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SunGard posts fourth quarter results

07 February 2013  |  1608 views  |  0 Source: SunGard

SunGard, one of the world's leading software and technology services companies, today reported results for the fourth quarter and full-year ended December 31, 2012.

For the fourth quarter, revenue was $1.13 billion, down 2% year over year. Currency had no material impact on fourth quarter revenue growth. Operating income was $196 million in the quarter, up 33% year over year, driven by a 7% decline in total costs and expenses, and operating margin was 17.3% for the quarter. Adjusted operating income was $321 million, up 3% year over year, and adjusted operating margin was 28.4%, up 1.4 points year over year.

Adjusted EBITDA was $406 million, up 3% year over year, and adjusted EBITDA margin was 35.9%, up 1.7 points year over year. Adjusted EBITDA and adjusted operating income are non-GAAP measures and are defined in Notes 1 and 2 in the Notes attached to this release.

For the full-year 2012, revenue was $4.26 billion, down 4% year over year (down 3% adjusting for currency). Excluding one of our Financial Systems businesses, a broker/dealer, revenue decreased 3% (down 2% adjusting for currency). Operating income was $74 million, which included a non-cash goodwill impairment charge of $385 million, compared to operating income of $337 million in 2011, which included a non-cash goodwill impairment charge of $48 million. Operating margin was 1.7%. Adjusted operating income was $911 million, up 1% year over year, and adjusted operating margin was 21.4%, up 1 point year over year. Adjusted EBITDA was $1,245 million, up 1% year over year, and adjusted EBITDA margin was 29.2%, up 1.5 points year over year.

Russ Fradin, president and chief executive officer, commented, "I'm pleased with our fourth quarter results, which capped a good performance in a challenging environment. In the quarter, license fees remained strong, while weakness in professional services revenue caused a small decline in total revenue. I'm encouraged by our improved margins, and I'm proud of the way our team finished the year. As a result of our continued focus on operating cost management, both profit and cash flow improved, even as we increased key investments in the business. These initiatives will help drive our long-term growth and enable us to add greater value to our clients."

Financial Systems revenue was $726 million in the fourth quarter, down 2% year over year (down 1% adjusting for currency). License fees were $93 million, an increase of $10 million, or 11%, compared to the fourth quarter of 2011.

For the full year, Financial Systems revenue was $2.65 billion, down 4% year over year (down 3% adjusting for currency). Excluding a broker/dealer business and adjusting for currency, revenue declined 1%. License fees were $229 million, a decrease of $11 million, or 5%, compared to last year (down 2% adjusting for currency).

During December, we acquired XcitekSolutionsPlus, LLC (XSP), a leading provider of end-to-end, automated corporate actions solutions. XSP offers a range of deployed, hosted and SaaS-based solutions that help automate the corporate actions processing lifecycle, including data sourcing and cleansing, position monitoring, notification and response and entitlement processing. XSP became a part of SunGard's Financial Systems segment and will help us deliver specialist corporate actions expertise and solutions to our customers.

Notable deals in the quarter included the following:
• One of the world's top 20 global banks renewed and expanded its relationship with SunGard and selected SunGard's InvestOne, Investar, Investran and Investier asset management solutions, including private network hosting, private equity administration and expansion of business on existing platforms.
• One of the world's largest asset managers selected SunGard to provide a global fund accounting platform.
• One of Europe's largest international banks has renewed SunGard's Stream Derivatives solution suite to support its global exchange-traded derivatives post-trade processing operations.
• One of America's largest banks renewed SunGard's Apex product to support their repurchase trading and position management worldwide.
• A leading Japanese investment bank selected SunGard's Adaptiv Riskbox solution to help improve and enhance its global market risk infrastructure and capabilities.
• A major Australian bank selected SunGard's Ambit Asset Finance platform to help unify its leasing operations and support the development of its domestic and regional asset finance businesses.
• A leading Medicaid managed care provider selected SunGard's iWORKS healthcare to provide insurance-related professional services and managed services.
• A global financial services company selected SunGard's AvantGard Treasury as a hosted solution to help consolidate and globalize its treasury operations.

Availability Services revenue was $353 million in the fourth quarter, down 4% year over year (down 4% as well adjusting for currency). For the full year, revenue was $1.40 billion, down 4% year over year (down 3% adjusting for currency).

Notable deals in the quarter included the following:
• A FTSE 100 international services company selected SunGard to help run its global IT operations, including cloud services, managed hosting and systems integration. SunGard was chosen based on our ability to manage complex global IT infrastructures and bring additional technology capabilities to our customer's clients.
• A global Fortune 500 leader in labeling technology and materials management selected SunGard to provide advanced recovery services, including SAN replication, virtual tape library replication and recovery through our Managed Recovery Program.

All Other revenue, comprised of our Public Sector and K-12 Education businesses, was $52 million in the fourth quarter, up 6% year over year. For the full year, other revenue was $204 million, flat year over year.

Notable deals in the quarter included the following:
• A county in Minnesota selected SunGard's ONESolution public administration solution for finance and human resources.
• A city in Iowa selected SunGard's ONESolution public safety solution to provide computer-aided dispatch, records management, mobile computing and jails management.
Financial Position

For the full-year 2012, the continuing operations of the Company generated $645 million in cash flow from operations, and the Company invested $260 million in capital expenditures and spent $40 million on two acquisitions net of acquired cash. At December 31, 2012, total debt was $6.7 billion, a decline of $1.2 billion from year end 2011, and cash was $546 million. The Company's leverage ratio as defined in its senior secured credit agreement was 4.75x, the lowest year-end leverage ratio since the Company was taken private in 2005, down from 4.96x at the end of 2011.

During the quarter, the Company successfully issued $1 billion of new 6.625% Senior Subordinated Notes due 2019, the proceeds of which were used to repurchase or redeem all of its existing 10.25% Senior Subordinated Notes due 2015. The Company also successfully issued $720 million of new term loans maturing in 2020 under its senior secured credit agreement and used the proceeds to pay a dividend of $724 million. In addition, the Company utilized available cash to prepay $217 million of debt and pay almost $70 million in taxes, a majority of which related to the sale of its Higher Education business. 

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