SunGard Announces Second Quarter 2006 Results.WAYNE Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. , Pa. -- SunGard (SunGard Data Systems Inc., Wayne, PA, www.sungard.com) A computer software and services company specializing in financial services, investment support systems and business continuity. SunGard was formed in 1983 from four subsidiaries of the Philadelphia-based Sun Company. (http://www.sungard.com), a global leader in integrated software Separate software components or applications that have been combined into one package. See integrated software package. and processing solutions and the pioneer and leading provider of information availability services, reported today that revenue for the three months ended June June: see month. 30, 2006 was $1.1 billion, an increase of 6% over revenue for the three months ended June 30, 2005. Revenue from software license fees in the quarter was $63 million, an increase of $4 million from the second quarter of 2005. Internal 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 5% for the quarter compared to the same period in 2005. Adjusted income from operations (defined in Note 1 to the Notes to the Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Financial Information) for the three months ended June 30, 2006 was $240 million, compared to $226 million in the same period in 2005. Reported income from operations for the three months ended June 30, 2006 was $123 million and includes amortization of acquired intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. of $102 million, stock-based compensation, purchase accounting adjustments and other expenses of $14 million and merger costs of $1 million. For the three months ended June 30, 2005, reported income from operations was $177 million and included amortization of acquired intangible assets of $35 million and merger costs of $14 million. For the three months ended June 30, 2006, adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (defined in Note 2 to the Notes to the Consolidated Condensed Financial Information) was $304 million compared to $292 million for the three months ended June 30, 2005. Cristobal Conde Con·dé , Prince de Title of Louis II de Bourbon. Known as "the Great Condé." 1621-1686. French general who won major victories in the Thirty Years' War. , president and chief executive officer, commented, "SunGard's performance in the quarter was solid. Our technology leadership is very strong and is reflected by the awards that we have garnered recently including highest customer satisfaction rating for FRONT ARENA from Kimsey's UK Dealing Room Survey, best order management system for BRASS and best streaming data Data that is structured and processed in a continuous flow, such as digital audio and video. See streaming audio and streaming video. management for PowerData both from Waters, and highest traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. index for iWORKS from Celent Communications. Our Common Services Architecture (CSA (1) (Canadian Standards Association, Toronto, Ontario, www.csa.ca) A standards-defining organization founded in 1919. It is involved in many industries, including electronics, communications and information technology. ) strategy has been very well received by customers and partners. We also received very positive feedback on our MiFID MiFID Markets in Financial Instruments Directive initiatives from the nearly 1,000 attendees at SunGard Europa Europa, in astronomy Europa (y  rō`pə), in astronomy, one of the 39 known moons, or natural satellites, of Jupiter. , our European Europeanemanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. customer conference held in Barcelona Barcelona (bär'səlō`nə, Catalan bär'səlō`nə, Span. bär'thālō`nä), city (1990 pop. 4,738,354), capital of Barcelona prov. and chief city of Catalonia, NE Spain, on the Mediterranean Sea. in June. Our competitiveness remains very strong." Reported revenue for the first six months of 2006 increased 6% over the same period in 2005 to $2.1 billion. Adjusted income from operations for the six months ended June 30, 2006 was $442 million compared to $431 million last year. Reported income from operations for the six months ended June 30, 2006 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. In the first six months of 2005, reported income from operations was $333 million and included amortization of acquired intangible assets of $69 million, merger costs of $18 million and a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $11 million related to the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of an availability services facility. Financial Systems revenue increased 6% to $500 million for the quarter. Internal revenue grew approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4%. License fees were $40 million for the quarter, an increase of $1 million from the second quarter of 2005. Notable deals in the quarter included: --A leading provider of wealth management, custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. services to financial intermediaries Financial intermediaries institution that provide the market function of matching borrowers and lenders or traders. signed an exclusive agreement to integrate its brokerage services with the transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. capabilities of the SunGard Transaction Network (STN (SuperTwisted Nematic) A passive matrix LCD technology that provides better contrast than twisted nematic (TN) by twisting the molecules from 180 to 270 degrees. See DSTN. ). --A leading provider of retirement services signed a multi-million dollar contract for professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. for the implementation of SunGard's Omni retirement plan administration solution. --One of the world's leading financial management and advisory companies selected SunGard's Martini for securities financing and lending. Higher Education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. & Public Sector Systems revenue increased 6% to $227 million for the quarter due to internal revenue growth. License fees were $21 million for the quarter, an increase of $2 million from the second quarter of 2005. Notable deals in the quarter included: --Two institutions in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , a comprehensive public university and a private, Ph.D.-granting institution, chose SunGard Higher Education to build new digital campuses. --A large state system in the southeastern south·east n. 1. Abbr. SE The direction or point on the mariner's compass halfway between due south and due east, or 135° east of due north. 2. An area or region lying in the southeast. 3. U.S. is extending its existing relationship with SunGard Higher Education by choosing Banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. Finance and HR administrative products. --A city in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and purchased SunGard's HTE HTE Hírközlési És Informatikai Tudományos Egyesület (Hungary) HTE High Temperature Electronics HTE HazMat Trucking Enforcer (software) HTE HighTech Engineering HTE High Tension Electrode HTE High Turnover of Employees OSSI public safety solutions and related services including computer-aided Computer-aided- or Computer-assisted- is a prefix that hints to the use of a computer as an indispensable tool in a certain field, usually derived from more traditional fields of science and engineering. dispatch A dispatch or dispatches can refer to:
