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 |
Delaware | 20-3059890 | |
Delaware | 20-3060101 | |
Delaware | 51-0267091 | |
(State or other jurisdiction of | (IRS Employer | |
incorporation or organization) | Identification No.) |
SunGard Capital Corp.
|
Yes þ | No o | ||
SunGard Capital Corp. II
|
Yes þ | No o | ||
SunGard Data Systems Inc.
|
Yes o | No þ |
SunGard Capital Corp.
|
Yes o | No o | ||
SunGard Capital Corp. II
|
Yes o | No o | ||
SunGard Data Systems Inc.
|
Yes o | No o |
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. |
SunGard Capital Corp.
|
Yes o | No þ | ||
SunGard Capital Corp. II
|
Yes o | No þ | ||
SunGard Data Systems Inc.
|
Yes o | No þ |
SunGard Capital Corp.
|
255,421,947 shares of Class A common stock and 28,380,147 shares of Class L common stock | |
SunGard Capital Corp. II
|
100 shares of common stock | |
SunGard Data Systems Inc.
|
100 shares of common stock |
Page | ||||
SunGard Capital Corp. |
||||
2 | ||||
3 | ||||
4 | ||||
SunGard Capital Corp. II |
||||
5 | ||||
6 | ||||
7 | ||||
SunGard Data Systems Inc. |
||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
23 | ||||
32 | ||||
32 |
1
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
Assets |
||||||||
Current: |
||||||||
Cash and cash equivalents |
$ | 778 | $ | 776 | ||||
Trade receivables, less allowance for doubtful accounts of $41 and $51 |
894 | 781 | ||||||
Earned but unbilled receivables |
167 | 193 | ||||||
Prepaid expenses and other current assets |
178 | 209 | ||||||
Clearing broker assets |
230 | 316 | ||||||
Deferred income taxes |
10 | 10 | ||||||
Total current assets |
2,257 | 2,285 | ||||||
Property and equipment, less accumulated depreciation of $1,135 and $1,199 |
918 | 923 | ||||||
Software products, less accumulated amortization of $1,301 and $1,366 |
809 | 766 | ||||||
Customer base, less accumulated amortization of $1,158 and $1,223 |
2,000 | 1,948 | ||||||
Other intangible assets, less accumulated amortization of $23 and $22 |
187 | 178 | ||||||
Trade name, less accumulated amortization of $7 and $9 |
1,023 | 1,021 | ||||||
Goodwill |
5,774 | 5,813 | ||||||
Total Assets |
$ | 12,968 | $ | 12,934 | ||||
Liabilities and Equity |
||||||||
Current: |
||||||||
Short-term and current portion of long-term debt |
$ | 9 | $ | 10 | ||||
Accounts payable |
64 | 55 | ||||||
Accrued compensation and benefits |
302 | 224 | ||||||
Accrued interest expense |
103 | 107 | ||||||
Other accrued expenses |
421 | 336 | ||||||
Clearing broker liabilities |
210 | 291 | ||||||
Deferred revenue |
997 | 987 | ||||||
Total current liabilities |
2,106 | 2,010 | ||||||
Long-term debt |
8,046 | 8,068 | ||||||
Deferred income taxes |
1,212 | 1,206 | ||||||
Total liabilities |
11,364 | 11,284 | ||||||
Commitments and contingencies |
||||||||
Noncontrolling interest in preferred stock of SCCII subject to a put option |
54 | 48 | ||||||
Class L common stock subject to a put option |
87 | 69 | ||||||
Class A common stock subject to a put option |
11 | 9 | ||||||
Stockholders equity: |
||||||||
Class L common stock, convertible, par value $.001 per share; cumulative 13.5% per annum,
compounded quarterly; aggregate liquidation preference of $4,699 million and
$4,857 million; 50,000,000 shares authorized, 28,670,331 and 28,706,654 shares issued |
| | ||||||
Class A common stock, par value $.001 per share; 550,000,000 shares authorized,
258,037,523 and 258,364,528 shares issued |
| | ||||||
Capital in excess of par value |
2,703 | 2,726 | ||||||
Treasury stock, 326,329 and 326,507 shares of Class L common stock; and
2,940,981 and 2,942,581 shares of Class A common stock |
(34 | ) | (34 | ) | ||||
Accumulated deficit |
(2,970 | ) | (3,047 | ) | ||||
