EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

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November 9, 2005

 

Michael J. Ruane    Kris Block
484-582-5405    484-582-5505

 

SunGard Announces Third Quarter 2005 Results

 

Wayne, PA — SunGard (http://www.sungard.com), a global leader in integrated software and processing solutions and the pioneer and leading provider of information availability services, reported today that revenue for the three months ended September 30, 2005 was $977 million, a 9% increase from the third quarter of 2004. These results do not include a $12 million reduction in revenue caused by purchase accounting adjustments to reflect deferred revenue at August 10, 2005 at its estimated fair value (the “deferred revenue adjustment”). This deferred revenue adjustment also results in corresponding reductions in income from operations and income before income taxes. Reported revenue was $965 million, a 7% increase from the third quarter of 2004.

 

Internal revenue (revenue from businesses owned for at least one year, excluding the deferred revenue adjustment and revenue from Brut LLC, which was sold in September 2004) grew 4% from the same period in 2004, with exchange rates having no effect.

 

Adjusted income from operations (defined in Note 1 to the Notes to the Consolidated Condensed Financial Information) in the third quarter of 2005 was $220 million compared to $218 million in the third quarter of 2004. Reported income from operations in the third quarter of 2005 was $9 million and includes merger costs of $121 million, amortization of acquired intangible assets of $67 million, the deferred revenue adjustment of $12 million, and stock-based compensation and other expenses of $11 million. In the third quarter of 2004, reported income from operations was $183 million and included amortization of acquired intangible assets of $31 million and merger costs of $4 million.

 

Adjusted EBITDA (defined in Note 2 to the Notes to the Consolidated Condensed Financial Information) was $278 million. In the third quarter of 2004, adjusted EBITDA was $286 million. Year to date, adjusted EBITDA was $838 million compared to $812 million for the first nine months of 2004.

 

Cristóbal Conde, president and chief executive officer, commented, “Our performance year to date is consistent with our overall expectations for the year despite some softness in our license-based businesses in the third quarter. During the quarter we completed the leveraged buy-out of the Company by a consortium of private equity firms. The acquisition has been received positively by our customers and employees. As a privately-held company, the interests of our various stakeholders are now more closely aligned, and we are pleased to be able to take a longer-term, more strategic view of our business.”


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Reported revenue for the first nine months of 2005 increased 11% over the same period in 2004 to $2.9 billion. Adjusted income from operations for the nine months ended September 30, 2005 was $651 million compared to $601 million last year. Reported income from operations for the nine months ended September 30, 2005 was $342 million and includes merger costs of $139 million, amortization of acquired intangible assets of $135 million, a one-time charge of $12 million related to the relocation of an availability services facility, the deferred revenue adjustment of $12 million and stock-based compensation and other expenses of $11 million. In the first nine months of 2004, reported income from operations was $508 million and included amortization of acquired intangible assets of $89 million and merger costs of $3 million.

 

On August 11, 2005, SunGard announced the completion of the acquisition of SunGard Data Systems Inc. by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake Partners and Texas Pacific Group. Under the terms of the merger agreement, the Company’s stockholders received $36 per share in cash, without interest.

 

Software & Processing, comprising the Financial Systems and Higher Education & Public Sector Systems businesses, provides software and processing solutions for financial services, higher education and the public sector. For the quarter, reported revenue grew 5% and, before the $6 million deferred revenue adjustment, revenue increased 6%. Internal revenue increased 3% for the quarter. License fees were $41 million for the quarter, a decrease of $16 million from the third quarter of 2004.

 

Financial Systems reported revenue of $449 million for the quarter, a 3% decrease. The deferred revenue adjustment related to Financial Systems was $3 million. The results for the third quarter of 2004 include the results of Brut LLC, which was sold in September of 2004. Internal revenue grew approximately 3%. License fees were $29 million for the quarter, a decrease of $9 million from the third quarter of 2004.

 

Some notable deals signed this quarter include:

 

    Several financial services institutions, including a leading life insurance company, a full-service broker/dealer and financial advisor and the U.S. subsidiary of a leading European bank, selected SunGard’s Protegent and Synapse solutions to address regulatory and compliance requirements.

 

    Several institutions in the alternative investment space, including a private equity fund and a Hong Kong-based fund of funds, selected SunGard’s Investran partnership accounting solution.


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    Several new-name customers, including the world’s leading commodity hedge fund and a bulge-bracket investment bank, selected SunGard’s Kiodex for commodity risk management and trading.

