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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended DECEMBER 31, 1999 or
---------------------
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____________ to
_____________
COMMISSION FILE NUMBER..............................................1-12989
SUNGARD/(R)/ DATA SYSTEMS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0267091
(State of incorporation) (I.R.S. Employer Identification No.)
1285 DRUMMERS LANE, WAYNE, PENNSYLVANIA 19087
(Address of principal executive offices, including zip code)
(610) 341-8700
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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
---- ----
The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant as of March 17, 2000 was $4,846,000,000.(1) There
were 131,261,000 shares of the registrant's Common Stock outstanding as of March
17, 2000.
Parts II and IV of this Form 10-K incorporate by reference certain information
from the registrant's annual report to stockholders for the fiscal year ended
December 31, 1999, and Part III of this Form 10-K incorporates by reference
certain information from the registrant's definitive proxy statement, for its
2000 annual meeting of stockholders, filed with the Securities and Exchange
Commission not later than 120 days after the end of the registrant's fiscal year
covered by this report.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in the definitive proxy statement
incorporated by reference into Part III of this Form 10-K. [ ]
(1) This equals the number of outstanding shares of the registrant's Common
Stock, reduced by the number of shares that may be deemed beneficially owned
by the registrant's directors, nominees and executive officers, multiplied
by the closing price of the registrant's Common Stock reported on March 17,
2000. This information is provided solely for record keeping purposes of the
Securities and Exchange Commission and shall not be construed as an
admission that any of the registrant's directors, nominees or executive
officers is an affiliate of the registrant or is the beneficial owner of any
such shares. Any such inference is hereby disclaimed.
TABLE OF CONTENTS
PART I
PAGE
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ITEM 1. BUSINESS............................................................................................. 1
Overview......................................................................................... 1
Investment Considerations........................................................................ 1
Investment Support Systems....................................................................... 4
Business Continuity and Internet Services........................................................ 7
Other Businesses................................................................................. 8
Product Development.............................................................................. 9
Acquisitions and Offerings....................................................................... 9
Competition......................................................................................11
Marketing........................................................................................12
Employees........................................................................................12
Proprietary Protection...........................................................................12
ITEM 2. PROPERTIES...........................................................................................13
ITEM 3. LEGAL PROCEEDINGS....................................................................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................14
ITEM 4.1 CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT.........................................................14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................................15
ITEM 6. SELECTED FINANCIAL DATA..............................................................................15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................................16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................................................16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................................................16
ITEM 11. EXECUTIVE COMPENSATION...............................................................................17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......................................17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................................17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K......................................17
SIGNATURES...........................................................................................19
LIST OF EXHIBITS.....................................................................................20
PART I
ITEM 1. BUSINESS
OVERVIEW
SunGard Data Systems Inc. ("SunGard") is a global leader in integrated
information-technology solutions and "eProcessing" for financial services.
SunGard is also the pioneer and a leading provider of high-availability
infrastructure for business continuity. With annual revenues in excess of one
billion dollars, SunGard serves more than 10,000 clients in over 50 countries,
including most of the world's largest financial services companies.
SunGard offers integrated, Web-enabled enterprise solutions for the
management, trading, processing and accounting of financial assets and offers
high-availability infrastructure, outsourcing and hosting for online and other
business-critical operations. SunGard's strategy, based on innovation,
acquisition and integration, results in a diversified revenue stream from
clients who rely upon a wide range of SunGard products and services for their
business-critical processing.
SunGard's products and services generally are delivered and supported
through individual business units that offer product-specific development and
customer support. These business units are organized into groups that focus on
like customers and facilitate product integration and multi-product sales and
implementations. SunGard's executive management team identifies synergies among
SunGard businesses to continue integrating its products and services and
pursuing additional opportunities for straight-through processing. One such
initiative is the SunGard Transaction Network, a virtual network linking
investors to brokers, brokers to exchanges, exchanges to banks, and banks to
custodians, to facilitate real-time, Internet-enabled straight-through
processing.
SunGard's diversified revenue stream is largely recurring. SunGard seeks to
maximize recurring revenues by selling its products and services under fixed-
term contracts and by emphasizing customer support, product quality and product
integration in order to establish long-term relationships with customers.
SunGard's recurring revenues accounted for approximately 81% of SunGard's total
revenues during the last three years (83% in 1999). SunGard's recurring revenues
are derived primarily from contracts for processing services, business
continuity and Internet services, professional services, software maintenance
and software and hardware rentals (see INVESTMENT CONSIDERATIONS). None of
SunGard's customers individually accounted for more than two percent of
SunGard's revenues in 1999.
SunGard, a Delaware corporation, was organized in 1982. SunGard's
executive offices are located at 1285 Drummers Lane, Wayne, Pennsylvania 19087,
and its telephone number is (610) 341-8700.
INVESTMENT CONSIDERATIONS
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.
This Report and other SunGard communications contain forward-looking
statements made by SunGard that are subject to risks and uncertainties and that
may change at any time and differ from actual results. Forward-looking
statements include information about possible or assumed future financial
results of SunGard and usually contain words such as "believes," "intends,"
"expects," "anticipates" or similar expressions. SunGard derives most of its
forward-looking statements from its operating budgets and forecasts, which are
based upon many detailed assumptions. While SunGard believes
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that its assumptions are reasonable, it cautions that there are inherent
difficulties in predicting certain important factors such as:
. the timing and magnitude of software sales;
. the timing and scope of technological advances;
. the integration and performance of acquired businesses;
. the prospect of future acquisitions;
. the ability to attract and retain skilled personnel;
. the effect of year 2000 issues on software and services buying
decisions; and
. the overall condition of the financial services industry.
Certain of these factors are further discussed below. These factors, as
and when applicable, and those discussed below should be considered in
evaluating SunGard's forward-looking statements and any investment in SunGard's
common stock.
RISK FACTORS.
You should carefully consider the risks described below before making any
investment decision. The risks and uncertainties described below are not the
only ones facing SunGard. Additional risks and uncertainties not presently
known to SunGard or that SunGard currently deems immaterial may also impair
SunGard's business operations. If any of the following risks actually occur,
SunGard's business, financial condition or results of future operations could be
materially adversely affected. In such case, the trading price of SunGard's
common stock could decline, and you may lose all or part of your investment.
SUNGARD'S GROWTH STRATEGY DEPENDS IN PART ON ACQUISITIONS. IF SUNGARD IS
UNABLE TO ACQUIRE BUSINESSES ON FAVORABLE TERMS OR SUCCESSFULLY INTEGRATE AND
MANAGE THE BUSINESSES ACQUIRED, SUNGARD'S BUSINESS AND FINANCIAL RESULTS MAY
SUFFER.
