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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

OR

Commission file number 1-12989

SunGard^® Data Systems Inc.

(Exact name of registrant as specified in its charter)

680 East Swedesford Road, Wayne, Pennsylvania 19087

(Address of principal executive offices, including zip code)

484-582-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  x  No

There were 284,395,866 shares of the registrant’s common stock, par value $.01 per share, outstanding at March 31, 2003.

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SUNGARD DATA SYSTEMS INC.

AND SUBSIDIARIES

INDEX

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

SunGard Data Systems Inc.

Consolidated Balance Sheets

(In thousands, except per-share amounts)

The accompanying notes are an integral part of these financial statements.

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SunGard Data Systems Inc.

Consolidated Statements of Income

(In thousands, except per-share amounts)

(Unaudited)

The accompanying notes are an integral part of these financial statements.

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SunGard Data Systems Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

The accompanying notes are an integral part of these financial statements.

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SUNGARD DATA SYSTEMS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation:

SunGard Data Systems Inc. (the Company) has three segments: Investment Support Systems (ISS), Availability Services (AS) and Other Businesses. The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.

The accompanying interim consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Interim financial reporting does not include all of the information and footnotes required by GAAP for complete financial statements. The interim financial information is unaudited, but reflects all normal adjustments which are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

2. Acquisitions:

The Company seeks to grow through both internal development and the acquisition of businesses that broaden or complement its existing product lines. During the three months ended March 31, 2003, the Company completed two acquisitions in its ISS segment and one acquisition in its Other Businesses segment. Gross cash paid in connection with these acquisitions is $203.3 million, subject to certain adjustments. Pro forma combined results of operations are not presented, other than in connection with the July 2002 acquisition of Guardian iT plc (Guardian), since the results as reported in the accompanying Consolidated Statements of Income would not be materially different.

During the three months ended March 31, 2002, the Company completed three acquisitions in its ISS segment. Gross cash paid in connection with these acquisitions is $22.6 million, subject to certain adjustments. Goodwill recorded is $10.6 million.

In connection with certain previously acquired businesses, a total of up to $171.0 million could be paid as additional consideration over the next three years contingent upon the future operating performance of those businesses. The amount paid, if any, will be recorded as additional goodwill at the time the actual performance is known and the amounts become due. During the three months ended March 31, 2003, the Company paid $15.0 million as additional consideration based upon the operating performance of a business previously acquired.

At March 31, 2003, the purchase-price allocations to the assets acquired and liabilities assumed for two of the three acquisitions completed during the three months ended March 31, 2003 are preliminary. Goodwill recorded for all three acquisitions is $119.3 million. These allocations are

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expected to be finalized in the second quarter when independent valuations of the identified intangible assets acquired and liabilities assumed are completed. In addition, the Guardian purchase-price allocation is still preliminary, but will be completed during the second quarter of 2003 upon finalization of facility closure plans and property lease valuations.

Changes in goodwill by segment during the three months ended March 31, 2003 follow (in thousands):

Because of the acquisitions completed in the first quarter of 2003 (and the finalization of purchase price allocations of previously completed acquisitions), the estimated amortization expense for each of the years 2003 to 2007 contained in Footnote 1 to the Company’s Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 has been updated. In addition, because certain of these allocations are still preliminary, it is likely that the estimated annual amortization expense will continue to be updated as the allocations are finalized. Based on amounts recorded at March 31, 2003, total estimated amortization of all acquisition-related intangible assets during each of the years ended December 31 follows (in thousands):

In connection with the integration of the last two AS acquisitions into the Company’s AS segment, the Company accrued, as a cost of the acquisitions and as part of goodwill, estimated costs of closing certain acquired facilities and reducing acquired headcount. The estimated costs for closing certain of the Company’s existing facilities and headcount reductions related to the Company’s existing employees were included in merger costs. Generally, all equipment located at closed facilities is relocated to other facilities, thereby improving the operational resilience and scope of services available to customers.

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The activity relating to severance and facility closure accruals in connection with these acquisitions follows (in thousands):

The remaining facility closure accrual relates primarily to the remaining lease obligations for 12 facilities identified for closure, net of estimated sublease income, and will be paid over their remaining lease terms, which expire between 2003 and 2017, unless terminated earlier.

Merger Costs:

During the three months ended March 31, 2003, no merger costs were recorded. During the three months ended March 31, 2002, merger costs related to closing certain facilities of the availability solutions business of Comdisco Inc. totaled $1.7 million (less than $.01 per diluted share).