Accumulated other comprehensive income (loss) |
(29 | ) | 36 | |||||
Total SunGard Capital Corp. stockholders deficit |
(330 | ) | (319 | ) | ||||
Noncontrolling interest in preferred stock of SCCII |
1,782 | 1,843 | ||||||
Total equity |
1,452 | 1,524 | ||||||
Total Liabilities and Equity |
$ | 12,968 | $ | 12,934 | ||||
2
Three Months Ended March 31, | ||||||||
2010 | 2011 | |||||||
Revenue: |
||||||||
Services |
$ | 1,104 | $ | 1,104 | ||||
License and resale fees |
68 | 74 | ||||||
Total products and services |
1,172 | 1,178 | ||||||
Reimbursed expenses |
28 | 32 | ||||||
1,200 | 1,210 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
568 | 559 | ||||||
Sales, marketing and administration |
271 | 283 | ||||||
Product development |
96 | 108 | ||||||
Depreciation and amortization |
74 | 72 | ||||||
Amortization of acquisition-related intangible assets |
120 | 125 | ||||||
1,129 | 1,147 | |||||||
Operating income |
71 | 63 | ||||||
Interest income |
| 1 | ||||||
Interest expense and amortization of deferred financing fees |
(159 | ) | (137 | ) | ||||
Other expense |
| (2 | ) | |||||
Loss from continuing operations before income taxes |
(88 | ) | (75 | ) | ||||
Benefit from income taxes |
32 | 52 | ||||||
Loss from continuing operations |
(56 | ) | (23 | ) | ||||
Income from discontinued operations, net of tax |
2 | | ||||||
Net loss |
(54 | ) | (23 | ) | ||||
Income attributable to the noncontrolling interest (including $6 million
and $1 million in temporary equity) |
(47 | ) | (54 | ) | ||||
Net loss attributable to SunGard Capital Corp. |
$ | (101 | ) | $ | (77 | ) | ||
3
Three Months ended March 31, | ||||||||
(in millions) | 2010 | 2011 | ||||||
Cash flow from operations: |
||||||||
Net loss |
$ | (54 | ) | $ | (23 | ) | ||
Income from discontinued operations, net of tax |
2 | | ||||||
Loss from continuing operations |
(56 | ) | (23 | ) | ||||
Reconciliation of loss from continuing operations to cash flow from operations: |
||||||||
Depreciation and amortization |
194 | 197 | ||||||
Deferred income tax benefit |
(29 | ) | (18 | ) | ||||
Stock compensation expense |
8 | 6 | ||||||
Amortization of deferred financing costs and debt discount |
11 | 10 | ||||||
Other noncash items |
1 | 3 | ||||||
Accounts receivable and other current assets |
155 | 60 | ||||||
Accounts payable and accrued expenses |
(194 | ) | (167 | ) | ||||
Clearing broker assets and liabilities, net |
1 | (4 | ) | |||||
Deferred revenue |
(25 | ) | (11 | ) | ||||
Cash flow from continuing operations |
66 | 53 | ||||||
Cash flow from discontinued operations |
13 | | ||||||
Cash flow from operations |
79 | 53 | ||||||
Investment activities: |
||||||||
Cash paid for acquired businesses, net of cash acquired |
(13 | ) | (19 | ) | ||||
Cash paid for property and equipment and software |
(76 | ) | (64 | ) | ||||
Other investing activities |
8 | 1 | ||||||
Cash used in continuing operations |
(81 | ) | (82 | ) | ||||
Cash provided by (used in) discontinued operations |
| | ||||||
Cash used in investment activities |
(81 | ) | (82 | ) | ||||
Financing activities: |
||||||||
Cash received from issuance of common stock |
1 | | ||||||
Cash received from borrowings, net of fees |
3 | 14 | ||||||
Cash used to repay debt |
(22 | ) | (1 | ) | ||||
Other financing activities |
| (2 | ) | |||||
Cash provided by (used in) continuing operations |
(18 | ) | 11 | |||||
Cash provided by (used in) discontinued operations |
| | ||||||
Cash provided by (used in) financing activities |
(18 | ) | 11 | |||||
Effect of exchange rate changes on cash |
(7 | ) | 16 | |||||
Decrease in cash and cash equivalents |
(27 | ) | (2 | ) | ||||
Beginning cash and cash equivalents includes cash of discontinued operations: (2010: $22) |
