[October 31, 2014] |
|
SunGard Announces Third Quarter 2014 Results
WAYNE, Pa. --(Business Wire)--
SunGard Data Systems Inc. ("SunGard" or the "Company"), one of the
world's leading software and technology services companies, today
reported results for the third quarter ended September 30, 2014. For the
third quarter, revenue was $691 million, up 2% year over year (also up
2% adjusting for currency). Operating income was $95 million in the
quarter, down 11% year over year, driven by a 5% increase in total costs
and expenses due to increased investments in sales and delivery capacity
and higher restructuring costs. The operating income margin was 13.7%,
down 2.1 points year over year. Adjusted EBITDA was $188 million, down
4% year over year, and the adjusted EBITDA margin was 27.1%, down 1.7
points year over year. Adjusted EBITDA is defined in Note 1 attached to
this release.
For reference, during last year's third quarter, the Company recognized
revenue of $11.5 million from the sale of a customer bankruptcy claim.
Excluding this sale, third quarter 2014 revenue grew 4%, operating
income was down 1% compared to the prior year and adjusted EBITDA
increased 2% year over year.
Year to date, revenue was $2.0 billion, up 1% year over year (also up 1%
adjusting for currency) and the Company incurred an operating loss of
$117 million, which included a $339 million non-cash impairment charge
related to the Availability Services split-off in the first quarter.
Adjusted EBITDA was $492 million, down 3% year over year, and the
adjusted EBITDA margin was 24.4%. Excluding the impairment charge and
the sale of the bankruptcy claim in the third quarter of 2013, year to
date revenue grew 2%, operating income declined 4%, and adjusted EBITDA
was flat.
Russ Fradin, president and chief executive officer, commented, "Over the
past few years, we've been making investments to help our customers
improve their competitiveness and address the litany of risk and
compliance issues that are common in today's marketplace. We're
providing new functionality, an improved end-user experience and
superior delivery, and they're taking hold in both the established and
emerging markets around the world. We're pleased to see these long term
commitments improving the top line growth of the company. We will
continue to make prudent investments to improve our top and bottom line
growth in the future."
Financial Systems ("FS") segment revenue was $637 million in the
third quarter, up 2% year over year (also up 2% year over year adjusting
for currency). Growth in services, as well as broker dealer revenues,
more than offset a decline in software license fees. FS segment costs
and expenses were $453 million, up 4% year over year, due to investments
in sales and delivery capacity. Adjusted EBITDA for the period was $184
million, down 3% from the prior year, and the adjusted EBITDA margin was
28.9%, down 1.6 points from last year. Excluding the sale of the
bankruptcy claim in the third quarter of 2013, FS revenue grew 4% and
adjusted EBITDA grew 3%.
Year to date, FS revenue was $1.9 billion, up 1% year over year (also up
1% adjusting for currency). For the same period, adjusted EBITDA was
$477 million, a decrease of 3%, compared to the prior year, and the
adjusted EBITDA margin was 25.7%, down 1.2 points from last year.
Excluding the sale of the bankruptcy claim in the third quarter of 2013,
year to date FS revenue grew 2%, adjusted EBITDA declined 1%.
Notable SunGard solutions in the quarter included the following deals:
-
Valdi was selected by one of the world's largest financial services
firms for a three-year deal to support its growing order management,
market access, and compliance requirements.
-
Aligne was chosen by a large oil and natural gas producer to support
the expansion of its pipeline operations platform.
-
Omni Retirement Business Process as a Service (BPaaS) was selected by
one of the largest financial services firms in the U.S. to aid in the
streamlining of its back-office operations and support new business
growth.
-
Protegent Surveillance was selected by one of North America's largest
independent broker-dealers to assist in meeting regulatory
requirements and better manage the risks within its advisory business.
-
XSP platform was chosen by one of the world's largest financial
services firms to automate their corporate actions processing.
-
Quantum was selected by a large European car manufacturer to supply a
treasury management solution hosted in a private cloud environment.
-
Prophet Enterprise was selected by one of the UK's largest insurance
companies in a licensing and services agreement to assist in meeting
the increased reporting requirements of Solvency II and reduce its
risks within a fully auditable environment.
