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8-K - FORM 8-K - SUNGARD DATA SYSTEMS INC | c97787e8vk.htm |
Exhibit 99.1
For more information, contact:
Robert Woods
|
Eric Erickson | Kris Block | ||
Tel: 484-582-5645
|
Tel: 484-582-5480 | Tel: 484-582-5505 | ||
robert.woods@sungard.com
|
eric.erickson@sungard.com | kris.block@sungard.com |
SunGard Announces 2009 Results
Wayne, PA March 15, 2010 SunGard, one of the worlds leading software and technology services
companies, today reported that revenue for the full-year 2009 was $5.51 billion, down 2% from 2008.
Adjusted EBITDA was $1.50 billion, down 7% from 2008. Adjusted income from operations was $1.16
billion, down 5% from 2008. Excluding the results of Availability Services and one of our trading
systems businesses, a broker/dealer described below, adjusted income from operations was up 3%.
SunGard reported a loss from operations of $576 million for the full-year 2009, compared to income
from operations of $470 million for the full-year 2008. The reported loss from operations in 2009
includes a noncash write-down of goodwill in SunGards Availability Services business of $1.13
billion. Reported income from operations in 2008 includes a noncash write-down of goodwill in
SunGards Public Sector business of $128 million. Those results include amortization of acquired
intangible assets, stock-based compensation, purchase-accounting adjustments, and other expenses
that total $609 million and $617 million in 2009 and 2008, respectively.
For its fourth quarter ended December 31, 2009, SunGard reported revenue of $1.47 billion, down 5%
from the prior-year period. Adjusted EBITDA was $441 million, down 10.5% from the prior-year
period. Adjusted income from operations was $342 million, down 11% from the prior-year period.
Excluding the results of Availability Services and the broker/dealer, adjusted income from
operations was up 2%.
SunGard reported a loss from operations for fourth quarter 2009 of $942 million, compared to
reported income from operations of $65 million for fourth quarter 2008, each inclusive of the
goodwill write-downs mentioned above.
Adjusted EBITDA and adjusted income from operations are defined in Notes 1 and 2 in the Notes
attached to this release.
Organic revenue (defined as revenue from businesses owned for at least one year and adjusted for
both businesses sold in the previous twelve months and the impact of currency exchange rates) was
down 3% for the full-year 2009 and down 7% for the fourth quarter. Approximately four percentage
points of the decrease in organic revenue in the quarter was attributable to one of our
broker/dealer businesses. This broker/dealer revenue, which is affected by market volatility and
customer mix, was down 2% for the full-year 2009 and down 36% in the fourth quarter versus 2008.
The customer mix is impacted by the market-wide dynamics by which active trading firms are opting
to become broker/dealers and trade on their own behalf. See Note 3 in the Notes attached to this
release.
The following table summarizes our results:
FY09 | FY08 | Y/Y | Q409 | Q408 | Y/Y | |||||||||||||||||||
Revenue ($B) |
5.51 | 5.60 | -2 | % | 1.47 | 1.54 | -5 | % | ||||||||||||||||
Adjusted EBITDA ($B) |
1.50 | 1.62 | -7 | % | 0.44 | 0.49 | -11 | % | ||||||||||||||||
Adjusted Income from Operations ($B) |
1.16 | 1.22 | -5 | % | 0.34 | 0.38 | -11 | % | ||||||||||||||||
Reported Income (loss) from Operations ($MM) |
-576 | 470 | | -942 | 65 | |
Cristóbal Conde, president and chief executive officer, commented, Our results reflect the
full-year impact of the credit crisis and the economic recession. We planned for a difficult year,
but overall our results were better than anticipated. The IT spending mood shows signs of tempered
optimism, but sales cycles remain long and pricing pressure is high. We are adding value through
bundling solutions and providing more content and expertise through professional services. Our
competitiveness is very strong and we are more relevant than ever to our customers and more
mission-critical than ever to their business.
The goodwill associated with SunGards Availability Services business, which was $2.26 billion at
September 30, 2009, was written down to $1.09 billion, representing a write-down of 15% of
SunGards total goodwill. This goodwill represents the remaining intangible value that was
allocated to the Availability Services business at the time of SunGards leveraged buy-out in 2005
after the fair value of all of its other assets and liabilities was determined. The determination
of a write-down in the carrying value of the goodwill associated with SunGards Availability
Services business is based on an evaluation of year-end results and a reduction in the revenue
growth outlook for the Availability Services business. As a result, SunGards estimate of the
future cash flows of its Availability Services business has been reduced, triggering the write-down
in goodwill.