664 | 778 | ||||||
Ending cash and cash equivalents includes cash of discontinued operations: (2010: $36) |
$ | 637 | $ | 776 | ||||
4
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
Assets |
||||||||
Current: |
||||||||
Cash and cash equivalents |
$ | 778 | $ | 776 | ||||
Trade receivables, less allowance for doubtful accounts of $41 and $51 |
894 | 781 | ||||||
Earned but unbilled receivables |
167 | 193 | ||||||
Prepaid expenses and other current assets |
178 | 209 | ||||||
Clearing broker assets |
230 | 316 | ||||||
Deferred income taxes |
10 | 10 | ||||||
Total current assets |
2,257 | 2,285 | ||||||
Property and equipment, less accumulated depreciation of $1,135 and $1,199 |
918 | 923 | ||||||
Software products, less accumulated amortization of $1,301 and $1,366 |
809 | 766 | ||||||
Customer base, less accumulated amortization of $1,158 and $1,223 |
2,000 | 1,948 | ||||||
Other intangible assets, less accumulated amortization of $23 and $22 |
187 | 178 | ||||||
Trade name, less accumulated amortization of $7 and $9 |
1,023 | 1,021 | ||||||
Goodwill |
5,774 | 5,813 | ||||||
Total Assets |
$ | 12,968 | $ | 12,934 | ||||
Liabilities and Stockholders Equity |
||||||||
Current: |
||||||||
Short-term and current portion of long-term debt |
$ | 9 | $ | 10 | ||||
Accounts payable |
64 | 55 | ||||||
Accrued compensation and benefits |
302 | 224 | ||||||
Accrued interest expense |
103 | 107 | ||||||
Other accrued expenses |
422 | 336 | ||||||
Clearing broker liabilities |
210 | 291 | ||||||
Deferred revenue |
997 | 987 | ||||||
Total current liabilities |
2,107 | 2,010 | ||||||
Long-term debt |
8,046 | 8,068 | ||||||
Deferred income taxes |
1,211 | 1,206 | ||||||
Total liabilities |
11,364 | 11,284 | ||||||
Commitments and contingencies |
||||||||
Preferred stock subject to a put option |
37 | 30 | ||||||
Stockholders equity: |
||||||||
Preferred stock, par value $.001 per share; cumulative 11.5% per annum, compounded
quarterly; aggregate liquidation preference of $1,818 million and $1,873 million;
14,999,000 shares authorized, 9,924,392 and 9,936,969 issued |
| | ||||||
Common stock, par value $.001 per share; 1,000 shares authorized,
100 shares issued and outstanding |
| | ||||||
Capital in excess of par value |
3,747 | 3,758 | ||||||
Treasury stock, 112,987 and 113,048 shares |
(14 | ) | (14 | ) | ||||
Accumulated deficit |
(2,137 | ) | (2,160 | ) | ||||
Accumulated other comprehensive income (loss) |
(29 | ) | 36 | |||||
Total stockholders equity |
1,567 | 1,620 | ||||||
Total Liabilities and Stockholders Equity |
$ | 12,968 | $ | 12,934 | ||||
5
Three months ended March 31, | ||||||||
2010 | 2011 | |||||||
Revenue: |
||||||||
Services |
$ | 1,104 | $ | 1,104 | ||||
License and resale fees |
68 | 74 | ||||||
Total products and services |
1,172 | 1,178 | ||||||
Reimbursed expenses |
28 | 32 | ||||||
1,200 | 1,210 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
568 | 559 | ||||||
Sales, marketing and administration |
271 | 283 | ||||||
Product development |
96 | 108 | ||||||
Depreciation and amortization |
74 | 72 | ||||||
Amortization of acquisition-related intangible assets |
120 | 125 | ||||||
1,129 | 1,147 | |||||||
Operating income |
71 | 63 | ||||||
Interest income |
| 1 | ||||||
Interest expense and amortization of deferred financing fees |
(159 | ) | (137 | ) | ||||
Other expense |
| (2 | ) | |||||
Loss from continuing operations before income taxes |
(88 | ) | (75 | ) | ||||
Benefit from income taxes |
32 | 52 | ||||||
Loss from continuing operations |
(56 | ) | (23 | ) | ||||
Income from discontinued operations, net of tax |
2 | | ||||||
Net loss |
$ | (54 | ) | $ | (23 | ) | ||
6
Three Months ended March 31, | ||||||||