-
IntelliMatch was selected by one of the largest banks in Latin America
to provide a centralized platform to automate transaction matching and
reconciliation processes across the bank's wholesale, retail, and
wealth management operations.
Public Sector and Education ("PS&E") segment revenue was $54
million in the third quarter, up 2% year over year. Adjusted EBITDA was
$17 million, up 1% year over year, and the adjusted EBITDA margin was
31.2%, down 0.2 points from last year. These results continue to reflect
strong demand for our public sector solutions.
Year to date, PS&E revenue was $162 million, up 5% year over year. For
the same period, adjusted EBITDA was $50 million, an increase of 4%,
compared to the prior year, and the adjusted EBITDA margin was 30.9%,
down 0.3 points from last year.
Notable SunGard solutions in the quarter included the following deals:
-
ONESolution was selected by a county in Maryland to provide public
safety solutions for computer-aided emergency dispatch, records
management, jails management, and mobile computing.
-
eFinancePLUS was selected by a Maryland public school district to help
manage financial, procurement, payroll, and personnel functions.
-
ONESolution was selected by a sheriff's department in Ohio to provide
public safety solutions for computer-aided emergency dispatch, records
management, and mobile computing.
-
eSchoolPLUS, IEPPLUS and PerformanceTRACKER software were chosen by a
Pennsylvania school district to manage student information,
performance data, and special education information.
Financial Position
For the nine months ended September 30, 2014, the continuing operations
of the Company generated $222 million in cash flow from operations.
Capital expenditures were $98 million, up $28 million year over year,
including a $22 million increase in the capitalization of software due
to new product investments.
At September 30, 2014, total debt was $4.7 billion and cash was $396
million. The Company's leverage ratio, as defined in its senior secured
credit agreement, was 5.59x, down from 5.64x at the end of the second
quarter. The leverage ratio is calculated using adjusted EBITDA as
defined in Note 2 attached to this release. See Note 3 attached to this
release for supplemental information on debt.
Conference Call & Webcast
SunGard will host a conference call and live web broadcast to discuss
third quarter 2014 results today at 9:00 a.m. (Eastern Time). The call
may also include a discussion of company developments, forward-looking
information and other material information about business and financial
matters. The dial-in number for the conference call is 706-902-1370, and
the conference ID number is 22805452. You may also listen to the call at www.investorcalendar.com
by clicking on the "audio" icon for SunGard. An audio replay will be
available two hours after the call ends through midnight on November 14,
2014. To listen to the replay, please dial 1-855-859-2056 or
404-537-3406 and enter the conference ID number 22805452. A replay will
also be available two hours after the call ends through midnight on
November 14, 2014 at www.investorcalendar.com.
About SunGard
SunGard is one of the world's leading software and technology services
companies, with annual revenue of about $2.8 billion. SunGard provides
software and processing solutions for financial services, education and
the public sector. SunGard serves approximately 16,000 customers in more
than 100 countries and has approximately 13,000 employees. For more
information, please visit www.sungard.com.
Trademark Information: SunGard, the SunGard logo, Aligne, eFinancePLUS,
eSchoolPLUS, IEPPLUS, IntelliMatch, Omni, ONESolution,
PerformanceTRACKER, Prophet, Protegent Surveillance, Quantum, Valdi, XSP
are trademarks or registered 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, financial results and pro forma estimates 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: global economic and market conditions; the condition of the
financial services industry, including the effect of any further
consolidation among financial services firms; our high degree of
debt-related leverage; the effect of war, terrorism, natural disasters
or other 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; the market and credit risks
associated with broker/dealer operations; the ability to retain and
attract customers and key personnel; risks relating to the foreign
countries where we transact business; the integration and performance of
acquired businesses; 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; a material weakness
in our internal controls; and unanticipated changes in our income tax
provision or the enactment of new tax legislation, issuance of
regulations or relevant judicial decisions 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 U.S.
