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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 Second Quarter 2014 Results

Wayne, PA – August 1, 2014 – SunGard Data Systems Inc. (“SunGard” or the “Company”), one of the world’s leading software and technology services companies, today reported results for the second quarter ended June 30, 2014. For the second quarter, revenue was $673 million, flat year over year (down 1% adjusting for currency). Operating income was $77 million in the quarter, down 16% year over year, driven by a 3% increase in total costs and expenses, and the operating margin was 11.4%, down 2.2 points year over year. Adjusted EBITDA was $159 million, down 12% year over year, and the adjusted EBITDA margin was 23.7%, down 3.3 points year over year. Excluding the $10 million reduction in costs and expense in the prior year quarter from the change to the Company’s vacation liability estimate, Adjusted EBITDA declined 7% year over year and the EBITDA margin declined 1.8 points. Adjusted EBITDA is defined in Note 1 attached to this release.

Year to date, revenue was $1.3 billion, up 1% year over year (flat adjusting for currency). Year to date, the Company incurred an operating loss of $212 million, which includes a $339 million impairment charge. Excluding this charge, operating income was $127 million, down 6% year over year, driven by a 2% increase in total costs and expenses, and operating margin was 9.5%. Adjusted EBITDA was $304 million, down 2% year over year, and adjusted EBITDA margin was 23%, down 0.7 points year over year. See Notes 2 and 3 attached to this release for historical financial information which presents the results of Availability Services in discontinued operations.

Russ Fradin, president and chief executive officer, commented, “Our second quarter results reflect some encouraging trends and the investments we’re making in sales capacity, new product development and the infrastructure to support faster services growth. On the revenue front, we’re pleased with the growth in our recurring revenue base as well as the increase in professional services revenue over the past several quarters. We were, however, disappointed in the relatively low level of software license fees, largely due to the timing of renewals which tend to vary from quarter to quarter. Overall, the market continues to be receptive to our new product introductions and our expanded managed services offerings, as evidenced by the trend towards higher recurring revenue. I’m confident we’re making the right investments to deliver long-term growth and create greater value for our clients.”

 

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LOGO

 

Financial Systems (“FS”) segment revenue was $618 million in the second quarter, flat year over year (down 1% year over year adjusting for currency) as growth in services was offset by a decline in software license fees, largely tied to the timing of customer renewals. FS segment costs and expenses were $464 million, up 4% year over year. Excluding the $10 million reduction in costs and expense in the prior year quarter from the change to our vacation liability estimate, FS costs and expenses increased 2% year over year. Investments were made in sales, development and infrastructure to support our improving recurring revenue base. Adjusted EBITDA for the period was $154 million, down 12% from the prior year, and the Adjusted EBITDA margin was 24.9%, down 3.3 points from last year. Excluding the change to our vacation liability estimate in the prior year quarter, Adjusted EBITDA declined 7% year over year and the EBITDA margin declined 1.7 points.

Year to date, FS revenue was $1.2 billion, up 1% year over year (flat adjusting for currency). For the same period, adjusted EBITDA was $293 million, a decrease of 3%, compared to the prior year, and the adjusted EBITDA margin was 24.1%, down 0.9 points from last year.

Notable deals in the quarter included the following:

 

    SunGard’s Front Arena was selected by one of Germany’s oldest private banks in a ten-year deal as a cross-asset, front-to-back sell-side solution to support its capital markets business

 

    SunGard’s Front Arena was also selected by a major buy-side US-based diversified financial institution and insurance provider to manage complex derivative portfolios.

 

    SunGard’s Apex Securities Finance was chosen by a major Canadian bank for a five-year deal to support its repo trading and global equity finance business.

 

    SunGard’s Omni was selected by a leading provider of investment services in Saudi Arabia for a five-year deal enabling them to deliver recordkeeping services for the thrift savings plans of their institutional clients.

