill recorded in connection with these acquisitions was
approximately $13,284,000.
On February 5, 1993, the Company sold its automotive dealership-systems
product line, resulting in an after-tax gain of $3,371,000 ($0.09 per fully
diluted share).
In connection with a 1992 acquisition, the Company could pay up to an
additional 50,000,000 Swedish Kronor (approximately $7,475,000 at December 31,
1995) depending upon the business achieving certain financial results during the
forty-two-month period ending April 30, 1996.
The results of operations of these acquired businesses have been included in
the accompanying Consolidated Statements of Income from the date of acquisition.
Pro forma combined results of operations are not presented since the results of
operations as reported in the accompanying Consolidated Statements of Income
would not be materially different.
3. Property and Equipment
Property and equipment consist of the following at
December 31 (in thousands):
1995 1994
---------------------
Computer and telecommunications
equipment.................................... $ 142,387 $ 121,691
Leasehold improvements.......................... 32,082 28,302
Office furniture and equipment.................. 27,156 22,413
Buildings and improvements...................... 15,797 15,672
Land............................................ 2,491 2,491
Construction in progress........................ 2,412 4,903
---------------------
222,325 195,472
Accumulated depreciation and
amortization................................. (126,580) (105,036)
---------------------
$ 95,745 $ 90,436
=====================
- ------
52 SunGard Data Systems Inc.
- ------
4. Long-Term Debt
Long-term debt consists of the following at December 31
(in thousands):
1995 1994
---------------------
Purchase price obligations due former
owners of acquired businesses................ $ 6,610 $ 7,944
Other, primarily capital lease
obligations for computer equipment
and buildings................................ 3,392 2,623
---------------------
10,002 10,567
Less current maturities......................... (6,761) (5,673)
---------------------
$3,241 $ 4,894
=====================
The Company has two unsecured revolving credit agreements (Credit Agreements)
that provide for up to an aggregate $25,000,000 of revolving credit for a three-
year period, renewable on an annual basis at the lenders' option, at an interest
rate based upon LIBOR plus 0.75%, the CD rate plus 0.875%, or the Prime rate, at
the Company's option. In order to remain eligible to borrow under the Credit
Agreements, the Company must, among other requirements, maintain a defined
minimum tangible net worth and limit its total debt. There had been no borrowing
under the Credit Agreements through December 31, 1995.
Annual maturities of long-term debt during the next five years are as
follows: 1996-$6,761,000; 1997-$797,000; 1998-$426,000; 1999-$429,000; and
2000-$85,000.
5. Stock Option and Award Plans
Employee Stock Purchase Plan
Under the Company's Employee Stock Purchase Plan, a maximum of 1,200,000 shares
of common stock may be issued to substantially all full-time employees. Eligible
employees may purchase a limited number of shares of common stock each quarter
through payroll deductions, at a purchase price equal to 85% of the closing
price of the Company's common stock on the last business day of each calendar
quarter. During 1995, 1994 and 1993, employees purchased 156,000, 173,000 and
128,000 shares, respectively, at average purchase prices of $22.49, $15.49 and
$15.03 per share, respectively. At December 31, 1995, 208,000 shares of common
stock were reserved for issuance under this plan.
Equity Incentive Plans
Under the Company's 1994 Equity Incentive Plan, awards or options to purchase up
to 1,000,000 shares of common stock may be granted to key employees of the
Company, with an individual limit of 200,000 shares per participant per year.
Options may be either incentive stock options or nonqualified stock options, and
the option price generally must be at least equal to the fair value of the
Company's common stock on the date of award or grant. Generally, options are
granted for a ten-year term and become fully exercisable one year from the date
of grant, subject to a four- or five-year vesting schedule.
During 1995 and 1994, long-term incentive awards (LTIP awards) were granted
to group chief executive officers for future options of up to an aggregate of
88,000 and 84,000 shares, respectively. The actual number of shares and the
exercise price per share are contingent upon achieving certain cumulative
financial results over a three-year period, beginning on January 1 of the year
of each LTIP award. If and when the option shares are earned, the exercise price
per share will be $19.05 and $19.33, respectively, but could be reduced to a
minimum of $12.09 and $12.37, respectively, if actual operating results during
the three-year period exceed targeted operating results. Compensation expense,
if any, is estimated initially at the time the achievement of the cumulative
financial results becomes probable and is recorded over the remaining three-year
period of each LTIP award, based upon the difference between the market value
and exercise price of the shares earned. During the year ended December 31,
1995, compensation expense of $631,000 was recorded in connection with certain
1994 LTIP awards. No compensation expense has been recorded for the 1995 LTIP
awards.