(in millions) | 2010 | 2011 | ||||||
Cash flow from operations: |
||||||||
Net loss |
$ | (54 | ) | $ | (23 | ) | ||
Income from discontinued operations, net of tax |
2 | | ||||||
Loss from continuing operations |
(56 | ) | (23 | ) | ||||
Reconciliation of loss from continuing operations to cash flow from operations: |
||||||||
Depreciation and amortization |
194 | 197 | ||||||
Deferred income tax benefit |
(29 | ) | (18 | ) | ||||
Stock compensation expense |
8 | 6 | ||||||
Amortization of deferred financing costs and debt discount |
11 | 10 | ||||||
Other noncash items |
1 | 3 | ||||||
Accounts receivable and other current assets |
155 | 60 | ||||||
Accounts payable and accrued expenses |
(193 | ) | (167 | ) | ||||
Clearing broker assets and liabilities, net |
1 | (4 | ) | |||||
Deferred revenue |
(25 | ) | (11 | ) | ||||
Cash flow from continuing operations |
67 | 53 | ||||||
Cash flow from discontinued operations |
13 | | ||||||
Cash flow from operations |
80 | 53 | ||||||
Investment activities: |
||||||||
Cash paid for acquired businesses, net of cash acquired |
(13 | ) | (19 | ) | ||||
Cash paid for property and equipment and software |
(76 | ) | (64 | ) | ||||
Other investing activities |
8 | 1 | ||||||
Cash used in continuing operations |
(81 | ) | (82 | ) | ||||
Cash provided by (used in) discontinued operations |
| | ||||||
Cash used in investment activities |
(81 | ) | (82 | ) | ||||
Financing activities: |
||||||||
Cash received from borrowings, net of fees |
3 | 14 | ||||||
Cash used to repay debt |
(22 | ) | (1 | ) | ||||
Other financing activities |
| (2 | ) | |||||
Cash provided by (used in) continuing operations |
(19 | ) | 11 | |||||
Cash provided by (used in) discontinued operations |
| | ||||||
Cash provided by (used in) financing activities |
(19 | ) | 11 | |||||
Effect of exchange rate changes on cash |
(7 | ) | 16 | |||||
Decrease in cash and cash equivalents |
(27 | ) | (2 | ) | ||||
Beginning cash and cash equivalents includes cash of discontinued operations: (2010: $22) |
664 | 778 | ||||||
Ending cash and cash equivalents includes cash of discontinued operations: (2010: $36) |
$ | 637 | $ | 776 | ||||
7
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
Assets |
||||||||
Current: |
||||||||
Cash and cash equivalents |
$ | 778 | $ | 776 | ||||
Trade receivables, less allowance for doubtful accounts of $41 and $51 |
894 | 781 | ||||||
Earned but unbilled receivables |
167 | 193 | ||||||
Prepaid expenses and other current assets |
178 | 209 | ||||||
Clearing broker assets |
230 | 316 | ||||||
Deferred income taxes |
10 | 10 | ||||||
Total current assets |
2,257 | 2,285 | ||||||
Property and equipment, less accumulated depreciation of $1,135 and $1,199 |
918 | 923 | ||||||
Software products, less accumulated amortization of $1,301 and $1,366 |
809 | 766 | ||||||
Customer base, less accumulated amortization of $1,158 and $1,223 |
2,000 | 1,948 | ||||||
Other intangible assets, less accumulated amortization of $23 and $22 |
187 | 178 | ||||||
Trade name, less accumulated amortization of $7 and $9 |
1,023 | 1,021 | ||||||
Goodwill |
5,774 | 5,813 | ||||||
Total Assets |
$ | 12,968 | $ | 12,934 | ||||
Liabilities and Stockholders Equity |
||||||||
Current: |
||||||||
Short-term and current portion of long-term debt |
$ | 9 | $ | 10 | ||||
Accounts payable |
64 | 55 | ||||||
Accrued compensation and benefits |
302 | 224 | ||||||
Accrued interest expense |
103 | 107 | ||||||
Other accrued expenses |
423 | 338 | ||||||
Clearing broker liabilities |
210 | 291 | ||||||
Deferred revenue |
997 | 987 | ||||||
Total current liabilities |
2,108 | 2,012 | ||||||
Long-term debt |
8,046 | 8,068 | ||||||
Deferred income taxes |
1,207 | 1,201 | ||||||