 

    SunGard’s Quantum Treasury solution, including hosting / infrastructure services and managed connectivity, was selected by one of the world’s largest medical equipment companies.

 

    SunGard’s Aligne solution for commodity trading and risk management, gas operations and settlements was chosen by a leading European gas trading company.

 

    SunGard’s WealthStation and Investor’sView were chosen by a large US financial services firm in a five-year deal to help grow its advisory and investment management business, as well as complement its use of SunGard’s AddVantage trust accounting system.

 

    SunGard’s Valdi was selected by a leading US regional bank to help enable better compliance with regulatory requirements and greater efficiency in client transaction processing.

Public Sector and Education (“PS&E”) segment revenue was $55 million in the second quarter, up 6% year over year. PS&E segment costs and expenses were $38 million, up 9% year over year, driven by recent new product offerings and the related new services growth. Adjusted EBITDA was $17 million, up 1% year over year, and the adjusted EBITDA margin was 31.3%, down 1.7 points from last year. These results reflect continued strong demand for our public sector solutions.

 

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LOGO

 

Year to date, PS&E revenue was $108 million, up 6% year over year. For the same period, adjusted EBITDA was $33 million, an increase of 5%, compared to the prior year, and the adjusted EBITDA margin was 30.7%, down 0.4 points from last year.

Notable deals in the quarter included the following:

 

    SunGard Public Sector’s ONESolution was selected by a county in California and a county in Kansas to provide enterprise-wide software solutions for finance, payroll and human resources.

 

    SunGard K-12 Education’s BusinessPLUS was chosen by a major intermediate school district in Michigan to help manage critical financial, procurement, payroll and personnel functions for six school districts.

 

    SunGard Public Sector’s ONESolution was chosen by a public agency that oversees much of the regional transportation infrastructure in the New York metropolitan area to provide public safety solutions for computer-aided emergency dispatch and mobile computing.

 

    SunGard K-12 Education’s eFinancePLUS software was selected by the department of education of a southern US state to help manage its critical financial, procurement, payroll and personnel functions in 247 districts.

Financial Position

For the six months ended June 30, 2014, the continuing operations of the Company generated $86 million in cash flow from operations. Capital expenditures were $58 million, including increased capitalization of software as a result of new product investments.

At June 30, 2014, total debt was $4.7 billion and cash was $314 million. The Company’s leverage ratio, as defined in its senior secured credit agreement, was 5.64x. The leverage ratio is calculated using adjusted EBITDA as defined in Note 4 attached to this release. See Note 5 attached to this release for supplemental information on debt.

Conference Call & Webcast

SunGard will host a conference call and live web broadcast to discuss second quarter 2014 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 76889776. 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 August 15, 2014. To listen to the replay, please dial 1-855-859-2056 or 404-537-3406 and enter the conference ID number 76889776.

 

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LOGO

 

About SunGard

SunGard is one of the world’s leading software and technology services companies, with annual revenue of about $2.8 billion. SunGard provides software and processing solutions for financial services, education and the public sector. SunGard serves approximately 16,000 customers in more than 100 countries and has approximately 13,000 employees. For more information, please visit www.sungard.com.

Trademark Information: SunGard, the SunGard logo, AddVantage, Aligne, Apex Securities Finance, BusinessPLUS, eFinancePLUS, Front Arena, Investor’s View, Omni, ONESolution, Quantum, WealthStation, Valdi 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.

