EX-99.1 2 dex991.htm PRESS RELEASE Press Release

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For more information, contact:     Exhibit 99.1
Michael J. Ruane   Kris Block  
Tel: 484-582-5405   Tel: 484-582-5505  
michael.ruane@sungard.com   kris.block@sungard.com  

SunGard Announces Record Results for 2005

Wayne, PA – February 22, 2006 – 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 adjusted income from operations (defined in Note 1 to the Notes to the Consolidated Condensed Financial Information) for the year 2005 was $933 million, a 13% increase over $828 million for the year 2004.

Reported income from operations for the year 2005 was $493 million and includes amortization of acquired intangible assets of $231 million, merger costs of $139 million, stock-based compensation and other expenses of $36 million, purchase accounting adjustments of $23 million and a one-time charge of $12 million related to the relocation of an availability services facility. The purchase accounting adjustments resulted in a reduction in revenue of $21 million and a reduction in expenses of $2 million, and were caused by adjustments to reflect deferred revenue, property and equipment at August 11, 2005 at their estimated fair values, as required under U.S. generally accepted accounting principles upon a change in control and adoption of a new basis of accounting. For the year 2004, reported income from operations was $703 million and included amortization of acquired intangible assets of $119 million and merger costs of $6 million.

Adjusted income from operations for the fourth quarter of 2005 was $282 million, a 24% increase over $228 million for the fourth quarter of 2004. Reported income from operations for the fourth quarter of 2005 was $151 million and included amortization of acquired intangible assets of $96 million, stock-based compensation and other expenses of $25 million and the purchase accounting adjustments of $11 million. For the fourth quarter of 2004, reported income from operations was $195 million and included amortization of acquired intangible assets of $29 million and merger costs of $3 million.

For the fourth quarter of 2005, adjusted EBITDA (defined in Note 2 to the Notes to the Consolidated Condensed Financial Information) was $341 million. For the year ended December 31, 2005, adjusted EBITDA was $1.19 billion compared to $1.11 billion for the year ended December 31, 2004.

Revenue for the year 2005 was $4.0 billion, an increase of 13% over revenue for the year 2004. Revenue for the three months ended December 31, 2005 was $1.09 billion, an increase of 19% over revenue for the fourth quarter of 2004. These results do not include a reduction in revenue caused by the


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deferred revenue adjustment of $21 million and $9 million in the year and the quarter, respectively. Reported revenue was $1.08 billion for the quarter, an 18% increase over the fourth 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) for the year and the quarter grew 6.5% and 8% compared to the same periods in 2004.

On August 11, 2005, SunGard Data Systems Inc. was acquired 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.

Cristóbal Conde, president and chief executive officer, commented, “We finished the year strongly, with our license-based businesses recovering from the softness in the third quarter. As a privately-held company, we are taking a longer-term view of our business. We launched our Common Services Architecture and an Enterprise Solutions Group that incorporates focused Consulting Services. This positions us very strongly to deepen our relationships with our key customers. Our competitiveness is better than ever.”

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 19% and, before the $7 million deferred revenue adjustment, revenue increased 20%. Internal revenue increased 8% for the quarter. License fees reached a record $100 million for the quarter, an increase of $37 million from the fourth quarter of 2004.

Financial Systems reported revenue of $530 million for the quarter, a 12% increase. The deferred revenue adjustment related to Financial Systems was $4 million. Internal revenue grew approximately 6%. License fees were $76 million for the quarter, an increase of $31 million from the fourth quarter of 2004.

Some notable deals signed this quarter include:

 

    A leading provider of financial services to the institutional equity and fixed income markets selected SunGard’s Phase3 for processing multi-currency, international business. The deal also included Adaptiv, Global One, Margin Advisor, STN Settlements and STN Euroclear.

 

    A global brokerage firm providing institutional clients with access to financial and commodity markets selected SunGard’s GMI to clear and settle derivative instruments globally.


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    A government agency in China selected SunGard’s AvantGard and STeP Trade Management for its treasury operations.

Higher Education & Public Sector Systems reported revenue increased 43% to $207 million for the quarter, due primarily to the acquisition of Vivista Holdings Limited in the first quarter of 2005 and strength in license sales. The deferred revenue adjustment related to Higher Education & Public Sector Systems was $3 million. Internal revenue increased approximately 17% for the quarter. License fees were $24 million for the quarter, an increase of $6 million from the fourth quarter of 2004.

Some notable deals signed this quarter include:

 

    A community college in Nevada selected SunGard Higher Education to provide managed technology services, 24/7 help desk support and development of a strategic technology plan.

 

    A statewide community college in Indiana, with 23 campuses and serving more than 100,000 students, chose SunGard Higher Education solutions to expand its digital campus.

 

    A university in Ohio will be replacing its existing SunGard SCT administrative solution with SCT Banner and expanding its digital campus with other SunGard solutions.