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 Condensed Statements of Operations
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sep. 30,
|
|
|
|
2013
|
|
2014
|
Revenue:
|
|
|
|
|
|
Services
|
|
$
|
607
|
|
|
$
|
624
|
|
|
License and resale fees
|
|
|
64
|
|
|
|
59
|
|
Total products and services
|
|
|
671
|
|
|
|
683
|
|
|
Reimbursed expenses
|
|
|
7
|
|
|
|
8
|
|
|
Total revenue
|
|
|
678
|
|
|
|
691
|
|
Costs and expenses:
|
|
|
|
|
|
Cost of sales and direct operating (excluding depreciation)
|
|
|
244
|
|
|
|
271
|
|
|
Sales, marketing and administration
|
|
|
157
|
|
|
|
171
|
|
|
Product development and maintenance
|
|
|
103
|
|
|
|
96
|
|
|
Depreciation
|
|
|
24
|
|
|
|
28
|
|
|
Amortization of acquisition-related intangible assets
|
|
|
43
|
|
|
|
30
|
|
|
Total costs and expenses
|
|
|
571
|
|
|
|
596
|
|
Operating income
|
|
|
107
|
|
|
|
95
|
|
|
Interest income
|
|
|
1
|
|
|
|
-
|
|
|
Interest expense and amortization of deferred financing fees
|
|
|
(78
|
)
|
|
|
(73
|
)
|
|
Loss on extinguishment of debt
|
|
|
(1
|
)
|
|
|
-
|
|
Income from continuing operations before income taxes
|
|
|
29
|
|
|
|
22
|
|
|
Provision for income taxes
|
|
|
(7
|
)
|
|
|
(11
|
)
|
Income from continuing operations
|
|
|
22
|
|
|
|
11
|
|
|
Income from discontinued operations, net of tax
|
|
|
1
|
|
|
|
-
|
|
Net income
|
|
$
|
23
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SunGard Data Systems Inc.
|
Consolidated Condensed Statements of Operations
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended Sep. 30,
|
|
|
|
2013
|
|
2014
|
Revenue:
|
|
|
|
|
|
Services
|
|
$
|
1,801
|
|
|
$
|
1,842
|
|
|
License and resale fees
|
|
|
164
|
|
|
|
150
|
|
Total products and services
|
|
|
1,965
|
|
|
|
1,992
|
|
|
Reimbursed expenses
|
|
|
24
|
|
|
|
25
|
|
|
Total revenue
|
|
|
1,989
|
|
|
|
2,017
|
|
Costs and expenses:
|
|
|
|
|
|
Cost of sales and direct operating (excluding depreciation)
|
|
|
757
|
|
|
|
799
|
|
|
Sales, marketing and administration
|
|
|
471
|
|
|
|
503
|
|
|
Product development and maintenance
|
|
|
309
|
|
|
|
300
|
|
|
Depreciation
|
|
|
73
|
|
|
|
79
|
|
|
Amortization of acquisition-related intangible assets
|
|
|
138
|
|
|
|
114
|
|
|
Trade name impairment charge
|
|
|
-
|
|
|
|
339
|
|
|
Total costs and expenses
|
|
|
1,748
|
|
|
|
2,134
|
|
Operating income (loss)
|
|
|
241
|
|
|
|
(117
|
)
|
|
Interest income
|
|
|
1
|
|
|
|
1
|
|
|
Interest expense and amortization of deferred financing fees
|
|
|
(247
|
)
|
|
|
(220
|
)
|
|
Loss on extinguishment of debt
|
|
|
(6
|
)
|
|
|
(61
|
)
|
|
Other expense
|
|
|
(2
|
)
|
|
|
-
|
|
Loss from continuing operations before income taxes
|
|
|
(13
|
)
|
|
|
(397
|
)
|
|
Benefit from income taxes
|
|
|
5
|
|
|
|
88
|
|
Loss from continuing operations
|
|
|
(8
|
)
|
|
|
(309
|
)
|
|
Loss from discontinued operations, net of tax
|
|
|
(1
|
)
|
|
|
(17
|
)
|
Net loss
|
|
$
|
(9
|
)
|
|
$
|
(326
|
)
|
|
|
|
|
|
|
See Notes to Consolidated Condensed Financial Information.
|
|
|
SunGard Data Systems Inc.
