424(b)(3)
Table of Contents

FILED PURSUANT TO RULE 424(B)(3)
File Number 333-158657
SUNGARD DATA SYSTEMS INC.
SUPPLEMENT NO. 6 TO
MARKET-MAKING PROSPECTUS DATED OCTOBER 20, 2009

THE DATE OF THIS SUPPLEMENT IS MAY 17, 2010

ON MAY 17, 2010, SUNGARD DATA SYSTEMS INC. FILED THE ATTACHED
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

 

 


Table of Contents

 
 
United States
Securities and Exchange Commission
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
   
þ   Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2010
OR
     
o   Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission file numbers:
     
SunGard Capital Corp.
  000-53653
SunGard Capital Corp. II
  000-53654
SunGard Data Systems Inc.
  001-12989
 
SunGard® Capital Corp.
SunGard® Capital Corp. II
SunGard® Data Systems Inc.
(Exact name of registrant as specified in its charter)
 
     
Delaware   20-3059890
Delaware   20-3060101
Delaware   51-0267091
(State or other jurisdiction of   (IRS Employer
incorporation or organization)   Identification No.)
680 East Swedesford Road, Wayne, Pennsylvania 19087
(Address of principal executive offices, including zip code)
484-582-2000
(Registrants’ telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
     
SunGard Capital Corp.
  Yes þ No o
SunGard Capital Corp. II
  Yes þ No o
SunGard Data Systems Inc.
  Yes o No þ
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
     
SunGard Capital Corp.
  Yes o No o
SunGard Capital Corp. II
  Yes o No o
SunGard Data Systems Inc.
  Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
SunGard Capital Corp.
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer þ   Smaller reporting company o
SunGard Capital Corp. II
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer þ   Smaller reporting company o
SunGard Data Systems Inc.
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer þ   Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
     
SunGard Capital Corp.
  Yes o No þ
SunGard Capital Corp. II
  Yes o No þ
SunGard Data Systems Inc.
  Yes o No þ
The number of shares of the registrants’ common stock outstanding as of March 31, 2010:
     
SunGard Capital Corp.
  255,447,411 shares of Class A common stock and 28,382,978 shares of Class L common stock
SunGard Capital Corp. II
  100 shares of common stock
SunGard Data Systems Inc.
  100 shares of common stock
 
 

 


 

SunGard Capital Corp.
SunGard Capital Corp. II
SunGard Data Systems Inc.
And Subsidiaries
Index
         
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Table of Contents

Part I. FINANCIAL INFORMATION
Explanatory Note
This Form 10-Q is a combined quarterly report being filed separately by three registrants: SunGard Capital Corp. (“SCC”), SunGard Capital Corp. II (“SCCII”) and SunGard Data Systems Inc. (“SunGard”). SCC and SCC II are collectively referred to as the “Parent Companies”. Unless the context indicates otherwise, any reference in this report to the “Company,” “we,” “us” and “our” refer to the Parent Companies together with their direct and indirect subsidiaries, including SunGard. Each registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.

 

1


Table of Contents

Item 1. Financial Statements
SunGard Capital Corp.
Consolidated Balance Sheets
(In millions except share and per-share amounts)
(Unaudited)
                 
    December 31,     March 31,  
    2009     2010  
 
               
Assets
               
Current:
               
Cash and cash equivalents
  $ 664     $ 637  
Trade receivables, less allowance for doubtful accounts of $49 and $58
    955       809  
Earned but unbilled receivables
    181       192  
Prepaid expenses and other current assets
    189       161  
Clearing broker assets
    332       275  
Deferred income taxes
    22       22  
 
           
Total current assets
    2,343       2,096  
 
               
Property and equipment, less accumulated depreciation of $936 and $977
    925       903  
Software products, less accumulated amortization of $1,091 and $1,120
    1,020       965  
Customer base, less accumulated amortization of $954 and $996
    2,294       2,225  
Other tangible and intangible assets, less accumulated amortization of $24 and $25
    195       185  
Trade name, less accumulated amortization of $10 and $10
    1,025       1,024  
Goodwill
    6,178       6,130  
 
           
Total Assets
  $ 13,980     $ 13,528  
 
           
 
               
Liabilities and Equity
               
Current:
               
Short-term and current portion of long-term debt
  $ 64     $ 56  
Accounts payable
    72       64  
Accrued compensation and benefits
    319       223  
Accrued interest expense
    146       91  
Other accrued expenses
    412       371  
Clearing broker liabilities
    294       238  
Deferred revenue
    1,040       1,018  
 
           
Total current liabilities
    2,347       2,061  
 
Long-term debt
    8,251       8,224  
Deferred income taxes
    1,318       1,285  
 
           
Total liabilities
    11,916       11,570  
 
           
 
Commitments and contingencies
               
 
Noncontrolling interest in preferred stock of SCCII subject to a put option
    51       58  
Class L common stock subject to a put option
    88       90  
Class A common stock subject to a put option
    11       11  
 
Stockholders’ equity:
               
Class L common stock, convertible, par value $.001 per share; cumulative 13.5% per annum, compounded quarterly; aggregate liquidation preference of $4,151 million and $4,294 million; 50,000,000 shares authorized, 28,613,930 and 28,631,392 shares issued
           
Class A common stock, par value $.001 per share; 550,000,000 shares authorized, 257,529,758 and 257,686,960 shares issued
           
Capital in excess of par value
    2,678       2,682  
Treasury stock, 248,414 shares of Class L common stock; and 2,239,549 shares of Class A common stock
    (27 )     (27 )
Accumulated deficit
    (2,209 )     (2,310 )
Accumulated other comprehensive income
    (121 )     (180 )
 
           
Total SunGard Capital Corp. stockholders’ equity
    321       165  
Noncontrolling interest in preferred stock of SCCII
    1,593       1,634  
 
           
Total equity
    1,914       1,799  
 
           
Total Liabilities and Equity
  $ 13,980     $ 13,528  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

2


Table of Contents

SunGard Capital Corp.
Consolidated Statements of Operations
(In millions)
(Unaudited)
                 
    Three months ended March 31,  
    2009     2010  
Revenue:
               
Services
  $ 1,247     $ 1,137  
License and resale fees
    64       84  
 
           
Total products and services
    1,311       1,221  
Reimbursed expenses
    24       28  
 
           
 
    1,335       1,249  
 
           
 
               
Costs and expenses:
               
Cost of sales and direct operating
    686       604  
Sales, marketing and administration
    269       275  
Product development
    87       96  
Depreciation and amortization
    69       75  
Amortization of acquisition-related intangible assets
    124       123  
Merger costs
          2  
 
           
 
    1,235       1,175  
 
           
Income from operations
    100       74  
Interest income
    1        
Interest expense and amortization of deferred financing fees
    (151 )     (159 )
Other income
    7        
 
           
Loss before income taxes
    (43 )     (85 )
Benefit from income taxes
    9       31  
 
           
Net loss
    (34 )     (54 )
Income attributable to the noncontrolling interest (including $1 million and $6 million in temporary equity)
    (42 )     (47 )
 
           
Net loss attributable to SunGard Capital Corp.
  $ (76 )   $ (101 )
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

SunGard Capital Corp.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
                 
    Three months ended March 31,  
    2009     2010  
Cash flow from operations:
               
Net loss
  $ (34 )   $ (54 )
Reconciliation of net loss to cash flow from operations:
               
Depreciation and amortization
    193       198  
Deferred income tax benefit
    (26 )     (30 )
Stock compensation expense
    7       8  
Amortization of deferred financing costs and debt discount
    10       11  
Other noncash items
    (7 )     1  
Accounts receivable and other current assets
    (15 )     168  
Accounts payable and accrued expenses
    (171 )     (199 )
Clearing broker assets and liabilities, net
    (20 )     1  
Deferred revenue
    (9 )     (25 )
 
           
Cash flow provided by (used in) operations
    (72 )     79  
 
           
 
               
Investment activities:
               
Cash paid for acquired businesses, net of cash acquired
    (6 )     (13 )
Cash paid for property and equipment and software
    (79 )     (76 )
Other investing activities
    (5 )     8  
 
           
Cash used in investment activities
    (90 )     (81 )
 
           
 
               
Financing activities:
               
Cash received from issuance of common stock
          1  
Cash received from other borrowings, net of fees
    240       3  
Cash used to repay debt
    (555 )     (22 )
Other financing activities
    (1 )      
 
           
Cash used in financing activities
    (316 )     (18 )
 
           
 
               
Effect of exchange rate changes on cash
    (6 )     (7 )
 
           
 
               
Decrease in cash and cash equivalents
    (484 )     (27 )
Beginning cash and cash equivalents
    975       664  
 
           
Ending cash and cash equivalents
  $ 491     $ 637  
 
           
 
               
Supplemental information:
               
 
               
Acquired businesses:
               