SunGard intends to grow by expanding its existing businesses and by
acquiring similar or complementary businesses. This growth strategy is subject
to a number of risks that could adversely affect SunGard's business and
financial results, including:
. SunGard may not be able to find suitable businesses to acquire on
affordable terms;
. competition from other acquirors and stock market fluctuations may make
it more difficult for SunGard to find and complete acquisitions;
. SunGard may have to raise money in the debt or equity markets to finance
future acquisitions;
. at any given time, a large number of shares of SunGard's common stock
issued to acquire businesses may become freely tradable in the market;
and
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. changes in accounting, tax, securities or other regulations may make it
more difficult or costly for SunGard to continue to grow by acquiring
similar or complementary businesses.
The businesses acquired by SunGard may perform worse than expected or may
be more difficult to integrate and manage than expected. If that happens,
SunGard's business and financial results may suffer for a number of reasons,
including:
. SunGard may have to devote unanticipated financial and management
resources to the acquired businesses;
. SunGard may not be able to realize expected operating efficiencies or
product integration benefits; and
. SunGard may have to write off goodwill or other intangible assets if the
acquisition was accounted for as a purchase.
SUNGARD'S SUCCESS DEPENDS IN PART ON ADAPTING ITS COMPUTER SERVICES AND
SOFTWARE TO CHANGES IN TECHNOLOGY AND CHANGES IN ITS CUSTOMERS' BUSINESSES. IF
SUNGARD DOES NOT SUCCESSFULLY UPDATE ITS SOFTWARE AND SERVICES, OR IF ITS NEW
PRODUCTS OR SERVICES ARE NOT TIMELY DELIVERED OR WELL RECEIVED BY CUSTOMERS,
SUNGARD'S BUSINESS AND FINANCIAL RESULTS MAY SUFFER.
SunGard's ability to successfully update its services and software and
timely develop and deliver new products and services required by its customers
is subject to a number of risks that could adversely affect SunGard's business
and financial results, including:
. SunGard may find it difficult to update its services and software and
timely develop and deliver its new products and services in a cost-
effective manner, especially when faced with rapid technological changes
that are hard to predict;
. SunGard may find it difficult to make its products work over the
Internet or to integrate its products into straight-through-processing
solutions;
. SunGard may find it difficult to update its services and software to
keep pace with business, regulatory and other developments in the
financial services industry in which most of SunGard's customers
operate; and
. new developments in patent law may make it more difficult or costly
for SunGard to add or retain important features in its software and
services.
SUNGARD'S BUSINESS IS DEPENDENT LARGELY ON THE FINANCIAL SERVICES INDUSTRY.
IF THAT INDUSTRY DOES POORLY, SUNGARD'S BUSINESS AND FINANCIAL RESULTS MAY
SUFFER.
SunGard sells most of its computer services and software to banks, mutual
funds, brokers, insurance companies and other financial services firms. If the
financial services industry or SunGard's customers in the financial services
industry experience problems, SunGard's business and financial results could be
adversely affected. For example, SunGard may suffer if securities trading
activity declines, the number or value of managed portfolios decreases, or there
is continued consolidation among firms in the financial services industry.
SUNGARD'S BUSINESS IS DEPENDENT ON SKILLED PERSONNEL. IF SUNGARD IS UNABLE
TO ATTRACT AND RETAIN SKILLED PERSONNEL, SUNGARD'S BUSINESS AND FINANCIAL
RESULTS MAY SUFFER.
SunGard's future success depends on the continued service and availability
of skilled personnel, particularly skilled technical, sales and management
personnel. Experienced personnel in the information-technology industry are in
high demand and competition for their talents is intense. There can be no
assurance that SunGard will be able to successfully attract and retain the
personnel
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that it needs. If SunGard is unable to successfully attract and retain skilled
personnel, SunGard's ability to provide its products and services may be
impeded. Even if SunGard is able to attract and retain the skilled personnel it
needs, SunGard's recruitment and compensation expenses could grow faster than
revenues, which could adversely affect SunGard's financial results.
IF CONTINUED YEAR 2000 COMPLIANCE CONCERNS NEGATIVELY IMPACT SOFTWARE AND
SERVICES BUYING DECISIONS, OR IF SUNGARD'S SIGNIFICANT THIRD-PARTY SOFTWARE AND
HARDWARE PROVIDERS DO NOT MEET CONTINUED YEAR 2000 REQUIREMENTS, SUNGARD'S
BUSINESS AND FINANCIAL RESULTS MAY SUFFER.
SunGard believes that year 2000 compliance concerns caused some decline in
software buying and conversion activity during the last half of 1999 and that
this impact may continue into the first half of 2000. As a result, SunGard's
rate of internal revenue growth may decline in the first half of 2000, as
compared to 1999, which could adversely affect SunGard's business and financial
results. Many third-party hardware, software and other products interact with
SunGard's products and services or are used by SunGard as an integral part of
its operations. Although SunGard believes that all of its important vendors are
meeting their year 2000 requirements, SunGard cannot determine at this time
whether or when year 2000 problems will arise with its third-party products. If
problems arise with third-party products, SunGard's business and financial
results may suffer.
INVESTMENT SUPPORT SYSTEMS
SunGard designs, markets and maintains a comprehensive set of proprietary
investment support systems for the financial services industry. SunGard's
customers include banks, brokers, exchanges, corporate treasury departments,
asset managers, mutual funds, investment advisers, insurance companies,
depositories, custodians, trustees, benefit plan administrators, transfer
agents, utilities, governments, educational institutions and nonprofit
organizations. The fundamental purpose of most of SunGard's investment support
systems is to automate the many detailed activities associated with trading
securities, managing portfolios and accounting for invested assets. SunGard
markets these systems throughout the United States and many systems also are
marketed worldwide.
SunGard delivers many of its investment support systems as an application
service provider, using SunGard's data centers that customers access over the
Internet or a private network. SunGard also delivers many of its investment
support systems by licensing the software to customers for use on their own
computers. SunGard provides investment support systems application services
primarily from its data centers in Birmingham (Alabama), Charlotte (North
Carolina), Fairfield (New Jersey), Hopkins (Minnesota), Ridgefield/Weehawken
(New Jersey), Voorhees (New Jersey) and Waltham (Massachusetts) (see
PROPERTIES). Contracts for investment support systems generally have initial
terms of one or more years and then continue for successive, one-year or longer
renewal terms, although some allow the customer to terminate on relatively short
notice.
SunGard's investment support systems business has continued to increase in
both size and scope, due to internal growth and acquisitions (see ACQUISITIONS
AND OFFERINGS).
BROKERAGE AND EXECUTION SYSTEMS. SunGard's brokerage and execution systems
provide comprehensive processing of securities and exchange-traded instruments
for banks and brokerages. These systems manage all important facets of
transaction processing, including order routing, execution and clearance,
position keeping and tracking, regulatory compliance and reporting, and
investment accounting and recordkeeping. SunGard also provides comprehensive
options analysis and risk management systems for professional option traders,
large banks and financial institutions. In addition, SunGard provides a service
to financial services firms that assists them with the collection, consolidation
and reporting of tax information on securities transactions. SunGard's brokerage
systems include software that enables banks and brokerages to launch Internet
trading and account services for their customers.
