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
Securities and Exchange Commission
þ | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
SunGard Capital Corp. | 000-53653 | |
SunGard Capital Corp. II | 000-53654 | |
SunGard Data Systems Inc. | 001-12989 |
SunGard® Capital Corp. II
SunGard® Data Systems Inc.
Delaware | 20-3059890 | |
Delaware | 20-3060101 | |
Delaware | 51-0267091 | |
(State or other jurisdiction of | (IRS Employer | |
incorporation or organization) | Identification No.) |
(Address of principal executive offices, including zip code)
(Registrants’ telephone number, including area code)
SunGard Capital Corp. | Yesþ Noo | |
SunGard Capital Corp. II | Yesþ Noo | |
SunGard Data Systems Inc. | Yeso Noþ |
SunGard Capital Corp. | Yeso Noo | |
SunGard Capital Corp. II | Yeso Noo | |
SunGard Data Systems Inc. | Yeso Noo |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo |
SunGard Capital Corp. | Yeso Noþ | |
SunGard Capital Corp. II | Yeso Noþ | |
SunGard Data Systems Inc. | Yeso Noþ |
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. II
SunGard Data Systems Inc.
And Subsidiaries
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Table of Contents
1
Table of Contents
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 | ||||
2
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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 | ) | ||
3
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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 | ||||
4
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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 | ||||
5
Table of Contents
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 | ) | ||
6
Table of Contents
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 | ||||
7
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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 | ||||
8
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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 | ) | ||
9
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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 | ||||
10
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SUNGARD CAPITAL CORP. II
SUNGARD DATA SYSTEMS INC.
11
Table of Contents
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 | |||||||||||||||
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 | ||||
4. | Derivatives: |
12
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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 | % | ||||||||||||
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 |
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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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 | |||||||||
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 |
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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Table of Contents
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 | ||||||||||||||||
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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Table of Contents
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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Table of Contents
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 | |||||
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 | ||||
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Table of Contents
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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Table of Contents
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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Table of Contents
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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Table of Contents
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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. |
22
Table of Contents
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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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. |
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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Item 3. | Quantitative and Qualitative Disclosures about Market Risk: |
Item 4T. | Controls and Procedures: |
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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: |
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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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) |
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 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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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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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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