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SunGard posts Q3 results

06 November 2008  |  508 views  |  0 Source: SunGard

SunGard, one of the world's leading software and IT services companies, reported today that revenue for the three months ended September 30, 2008 was $1.39 billion, an increase of 14% compared to the same period in 2007.

Organic revenue (revenue from businesses owned for at least one year, and excluding revenue from businesses sold in the previous twelve months) grew 11% compared to the same period in 2007, including an approximately 9% increase attributable to one of our broker/dealer businesses. Adjusting for this item, organic revenue growth in the quarter was 2%. The broker/dealer revenue has remained uncharacteristically high and is a function of market volatility and customer mix. We expect this revenue to decline at some point but are unable to predict the timing.

Adjusted income from operations (defined in Note 1 to the Notes to the Consolidated Condensed Financial Information) for the three months ended September 30, 2008 was $290 million, compared to $291 million in the same period in 2007.

Reported income from operations for the three months ended September 30, 2008 was $136 million, a 17% decrease compared to the same period in 2007. Reported income from operations in the three months ended September 30, 2008 and 2007 includes amortization of acquired intangible assets of $131 million and $110 million, respectively, and stock-based compensation, purchase accounting adjustments, merger costs and other expenses of $23 million and $17 million, respectively.

Adjusted EBITDA (defined in Note 2 to the Notes to the Consolidated Condensed Financial Information) was $371 million for the three months ended September 30, 2008, an increase of 4% compared to the same period in 2007.

Cristóbal Conde, president and chief executive officer, commented, "SunGard's performance in the quarter was solid, despite the challenging operating environment. As anticipated, the economic crisis is impacting our results and pipelines across all of our business segments. However, we entered the crisis in a position of strength: our revenue is highly diversified and largely recurring; our customers view us as a strategic partner; and we have a strong lhave a strong liquidity position. The lessons learned from previous economic crises apply to this one. We intend to stick to our disciplined approach to decision-making based on hard data and a long-term view of the business. The crisis is a significant opportunity for us to outpace our competitors, and we are confident that SunGard will come out of it stronger and even more competitive."

Revenue for the first nine months of 2008 increased 15% over the same period in 2007 to $4.05 billion. Adjusted income from operations for the nine months ended September 30, 2008 was $832 million compared to $783 million last year. Reported income from operations for the nine months ended September 30, 2008 was $405 million and includes amortization of acquired intangible assets of $361 million and stock-based compensation, purchase accounting adjustments and other expenses of $66 million. In the first nine months of 2007, reported income from operations was $412 million and includes amortization of acquired intangible assets of $319 million, stock-based compensation, purchase accounting adjustments and other expenses of $52 million.

Financial Systems revenue increased 24% to $774 million for the quarter. Organic revenue grew approximately 22%, including an approximately 18% increase attributable to one of our broker/dealer businesses, which exceeded our expectations for the quarter and is not expected to continue. License fees were $35 million for the quarter, a decrease of $8 million compared to the same period in 2007.

Notable deals in the quarter included the following:

  • A large U.S.-based clearing firm extended its agreement for SunGard's Phase3 securities processing solution.
  • One of the world's largest third party fund administrators extended its agreement for SunGard's Asset Arena investment accounting solution.
  • One of Europe's largest utilities selected SunGard Energy Solutions to help it streamline its operations.

For the third year in a row SunGard was ranked in the top spot in the RiskTech 100 published by Chartis Research.

Higher Education revenue decreased 2%, all of which was organic, to $128 million for the quarter. License fees were $7 million for the quarter, a decrease of $3 million from the same quarter of 2007.

Notable deals in the quarter included the following:

  • A large state research institution in Tennessee extended its relationship with SunGard Higher Education and selected a full range of Banner Unified Digital Campus solutions and supporting services.
  • A private law school in New York renewed its relationship with SunGard Higher Education for continued support in managing its information technology.
  • A vocational training institute in Abu Dhabi selected a full range of Banner Unified Digital Campus solutions.

SunGard Higher Education's Banner Unified Digital Campus was placed in the Leaders quadrant of the "Magic Quadrant for Higher Education Administrative Suites, 2008."

Public Sector revenue decreased 6% to $94 million for the quarter, all of which was organic, with three percent attributable to changes in currency exchange rates. License fees were $5 million for the quarter a decrease of $2 million from the same quarter of 2007.

Notable deals in the quarter included the following:

  • A national public safety improvement organization in the U.K. selected SunGard Public Sector to provide a case and custody tracking solution.
  • A statewide public safety agency in the U.S. selected SunGard Public Sector to provide dispatch and mobile computing solutions.
  • A K-12 school district in Missouri selected SunGard Public Sector's financial and administrative software.

Availability Services revenue increased 8% to $398 million for the quarter. Organic revenue grew 3%. License fees associated with the Company's acquisition of Strohl Systems were $4 million.

Notable deals in the quarter included the following:

  • A leading provider of asset and property management software solutions chose SunGard for managed services.
  • A global brokerage services firm chose SunGard as its managed services provider.
  • A technology leader in the life sciences industry selected SunGard for recovery services.

Financial Position

At September 30, 2008, total debt was $8.769 billion, cash balances were $1.588 billion and off-balance sheet debt was $448 million. During the nine months ended September 30, 2008, the Company invested $280 million in capital expenditures and $174 million (net of cash acquired) in four acquisitions. On October 1, 2008, SunGard used $390 million to acquire 64.51% of GL TRADE SA, a global financial software solutions company, and continues to acquire additional shares through a tender offer in France.

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