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8-K - FORM 8-K - SUNGARD DATA SYSTEMS INC | c92027e8vk.htm |
Exhibit 99.1
For more information, contact: |
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Michael Ruane
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Eric Erickson | Colleen Mitchell | ||
Tel: 484-582-5405
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Tel: 484-582-5480 | Tel: 484-582-5478 | ||
michael.ruane@sungard.com
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eric.erickson@sungard.com | colleen.mitchell@sungard.com |
SunGard Announces Third Quarter 2009 Results
Wayne, PA November 5, 2009 SunGard, one of the worlds leading software and IT services
companies, reported today that revenue for the three months ended September 30, 2009 was $1.34
billion, a decrease of 4% compared to the same period in 2008. On a constant currency basis,
organic revenue decreased by 7% in the quarter. Organic revenue is revenue from businesses owned
for at least one year and excludes revenue from businesses sold in the previous twelve months.
Approximately five percentage points of the decrease in organic revenue in the quarter was
attributable to one of our broker/dealer businesses.
For the three months ended September 30, 2009, adjusted EBITDA (defined in Note 1 to the Notes to
the Consolidated Condensed Financial Information) was $373 million, a $2 million increase from the
prior year period.
Adjusted income from operations (defined in Note 2 to the Notes to the Consolidated Condensed
Financial Information) for the three months ended September 30, 2009 was $300 million, a 3%
increase from $290 million in 2008.
Reported income from operations for the three months ended September 30, 2009 was $132 million
compared to $136 million for the year 2008, a decrease of $4 million. Reported income from
operations in 2009 and 2008 includes amortization of acquired intangible assets of $150 million and
$131 million, respectively, and stock-based compensation, purchase accounting adjustments and other
costs of $18 million and $23 million, respectively.
Cristóbal Conde, president and chief executive officer, commented, We are pleased that we continue
to hit our targets. Overall, SunGard is viewed as a very strong strategic partner. The spending
mood is trending to the positive, but sales cycles remain long. Customers are still looking to
reduce their spending on core platforms that are not in growth businesses, but at the same time
they are reallocating these savings to discretionary budgets to go after growth opportunities. Our
ability to bundle and cross-sell solutions makes us very competitive.
Revenue for the first nine months of 2009 decreased less than one-half of 1% over the same period
in 2008 to $4.04 billion. Adjusted EBITDA for the nine months ended September 30, 2009 was $1.05
billion
compared to $1.07 billion last year. Adjusted income from operations for the nine months ended
September 30, 2009 was $816 million compared to $832 million last year. Reported income from
operations in 2009 and 2008 was $366 million and $405 million and includes amortization of acquired
intangible assets of $404 million and $361 million, respectively, and stock-based compensation,
purchase accounting adjustments and other costs of $46 million and $66 million, respectively.
Financial Systems organic revenue decreased 15% for the quarter on a constant currency basis.
Approximately 8% of the decrease in organic revenue was attributable to one of our broker/dealer
businesses. This broker/dealer revenue has been uncharacteristically high and is a function of
market volatility and customer mix. It decreased year over year and sequentially has declined two
of the past three quarters. In addition, the largest customer in this
business has given us notice that it plans to decrease its use of our
services beginning in the first quarter of 2010 as a result of
impending regulatory changes. The estimated annual impact of this
customer departure is approximately $384 million in revenue and
$35-$40 million in income from operations. Total Financial Systems revenue decreased 6% to $724 million for the
quarter. License fees were $38 million for the quarter, an increase of $3 million compared to the
same quarter in 2008.
Notable deals in the quarter included the following:
| A large insurer in China chose SunGards Asset Arena to automate its back-office
operations. |
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| One of the worlds largest payments companies, and an existing customer of SunGard
AvantGard, selected SunGards STN Money Markets to help streamline its trading and
reporting. |
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| A long-term SunGard customer extended its contract for Brass and Protegent to support
its U.S. equities trading desk. |
Higher Education revenue decreased 2%, all of which was organic, to $125 million for the quarter.