Under the Company's 1986 and 1982 Stock Option Plans, options to purchase up
to 4,094,000 shares of the Company's common stock may be issued to officers and
key employees. These options may be either incentive stock options or
nonqualified stock options, and the option price must be at least equal to the
fair value of the Company's common stock on the date of grant. Generally,
options are granted for a ten-year term and become fully exercisable one year
from the date of grant, subject to a four- or five-year vesting schedule.
- ------
53 1995 Annual Report
- ------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
The table below summarizes transactions under these stock option plans. All
share and per share amounts have been restated to reflect a July 1995 two-for-
one stock split (see Note 10).
Other Stock Awards
On April 30, 1991, the stockholders approved the Company's Restricted Stock
Award Plan for Outside Directors (RSAP). The RSAP provides for awards of up to
200,000 shares of the Company's common stock. Each outside director
automatically receives an initial award of 10,000 shares of the Company's common
stock upon election to the Company's Board of Directors and, upon reelection as
an outside director every fifth year thereafter, automatically receives another
10,000 shares. Shares awarded under the RSAP are subject to certain transfer and
forfeiture restrictions that lapse over a five-year vesting period. RSAP awards
for 10,000 shares were granted during 1994 and 1993 at market values of $17.31
and $14.50 per share, respectively. There were no awards during 1995. At
December 31, 1995, 121,000 shares of common stock were reserved for issuance
under this plan.
On May 1, 1990, the stockholders approved the Company's Restricted Stock
Incentive Plan (RSIP). The RSIP provides for awards of up to 800,000 shares of
the Company's common stock to key management employees. Shares awarded under the
RSIP are subject to certain transfer and forfeiture restrictions that lapse over
a five-year vesting period. There have been no awards granted since 1991. At
December 31, 1995, 107,000 shares of common stock were reserved for issuance
under this plan.
Unearned compensation expense related to the restricted stock plans is
reported as a reduction of stockholders' equity in the accompanying consolidated
financial statements. For accounting purposes, compensation expense is recorded
ratably over the five-year period during which the shares are subject to
transfer and forfeiture restrictions and is based on the market value on the
award date less the par value of the shares awarded. Compensation expense
related to these plans aggregated $638,000, $1,462,000 and $1,432,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.
Shares
-----------------------------------
Under
Available Award or Option
------------------------------------
Balances at December 31, 1992 ($0.35 - $14.19 per share)....................... 104,000 1,564,000
Authorized.................................................................. 500,000 --
Canceled ($5.00 - $14.50 per share)......................................... 80,000 (80,000)
Granted ($14.50 - $19.50 per share)......................................... (130,000) 130,000
Exercised ($0.35 - $11.69 per share)........................................ -- (246,000)
------------------------------------
Balances at December 31, 1993 ($2.50 - $19.50 per share)....................... 554,000 1,368,000
Authorized.................................................................. 1,000,000 --
LTIP awards ($12.37 - $19.33 per share)..................................... (84,000) 84,000
Canceled ($7.00 - $11.69 per share)......................................... 10,000 (10,000)
Granted ($19.25 - $19.38 per share)......................................... (102,000) 102,000
Exercised ($2.50 - $11.69 per share)........................................ -- (184,000)
------------------------------------
Balances at December 31, 1994 ($2.50 - $19.50 per share)....................... 1,378,000 1,360,000
Poolings-of-interests ($0.38 - $8.21 per share)............................. -- 89,000
LTIP awards ($12.09 - $19.05 per share)..................................... (88,000) 88,000
Canceled ($7.00 - $19.50 per share)......................................... 56,000 (56,000)
Granted ($20.63 - $30.75 per share)......................................... (729,000) 729,000
Exercised ($2.50 - $19.50 per share)........................................ -- (339,000)
------------------------------------
Balances at December 31, 1995 ($0.38 - $30.75 per share)....................... 617,000 1,871,000
====================================
Options exercisable at December 31, 1995 878,000
=========
- ------
54 SunGard Data Systems Inc.
- ------
6. Savings Plans
The Company and its subsidiaries maintain savings plans that cover substantially
all employees. These plans generally provide that the Company will contribute a
certain percentage of employee compensation or contributions up to a specified
level. Company contributions charged to income under these plans aggregated
$5,338,000, $3,800,000 and $3,092,000 for the years ended December 31, 1995,
1994 and 1993, respectively.
