SunGard
Our Business Our Strategic Focus www.sungard.com
Safe Harbor
Statements about the expected future prospects of our software and processing businesses and our availability services business as two independent companies if the planned spin-off is completed, statements about the expected effects, timing and completion of the planned spin-off, statements about our outlook for earnings per share in 2004, statements about our outlook for internal revenue growth in 2004 and 2005, and all other 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: general economic and market conditions, including the lingering effects of the economic slowdown on information technology spending levels, trading volumes and services revenue, and including the fact that the economic slowdown has left many companies with excess data center capacity that provides them with the capability for in-house high-availability solutions; the overall condition of the financial services industry, including the effect of any further consolidation among financial services firms; the regulatory, credit and market risks associated with our clearing broker operations; the integration of acquired businesses, the performance of acquired businesses including Systems & Computer Technology Corporation, and the prospects for future acquisitions; the effect of war, terrorism or catastrophic events; the timing and magnitude of software sales; the timing and scope of technological advances; the ability to retain and attract customers and key personnel; 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 planned spin-off may be delayed or may not be completed due to a number of factors, including the board of directors’ discretion to delay or cancel the spin-off or the failure to obtain a favorable ruling from the Internal Revenue Service or an acceptable tax opinion. The factors described in this paragraph and other factors that may affect our business or future financial results and our ability to complete a spin-off, as
and when applicable, are discussed in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2003, 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.
www.sungard.com
Today SunGard is …
2003 $3 billion
Revenue
IT Systems for Investment Support:
Develop systems that process $15 trillion in financial assets, 5 million transactions/day for 16,000 customers.
Application Service Provider for Processing:
Run our systems with operational resilience and economies of scale.
ASP
Treasury & Risk Management
Wealth Management
Brokerage & Trading
Finance Sector
Business Continuity Services
Industrial Sector
Consulting
Services Sector
Higher Ed & Public Sector
Benefit, Insurance & Investor Acctg
Investment Management
STN
ASP
Production Services
SGN
ASP
Infrastructure for
Availability Services:
Operate 60+ recovery facilities spanning 3 million sq.ft. 25,000 miles of managed networks supporting 10,000 customers.
STN
Transaction Network for
STP (Straight-Through Processing)
Connect our buy-side and sell-side systems to help our customers efficiently trade and settle trades with each other.
www.sungard.com
SunGard Total Revenue Growth
(in $M, as initially reported)
2003 $2.96 billion
+20%
5-year Compound Annual Growth Rate
1986 $69 million
1986 1990 1995 2000 2003 $3 billion $2 billion $1 billion
Please review SunGard financial reports posted at www.sungard.com/investors.
www.sungard.com
Why a Separation of Businesses
1983: SunGard created when Sun Oil sold its disaster recovery business and several investment support systems businesses
neither business had the size or scope to stand alone
Software & Processing: broad range of integrated software and processing solutions primarily for financial services and higher education
Availability Services: comprehensive continuum of information availability services to IT-dependent enterprises of all types
Businesses thrived but remained quite discrete with:
separate sales forces
different types of customers
distinct strategies
limited operating overlap
www.sungard.com
Separation of Businesses
Size and Scope of Each
industry leadership
global operations
deep customer relationships
experienced operating management teams
financially strong
Facilitate Growth
better able to support respective customer bases
greater agility for industry change
advance growth strategies for respective business segments
distinct drivers, dynamics and opportunities
Independence to explore and expand strategic alliances
Enhance Value
enable separate investment decisions for each business
allow equity markets to value each business on its own merits
more closely align each company’s management with its stockholders
for performance, risk and reward
www.sungard.com
Software & Processing
Pursue growth opportunities and strategic alliances in its core financial services and higher education markets
Focus more aggressively on deepening customer relationships and on product development and integration
Be a more agile and proactive company, enabling it to better support customers as they address transformations in their own industry sectors
Settlement
BANK
Execution
EXCHANGE
Custody
CUSTODIAN
Integrated straight-through processing across institutions
Order Mgt
BROKER
Accounting
TRUSTEE
Portfolio Management
INVESTOR
www.sungard.com
Software & Processing Financial Results
(in $M, as initially reported)
Full-Year 2003 YoY Chg YTD 2004 YoY Chg
Revenue $ 1,785 16% $ 1,149 38%
License fees $ 165 11% $ 90 30%
Operating Income* $ 324 -5% $ 177 16%
Dep. & Amort. $ 131 30% $ 84 42%
Operating margin 18% -18% 15% -16%
Capex** $ 31 -6% $ 18 4%
*Excludes corporate expenses and merger costs. **Capex represents cash paid for property and equipment.