License fees were $8 million for the quarter, an increase of $1 million from the same quarter of
2008.
Notable deals in the quarter included the following:
| Four schools in the northeast, part of one of the largest higher education systems in
the U.S., purchased a range of Banner Unified Digital Campus solutions. |
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| A public two-year college in New York extended its relationship with SunGard Higher
Education for technology management services. |
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| One of the most recognized MBA universities in Brazil chose SunGard Higher Educations
Banner Unified Digital Campus. |
Public Sector organic revenue increased 14% in the quarter on a constant currency basis. This
business has significant operations in the U.K., with both revenue and expenses denominated in
British pounds. Total Public Sector revenue increased 10% to $103 million for the quarter.
License fees were $6 million for the quarter, an increase of $1 million from the same quarter of
2008.
Notable deals in the quarter included the following:
| A national agency dedicated to improving public safety throughout the U.K. extended its
contract with SunGard Public Sector for case and custody support. |
| A county in Florida selected SunGard Public Sector to provide records management and
mobile computing software solutions. |
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| A county in Texas selected SunGard Public Sector to provide computer-aided dispatch,
records management, mobile computing and jail management software. |
Availability Services organic revenue was unchanged in the quarter on a constant currency basis.
Total Availability Services revenue decreased 3% to $385 million for the quarter.
Notable deals in the quarter included the following:
| A prominent, national pharmacy chain chose SunGard to provide disaster recovery
services. |
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| A large Canadian bank selected SunGard as its managed services provider. |
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| An electronics design, production and product management company selected SunGard for
hosting and managed services. |
Financial Position
At September 30, 2009, total debt was $8.34 billion and cash balances were $479 million. During
the nine months ended September 30, 2009, the Company invested $255 million in capital expenditures
and completed two acquisitions.
Conference Call & Webcast
A conference call to review the results is scheduled for Friday, November 6, 2009 at 9:00 a.m.
(Eastern Time). The dial-in number is 706-902-1370, conference ID 38270686. A replay will be
available shortly after the end of the call through midnight on November 13, 2009. To listen to
the replay, please dial 706-645-9291, conference ID 38270686. You may also listen to the call at
www.investorcalendar.com by clicking on the audio icon for SunGard. A replay will be available
shortly after the end of the webcast, through midnight on November 13, 2009 at
www.investorcalendar.com.
About SunGard
SunGard is one of the worlds leading software and IT services companies. SunGard serves more than
25,000 customers in more than 70 countries.
SunGard provides software and processing solutions for financial services, higher education and the
public sector. SunGard also provides disaster recovery services, managed IT services, information
availability consulting services and business continuity management software.
With annual revenue exceeding $5 billion, SunGard is ranked 435 on the Fortune 500 and is the
largest privately held business software and services company on the Forbes list of private
businesses. Based on information compiled by Datamonitor*, SunGard is the third largest provider of
business applications software after Oracle and SAP. Continuity, Insurance & Risk has recognized
SunGard as service provider of the year an unprecedented six times. For more information, please
visit SunGard at www.sungard.com.
*January 2009 Technology Vendors Financial Database Tracker http://www.datamonitor.com
Trademark Information: SunGard, the SunGard logo, Asset Arena, AvantGard, Banner, Brass, Protegent
and STN are trademarks or registered trademarks of SunGard Data Systems Inc. or its subsidiaries in
the U.S. and other countries. All other trade names are trademarks or registered trademarks of
their respective holders.