SunGard provides a variety of customer relationship management software.
This includes software used by retail brokers in tracking customer contacts,
managing portfolios and measuring performance, and software designed for
prospecting, client profiling, needs analysis and cross-selling for use by
insurance, banking and brokerage companies.
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SunGard's products include a wireless communications system for
straight-through processing of securities listed on the New York Stock Exchange,
which is used by SunGard's two-dollar broker to execute trades for its
institutional customers. SunGard also has an equity position in an electronic
communications network that is used by institutions and brokers to trade
anonymously and that operates using SunGard solutions (see ACQUISITIONS AND
OFFERINGS).
SunGard offers straight-through processing for equities by automatically
routing orders to a network of participating brokers. This service is marketed
to portfolio managers and independent financial advisers who use SunGard
investment support systems or third party portfolio management systems.
SunGard also offers software solutions for enterprise application
integration--known as middleware--for the financial services industry that
provide intelligent message translation, content-based routing, and data
validation and enrichment, making it easier to integrate business processes.
RISK AND DERIVATIVES SYSTEMS. SunGard provides software applications and
software development platforms that handle most aspects of risk management and
trading operations for capital markets globally. Generally, these products are
used by traders and market-makers of various types of derivative instruments,
equities, fixed income securities and foreign exchange contracts and by their
middle- and back-office operations. These front-to-back office systems provide
trading support, risk management, trade pricing and analysis, transaction
processing and accounting functions, and also assist users in determining
hedging strategies and monitoring compliance with capital requirements, trading
limits and government regulations.
SunGard also provides asset and liability management software with
comprehensive risk management and performance measurement functionality to
financial institutions.
SunGard also provides systems that permit energy companies and power
trading firms to control physical and financial trading and provide trading
support, market risk management, trade processing, power scheduling and
accounting functions.
ASSET MANAGEMENT SYSTEMS. SunGard's asset management systems maintain the
books of record for all types of large investment portfolios, such as those
managed by banks, mutual funds, employee retirement plans and insurance
companies. The primary functions of these systems are to track investment
activities such as purchases and sales, value portfolios using transmissions of
security prices and quality ratings received from various worldwide market
sources, perform complex accounting calculations and general ledger postings,
and generate a variety of accounting, audit, tax and regulatory reports. In
addition, some of these systems are used by investment advisers and
5
other portfolio managers to analyze large investment portfolios using
computerized models to assist with investment strategy and management
decisions.
SunGard's investment reporting and analysis systems accept data from other
asset management systems or outside sources and perform special reporting or
analyses for fund managers and customers. Some of these systems analyze the
performance of portfolios, perform other types of investment measurement and
analysis, and produce regulatory reports for retirement plan sponsors and
participants.
SunGard offers an integrated asset management application suite that
provides straight-through processing for global asset management firms and
includes functionality for portfolio management, compliance, performance
measurement and trade order management.
SunGard also provides specialized asset management systems for bank trust
accounts. These systems automate the investment, administrative and operations
areas unique to the bank trust businesses, including cash management,
preparation of tax returns for taxable trusts, management and investment of
assets, payment of trust expenses, payment of benefits to retirees, beneficiary
distributions, customer statement production and other customer service duties.
SunGard's custody systems automate the functions associated with the
worldwide custody and safekeeping of investment assets, such as trade
settlement, investment income collection, preparation of client statements, tax
reclamation, foreign exchange and reconciliation of depository and sub-custodian
positions.
SunGard's securities lending system automates the functions associated with
worldwide securities lending activities. In addition, SunGard has entered into
an arrangement with a securities lending agent who is offering securities
lending services to SunGard's asset management systems customers.
SunGard also provides general ledger accounting systems to insurance
companies. These systems provide general ledger, budget performance and
responsibility reporting, cost accounting and profitability analysis.
SunGard also offers an online, straight-through-processing service that
automates the investment process for mutual fund transactions. This service is
marketed to users of SunGard's trust accounting, securities trading and
participant accounting systems, and for use with other vendors' software
products.
INVESTOR ACCOUNTING SYSTEMS. SunGard's participant accounting systems
automate the investment operations associated with defined-contribution
retirement plans such as 401(k) plans. These systems maintain the books of
record for each participant's share of the cash and securities in the plan,
monitor compliance with government regulations and plan restrictions, process
benefits payments to retirees, and produce tax reports for plan sponsors and
participants. As a complement to SunGard's participant accounting systems,
SunGard offers document generation systems for the creation of retirement plan
documents and forms, and software for annual government filings and returns made
by employee benefit and compensation plans.
SunGard's investor accounting systems automate the transfer agent process
for stock, bond and mutual fund issues. These systems maintain shareholder and
bondholder positions, process dividend and interest distributions, generate
proxy materials, tabulate votes, and produce tax reports and periodic
shareholder and bondholder statements.
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SunGard also provides application software systems that facilitate the
sales, marketing and administration functions of life insurance companies and
employee benefit plan administrators.
BANKING AND TREASURY SYSTEMS. SunGard's wholesale banking systems are used
for international funds transfer, trade services and cash management by
corporate and correspondent banks over the Internet or private networks, often
under a bank's private label. SunGard also provides exception-management and
report warehouse systems to financial institutions. These systems detect and
repair errors in electronic transactions, thereby preventing disruptions in
transaction processing and transmissions.
SunGard's treasury and risk management systems are used by the treasury
departments of Fortune 2000 companies and governmental entities worldwide. These
products enable the efficient management of an organization's cash, debt and
investment portfolios. SunGard also provides global professional services, which
focus on application implementation and integration for these treasury systems.
SunGard offers a Web-based service that provides a single point of access over
the Internet to enable corporate treasurers to more efficiently manage
geographically disbursed treasury operations.
PUBLIC SECTOR SYSTEMS. SunGard's public sector product offerings include
fund accounting systems for the accounting and management requirements of
educational institutions, state and local governments and other nonprofit
organizations; financial accounting, payroll and human resources systems for
local governments and school districts; and fundraising and event planning
software and information support systems for educational institutions, hospitals
and charitable institutions.
BUSINESS CONTINUITY AND INTERNET SERVICES
SunGard provides business continuity services and high-availability
infrastructure for all major computing platforms, enabling customers to have
around-the-clock access to business-critical information. SunGard also provides
Web-hosting and co-location services, as well as outsourcing and remote-access
computer services for software developers and government agencies.
Many businesses depend upon computers to perform critical tasks and use
communications networks to transmit data between computer facilities and distant
offices. As more and more business is conducted via the Internet, it is
essential for applications to remain available twenty-four-hours-a-day, seven-
days-a-week. System outages are no longer tolerated since they may result in
lost business. To address this problem, SunGard offers a comprehensive range of
business continuity services.