Property and equipment
  $     $ 2  
Software products
    5       3  
Customer base
    2       10  
Goodwill
    2       2  
Other tangible and intangible assets
          3  
Deferred income taxes
          (2 )
Purchase price obligations and debt assumed
          (1 )
Net current liabilities assumed
    (3 )     (4 )
 
           
Cash paid for acquired businesses, net of cash acquired of $- and $1, respectively
  $ 6     $ 13  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

4


Table of Contents

SunGard Capital Corp. II
Consolidated Balance Sheets
(In millions except share and per-share amounts)
(Unaudited)
                 
    December 31,     March 31,  
    2009     2010  
 
               
Assets
               
Current:
               
Cash and cash equivalents
  $ 664     $ 637  
Trade receivables, less allowance for doubtful accounts of $49 and $58
    955       809  
Earned but unbilled receivables
    181       192  
Prepaid expenses and other current assets
    189       161  
Clearing broker assets
    332       275  
Deferred income taxes
    22       22  
 
           
Total current assets
    2,343       2,096  
 
               
Property and equipment, less accumulated depreciation of $936 and $977
    925       903  
Software products, less accumulated amortization of $1,091 and $1,120
    1,020       965  
Customer base, less accumulated amortization of $954 and $996
    2,294       2,225  
Other tangible and intangible assets, less accumulated amortization of $24 and $25
    195       185  
Trade name, less accumulated amortization of $10 and $10
    1,025       1,024  
Goodwill
    6,178       6,130  
 
           
Total Assets
  $ 13,980     $ 13,528  
 
           
 
               
Liabilities and Stockholders’ Equity
               
Current:
               
Short-term and current portion of long-term debt
  $ 64     $ 56  
Accounts payable
    72       64  
Accrued compensation and benefits
    319       223  
Accrued interest expense
    146       91  
Other accrued expenses
    412       371  
Clearing broker liabilities
    294       238  
Deferred revenue
    1,040       1,018  
 
           
Total current liabilities
    2,347       2,061  
 
Long-term debt
    8,251       8,224  
Deferred income taxes
    1,318       1,285  
 
           
Total liabilities
    11,916       11,570  
 
           
 
Commitments and contingencies
               
 
Preferred stock subject to a put option
    38       39  
 
               
Stockholders’ equity:
               
Preferred stock, par value $.001 per share; cumulative 11.5% per annum, compounded quarterly; aggregate liquidation preference of $1,627 million and $1,675 million; 14,999,000 shares authorized, 9,904,863 and 9,910,909 issued
           
Common stock, par value $.001 per share; 1,000 shares authorized, 100 shares issued and outstanding
           
Capital in excess of par value
    3,724       3,730  
Treasury stock, 86,008 shares
    (10 )     (10 )
Accumulated deficit
    (1,567 )     (1,621 )
Accumulated other comprehensive income
    (121 )     (180 )
 
           
Total stockholders’ equity
    2,026       1,919  
 
           
Total Liabilities and Stockholders’ Equity
  $ 13,980     $ 13,528  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

5


Table of Contents

SunGard Capital Corp. II
Consolidated Statements of Operations
(In millions)
(Unaudited)
                 
    Three months ended March 31,  
    2009     2010  
Revenue:
               
Services
  $ 1,247     $ 1,137  
License and resale fees
    64       84  
 
           
Total products and services
    1,311       1,221  
Reimbursed expenses
    24       28  
 
           
 
    1,335       1,249  
 
           
 
               
Costs and expenses:
               
Cost of sales and direct operating
    686       604  
Sales, marketing and administration
    269       275  
Product development
    87       96  
Depreciation and amortization
    69       75  
Amortization of acquisition-related intangible assets
    124       123  
Merger costs
          2  
 
           
 
    1,235       1,175  
 
           
Income from operations
    100       74  
Interest income
    1        
Interest expense and amortization of deferred financing fees
    (151 )     (159 )
Other income
    7        
 
           
Loss before income taxes
    (43 )     (85 )
Benefit from income taxes
    9       31  
 
           
Net loss
  $ (34 )   $ (54 )
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

6


Table of Contents

SunGard Capital Corp. II
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
                 
    Three months ended March 31,  
(in millions)   2009     2010  
Cash flow from operations:
               
Net loss
  $ (34 )   $ (54 )
Reconciliation of net loss to cash flow from operations:
               
Depreciation and amortization
    193       198  
Deferred income tax benefit
    (26 )     (30 )
Stock compensation expense
    7       8  
Amortization of deferred financing costs and debt discount
    10       11  
Other noncash items
    (7 )     1  
Accounts receivable and other current assets
    (15 )     168  
Accounts payable and accrued expenses
    (170 )     (198 )
Clearing broker assets and liabilities, net
    (20 )     1  
Deferred revenue
    (9 )     (25 )
 
           
Cash flow provided by (used in) operations
    (71 )     80  
 
           
 
               
Investment activities:
               
Cash paid for acquired businesses, net of cash acquired
    (6 )     (13 )
Cash paid for property and equipment and software
    (79 )     (76 )
Other investing activities
    (5 )     8  
 
           
Cash used in investment activities
    (90 )     (81 )
 
           
 
               
Financing activities:
               
Cash received from other borrowings, net of fees
    240       3  
Cash used to repay debt
    (555 )     (22 )
Other financing activities
    (2 )      
 
           
Cash used in financing activities
    (317 )     (19 )
 
           
 
               
Effect of exchange rate changes on cash
    (6 )     (7 )
 
           
 
               
Decrease in cash and cash equivalents
    (484 )     (27 )
Beginning cash and cash equivalents
    975       664  
 
           
Ending cash and cash equivalents
  $ 491     $ 637  
 
           
 
               
Supplemental information:
               
 
               
Acquired businesses:
               
Property and equipment
  $     $ 2  
Software products
    5       3  
Customer base
    2       10  
Goodwill
    2       2  
Other tangible and intangible assets
          3  
Deferred income taxes
          (2 )
Purchase price obligations and debt assumed
          (1 )
Net current liabilities assumed
    (3 )     (4 )
 
           
Cash paid for acquired businesses, net of cash acquired of $- and $1, respectively
  $ 6     $ 13  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

7


Table of Contents

SunGard Data Systems Inc.
Consolidated Balance Sheets
(In millions except share and per-share amounts)
(Unaudited)
                 
    December 31,     March 31,  
    2009     2010  
 
               
Assets
               
Current:
               
Cash and cash equivalents
  $ 664     $ 637  
Trade receivables, less allowance for doubtful accounts of $49 and $58
    955       809  
Earned but unbilled receivables
    181       192  
Prepaid expenses and other current assets
    189       161  
Clearing broker assets
    332       275  
Deferred income taxes
    22       22  
 
           
Total current assets
    2,343       2,096  
 
Property and equipment, less accumulated depreciation of $936 and $977
    925       903  
Software products, less accumulated amortization of $1,091 and $1,120
    1,020       965  
Customer base, less accumulated amortization of $954 and $996
    2,294       2,225  
Other tangible and intangible assets, less accumulated amortization of $24 and $25
    195       185  
Trade name, less accumulated amortization of $10 and $10
    1,025       1,024  
Goodwill
    6,178       6,130  
 
           
Total Assets
  $ 13,980     $ 13,528  
 
           
 
               
Liabilities and Stockholder’s Equity
               
Current:
               
Short-term and current portion of long-term debt
  $ 64     $ 56  
Accounts payable
    72       64  
Accrued compensation and benefits
    319       223  
Accrued interest expense
    146       91  
Other accrued expenses
    413       371  
Clearing broker liabilities
    294       238  
Deferred revenue
    1,040       1,018  
 
           
Total current liabilities
    2,348       2,061  
 
Long-term debt
    8,251       8,224  
Deferred income taxes
    1,314       1,281  
 
           
Total liabilities
    11,913       11,566  
 
           
 
Commitments and contingencies
               
 
Stockholder’s equity:
               
Common stock, par value $.01 per share; 100 shares authorized, issued and outstanding
           
Capital in excess of par value
    3,755       3,763  
Accumulated deficit
    (1,567 )     (1,621 )
Accumulated other comprehensive income
    (121 )     (180 )
 
           
Total stockholder’s equity
    2,067       1,962  
 
           
Total Liabilities and Stockholder’s Equity
  $ 13,980     $ 13,528  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

8


Table of Contents

SunGard Data Systems Inc.
Consolidated Statements of Operations
(In millions)
(Unaudited)
                 
    Three Months Ended March 31,  
    2009     2010  
Revenue:
               
Services
  $ 1,247     $ 1,137  
License and resale fees
    64       84  
 
           
Total products and services
    1,311       1,221  
Reimbursed expenses
    24       28  
 
           
 
    1,335       1,249  
 
           
 
               
Costs and expenses:
               