 

Higher Education & Public Sector Systems reported revenue increased 28% to $193 million for the quarter, due primarily to the acquisition of Vivista Holdings Limited in the first quarter of 2005. The deferred revenue adjustment related to Higher Education & Public Sector Systems was $3 million in the quarter. Internal revenue increased approximately 5% for the quarter. License fees were $12 million for the quarter, a decrease of $7 million from the third quarter of 2004.

 

Some notable deals signed this quarter include:

 

    A California community college district, supporting three institutions and serving more than 60,000 students, selected SunGard to help it build a Unified Digital Campus with SCT Banner, SCT Luminis and SCT fsaATLAS.

 

    A large, statewide university system in northeastern United States committed seven additional institutions to implement SunGard solutions to build their Unified Digital Campus.

 

    U.K. ambulance services trusts selected SunGard’s Vivista for a nationwide cell-based radio communications system in a multi-year, multimillion dollar contract, the largest single contract in SunGard’s corporate history.

 

Availability Services helps information-dependent enterprises of all types to ensure the continuity of their business. Reported revenue in this segment increased 12% to $323 million for the quarter, due primarily to the acquisition of Inflow, Inc. in the first quarter of 2005, offset in part by the $6 million deferred revenue adjustment. Internal revenue increased 6% for the quarter.

 

Some notable deals signed this quarter include:

 

    A U.S. division of one of India’s leading global IT services companies selected SunGard for managed services offerings.

 

    A large international pharmaceutical company that creates, manufactures and markets prescription medicines selected SunGard for managed services.

 

    A non-profit organization that operates hospitals, nursing homes and home care services selected SunGard for disaster recovery services.

 

At September 30, 2005, total debt was $7.73 billion and cash balances were $303 million. Through the first nine months of 2005 the Company has completed eight acquisitions for approximately $434 million (net of cash acquired), including $363 million for the acquisitions of Vivista and Inflow. Capital expenditures were $209 million company wide for the first nine months of 2005. In the three month period ended September 30, 2005, the Company completed two acquisitions for $16 million (net of cash acquired).


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Conference Call & Webcast

 

SunGard will hold its quarterly earnings conference call at 8:30 AM Eastern on November 10, 2005. The dial-in number is (719) 457-2642, passcode 4000821. You may also listen to the call at www.vcall.com, by clicking on “Today’s Vcalls” and then on the “listen” icon for SunGard. A replay will be available shortly after the end of the Web cast, through midnight on Thursday, November 17, 2005, at www.vcall.com. The replay by phone will be available shortly after the end of the call, through midnight on November 14, 2005. To listen to the replay by phone, please dial 719-457-0820, passcode 4000821.

 

About SunGard

 

With annual revenue of $4 billion, SunGard is a global leader in software and processing solutions for financial services, higher education and the public sector. SunGard also helps information-dependent enterprises of all types to ensure the continuity of their business. SunGard serves more than 25,000 customers in more than 50 countries, including the world’s 50 largest financial services companies. Visit SunGard at www.sungard.com.

 

Trademark Information: SunGard, the SunGard logo, Banner, fsaATLAS, Investran, Kiodex, Luminis, Protegent, SCT and Synapse 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.

 

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 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: 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 ASP Systems; 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; and the ability to obtain patent protection and avoid patent-related liabilities in the context of a rapidly developing legal


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framework for software and business-method patents. The factors described in this paragraph and other factors that may affect our business or future financial results are discussed in our filings with the Securities and Exchange Commission, including our Form 10-Q dated November 9, 2005, a copy 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 thousands)

 

     Predecessor

    Successor

       
    

Three Months
Ended

Sept. 30,

2004


    Period from
July 1 to
August 10,
2005


    Period from
Aug. 11 to
Sept. 30,
2005


   

Combined
Three Months
Sept. 30,

2005


 

Revenue:

                                

Services

   $ 799,878     $ 388,503     $ 490,719     $ 879,222  

License and resale fees

     75,540       17,562       42,246       59,808  
    


 


 


 


Total products and services

     875,418       406,065       532,965       939,030  

Reimbursed expenses

     23,920       11,363       14,828       26,191  
    


 


 


 


       899,338       417,428       547,793       965,221  
    


 


 


 


Costs and expenses:

                                

Cost of sales and direct operating

     410,484       205,471       246,530       452,001  

Sales, marketing and administration

     158,481       75,650       116,837       192,487  

Product development

     57,728       29,108       36,390       65,498  

Depreciation and amortization

     54,679       26,006       32,516       58,522  

Amortization of acquisition-related intangible assets

     31,065       15,486       51,187       66,673  

Merger costs

     3,500       102,708       18,443       121,151  
    


 


 


 


       715,937       454,429       501,903       956,332  
    


 


 


 


Income (loss) from operations

     183,401       (37,001 )     45,890       8,889  

Interest income

     1,859       2,809       2,157       4,966  

Interest expense

     (7,780 )     (3,032 )     (88,268 )     (91,300 )

Other income (expense)

     79,362       —         (2,734 )     (2,734 )
    


 


 


 


Income (loss) before income taxes

     256,842       (37,224 )     (42,955 )     (80,179 )

Provision (benefit) for income taxes

     103,305       5,441       (19,884 )     (14,443 )
    


 


 


 


Net income (loss)

   $ 153,537     $ (42,665 )   $ (23,071 )   $ (65,736 )
    


 


 


 


 

SunGard Data Systems Inc.