BUSINESS CONTINUITY. SunGard provides high-availability infrastructure for
use by customers whenever they are unable to operate or communicate with their
computer facilities. SunGard provides its high-availability infrastructure
through fully equipped and operational computer centers known as "hotsites,"
where customers may restore their critical applications using SunGard's
installed computer equipment. SunGard also provides environmentally prepared
computer centers known as "coldsites," in which customers may install and
operate their own computer equipment, and general office space equipped with
workstations and office equipment. In addition, SunGard provides mobile
resources that may be delivered or shipped directly to customer-specified
locations and electronic vaulting operations.
SunGard provides business continuity services to users of IBM (and
compatible) mainframe computers and also to users of Compaq, Data General, Dell,
Digital, Filenet, Hewlett Packard, IBM midrange (AS/400 and RS/6000), NCR,
Netframe, Prime, Pyramid, Sequent, Sequoia, Silicon Graphics, Stratus, Sun
Microsystems, Tandem and Unisys computers. These services are marketed primarily
to prospects and customers directly
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and through representatives for their mainframe and various midrange computer
installations in North America.
During 1999, for the fourteenth consecutive year, SunGard successfully
supported all customers who experienced computer-related failures.
SunGard believes that it conceived and first implemented the concept of the
MegaCenter, a multiple hotsite and coldsite facility that customers may use
directly or remotely. SunGard operates five MegaCenters, located in Atlanta,
Chicago, Philadelphia, Scottsdale (Arizona) and Warminster (Pennsylvania) (see
PROPERTIES). During 1999, SunGard expanded its Atlanta and Scottsdale
MegaCenters and completed a major expansion of its Philadelphia MegaCenter,
which SunGard believes is the world's largest commercial facility dedicated to
business continuity.
SunGard also operates MetroCenter facilities in strategic locations
throughout North America to provide work-group recovery services, enhanced
remote operations capabilities, and recovery operations and testing support for
mobile computer systems. MetroCenters are located in the United States and
Canada, including Beachwood (Ohio), Bellevue (Washington), Boston, Chicago,
Dallas, Denver, Herndon (Virginia), Jersey City (New Jersey), Los Angeles,
Montreal, Northville (Michigan), Pittsburgh, St. Louis, St. Paul, San Ramon
(California) and Toronto. The Denver, St. Paul and Toronto MetroCenters also
have coldsites that can be used in conjunction with the remote operations
capability. The recently expanded Boston location houses SunGard's MetroStor
product for data vaulting and storage.
SunGard believes that by operating a relatively small number of large
facilities linked by a comprehensive communications network it can provide
superior business continuity services in the most effective manner. The SunGard
National Network, a dedicated network linking all of SunGard's MegaCenters and
MetroCenters and many customer locations, provides customers with a nationwide
managed recovery network utilizing synchronous optical technology (SONET).
PLANNING SOLUTIONS. SunGard provides planning software and professional
consulting and educational services to develop comprehensive, business-wide
continuity plans. SunGard's contingency planning software integrates business
analysis and testing tools with automated plan development and reporting
features and offers Internet capabilities. The services performed by SunGard
include risk analyses and audits to determine exposure to the disruption of
critical operations, business and application impact analyses to prioritize
business continuity strategies, and the development of enterprise business
continuity plans. SunGard also designs testing and maintenance programs to
verify that customers' plans reflect the most current operational conditions.
eSOURCING. SunGard provides co-location, Web-hosting, Internet access,
dedicated or on-demand private network access, application service processing
accessible over the Internet or a private network, and outsourcing for
production data centers. These activities are supported at SunGard's MegaCenter
and MetroCenter facilities as well as SunGard's data centers in Voorhees and
Birmingham (see PROPERTIES). SunGard's application service processing is
provided both as an external service to customers using SunGard's investment
support sustems or third party applications, and also as an internal service to
support a number of SunGard's investment support systems business units.
OTHER BUSINESSES
SunGard provides a work-flow management system, which increases efficiency
and flexibility in managing healthcare insurance organizations, and an automated
mailing-services business.
On March 31, 1999, SunGard sold two wholly owned healthcare information
systems businesses (see ACQUISITIONS AND OFFERINGS).
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PRODUCT DEVELOPMENT
SunGard continually upgrades, enhances and expands its proprietary products
and services to meet the needs of its customers and to utilize advances in
technology (see INVESTMENT CONSIDERATIONS).
The investment support systems needs of the financial services industry are
complex and substantial, and continually evolve as a result of increased trading
volume, complexity of financial instruments, changes in laws, introductions of
new types of investment vehicles and technologies, and increased competition.
For these reasons, SunGard continually maintains, enhances and evolves its
proprietary investment support systems. SunGard expects to continue to develop
enhanced and new functionality for its products, further develop Internet and
straight-through-processing capabilities, and develop Windows 2000 and UNIX
versions of many products. During 2000, SunGard also plans to expand the number
of SunGard products that link to the SunGard Transaction Network and to pursue
other initiatives aimed at achieving SunGard's goal of enabling customers to
initiate transactions on the Web - anytime, anywhere - and to execute and record
those transactions on a real-time basis. SunGard's product development strategy
depends in part on the introduction of new technology into the established
functionality of its existing systems.
SunGard funds most of its routine ongoing software maintenance and support
activities through the software maintenance and related upgrade fees paid by its
investment support systems license customers and a portion of the monthly fees
paid by its processing customers. SunGard's expenditures for software
development during 1999, 1998 and 1997, including amounts that were capitalized,
totaled approximately $136.2 million, $137.4 million and $109.3 million,
respectively (these amounts are restated for certain poolings of interests-see
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA). These amounts do not include
routine software maintenance and support costs that are included in cost of
sales, nor do they include costs incurred in performing certain custom
development projects for individual customers in the ordinary course of
business.
SunGard expands its business continuity and Internet services by adding new
service offerings and by opening new facilities or expanding existing facilities
to accommodate both the growth in its customer base and the addition of
different types of computer systems and service offerings. SunGard expects to
open a new MetroCenter in Orlando in 2000. Also, SunGard regularly upgrades its
high-availability infrastructure to offer the most advanced computer equipment
and communications technology generally used by its customers. SunGard also
expects to expand its offerings with respect to Web-hosting, co-location and
Web-enabled outsourcing services.
ACQUISITIONS AND OFFERINGS
SunGard seeks to grow through internal development and the acquisition of
businesses that broaden or complement its existing product lines (see INVESTMENT
CONSIDERATIONS). Since its initial public offering in 1986, SunGard has acquired
91 businesses including 66 in investment support systems and 21 in business
continuity and Internet services. Also during this period, SunGard completed two
additional public offerings, a common stock offering in 1987 and a convertible
debenture offering in 1990. The debentures were converted into common stock in
1993.