Mr. Conde said, Availability Services is an important part of SunGards business and will continue
to generate strong operating margins and significant cash flow. Our write-down of its goodwill,
which is a noncash charge, has no impact on our debt covenant compliance or our liquidity, does not
change either our competitive position or strategy, and has no bearing on our day-to-day delivery
of customer services. The write-down also will not affect our investment in facilities and new
product development. In 2010 our plan for the business is to increase capital expenditures over
10% and increase product development outlays even more. The fundamentals of the Availability
Services business remain strong, and we look to grow the business by continuing to deliver
industry-leading recovery services, managed services, and business continuity management software
and consulting services.
Financial Systems revenue decreased 8% to $836 million in the quarter, with total revenue of $3.07
billion for the year. Organic revenue decreased 10% in the quarter; excluding the broker/dealer
business, organic revenue decreased 3% for the fourth quarter. License fees were $83 million for
the fourth quarter, a decrease of $4 million compared to the prior-year period.
Notable deals in the quarter included the following:
| A global bank specializing in emerging markets chose SunGards Adaptiv limit management solution to support its wholesale banking business. | ||
| A leading provider of financial services to institutional investors expanded its relationship with SunGard to include a wealth management global services agreement for consulting, professional services and project management. | ||
| A global diversified financial services firm expanded its use of SunGards GMI to enhance its back-office processing. |
Higher Education revenue decreased 2%, all of which was organic, to $137 million for the quarter
and was $526 million for the year. License fees were $14 million for the quarter, an increase of
$1 million from the prior-year period.
Notable deals in the quarter included the following:
| A multi-campus technical college in South Carolina selected SunGard for technology management services. | ||
| A public state university system of eight campuses in the southeastern U.S. selected SunGard to provide a suite of solutions and services to support a business process transformation. | ||
| A private Chilean university extended its relationship with SunGard and purchased additional Banner solutions. |
Public Sector revenue increased 4% to $108 million in the quarter, with total revenue of $397
million for the year. Organic revenue increased 1% in the quarter.
Notable deals in the quarter included the following:
| A district council in the United Kingdom renewed its contract with SunGard to provide managed services. | ||
| A city in South Carolina selected SunGard to upgrade its computer-aided dispatch, records management and mobile computing solutions. | ||
| A county in South Dakota contracted with SunGard to provide financials and human resources support for school district employees. |
Availability Services revenue decreased 2% to $386 million in the quarter, with total revenue of
$1.52 billion for the year. Organic revenue decreased 3% for the quarter.
Notable deals in the quarter included the following:
| A leading provider of market intelligence to the pharmaceutical and healthcare industries selected SunGards recovery services, managed services and consulting services. | ||
| A leading producer of cereal and convenience foods selected SunGard for comprehensive information availability services including managed services, recovery services and professional services. | ||
| A private bank and wealth management company selected SunGard as its managed services provider. |
Financial Position
At December 31, 2009, total debt was $8.32 billion, cash balances were $664 million and the
Companys leverage ratio improved to 4.99. During 2009, the Company generated $639 million in cash
flow from operations, an increase of $254 million from 2008. The Company also invested $327
million in capital expenditures and completed three acquisitions in 2009.
Conference Call & Webcast
A conference call to review the results is scheduled for Tuesday, March 16, 2010 at 9:00 a.m.
(Eastern Time). The dial-in number is 706-902-1370, conference ID 59163457. A replay will be
available shortly after the end of the call through midnight on March 23, 2010. To listen to the
replay, please dial 706-645-9291, conference ID 59163457. You may also listen to the call at
www.investorcalendar.com by clicking on the audio icon for SunGard.
About SunGard
SunGard is one of the worlds leading software and technology services companies. SunGard has more than
20,000 employees and serves 25,000 customers in 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 IT
services company.
