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Exhibit 99.1

 

LOGO

For more information, contact:

 

Henry Miller - financial contact    George Thomas - media contact
Tel: 484-582-5445    Tel: 484-582-5635
henry.miller@sungard.com    george.thomas@sungard.com

SunGard Announces Third Quarter 2013 Results

Wayne, PA – October 29, 2013 – SunGard, one of the world’s leading software and technology services companies, today reported results for the third quarter ended September 30, 2013. For the third quarter, revenue was $1.0 billion, down 1% year over year. Currency had no material impact on reported revenue for the quarter compared to the prior year. Operating income was $122 million and the operating margin was 11.9% in the quarter, compared to an operating loss of $279 million in the third quarter of 2012. Third quarter 2012 included a $385 million non-cash goodwill impairment charge. Excluding this charge, operating income increased 16% year over year. This was driven by a 3% decline in total costs and expenses. Adjusted EBITDA was $306 million, up 3% year over year, and the adjusted EBITDA margin was 29.7%, up 1.1 points year over year. Adjusted EBITDA is defined in Note 1 attached to this release.

Year to date, revenue was $3.1 billion, down 3% year over year (down 2% adjusting for currency). Operating income was $289 million and the operating margin was 9.5%, compared to an operating loss of $122 million last year. Excluding the goodwill impairment charge mentioned above, operating income increased 10% year over year. This was driven by a 4% decline in total costs and expenses. Adjusted EBITDA was $839 million, flat year over year, and the adjusted EBITDA margin was 27.5%, up 0.8 points year over year.

Russ Fradin, president and chief executive officer, commented, “We remain focused on improving our growth profile. Many of our solutions are seeing strong demand around the world, including our treasury, risk and compliance, and public sector solutions. We’ve instilled disciplined management processes and are realigning our investments for growth, resulting in improved margins, stronger cash flows and reduced debt levels. We are confident that our strategies are taking hold and we are encouraged by SunGard’s opportunities.”

Financial Systems (“FS”) revenue was $635 million in the third quarter, down 1% year over year (also down 1% adjusting for currency). During the quarter, FS recognized $11.5 million of revenue related to the sale of a customer bankruptcy claim. Excluding this sale, FS revenue declined 2% year to year, principally driven by a decline in professional services. Partially offsetting this was growth in software license fees of 23%, or $10 million, to $53 million. Adjusted EBITDA for the period was $194 million, up 14% from the prior year, and the adjusted EBITDA margin was 30.5%, up 3.9 points from last year. Year to date, FS revenue was $1.9 billion, down 3% year over year (also down 3% adjusting for currency). For the same period, license fees were $132 million, a decrease of $4 million year over year. Adjusted EBITDA was $502 million, up 6% from the prior year, and the adjusted EBITDA margin was 26.9%, up 2.3 points from last year.

 

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LOGO

 

Notable deals in the quarter included the following:

 

    SunGard’s Stream Clearvision was selected by a global agency broker and clearing firm to support its global derivatives clearing business.

 

    SunGard’s Front Arena was renewed by one of Denmark’s largest banks to support cross-asset trading, OTC derivatives operations, and enterprise risk management.

 

    SunGard’s AvantGard solution was selected by one of the world’s foremost technology companies for treasury and cash management services with additional hosting and managed services.

 

    SGN Funds was renewed by one of the world’s largest asset management firms to support its trust and employee benefits customers.

 

    SunGard’s Stream Transfer Agency was selected by one of the largest U.S. banks as part of a renewed and expanded commitment to help transform the bank’s corporate trust operations and consolidate multiple debt and equity processing systems.

Availability Services (“AS”) revenue was $340 million in the third quarter, down 2% year over year (down 1% adjusting for currency), reflecting customer attrition and incremental investments in new service offerings. Adjusted EBITDA was $108 million, down 11% from the prior year, and the adjusted EBITDA margin was 31.6%, down 3.2 points from last year. Year to date, AS revenue was $1.0 billion, down 2% year over year (also down 2% adjusting for currency), and adjusted EBITDA was $325 million, down 7% from prior year, and the adjusted EBITDA margin was 31.5%, down 1.9 points from last year.