|
Consolidated Condensed Balance Sheets
|
(in millions)
|
(Unaudited)
|
|
|
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Sep. 30,
|
|
|
|
|
2013
|
|
2014 (a)
|
|
2014
|
Assets:
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
675
|
|
$
|
355
|
|
|
$
|
396
|
|
Accounts receivable, net
|
|
|
657
|
|
|
549
|
|
|
|
509
|
|
Prepaid expenses and other current assets
|
|
|
123
|
|
|
138
|
|
|
|
134
|
|
Assets of discontinued operations
|
|
|
2,516
|
|
|
-
|
|
|
|
-
|
|
|
Total current assets
|
|
|
3,971
|
|
|
1,042
|
|
|
|
1,039
|
Property and equipment, net
|
|
|
152
|
|
|
149
|
|
|
|
147
|
Software products, net
|
|
|
270
|
|
|
249
|
|
|
|
222
|
Customer base, net
|
|
|
421
|
|
|
405
|
|
|
|
375
|
Other assets, net
|
|
|
113
|
|
|
105
|
|
|
|
100
|
Trade name
|
|
|
1,019
|
|
|
672
|
|
|
|
672
|
Goodwill
|
|
|
3,828
|
|
|
3,827
|
|
|
|
3,784
|
|
|
Total Assets
|
|
$
|
9,774
|
|
$
|
6,449
|
|
|
$
|
6,339
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholder's Equity:
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
Short-term and current portion of long-term debt
|
|
$
|
290
|
|
$
|
2
|
|
|
$
|
2
|
|
Accounts payable and accrued expenses
|
|
|
420
|
|
|
343
|
|
|
|
367
|
|
Deferred revenue
|
|
|
589
|
|
|
592
|
|
|
|
509
|
|
Liabilities of discontinued operations
|
|
|
799
|
|
|
-
|
|
|
|
-
|
|
|
Total current liabilities
|
|
|
2,098
|
|
|
937
|
|
|
|
878
|
Long-term debt
|
|
|
6,094
|
|
|
4,669
|
|
|
|
4,669
|
Deferred and other income taxes
|
|
|
739
|
|
|
650
|
|
|
|
631
|
Other long-term liabilities
|
|
|
22
|
|
|
24
|
|
|
|
28
|
|
|
Total liabilities
|
|
|
8,953
|
|
|
6,280
|
|
|
|
6,206
|
Stockholder's equity
|
|
|
821
|
|
|
169
|
|
|
|
133
|
|
|
Total Liabilities and Stockholder's Equity
|
|
$
|
9,774
|
|
$
|
6,449
|
|
|
$
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The March 31, 2014 balance sheet (the balance sheet immediately
after split-off of Availability Services which occurred on March
31, 2014) is included to present for comparability to September
30, 2014.
|
|
|
|
|
|
See Notes to Consolidated Condensed Financial Information.
|
|
|
|
|
|
|
|
|
|
SunGard Data Systems Inc.
|
Consolidated Condensed Statements of Cash Flows
|
(in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended Sep. 30,
|
|
|
|
|
|
|
2013
|
|
2014
|
Cash flow from operations:
|
|
|
|
|
|
|
|
Cash flow from continuing operations
|
|
|
|
|
$
|
327
|
|
|
$
|
222
|
|
Cash flow from discontinued operations
|
|
|
|
|
|
242
|
|
|
|
34
|
|
Cash flow from operations
|
|
|
|
|
|
569
|
|
|
|
256
|
|
|
|
|
|
|
|
|
|
Investment activities:
|
|
|
|
|
|
|
Cash paid for acquired businesses, net of cash acquired
|
|
|
(1
|
)
|
|
|
(4
|
)
|
Cash paid for property, equipment and software
|
|
|
|
|
(70
|
)
|
|
|
(98
|
)
|
Cash used in continuing operations
|
|
|
|
|
|
(71
|
)
|
|
|
(102
|
)
|
Cash (used in) provided by discontinued operations
|
|
|
(89
|
)
|
|
|
7
|
|
Cash used in investment activities
|
|
|
|
|
|
(160
|
)
|
|
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
Cash received from borrowings, net of fees
|
|
|
|
|
|
2,173
|
|
|
|
(7
|
)
|
Cash used to repay debt
|
|
|
|
|
|
(2,418
|
)
|
|
|
(1,324
|
)
|
Other financing activities
|
|
|
|
|
|
(18
|
)
|
|
|
(18
|
)
|
Cash used in continuing operations
|
|
|
|
|
|
(263
|
)
|
|
|
(1,349
|
)
|
Cash (used in) provided by discontinued operations
|
|
|
(1
|
)
|
|
|
887
|
|
Cash used in financing activities
|
|
|
|
|
|
(264
|
)
|
|
|
(462
|
)
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
|
143
|
|
|
|
(310
|
)
|
|
|
|
|
|
|
|
|
|
Beginning cash and cash equivalents, including cash of discontinued
operations (2013: $11, 2014: $31)
|
|
|
546
|
|
|
|
706
|
|
|
|
|
|
|
|
|
|
|
Ending cash and cash equivalents, including cash of discontinued
operations (2013: $31, 2014: $-)
|
|
$
|
689
|
|
|
$
|
396
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Condensed Financial Information.