Trademark Information: SunGard, the SunGard logo, Adaptiv, Banner and GMI 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 | ||||||||
Dec. 31, | Dec. 31, | |||||||
2008 | 2009 | |||||||
Revenue: |
||||||||
Services |
$ | 1,404 | $ | 1,274 | ||||
License and resale fees |
134 | 148 | ||||||
Total products and services |
1,538 | 1,422 | ||||||
Reimbursed expenses |
5 | 45 | ||||||
1,543 | 1,467 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
720 | 671 | ||||||
Sales, marketing and administration |
336 | 320 | ||||||
Product development |
67 | 77 | ||||||
Depreciation and amortization |
71 | 76 | ||||||
Amortization of acquisition-related intangible assets |
154 | 136 | ||||||
Goodwill impairment charge and merger costs |
130 | 1,129 | ||||||
1,478 | 2,409 | |||||||
Income (loss) from operations |
65 | (942 | ) | |||||
Interest income |
5 | 1 | ||||||
Interest expense and amortization of deferred financing fees |
(166 | ) | (166 | ) | ||||
Other income (expense) |
(44 | ) | 9 | |||||
Loss before income taxes |
(140 | ) | (1,098 | ) | ||||
Benefit from (provision for) income taxes |
(47 | ) | 9 | |||||
Net loss |
$ | (187 | ) | $ | (1,089 | ) | ||
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
Consolidated Statements of Operations
(in millions)
Twelve Months Ended | ||||||||
Dec. 31, | Dec. 31, | |||||||
2008 | 2009 | |||||||
Revenue: |
||||||||
Services |
$ | 5,083 | $ | 4,961 | ||||
License and resale fees |
369 | 384 | ||||||
Total products and services |
5,452 | 5,345 | ||||||
Reimbursed expenses |
144 | 163 | ||||||
5,596 | 5,508 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
2,744 | 2,709 | ||||||
Sales, marketing and administration |
1,151 | 1,112 | ||||||
Product development |
308 | 302 | ||||||
Depreciation and amortization |
278 | 291 | ||||||
Amortization of acquisition-related intangible assets |
515 | 540 | ||||||
Goodwill impairment charge and merger costs |
130 | 1,130 | ||||||
5,126 | 6,084 | |||||||
Income (loss) from operations |
470 | (576 | ) | |||||
Interest income |
18 | 7 | ||||||
Interest expense and amortization of deferred
financing fees |
(599 | ) | (637 | ) | ||||
Other income (expense) |
(93 | ) | 15 | |||||
Loss before income taxes |
(204 | ) | (1,191 | ) | ||||
Benefit from (provision for) income taxes |
(38 | ) | 21 | |||||
Net loss |
$ | (242 | ) | $ | (1,170 | ) | ||
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, | Dec. 31, | |||||||
2008 | 2009 | |||||||
Assets: |
||||||||
Current: |
||||||||
Cash and cash equivalents |
$ | 975 | $ | 664 | ||||
Accounts receivable, net |
782 | 1,136 | ||||||
Clearing broker assets |
309 | 332 | ||||||
Prepaid expenses and other current assets |
144 | 211 | ||||||
Retained interest in accounts receivable sold |
285 | | ||||||
Total current assets |
2,495 | 2,343 | ||||||
Property and equipment, net |
898 | 925 | ||||||
Software products, net |
1,159 | 1,020 | ||||||
Customer base, net |
2,616 | 2,294 | ||||||
Other assets, net |
1,282 | 1,220 | ||||||
Goodwill |
7,328 | 6,178 | ||||||
Total Assets |
$ | 15,778 | $ | 13,980 | ||||
Liabilities and Stockholders Equity: |
||||||||
Current: |
||||||||
Short-term and current portion of long-term debt |
$ | 322 | $ | 64 | ||||
Accounts payable and accrued expenses |
961 | 950 | ||||||
Clearing broker liabilities |
310 | 294 | ||||||
Deferred revenue |
977 | 1,040 | ||||||
Total current liabilities |
2,570 | 2,348 | ||||||
Long-term debt |
8,553 | 8,251 | ||||||
Deferred income taxes |
1,592 | 1,366 | ||||||
Total liabilities |
12,715 | 11,965 | ||||||
Stockholders equity |
3,063 | 2,015 | ||||||
Total Liabilities and Stockholders Equity |
$ | 15,778 | $ | 13,980 | ||||
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 | ||||||||
Dec. 31, | Dec. 31, | |||||||
(in millions) | 2008 | 2009 | ||||||
Net loss |
$ | (187 | ) | $ | (1,089 | ) | ||
Interest expense, net |
161 | 165 | ||||||
Income tax (benefit) expense |
47 | (9 | ) | |||||
Depreciation and amortization |
225 | 212 | ||||||
Goodwill impairment charge |
128 | 1,126 | ||||||
EBITDA |
374 | 405 | ||||||
Purchase accounting adjustments |
11 | 4 | ||||||
Non-cash charges |
13 | 11 | ||||||
Restructuring and other charges |
34 | 21 | ||||||