Cost of sales and direct operating
    686       604  
Sales, marketing and administration
    269       275  
Product development
    87       96  
Depreciation and amortization
    69       75  
Amortization of acquisition-related intangible assets
    124       123  
Merger costs
          2  
 
           
 
    1,235       1,175  
 
           
Income from operations
    100       74  
Interest income
    1        
Interest expense and amortization of deferred financing fees
    (151 )     (159 )
Other income
    7        
 
           
Loss before income taxes
    (43 )     (85 )
Benefit from income taxes
    9       31  
 
           
Net loss
  $ (34 )   $ (54 )
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

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SunGard Data Systems Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
                 
    Three months ended March 31,  
    2009     2010  
Cash flow from operations:
               
Net loss
  $ (34 )   $ (54 )
Reconciliation of net loss to cash flow from operations:
               
Depreciation and amortization
    193       198  
Deferred income tax benefit
    (26 )     (30 )
Stock compensation expense
    7       8  
Amortization of deferred financing costs and debt discount
    10       11  
Other noncash items
    (7 )     1  
Accounts receivable and other current assets
    (15 )     168  
Accounts payable and accrued expenses
    (171 )     (198 )
Clearing broker assets and liabilities, net
    (20 )     1  
Deferred revenue
    (9 )     (25 )
 
           
Cash flow provided by (used in) operations
    (72 )     80  
 
           
 
               
Investment activities:
               
Cash paid for acquired businesses, net of cash acquired
    (6 )     (13 )
Cash paid for property and equipment and software
    (79 )     (76 )
Other investing activities
    (5 )     8  
 
           
Cash used in investment activities
    (90 )     (81 )
 
           
 
               
Financing activities:
               
Cash received from other borrowings, net of fees
    240       3  
Cash used to repay debt
    (555 )     (22 )
Other financing activities
    (1 )      
 
           
Cash used in financing activities
    (316 )     (19 )
 
           
 
               
Effect of exchange rate changes on cash
    (6 )     (7 )
 
           
 
               
Decrease in cash and cash equivalents
    (484 )     (27 )
Beginning cash and cash equivalents
    975       664  
 
           
Ending cash and cash equivalents
  $ 491     $ 637  
 
           
 
               
Supplemental information:
               
 
               
Acquired businesses:
               
Property and equipment
  $     $ 2  
Software products
    5       3  
Customer base
    2       10  
Goodwill
    2       2  
Other tangible and intangible assets
          3  
Deferred income taxes
          (2 )
Purchase price obligations and debt assumed
          (1 )
Net current liabilities assumed
    (3 )     (4 )
 
           
Cash paid for acquired businesses, net of cash acquired of $- and $1, respectively
  $ 6     $ 13  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

 

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SUNGARD CAPITAL CORP.
SUNGARD CAPITAL CORP. II
SUNGARD DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation:
SunGard Data Systems Inc. (“SunGard”) was acquired on August 11, 2005 (the “Transaction”) in a leveraged buy-out by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG (collectively, the “Sponsors”).
SunGard is a wholly owned subsidiary of SunGard Holdco LLC, which is wholly owned by SunGard Holding Corp., which is wholly owned by SunGard Capital Corp. II (“SCCII”), which is a subsidiary of SunGard Capital Corp. (“SCC”). All four of these companies were formed for the purpose of facilitating the Transaction and are collectively referred to as the “Holding Companies.” SCC, SCCII and SunGard are separate reporting companies and, together with their direct and indirect subsidiaries, are collectively referred to as the “Company”.
The Company has four reportable segments: Financial Systems (“FS”), Higher Education (“HE”), Public Sector (“PS”) and Availability Services (“AS”). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.
The accompanying interim consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Interim financial reporting does not include all of the information and footnotes required by GAAP for annual financial statements. The interim financial information is unaudited, but, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments necessary to provide a fair statement of results for the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.
The presentation of certain prior year amounts has been revised to conform to the current year presentation.
Recent Accounting Pronouncements
The Financial Accounting Standard Board issued new revenue recognition guidance for arrangements with multiple deliverables. The new guidance, whose scope excludes software revenue recognition, modifies the fair value requirements for revenue recognition by providing “best estimate of selling price” in addition to vendor specific objective evidence, or “VSOE”, and vendor objective evidence, now referred to as third-party evidence, or “TPE”, for determining the selling price of a deliverable. Since the Company will be able to use an estimate of the selling price for the deliverables in an arrangement, all deliverables will be separate units of accounting, provided (a) a delivered item has value to the customer on a standalone basis, and (b) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the Company. As a result of the requirement to use the best estimate of the selling price when VSOE or TPE of the selling price cannot be determined, the residual method is no longer permitted. The new guidance is effective for fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact of this revenue guidance, but does not expect the guidance to have a material impact on the consolidated financial statements.

 

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2. Goodwill:
The following table summarizes changes in goodwill by segment (in millions):
                                                                         
    Cost     Accumulated Impairment  
    FS     HE     PS     AS     Subtotal     PS     AS     Subtotal     Total  
Balance at December 31, 2009
  $ 3,457     $ 950     $ 814     $ 2,211     $ 7,432     $ (128 )   $ (1,126 )   $ (1,254 )   $ 6,178  
2010 acquisitions
    2                   1       3                         3  
Adjustments related to the Transaction and prior year acquisitions
                      (1 )     (1 )                       (1 )
Effect of foreign currency translation
    (31 )           (9 )     (10 )     (50 )                       (50 )
 
                                                     
 
                                                                       
Balance at March 31, 2010
  $ 3,428     $ 950     $ 805     $ 2,201     $ 7,384     $ (128 )   $ (1,126 )   $ (1,254 )   $ 6,130  
 
                                                     
3. Clearing Broker Assets and Liabilities:
Clearing broker assets and liabilities are comprised of the following (in millions):
                 
    December 31,     March 31,  
    2009     2010  
Segregated customer cash and treasury bills
  $ 153     $ 39  
Securities owned
    40       86  
Securities borrowed
    116       130  
Receivables from customers and other
    23       20  
 
           
Clearing broker assets
  $ 332     $ 275  
 
           
 
               
Payables to customers
  $ 163     $ 63  
Securities loaned
    95       102  
Customer securities sold short, not yet purchased
    9       14  
Payable to brokers and dealers
    27       59  
 
           
Clearing broker liabilities
  $ 294     $ 238  
 
           
Segregated customer cash and treasury bills are held by the Company on behalf of customers. Clearing broker securities consist of trading and investment securities at fair market values, which are based on quoted market rates. Securities borrowed and loaned are collateralized financing transactions which are cash deposits made to or received from other broker/dealers. Receivables from and payables to customers represent amounts due or payable on cash and margin transactions.
4.   Derivatives:
The Company uses interest rate swap agreements to manage the amount of its floating rate debt in order to reduce its exposure to variable rate interest payments associated with the senior secured credit facilities. Each of these swap agreements is designated as a cash flow hedge. SunGard pays a stream of fixed interest payments for the term of the swap, and in turn, receives variable interest payments based on LIBOR. The net receipt or payment from the interest rate swap agreements is included in interest expense. The Company does not enter into interest rate swaps for speculative or trading purposes. A summary of the Company’s interest rate swaps follows:

 

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            Notional             Interest rate  
            Amount     Interest rate     received  
Inception   Maturity     (in millions)     paid     (LIBOR)  
 
February 2006
  February 2011   $ 800       5.00 %   3-Month
January 2008
  February 2011   $ 750       3.17 %   3-Month
January/February 2009
  February 2012   $ 1,200       1.78 %   1-Month
January/February 2010
  May 2013   $ 500       1.99 %   3-Month
 
                             
Total / Weighted Average interest rate
          $ 3,250       2.93 %        
 
                             
The fair values of interest rate swaps designated as cash flow hedging instruments, included in other accrued expenses on the consolidated balance sheets, are $70 million and $69 million as of December 31, 2009 and March 31, 2010, respectively.
The table below summarizes the impact of the effective portion of interest rate swaps on the balance sheets and statements of operations for the three months ended March 31, 2009 and 2010 (in millions):
                     
    Three months ended
March 31,
     
    2009     2010   Classification
Gain (loss) recognized in Accumulated Other Comprehensive Loss (OCI)
  $ (4 )   $ 2     OCI
Gain (loss) reclassified from accumulated OCI into income
    (15 )     (22 )   Interest expense and amortization of deferred financing fees
The Company has no ineffectiveness related to its swap agreements.
The Company expects to reclassify in the next twelve months approximately $79 million from OCI into earnings related to the Company’s interest rate swaps based on the borrowing rates at March 31, 2010.
5. Fair Value Measurements:
The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2010 (in millions):
                                 
    Fair Value Measures Using        
    Level 1     Level 2     Level 3     Total  
Assets
                               
Cash and cash equivalents — money market funds
  $ 156     $     $     $ 156  
Clearing broker assets — treasury bills
    35                   35  
Clearing broker assets — securities owned
    86                   86  
 