Notable deals in the quarter included the following:

 

    SunGard was selected by one of the largest U.S. insurance companies to provide a complete disaster recovery solution, including hot site recovery services, advanced recovery services with co-location, and the Managed Recovery Program.

 

    A leading supplier of aerospace and energy generation components selected SunGard to help modernize and consolidate its disaster recovery program with Managed Vaulting services and Recover2Cloud for Vaulting.

 

    A leading U.K. e-commerce logistics and delivery company expanded its relationship with SunGard to include consulting and cloud hosting services.

Public Sector and Education revenue was $53 million in the third quarter, up 6% year over year, reflecting strong demand for newly introduced software solutions. Adjusted EBITDA was $16 million, up 10% year over year, and the adjusted EBITDA margin was 31.4%, up 1 point from last year. Year to date, revenue was $155 million, an increase of 2% year over year, and adjusted EBITDA was $48 million, up 3% from the prior year, and the adjusted EBITDA margin was 31.2%, up 0.2 points from last year.

 

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LOGO

 

Notable deals in the quarter included the following:

 

    SunGard Public Sector’s ONESolution was selected by a city in Texas to provide public safety solutions for computer-aided emergency dispatch, records management and mobile computing.

 

    SunGard K-12 Education’s eSchoolPLUS and PerformancePLUS were selected by one of the largest public school districts in Pennsylvania to help manage student data and support student achievement and for tracking student performance and building local benchmark assessments.

Financial Position

For the nine months ended September 30, 2013, the continuing operations of the Company generated $569 million in cash flow from operations, up $143 million year over year, and invested $160 million in capital expenditures, down $13 million from the prior year. In addition, year to date the Company used its cash flow and available cash to repay $218 million of debt.

At September 30, 2013, total debt was $6.4 billion and cash was $689 million. The Company’s leverage ratio, as defined in its senior secured credit agreement, was 4.50x, down from 4.75x at the end of 2012. The leverage ratio is calculated using adjusted EBITDA as defined in Note 2 attached to this release.

Conference Call & Webcast

SunGard will host a conference call and live web broadcast to discuss third quarter 2013 results today at 9:00 a.m. (Eastern Time). The dial-in number for the conference call is 706-902-1370, and the conference ID number is 89628597. You may also listen to the call at www.investorcalendar.com by clicking on the “audio” icon for SunGard. An audio replay will be available two hours after the call ends through midnight on November 12, 2013. To listen to the replay, please dial 1-855-859-2056 or 404-537-3406 and enter the conference ID number 89628597.

About SunGard

SunGard is one of the world’s leading software and technology services companies. SunGard serves approximately 25,000 customers in more than 70 countries and has approximately 17,000 employees. SunGard provides software and processing solutions for financial services, 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 of over $4.0 billion, SunGard is one of the largest privately held IT software and services company. For more information, please visit www.sungard.com.

Trademark Information: SunGard, the SunGard logo, Front Arena, AvantGard, eSchoolPlus, PerformancePlus, Stream Clearvision, Stream Transfer Agency, SGN Funds, and SunGard Stream are trademarks or registered 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.

 

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LOGO

 

SunGard’s “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, financial results and pro forma estimates 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: global economic and market conditions; the condition of the financial services industry, including the effect of any further consolidation among financial services firms; our high degree of debt-related leverage; the effect of war, terrorism, natural disasters or other 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 broker/dealer operations; the ability to retain and attract customers and key personnel; risks relating to the foreign countries where we transact business; the integration and performance of acquired businesses; 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; a material weakness in our internal controls; and unanticipated changes in our income tax provision or the enactment of new tax legislation, issuance of regulations or relevant judicial decisions. 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 U.S. 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.

 

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SunGard Data Systems Inc.