|
|
|
SunGard Data Systems Inc.
|
Notes to Consolidated Condensed Financial Information (Unaudited)
|
|
Note 1. Reconciliation of Adjusted EBITDA to Operating Income
(Loss)
|
|
We evaluate the performance of our segments using non-GAAP measures.
Our primary non-GAAP measure is Adjusted EBITDA, whose corresponding
GAAP measure is operating income. Adjusted EBITDA is defined as
operating income excluding depreciation, amortization of
acquisition-related intangible assets, goodwill and trade name
impairment charges, severance and facility closure charges, stock
compensation, management fees, and certain other costs.
|
|
We believe Adjusted EBITDA is an effective tool to measure our
operating performance since it excludes non-cash items and certain
variable charges. We use Adjusted EBITDA extensively to measure both
SunGard and its reportable segments within the Company, and also to
report our results to our board of directors.
|
|
While Adjusted EBITDA is useful for analysis purposes, it should not
be considered as an alternative to our reported GAAP results. Also,
Adjusted EBITDA may not be comparable to similarly titled measures
used by other companies. Adjusted EBITDA is similar, but not
identical, to adjusted EBITDA per the Senior Secured Credit
Agreement for purposes of our debt covenants (see Note 2).
|
|
The following is a reconciliation of Adjusted EBITDA and Adjusted
EBITDA margin to the corresponding reported GAAP measures that we
believe to be most directly comparable. Percentage changes are
computed based on unrounded amounts. Also, reported amounts may not
sum to totals due to rounding.
|
|
For clarity, we have re-labeled certain adjustments below for
consistency with Note 2. Other costs, which had formerly been
included with restructuring charges, is now presented separately.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sep. 30,
|
|
Nine Months Ended Sep. 30,
|
(in millions)
|
|
2013
|
|
2014
|
|
change
|
|
2013
|
|
2014
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Systems segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
625
|
|
|
$
|
637
|
|
|
2
|
|
|
%
|
|
|
$
|
1,834
|
|
|
$
|
1,855
|
|
|
1
|
|
|
%
|
Adjusted EBITDA
|
|
$
|
191
|
|
|
$
|
184
|
|
|
(3
|
)
|
|
%
|
|
|
$
|
493
|
|
|
$
|
477
|
|
|
(3
|
)
|
|
%
|
Adjusted EBITDA margin
|
|
|
30.5
|
%
|
|
|
28.9
|
%
|
|
(1.6
|
)
|
|
pts
|
|
|
26.9
|
%
|
|
|
25.7
|
%
|
|
(1.2
|
)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Sector & Education segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
53
|
|
|
$
|
54
|
|
|
2
|
|
|
%
|
|
|
$
|
155
|
|
|
$
|
162
|
|
|
5
|
|
|
%
|
Adjusted EBITDA
|
|
$
|
16
|
|
|
$
|
17
|
|
|
1
|
|
|
%
|
|
|
$
|
48
|
|
|
$
|
50
|
|
|
4
|
|
|
%
|
Adjusted EBITDA margin
|
|
|
31.4
|
%
|
|
|
31.2
|
%
|
|
(0.2
|
)
|
|
pts
|
|
|
31.2
|
%
|
|
|
30.9
|
%
|
|
(0.3
|
)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
(12
|
)
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
$
|
(36
|
)
|
|
$
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
678
|
|
|
$
|
691
|
|
|
2
|
|
|
%
|
|
|
$
|
1,989
|
|
|
$
|
2,017
|
|
|
1
|
|
|
%
|
Adjusted EBITDA
|
|
$
|
195
|
|
|
$
|
188
|
|
|
(4
|
)
|
|
%
|
|
|
$
|
505
|
|
|
$
|
492
|
|
|
(3
|
)
|
|
%
|
Adjusted EBITDA margin
|
|
|
28.8
|
%
|
|
|
27.1
|
%
|
|
(1.7
|
)
|
|
pts
|
|
|
25.4
|
%
|
|
|
24.4
|
%
|
|
(1.0
|
)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
pts = margin points
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sep. 30,
|
|
Nine Months Ended Sep. 30,
|
Reconciliation of Adjusted EBITDA to operating income:
|
|
2013
|
|
2014
|
|
change
|
|
2013
|
|
2014
|