During 1999, SunGard spent approximately $95.4 million in cash, net of cash
acquired, to acquire eight investment support systems businesses. In addition,
SunGard issued during 1999 a
9
total of 18.8 million shares of its common stock to acquire ten investment
support systems businesses in transactions that were accounted for as poolings
of interests.
- -------------------------------------------------------------------------------------------------------------------
ACQUIRED COMPANY/BUSINESS DATE ACQUIRED DESCRIPTION
===================================================================================================================
DollarMark Solutions, Inc. 02/02/99 Asset and liability management software for banks and other
financial institutions.
- -------------------------------------------------------------------------------------------------------------------
Sterling Wentworth Corporation 02/18/99 Rule-based selling, analysis and advisory software tools for
the financial services industry, specifically insurance,
banking and brokerage companies.
- -------------------------------------------------------------------------------------------------------------------
Annual Statement Automated 02/19/99 Statutory accounting and reporting software for
Products insurance companies.
- -------------------------------------------------------------------------------------------------------------------
Automated Securities 03/01/99 Equity order management software for brokerage firms,
Clearance, Ltd. electronic communications network for trading over-the-counter
stocks, and two-dollar broker using a wireless communications
system for trading exchange-listed securities.
- -------------------------------------------------------------------------------------------------------------------
Tiger Systems, Inc. 03/01/99 Electronic letter-of-credit automation software for banks.
- -------------------------------------------------------------------------------------------------------------------
TrueRisk Incorporated 04/14/99 Risk management applications.
- -------------------------------------------------------------------------------------------------------------------
FDP Corp. 04/28/99 Application software systems that facilitate the sales,
marketing and administration functions of life insurance
companies and employee benefit plan administrators.
- -------------------------------------------------------------------------------------------------------------------
RiskCare Limited 06/14/99 Software for trading and processing equity derivative
instruments.
- -------------------------------------------------------------------------------------------------------------------
Objective Resources Group, Inc. 06/25/99 Professional services and software development (primarily for
RiskWorks) for the energy and utilities markets.
- -------------------------------------------------------------------------------------------------------------------
Capital Financial Systems Ltd. 06/28/99 Software development and professional services for custody
products in the international marketplace.
- -------------------------------------------------------------------------------------------------------------------
RiskWorks, Inc. 06/29/99 Integrated position and risk management software for the
energy and utilities markets.
- -------------------------------------------------------------------------------------------------------------------
Oshap Technologies Ltd. 07/13/99 MINT: software solutions for enterprise application
integration.
Decalog: portfolio management, compliance, performance
measurement and trade order management software for global asset
managers.
- -------------------------------------------------------------------------------------------------------------------
Pentamation Enterprises, Inc. 08/16/99 Financial accounting, payroll and human resources software
for local governments and public school districts, and
student administrative software for school districts.
- -------------------------------------------------------------------------------------------------------------------
Exchange Market Systems E.M.S. 08/31/99 Software that enables "brick and mortar" banks and brokerages
Inc. to launch Internet trading and account services for their
customers.
- -------------------------------------------------------------------------------------------------------------------
Peak 1 Resources, Inc. 08/31/99 PC-based software for government-mandated annual filings and
returns for retirement and employee benefit plans.
- -------------------------------------------------------------------------------------------------------------------
Soft Broker AB 09/29/99 Internet-based application for trading stock and equity options
on electronic exchanges.
- -------------------------------------------------------------------------------------------------------------------
Business Systems Resources, 10/06/99 Fundraising software solutions for colleges and universities.
LLC
- -------------------------------------------------------------------------------------------------------------------
Synamic Limited's Financial 10/21/99 Collateral management software for financial institutions.
Products Division
- -------------------------------------------------------------------------------------------------------------------
10
- -------------------------------------------------------------------------------------------------------------------
ACQUIRED COMPANY/BUSINESS DATE ACQUIRED DESCRIPTION
===================================================================================================================
US Virtual, Inc. 02/15/00 Internet-based order entry trading application for futures and
options, and simulated brokerage application.
- -------------------------------------------------------------------------------------------------------------------
Microbank Software, Inc. 02/16/00 Exception-management software for banks.
- -------------------------------------------------------------------------------------------------------------------
Global Information Solutions 03/01/00 Treasury information systems for major corporations and banks.
Limited
- -------------------------------------------------------------------------------------------------------------------
Cassidy, Jones & Co., Inc. 03/09/00 Two-dollar broker operating on the floor of the NYSE.
- -------------------------------------------------------------------------------------------------------------------
As part of the acquisition of Automated Securities Clearance, Ltd., SunGard
acquired a majority interest in The Brass Utility L.L.C. (BRUT), an electronic
communications network (ECN). In February 2000, BRUT merged with Strike
Technologies and is now known as Brut ECN LLC. SunGard's ownership in the merged
ECN is 20%. SunGard also entered into long-term contracts for processing and
clearing transactions for Brut ECN LLC.
In March 2000, SunGard purchased 7.5% of the outstanding common stock and
certain preferred stock of Netera, Inc., a provider of e-business consulting
services and technology solutions for entities that wish to do business on the
Internet.
In March 1999, SunGard sold two healthcare information systems businesses,
Intelus Corporation and Med Data Systems, Inc.
COMPETITION
Since most of SunGard's computer services and software are specialized and
technical in nature, most of the market niches in which SunGard competes have a
relatively small number of significant competitors. Some of SunGard's existing
competitors and some potential competitors have substantially greater financial,
technological and marketing resources than SunGard. SunGard believes that, for
most of its businesses, service, quality and reliability are more important
competitive factors than price.
In its investment support systems business, SunGard competes with numerous
other data processing and financial software vendors that may be broadly
categorized into two groups. One group is comprised of specialized investment
support systems companies, most of which are much smaller than SunGard. The
other group is comprised of large computer services companies whose principal
businesses are not in the investment support systems area, such as Automatic
Data Processing, Inc., Reuters Group PLC and The Thomson Corporation, all of
which are also active acquirors. SunGard also faces competition from the
internal processing and development capabilities of its customers and prospects.
The key competitive factors in marketing investment support systems are the
accuracy and timeliness of processed information provided to customers, features
and adaptability of the software, level and quality of customer support, level
of software development expertise and overall net cost. SunGard believes that
it competes effectively as to each of these factors and that its reputation and
experience in these markets are important competitive advantages.
The business continuity business is highly competitive. SunGard's
principal competitors in this business are Comdisco, Inc. and IBM Corporation.
SunGard also faces potential competition from major companies that have computer
facilities that could be made available for business
11
continuity use. SunGard believes that it competes effectively as to the key
competitive factors in this market, namely quality of facilities, scope and
quality of services, level and quality of customer support, level of technical
expertise and price. SunGard also believes that its experience and reputation as
the innovator in this business are important competitive advantages.