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; 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 Jun. 30,  
     2013     2014  

Revenue:

    

Services

   $ 596      $ 617   

License and resale fees

     67        47   
  

 

 

   

 

 

 

Total products and services

     663        664   

Reimbursed expenses

     9        9   
  

 

 

   

 

 

 

Total revenue

     672        673   
  

 

 

   

 

 

 

Costs and expenses:

    

Cost of sales and direct operating (excluding depreciation)

     252        265   

Sales, marketing and administration

     159        162   

Product development and maintenance

     98        101   

Depreciation

     25        27   

Amortization of acquisition-related intangible assets

     47        41   
  

 

 

   

 

 

 

Total costs and expenses

     581        596   
  

 

 

   

 

 

 

Operating income

     91        77   

Interest income

     —          1   

Interest expense and amortization of deferred financing fees

     (79     (73

Other expense

     (2     —     
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     10        5   

Provision for income taxes

     (5     (2
  

 

 

   

 

 

 

Income from continuing operations

     5        3   

Income from discontinued operations, net of tax

     10        —     
  

 

 

   

 

 

 

Net income

   $ 15      $ 3   
  

 

 

   

 

 

 

 

 

SunGard Data Systems Inc.

Consolidated Statements of Operations

(in millions)

(Unaudited)

 

     Six Months Ended Jun. 30,  
     2013     2014  

Revenue:

    

Services

   $ 1,194      $ 1,218   

License and resale fees

     100        91   
  

 

 

   

 

 

 

Total products and services

     1,294        1,309   

Reimbursed expenses

     17        17   
  

 

 

   

 

 

 

Total revenue

     1,311        1,326   
  

 

 

   

 

 

 

Costs and expenses:

    

Cost of sales and direct operating (excluding depreciation)

     513        528   

Sales, marketing and administration

     314        332   

Product development and maintenance

     206        204   

Depreciation

     49        51   

Amortization of acquisition-related intangible assets

     95        84   

Trade name impairment charge

     —          339   
  

 

 

   

 

 

 

Total costs and expenses

     1,177        1,538   
  

 

 

   

 

 

 

Operating income (loss)

     134        (212

Interest income

     —          1   

Interest expense and amortization of deferred financing fees

     (169     (147

Loss on extinguishment of debt

     (5     (61

Other expense

     (2     —     
  

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (42     (419

Benefit from income taxes

     12        99   
  

 

 

   

 

 

 

Loss from continuing operations

     (30     (320

Loss from discontinued operations, net of tax

     (2     (17
  

 

 

   

 

 

 

Net loss

   $ (32   $ (337
  

 

 

   

 

 

 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Balance Sheets

(in millions)

(Unaudited)

 

     Dec. 31,
2013
     Jun. 30,
2014
 

Assets:

     

Current:

     

Cash and cash equivalents

   $ 675       $ 314   

Accounts receivable, net

     657         540   

Prepaid expenses and other current assets

     123         146   

Assets of discontinued operations

     2,516         —     
  

 

 

    

 

 

 

Total current assets

     3,971         1,000   

Property and equipment, net

     152         152   

Software products, net

     270         229   

Customer base, net

     421         390   

Other assets, net

     113         105   

Trade name

     1,019         672   

Goodwill

     3,828         3,827   
  

 

 

    

 

 

 

Total Assets

   $ 9,774       $ 6,375   
  

 

 

    

 

 

 

Liabilities and Stockholder’s Equity:

     

Current:

     

Short-term and current portion of long-term debt

   $ 290       $ 2   

Accounts payable and accrued expenses

     420         299   

Deferred revenue

     589         563   

Liabilities of discontinued operations

     799         —     
  

 

 

    

 

 

 

Total current liabilities

     2,098         864   

Long-term debt

     6,094         4,669   

Deferred and other income taxes

     739         641   

Other long-term liabilities

     22         32   
  

 

 

    

 

 

 

Total liabilities

     8,953         6,206   

Stockholder’s equity

     821         169   
  

 

 

    

 

 

 

Total Liabilities and Stockholder’s Equity

   $ 9,774       $ 6,375   
  

 

 

    

 

 

 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Statements of Cash Flows

(in millions)

(Unaudited)

 

     Six Months Ended Jun. 30,  
     2013     2014  

Cash flow from operations:

    

Cash flow from continuing operations

   $ 136      $ 86   

Cash flow from discontinued operations

     170        34   
  

 

 

   

 

 

 

