Press Releases
SunGard Announces 2009 Results
March 15, 2010 — Wayne, PA
SunGard, one of the world’s 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 SunGard’s Availability Services business of $1.13 billion. Reported income from operations in 2008 includes a noncash write-down of goodwill in SunGard’s 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 SunGard’s 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 SunGard’s total goodwill. This goodwill represents the remaining intangible value that was allocated to the Availability Services business at the time of SunGard’s 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 SunGard’s 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, SunGard’s 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 SunGard’s 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 SunGard’s 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 SunGard’s 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 SunGard’s 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 Company’s 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 world’s 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.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; 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.