EXHIBIT 99.3
PART I - CONDENSED FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFINITY FINANCIAL TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
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(UNAUDITED)
Current assets:
Cash and cash equivalents..................... $18,211 $36,952
Short-term investments........................ 22,869 --
Receivables, net.............................. 20,893 18,802
Deferred tax asset............................ 887 887
Prepaid expenses and other current assets..... 510 337
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Total current assets........................ 63,370 56,978
Property and equipment, net..................... 3,468 2,896
Other non-current assets........................ 927 430
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Total assets................................ $67,765 $60,304
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 3,439 $ 1,739
Accrued compensation........................... 4,794 3,959
Other accrued liabilities...................... 2,528 2,861
Deferred revenue............................... 8,774 10,399
Current portion of capital lease obligations... 302 368
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Total current liabilities.................... 19,837 19,326
Long-term portion of capital lease obligations.. 463 553
Commitments:
Stockholders' equity:
Common stock................................... 33,368 32,207
Deferred stock compensation.................... (391) (508)
Notes receivable from stockholders............. (438) (826)
Cumulative translation adjustment.............. (22) (21)
Retained earnings.............................. 14,948 9,573
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Total stockholders' equity................... 47,465 40,425
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Total liabilities and stockholders' equity... $67,765 $60,304
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See accompanying notes to condensed consolidated financial statements.
INFINITY FINANCIAL TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data - unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1997 1996 1997 1996
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Revenues:
License revenues.............................. $12,928 $ 8,380 $34,473 $22,498
Service revenues.............................. 4,228 2,237 11,736 6,066
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Total revenues............................... 17,156 10,617 46,209 28,564
Costs and expenses:
Cost of revenues.............................. 3,391 1,384 8,295 3,249
Sales and marketing........................... 5,852 3,896 16,347 10,070
Research and development...................... 3,631 2,433 9,732 6,571
General and administrative.................... 1,226 891 3,640 2,600
Acquired in-process research &
development................................. -- -- 861 --
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Total costs and expenses..................... 14,100 8,604 38,875 22,490
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Income from operations......................... 3,056 2,013 7,334 6,074
Other income, net.............................. 359 74 1,064 17
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Income before provision for income taxes....... 3,415 2,087 8,398 6,091
Provision for income taxes..................... 1,229 793 3,023 2,314
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Net income................................... $ 2,186 $ 1,294 $ 5,375 $ 3,777
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Net income per share........................... $0.10 $0.07 $0.26 $0.20
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Shares used in computing net income per share 20,891 18,763 20,974 18,808
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See accompanying notes to condensed consolidated financial statements.
INFINITY FINANCIAL TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
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1997 1996
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Cash flows from operating activities:
Net income................................................... $ 5,375 $ 3,777
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization and other........................ 1,224 825
Acquired in-process research and development................ 907 --
Changes in assets and liabilities:
Receivables................................................. (2,091) (8,711)
Deferred tax asset.......................................... -- (441)
Prepaid expenses and other assets........................... (348) (174)
Accounts payable............................................ 1,700 1,189
Accrued compensation........................................ 835 986
Payable to former stockholder............................... -- (1,277)
Other accrued liabilities................................... (333) 1,231
Deferred revenue............................................ (1,625) 5,344
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Net cash provided by (used in) operating activities........ 5,644 2,749
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Cash flows used in investing activities:
Capital expenditures......................................... (1,627) (1,337)
Purchases of short-term investments.......................... (57,904) --
Maturities of short-term investments......................... 35,035 --
Acquisition of purchased technology.......................... (1,230) --
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Net cash used in investing activities...................... (25,726) (1,337)
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Cash flows provided by (used in) financing activities:
Payment of long-term promissory note......................... -- (67)
Payments of notes receivable from stockholders............... 388 201
Principal payments of capital lease obligations.............. (208) (232)
Proceeds from issuance of common stock....................... 1,161 201
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Net cash provided by (used in) financing activities........ 1,341 103
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Net increase (decrease) in cash and cash equivalents.......... (18,741) 1,515
Cash and cash equivalents at beginning of period.............. 36,952 3,517
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Cash and cash equivalents at end of period.................... $ 18,211 $ 5,032
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SUPPLEMENTAL INFORMATION:
Cash paid during the period:
Income taxes paid ....................................... $ 2,761 $ 2,302
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Interest paid ........................................... $ 82 $ 48
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See accompanying notes to condensed consolidated financial statements.
INFINITY FINANCIAL TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DESCRIPTION OF BUSINESS
Infinity Financial Technology, Inc. ("Infinity" or the "Company") develops
and markets enterprise software solutions for financial risk management. These
solutions address the rigorous business requirements of global organizations
that manage complex financial assets, including banks, fund managers, and
corporate and government treasuries. The Company provides a comprehensive range
of customer support services, including maintenance, training, and consulting.