Availability Services helps information-dependent enterprises of all types to ensure the continuity of their business. Reported revenue in this segment increased 16% to $346 million for the quarter, due primarily to the acquisition of Inflow, Inc. in the first quarter of 2005, offset in part by the $2 million deferred revenue adjustment. Internal revenue increased 8% for the quarter.

Some notable deals signed this quarter include:

 

    A leading provider of data management solutions for clinical trials and drug safety selected SunGard for managed services.

 

    One of the largest marketing communications networks in the world that services a large number of Fortune Global 500 companies selected SunGard for managed services.

 

    One of the world’s largest offshore drilling companies, which specializes in constructing oil and natural gas wells in deep water and harsh environments, selected SunGard for disaster recovery services.

At December 31, 2005, total debt was $7.43 billion and cash balances were $317 million. For the year ended December 31, 2005, the Company completed eleven acquisitions for approximately $538 million (net of cash acquired), including $363 million for the acquisitions of Vivista and Inflow. Capital expenditures were $277 million company-wide. In the three month period ended December 31, 2005, the Company completed three acquisitions for $104 million (net of cash acquired).


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Conference Call & Webcast

SunGard will hold its quarterly earnings conference call at 9:00 AM Eastern on February 23, 2006. The dial-in number is: (719) 457-2654, pass-code: 5404881. You also may 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, March 2, 2006, at www.vcall.com. The replay by phone will be available shortly after the end of the call, through midnight on Monday, February 27, 2006. To listen to the replay by phone, please dial: (719) 457-0820, pass-code: 5404881.

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, Adaptiv, AvantGard, Global One, GMI, Phase3 and STeP 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 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; and 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. 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

Dec. 31,

2004

   

Three Months
Ended

Dec. 31,

2005

 

Revenue:

    

Services

   $ 815,704     $ 927,769  

License and resale fees

     81,111       124,054  
                

Total products and services

     896,815       1,051,823  

Reimbursed expenses

     20,350       31,715  
                
     917,165       1,083,538  
                

Costs and expenses:

    

Cost of sales and direct operating

     390,821       494,377  

Sales, marketing and administration

     184,288       226,725  

Product development

     58,860       59,709  

Depreciation and amortization

     55,447       56,187  

Amortization of acquisition-related intangible assets

     29,402       95,705  

Merger costs and other

     3,092       (466 )
                
     721,910       932,237  
                

Income (loss) from operations

     195,255       151,301  

Interest income

     2,989       3,919  

Interest expense and amortization of deferred financing fees

     (6,363 )     (160,011 )

Other income (expense)

     (1,296 )     (14,718 )
                

Income (loss) before income taxes

     190,585       (19,509 )

Income taxes

     78,706       (13,294 )
                

Net income (loss)

   $ 111,879     $ (6,215 )
                

SunGard Data Systems Inc.

Consolidated Statements of Operations

(in thousands)

 

     Predecessor     Successor        
    

Year

Ended

Dec. 31,

2004

    Period from
Jan. 1 to
Aug. 10,
2005
   

Period from
Aug. 11 to
Dec. 31,

2005

   

Combined
Twelve Months
Dec. 31,

2005

 

Revenue:

        

Services

   $ 3,179,967     $ 2,125,549     $ 1,418,488     $ 3,544,037  

License and resale fees

     282,085       179,589       166,300       345,889  
                                

Total products and services

     3,462,052       2,305,138       1,584,788       3,889,926  

Reimbursed expenses

     93,819       66,203       46,543       112,746  
                                
     3,555,871       2,371,341       1,631,331       4,002,672  
                                

Costs and expenses:

        

Cost of sales and direct operating

     1,607,614       1,119,555       740,907       1,860,462  

Sales, marketing and administration

     665,275       456,003       343,562       799,565  

Product development

     236,401       153,657       96,099       249,756  

Depreciation and amortization

     218,136       141,410       88,703       230,113  

Amortization of acquisition-related intangible assets

     118,893       84,092       146,893       230,985  

Merger costs and other

     6,168       121,013       17,977       138,990  
                                
     2,852,487       2,075,730       1,434,141       3,509,871  
                                

Income from operations

     703,384       295,611       197,190       492,801  

Interest income

     8,222       9,076       6,076       15,152  

Interest expense and amortization of deferred financing fees

     (28,536 )     (16,617 )     (248,279 )     (264,896 )

Other income (expense)

     78,066       (174 )     (17,452 )     (17,626 )
                                

Income (loss) before income taxes

     761,136       287,896       (62,465 )     225,431  

Income taxes

     307,495       142,144       (33,178 )     108,966  
                                

Net income (loss)

   $ 453,641     $ 145,752     $ (29,287 )   $ 116,465  
                                

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Balance Sheets

(in thousands)

 

     Predecessor    Successor
     December 31,
2004
   December 31,
2005

Assets:

     

Current:

     