SunGards Safe Harbor Statement under Private Securities Litigation Reform Act of 1995
Statements in this release other than historical facts constitute forward-looking statements. You
can identify forward-looking statements because they contain words such as believes, expects,
may, will, would, should, seeks, approximately, intends, plans, estimates, or
anticipates or similar expressions which concern our strategy, plans or intentions. All
statements we make relating to estimated and projected earnings, margins, costs, expenditures, cash
flows, growth rates and financial results are forward-looking statements. In addition, we, through
our senior management, from time to time make forward-looking public statements concerning our
expected future operations and performance and other developments. All of these forward-looking
statements are subject to risks and uncertainties that may change at any time, and, therefore, our
actual results may differ materially from those we expected. We derive most of our forward-looking
statements from our operating budgets and forecasts, which are based upon many detailed
assumptions. While we believe that our assumptions are reasonable, we caution that it is very
difficult to predict the impact of known factors, and, of course, it is impossible for us to
anticipate all factors that could affect our actual results. Some of the factors that we believe
could affect our results include: our high degree of leverage; general economic and market
conditions; the overall condition of the financial services industry, including the effect of any
further consolidation among financial services firms; the integration of acquired businesses, the
performance of acquired businesses, and the prospects for future acquisitions; the effect of war,
terrorism, natural disasters or catastrophic events; the effect of disruptions to our systems and
infrastructure; the timing and magnitude of software sales; the timing and scope of technological
advances; customers taking their information availability solutions in-house; the trend in
information availability toward solutions utilizing more dedicated resources; the market and credit
risks associated with clearing broker operations; the ability to retain and attract customers and
key personnel; risks relating to the foreign countries where we transact business; the ability to
obtain patent protection and avoid patent-related liabilities in the context of a rapidly
developing legal framework for software and business-method patents; and a material weakness in our
internal controls. The factors described in this paragraph and other factors that may affect our
business or future financial results are discussed in our periodic filings with the Securities and
Exchange Commission, copies of which may be obtained from us without charge. We assume no
obligation to update any written or oral forward-looking statement made by us or on our behalf as a
result of new information, future events or other factors.
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
Consolidated Statements of Operations
(in millions)
Three Months Ended | ||||||||
Sept. 30, | Sept. 30, | |||||||
2008 | 2009 | |||||||
Revenue: |
||||||||
Services |
$ | 1,267 | $ | 1,198 | ||||
License and resale fees |
78 | 93 | ||||||
Total products and services |
1,345 | 1,291 | ||||||
Reimbursed expenses |
49 | 46 | ||||||
1,394 | 1,337 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
728 | 642 | ||||||
Sales, marketing and administration |
245 | 262 | ||||||
Product development |
84 | 77 | ||||||
Depreciation and amortization |
70 | 74 | ||||||
Amortization of acquisition-related intangible assets |
131 | 150 | ||||||
1,258 | 1,205 | |||||||
Income from operations |
136 | 132 | ||||||
Interest income |
4 | 5 | ||||||
Interest expense and amortization of deferred financing fees |
(142 | ) | (165 | ) | ||||
Other expense |
(24 | ) | (15 | ) | ||||
Loss before income taxes |
(26 | ) | (43 | ) | ||||
Benefit from (provision for) income taxes |
(9 | ) | 3 | |||||
Net loss |
$ | (35 | ) | $ | (40 | ) | ||
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
Consolidated Statements of Operations
(in millions)
Nine Months Ended | ||||||||
Sept. 30, | Sept. 30, | |||||||
2008 | 2009 | |||||||
Revenue: |
||||||||
Services |
$ | 3,679 | $ | 3,687 | ||||
License and resale fees |
235 | 236 | ||||||
Total products and services |
3,914 | 3,923 | ||||||
Reimbursed expenses |
139 | 118 | ||||||
4,053 | 4,041 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
2,024 | 2,038 | ||||||
Sales, marketing and administration |
815 | 792 | ||||||
Product development |
241 | 225 | ||||||
Depreciation and amortization |
207 | 215 | ||||||
Amortization of acquisition-related intangible assets |
361 | 404 | ||||||
Merger costs |
| 1 | ||||||
3,648 | 3,675 | |||||||
Income from operations |
405 | 366 | ||||||
Interest income |
13 | 6 | ||||||
Interest expense and amortization of deferred financing fees |
(433 | ) | (471 | ) | ||||
Other income (expense) |
(49 | ) | 6 | |||||
Loss before income taxes |
(64 | ) | (93 | ) | ||||
Benefit from income taxes |
9 | 12 | ||||||
Net loss |
$ | (55 | ) | $ | (81 | ) | ||
See Notes to Consolidated Condensed Financial Information.