Consolidated Statements of Operations

(in thousands)

 

     Predecessor

    Successor

       
    

Nine Months
Ended

Sept. 30,
2004


    Period from
January 1 to
August 10,
2005


    Period from
Aug. 11 to
Sept. 30,
2005


    Combined
Nine Months
Sept. 30,
2005


 

Revenue:

                                

Services

   $ 2,364,263     $ 2,125,549     $ 490,719     $ 2,616,268  

License and resale fees

     200,974       179,589       42,246       221,835  
    


 


 


 


Total products and services

     2,565,237       2,305,138       532,965       2,838,103  

Reimbursed expenses

     73,469       66,203       14,828       81,031  
    


 


 


 


       2,638,706       2,371,341       547,793       2,919,134  
    


 


 


 


Costs and expenses:

                                

Cost of sales and direct operating

     1,216,793       1,119,555       246,530       1,366,085  

Sales, marketing and administration

     480,987       456,003       116,837       572,840  

Product development

     177,541       153,657       36,390       190,047  

Depreciation and amortization

     162,689       141,410       32,516       173,926  

Amortization of acquisition-related intangible assets

     89,491       84,092       51,187       135,279  

Merger costs

     3,076       121,013       18,443       139,456  
    


 


 


 


       2,130,577       2,075,730       501,903       2,577,633  
    


 


 


 


Income from operations

     508,129       295,611       45,890       341,501  

Interest income

     5,233       9,076       2,157       11,233  

Interest expense

     (22,173 )     (16,617 )     (88,268 )     (104,885 )

Other income (expense)

     79,362       (174 )     (2,734 )     (2,908 )
    


 


 


 


Income (loss) before income taxes

     570,551       287,896       (42,955 )     244,941  

Provision (benefit) for income taxes

     228,789       142,144       (19,884 )     122,260  
    


 


 


 


Net income (loss)

   $ 341,762     $ 145,752     $ (23,071 )   $ 122,681  
    


 


 


 


 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Balance Sheets

(in thousands)

 

     Predecessor    Successor
     December 31,
2004


   September 30,
2005


Assets:

             

Current:

             

Cash and equivalents

   $ 674,946    $ 303,458

Accounts receivable, net

     735,745      477,216

Clearing broker assets

     232,450      422,793

Prepaid expenses and other current assets

     151,345      182,923

Retained interest in accounts receivable sold

     —        150,536
    

  

Total current assets

     1,794,486      1,536,926

Property and equipment, net

     620,293      716,980

Software products, net

     352,722      1,241,391

Customer base, net

     556,965      2,704,123

Other assets, net

     45,958      1,003,361

Goodwill

     1,824,217      7,260,336
    

  

Total Assets

   $ 5,194,641    $ 14,463,117
    

  

Liabilities and Stockholders’ Equity:

             

Current:

             

Short-term and current portion of long-term debt

   $ 45,332    $ 49,614

Accounts payable and accrued expenses

     492,353      541,295

Clearing broker liabilities

     208,730      411,866

Deferred revenue

     629,710      653,863
    

  

Total current liabilities

     1,376,125      1,656,638

Long-term debt

     509,046      7,680,555

Deferred income taxes

     57,834      1,548,052
    

  

Total liabilities

     1,943,005      10,885,245

Stockholders’ equity

     3,251,636      3,577,872
    

  

Total Liabilities and Stockholders’ Equity

   $ 5,194,641    $ 14,463,117
    

  

 

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information

 

Note 1. Reconciliation of Income (Loss) from Operations to Adjusted Income from Operations

 

Adjusted income from operations represents income or loss from operations adjusted for amortization of acquisition-related intangible assets, merger costs, the gain on sale of Brut LLC in September 2004, a one-time charge related to the relocation of an availability services facility, adjustments for deferred revenue, stock-based compensation expense and external 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 (loss) from operations, as that term is defined under GAAP, and should not be considered as an alternative to income (loss) 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 (loss) 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 (loss) from operations, the GAAP measure we believe to be most directly comparable to adjusted income from operations.