Cash and equivalents

   $ 674,946    $ 316,710

Accounts receivable, net

     735,745      228,287

Clearing broker assets

     232,450      390,671

Prepaid expenses and other current assets

     151,345      205,702

Retained interest in accounts receivable sold

     —        224,314
             

Total current assets

     1,794,486      1,365,684

Property and equipment, net

     620,293      704,982

Software products, net

     352,722      1,527,945

Customer base, net

     556,965      2,817,053

Other assets, net

     45,958      1,266,796

Goodwill

     1,824,217      6,904,184
             

Total Assets

   $ 5,194,641    $ 14,586,644
             

Liabilities and Stockholders’ Equity:

     

Current:

     

Short-term and current portion of long-term debt

   $ 45,332    $ 46,460

Accounts payable and accrued expenses

     492,354      711,345

Clearing broker liabilities

     208,730      359,860

Deferred revenue

     629,710      694,504
             

Total current liabilities

     1,376,126      1,812,169

Long-term debt

     509,046      7,382,800

Deferred income taxes

     57,834      1,820,298
             

Total liabilities

     1,943,006      11,015,267

Stockholders’ equity

     3,251,635      3,571,377
             

Total Liabilities and Stockholders’ Equity

   $ 5,194,641    $ 14,586,644
             

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Notes to Consolidated Condensed Financial Information

Note 1. Reconciliation of Income 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 and other costs, the gain on sale of Brut LLC in September 2004, a one-time charge related to the relocation of an availability service 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 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.

 

      Predecessor    Successor  

(in thousands)

  

Three Months
Ended

Dec. 31,

2004

  

Three Months
Ended

Dec. 31,

2005

 

Income from operations

   $ 195,255    $ 151,301  

Amortization of acquisition-related intangible assets

     29,402      95,705  

Merger and other costs

     3,092      (466 )

Purchase accounting adjustments

     —        10,556  

Stock based compensation and other costs

     —        24,864  
               

Adjusted income from operations

   $ 227,749    $ 281,960  
               

 

      Predecessor    Successor     

(in thousands)

   Year
Ended
Dec. 31,
2004
   Period from
Jan. 1 to
Aug. 10,
2005
   Period from
Aug. 11 to
Dec. 31,
2005
  

Combined
Twelve Months
Dec. 31,

2005

Income from operations

   $ 703,384    $ 295,611    $ 197,190    $ 492,801

Amortization of acquisition-related intangible assets

     118,893      84,092      146,893      230,985

Merger and other costs

     6,168      121,013      17,977      138,990

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

     —        11,497      —        11,497

Purchase accounting adjustments

     —        —        22,670      22,670

Stock based compensation and other costs

     —        —        35,688      35,688
                           

Adjusted income from operations

   $ 828,445    $ 512,213    $ 420,418    $ 932,631
                           


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 facility, both of 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. The Company 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

Dec. 31,

2004

  

Three Months
Ended

Dec. 31,

2005

 

Net income (loss)

   $ 111,879    $ (6,215 )

Interest expense, net

     3,374      156,092  

Taxes

     78,706      (13,294 )

Depreciation and amortization (1)

     84,849      151,892  
               

EBITDA

     278,808      288,475  

Purchase accounting adjustments (1)

     —        7,332  

Non-cash charges

     446      21,705  

Unusual or non-recurring charges

     4,389      2,232  

Acquired EBITDA, net of disposed EBITDA

     12,232      (1,110 )

Other

     957      8,567  
               

Adjusted EBITDA - Senior Credit Facility

     296,832      327,201  

Loss on sale of receivables

     —        14,286  
               

Adjusted EBITDA - Senior Notes and Senior Subordinated Notes

   $ 296,832    $ 341,487  
               

 

      Predecessor    Successor      

(in thousands)

  

Year Ended
Dec. 31,

2004

    Period from
Jan. 1 to
Aug. 10,
2005
   Period from
Aug. 11 to
Dec. 31,
2005
   

Combined
Twelve Months
Dec. 31,

2005

Net income (loss)

   $ 453,641     $ 145,752    $ (29,287 )   $ 116,465

Interest expense, net

     20,314       7,541      242,203       249,744

Taxes

     307,495       142,144      (33,178 )     108,966

Depreciation and amortization (1)

     337,029       225,502      235,596       461,098
                             

EBITDA

     1,118,479       520,939      415,334       936,273

Purchase accounting adjustments (1)

     —         —        19,446       19,446

Non-cash charges

     1,461       61,128      29,690       90,818

Unusual or non-recurring charges

     (71,898 )     60,761      21,070       81,831

Restructuring charges or reserves

     —         11,497      —         11,497

Acquired EBITDA, net of disposed EBITDA

     57,321       17,053      (71 )     16,982

Other

     2,991       2,271      8,701       10,972
                             

Adjusted EBITDA - Senior Credit Facility

     1,108,354       673,649      494,170       1,167,819

Loss on sale of receivables

     —         —        18,255       18,255
                             

Adjusted EBITDA - Senior Notes and Senior Subordinated Notes

   $ 1,108,354     $ 673,649    $ 512,425     $ 1,186,074
                             

 

(1) Depreciation and amortization includes a purchase accounting adjustment to property and equipment of $3,224.