Pro forma expense savings related to acquisitions |
4 | | ||||||
Other |
45 | | ||||||
Adjusted EBITDA senior secured credit facilities |
481 | 441 | ||||||
Loss on sale of receivables |
12 | | ||||||
Adjusted EBITDA senior notes due 2013 and 2015
and senior subordinated notes due 2015 |
$ | 493 | $ | 441 | ||||
Twelve Months Ended | ||||||||
Dec. 31, | Dec. 31, | |||||||
(in millions) | 2008 | 2009 | ||||||
Net loss |
$ | (242 | ) | $ | (1,170 | ) | ||
Interest expense, net |
581 | 630 | ||||||
Income tax expense (benefit) |
38 | (21 | ) | |||||
Depreciation and amortization |
793 | 831 | ||||||
Goodwill impairment charge |
128 | 1,126 | ||||||
EBITDA |
1,298 | 1,396 | ||||||
Purchase accounting adjustments |
39 | 17 | ||||||
Non-cash charges |
35 | 36 | ||||||
Restructuring and other charges |
68 | 42 | ||||||
Acquired EBITDA, net of disposed EBITDA |
57 | | ||||||
Pro forma expense savings related to acquisitions |
17 | 3 | ||||||
Other |
76 | 5 | ||||||
Adjusted EBITDA senior secured credit facilities |
1,590 | 1,499 | ||||||
Loss on sale of receivables |
25 | | ||||||
Adjusted EBITDA senior notes due 2013 and 2015
and senior subordinated notes due 2015 |
$ | 1,615 | $ | 1,499 | ||||
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 goodwill impairment
charges, amortization of acquisition-related intangible assets, merger costs, purchase accounting
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 | ||||||||
Dec. 31, | Dec. 31, | |||||||
(in millions) | 2008 | 2009 | ||||||
Income (loss) from operations |
$ | 65 | $ | (942 | ) | |||
Amortization of acquisition-related intangible
assets |
154 | 136 | ||||||
Goodwill impairment charge |
128 | 1,126 | ||||||
Merger costs |
2 | 3 | ||||||
Purchase accounting adjustments |
11 | 4 | ||||||
Stock-based compensation and other costs |
23 | 15 | ||||||
Adjusted income from operations |
$ | 383 | $ | 342 | ||||
Twelve Months Ended | ||||||||
Dec. 31, | Dec. 31, | |||||||
(in millions) | 2008 | 2009 | ||||||
Income (loss) from operations |
$ | 470 | $ | (576 | ) | |||
Amortization of acquisition-related intangible
assets |
515 | 540 | ||||||
Goodwill impairment charge |
128 | 1,126 | ||||||
Merger costs |
2 | 4 | ||||||
Purchase accounting adjustments |
43 | 17 | ||||||
Stock-based compensation and other costs |
57 | 48 | ||||||
Adjusted income from operations |
$ | 1,215 | $ | 1,159 | ||||
SunGard Data Systems Inc.
Notes to Consolidated Condensed Financial Information
Notes to Consolidated Condensed Financial Information
Note 3. Impact of Broker/Dealer on Organic Revenue Growth
The Company defines organic revenue as revenue from businesses owned for at least one year and
excluding revenue from businesses sold in the previous twelve months further adjusted to remove the
impact of changes in currency exchange rates. When assessing its financial results, the Company
focuses on organic revenue because reported revenue is affected by the timing and magnitude of
acquisitions, dispositions and currency. Beginning in 2007, the Company began to experience
significant revenue growth in one of our trading systems businesses, a broker/dealer business with
inherently lower margins than the rest of the financial systems business, and whose revenue is a
function of market volatility and customer mix. Reported revenue and organic revenue growth with
and without the broker/dealer business for the total Company and Financial Systems for 2008 and
2009 follows:
Quarter ended | ||||||||||||||||||||||||
2008 | Mar-09 | Jun-09 | Sep-09 | Dec-09 | 2009 | |||||||||||||||||||
Revenue growth as reported: |
||||||||||||||||||||||||
Total SunGard |
14 | % | 3 | % | 1 | % | -4 | % | -5 | % | -2 | % | ||||||||||||
Financial Systems |
23 | % | 8 | % | 8 | % | -6 | % | -8 | % | | % | ||||||||||||
Organic revenue growth: |
||||||||||||||||||||||||
Total SunGard |
10 | % | 3 | % | | % | -7 | % | -7 | % | -3 | % | ||||||||||||
Financial Systems |
17 | % | 4 | % | 2 | % | -15 | % | -10 | % | -5 | % | ||||||||||||
Organic revenue growth without broker/dealer business: |
||||||||||||||||||||||||
Total SunGard |
4 | % | -1 | % | -6 | % | -2 | % | -3 | % | -3 | % | ||||||||||||
Financial Systems |
5 | % | -5 | % | -10 | % | -7 | % | -3 | % | -6 | % |