In its new business of providing Web-hosting, co-location, Internet access
and Web-enabled outsourcing services, SunGard competes with numerous other
vendors, including specialized Web-hosting, co-location and Internet access
service providers, large computer services companies and telecommunications
companies. SunGard believes that its historical strengths in business continuity
and its significant high-availability infrastructure assets will allow SunGard
to compete effectively as to the key competitive factors in this market, namely
quality of facilities, technical expertise, network capabilities, ability to
provide customized solutions and price.
MARKETING
Most of SunGard's specialized investment support services and business
continuity services are marketed throughout the United States, and many are
marketed worldwide. SunGard's international sales during 1999, 1998 and 1997
totaled approximately $297.0 million, $314.5 million and $246.4 million,
respectively (these amounts are restated for certain poolings of interests-see
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA).
SunGard develops and maintains proprietary marketing information by
identifying prospective customers through a variety of industry contacts,
databases and other sources, and then forming business relationships with
prospects. SunGard also attempts to identify and attract customers through its
Web site and by conducting seminars and participating in industry conferences.
Customer references have been an important aid in obtaining new business.
EMPLOYEES
At December 31, 1999, SunGard had approximately 6,900 full-time employees.
SunGard believes that its success, in part, depends on its continuing ability to
attract and retain skilled technical, sales and management personnel. While
skilled personnel (particularly application processing professionals and
software developers) are in high demand and competition for their talents is
intense, and although SunGard has been experiencing an increased rate of
turnover, SunGard believes that it has been able to attract and retain highly
qualified personnel (see INVESTMENT CONSIDERATIONS). None of SunGard's employees
is covered by a collective bargaining contract. SunGard believes that its
employee relations are excellent.
PROPRIETARY PROTECTION
SunGard owns registered marks for the SUNGARD name and owns or has applied
for trademark registration for many of its products and services. SunGard relies
primarily on contractual restrictions and copyright and trade secret laws for
the protection of its proprietary services and software. SunGard also has
established policies requiring its personnel to maintain the confidentiality of
SunGard's proprietary property. Although SunGard has few registrations of its
copyrights and has no patents, SunGard is applying for software patents on a
case by case basis and will continue to monitor ongoing developments in the
evolving software patent field.
12
ITEM 2. PROPERTIES
The following table indicates the location and size of SunGard's principal
computer facilities and business continuity and Internet services MegaCenters.
- -----------------------------------------------------------------------------------------------------------------
LOCATION Purpose SQUARE FEET
=================================================================================================================
Alpharetta, GA Business continuity and Internet services MegaCenter. 60,000
(near Atlanta)
- -----------------------------------------------------------------------------------------------------------------
Birmingham, AL Asset management systems, investor accounting systems and eSourcing 50,000
data center.
- -----------------------------------------------------------------------------------------------------------------
Charlotte, NC Asset management systems data center. 40,200
- -----------------------------------------------------------------------------------------------------------------
Fairfield, NJ Asset management systems data center. 22,000
(near New York)
- -----------------------------------------------------------------------------------------------------------------
Hopkins, MN Brokerage and execution systems data center. 46,200
(near Minneapolis)
- -----------------------------------------------------------------------------------------------------------------
Northbrook, IL Business continuity and Internet services MegaCenter. 84,000
(near Chicago)
- -----------------------------------------------------------------------------------------------------------------
Philadelphia, PA Business continuity and Internet services MegaCenter. 368,600
- -----------------------------------------------------------------------------------------------------------------
Ridgefield and Weehawken, Brokerage and execution systems data centers. 5,800
NJ (near New York)
- -----------------------------------------------------------------------------------------------------------------
Scottsdale, AZ Business continuity and Internet services MegaCenter. 35,800
- -----------------------------------------------------------------------------------------------------------------
Voorhees, NJ Assets management systems, investor accounting systems and 51,000
(near Philadelphia) eSourcing data center.
- -----------------------------------------------------------------------------------------------------------------
Waltham, MA Brokerage and execution systems data center. 13,100
(near Boston)
- -----------------------------------------------------------------------------------------------------------------
Warminster, PA Business continuity and Internet services MegaCenter. 20,000
(near Philadelphia)
- -----------------------------------------------------------------------------------------------------------------
SunGard leases all of its offices and facilities listed above, with the
exception of its Voorhees, Warminster and Weehawken facilities, which are owned,
and its Hopkins facility, which consists of two connected buildings, one leased
and the other owned. SunGard also owns its MetroCenters in St. Paul and
Northbrook and certain of its other offices. In addition, SunGard leases space,
primarily for sales offices, customer support offices, MetroCenters and remote
operations centers, in many locations in the United States and worldwide.
SunGard believes that its leased and owned facilities are adequate for SunGard's
present operations.
ITEM 3. LEGAL PROCEEDINGS
SunGard is presently a party to certain lawsuits arising in the ordinary
course of its business. SunGard believes that none of its current legal
proceedings will be material to its business or financial condition.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4.1 CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of SunGard who are not also directors are listed below.
- -----------------------------------------------------------------------------------------------------------------
NAME AGE PRINCIPAL POSITIONS WITH SUNGARD DATA SYSTEMS INC.
=================================================================================================================
Andrew P. Bronstein 41 Vice President and Controller
- -----------------------------------------------------------------------------------------------------------------
Philip L. Dowd 58 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Robert Greifeld 42 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Lawrence A. Gross 47 Vice President and General Counsel
- -----------------------------------------------------------------------------------------------------------------
Michael K. Muratore 53 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Donna J. Pedrick 50 Vice President-Human Resources
- -----------------------------------------------------------------------------------------------------------------
David E. Robinson 56 Senior Vice President
- -----------------------------------------------------------------------------------------------------------------
Michael J. Ruane 46 Chief Financial Officer and Vice President-Finance
- -----------------------------------------------------------------------------------------------------------------
Richard C. Tarbox 47 Vice President-Corporate Development
- -----------------------------------------------------------------------------------------------------------------
Mr. Bronstein has been Vice President and Controller of SunGard since 1994.
Before that, he was Corporate Controller since 1992. From 1985 to 1992, he was
a manager with Coopers & Lybrand L.L.P., Philadelphia, where he served as senior
manager on SunGard's account and as director of the firm's Philadelphia high
technology group. Mr. Bronstein is a director and officer of most of SunGard's
domestic subsidiaries.
Mr. Dowd has been Senior Vice President of SunGard since October 1998.
From 1990 to October 1998, Mr. Dowd was Chief Executive Officer of the SunGard
Trust and Shareholder Systems Group. He was President of SunGard Investment
Systems Inc. from 1982 to 1990. Mr. Dowd is a director and/or officer of many
of SunGard's investment support systems subsidiaries.
Mr. Greifeld has been Senior Vice President of SunGard since February 2000.
From August 1999 to February 2000, Mr. Greifeld was Vice President of SunGard,
and from May 1999 to August 1999, he was Chief Executive Officer of the SunGard
Brokerage Systems Group. From 1993 to 1999, Mr. Greifeld was President of
Automated Securities Clearance, Ltd., which was acquired by SunGard in March
1999. Mr. Greifeld is a director and/or officer of many of SunGard's investment
support systems subsidiaries.