Consolidated Statements of Operations

(in millions)

(Unaudited)

 

     Three Months Ended Sept. 30,  
     2012     2013  

Revenue:

    

Services

   $ 969      $ 951   

License and resale fees

     53        65   
  

 

 

   

 

 

 

Total products and services

     1,022        1,016   

Reimbursed expenses

     13        12   
  

 

 

   

 

 

 

Total revenue

     1,035        1,028   
  

 

 

   

 

 

 

Costs and expenses:

    

Cost of sales and direct operating (excluding depreciation)

     430        423   

Sales, marketing and administration

     237        232   

Product development and maintenance

     98        96   

Depreciation

     70        73   

Amortization of acquisition-related intangible assets

     94        82   

Goodwill impairment charges

     385        —     
  

 

 

   

 

 

 

Total costs and expenses

     1,314        906   
  

 

 

   

 

 

 

Operating income (loss)

     (279     122   

Interest income

     1        1   

Interest expense and amortization of deferred financing fees

     (102     (96

Loss on extinguishment of debt

     —          (1
  

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (380     26   

Benefit (provision) from income taxes

     13        (3
  

 

 

   

 

 

 

Income (loss) from continuing operations

     (367     23   

Income from discontinued operations, net of tax

     5        —     
  

 

 

   

 

 

 

Net Income (loss)

   $ (362   $ 23   
  

 

 

   

 

 

 


SunGard Data Systems Inc.

Consolidated Statements of Operations

(in millions)

(Unaudited)

 

     Nine Months Ended Sept. 30,  
     2012     2013  

Revenue:

    

Services

   $ 2,916      $ 2,844   

License and resale fees

     168        166   
  

 

 

   

 

 

 

Total products and services

     3,084        3,010   

Reimbursed expenses

     47        41   
  

 

 

   

 

 

 

Total revenue

     3,131        3,051   
  

 

 

   

 

 

 

Costs and expenses:

    

Cost of sales and direct operating (excluding depreciation)

     1,316        1,284   

Sales, marketing and administration

     751        716   

Product development and maintenance

     295        285   

Depreciation

     211        222   

Amortization of acquisition-related intangible assets

     295        255   

Goodwill impairment charges

     385        —     
  

 

 

   

 

 

 

Total costs and expenses

     3,253        2,762   
  

 

 

   

 

 

 

Operating income (loss)

     (122     289   

Interest income

     1        1   

Interest expense and amortization of deferred financing fees

     (325     (302

Loss on extinguishment of debt

     (51     (6

Other income (loss)

     2        (1
  

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (495     (19

Benefit from income taxes

     44        10   
  

 

 

   

 

 

 

Loss from continuing operations

     (451     (9

Income (loss) from discontinued operations, net of tax

     316        —     
  

 

 

   

 

 

 

Net income (loss)

   $ (135   $ (9
  

 

 

   

 

 

 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Balance Sheets

(in millions)

(Unaudited)

 

     Dec. 31,      Sept. 30,  
     2012      2013  

Assets:

     

Current:

     

Cash and cash equivalents

   $ 546       $ 689   

Accounts receivable, net

     900         715   

Prepaid expenses and other current assets

     230         228   
  

 

 

    

 

 

 

Total current assets

     1,676         1,632   

Property and equipment, net

     874         812   

Software products, net

     411         326   

Customer base, net

     1,367         1,205   

Other assets, net

     1,151         1,144   

Goodwill

     4,539         4,545   
  

 

 

    

 

 

 

Total Assets

   $ 10,018       $ 9,664   
  

 

 

    

 

 

 

Liabilities and Stockholder’s Equity:

     

Current:

     

Short-term and current portion of long-term debt

   $ 63       $ 342   

Accounts payable and accrued expenses

     608         590   

Deferred revenue

     836         773   
  

 

 

    

 

 

 

Total current liabilities

     1,507         1,705   

Long-term debt

     6,599         6,106   

Deferred income and other taxes

     1,120         1,025   

Other long-term liabilities

     76         100   
  

 

 

    

 

 

 

Total liabilities

     9,302         8,936   

Stockholder’s equity

     716         728   
  

 

 

    

 

 

 

Total Liabilities and Stockholder’s Equity

   $ 10,018       $ 9,664   
  

 

 

    

 

 

 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Statements of Cash Flows

(in millions)

(Unaudited)

 

     Nine Months Ended Sept. 30,  
     2012     2013  

Cash flow from operations:

    

Cash flow from (used in) continuing operations

   $ 426      $ 569   

Cash flow from (used in) discontinued operations

     (340     —     
  

 

 

   

 

 

 

Cash flow from (used in) operations

     86        569   

Investment activities:

    

Cash paid for acquired businesses, net of cash acquired

     (10     (1

Cash paid for property, equipment and software

     (173     (160

Other investing activities

     3        1   
  

 