|
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Systems segment
|
|
$
|
191
|
|
|
$
|
184
|
|
|
|
|
|
|
|
$
|
493
|
|
|
$
|
477
|
|
|
|
|
|
Public Sector & Education segment
|
|
|
16
|
|
|
|
17
|
|
|
|
|
|
|
|
|
48
|
|
|
|
50
|
|
|
|
|
|
Corporate
|
|
|
(12
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
(36
|
)
|
|
|
(35
|
)
|
|
|
|
|
Total Adjusted EBITDA
|
|
|
195
|
|
|
|
188
|
|
|
|
|
|
|
|
|
505
|
|
|
|
492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(24
|
)
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
(73
|
)
|
|
|
(79
|
)
|
|
|
|
|
Amortization of acquisition-related intangible assets
|
|
|
(43
|
)
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
(138
|
)
|
|
|
(114
|
)
|
|
|
|
|
Trade name impairment charge
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(339
|
)
|
|
|
|
|
Restructuring charges
|
|
|
(6
|
)
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
(24
|
)
|
|
|
|
|
Stock compensation expense
|
|
|
(10
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
(30
|
)
|
|
|
(33
|
)
|
|
|
|
|
Management fees
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|
|
|
Other costs
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
(14
|
)
|
|
|
|
|
Total operating income (loss)
|
|
$
|
107
|
|
|
$
|
95
|
|
|
(11
|
)
|
|
%
|
|
|
$
|
241
|
|
|
$
|
(117
|
)
|
|
(149
|
)
|
|
%
|
Operating income margin
|
|
|
15.8
|
%
|
|
|
13.7
|
%
|
|
(2.1
|
)
|
|
pts
|
|
|
12.1
|
%
|
|
|
(5.8
|
%)
|
|
(17.9
|
)
|
|
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SunGard Data Systems Inc.
|
Notes to Consolidated Condensed Financial Information (Unaudited)
|
|
Note 2. Reconciliation of Income (Loss) from Continuing
Operations to EBITDA and Reconciliation of EBITDA to Adjusted EBITDA
Per Senior Secured Credit Agreement
|
|
EBITDA represents income (loss) from continuing operations before
interest expense, income taxes and depreciation and amortization.
Adjusted EBITDA per our Senior Secured Credit Agreement is defined
as EBITDA further adjusted to give effect to certain items that are
required in calculating covenant compliance under our senior secured
credit facilities, as amended, our senior notes and senior
subordinated notes. Adjusted EBITDA per our Senior Secured Credit
Agreement is calculated by subtracting from or adding to EBITDA
items of income or expense described below. EBITDA and Adjusted
EBITDA per our Senior Secured Credit Agreement are not recognized
terms under generally accepted accounting principles (GAAP). EBITDA
and Adjusted EBITDA per our Senior Secured Credit Agreement do not
represent income (loss) from continuing operations, as that term is
defined under GAAP, and should not be considered as an alternative
to income (loss) from continuing operations as an indicator of our
operating performance. Additionally, EBITDA and Adjusted EBITDA per
our Senior Secured Credit Agreement 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 per our Senior Secured Credit Agreement to be key
indicators of our ability to pay our debt. EBITDA and Adjusted
EBITDA per our Senior Secured Credit Agreement as presented herein
are not necessarily comparable to similarly titled measures. The
following is a reconciliation of EBITDA and Adjusted EBITDA per our
Senior Secured Credit Agreement to income (loss) from continuing
operations, the GAAP measure we believe to be most directly
comparable to EBITDA and Adjusted EBITDA per our Senior Secured
Credit Agreement. Further information regarding this reconciliation
is included in our periodic filings with the U.S. Securities and
Exchange Commission.