                       
 
  $ 277     $     $     $ 277  
 
                       
 
                               
Liabilities
                               
Clearing broker liabilities — customer securities sold short, not yet purchased
  $ 14     $     $     $ 14  
Interest rate swap agreements and other
          67             67  
 
                       
 
  $ 14     $ 67     $     $ 81  
 
                       

 

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The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2009 (in millions):
                                 
    Fair Value Measures Using        
    Level 1     Level 2     Level 3     Total  
Assets
                               
Cash and cash equivalents — money market funds
  $ 168     $     $     $ 168  
Clearing broker assets — U.S. treasury bills
    151                   151  
Clearing broker assets — securities owned
    40                   40  
 
                       
 
  $ 359     $     $     $ 359  
 
                       
 
                               
Liabilities
                               
Clearing broker liabilities — customer securities sold short, not yet purchased
  $ 9     $     $     $ 9  
Interest rate swap agreements
          70             70  
 
                       
 
  $ 9     $ 70     $     $ 79  
 
                       
A Level 1 fair value measure is based upon quoted prices in active markets for identical assets or liabilities. A Level 2 fair value measure is based upon quoted prices for similar assets and liabilities in active markets or inputs that are observable. A Level 3 fair value measure is based upon inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).
Cash and cash equivalents – money market funds and Clearing broker assets – U.S. treasury bills are recognized and measured at fair value in the Company’s financial statements. Clearing broker assets and liabilities – securities owned and customer securities sold short, not yet purchased are recorded at closing exchange-quoted prices. Fair values of the interest rate swap agreements are calculated using a discounted cash flow model using observable applicable market swap rates and assumptions and are compared to market valuations obtained from brokers.
The following table presents the carrying amount and estimated fair value of the Company’s debt, including current portion and excluding the interest rate swaps, as of December 31, 2009 and March 31, 2010 (in millions):
                                 
    December 31, 2009     March 31, 2010  
    Carrying     Fair     Carrying     Fair  
    Value     Value     Value     Value  
 
                               
Floating rate debt
  $ 4,967     $ 4,815     $ 4,937     $ 4,879  
Fixed rate debt
    3,348       3,507       3,343       3,476  
The fair value of the Company’s floating rate and fixed rate long-term debt is primarily based on market rates.
6. Comprehensive Income (Loss):
Comprehensive income (loss) consists of net income (loss) adjusted for other increases and decreases affecting stockholder’s equity that are excluded from the determination of net income (loss). The calculation of comprehensive income (loss) follows (in millions):
                 
    Three Months Ended  
    March 31,  
    2009     2010  
Net loss
  $ (34 )   $ (54 )
Foreign currency translation losses
    (87 )     (61 )
Unrealized gains (losses) on derivative instruments
    (4 )     2  
 
           
Comprehensive income (loss)
  $ (125 )   $ (113 )
 
           

 

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7. Equity:
A rollforward of SCC’s temporary and permanent equity for 2010 follows:
                                                                 
    SunGard Capital Corp. stockholders     Noncontrolling interest          
    Class L -     Class A -                                          
    temporary     temporary     Permanent             Temporary     Permanent              
    equity     equity     equity     Subtotal     equity     equity     Subtotal     Total  
Balance at December 31, 2009
  $ 88     $ 11     $ 321     $ 420     $ 51     $ 1,593     $ 1,644     $ 2,064  
Net income (loss)
                (101 )     (101 )     6       41       47       (54 )
Foreign currency translation
                (61 )     (61 )                       (61 )
Net unrealized gain on derivative instruments
                2       2                         2  
 
                                               
Comprehensive income (loss)
                (160 )     (160 )     6       41       47       (113 )
Stock compensation expense
                8       8                         8  
Transfer intrinsic value of vested restricted stock units
    2             (4 )     (2 )     1             1       (1 )
 
                                               
Balance at March 31, 2010
  $ 90     $ 11     $ 165     $ 266     $ 58     $ 1,634     $ 1,692     $ 1,958  
 
                                               
A rollforward of SCC’s temporary and permanent equity for 2009 follows:
                                                                 
    SunGard Capital Corp. stockholders     Noncontrolling interest          
    Class L -     Class A -                                          
    temporary     temporary     Permanent             Temporary     Permanent              
    equity     equity     equity     Subtotal     equity     equity     Subtotal     Total  
Balance at December 31, 2008
  $ 111     $ 12     $ 1,458     $ 1,581     $ 60     $ 1,411     $ 1,471     $ 3,052  
Net income (loss)
                (76 )     (76 )     1       41       42       (34 )
Foreign currency translation
                (87 )     (87 )                       (87 )
Net unrealized gain on derivative instruments
                (4 )     (4 )                       (4 )
 
                                               
Comprehensive income (loss)
                (167 )     (167 )     1       41       42       (125 )
Stock compensation expense
                7       7                         7  
Termination of put options due to employee terminations and other
    (31 )     (3 )     49       15       (15 )     (1 )     (16 )     (1 )
Transfer intrinsic value of vested restricted stock units
    4       1       (2 )     3                         3  
 
                                               
Balance at March 31, 2009
  $ 84     $ 10     $ 1,345     $ 1,439     $ 46     $ 1,451     $ 1,497     $ 2,936  
 
                                               

 

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8. Segment Information:
The Company has four reportable segments: FS, HE and PS, which together form the Company’s Software & Processing Solutions business, and AS. The Company evaluates the performance of its segments based on operating results before interest, income taxes, amortization of acquisition-related intangible assets, stock compensation and certain other costs. The operating results apply to each of SCC, SCCII and SunGard unless otherwise noted. The operating results for each segment follow (in millions):
                 
    Three Months Ended March 31,  
    2009     2010  
Revenue:
               
Financial systems
  $ 742     $ 659  
Higher education
    132       120  
Public Sector
    91       101  
 
           
Software & processing solutions
    965       880  
Availability services
    370       369  
 
           
 
  $ 1,335     $ 1,249  
 
           
Depreciation and amortization:
               
Financial systems
  $ 19     $ 19  
Higher education
    3       3  
Public sector
    2       3  
 
           
Software & processing solutions
    24       25  
Availability services
    45       50  
 
           
 
  $ 69     $ 75  
 
           
Income (loss) from operations:
               
Financial systems
  $ 119     $ 114  
Higher education
    27       31  
Public sector
    17       17  
 
           
Software & processing solutions
    163       162  
Availability services
    89       70  
Corporate and other items (1)
    (152 )     (156 )
Merger costs
          (2 )
 
           
 
  $ 100     $ 74  
 
           
Cash paid for property and equipment and software:
               
Financial systems
  $ 26     $ 20  
Higher education
    2       2  
Public sector
    2       2  
 
           
Software & processing solutions
    30       24  
Availability services
    49       51  
Corporate administration
          1  
 
           
 
  $ 79     $ 76  
 
           
     
(1)   Includes corporate administrative expenses, stock compensation expense, management fees paid to the Sponsors, other items and amortization of acquisition-related intangible assets of $124 million and $123 million for the three month periods ended March 31, 2009 and 2010, respectively.

 

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Amortization of acquisition-related intangible assets by segment follows (in millions):
                 
    Three Months Ended March 31,  
    2009     2010  
Amortization of acquisition-related intangible assets:
               
Financial systems
  $ 66     $ 64  
Higher education
    8       8  
Public sector
    8       9  
 
           
Software & processing solutions
    82       81  
Availability services
    41       42  
Corporate administration
    1        
 
           
 
  $ 124     $ 123  
 
           
The FS Segment is organized to align with customer-facing business areas. FS revenue by these business areas follows (in millions):
                 
    Three Months Ended March 31,  
    2009     2010  
Trading Systems
  $ 221     $ 106  
Wealth Management
    97       92  
Brokerage & Clearance
    71       78  
Capital Markets
    63       68  
Global Trading
    54       68  
Corporations
    44       49  
Institutional Asset Management
    50       48  
Banks
    32       39  
All other
    110       111  
 
           
Total Financial Systems
  $ 742     $ 659  
 
           
9. Related Party Transactions:
In accordance with the Management Agreement between the Company and affiliates of the Sponsors, the Company recorded $5 million and $4 million of management fees in sales, marketing and administration expenses during the three months ended March 31, 2009 and 2010, respectively. At each of December 31, 2009 and March 31, 2010, $4 million was included in other accrued expenses.
10. Supplemental Guarantor Condensed Consolidating Financial Statements:
SunGard’s senior notes are jointly and severally, fully and unconditionally guaranteed on a senior unsecured basis and the senior subordinated notes are jointly and severally, fully and unconditionally guaranteed on an unsecured senior subordinated basis, in each case, subject to certain exceptions, by substantially all wholly owned, domestic subsidiaries of SunGard (collectively, the “Guarantors”). Each of the Guarantors is 100% owned, directly or indirectly, by SunGard. None of the other subsidiaries of SunGard, either direct or indirect, nor any of the Holding Companies guarantee the senior notes and senior subordinated notes (“Non-Guarantors”). The Guarantors and SunGard Holdco LLC also unconditionally guarantee the senior secured credit facilities.
The following tables present the financial position, results of operations and cash flows of SunGard (referred to as “Parent Company” for purposes of this note only), the Guarantor subsidiaries, the Non-Guarantor subsidiaries and Eliminations as of December 31, 2009 and March 31, 2010, and for the three-month periods ended March 31, 2009 and 2010 to arrive at the information for SunGard on a consolidated basis. SCC and SCCII are neither parties nor guarantors to the debt issued as described in the notes to consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2009.