 

   

 

 

 

Cash provided by (used in) continuing operations

     (180     (160

Cash provided by (used in) discontinued operations

     1,758        —     
  

 

 

   

 

 

 

Cash provided by (used in) investment activities

     1,578        (160

Financing activities:

    

Cash received from borrowings, net of fees

     (17     2,173   

Cash used to repay debt

     (1,727     (2,419

Premium paid to retire debt

     (27     —     

Other financing activities

     (19     (18
  

 

 

   

 

 

 

Cash provided by (used in) continuing operations

     (1,790     (264

Cash provided by (used in) discontinued operations

     —          —     
  

 

 

   

 

 

 

Cash provided by (used in) financing activities

     (1,790     (264

Effect of exchange rate changes on cash

     5        (2
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (121     143   

Beginning cash and cash equivalents includes cash of discontinued operations (2012: $6, 2013: $-)

     873        546   
  

 

 

   

 

 

 

Ending cash and cash equivalents includes cash of discontinued operations (2012: $-, 2013: $-)

   $ 752      $ 689   
  

 

 

   

 

 

 


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

Note 1. Reconciliation of Segment Adjusted EBITDA to Operating Income (Loss)

We evaluate the performance of our segments using non-GAAP measures. Our primary non-GAAP measure is Adjusted EBITDA, whose corresponding GAAP measure is operating income. Adjusted EBITDA is defined as operating income excluding depreciation, amortization of acquisition-related intangible assets, goodwill impairment, severance and facility closure charges, stock compensation, management fees, and certain other costs.

We believe Adjusted EBITDA is an effective tool to measure our operating performance since it excludes non-cash items and certain variable charges. We use Adjusted EBITDA extensively to measure both SunGard and its reportable segments within the Company and also to report our results to our board of directors.

While Adjusted EBITDA is useful for analysis purposes, it should not be considered as an alternative to our reported GAAP results. Also, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is similar, but not identical, to adjusted EBITDA per the Senior Secured Credit Agreement for purposes of our debt covenants (see Note 2).

The following is a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to the corresponding reported GAAP measures that we believe to be most directly comparable. Percentage changes are computed based on unrounded amounts.

 

     Three Months Ended Sept. 30,     Nine Months Ended Sept. 30,  
(in millions)    2012     2013     change     2012     2013     change  

Financial Systems segment

            

Revenue

   $ 640      $ 635        (1 )%    $ 1,928      $ 1,867        (3 )% 
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 170      $ 194        14   $ 474      $ 502        6

Adjusted EBITDA margin

     26.6     30.5     3.9 pts      24.6     26.9     2.3 pts 

Availability Services segment

            

Revenue

   $ 346      $ 340        (2 )%    $ 1,052      $ 1,029        (2 )% 
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 120      $ 108        (11 )%    $ 351      $ 325        (7 )% 

Adjusted EBITDA margin

     34.8     31.6     (3.2 )pts      33.4     31.5     (1.9 )pts 

Public Sector & Education segment

            

Revenue

   $ 49      $ 53        6   $ 151      $ 155        2
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 15      $ 16        10   $ 47      $ 48        3

Adjusted EBITDA margin

     30.4     31.4     1.0 pts      31.0     31.2     0.2 pts 

Corporate

            

Adjusted EBITDA

   $ (10   $ (12     $ (35   $ (36  

Total

            

Revenue

   $ 1,035      $ 1,028        (1 )%    $ 3,131      $ 3,051        (3 )% 
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 295      $ 306        3   $ 837      $ 839        0

Adjusted EBITDA margin

     28.6     29.7     1.1 pts      26.7     27.5     0.8 pts 

pts = margin points

Reconciliation of Segment Adjusted EBITDA to operating income:

 

Financial Systems segment

   $ 170      $  194      $ 474      $ 502   

Availability Services segment

     120        108        351        325   

Public Sector & Education segment

     15        16        47        48   

Corporate

     (10     (12     (35     (36
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted EBITDA