Mr. Gross has been Vice President and General Counsel of SunGard since 1986
and Secretary of SunGard since 1987. From 1979 to 1986, he was a lawyer with
Blank, Rome, Comisky & McCauley, Philadelphia, and he has represented SunGard
since 1983. Mr. Gross is a director and officer of most of SunGard's domestic
subsidiaries and some of its foreign subsidiaries.
Mr. Muratore has been Senior Vice President of SunGard since October 1998.
From 1995 to October 1998, Mr. Muratore was Chief Executive Officer of the
SunGard Financial Systems Group, and from 1990 to 1995, he was Chief Executive
Officer of the SunGard Computer Services
14
Group. From 1985 to 1990, Mr. Muratore held various senior executive positions
with SunGard. Mr. Muratore is a director and/or officer of many of SunGard's
domestic subsidiaries.
Ms. Pedrick has been Vice President-Human Resources of SunGard since 1988.
From 1983 to 1988, she was Director-Human Resources of SunGard.
Mr. Robinson has been Senior Vice President of SunGard since August 1999.
From October 1998 until August 1999, Mr. Robinson was Chief Executive Officer of
the SunGard Investment and Shareholder Systems Group. From 1983 to 1999, Mr.
Robinson held various senior executive positions with SunGard, including
President of SunGard Investment Systems Inc. from 1993 to 1999. Mr. Robinson is
a director and/or officer of many of SunGard's investment support systems
subsidiaries.
Mr. Ruane has been Chief Financial Officer, Vice President-Finance and
Treasurer of SunGard since 1994. From 1992 until 1994, Mr. Ruane was Chief
Financial Officer and Vice President-Finance of the SunGard Trading Systems
Group. Before that, he was Vice President-Controller of SunGard from 1990
through 1992, and Corporate Controller of SunGard from 1985 to 1990. Mr. Ruane
is a director and officer of most of SunGard's domestic and foreign
subsidiaries.
Mr. Tarbox has been Vice President-Corporate Development of SunGard since
1987.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is incorporated by reference to the section entitled STOCK
INFORMATION in SunGard's 1999 Annual Report to Stockholders (included in Exhibit
13.1 to this Report on Form 10-K).
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference to the section entitled
SELECTED FINANCIAL INFORMATION in SunGard's 1999 Annual Report to Stockholders
(included in Exhibit 13.1 to this Report on Form 10-K).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This information is incorporated by reference to the section entitled
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS in SunGard's 1999 Annual Report to Stockholders (included in Exhibit
13.1 to this Report on Form 10-K).
15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
SunGard does not use derivative financial instruments to manage market risk
exposures or for trading or speculative purposes. SunGard invests available
cash in short-term, highly-liquid financial instruments, with a substantial
portion of such investments having initial maturities of three months or less.
While changes in interest rates could decrease SunGard's interest income,
SunGard does not consider the interest rate risk for these investments to be
material. As of December 31, 1999, SunGard also held an equity investment
interest equal to approximately 16.5% of the common stock in Tecnomatix
Technologies Ltd. (NASDAQ: TCNO), which was acquired in connection with a
pooling-of-interests transaction. The risks associated with this investment
include foreign currency risk, technology risk, and risks associated with the
public finance markets. SunGard does not believe that it has a material exposure
to the risks associated with this investment.
While approximately 21% of SunGard's 1999 revenues came from sales to
customers located outside of the United States, more than half of these sales
were U.S. dollar-denominated sales by SunGard's U.S.-based operations. For
SunGard's foreign operations, SunGard generally matches local currency revenues
with local currency costs. For these reasons, SunGard does not believe that it
has a material exposure to changes in foreign currency exchange rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of SunGard, supplementary data and related
documents that are included in this Report on Form 10-K are listed in Item
14(a), Part IV, of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
This Part incorporates certain information from SunGard's definitive proxy
statement for its 2000 Annual Meeting of Stockholders ("2000 Proxy Statement")
filed with the Securities and Exchange Commission not later than 120 days after
the end of SunGard's fiscal year covered by this Report on Form 10-K.
Notwithstanding such incorporation, the sections of SunGard's 2000 Proxy
Statement entitled REPORT OF THE COMPENSATION COMMITTEE AND EQUITY AWARD
SUBCOMMITTEE and PERFORMANCE GRAPH shall not be deemed to be "filed" as part of
this Report.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of SunGard is incorporated by
reference to SunGard's 2000 Proxy Statement including but not necessarily
limited to the section of such proxy statement entitled ELECTION OF DIRECTORS.
Information concerning executive officers of SunGard who are not also
directors is included in Item 4.1, Part I, of this Report on Form 10-K.
16
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference to SunGard's 2000 Proxy
Statement including but not necessarily limited to the section of such proxy
statement entitled EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference to SunGard's 2000 Proxy
Statement including but not necessarily limited to the section of such proxy
statement entitled BENEFICIAL OWNERSHIP OF COMMON STOCK.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to SunGard's 2000 Proxy
Statement including but not necessarily limited to the sections of such proxy
statement entitled EXECUTIVE COMPENSATION, BENEFICIAL OWNERSHIP OF COMMON STOCK
and ELECTION OF DIRECTORS.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
The following financial statements of SunGard, supplementary data and
related documents are incorporated by reference to SunGard's 1999 Annual Report
to Stockholders (included in Exhibit 13.1 to this Report on Form 10-K):
Report of Independent Accountants on Financial Statements, dated February
10, 2000, except as to the subsequent events information presented in Note
2, for which the date is March 1, 2000.
Consolidated Statements of Income for each of the years ended December 31,
1999, 1998 and 1997.
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Cash Flows for each of the years ended December
31, 1999, 1998 and 1997.
Consolidated Statement of Stockholders' Equity for each of the years ended
December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
Quarterly Financial Information (unaudited).
17
(a)(2) FINANCIAL STATEMENT SCHEDULES
None.
(a)(3) EXHIBITS
The Exhibits that are incorporated by reference in this Report on Form
10-K, or are filed with this Report, are listed in the LIST OF EXHIBITS
beginning on page 20 of this Report. Exhibits 10.8 through 10.22 are the
management contracts and compensatory plans and arrangements that are required
to be filed as Exhibits to this Report.
(b) REPORTS ON FORM 8-K
None.
18
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SUNGARD DATA SYSTEMS INC.
Date: March 29, 2000 By: s/ James L. Mann
------------------------------------
JAMES L. MANN,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATES INDICATED.