SunGard Data Systems Inc.
Consolidated Condensed Balance Sheets
(in millions)
Consolidated Condensed Balance Sheets
(in millions)
Dec. 31, | Sept. 30, | |||||||
2008 | 2009 | |||||||
Assets: |
||||||||
Current: |
||||||||
Cash and cash equivalents |
$ | 975 | $ | 479 | ||||
Accounts receivable, net |
782 | 1,043 | ||||||
Clearing broker assets |
309 | 376 | ||||||
Prepaid expenses and other current assets |
144 | 156 | ||||||
Retained interest in accounts receivable sold |
285 | | ||||||
Total current assets |
2,495 | 2,054 | ||||||
Property and equipment, net |
898 | 932 | ||||||
Software products, net |
1,159 | 1,080 | ||||||
Customer base, net |
2,616 | 2,361 | ||||||
Other assets, net |
1,282 | 1,231 | ||||||
Goodwill |
7,328 | 7,434 | ||||||
Total Assets |
$ | 15,778 | $ | 15,092 | ||||
Liabilities and Stockholders Equity: |
||||||||
Current: |
||||||||
Short-term and current portion of long-term debt |
$ | 322 | $ | 57 | ||||
Accounts payable and accrued expenses |
961 | 843 | ||||||
Clearing broker liabilities |
310 | 358 | ||||||
Deferred revenue |
977 | 972 | ||||||
Total current liabilities |
2,570 | 2,230 | ||||||
Long-term debt |
8,553 | 8,287 | ||||||
Deferred income taxes |
1,592 | 1,482 | ||||||
Total liabilities |
12,715 | 11,999 | ||||||
Stockholders equity |
3,063 | 3,093 | ||||||
Total Liabilities and Stockholders Equity |
$ | 15,778 | $ | 15,092 | ||||
See Notes to Consolidated Condensed Financial Information.
SunGard Data Systems Inc.
Notes to Consolidated Condensed Financial Information
Notes to Consolidated Condensed Financial Information
Note 1. Reconciliation of Net Income (Loss) to EBITDA and Reconciliation of EBITDA to Adjusted EBITDA
EBITDA represents net income (loss) before interest expense, income taxes, depreciation and
amortization and goodwill impairment. Adjusted EBITDA is defined as EBITDA further adjusted to
give effect to certain items that are required in calculating covenant compliance under our senior
and senior subordinated notes as well as under our senior secured credit facilities, which were
entered into in August 2005 and our senior notes entered into in September 2008. Adjusted EBITDA
is calculated by subtracting from or adding to EBITDA items of income or expense described below.
EBITDA and Adjusted EBITDA are not recognized terms under generally accepted accounting principles
(GAAP). EBITDA and Adjusted EBITDA do not represent net income (loss), as that term is defined
under GAAP, and should not be considered as an alternative to net income (loss) as an indicator of
our operating performance. Additionally, EBITDA and Adjusted EBITDA are not intended to be
measures of free cash flow available for management or discretionary use as such measures do not
consider certain cash requirements such as capital expenditures (including capitalized software
expense), tax payments and debt service requirements. SunGard considers EBITDA and Adjusted EBITDA
to be key indicators of our ability to pay our debt. EBITDA and Adjusted EBITDA as presented
herein are not necessarily comparable to similarly titled measures. The following is a
reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the GAAP measure we believe to
be most directly comparable to EBITDA and Adjusted EBITDA. Further information regarding this
reconciliation is included in our periodic filings with the U.S. Securities and Exchange
Commission.