Cash flow from operations

     306        120   

Investment activities:

    

Cash paid for acquired businesses, net of cash acquired

     (1     —     

Cash paid for property, equipment and software

     (46     (58
  

 

 

   

 

 

 

Cash used in continuing operations

     (47     (58

Cash (used in) provided by discontinued operations

     (54     5   
  

 

 

   

 

 

 

Cash used in investment activities

     (101     (53

Financing activities:

    

Cash received from borrowings, net of fees

     2,173        (7

Cash used to repay debt

     (2,359     (1,324

Other financing activities

     (15     (16
  

 

 

   

 

 

 

Cash used in continuing operations

     (201     (1,347

Cash provided by discontinued operations

     —          887   
  

 

 

   

 

 

 

Cash used in financing activities

     (201     (460

Effect of exchange rate changes on cash

     (12     1   
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (8     (392

Beginning cash and cash equivalents, including cash of discontinued operations (2013: $11, 2014: $31)

     546        706   
  

 

 

   

 

 

 

Ending cash and cash equivalents, including cash of discontinued operations (2013: $36, 2014: $-)

   $ 538      $ 314   
  

 

 

   

 

 

 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

Note 1. Reconciliation of 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 and trade name impairment charges, 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 4).

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. Also, reported amounts may not sum to totals due to rounding.

 

     Three Months Ended Jun. 30,     Six Months Ended Jun. 30,  
(in millions)    2013     2014     change     2013     2014     change  

Financial Systems segment

            

Revenue

   $ 620      $ 618        (0 )%    $ 1,209      $ 1,218        1
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 174      $ 154        (12 )%    $ 302      $ 293        (3 )% 

Adjusted EBITDA margin

     28.2     24.9     (3.3 )pts      25.0     24.1     (0.9 )pts 

Public Sector & Education segment

            

Revenue

   $ 52      $ 55        6   $ 102      $ 108        6
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 18      $ 17        1   $ 32      $ 33        5

Adjusted EBITDA margin

     33.0     31.3     (1.7 )pts      31.1     30.7     (0.4 )pts 

Corporate

            

Adjusted EBITDA

   $ (11   $ (12     $ (24   $ (22  

Total

            

Revenue

   $ 672      $ 673        0   $ 1,311      $ 1,326        1
  

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted EBITDA

   $ 181      $ 159        (12 )%    $ 310      $ 304        (2 )% 

Adjusted EBITDA margin

     26.9     23.7     (3.3 )pts      23.6     23.0     (0.7 )pts 

pts = margin points

            
     Three Months Ended Jun. 30,     Six Months Ended Jun. 30,  
Reconciliation of Adjusted EBITDA to operating income:    2013     2014     change     2013     2014     change  

Financial Systems segment

   $ 174      $ 154        $ 302      $ 293     

Public Sector & Education segment

     18        17          32        33     

Corporate

     (11     (12       (24     (22  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Adjusted EBITDA

     181        159          310        304     

Depreciation

     (25     (27       (49     (51  

Amortization of acquisition-related intangible assets

     (47     (41       (95     (84  

Trade name impairment

     —          —            —          (339  

Restructuring and other costs

     (5     (2       (9     (19  

Stock compensation expense

     (11     (11       (20     (20  

Management fees

     (2     (1       (3     (3  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total operating income (loss)

   $ 91      $ 77        (16 )%    $ 134      $ (212     (258 )% 
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating income margin

     13.6     11.4     (2.2 )pts      10.2     (16.0 )%      (26.2 )pts 


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

 

Note 2. Consolidated Statements of Operations

The following consolidated statements of operations have been adjusted to present the results of Availability Services in discontinued operations for the full years 2011, 2012 and 2013 (in millions).