Availability Services revenue increased 5% to $337 million for the quarter. Internal revenue increased approximately 6%, reflecting the effect of the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of a UK-based value-added reseller A value-added reseller (VAR) is a company that adds some feature(s) to an existing product(s), then resells it (usually to end-users) as an integrated product or complete "turn-key" solution. . Notable deals in the quarter include: --A private, non-sectarian research university with ten schools and colleges, selected SunGard Availability Services for traditional disaster recovery and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality . --A large integrated health network selected SunGard Availability Services for traditional disaster recovery services. --A leading global IT services and product engineering company selected SunGard Availability Services for managed services. At June 30, 2006, total debt was $7.44 billion and cash balances were $260 million. Capital expenditures were $144 million company-wide for the six months ended June 30, 2006. Conference Call & Webcast A conference call to review the results is scheduled for Thursday Thursday: see week. , August 10, 2006 at 9:00 a.m. (Eastern Time). The dial-in number is (719) 457-2698, passcode 6654527. A replay will be available shortly after the end of the call through midnight on August 17, 2006. To listen to the replay, please dial (719) 457-0820, passcode 6654527. 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 Web cast, through midnight on August 17, 2006 at www.vcall.com. About SunGard With annual revenue of $4 billion, SunGard is a global leader in software and processing solutions for financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , 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, FRONT ARENA, HTE, iWORKS, Martini, Omni, OSSI, PowerData and STN 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 Statements in this release other than historical facts constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 de·rive v. 1. To obtain or receive from a source. 2. To produce or obtain a chemical compound from another substance by chemical reaction. most of our forward-looking statements from our operating budgets Noun 1. operating budget - a budget for current expenses as distinct from financial transactions or permanent improvements budget items, operating cost, operating expense, overhead - the expense of maintaining property (e.g. 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 terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. , natural disasters or catastrophic events; the effect of disruptions to our systems and infrastructure; the timing and magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of software sales; the timing and scope of technological advances; customers taking their information availability solutions in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. ; 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 An earlier e-commerce system for the Web from Open Market that included order capture and secure order fulfillment using credit cards, ecash and other payment systems. It included customer service and subscription administration capabilities as well as an integrated database for reporting 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 Form 10-Q See 10-Q. for the quarter ended June 30, 2006, 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.
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
Predecessor Successor
----------- -----------
Three Three
Months Months
Ended Ended
June 30, June 30,
2005 2006
----------- -----------
Revenue:
Services $897 $956
License and resale fees 80 80
----------- -----------
Total products and services 977 1,036
Reimbursed expenses 30 28
----------- -----------
1,007 1,064
----------- -----------
Costs and expenses:
Cost of sales and direct operating 471 495
Sales, marketing and administration 186 221
Product development 65 64
Depreciation and amortization 59 58
Amortization of acquisition-related
intangible assets 35 102
Merger costs and other 14 1
----------- -----------
830 941
----------- -----------
Income from operations 177 123
Interest income 3 3
Interest expense and amortization of
deferred financing fees (7) (161)
Other expense - (6)
----------- -----------
Income (loss) before income taxes 173 (41)
Provision (benefit) for income taxes 75 (11)
----------- -----------
Net income (loss) $98 ($30)
=========== ===========
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
Predecessor Successor
----------- -----------
Year Year
to Date to Date
June 30, June 30,
2005 2006
----------- -----------
Revenue:
Services $1,737 $1,879
License and resale fees 162 133
----------- -----------
Total products and services 1,899 2,012
Reimbursed expenses 55 55
----------- -----------
1,954 2,067
----------- -----------
Costs and expenses:
Cost of sales and direct operating 914 967
Sales, marketing and administration 380 444
Product development 125 128
Depreciation and amortization 115 115
Amortization of acquisition-related
intangible assets 69 198
Merger costs and other 18 3
----------- -----------
1,621 1,855
----------- -----------
Income from operations 333 212
Interest income 6 6
Interest expense and amortization of
deferred financing fees (14) (318)
Other income (expense) - (18)
----------- -----------
Income (loss) before income taxes 325 (118)
Income taxes 137 (42)
----------- -----------
Net income (loss) $188 ($76)
=========== ===========
See Notes to Consolidated Condensed Financial Information.