Total liabilities |
11,361 | 11,281 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common stock, par value $.01 per share; 100 shares authorized,
issued and outstanding |
| | ||||||
Capital in excess of par value |
3,773 | 3,777 | ||||||
Accumulated deficit |
(2,137 | ) | (2,160 | ) | ||||
Accumulated other comprehensive income (loss) |
(29 | ) | 36 | |||||
Total stockholders equity |
1,607 | 1,653 | ||||||
Total Liabilities and Stockholders Equity |
$ | 12,968 | $ | 12,934 | ||||
8
Three months ended March 31, | ||||||||
2010 | 2011 | |||||||
Revenue: |
||||||||
Services |
$ | 1,104 | $ | 1,104 | ||||
License and resale fees |
68 | 74 | ||||||
Total products and services |
1,172 | 1,178 | ||||||
Reimbursed expenses |
28 | 32 | ||||||
1,200 | 1,210 | |||||||
Costs and expenses: |
||||||||
Cost of sales and direct operating |
568 | 559 | ||||||
Sales, marketing and administration |
271 | 283 | ||||||
Product development |
96 | 108 | ||||||
Depreciation and amortization |
74 | 72 | ||||||
Amortization of acquisition-related intangible assets |
120 | 125 | ||||||
1,129 | 1,147 | |||||||
Operating income |
71 | 63 | ||||||
Interest income |
| 1 | ||||||
Interest expense and amortization of deferred financing fees |
(159 | ) | (137 | ) | ||||
Other expense |
| (2 | ) | |||||
Loss from continuing operations before income taxes |
(88 | ) | (75 | ) | ||||
Benefit from income taxes |
32 | 52 | ||||||
Loss from continuing operations |
(56 | ) | (23 | ) | ||||
Income from discontinued operations, net of tax |
2 | | ||||||
Net loss |
$ | (54 | ) | $ | (23 | ) | ||
9
Three Months ended March 31, | ||||||||
2010 | 2011 | |||||||
Cash flow from operations: |
||||||||
Net loss |
$ | (54 | ) | $ | (23 | ) | ||
Income from discontinued operations, net of tax |
2 | | ||||||
Loss from continuing operations |
(56 | ) | (23 | ) | ||||
Reconciliation of loss from continuing operations to cash flow from operations: |
||||||||
Depreciation and amortization |
194 | 197 | ||||||
Deferred income tax benefit |
(29 | ) | (18 | ) | ||||
Stock compensation expense |
8 | 6 | ||||||
Amortization of deferred financing costs and debt discount |
11 | 10 | ||||||
Other noncash items |
1 | 3 | ||||||
Accounts receivable and other current assets |
155 | 60 | ||||||
Accounts payable and accrued expenses |
(193 | ) | (167 | ) | ||||
Clearing broker assets and liabilities, net |
1 | (4 | ) | |||||
Deferred revenue |
(25 | ) | (11 | ) | ||||
Cash flow from continuing operations |
67 | 53 | ||||||
Cash flow from discontinued operations |
13 | | ||||||
Cash flow from operations |
80 | 53 | ||||||
Investment activities: |
||||||||
Cash paid for acquired businesses, net of cash acquired |
(13 | ) | (19 | ) | ||||
Cash paid for property and equipment and software |
(76 | ) | (64 | ) | ||||
Other investing activities |
8 | 1 | ||||||
Cash used in continuing operations |
(81 | ) | (82 | ) | ||||
Cash provided by (used in) discontinued operations |
| | ||||||
Cash used in investment activities |
(81 | ) | (82 | ) | ||||
Financing activities: |
||||||||
Cash received from borrowings, net of fees |
3 | 14 | ||||||
Cash used to repay debt |
(22 | ) | (1 | ) | ||||
Other financing activities |
| (2 | ) | |||||
Cash provided by (used in) continuing operations |
(19 | ) | 11 | |||||
Cash provided by (used in) discontinued operations |
| | ||||||
Cash provided by (used in) financing activities |
(19 | ) | 11 | |||||
Effect of exchange rate changes on cash |
(7 | ) | 16 | |||||
Decrease in cash and cash equivalents |
(27 | ) | (2 | ) | ||||
Beginning cash and cash equivalents includes cash of discontinued operations: (2010: $22) |
664 | 778 | ||||||
Ending cash and cash equivalents includes cash of discontinued operations: (2010: $36) |