 

     Year ended Dec. 31,  
     2011     2012     2013  

Revenue:

      

Services

   $ 2,563      $ 2,495      $ 2,454   

License and resale fees

     284        271        274   
  

 

 

   

 

 

   

 

 

 

Total products and services

     2,847        2,766        2,728   

Reimbursed expenses

     74        42        33   
  

 

 

   

 

 

   

 

 

 

Total revenue

     2,921        2,808        2,761   
  

 

 

   

 

 

   

 

 

 

Costs and expenses:

      

Cost of sales and direct operating (excluding depreciation)

     1,125        1,063        1,020   

Sales, marketing and administration

     735        651        643   

Product development and maintenance

     456        433        407   

Depreciation

     91        96        104   

Amortization of acquisition-related intangible assets

     260        217        182   

Goodwill impairment charge

     12        —          —     
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     2,679        2,460        2,356   
  

 

 

   

 

 

   

 

 

 

Operating income

     242        348        405   

Interest income

     3        1        1   

Interest expense and amortization of deferred financing fees

     (463     (360     (326

Loss on extinguishment of debt

     (3     (82     (6

Other income (expense)

     —          1        (2
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (221     (92     72   

Benefit from (provision for) income taxes

     145        49        (26
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (76     (43     46   

Income (loss) from discontinued operations, net of tax

     (73     (23     17   
  

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (149   $ (66   $ 63   
  

 

 

   

 

 

   

 

 

 


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

 

Note 3. Statements of Cash Flows

The following statements of cash flows have been adjusted to present the results of Availability Services in discontinued operations for the full years 2011, 2012 and 2013 (in millions).

 

     Year Ended Dec. 31  
     2011     2012     2013  

Cash flow from operations:

      

Cash flow from continuing operations

   $ 164      $ 287      $ 422   

Cash flow from (used in) discontinued operations

     514        (43     324   
  

 

 

   

 

 

   

 

 

 

Cash flow from operations

     678        244        746   

Investment activities:

      

Cash paid for acquired businesses, net of cash acquired

     (35     (40     (2

Cash paid for property, equipment and software

     (97     (97     (111

Other investing activities

     (5     1        1   
  

 

 

   

 

 

   

 

 

 

Cash used in continuing operations

     (137     (136     (112

Cash from (used in) discontinued operations

     (189     1,597        (146
  

 

 

   

 

 

   

 

 

 

Cash from (used in) investment activities

     (326     1,461        (258

Financing activities:

      

Cash received from borrowings, net of fees

     (4     1,715        2,171   

Cash used to repay debt

     (236     (2,943     (2,475

Premium paid to retire debt

     —          (48     —     

Dividends Paid

     —          (724     (3

Other financing activities

     (15     (36     (18
  

 

 

   

 

 

   

 

 

 

Cash used in continuing operations

     (255     (2,036     (325

Cash from (used in) discontinued operations

     2        (3     (2
  

 

 

   

 

 

   

 

 

 

Cash used in financing activities

     (253     (2,039     (327

Effect of exchange rate changes on cash

     (4     7        (1
  

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     95        (327     160   

Beginning cash and cash equivalents, including cash of discontinued operations

     778        873        546   
  

 

 

   

 

 

   

 

 

 

Ending cash and cash equivalents, including cash of discontinued operations

   $ 873      $ 546      $ 706   
  

 

 

   

 

 

   

 

 

 


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

 

Note 4. 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.

 

     Three Months Ended Jun. 30,     Last Twelve
Months Ended
 

(in millions)

   2013     2014     Jun. 30, 2014  

Total revenue

   $ 672      $ 673      $ 2,776   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ 5      $ 3      $ (244

Interest expense, net

     79        72        302   

Benefit from (provision for) income taxes

     5        2        (61

Depreciation and amortization

     72        68        277   
  

 

 

   

 

 

   

 

 

 

EBITDA

     161        145        274   

Trade name impairment charge

     —          —          339   

Purchase accounting adjustments

     2        —          3   

Non-cash charges

     11        11        40   

Restructuring and other

     7        3        39   

Loss on extinguishment of debt

     —          —          62   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA - per Senior Secured Credit Agreement *