Please review SunGard financial reports posted at www.sungard.com/investors.
www.sungard.com
Securities Market Transformation
Pain-point Shift
Old cost: $X per trade
10% Buyer
20% Link 40%
Market 20%
Link 10% Seller
New cost: $0.2X per trade
30% Buyer
15% Link
10% Market
15% Link 30%
Seller
Straight-through Processing within and across institutions
Integrate solutions to reduce customers’ costs & improve their competitiveness Connect solutions to help customers trade & settle trades more efficiently www.sungard.com
Opportunity to Reduce Customer Costs
Data Distributor Market Data Distribution System
Institutional Investor
Self-Clearing Broker
Non-Clearing Retail Broker
Retail investor
Portfolio Management System Trading Market-Making System Trading Market-Making System Performance Attribution System Trade Order Management System Trade Order Management System Exchange
Trade Order Management System
Web Server
Processing / Accounting System Processing / Accounting System Processing / Accounting System Account Management system Netting System Global Custody System Local Custody System
Central Depositary System
Processing System Global Custodian Local Custodian Clearer Settlement System Banking / Payment System Bank Banking / Payment System
Central Payment/ Netting System
Banking / Payment System Bank Bank www.sungard.com
Higher Education & Public Sector
Specialization & Rich Functionality
Specialized within verticals Focused on unique needs and demands of higher education and public sector
Better, Cheaper, Faster
Substantial advantages vs. generic ERPs Superior fit, cost and execution
Scale
Leader in the higher ed space in U.S.
www.sungard.com
Higher Education & Public Sector
Growing breadth of our ERP solutions: accounting, human resources management, payroll utility billing, land management, student administration STN fundraising, and grant project management
Colleges, universities, school districts, local governments:
Over 1,500 Colleges and Universities
Over 15% of school districts with more than 2,500 students Over 2,500 Local Governments www.sungard.com
Availability Services
Expertise and Focus
Leader in US and major European countries Complete portfolio of services including managed hosting, storage, information security, planning, consulting and disaster recovery Help engineer solutions that are secure, reliable and compliant
Scale
Able to handle complex IT requirements
Leveraging 3 million sq ft of hardened facilities and global network Address customers’ mission critical applications and less time-sensitive requirements in a cost-effective manner
Independence
Hardware and software neutral
Focus on managing our significant infrastructure, aggressively implementing cutting-edge technology Pursue strategic alliances to expand services to better serve our diverse customer base www.sungard.com
Availability Services Financial Results
(in $M, as initially reported)
Full-Year YoY YTD YoY
2003 Chg 2004 Chg
Revenue $ 1,171 11% $ 591 2%
Operating Income* $ 340 32% $ 173 17%
Dep. & Amort. $ 179 8% $ 81 -11%
Operating margin 29% 18% 29% 15%
Capex** $ 147 73% $ 79 6%
*Excludes corporate expenses and merger costs. **Capex represents cash paid for property and equipment.
Please review SunGard financial reports posted at www.sungard.com/investors.
www.sungard.com
Availability Services Continuum
High
Complexity
Low
Professional Services
Systems Management
Managed Storage
Records Management
Monitoring Services
Business Continuity
Network
Hot Site
Mobile
Planning Software Information Availability
Managed Services
Minutes Hours Days Weeks
Low
High
Downtime
High Availability
Dedicated Solution Higher revenue per deal Lower margin
Disaster Recovery
Shared (pooled risk) model Lower revenue per deal Higher margin www.sungard.com
Availability Services
Broad Vertical Base
Wholesale and Retail Trade 9%
All Others 9%
Manufacturing 19%
Finance, Insurance, and Real Estate 33%
Services 30%
Customer Base by Industry www.sungard.com
Recap
Size and Scope
Industry Leadership Global Presence
Deep Customer Relationships Financial Strength
Growth
Advance Growth strategies for respective business segments Greater Agility for industry change Internal Revenue Growth:
2H 2004: modest improvement FY 2005: low to mid single digits
Value
Separate investment decisions for each business Equity markets to value each on its own merits Closer alignment between management and stockholder interests www.sungard.com
SunGard www.sungard.com