$ | 637 | $ | 776 | ||||
10
Three Months ended | ||||
March 31, 2010 | ||||
Revenue |
$ | 49 | ||
Operating income |
3 | |||
Income before income taxes |
3 | |||
Provision for income taxes |
(1 | ) | ||
Income from discontinued operations |
$ | 2 | ||
11
Cost | Cumulative Impairment | |||||||||||||||||||||||||||||||||||||||
FS | HE | PS | AS | Subtotal | HE | PS | AS | Subtotal | Total | |||||||||||||||||||||||||||||||
Balance at December 31, 2010 |
$ | 3,450 | $ | 1,048 | $ | 436 | $ | 2,203 | $ | 7,137 | $ | (32 | ) | $ | (205 | ) | $ | (1,126 | ) | $ | (1,363 | ) | $ | 5,774 | ||||||||||||||||
2011 acquisitions |
4 | | | | 4 | | | | | 4 | ||||||||||||||||||||||||||||||
Adjustments related to the Transaction and prior year acquisitions |
(1 | ) | | | | (1 | ) | | | | | (1 | ) | |||||||||||||||||||||||||||
Effect of foreign currency translation |
28 | | | 8 | 36 | | | | | 36 | ||||||||||||||||||||||||||||||
Balance at March 31, 2011 |
$ | 3,481 | $ | 1,048 | $ | 436 | $ | 2,211 | $ | 7,176 | $ | (32 | ) | $ | (205 | ) | $ | (1,126 | ) | $ | (1,363 | ) | $ | 5,813 | ||||||||||||||||
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
Segregated customer cash and treasury bills |
$ | 57 | $ | 67 | ||||
Collateral for securities borrowed |
154 | 231 | ||||||
Receivables from customers and other |
19 | 18 | ||||||
Clearing broker assets |
$ | 230 | $ | 316 | ||||
Payables to customers |
$ | 19 | $ | 19 | ||||
Collateral for securities loaned |
137 | 213 | ||||||
Payable to brokers and dealers |
54 | 59 | ||||||
Clearing broker liabilities |
$ | 210 | $ | 291 | ||||
12
Notional | Interest rate | |||||||||||||||
Amount | Interest rate | received | ||||||||||||||
Inception | Maturity | (in millions) | paid | (LIBOR) | ||||||||||||
January/February 2009 |
February 2012 | $ | 1,200 | 1.78 | % | 1-Month | ||||||||||
February 2010 |
May 2013 | 500 | 1.99 | % | 3-Month | |||||||||||
Total / Weighted Average interest rate |
$ | 1,700 | 1.84 | % | ||||||||||||
Three Months ended | ||||||||||||
March 31, | ||||||||||||
Classification | 2010 | 2011 | ||||||||||
Loss recognized in Accumulated Other Comprehensive Loss (OCI) |
OCI | $ | (20 | ) | $ | (1 | ) | |||||
Loss reclassified from accumulated OCI into income |
Interest expense and amortization of deferred financing fees | 22 | 13 |
Fair Value Measures Using | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents money market funds |
$ | 278 | $ | | $ | | $ | 278 | ||||||||
Liabilities |
||||||||||||||||
Interest rate swap agreements and other |
$ | | $ | 22 | $ | | $ | 22 | ||||||||
Fair Value Measures Using | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents money market funds |
$ | 210 | $ | | $ | | $ | 210 | ||||||||
Clearing broker assets treasury bills |
2 | | | 2 | ||||||||||||
$ | 212 | $ | | $ | | $ | 212 | |||||||||
Liabilities |
||||||||||||||||
Interest rate swap agreements and other |
$ | | $ | 34 | $ | | $ | 34 | ||||||||
13
December 31, 2010 | March 31, 2011 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Floating rate debt |
$ | 4,707 | $ | 4,644 | $ | 4,727 | $ | 4,702 | ||||||||
Fixed rate debt |
3,348 | 3,432 | 3,351 | 3,481 |
Three Months Ended March 31, | ||||||||
2010 | 2011 | |||||||
Net loss |
$ | (54 | ) | $ | (23 | ) | ||
Foreign currency translation gains (losses) |
(61 | ) | 57 | |||||
Unrealized gains on derivative instruments |
2 | 8 | ||||||
Comprehensive income (loss) |
$ | (113 | ) | $ | 42 | |||
14
SunGard Capital Corp. stockholders | Noncontrolling interest | |||||||||||||||||||||||||||
Class L - | Class A - | |||||||||||||||||||||||||||
temporary | temporary | Permanent | Temporary | Permanent | ||||||||||||||||||||||||