7. Income Taxes
The provisions for income taxes for the years ended December 31, 1995, 1994 and
1993 consist of the following (in thousands):
1995 1994 1993
---------------------------
Current:
Federal............................ $26,112 $22,251 $17,013
State.............................. 6,708 6,810 5,415
Foreign............................ 4,994 4,048 1,579
---------------------------
37,814 33,109 24,007
---------------------------
Deferred:
Federal............................ (1,376) (2,579) 432
State.............................. (216) (603) 231
Foreign............................ 218 (486) 47
---------------------------
(1,374) (3,668) 710
---------------------------
$36,440 $29,441 $24,717
===========================
Differences between income tax expense at the United States federal statutory
income tax rate and the Company's effective income tax rate for the years ended
December 31, 1995, 1994 and 1993 are as follows (in thousands):
1995 1994 1993
---------------------------
Tax at federal statutory rate........ $29,789 $25,385 $22,117
State income taxes, net of
federal benefit................... 4,393 4,034 3,670
Nondeductible amortization........... 1,039 1,142 1,009
Merger costs......................... 1,524 -- --
Tax-exempt interest income........... (648) (859) (817)
Foreign taxes........................ (120) 196 210
Product-line sale.................... -- -- (1,013)
Other, net........................... 463 (457) (459)
---------------------------
$36,440 $29,441 $24,717
===========================
Effective income tax rate............ 42.8% 40.6% 39.1%
===========================
Deferred taxes are recorded based upon differences between financial statement
and tax bases of assets and liabilities. The following deferred taxes were
recorded as of December 31, 1995 and 1994 (in thousands):
1995 1994
-----------------
Current:
Accounts receivable.................. $ 2,483 $ 2,868
Accrued compensation and benefits.... 2,810 2,632
Other accrued expenses............... 1,434 1,361
Deferred compensation................ -- (371)
-----------------
$ 6,727 $ 6,490
-----------------
Long-Term:
Property and equipment............... $ 1,759 $ (77)
Intangible assets.................... (8,662) (8,067)
Deferred compensation................ 275 --
-----------------
$(6,628) $(8,144)
=================
8. Export Sales
The Company's domestic operations recorded revenues primarily from international
software licenses and maintenance and professional services of approximately
$51,273,000, $33,505,000 and $29,061,000 for the years ended December 31, 1995,
1994 and 1993, respectively.
9. Commitments
The Company leases a substantial portion of its computer equipment and
facilities under operating leases. Future minimum rentals under operating leases
with initial or remaining noncancelable lease terms in excess of one year as of
December 31, 1995 follow (in thousands):
1996 ................. $ 45,016
1997 ................. 37,828
1998 ................. 27,581
1999 ................. 12,312
2000 ................. 3,929
Thereafter ........... 17,719
--------
$144,385
========
Rent expense aggregated $52,359,000, $45,923,000 and $40,914,000 for the years
ended December 31, 1995, 1994 and 1993, respectively.
- ------
55 1995 Annual Report
- ------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
10. Stockholders' Equity
Common Stock Split:
On June 2, 1995, the Company's Board of Directors authorized a two-for-one stock
split of the Company's common stock. The stock split was effective for
stockholders of record on June 15, 1995, and shares were issued on July 7, 1995.
The number of shares used for purposes of calculating net income per common
share and all per share data have been adjusted for all periods presented to
reflect this stock split.
Common Stock Repurchases:
In November 1994, the Company's Board of Directors authorized a stock repurchase
plan permitting the Company to repurchase up to 2,000,000 shares of its common
stock by December 31, 1995. Under that plan, the Company repurchased shares of
its common stock in a systematic pattern in order to satisfy the needs arising
from activity in its employee stock purchase, equity incentive and other stock
award plans. In 1995, the Company repurchased 400,000 shares of its common stock
at a cost of $10,029,000.
In November 1995, the Company's Board of Directors extended the common
stock repurchase program in order to permit the Company to continue its
systematic pattern of stock repurchases to satisfy the needs arising from
activity in its employee stock purchase, equity incentive and other stock award
plans.
When treasury stock is reissued, any excess of the acquisition cost of the
stock over the proceeds from reissuance is charged to retained earnings.
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Stockholders
SunGard Data Systems Inc.
We have audited the accompanying consolidated balance sheets of SunGard Data
Systems Inc. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
SunGard Data Systems Inc. and subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 8, 1996
- ------
56 SunGard Data Systems Inc.
- ------