   $ 181      $ 159      $ 757   
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     26.9     23.6     27.3
  

 

 

   

 

 

   

 

 

 

Year to Year Margin change

       (3.3 points  
    

 

 

   

 

     Six Months Ended Jun. 30,  

(in millions)

   2013     2014  

Total revenue

   $ 1,311      $ 1,326   
  

 

 

   

 

 

 

Loss from continuing operations

   $ (30   $ (320

Interest expense, net

     169        146   

Benefit from income taxes

     (12     (99

Depreciation and amortization

     144        135   
  

 

 

   

 

 

 

EBITDA

     271        (138

Trade name impairment charge

     —          339   

Purchase accounting adjustments

     4        1   

Non-cash charges

     20        20   

Restructuring and other

     8        20   

Loss on extinguishment of debt

     5        61   
  

 

 

   

 

 

 

Adjusted EBITDA - per Senior Secured Credit Agreement *

   $ 308      $ 303   
  

 

 

   

 

 

 

Adjusted EBITDA margin

     23.5     22.9
  

 

 

   

 

 

 

Year to Year Margin change

       (0.6 points
    

 

 

 

 

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


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information (Unaudited)

 

Note 5. Supplemental Information

The debt and cash data included below (in millions) is presented to provide clarity related to SunGard’s debt structure and changes in both the components of debt and cash from December 31, 2013 (prior to the Availability Services (AS) split-off) to June 30, 2014 related to first half of 2014 activity and the split-off of AS from SunGard. Other debt as of December 31, 2013 included $8 million of debt related to AS which was primarily capital lease obligations.

 

     Dec. 31, 2013     Jun. 30, 2014     Change  

Cash

   $ 706      $ 314      $ (392
  

 

 

   

 

 

   

 

 

 

Senior Secured Credit Facilities:

      

Secured revolving credit facility

   $ —        $ —        $ —     

Tranche A, effective interest rate of 1.92%

     7        —          (7

Tranche C, effective interest rate of 4.41% and 4.44%

     427        400        (27

Tranche D, effective interest rate of 4.50%

     713        —          (713

Tranche E, effective interest rate of 4.10% and 4.31%

     2,183        1,918        (265
  

 

 

   

 

 

   

 

 

 

Total Senior Secured Credit Facilities

     3,330        2,318        (1,012

Senior Secured Notes due 2014 at 4.875%

     250        —          (250

Senior Notes due 2018 at 7.375%

     900        511        (389

Senior Notes due 2020 at 7.625%

     700        700        —     

Senior Subordinated Notes due 2019 at 6.625%

     1,000        1,000        —     

Secured accounts receivable facility, at 3.67% and 3.16%

     200        140        (60

Other, primarily foreign bank debt and capital lease obligations

     12        2        (10
  

 

 

   

 

 

   

 

 

 

Total debt

   $ 6,392      $ 4,671      $ (1,721
  

 

 

   

 

 

   

 

 

 

Net Debt (Total debt less cash)

   $ 5,686      $ 4,357      $ (1,329
  

 

 

   

 

 

   

 

 

 

Leverage Metric per Credit Agreement

     4.56x        5.64x        1.08x   

Weighted Average Interest Rate

     5.42     5.61     0.19 points   

Percent Fixed Rate (swap adjusted)

     54     67     13 points   

Percent Bonds of Total Debt

     45     47     2 points   

The contractual future maturities of debt are as follows (in millions):

 

     Dec. 31, 2013      Jun. 30, 2014      Change  

2014

   $ 293       $ —         $ (293

2015

     31         2         (29

2016

     31         —           (31

2017

     656         400         (256

2018

     929         511         (418

Thereafter

     4,452         3,758         (694
  

 

 

    

 

 

    

 

 

 

Total debt

   $ 6,392       $ 4,671       $ (1,721