Pro Forma Financial Information:

On July 1, 2002, the Company completed the acquisition of Guardian. The following unaudited pro forma combined results of operations for the three months ended March 31, 2002 is provided for illustrative purposes only and assumes that this acquisition occurred on January 1, 2002. This unaudited pro forma information (in thousands, except per-share amounts) should not be relied upon as necessarily being indicative of the historical results that would have been obtained if this acquisition had actually occurred on that date, nor of the results that may be obtained in the future.

Subsequent Event:

On April 8, 2003, the Company completed its previously announced cash tender offer for the outstanding common shares of Caminus Corporation. The gross cash paid was approximately $160.0 million, of which $140.0 million was borrowed under the Company’s existing credit agreement.

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3. Clearing Broker Assets and Liabilities:

During the three months ended March 31, 2003, the Company acquired a registered broker that provides order routing, execution and clearing services for professional traders. At March 31, 2003, clearing broker assets and liabilities are comprised of the following (in thousands):

Segregated customer cash and treasury bills are held by the Company on behalf of customers. Other customer securities consist of trading and investment securities at fair market values. Securities borrowed and loaned represent deposits made to or received from other broker-dealers. Receivables from and payables to customers represent amounts due or payable on cash and margin transactions.

4. Shares Used in Computing Net Income Per Common Share:

The computation of shares used in computing basic and diluted net income per common share for the three months ended March 31, 2003 and 2002 follows (in thousands):

During the three months ended March 31, 2003, the Company had approximately 19.5 million outstanding employee stock options that are out-of-the-money and therefore excluded from the calculation of the dilutive effect of employee stock options. These stock options are considered to be out-of-the-money because the option exercise prices exceed the average share price during the three months ended March 31, 2003. The dilutive effect of employee stock options is measured by the amount, if any, that individual stock option exercise prices are less than the average share price during the period.

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5. Stock-Based Compensation:

The Company applies Accounting Principles Board Opinion Number 25, “Accounting for Stock Issued to Employees,” in accounting for its stock option and award plans. Accordingly, compensation expense has been recorded for its restricted stock awards and no expense has been recorded for its other stock-based plans. Statement of Financial Accounting Standards Number 123, “Accounting for Stock-Based Compensation” (SFAS 123), changed the method for recognition of cost of stock option and award plans. Adoption of the cost recognition requirements under SFAS 123 is optional; however, the following supplemental information is provided for each of the three months ended March 31 (in thousands, except per-share amounts):

The weighted-average fair value of the options granted during the three months ended March 31, 2003 and 2002 is estimated to be $11.54 and $18.84 per share, respectively, on the date of grant, representing 60% and 57%, respectively, of the weighted-average market value of the Company’s common stock on the date of grant. The fair value of options granted is determined using the Black-Scholes pricing model with the following assumptions in both periods: volatility of 52%; expected term of six years (nine and one-half years for unvested performance accelerated stock options); risk-free interest rate of 3.1%; and no dividend yield. The effects of applying SFAS 123 in this pro forma disclosure are not necessarily indicative of the impact on future years, since the Company anticipates that additional options and awards will be made in future years.

6. Comprehensive Income:

Comprehensive income consists of net income adjusted for other increases and decreases affecting stockholders’ equity that are excluded from the determination of net income. The calculation of comprehensive income for the three months ended March 31, 2003 and 2002 follows (in thousands):

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7. Segment Information:

The Company has three segments: ISS, AS and Other Businesses. Effective January 1, 2003, a change in management responsibilities caused a reclassification of a business that provides workflow management systems, primarily to healthcare insurance organizations, from Other Businesses to ISS. This change in segment reporting has been reflected for all periods presented. The operating results for each of the segments for each of the quarters of 2002, the year ended December 31, 2002 and the three months ended March 31, 2003 follows (in thousands):

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis supplement the management’s discussion and analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, and presume that readers have read or have access to the discussion and analysis in the Company’s Annual Report. The following discussion and analysis include historical and certain forward-looking information that should be read together with the accompanying Consolidated Financial Statements, related footnotes, and the discussion below of certain risks and uncertainties that could cause future operating results to differ materially from historical results or from the expected results indicated by forward-looking statements.

Results of Operations:

The following table sets forth, for the periods indicated, certain amounts included in the Company’s Consolidated Statements of Income, the relative percentage that those amounts represent to consolidated revenues (unless otherwise indicated), and the percentage change in those amounts from period to period.