|
|
For clarity, we have re-labeled certain adjustments below for
consistency with Note 1. Management fees and Other costs, each of
which had formerly been included with restructuring charges, are now
presented separately.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last Twelve
|
|
|
Three Months Ended Sep. 30,
|
|
Months Ended
|
(in millions)
|
|
2013
|
|
2014
|
|
Sep. 30, 2014
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
678
|
|
|
$
|
691
|
|
|
$
|
2,789
|
|
Income (loss) from continuing operations
|
|
$
|
22
|
|
|
$
|
11
|
|
|
$
|
(255
|
)
|
Interest expense, net
|
|
|
77
|
|
|
|
73
|
|
|
|
298
|
|
Benefit from (provision for) income taxes
|
|
|
7
|
|
|
|
11
|
|
|
|
(57
|
)
|
Depreciation
|
|
|
24
|
|
|
|
28
|
|
|
|
110
|
|
Amortization of acquisition-related intangible assets
|
|
|
43
|
|
|
|
30
|
|
|
|
158
|
|
EBITDA
|
|
|
173
|
|
|
|
153
|
|
|
|
254
|
|
Trade name impairment charge
|
|
|
-
|
|
|
|
-
|
|
|
|
339
|
|
Purchase accounting adjustments
|
|
|
1
|
|
|
|
-
|
|
|
|
2
|
|
Stock compensation expense
|
|
|
10
|
|
|
|
13
|
|
|
|
42
|
|
Restructuring charges
|
|
|
6
|
|
|
|
17
|
|
|
|
32
|
|
Management fees
|
|
|
2
|
|
|
|
3
|
|
|
|
8
|
|
Other costs
|
|
|
2
|
|
|
|
1
|
|
|
|
11
|
|
Loss on extinguishment of debt
|
|
|
1
|
|
|
|
-
|
|
|
|
61
|
|
Adjusted EBITDA - per Senior Secured Credit Agreement *
|
|
$
|
195
|
|
|
$
|
187
|
|
|
$
|
749
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
28.8
|
%
|
|
|
27.0
|
%
|
|
|
26.8
|
%
|
Year to Year Margin change
|
|
|
|
(1.8 points)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended Sep. 30,
|
|
(in millions)
|
|
2013
|
|
2014
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
1,989
|
|
|
$
|
2,017
|
|
|
|
Loss from continuing operations
|
|
$
|
(8
|
)
|
|
$
|
(309
|
)
|
|
|
Interest expense, net
|
|
|
246
|
|
|
|
219
|
|
|
|
Benefit from income taxes
|
|
|
(5
|
)
|
|
|
(88
|
)
|
|
|
Depreciation
|
|
|
73
|
|
|
|
79
|
|
|
|
Amortization of acquisition-related intangible assets
|
|
|
138
|
|
|
|
114
|
|
|
|
EBITDA
|
|
|
444
|
|
|
|
15
|
|
|
|
Trade name impairment charge
|
|
|
-
|
|
|
|
339
|
|
|
|
Purchase accounting adjustments
|
|
|
5
|
|
|
|
1
|
|
|
|
Stock compensation expense
|
|
|
30
|
|
|
|
33
|
|
|
|
Restructuring charges
|
|
|
9
|
|
|
|
24
|
|
|
|
Management fees
|
|
|
5
|
|
|
|
6
|
|
|
|
Other costs
|
|
|
4
|
|
|
|
11
|
|
|
|
Loss on extinguishment of debt
|
|
|
6
|
|
|
|
61
|
|
|
|
Adjusted EBITDA - per Senior Secured Credit Agreement *
|
|
$
|
503
|
|
|
$
|
490
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
25.3
|
%
|
|
|
24.3
|
%
|
|
|
Year to Year Margin change
|
|
|
|
(1.0 points)
|
|
|
* Also applies to Senior Notes due 2018 and 2020 and Senior
Subordinated Notes due 2019
|
|
|
SunGard Data Systems Inc.