Three Months Ended | ||||||||||||
As originally | Last Twelve | |||||||||||
reported | Months | |||||||||||
Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||
(in millions) | 2008 | 2009 | 2009 | |||||||||
Net loss |
$ | (35 | ) | $ | (40 | ) | $ | (268 | ) | |||
Interest expense, net |
138 | 160 | 626 | |||||||||
Income tax (benefit) expense |
9 | (3 | ) | 35 | ||||||||
Depreciation and amortization |
201 | 224 | 844 | |||||||||
Goodwill impairment charge |
| | 128 | |||||||||
EBITDA |
313 | 341 | 1,365 | |||||||||
Purchase accounting adjustments |
25 | 5 | 23 | |||||||||
Non-cash charges |
8 | 8 | 39 | |||||||||
Unusual or non-recurring charges |
9 | 3 | 47 | |||||||||
Acquired EBITDA, net of disposed EBITDA |
5 | | 1 | |||||||||
Pro forma expense savings related to acquisitions |
| | 5 | |||||||||
Other |
7 | 16 | 48 | |||||||||
Adjusted EBITDA senior secured credit facilities |
367 | 373 | 1,528 | |||||||||
Loss on sale of receivables |
4 | | 12 | |||||||||
Adjusted EBITDA senior notes due 2013 and 2015
and senior subordinated notes due 2015 |
$ | 371 | $ | 373 | $ | 1,540 | ||||||
Nine Months Ended | ||||||||
As originally | ||||||||
reported | ||||||||
Sept. 30, | Sept. 30, | |||||||
(in millions) | 2008 | 2009 | ||||||
Net loss |
$ | (55 | ) | $ | (81 | ) | ||
Interest expense, net |
420 | 465 | ||||||
Income tax benefit |
(9 | ) | (12 | ) | ||||
Depreciation and amortization |
568 | 619 | ||||||
EBITDA |
924 | 991 | ||||||
Purchase accounting adjustments |
45 | 13 | ||||||
Non-cash charges |
22 | 25 | ||||||
Unusual or non-recurring charges |
17 | 13 | ||||||
Acquired EBITDA, net of disposed EBITDA |
13 | | ||||||
Pro forma expense savings related to acquisitions |
| 1 | ||||||
Other |
31 | 6 | ||||||
Adjusted EBITDA senior secured credit facilities |
1,052 | 1,049 | ||||||
Loss on sale of receivables |
13 | | ||||||
Adjusted EBITDA senior notes due 2013 and 2015
and senior subordinated notes due 2015 |
$ | 1,065 | $ | 1,049 | ||||
SunGard Data Systems Inc.
Notes to Consolidated Condensed Financial Information
Notes to Consolidated Condensed Financial Information
Note 2. Reconciliation of Income from Operations to Adjusted Income from Operations
Adjusted income from operations represents income from operations adjusted for amortization of acquisition-related
intangible assets, goodwill impairment charges, merger costs, adjustments for deferred revenue, stock-based compensation
expense and management fee expense. Adjusted income from operations is not a recognized term under generally accepted
accounting principles (GAAP). Adjusted income from operations does not represent income from operations, as that term
is defined under GAAP, and should not be considered as an alternative to income from operations as an indicator of our
operating performance. We have included information concerning adjusted income from operations because we use such
information when evaluating income from operations to better evaluate the underlying performance of the Company.
Adjusted income from operations as presented herein is not necessarily comparable to similarly titled measures. The
following is a reconciliation between adjusted income from operations and income from operations, the GAAP measure we
believe to be most directly comparable to adjusted income from operations.
Three Months Ended | ||||||||
Sept. 30, | Sept. 30, | |||||||
(in millions) | 2008 | 2009 | ||||||
Income from operations |
$ | 136 | $ | 132 | ||||
Amortization of acquisition-related intangible assets |
131 | 150 | ||||||
Purchase accounting adjustments |
11 | 6 | ||||||
Stock-based compensation and other costs |
12 | 12 | ||||||
Adjusted income from operations |
$ | 290 | $ | 300 | ||||
Nine Months Ended | ||||||||
Sept. 30, | Sept. 30, | |||||||
(in millions) | 2008 | 2009 | ||||||
Income from operations |
$ | 405 | $ | 366 | ||||
Amortization of acquisition-related intangible assets |
361 | 404 | ||||||
Purchase accounting adjustments |
32 | 13 | ||||||
Stock-based compensation and other costs |
34 | 33 | ||||||
Adjusted income from operations |
$ | 832 | $ | 816 | ||||