Signature Capacity Date
- --------------------------------------- ----------------------------------- --------------
s/ James L. Mann Chief Executive Officer and March 29, 2000
- --------------------------------------- Chairman of the Board of Directors
James L. Mann (principal executive officer)
s/ Cristobal Conde President, Chief Operating Officer March 29, 2000
- --------------------------------------- and Director
Cristobal Conde
s/ Michael J. Ruane Chief Financial Officer and March 29, 2000
- --------------------------------------- Vice President-Finance
Michael J. Ruane (principal financial officer)
s/ Andrew P. Bronstein Vice President and Controller March 29, 2000
- --------------------------------------- (principal accounting officer)
Andrew P. Bronstein
s/ Till M. Guldimann Senior Vice President, Strategy and March 29, 2000
- --------------------------------------- Director
Till M. Guldimann
s/ Gregory S. Bentley Director March 29, 2000
- ---------------------------------------
Gregory S. Bentley
s/ Michael C. Brooks Director March 29, 2000
- ---------------------------------------
Michael C. Brooks
s/ Albert A. Eisenstat Director March 29, 2000
- ---------------------------------------
Albert A. Eisenstat
s/ Bernard Goldstein Director March 29, 2000
- ---------------------------------------
Bernard Goldstein
s/ Michael Roth Director March 29, 2000
- ---------------------------------------
Michael Roth
s/ Malcolm I. Ruddock Director March 29, 2000
- ---------------------------------------
Malcolm I. Ruddock
s/ Lawrence J. Schoenberg Director March 29, 2000
- ---------------------------------------
Lawrence J. Schoenberg
19
LIST OF EXHIBITS
NUMBER DOCUMENT
- ------ --------
3.1/(1)/ Restated Certificate of Incorporation of SunGard.
3.2 Amended and Restated Bylaws of SunGard (filed with this Report).
4.1/(2)/ Specimen Common Stock Certificate of SunGard.
10.1/(3)/ Lease, dated April 12, 1984, between SunGard and Broad and Noble
Associates, Inc., relating to SunGard's facility at 401 North
Broad Street, Philadelphia, Pennsylvania, and Amendments
thereto, dated October 18, 1989, September 30, 1991 and November
19, 1992 ("401 Lease").
10.2/(4)/ Amendment to 401 Lease, dated October 9, 1995.
10.3/(5)/ Amendment to 401 Lease, dated December 23, 1996.
10.4/(6)/ Amendment to 401 Lease, dated March 1997.
10.5/(6)/ Amendment to 401 Lease, dated December 18, 1997.
10.6 Amendment to 401 Lease, dated June 9, 1999 (filed with this
Report).
10.7/(7)/ Credit Agreement, dated August 29, 1996, among SunGard, certain
banks and other financial institutions and PNC Bank, National
Association, as Agent.
10.8/(8)/ SunGard's 1986 Stock Option Plan, Amendments thereto, dated
January 1, 1987, November 1, 1988, February 6, 1990, November 8,
1991, February 16, 1993 and February 13, 1995, and United
Kingdom Addendum thereto, dated February 12, 1991./(13)/
10.9/(9)/ SunGard's 1988 Nonqualified Stock Option Plan and Amendment
thereto, dated October 30, 1990./(13)/
10.10/(10)/ SunGard's 1990 Amended and Restated Restricted Stock Incentive
Plan./(13)/
10.11/(11)/ SunGard's Restricted Stock Award Plan for Outside Directors.
/(13)/
10.12 Amendment No. 1 to SunGard's Restricted Stock Award Plan for
Outside Directors (filed with this Report)./(13)/
10.13/(12)/ SunGard's 1994 Equity Incentive Plan./(13)/
10.14 Amendment No. 1 to SunGard's 1994 Equity Incentive Plan (filed
with this Report)./(13)/
10.15/(4)/ SunGard's 1996 Equity Incentive Plan./(13)/
10.16/(5)/ The United Kingdom Addendum to SunGard's 1996 Equity Incentive
Plan./(13)/
20
10.17 Amendment No. 1 to SunGard's 1996 Equity Incentive Plan (filed
with this Report)./(13)/
10.18/(6)/ SunGard's 1998 Equity Incentive Plan./(13)/
10.19 SunGard's 2000 Equity Incentive Plan (filed with this
Report)./(13)/
10.20 Summary Description of SunGard's Annual Executive Incentive
Compensation Program (filed with this Report)./(13)/
10.21 Summary Description of SunGard's Long-Term Executive Incentive
Compensation Plan (filed with this Report)./(13)/
10.22/(9)/ Form of Indemnification Agreement entered into by SunGard with
its directors and officers./(13)/
13.1 Portions of SunGard's Annual Report to Stockholders for the
fiscal year ended December 31, 1999 expressly incorporated
herein by reference (filed with this Report).
21.1 Subsidiaries of the Registrant (filed with this Report).
23.1 Consent of Independent Accountants regarding SunGard's
consolidated financial statements (filed with this Report).
27.1 Financial Data Schedule for the year ended December 31, 1999
(filed with this Report).
_____________
(1) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (Commission
File No. 1-12989).
(2) Incorporated by reference to the Exhibits filed with SunGard's Registration
Statement on Form S-1 and Amendments No. 1, No. 2, and No. 3 thereto
(Registration No. 33-3181).
(3) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission
File No. 0-14232).
(4) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (Commission
File No. 0-14232).
(5) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 (Commission
File No. 0-14232).
(6) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 (Commission
File No. 1-12989).
(7) Incorporated by reference to the Exhibits filed with SunGard's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1996
(Commission File No. 0-14232).
(8) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 (Commission
File No. 0-14232).
21
(9) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991 (Commission
File No. 0-14232).
(10) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989 (Commission
File No. 0-14232).
(11) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission
File No. 0-14232).
(12) Incorporated by reference to the Exhibits filed with SunGard's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993 (Commission
File No. 0-14232).
(13) Management contract or compensatory plan or arrangement.
22
INDEX OF EXHIBITS FILED WITH THIS REPORT
NUMBER DOCUMENT
- ------ --------
3.2 Amended and Restated Bylaws of SunGard.
10.6 Lease Amendment to 401 Lease dated June 9, 1999.
10.12 Amendment No. 1 to SunGard's Restricted Stock Award Plan for Outside
Directors./(1)/
10.14 Amendment No. 1 to SunGard's 1994 Equity Incentive Plan./(1)/
10.17 Amendment No. 1 to SunGard's 1996 Equity Incentive Plan./(1)/
10.19 SunGard's 2000 Equity Incentive Plan./(1)/
10.20 Summary Description of SunGard's Annual Executive Incentive Compensation
Program./(1)/
10.21 Summary Description of SunGard's Long-Term Executive Incentive
Compensation Plan./(1)/
13.1 Portions of SunGard's Annual Report to Stockholders for the fiscal year
ended December 31, 1999 expressly incorporated herein by reference.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants regarding SunGard's consolidated
financial statements.
27.1 Financial Data Schedule for the year ended December 31, 1999.
___________
(1) Management contract or compensatory plan or arrangement.
23