|
Notes to Consolidated Condensed Financial Information (Unaudited)
|
|
|
Note 3. Supplemental Information
|
|
|
|
The debt and cash data included below (in millions) is presented to
provide clarity related to SunGard's debt structure and changes in
both the components of debt and cash from March 31, 2014
(immediately after the Availability Services (AS) split-off) to
September 30, 2014 related to the activity in the six month period
from March 31, 2014 to September 30, 2014. The components of debt
and cash at December 31, 2013 reflect the balances before the
split-off of AS. Other debt as of December 31, 2013 included $8
million of debt related to AS which was primarily capital lease
obligations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31, 2013
|
|
Mar. 31, 2014
|
|
Sep. 30, 2014
|
|
Change from Mar.31 to Sep. 30
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
706
|
|
|
$
|
355
|
|
|
$
|
396
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit Facilities:
|
|
|
|
|
|
|
|
|
Secured revolving credit facility
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Tranche A
|
|
|
7
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Tranche C
|
|
|
427
|
|
|
|
400
|
|
|
|
400
|
|
|
|
-
|
|
Tranche D
|
|
|
713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Tranche E
|
|
|
2,183
|
|
|
|
1,918
|
|
|
|
1,918
|
|
|
|
-
|
|
Total Senior Secured Credit Facilities
|
|
|
3,330
|
|
|
|
2,318
|
|
|
|
2,318
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Notes due 2014 at 4.875%
|
|
|
250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Senior Notes due 2018 at 7.375%
|
|
|
900
|
|
|
|
511
|
|
|
|
511
|
|
|
|
-
|
|
Senior Notes due 2020 at 7.625%
|
|
|
700
|
|
|
|
700
|
|
|
|
700
|
|
|
|
-
|
|
Senior Subordinated Notes due 2019 at 6.625%
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
-
|
|
Secured accounts receivable facility
|
|
|
200
|
|
|
|
140
|
|
|
|
140
|
|
|
|
-
|
|
Other, primarily foreign bank debt and capital lease obligations
|
|
|
12
|
|
|
|
2
|
|
|
|
2
|
|
|
|
-
|
|
Total debt
|
|
$
|
6,392
|
|
|
$
|
4,671
|
|
|
$
|
4,671
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Debt (Total debt less cash)
|
|
$
|
5,686
|
|
|
$
|
4,316
|
|
|
$
|
4,275
|
|
|
$
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
Leverage Metric per Credit Agreement
|
|
4.56x
|
|
5.42x
|
|
5.59x
|
|
0.17x
|
Weighted Average Interest Rate
|
|
|
5.42
|
%
|
|
|
5.63
|
%
|
|
|
5.61
|
%
|
|
-0.02 points
|
Percent Fixed Rate (swap adjusted)
|
|
|
54
|
%
|
|
|
67
|
%
|
|
|
67
|
%
|
|
0 points
|
Percent Bonds of Total Debt
|
|
|
45
|
%
|
|
|
47
|
%
|
|
|
47
|
%
|
|
0 points
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The contractual future maturities of debt are as follows (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Dec. 31, 2013
|
|
Mar. 31, 2014
|
|
Sep. 30, 2014
|
|
Change from Mar.31 to Sep. 30
|
|
|
|
|
|
|
|
|
|
2014
|
|
$
|
293
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
2015
|
|
|
31
|
|
|
|
2
|
|
|
|
2
|
|
|
|
-
|
|
2016
|
|
|
31
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2017
|
|
|
656
|
|
|
|
540
|
|
|
|
400
|
|
|
|
(140
|
)
|
2018
|
|
|
929
|
|
|
|
511
|
|
|
|
511
|
|
|
|
-
|
|
Thereafter
|
|
|
4,452
|
|
|
|
3,618
|
|
|
|
3,758
|
|
|
|
140
|
|
Total debt
|
|
$
|
6,392
|
|
|
$
|
4,671
|
|
|
$
|
4,671
|
|
|
$
|
-
|
|
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