 

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    Supplemental Condensed Consolidating Balance Sheet  
    December 31, 2009  
    Parent     Guarantor     Non-Guarantor              
(in millions)   Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Assets
                                       
Current:
                                       
Cash and cash equivalents
  $ 126     $ (9 )   $ 547     $     $ 664  
Intercompany balances
    (6,563 )     5,787       776              
Trade receivables, net
          734       402             1,136  
Prepaid expenses, taxes and other current assets
    2,017       77       417       (1,968 )     543  
 
                             
Total current assets
    (4,420 )     6,589       2,142       (1,968 )     2,343  
Property and equipment, net
    1       603       321             925  
Intangible assets, net
    164       3,756       614             4,534  
Intercompany balances
    961       (691 )     (270 )            
Goodwill
          4,895       1,283             6,178  
Investment in subsidiaries
    13,394       2,490             (15,884 )      
 
                             
Total Assets
  $ 10,100     $ 17,642     $ 4,090     $ (17,852 )   $ 13,980  
 
                             
 
                                       
Liabilities and Stockholder’s Equity
                                       
Current:
                                       
Short-term and current portion of long-term debt
  $ 45     $ 7     $ 12     $     $ 64  
Accounts payable and other current liabilities
    272       2,901       1,079       (1,968 )     2,284  
 
                             
Total current liabilities
    317       2,908       1,091       (1,968 )     2,348  
Long-term debt
    7,687       3       561             8,251  
Intercompany debt
    82       103       (31 )     (154 )      
Deferred income taxes
    (53 )     1,234       133             1,314  
 
                             
Total liabilities
    8,033       4,248       1,754       (2,122 )     11,913  
 
                             
Total stockholder’s equity
    2,067       13,394       2,336       (15,730 )     2,067  
 
                             
Total Liabilities and Stockholder’s Equity
  $ 10,100     $ 17,642     $ 4,090     $ (17,852 )   $ 13,980  
 
                             

 

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    Supplemental Condensed Consolidating Balance Sheet  
    March 31, 2010  
    Parent     Guarantor     Non-Guarantor              
(in millions)   Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Assets
                                       
Current:
                                       
Cash and cash equivalents
  $ 98     $ (16 )   $ 555     $     $ 637  
Intercompany balances
    (6,691 )     5,947       744              
Trade receivables, net
    2       659       340             1,001  
Prepaid expenses, taxes and other current assets
    2,029       92       383       (2,046 )     458  
 
                             
Total current assets
    (4,562 )     6,682       2,022       (2,046 )     2,096  
Property and equipment, net
          597       306             903  
Intangible assets, net
    153       3,656       590             4,399  
Intercompany balances
    951       (691 )     (260 )            
Goodwill
          4,895       1,235             6,130  
Investment in subsidiaries
    13,392       2,398             (15,790 )      
 
                             
Total Assets
  $ 9,934     $ 17,537     $ 3,893     $ (17,836 )   $ 13,528  
 
                             
 
                                       
Liabilities and Stockholder’s Equity
                                       
Current:
                                       
Short-term and current portion of long-term debt
  $ 45     $ 6     $ 5     $     $ 56  
Accounts payable and other current liabilities
    210       2,862       979       (2,046 )     2,005  
 
                             
Total current liabilities
    255       2,868       984       (2,046 )     2,061  
Long-term debt
    7,677       2       545             8,224  
Intercompany debt
    91       74       (39 )     (126 )      
Deferred income taxes
    (51 )     1,201       131             1,281  
 
                             
Total liabilities
    7,972       4,145       1,621       (2,172 )     11,566  
 
                             
Total stockholder’s equity
    1,962       13,392       2,272       (15,664 )     1,962  
 
                             
Total Liabilities and Stockholder’s Equity
  $ 9,934     $ 17,537     $ 3,893     $ (17,836 )   $ 13,528  
 
                             
                                         
    Supplemental Condensed Consolidating Schedule of Operations  
    Three Months Ended March 31, 2009  
    Parent     Guarantor     Non-Guarantor              
(in millions)   Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Total revenue
  $     $ 834     $ 522     $ (21 )   $ 1,335  
 
                             
 
                                       
Costs and expenses:
                                       
Cost of sales and direct operating
          372       335       (21 )     686  
Sales, marketing and administration
    23       154       92             269  
Product development
          45       42             87  
Depreciation and amortization
          52       17             69  
Amortization of acquisition-related intangible assets
    1       100       23             124  
 
                             
 
    24       723       509       (21 )     1,235  
 
                             
Income (loss) from operations
    (24 )     111       13             100  
Net interest income (expense)
    (143 )     (11 )     4             (150 )
Other income (expense)
    75       17       6       (91 )     7  
 
                             
Income (loss) before income taxes
    (92 )     117       23       (91 )     (43 )
Provision (benefit) for income taxes
    (58 )     42       7             (9 )
 
                             
Net income (loss)
  $ (34 )   $ 75     $ 16     $ (91 )   $ (34 )
 
                             

 

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    Supplemental Condensed Consolidating Schedule of Operations  
    Three Months Ended March 31, 2010  
    Parent     Guarantor     Non-Guarantor              
(in millions)   Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Total revenue
  $     $ 874     $ 408     $ (33 )   $ 1,249  
 
                             
 
                                       
Costs and expenses:
                                       
Cost of sales and direct operating
          386       251       (33 )     604  
Sales, marketing and administration
    28       138       109             275  
Product development
          45       51             96  
Depreciation and amortization
          54       21             75  
Amortization of acquisition- related intangible assets
          101       22             123  
Merger costs
                2             2  
 
                             
 
    28       724       456       (33 )     1,175  
 
                             
Income (loss) from operations
    (28 )     150       (48 )           74  
Net interest income (expense)
    (147 )     (56 )     44             (159 )
Other income (expense)
    60       (3 )           (57 )      
 
                             
Income (loss) before income taxes
    (115 )     91       (4 )     (57 )     (85 )
Provision (benefit) for income taxes
    (61 )     31       (1 )           (31 )
 
                             
Net income (loss)
  $ (54 )   $ 60     $ (3 )   $ (57 )   $ (54 )
 
                             
                                         
    Supplemental Condensed Consolidating Schedule of Cash Flows  
    Three Months Ended March 31, 2009  
    Parent     Guarantor     Non-Guarantor              
(in millions)   Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash Flow From Operations
                                       
Net income (loss)
  $ (34 )   $ 75     $ 16     $ (91 )   $ (34 )
Non cash adjustments
    (56 )     112       30       91       177  
Changes in operating assets and liabilities
    (226 )     (336 )     347             (215 )
 
                             
Cash flow provided by (used in) operations
    (316 )     (149 )     393             (72 )
 
                             
 
                                       
Investment Activities
                                       
Intercompany transactions
    375       223       (598 )            
Cash paid for businesses acquired by the Company, net of cash acquired
          (6 )                 (6 )
Cash paid for property and equipment and software
          (61 )     (18 )           (79 )
Other investing activities
    (3 )           (2 )           (5 )
 
                             
Cash provided by (used in) investment activities
    372       156       (618 )           (90 )
 
                             
 
                                       
Financing Activities
                                       
Net borrowings (repayments) of long-term debt
    (546 )     (2 )     233             (315 )
Other financing activities
    (1 )                       (1 )
 
                             
Cash provided by (used in) financing activities
    (547 )     (2 )     233             (316 )
 
                             
 
                                       
Effect of exchange rate changes on cash
                (6 )           (6 )
 
                             
 
                                       
Increase (decrease) in cash and cash equivalents
    (491 )     5       2             (484 )
Beginning cash and cash equivalents
    511       16       448             975  
 
                             
Ending cash and cash equivalents
  $ 20     $ 21     $ 450     $     $ 491  
 
                             

 

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    Supplemental Condensed Consolidating Schedule of Cash Flows  
    Three Months Ended March 31, 2010  
    Parent     Guarantor     Non-Guarantor              
(in millions)   Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash Flow From Operations
                                       
Net income (loss)
  $ (54 )   $ 60     $ (3 )   $ (57 )   $ (54 )
Non cash adjustments
    (40 )     130       41       57       188  
Changes in operating assets and liabilities
    (75 )     8       13             (54 )
 