SunGard Data Systems Inc.
Consolidated Condensed Balance Sheets
(in millions)
Successor
-----------------
Dec. 31, June 30,
2005 2006
-------- --------
Assets:
Current:
Cash and equivalents $317 $260
Accounts receivable, net 228 223
Clearing broker assets 391 408
Prepaid expenses and other current assets 206 202
Retained interest in accounts receivable sold 224 270
-------- --------
Total current assets 1,366 1,363
Property and equipment, net 705 731
Software products, net 1,528 1,405
Customer base, net 2,817 2,902
Other assets, net 1,267 1,287
Goodwill 6,904 6,935
-------- --------
Total Assets $14,587 $14,623
======== ========
Liabilities and Stockholder's Equity:
Current:
Short-term and current portion of long-term debt $46 $44
Accounts payable and accrued expenses 728 636
Clearing broker liabilities 360 375
Deferred revenue 695 736
-------- --------
Total current liabilities 1,829 1,791
Long-term debt 7,383 7,392
Deferred income taxes 1,803 1,863
-------- --------
Total liabilities 11,015 11,046
Stockholder's equity 3,572 3,577
-------- --------
Total Liabilities and Stockholder's Equity $14,587 $14,623
======== ========
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, 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 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
----------- -----------
Three Three
Months Months
Ended Ended
June 30, June 30,
(in millions) 2005 2006
---------------------------------------------- ----------- -----------
Income from operations $177 $123
Amortization of acquisition-related intangible
assets 35 102
Merger and other costs 14 1
Purchase accounting adjustments - 2
Stock-based compensation and other costs - 12
----------- -----------
Adjusted income from operations $226 $240
=========== ===========
Predecessor Successor
----------- -----------
Year Year
to Date to Date
June 30, June 30,
(in millions) 2005 2006
---------------------------------------------- ----------- -----------
Income from operations $333 $212
Amortization of acquisition-related intangible
assets 69 198
Merger and other costs 18 3
One-time charge related to the relocation of
an availability services facility 11 -
Purchase accounting adjustments - 6
Stock-based compensation and other costs - 23
----------- -----------
Adjusted income from operations $431 $442
=========== ===========
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. 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
----------- -----------
Three Three
Months Months
Ended Ended
June 30, June 30,
(in millions) 2005 2006
---------------------------------------------- ----------- -----------
Net income (loss) $98 ($30)
Interest expense, net 4 158
Taxes 75 (11)
Depreciation and amortization 94 160
----------- -----------
EBITDA 271 277
Non-cash charges - 10
Unusual or non-recurring charges 15 5
Acquired EBITDA, net of disposed EBITDA 6 2
Other - 4
----------- -----------
Adjusted EBITDA - Senior Credit Facility 292 298
Loss on sale of receivables - 6
----------- -----------
Adjusted EBITDA - Senior Notes and Senior
Subordinated Notes $292 $304
=========== ===========
Predecessor Successor
----------- -----------
Year Year
to Date to Date
June 30, June 30,
(in millions) 2005 2006
---------------------------------------------- ----------- -----------
Net income (loss) $188 ($76)
Interest expense, net 8 312
Taxes 137 (42)
Depreciation and amortization 184 313
----------- -----------
EBITDA 517 507
Purchase accounting adjustments - 2
Non-cash charges 1 18
Unusual or non-recurring charges 18 11
Restructuring charges or reserves 11 -
Acquired EBITDA, net of disposed EBITDA 17 1
Other 2 11
----------- -----------
Adjusted EBITDA - Senior Credit Facility 566 550
Loss on sale of receivables - 13
----------- -----------
Adjusted EBITDA - Senior Notes and Senior
Subordinated Notes $566 $563
=========== ===========
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