Infinity's principal markets for its products and services are primarily in
North America, Western Europe and Asia/Pacific. The Company was incorporated in
California in 1989 and was reincorporated in Delaware in 1996.
The Company has more than 65 customers around the world, consisting of large
banks and other financial institutions with sophisticated trading operations and
risk management needs. Its primary product is the Infinity Platform(TM), which
provides customers with a foundation to rapidly develop, deploy and modify
trading and risk management systems in response to the changing requirements of
the marketplace. Infinity also offers Infinity Derivatives(TM), software
solutions for derivatives trading, Infinity RiskView(TM), which is designed to
facilitate customers' development of risk management systems, Infinity Limit
Manager(TM), Infinity Market Simulator(TM) and Infinity FinEx(TM). In addition,
riskview.com(TM), the first web-based portfolio analytics tool for fund
managers, was introduced in September 1997 by Infinity in partnership with Dow
Jones and IBM Corporation.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "Commission") and reflect all adjustments consisting of normal recurring
adjustments which, in the opinion of management, are necessary for a fair
presentation of the operating results for the periods presented. The results of
operations for the interim periods presented are not necessarily indicative of
the results that may be expected for the full fiscal year. This quarterly report
on Form 10-Q should be read in conjunction with the audited consolidated
financial statements and notes thereto for the three year period ended December
31, 1996 included in the Infinity Financial Technology, Inc. Annual Report on
Form 10-K filed with the Commission in March 1997.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All intercompany account balances and
transactions have been eliminated in consolidation. Certain amounts from prior
years have been reclassified to conform to current year presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions which affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates, and such differences could affect the
results of operations reported in future periods.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position 91-1 ("SOP 91-1"), "Software
Revenue Recognition." License revenues are recognized upon shipment only if no
significant vendor obligations remain and collection of the resulting receivable
is deemed probable. When the Company receives payment on licenses prior to
shipment and fulfillment of significant vendor obligations, such payments are
recorded as deferred revenue. Service revenues consist primarily of maintenance
and support, training, consulting and co-development projects. Service revenues
from customer maintenance fees for ongoing customer support and product updates
are recognized ratably over the maintenance term, which is typically 12 months.
Service revenues from customer training and consulting services are recognized
as the service is performed. Service revenues from co-development agreements are
recognized upon achievement of contractual milestones or on a percentage-of-
completion basis.
NET INCOME PER SHARE
Net income per share is computed using the weighted average number of common
shares outstanding and common equivalent shares arising from the assumed
exercise of stock options using the treasury stock method. Pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins, common and common
equivalent shares issued during the period commencing 12 months prior to the
initial filing of the Company's initial public offering at prices below the
assumed public offering price have been included in the calculation as if they
were outstanding for all periods presented (using the treasury stock method).
Fully diluted net income per share is computed using the weighted average common
and common equivalent shares outstanding plus other dilutive shares outstanding
which are not common equivalent shares.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which the Company is required to adopt on December
31, 1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings per share, the
dilutive effect of stock options and convertible preferred stock will be
excluded. The impact is expected to result in an increase in primary earnings
per share for the three months ended September 30, 1997 and 1996 of $0.01 and
$0.02 per share, respectively, and for the nine months ended September 30, 1997
and 1996 of $0.03 and $0.09 per share, respectively. The impact of Statement No.
128 on the calculation of fully diluted earnings per share for these periods is
not expected to be material.
SUBSEQUENT EVENT
On October 17, 1997, the Company entered into an Agreement and Plan of
Merger and Reorganization (the "Reorganization Agreement") with SunGard Data
Systems, Inc., a Delaware corporation ("SunGard"), providing for the acquisition
of Infinity by SunGard. Upon consummation of the merger, Infinity will become a
wholly owned subsidiary of SunGard. As a result of the merger, each outstanding
share of common stock of Infinity will be converted into the right to receive
0.68 of a share of common stock of SunGard. The shares to be issued by SunGard
in the transaction will have a value of approximately $313 million based upon
SunGard's closing price of $24 1/16 on October 16,1997. The obligations of
SunGard and Infinity to effect the merger and otherwise consummate the
transactions contemplated by the Reorganization Agreement are subject to the
satisfaction or waiver of various conditions, including the adoption and
approval of the Reorganization Agreement and the approval of the merger by
holders of a majority of the outstanding shares of Infinity common stock and the
expiration or termination of the waiting period applicable to the merger under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The
Reorganization Agreement calls for the merger to be consummated shortly after
such stockholder approval is obtained, such waiting period expires or is
terminated and the other conditions to consummation of the merger are satisfied
or waived. The merger is intended to be accounted for as a pooling of interests
for financial reporting purposes in accordance with generally accepted
accounting principles. The merger is more fully described in SunGard's Form S-4
Registration Statement filed with the Securities and Exchange Commission on
November 12, 1997.