                             
Cash flow provided by (used in) operations
    (169 )     198       51             80  
 
                             
 
                                       
Investment Activities
                                       
Intercompany transactions
    153       (153 )                  
Cash paid for businesses acquired by the Company, net of cash acquired
                (13 )           (13 )
Cash paid for property and equipment and software
          (56 )     (20 )           (76 )
Other investing activities
    (1 )     6       3             8  
 
                             
Cash provided by (used in) investment activities
    152       (203 )     (30 )           (81 )
 
                             
 
                                       
Financing Activities
                                       
Net repayments of long-term debt
    (11 )     (2 )     (6 )           (19 )
 
                             
Cash used in financing activities
    (11 )     (2 )     (6 )           (19 )
 
                             
 
                                       
Effect of exchange rate changes on cash
                (7 )           (7 )
 
                             
 
                                       
Increase (decrease) in cash and cash equivalents
    (28 )     (7 )     8             (27 )
Beginning cash and cash equivalents
    126       (9 )     547             664  
 
                             
Ending cash and cash equivalents
  $ 98     $ (16 )   $ 555     $     $ 637  
 
                             

 

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
The following discussion and analysis supplement the management’s discussion and analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and presume that readers have read or have access to the discussion and analysis in this filing. The following discussion and analysis includes historical and certain forward-looking information that should be read together with the accompanying Consolidated Financial Statements, related footnotes, and the discussion below of certain risks and uncertainties that could cause future operating results to differ materially from historical results or from the expected results indicated by forward-looking statements. The following discussion reflects the results of operations and financial condition of SCC, which are materially the same as the results of operations and financial condition of SCCII and SunGard. Therefore, the discussions provided are applicable to each of SCC, SCCII and SunGard unless otherwise noted.
Results of Operations:
The following table sets forth, for the periods indicated, certain amounts included in our Consolidated Statements of Operations, the relative percentage that those amounts represent to consolidated revenue (unless otherwise indicated), and the percentage change in those amounts from period to period.
                                         
    Three Months Ended     Three Months Ended        
    March 31,     March 31,     Percent  
    2009     2010     Increase  
            percent of             percent of     (Decrease)  
(in millions)           revenue             revenue     2010 vs. 2009  
Revenue
                                       
Financial systems (FS)
  $ 742       56 %   $ 659       53 %     (11 )%
Higher education (HE)
    132       10 %     120       10 %     (9 )%
Public sector (PS)
    91       7 %     101       8 %     11 %
 
                                   
 
Software & processing solutions
    965       72 %     880       70 %     (9 )%
Availability services (AS)
    370       28 %     369       30 %     %
 
                                   
 
  $ 1,335       100 %   $ 1,249       100 %     (6 )%
 
                                   
 
                                       
Costs and Expenses
                                       
Cost of sales and direct operating
  $ 686       51 %   $ 604       48 %     (12 )%
Sales, marketing and administration
    269       20 %     275       22 %     2 %
Product development
    87       7 %     96       8 %     10 %
Depreciation and amortization
    69       5 %     75       6 %     9 %
Amortization of acquisition- related intangible assets
    124       9 %     123       10 %     (1) %
Merger costs
          %     2       %     %
 
                                   
 
  $ 1,235       93 %   $ 1,175       94 %     (5) %
 
                                   
 
                                       
Income from Operations
                                       
Financial systems (1)
  $ 119       16 %   $ 114       17 %     (4 )%
Higher education (1)
    27       20 %     31       26 %     15 %
Public sector (1)
    17       19 %     17       17 %     %
 
                                   
Software & processing solutions (1)
    163       17 %     162       18 %     (1 )%
Availability services (1)
    89       24 %     70       19 %     (21 )%
Corporate administration
    (13 )     (1 )%     (17 )     (1 )%     31 %
Amortization of acquisition- related intangible assets
    (124 )     (9 )%     (123 )     (10 )%     (1 )%
Stock Compensation expense
    (7 )     (1 )%     (8 )     (1 )%     14 %
Merger costs and other items (2)
    (8 )     (1 )%     (10 )     (1 )%     25 %
 
                                   
 
  $ 100       7 %   $ 74       6 %     (26 )%
 
                                   
     
(1)   Percent of revenue is calculated as a percent of revenue from FS, HE, PS, Software and Processing Solutions, and AS, respectively.
 
(2)   Merger costs and other items include merger costs, certain purchase accounting adjustments and management fees paid to the Sponsors, partially offset in each year by capitalized software development costs.

 

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The following table sets forth, for the periods indicated, certain supplemental revenue data, the relative percentage that those amounts represent to total revenue and the percentage change in those amounts from period to period.
                                         
    Three Months Ended     Three Months Ended        
    March 31,     March 31     Percent  
    2009     2010     Increase  
            percent of             percent of     (Decrease)  
(in millions)           revenue             revenue     2010 vs. 2009  
Financial Systems
                                       
Services
  $ 698       52 %   $ 593       47 %     (15 )%
License and resale fees
    26       2 %     44       4 %     69 %
 
                                   
Total products and services
    724       54 %     637       51 %     (12 )%
Reimbursed expenses
    18       1 %     22       2 %     22 %
 
                                   
 
  $ 742       56 %   $ 659       53 %     (11) %
 
                                   
 
                                       
Higher Education
                                       
Services
  $ 114       9 %   $ 103       8 %     (10 )%
License and resale fees
    16       1 %     15       1 %     (6 )%
 
                                   
Total products and services
    130       10 %     118       9 %     (9 )%
Reimbursed expenses
    2       %     2       %     %
 
                                   
 
  $ 132       10 %   $ 120       10 %     (9 )%
 
                                   
 
                                       
Public Sector
                                       
Services
  $ 69       5 %   $ 76       6 %     10 %
License and resale fees
    21       2 %     24       2 %     14 %
 
                                   
Total products and services
    90       7 %     100       8 %     11 %
Reimbursed expenses
    1       %     1       %     %
 
                                   
 
  $ 91       7 %   $ 101       8 %     11 %
 
                                   
 
                                       
Software & Processing Solutions
                                       
Services
  $ 881       66 %   $ 772       62 %     (12) %
License and resale fees
    63       5 %     83       7 %     32 %
 
                                   
Total products and services
    944       71 %     855       68 %     (9) %
Reimbursed expenses
    21       2 %     25       2 %     19 %
 
                                   
 
  $ 965       72 %   $ 880       70 %     (9) %
 
                                   
 
                                       
Availability Services
                                       
Services
  $ 366       27 %   $ 365       29 %     %
License and resale fees
    1       %     1       %     %
 
                                   
Total products and services
    367       27 %     366       29 %     %
Reimbursed expenses
    3       %     3       %     %
 
                                   
 
  $ 370       28 %   $ 369       30 %     %
 
                                   
 
                                       
Total Revenue
                                       
Services
  $ 1,247       93 %   $ 1,137       91 %     (9) %
License and resale fees
    64       5 %     84       7 %     31 %
 
                                   
Total products and services
    1,311       98 %     1,221       98 %     (7 )%
Reimbursed expenses
    24       2 %     28       2 %     17 %
 
                                   
 
  $ 1,335       100 %   $ 1,249       100 %     (6) %
 
                                   

 

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Three Months Ended March 31, 2010 Compared To Three Months Ended March 31, 2009
Income from Operations:
Our total operating margin was 6% for the three months ended March 31, 2010, compared to 7% for the three months ended March 31, 2009 primarily due to the decline in the AS operating margin, partially offset by a $17 million increase in license fees.
Financial Systems:
The FS operating margin was 17% and 16% for the three months ended March 31, 2010 and 2009, respectively. The operating margin improvement is primarily due to a $20 million increase in software license fees primarily resulting from recognition of $15 million of license fee backlog that existed at December 31, 2009, partially offset by the impact of currency exchange rates.
Higher Education:
The HE operating margin was 26% and 20% for the three months ended March 31, 2010 and 2009, respectively, primarily due to employee-related cost reductions and the impact of a customer user conference held in the first quarter of 2009 that is planned for the second quarter of 2010.
Public Sector:
The PS operating margin was 17% and 19% for the three months ended March 31, 2010 and 2009, respectively, due primarily to a decrease in license fees, partially offset by improvement in the U.K. business.
Availability Services:
The AS operating margin was 19% and 24% for the three months ended March 31, 2010 and 2009, respectively. The lower margin was primarily due to increases in employee-related costs, including approximately $5 million related to headcount reductions, mostly in North America, facility expansions which increased the fixed cost base in advance of anticipated revenue growth and increased depreciation and amortization, and the impact of a change in the mix of revenue from recovery services which typically use shared resources to managed services which use dedicated resources.
Revenue:
Total revenue decreased $86 million or 6% for the three months ended March 31, 2010 compared to the first quarter of 2009. Organic revenue decreased 9% in the first quarter of 2010 compared to the prior year period, primarily because of a $122 million decline in broker/dealer revenue, partially offset by the increase in license fees and software rental revenue. Organic revenue is defined as revenue for businesses owned for at least one year and further adjusted for the effects of businesses sold in the previous twelve months and the impact of currency exchange rates. This organic revenue decline was attributed to one of our broker/dealer businesses with the increases in license fees and software rental revenue offsetting other revenue declines.
Financial Systems:
FS revenue decreased $83 million or 11% in the first quarter of 2010 from the prior year period. Organic revenue decreased 13% in the quarter. Excluding the broker/dealer business, organic revenue was up 4%. Professional services revenue increased $5 million or 4%. Revenue from license and resale fees included software license revenue of $40 million, an increase of $20 million compared to the same quarter in 2009, reflecting the recognition in 2010 of $15 million that was in backlog at December 31, 2009.
Higher Education:
HE revenue decreased $12 million or 9% for the three months ended March 31, 2010 compared to the corresponding period in 2009 due to a decrease in organic revenue. HE services revenue decreased $11 million, primarily due to revenue associated with a customer user conference held in the first quarter of 2009 that is planned for the second quarter of 2010 and a decrease in professional services. Revenue from license and resale fees included software license revenue of $5 million in the three months ended March 31, 2010, unchanged from the prior year period.