equity | equity | equity | Total | equity | equity | Total | ||||||||||||||||||||||
Balance at December 31, 2010 |
$ | 87 | $ | 11 | $ | (330 | ) | $ | (232 | ) | $ | 54 | $ | 1,782 | $ | 1,836 | ||||||||||||
Net income (loss) |
| | (77 | ) | (77 | ) | 1 | 53 | 54 | |||||||||||||||||||
Foreign currency translation |
| | 57 | 57 | | | | |||||||||||||||||||||
Net unrealized gain on derivative instruments |
| | 8 | 8 | | | | |||||||||||||||||||||
Comprehensive income (loss) |
| | (12 | ) | (12 | ) | 1 | 53 | 54 | |||||||||||||||||||
Stock compensation expense |
| | 6 | 6 | | | | |||||||||||||||||||||
Termination of put options due to employee terminations and other |
(20 | ) | (2 | ) | 22 | | (8 | ) | 8 | | ||||||||||||||||||
Transfer intrinsic value of vested restricted stock units |
2 | | (3 | ) | (1 | ) | 1 | | 1 | |||||||||||||||||||
Other |
| | (2 | ) | (2 | ) | | | | |||||||||||||||||||
Balance at March 31, 2011 |
$ | 69 | $ | 9 | $ | (319 | ) | $ | (241 | ) | $ | 48 | $ | 1,843 | $ | 1,891 | ||||||||||||
SunGard Capital Corp. stockholders | Noncontrolling interest | |||||||||||||||||||||||||||
Class L - | Class A - | |||||||||||||||||||||||||||
temporary | temporary | Permanent | Temporary | Permanent | ||||||||||||||||||||||||
equity | equity | equity | Total | equity | equity | Total | ||||||||||||||||||||||
Balance at December 31, 2009 |
$ | 88 | $ | 11 | $ | 321 | $ | 420 | $ | 51 | $ | 1,593 | $ | 1,644 | ||||||||||||||
Net income (loss) |
| | (101 | ) | (101 | ) | 6 | 41 | 47 | |||||||||||||||||||
Foreign currency translation |
| | (61 | ) | (61 | ) | | | | |||||||||||||||||||
Net unrealized gain on derivative instruments |
| | 2 | 2 | | | | |||||||||||||||||||||
Comprehensive income (loss) |
| | (160 | ) | (160 | ) | 6 | 41 | 47 | |||||||||||||||||||
Stock compensation expense |
| | 8 | 8 | | | | |||||||||||||||||||||
Transfer intrinsic value of vested restricted
stock units |
2 | | (4 | ) | (2 | ) | 1 | | 1 | |||||||||||||||||||
Balance at March 31, 2010 |
$ | 90 | $ | 11 | $ | 165 | $ | 266 | $ | 58 | $ | 1,634 | $ | 1,692 | ||||||||||||||
15
Three Months Ended March 31, | ||||||||
2010 | 2011 | |||||||
Revenue: |
||||||||
Financial systems |
$ | 660 | $ | 672 | ||||
Higher education |
136 | 140 | ||||||
Public sector |
35 | 34 | ||||||
Software & processing solutions |
831 | 846 | ||||||
Availability services |
369 | 364 | ||||||
$ | 1,200 | $ | 1,210 | |||||
Depreciation and amortization: |
||||||||
Financial systems |
$ | 19 | $ | 21 | ||||
Higher education |
4 | 4 | ||||||
Public sector |
1 | 1 | ||||||
Software & processing solutions |
24 | 26 | ||||||
Availability services |
50 | 46 | ||||||
$ | 74 | $ | 72 | |||||
Income (loss) from operations: |
||||||||
Financial systems |
$ | 114 | $ | 115 | ||||
Higher education |
34 | 27 | ||||||
Public sector |
8 | 10 | ||||||
Software & processing solutions |
156 | 152 | ||||||
Availability services |
70 | 73 | ||||||
Corporate and other items (1) |
(145 | ) | (150 | ) | ||||
Other costs |
(10 | ) | (12 | ) | ||||
$ | 71 | $ | 63 | |||||
Cash paid for property and equipment and software: |
||||||||
Financial systems |
$ | 20 | $ | 23 | ||||
Higher education |
2 | 3 | ||||||
Public sector |
2 | 1 | ||||||
Software & processing solutions |
24 | 27 | ||||||
Availability services |
51 | 35 | ||||||
Corporate administration |
1 | 2 | ||||||
$ | 76 | $ | 64 | |||||
(1) | Includes corporate administrative expenses, stock compensation expense, management
fees paid to the Sponsors, other items and amortization of acquisition-related intangible assets of
$120 million and $125 million for the three month periods ended March 31, 2010 and 2011,
respectively. |
16
Three Months Ended March 31, | ||||||||
