EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

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For more information, contact:

 

Michael Ruane   Eric Erickson   Kris Block
Tel: 484-582-5405   Tel: 484-582-5480   Tel: 484-582-5505
michael.ruane@sungard.com   eric.erickson@sungard.com   kris.block@sungard.com

SunGard Announces Second Quarter 2007 Results

Wayne, PA – August 9, 2007 – 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 June 30, 2007 was $1.18 billion, an increase of 10% over revenue for the three months ended June 30, 2006. Organic revenue (revenue from businesses owned for at least one year and further adjusted for the effects of businesses sold in the previous twelve months) grew 9% for the quarter compared to the same period in 2006, including the approximate 2% impact of changes in currency exchange rates overall and in each of our segments.

Adjusted income from operations (defined in Note 1 to the Notes to the Consolidated Condensed Financial Information) for the three months ended June 30, 2007 was $265 million, a 10% increase over $240 million for the same period in 2006.

Reported income from operations for the three months ended June 30, 2007 was $134 million compared to $123 million for the same period in 2006, an increase of 9%. Reported income from operations in the three months ended June 30, 2007 and 2006 includes amortization of acquired intangible assets of $105 million and $102 million, respectively; stock-based compensation and purchase accounting adjustments and other expenses of $26 million and $14 million, respectively; and merger costs of $1 million in the three months ended June 30, 2006.

For the three months ended June 30, 2007, adjusted EBITDA (defined in Note 2 to the Notes to the Consolidated Condensed Financial Information) was $342 million compared to $304 million in 2006, an increase of 13%.

Cristóbal Conde, president and chief executive officer, commented, “SunGard’s performance for the quarter was strong. Our Financial Systems business once again reported strong organic growth. The realignment of our Financial Systems business earlier this year has improved our competitiveness and positioned us better to bundle multiple products. Our Availability Services business recently announced a definitive agreement to acquire VeriCenter which will help broaden our service offerings and improve our economies of scale. Overall the pipeline is solid and our competitiveness remains strong.”

Revenue for the first six months of 2007 increased 11% over the same period in 2006 to $2.29 billion. Adjusted income from operations for the six months ended June 30, 2007 was $492 million compared to $442 million last year. Reported income from operations for the six months ended June 30, 2007 was $248 million and includes amortization of acquired intangible assets of $209 million and stock-based compensation, purchase accounting adjustments and other expenses of $35 million. In the first six months of 2006, reported income from operations was $212 million and includes amortization of acquired intangible assets of $198 million, stock-based compensation, purchase accounting adjustments and other expenses of $29 million and merger costs of $3 million.

Financial Systems revenue increased 19% to $590 million for the quarter. Organic revenue grew approximately 15%. License fees were $56 million for the quarter compared to $40 million for the same period in 2006, an increase of 41%.

Notable deals in the quarter included the following:

 

   

A leading international investment firm selected SunGard for its Rule 22c2 compliance solution for market timing for mutual funds.


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A leading global provider of financial business solutions selected SunGard’s BRASS EnGard as its equities trading compliance solution.

 

   

A global broker-dealer signed a ten-year renewal to use SunGard’s GMI system for global derivatives, futures and options.

Higher Education & Public Sector Systems revenue was $233 million for the quarter, unchanged from the same period in 2006. License fees were $20 million for the quarter, a decrease of $2 million from the same quarter of 2006.

Notable deals in the quarter included the following:

 

   

A community college district in California renewed a contract with SunGard Higher Education to manage its information technology.

 

   

A research university selected a full range of SunGard Higher Education’s Banner Unified Digital Campus solutions.

 

   

A policy development company based in London renewed a contract with SunGard Vivista to manage its business services and information and communications technology.

Availability Services revenue increased 4%, all of which was organic, to $352 million for the quarter.

Notable deals in the quarter included the following:

 

   

A large commercial bank selected SunGard for vaulting and disaster recovery services.

 

   

A computer programming vendor that provides automated data management solutions selected SunGard for managed services.

 

   

An industrial construction services company specializing in scaffolding and concrete construction forming selected SunGard for managed services.

At June 30, 2007, total debt was $7.5 billion, cash balances were $294 million and off-balance sheet debt was $417 million. During the six months ended June 30, 2007, the Company invested $152 million in capital expenditures and $62 million (net of cash acquired) in seven acquisitions.

Conference Call & Webcast

A conference call to review the results is scheduled for Friday, August 10, 2007 at 9:00 a.m. (Eastern Time). The dial-in number is (706) 902-1370, conference ID 10283243. A replay will be available shortly after the end of the call through midnight on August 17, 2007. To listen to the replay, please dial (706) 645-9291, conference ID 10283243. You may also listen to the call at www.vcall.com, by clicking on the “Investor Events Calendar” and then on the “listen” icon for SunGard. A replay will be available shortly after the end of the Webcast, through midnight on August 17, 2007 at www.vcall.com.

About SunGard

With annual revenue exceeding $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, BRASS EnGard, GMI and Vivista 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.