 

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Public Sector:
PS revenue increased $10 million or 11% for the three months ended March 31, 2010 compared to the corresponding period in 2009. Organic revenue increased 5%. Revenue from license and resale fees included software license revenue of $2 million and $5 million in the three months ended March 31, 2010 and 2009, respectively.
Availability Services:
AS revenue decreased $1 million in the first quarter of 2010 from the prior year period. Organic revenue decreased 3% in the quarter. In North America, revenue decreased 3% overall and 4% organically, where decreases in recovery services and professional services revenue exceeded growth in managed services. Revenue in Europe increased 12%, but grew 3% organically.
Costs and Expenses:
Cost of sales and direct operating expenses as a percentage of total revenue was 48% and 51% in the three-month periods ended March 31, 2010 and 2009, respectively, largely the result of the lower volumes of the broker/dealer business previously mentioned. Also impacting the period were higher FS consultant expenses and AS facilities costs, partially offset by lower costs associated with the HE customer user conference that was held in the first quarter of 2009.
Sales, marketing and administration expenses as a percentage of total revenue was 22% and 20% in the three-month periods ended March 31, 2010 and 2009, respectively. Increases in sales, marketing and administration expenses were primarily due to increases in AS, FS and corporate employment-related expense and advertising costs, partially offset by reduced FS facilities costs and HE employment-related expenses.
Because AS product development costs are insignificant, it is more meaningful to measure product development expenses as a percentage of revenue from software and processing solutions. For the three months ended March 31, 2010 and 2009, product development costs were 11% and 9% of revenue from software and processing solutions, respectively.
Depreciation and amortization as a percentage of total revenue was 6% and 5% in the three-month periods ended March 31, 2010 and 2009, respectively primarily due to capital expenditures supporting AS.
Merger costs are costs incurred for the shutdown of the professional trading portion of the broker/dealer business. We expect to incur up to an additional $10 million related to this shutdown during the remainder of 2010.
Interest expense was $159 million and $151 million for the three months ended March 31, 2010 and 2009, respectively. The increase in interest expense was due primarily to interest rate increases mainly due to amending the term loan in 2009 and increased average borrowings under our receivables facility, partially offset by reduced borrowings under our revolving credit facility.
Other income was $7 million for the three months ended March 31, 2009. The change is primarily attributable to $7 million of foreign currency translation gains related to our Euro denominated term loan in the three months ended March 31, 2009.
The effective income tax rates for the three months ended March 31, 2010 and 2009 were a benefit of 36% and 21%, respectively. The rate in the first quarter of 2010 reflects the expected mix of taxable income in various jurisdictions as well as our ability to fully utilize foreign tax credits. The rate in the first quarter of 2009 reflects limitations on our ability to utilize certain foreign tax credits.
Accreted dividends on SCCII’s cumulative preferred stock were $47 million and $42 million for the three months ended March 31, 2010 and 2009, respectively. The increase in dividends is due to compounding. No dividends have been declared by SCCII.
Liquidity and Capital Resources:
At March 31, 2010, cash and equivalents were $637 million, a decrease of $27 million from December 31, 2009. Cash flow provided by operations was $79 million in the three months ended March 31, 2010 compared to cash flow used in operations of $72 million in the three months ended March 31, 2009. The increase in cash flow from operations is due primarily to the termination in December 2008 of our off-balance sheet accounts receivable securitization program and a $50 million tax refund received in the first quarter of 2010.

 

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Net cash used in investing activities was $81 million in the three months ended March 31, 2010, comprised of cash paid for property and equipment and other assets and one business acquired in each of our FS and AS segments.
Net cash used in financing activities was $18 million for the three months ended March 31, 2010, primarily related to quarterly principal payments on the term loans. At March 31, 2010, no amount was outstanding under the revolving credit facility and $251 million was outstanding under the receivables facility, which represented the full amount available for borrowing based on the terms and conditions of the facility. In early 2010, we entered into interest rate swap agreements, with an aggregate notional amount of $500 million, which expire in May 2013 under which we pay fixed interest payments (at 1.99%) for the term of the swaps and, in turn, receive variable interest payments based on three-month LIBOR.
At March 31, 2010, contingent purchase price obligations that depend upon the operating performance of certain acquired businesses could total $55 million, all of which could be due in the next 12 months. We also have outstanding letters of credit and bid bonds that total approximately $40 million.
At March 31, 2010, we have outstanding $8.28 billion in aggregate indebtedness, with additional borrowing capacity of $803 million under the revolving credit facility (after giving effect to outstanding letters of credit).
We expect our available cash balances, cash flows from operations, combined with availability under the revolving credit facility and receivables facility, to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending for a period that includes at least the next 12 months.
Covenant Compliance
Adjusted EBITDA is used to determine compliance with certain covenants contained in the indentures governing SunGard’s senior notes due 2013 and 2015 and senior subordinated notes due 2015 and in SunGard’s senior secured credit facilities. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain adjustments permitted in calculating covenant compliance under the indentures and senior secured credit facilities. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors to demonstrate compliance with the financing covenants.
The breach of covenants in SunGard’s senior secured credit facilities that are tied to ratios based on Adjusted EBITDA could result in a default under that agreement and the lenders could elect to declare all amounts borrowed due and payable. Any such acceleration would also result in a default under the indentures. Additionally, under SunGard’s debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Adjusted EBITDA.
Adjusted EBITDA is calculated as follows (in millions):
                         
                    Last Twelve  
                    Months  
    Three Months Ended March 31,     March 31,  
    2009     2010     2010  
Net income (loss)
  $ (34 )   $ (54 )   $ (1,138 )
Interest expense, net
    150       159       639  
Taxes
    (9 )     (31 )     (95 )
Depreciation and amortization
    193       198       836  
Goodwill impairment charge
                1,126  
 
                 
EBITDA
    300       272       1,368  
Purchase accounting adjustments (a)
    5       4       17  
Non-cash charges (b)
    9       8       35  
Restructuring and other charges (c)
    9       9       41  
Pro forma expense savings related to acquisitions (d)
    1             2  
Other (e)
    2       4       6  
 
                 
Adjusted EBITDA — senior secured credit facilities, senior notes due 2013 and 2015 and senior subordinated notes due 2015
  $ 326     $ 297     $ 1,469  
 
                 

 

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(a)   Purchase accounting adjustments include the adjustment of deferred revenue and lease reserves to fair value at the date of the Transaction and subsequent acquisitions made by the Company and certain acquisition-related compensation expense.
 
(b)   Non-cash charges include stock-based compensation and loss on the sale of assets.
 
(c)   Restructuring and other charges include debt refinancing costs, severance and related payroll taxes, reserves to consolidate certain facilities, settlements with former owners of acquired companies and certain other expenses associated with acquisitions made by the Company.
 
(d)   Pro forma adjustments represent the full-year impact of savings resulting from post-acquisition integration activities.
 
(e)   Other includes gains or losses related to fluctuation of foreign currency exchange rates impacting the foreign-denominated debt, management fees paid to the Sponsors and franchise and similar taxes reported in operating expenses, partially offset by certain charges relating to the receivables facility.
The covenant requirements and actual ratios for the twelve months ended March 31, 2010 are as follows. All covenants are in compliance.
                 