 

     Predecessor

    Successor

    

(in thousands)


  

Three Months
Ended

Sept. 30,

2004


   Period from
July 1 to
August 10,
2005


    Period from
Aug. 11 to
Sept. 30,
2005


  

Combined
Three Months
Sept. 30,

2005


Income (loss) from operations

   $ 183,401    $ (37,001 )   $ 45,890    $ 8,889

Amortization of acquisition-related intangible assets

     31,065      15,486       51,187      66,673

Merger costs

     3,500      102,708       18,443      121,151

Deferred revenue adjustment

     —        —         12,114      12,114

Stock based compensation and other costs

     —        —         10,824      10,824
    

  


 

  

Adjusted income from operations

   $ 217,966    $ 81,193     $ 138,458    $ 219,651
    

  


 

  

     Predecessor

    Successor

    

(in thousands)


  

Nine Months
Ended

Sept. 30,

2004


   Period from
January 1 to
August 10,
2005


    Period from
Aug. 11 to
Sept. 30,
2005


  

Combined
Nine Months
Sept. 30,

2005


Income (loss) from operations

   $ 508,129    $ 295,611     $ 45,890    $ 341,501

Amortization of acquisition-related intangible assets

     89,491      84,092       51,187      135,279

Merger costs

     3,076      121,013       18,443      139,456

One-time charge related to the relocation of an availability services facility

     —        11,497       —        11,497

Deferred revenue adjustment

     —        —         12,114      12,114

Stock based compensation and other costs

     —        —         10,824      10,824
    

  


 

  

Adjusted income from operations

   $ 600,696    $ 512,213     $ 138,458    $ 650,671
    

  


 

  


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information

 

Note 2. 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. 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. 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, or 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.

 

     Predecessor

    Successor

       

(in thousands)


  

Three Months
Ended

Sept. 30,

2004


    Period from
July 1 to
August 10,
2005


    Period from
Aug. 11 to
Sept. 30,
2005


   

Combined
Three Months
Sept. 30,

2005


 

Net income (loss)

   $ 153,537     $ (42,665 )   $ (23,071 )   $ (65,736 )

Interest expense, net

     5,921       223       86,111       86,334  

Taxes

     103,305       5,441       (19,884 )     (14,443 )

Depreciation and amortization

     85,744       41,492       83,703       125,195  
    


 


 


 


EBITDA

     348,507       4,491       126,859       131,350  

Purchase accounting adjustments

     —         —         12,114       12,114  

Non-cash charges

     559       70       7,985       8,055  

Unusual or non-recurring charges

     (75,862 )     102,708       18,838       121,546  

Acquired EBITDA, net of disposed EBITDA

     11,630       503       —         503  

Other

     829       247       134       381  
    


 


 


 


Adjusted EBITDA - Senior Credit Facilities

     285,663       108,019       165,930       273,949  

Loss on sale of receivables

     —         —         3,969       3,969  
    


 


 


 


Adjusted EBITDA - Senior Notes and Senior Subordinated Notes

   $ 285,663     $ 108,019     $ 169,899     $ 277,918  
    


 


 


 


     Predecessor

    Successor

       

(in thousands)


  

Nine Months
Ended

Sept. 30,

2004


    Period from
January 1 to
August 10,
2005


    Period from
Aug. 11 to
Sept. 30,
2005


   

Combined
Nine Months
Sept. 30,

2005


 

Net income (loss)

   $ 341,762     $ 145,752     $ (23,071 )   $ 122,681  

Interest expense, net

     16,940       7,541       86,111       93,652  

Taxes

     228,789       142,144       (19,884 )     122,260  

Depreciation and amortization

     252,180       225,502       83,703       309,205  
    


 


 


 


EBITDA

     839,671       520,939       126,859       647,798  

Purchase accounting adjustments

     —         —         12,114       12,114  

Non-cash charges

     1,015       61,128       7,985       69,113  

Unusual or non-recurring charges

     (76,286 )     60,761       18,838       79,599  

Restructuring charges or reserves

     —         11,497       —         11,497  

Acquired EBITDA, net of disposed EBITDA

     45,089       11,836       —         11,836  

Other

     2,034       2,271       134       2,405  
    


 


 


 


Adjusted EBITDA - Senior Credit Facilities

     811,523       668,432       165,930       834,362  

Loss on sale of receivables

     —         —         3,969       3,969  
    


 


 


 


Adjusted EBITDA - Senior Notes and Senior Subordinated Notes

   $ 811,523     $ 668,432     $ 169,899     $ 838,331