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 Record Results for 2007

Wayne, PA – February 20, 2008 – 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 Consolidated Condensed Financial Information) for the year 2007 was $1.15 billion, a 15% increase over $994 million in 2006.

Reported income from operations for the year 2007 was $631 million compared to $532 million for the year 2006, an increase of 19%. Reported income from operations in 2007 and 2006 includes: amortization of acquired intangible assets of $438 million and $399 million, respectively; stock-based compensation, purchase accounting adjustments and other expenses of $76 million and $59 million, respectively; and merger costs of $4 million in 2006.

Adjusted income from operations for the three months ended December 31, 2007 was $364 million, a 22% increase over $299 million for the same period in 2006. Reported income from operations for the three months ended December 31, 2007 was $219 million compared to $184 million for the year 2006, an increase of 19%.

For the year 2007, adjusted EBITDA (defined in Note 2 to the Notes to Consolidated Condensed Financial Information) was $1.43 billion compared to $1.25 billion in 2006, an increase of 14%. For the three months ended December 31, 2007, adjusted EBITDA was $437 million compared to $373 million in 2006, an increase of 17%.

Revenue for the year 2007 was $4.90 billion, an increase of 13% over revenue for the year 2006. Revenue for the three months ended December 31, 2007 was $1.39 billion, an increase of 17% over revenue for the same period in 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 11% for the year and 14% for the quarter compared to the same periods in 2006. The increase in the year and the quarter includes an increase of approximately 3% and 4%, respectively, attributable to one of our broker/dealer businesses, and both periods include a 2% positive impact of foreign exchange movements overall and within each of our segments. Adjusting for these items, organic revenue growth in the year and the quarter was 6% and 8%, respectively. The broker/dealer revenue is uncharacteristically high and is expected to return to former levels over time.

Cristóbal Conde, president and chief executive officer, commented, “SunGard’s performance for the quarter was strong despite uncertainty about the broader economy. In our Financial Systems business, fourth quarter results were very strong and were not impacted by the sub-prime crisis. In our Higher Education and Public Sector businesses, we continued to sign new business and renew existing relationships. We saw continued strong performance from our Higher Education business for the quarter and the year. We will begin reporting these businesses separately going forward. In our Availability Services business, we saw a continuation of the trend towards advanced recovery and managed services. Our Availability Services business in the UK produced strong results. Overall, our competitive position is stronger than ever and our pipelines remain healthy.”

Financial Systems revenue increased 23% to $745 million for the quarter. Organic revenue grew approximately 21%, with trading volumes of one of our trading systems businesses, a broker/dealer with inherently lower operating margins, contributing $54 million or eight percentage points to the growth rate, which exceeded our expectations for the quarter and is not expected to continue. License fees were $89 million for the quarter compared to $80 million for the same period in 2006, an increase of 11%.


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Notable deals in the quarter included the following:

 

   

A large international brokerage firm selected Phase3 to process its equity and option business and also renewed its license for GMI.

 

   

A diversified financial services corporation selected the Fidelity-SunGard platform for mutual fund trading and custody services for its employee benefit division.

 

   

One of the world’s leading global financial services firms retained SunGard Consulting Services to build custom technology features for its data warehouse and trading platform.

Higher Education & Public Sector Systems revenue increased 11% to $258 million for the quarter. Organic revenue grew 11%. License fees were $24 million for the quarter, an increase of $4 million from the same quarter of 2006.

Notable deals in the quarter included the following:

 

   

One of the largest research institutions in the U.S. chose SunGard Higher Education to help it build a Unified Digital Campus using the Banner suite.

 

   

A top-tier, private university chose SunGard Higher Education to help it build a Unified Digital Campus using the Banner suite.

 

   

A police department in South Carolina chose SunGard Public Sector to provide public safety software solutions.

Availability Services revenue increased 10% to $385 million for the quarter. Organic revenue grew 4%.

Notable deals in the quarter included the following:

 

   

An information technology and services company selected SunGard for disaster recovery services.

 

   

One of the largest municipal hospitals and healthcare centers in the U.S. selected SunGard as a managed service provider.

 

   

An international leader in public finance and financial services to local public authorities chose SunGard for managed services.

At December 31, 2007, total debt was $7.49 billion, cash balances were $427 million and off-balance sheet debt was $441 million. During the year 2007, the Company invested $307 million in capital expenditures and $265 million (net of cash acquired) in eleven acquisitions.

Conference Call & Webcast

A conference call to review the results is scheduled for Thursday, February 21, 2008 at 9:00 a.m. (Eastern Time). The dial-in number is 706-902-1370, conference ID 30211694. A replay will be available shortly after the end of the call through midnight on February 28, 2008. To listen to the replay, please dial 706-645-9291, conference ID 30211694. 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 February 28, 2008 at www.vcall.com.

About SunGard

With annual revenue of $5 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.