    Covenant     Actual  
    Requirements     Ratios  
Senior secured credit facilities (1)
               
Minimum Adjusted EBITDA to consolidated interest expense ratio
    1.70x       2.53x  
Maximum total debt to Adjusted EBITDA
    6.25x       5.08x  
Senior notes due 2013 and 2015 and senior subordinated notes due 2015 (2)
               
Minimum Adjusted EBITDA to fixed charges ratio required to incur additional debt pursuant to ratio provisions
    2.00x       2.52x  
     
(1)   The senior secured credit facilities require us to maintain an Adjusted EBITDA to consolidated interest expense ratio starting at a minimum of 1.70x for the four-quarter period ended December 31, 2009 and increasing over time to 1.80x by the end of 2010 and 2.20x by the end of 2013. Consolidated interest expense is defined in the senior secured credit facilities as consolidated cash interest expense less cash interest income further adjusted for certain non-cash or non-recurring interest expense and the elimination of interest expense and fees associated with SunGard’s receivables facility. Beginning with the four-quarter period ending December 31, 2009, we are required to maintain a consolidated total debt to Adjusted EBITDA ratio of 6.25x and decreasing over time to 5.75x by the end of 2011 and to 4.75x by the end of 2013. Consolidated total debt is defined in the senior secured credit facilities as total debt less certain indebtedness and further adjusted for cash and cash equivalents on our balance sheet in excess of $50 million. Failure to satisfy these ratio requirements would constitute a default under the senior secured credit facilities. If our lenders failed to waive any such default, our repayment obligations under the senior secured credit facilities could be accelerated, which would also constitute a default under our indentures.
 
(2)   SunGard’s ability to incur additional debt and make certain restricted payments under our indentures, subject to specified exceptions, is tied to an Adjusted EBITDA to fixed charges ratio of at least 2.0x, except that we may incur certain debt and make certain restricted payments and certain permitted investments without regard to the ratio, such as the ability to incur up to an aggregate principal amount of $5.75 billion under credit facilities (inclusive of amounts outstanding under the senior credit facilities from time to time; as of March 31, 2010, we had $4.69 billion outstanding under the term loan facilities and available commitments of $803 million under the revolving credit facility), to acquire persons engaged in a similar business that become restricted subsidiaries and to make other investments equal to 6% of our consolidated assets. Fixed charges is defined in the indentures governing the Senior Notes due 2013 and 2015 and the Senior Subordinated Notes due 2015 as consolidated interest expense less interest income, adjusted for acquisitions, and further adjusted for non-cash interest and the elimination of interest expense and fees associated with the receivables facility.

 

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Certain Risks and Uncertainties
Certain of the matters we discuss in this Report on Form 10-Q may constitute forward-looking statements. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “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: our high degree of leverage; general economic and market conditions; the 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, 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; customers taking their information availability solutions in-house; 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 business; 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; and a material weakness in our internal controls. 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 this Form 10-Q. 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.
Item 3.   Quantitative and Qualitative Disclosures about Market Risk:
We do not use derivative financial instruments for trading or speculative purposes.
At March 31, 2010, we had total debt of $8.28 billion, including $4.94 billion of variable rate debt. We have entered into interest rate swap agreements which fix the interest rates for $3.25 billion of our variable rate debt. Swap agreements with a notional value of $800 million effectively fix our interest rates at 5.00% and expire in February 2011. Swap agreements expiring in February 2011 with a notional value of $750 million effectively fix our interest rates at 3.17%. Swap agreements expiring in February 2012 with a notional value of $1.2 billion effectively fix our interest rates at 1.78%. Swap agreements expiring in May 2013 with a notional value of $500 million effectively fix our interest rates at 1.99%. Our remaining variable rate debt of $1.69 billion is subject to changes in underlying interest rates, and, accordingly, our interest payments will fluctuate. During the period when all of our interest rate swap agreements are effective, a 1% change in interest rates would result in a change in interest of approximately $17 million per year. Upon the expiration of each interest rate swap agreement in February 2011, February 2012 and May 2013, a 1% change in interest rates would result in a change in interest of approximately $32 million, $44 million and $49 million per year, respectively.
Item 4T.   Controls and Procedures:
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Report were effective.
No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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Part II Other Information:
Item 1.   Legal Proceedings: None.
Item 1A.   Risk Factors: There have been no material changes to SCC’s, SCCII’s or SunGard’s Risk Factors as previously disclosed in their Form 10-K for the year ended December 31, 2009.
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds: None.
Item 3.   Defaults Upon Senior Securities: None.
Item 4.   (Removed and Reserved)
Item 5.   Other Information:
(a) None.
(b) None.
Item 6.   Exhibits:
         
Number   Document
       
 
  12.1    
Computation of Ratio of Earnings to Fixed Charges.
       
 
  31.1    
Certification of Cristóbal Conde, Chief Executive Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(a) or Rule 15d-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  31.2    
Certification of Robert F. Woods, Chief Financial Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(a) or Rule 15d-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  32.1    
Certification of Cristóbal Conde, Chief Executive Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002.
       
 
  32.2    
Certification of Robert F. Woods, Chief Financial Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002.

 

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  SUNGARD CAPITAL CORP.
SUNGARD CAPITAL CORP. II

 
 
Dated: May 17, 2010  By:   /s/ Robert F. Woods    
    Robert F. Woods   
    Executive Vice President and Chief Financial Officer
(Principal Financial Officer) 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  SUNGARD DATA SYSTEMS INC.
 
 
Dated: May 17, 2010  By:   /s/ Robert F. Woods    
    Robert F. Woods   
    Senior Vice President-Finance and Chief Financial Officer
(Principal Financial Officer) 
 

 

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Exhibit Index
         
Exhibit No.   Document
       
 
  12.1    
Computation of Ratio of Earnings to Fixed Charges.
       
 
  31.1    
Certification of Cristóbal Conde, Chief Executive Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(a) or Rule 15d-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  31.2    
Certification of Robert F. Woods, Chief Financial Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(a) or Rule 15d-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002.
       
 
  32.1    
Certification of Cristóbal Conde, Chief Executive Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002.
       
 
  32.2    
Certification of Robert F. Woods, Chief Financial Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002.

 

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Exhibit 12.1
SunGard Capital Corp.
SunGard Capital Corp. II
SunGard Data Systems Inc.
Computation of Ratio of Earnings to Fixed Charges (Unaudited)
($ in millions)
                 
    Three Months Ended  
    March 31,  
    2009     2010  
Fixed charges
               
Interest expense
  $ 141     $ 149  
Amortization of debt issuance costs and debt discount
    10       11  
Portion of rental expense representative of interest
    20       20  
 
           
Total fixed charges
  $ 171     $ 180  
 
           
 
               
Earnings
               
Income (loss) before income taxes
  $ (43 )   $ (85 )
Fixed charges per above
    171       180  
 
           
Total earnings
  $ 128     $ 95  
 
           
 
               
Ratio of earnings to fixed charges
    *       *  
     
*   Earnings for the three months ended March 31, 2009 and 2010 were inadequate to cover fixed charges by $43 million and $85 million, respectively.

 


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Exhibit 31.1  

Certification of Cristóbal Conde
Required by Rule 13a-14(a) or Rule 15d-14(a) and
Section 302 of the Sarbanes-Oxley Act of 2002

I, Cristóbal Conde, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. (collectively, “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

   
Date: May 17, 2010
 
 
/s/ Cristóbal Conde
 
 
 
Cristóbal Conde
 
President and Chief Executive Officer
 
SunGard Capital Corp., SunGard Capital Corp. II & SunGard Data Systems Inc.
 

 

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Exhibit 31.2

Certification of Robert F. Woods
Required by Rule 13a-14(a) or Rule 15d-14(a) and
Section 302 of the Sarbanes-Oxley Act of 2002

I, Robert F. Woods, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. (collectively, “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

   
Date: May 17, 2010
 
 
/s/ Robert F. Woods
 
 
 
Robert F. Woods
 
Chief Financial Officer
 
SunGard Capital Corp., SunGard Capital Corp. II & SunGard Data Systems Inc.
 

 

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Exhibit 32.1

Certification of Cristóbal Conde
Required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.(S) 1350, as adopted), I, Cristóbal Conde, Chief Executive Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. (collectively, the “Company”), hereby certify that to my knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2010 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

   
Date: May 17, 2010
 
 
/s/ Cristóbal Conde
 
 
 
Cristóbal Conde
 
Chief Executive Officer
 

A signed original of this written statement required by Section 906 has been provided to SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. and will be retained by SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

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Table of Contents

Exhibit 32.2

Certification of Robert F. Woods
Required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.(S) 1350, as adopted), I, Robert F. Woods, Chief Financial Officer of SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. (collectively, the “Company”), hereby certify that to my knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2010 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

   
Date: May 17, 2010
 
 
/s/ Robert F. Woods
 
 
 
Robert F. Woods
 
Chief Financial Officer
 

A signed original of this written statement required by Section 906 has been provided to SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. and will be retained by SunGard Capital Corp., SunGard Capital Corp. II and SunGard Data Systems Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

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