     295        306        837        839   

Depreciation

     (70     (73     (211     (222

Amortization of acquisition-related intangible assets

     (94     (82     (295     (255

Goodwill impairment

     (385     —          (385     —     

Restructuring and other costs

     (13     (14     (30     (30

Stock compensation expense

     (9     (12     (29     (35

Management fees

     (3     (3     (9     (8
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

   $ (279   $ 122      $ (122   $ 289   
  

 

 

   

 

 

   

 

 

   

 

 

 


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

 

Note 2. Reconciliation of Income (Loss) from Continuing Operations to EBITDA and Reconciliation of EBITDA to Adjusted EBITDA Per Senior Secured Credit Agreement

EBITDA represents income (loss) from continuing operations before interest expense, income taxes and depreciation and amortization. Adjusted EBITDA per our Senior Secured Credit Agreement is defined as EBITDA further adjusted to give effect to certain items that are required in calculating covenant compliance under our senior secured credit facilities, as amended, our senior notes and senior subordinated notes. Adjusted EBITDA per our Senior Secured Credit Agreement is calculated by subtracting from or adding to EBITDA items of income or expense described below. EBITDA and Adjusted EBITDA per our Senior Secured Credit Agreement are not recognized terms under generally accepted accounting principles (GAAP). EBITDA and Adjusted EBITDA per our Senior Secured Credit Agreement do not represent income (loss) from continuing operations, as that term is defined under GAAP, and should not be considered as an alternative to income (loss) from continuing operations as an indicator of our operating performance. Additionally, EBITDA and Adjusted EBITDA per our Senior Secured Credit Agreement 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 per our Senior Secured Credit Agreement to be key indicators of our ability to pay our debt. EBITDA and Adjusted EBITDA per our Senior Secured Credit Agreement as presented herein are not necessarily comparable to similarly titled measures. The following is a reconciliation of EBITDA and Adjusted EBITDA per our Senior Secured Credit Agreement to income (loss) from continuing operations, the GAAP measure we believe to be most directly comparable to EBITDA and Adjusted EBITDA per our Senior Secured Credit Agreement. Further information regarding this reconciliation is included in our periodic filings with the U.S. Securities and Exchange Commission.

 

           Last Twelve
Months Ended
 
     Three Months Ended Sept. 30,     Sept. 30  

(in millions)

   2012     2013     2013  

Total revenue

   $ 1,035      $ 1,028      $ 4,183   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ (367   $ 23      $ 45   

Interest expense, net

     101        95        404   

Provision for (benefit from) income taxes

     (13     3        (4

Depreciation and amortization

     164        155        643   
  

 

 

   

 

 

   

 

 

 

EBITDA

     (115     276        1,088   

Goodwill impairment charge

     385        —          —     

Purchase accounting adjustments

     2        1        8   

Non-cash charges

     10        12        45   

Restructuring and other

     16        16        68   

Acquired EBITDA, net of disposed EBITDA

     1        —          1   

Loss on extinguishment of debt

     —          1        36   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA - per Senior Secured Credit Agreement *

   $ 299      $ 306      $ 1,246   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     28.9     29.8     29.8
  

 

 

   

 

 

   

 

 

 

Year to Year Margin improvement

       0.9 points        1.1 points   
    

 

 

   

 

 

 


     Nine Months Ended Sept. 30,  

(in millions)

   2012     2013  

Total revenue

   $  3,131      $  3,051   
  

 

 

   

 

 

 

Loss from continuing operations

   $ (451   $ (9

Interest expense, net

     324        301   

Benefit from income taxes

     (44     (10

Depreciation and amortization

     506        477   
  

 

 

   

 

 

 

EBITDA

     335        759   

Goodwill impairment charges

     385        —     

Purchase accounting adjustments

     7        6   

Non-cash charges

     30        36   

Restructuring and other

     29        33   

Acquired EBITDA, net of disposed EBITDA

     2        —     

Loss on extinguishment of debt

     51        6   
  

 

 

   

 

 

 

Adjusted EBITDA - per Senior Secured Credit Agreement *

   $ 839      $ 840   
  

 

 

   

 

 

 

Adjusted EBITDA margin

     26.8     27.5
  

 

 

   

 

 

 

Year to Year Margin improvement

       0.7 points   
    

 

 

 

 

* Also applies to Senior Notes due 2018 and 2020 and Senior Subordinated Notes due 2019