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Trademark Information: SunGard, the SunGard logo, Banner, GMI and Phase3 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: 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  
     Dec. 31,
2006
    Dec. 31,
2007
 

Revenue:

    

Services

   $ 1,028     $ 1,202  

License and resale fees

     128       144  
                

Total products and services

     1,156       1,346  

Reimbursed expenses

     32       42  
                
     1,188       1,388  
                

Costs and expenses:

    

Cost of sales and direct operating

     520       619  

Sales, marketing and administration

     256       294  

Product development

     64       69  

Depreciation and amortization

     63       68  

Amortization of acquisition-related intangible assets

     102       119  

Merger costs

     (1 )     —    
                
     1,004       1,169  
                

Income from operations

     184       219  

Interest income

     4       6  

Interest expense and amortization of deferred financing fees

     (173 )     (160 )

Other expense

     (7 )     (17 )
                

Income before income taxes

     8       48  

Income tax expense

     19       18  
                

Net income (loss)

   $ (11 )   $ 30  
                

SunGard Data Systems Inc.

Consolidated Statements of Operations

(in millions)

 

     Twelve Months Ended  
     Dec. 31,
2006
    Dec. 31,
2007
 

Revenue:

    

Services

   $ 3,870     $ 4,364  

License and resale fees

     342       396  
                

Total products and services

     4,212       4,760  

Reimbursed expenses

     111       141  
                
     4,323       4,901  
                

Costs and expenses:

    

Cost of sales and direct operating

     1,980       2,268  

Sales, marketing and administration

     915       1,042  

Product development

     255       271  

Depreciation and amortization

     238       251  

Amortization of acquisition-related intangible assets

     399       438  

Merger costs

     4       —    
                
     3,791       4,270  
                

Income from operations

     532       631  

Interest income

     14       19  

Interest expense and amortization of deferred financing fees

     (656 )     (645 )

Other expense

     (29 )     (68 )
                

Loss before income taxes

     (139 )     (63 )

Income tax benefit

     (21 )     (3 )
                

Net loss

   $ (118 )   $ (60 )
                

See Notes to Consolidated Condensed Financial Information.


SunGard Data Systems Inc.

Consolidated Condensed Balance Sheets

(in millions)

 

     Dec. 31,
2006
   Dec. 31,
2007

Assets:

     

Current:

     

Cash and cash equivalents

   $ 316    $ 427

Accounts receivable, net

     279      353

Clearing broker assets

     420      469

Prepaid expenses and other current assets

     179      198

Retained interest in accounts receivable sold

     275      243
             

Total current assets

     1,469      1,690

Property and equipment, net

     773      852

Software products, net

     1,386      1,266

Customer base, net

     2,857      2,745

Other assets, net

     1,235      1,201

Goodwill

     6,951      7,086
             

Total Assets

   $ 14,671    $ 14,840
             

Liabilities and Stockholder’s Equity:

     

Current:

     

Short-term and current portion of long-term debt

   $ 45    $ 55

Accounts payable and accrued expenses

     743      894

Clearing broker liabilities

     376      434

Deferred revenue

     762      825
             

Total current liabilities

     1,926      2,208

Long-term debt

     7,394      7,430

Deferred income taxes

     1,777      1,646
             

Total liabilities

     11,097      11,284

Stockholder’s equity

     3,574      3,556
             

Total Liabilities and Stockholder’s Equity

   $ 14,671    $ 14,840
             

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)

   Dec. 31,
2006
    Dec. 31,
2007

Income from operations

   $ 184     $ 219

Amortization of acquisition-related intangible assets

     102       119

Merger costs

     (1 )     —  

Purchase accounting adjustments

     (2 )     8

Stock-based compensation and other costs

     16       18
              

Adjusted income from operations

   $ 299     $ 364
              
     Twelve Months Ended

(in millions)

   Dec. 31,
2006
    Dec. 31,
2007

Income from operations

   $ 532     $ 631

Amortization of acquisition-related intangible assets

     399       438

Merger costs

     4       —  

Purchase accounting adjustments

     7       18

Stock-based compensation and other costs

     52       58
              

Adjusted income from operations

   $ 994     $ 1,145
              


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)

   Dec. 31,
2006
    Dec. 31,
2007
 

Net income (loss)

   $ (11 )   $ 30  

Interest expense, net

     169       154  

Income tax expense

     19       18  

Depreciation and amortization

     165       187  
                

EBITDA

     342       389  

Purchase accounting adjustments

     (4 )     6  

Non-cash charges

     13       14  

Unusual or non-recurring charges

     14       5  

Acquired EBITDA, net of disposed EBITDA

     (3 )     (1 )

Other

     2       16  
                

Adjusted EBITDA - senior secured credit facilities

     364       429  

Loss on sale of receivables

     9       8  
                

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

   $ 373     $ 437  
                
     Twelve Months Ended  

(in millions)

   Dec. 31,
2006
    Dec. 31,
2007
 

Net loss

   $ (118 )   $ (60 )

Interest expense, net

     642       626  

Income tax expense

     (21 )     (3 )

Depreciation and amortization

     637       689  
                

EBITDA

     1,140       1,252  

Purchase accounting adjustments

     (2 )     14  

Non-cash charges

     41       37  

Unusual or non-recurring charges

     30       43  

Acquired EBITDA, net of disposed EBITDA

     —         12  

Other

     16       38  
                

Adjusted EBITDA - senior secured credit facilities

     1,225       1,396  

Loss on sale of receivables

     29       29  
                

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

   $ 1,254     $ 1,425