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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: 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; 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 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)

 

     Three Months Ended  
    

Jun. 30,

2006

   

Jun. 30,

2007

 

Revenue:

    

Services

   $ 956     $ 1,042  

License and resale fees

     80       100  
                

Total products and services

     1,036       1,142  

Reimbursed expenses

     28       33  
                
     1,064       1,175  
                

Costs and expenses:

    

Cost of sales and direct operating

     495       543  

Sales, marketing and administration

     221       268  

Product development

     64       64  

Depreciation and amortization

     58       61  

Amortization of acquisition-related intangible assets

     102       105  

Merger costs

     1       —    
                
     941       1,041  
                

Income from operations

     123       134  

Interest income

     3       4  

Interest expense and amortization of deferred financing fees

     (161 )     (159 )

Other expense

     (6 )     (3 )
                

Loss before income taxes

     (41 )     (24 )

Income tax benefit

     (11 )     (19 )
                

Net loss

   $ (30 )   $ (5 )
                

SunGard Data Systems Inc.

Consolidated Statements of Operations

(in millions)

 

     Six Months Ended  
    

Jun. 30,

2006

   

Jun. 30,

2007

 

Revenue:

    

Services

   $ 1,879     $ 2,064  

License and resale fees

     133       165  
                

Total products and services

     2,012       2,229  

Reimbursed expenses

     55       62  
                
     2,067       2,291  
                

Costs and expenses:

    

Cost of sales and direct operating

     967       1,068  

Sales, marketing and administration

     444       508  

Product development

     128       138  

Depreciation and amortization

     115       120  

Amortization of acquisition-related intangible assets

     198       209  

Merger costs

     3       —    
                
     1,855       2,043  
                

Income from operations

     212       248  

Interest income

     6       9  

Interest expense and amortization of deferred financing fees

     (318 )     (324 )

Other expense

     (18 )     (40 )
                

Loss before income taxes

     (118 )     (107 )

Income tax benefit

     (42 )     (6 )
                

Net loss

   $ (76 )   $ (101 )
                

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Balance Sheets

(in millions)

 

    

Dec. 31,

2006

  

Jun. 30,

2007

Assets:

     

Current:

     

Cash and cash equivalents

   $ 316    $ 294

Accounts receivable, net

     279      285

Clearing broker assets

     420      461

Prepaid expenses and other current assets

     179      195

Retained interest in accounts receivable sold

     275      261
             

Total current assets

     1,469      1,496

Property and equipment, net

     773      797

Software products, net

     1,386      1,338

Customer base, net

     2,857      2,811

Other assets, net

     1,235      1,223

Goodwill

     6,951      7,007
             

Total Assets

   $ 14,671    $ 14,672
             

Liabilities and Stockholder’s Equity:

     

Current:

     

Short-term and current portion of long-term debt

   $ 45    $ 63

Accounts payable and accrued expenses

     743      663

Clearing broker liabilities

     376      407

Deferred revenue

     762      798
             

Total current liabilities

     1,926      1,931

Long-term debt

     7,394      7,437

Deferred income taxes

     1,777      1,793
             

Total liabilities

     11,097      11,161

Stockholder’s equity

     3,574      3,511
             

Total Liabilities and Stockholder’s Equity

   $ 14,671    $ 14,672
             

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 from operations adjusted for amortization of acquisition-related intangible assets, merger costs, 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.

 

     Three Months Ended

(in millions)

  

Jun. 30,

2006

  

Jun. 30,

2007

Income from operations

   $ 123    $ 134

Amortization of acquisition-related intangible assets

     102      105

Merger costs

     1      —  

Purchase accounting adjustments

     2      2

Stock-based compensation and other costs

     12      24
             

Adjusted income from operations

   $ 240    $ 265
             

 

     Six Months Ended

(in millions)

   Jun. 30,
2006
   Jun. 30,
2007

Income from operations

   $ 212    $ 248

Amortization of acquisition-related intangible assets

     198      209

Merger costs

     3      —  

Purchase accounting adjustments

     6      3

Stock-based compensation and other costs

     23      32
             

Adjusted income from operations

   $ 442    $ 492
             


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, 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. 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.

 

     Three Months Ended  

(in millions)

   Jun. 30,
2006
    Jun. 30,
2007
 

Net loss

   $ (30 )   $ (5 )

Interest expense, net

     158       155  

Income tax benefit

     (11 )     (19 )

Depreciation and amortization

     160       166  
                

EBITDA

     277       297  

Purchase accounting adjustments

     —         2  

Non-cash charges

     10       7  

Unusual or non-recurring charges

     5       12  

Acquired EBITDA, net of disposed EBITDA

     2       12  

Other

     4       3  
                

Adjusted EBITDA - senior secured credit facilities

     298       333  

Loss on sale of receivables

     6       9  
                

Adjusted EBITDA - senior notes due 2013 and senior subordinated notes due 2015

   $ 304     $ 342  
                

 

     Six Months Ended  

(in millions)

  

Jun. 30,

2006

   

Jun. 30,

2007

 

Net loss

   $ (76 )   $ (101 )

Interest expense, net

     312       315  

Income tax benefit

     (42 )     (6 )

Depreciation and amortization

     313       329  
                

EBITDA

     507       537  

Purchase accounting adjustments

     2       3  

Non-cash charges

     18       15  

Unusual or non-recurring charges

     11       42  

Acquired EBITDA, net of disposed EBITDA

     1       8  

Other

     11       9  
                

Adjusted EBITDA - senior secured credit facilities

     550       614  

Loss on sale of receivables

     13       16  
                

Adjusted EBITDA - senior notes due 2013 and senior subordinated notes due 2015

   $ 563     $ 630