2010 | 2011 | |||||||
Amortization of acquisition-related intangible assets: |
||||||||
Financial systems |
$ | 64 | $ | 69 | (1) | |||
Higher education |
10 | 10 | ||||||
Public sector |
4 | 3 | ||||||
Software & processing solutions |
78 | 82 | ||||||
Availability services |
42 | 43 | ||||||
$ | 120 | $ | 125 | |||||
(1) | Amortization of acquisition-related intangible assets in 2011 includes approximately $3
million and $4 million of impairment charges related to customer base and software, respectively,
for a subsidiary in the FS segment. |
Three Months Ended March 31, | ||||||||
2010 | 2011 | |||||||
Position, Risk & Operations |
$ | 152 | $ | 175 | ||||
Global Trading |
146 | 131 | ||||||
Wealth Management |
92 | 91 | ||||||
Asset Management |
85 | 89 | ||||||
Banking |
43 | 47 | ||||||
Corporate Liquidity |
45 | 41 | ||||||
Insurance |
38 | 39 | ||||||
Global Services |
32 | 30 | ||||||
Technology, Deployment & Distribution |
19 | 22 | ||||||
Computer Services |
8 | 7 | ||||||
Total Financial Systems |
$ | 660 | $ | 672 | ||||
17
Three Months ended March 31, | ||||||||
2010 | 2011 | |||||||
Supplemental information: |
||||||||
Acquired businesses: |
||||||||
Property and equipment |
$ | 2 | $ | 1 | ||||
Software products |
3 | 11 | ||||||
Customer base |
10 | 8 | ||||||
Goodwill |
2 | 4 | ||||||
Other tangible and intangible assets |
3 | | ||||||
Deferred income taxes |
(2 | ) | (4 | ) | ||||
Purchase price obligations and debt assumed |
(1 | ) | (1 | ) | ||||
Net current liabilities assumed |
(4 | ) | | |||||
Cash paid for acquired businesses, net of cash acquired of $1 and $3, respectively |
$ | 13 | $ | 19 | ||||
18
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | ||||||||||||||||||
(in millions) | Company | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets |
||||||||||||||||||||
Current: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 179 | $ | | $ | 599 | $ | | $ | 778 | ||||||||||
Intercompany balances |
(7,500 | ) | 6,659 | 841 | | | ||||||||||||||
Trade receivables, net |
2 | 702 | 357 | | 1,061 | |||||||||||||||
Prepaid expenses, taxes and other current assets |
2,729 | 85 | 309 | (2,705 | ) | 418 | ||||||||||||||
Total current assets |
(4,590 | ) | 7,446 | 2,106 | (2,705 | ) | 2,257 | |||||||||||||
Property and equipment, net |
| 602 | 316 | | 918 | |||||||||||||||
Intangible assets, net |
150 | 3,330 | 539 | | 4,019 | |||||||||||||||
Intercompany balances |
(4 | ) | | 4 | | | ||||||||||||||
Goodwill |
| 4,657 | 1,117 | | 5,774 | |||||||||||||||
Investment in subsidiaries |
14,012 | 2,456 | | (16,468 | ) | | ||||||||||||||
Total Assets |
$ | 9,568 | $ | 18,491 | $ | 4,082 | $ | (19,173 | ) | $ | 12,968 | |||||||||
Liabilities and Stockholders Equity |
||||||||||||||||||||
Current: |
||||||||||||||||||||
Short-term and current portion of long-term debt |
$ | | $ | 2 | $ | 7 | $ | | $ | 9 | ||||||||||
Accounts payable and other current liabilities |
203 | 3,661 | 940 | (2,705 | ) | 2,099 | ||||||||||||||
Total current liabilities |
203 | 3,663 | 947 | (2,705 | ) | 2,108 | ||||||||||||||
Long-term debt |
7,607 | 2 | 437 | | 8,046 | |||||||||||||||
Intercompany debt |
(195 | ) | 65 | 249 | (119 | ) | | |||||||||||||
Deferred income taxes |
346 | 749 | 112 | | 1,207 | |||||||||||||||
Total liabilities |
7,961 | 4,479 | 1,745 | (2,824 | ) | 11,361 | ||||||||||||||
Total stockholders equity |
1,607 | 14,012 | 2,337 | (16,349 | ) | 1,607 | ||||||||||||||
Total Liabilities and Stockholders Equity |
$ | 9,568 | $ | 18,491 | $ | 4,082 | $ | (19,173 | ) | $ | 12,968 | |||||||||
19
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||||||||
March 31, 2011 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | ||||||||||||||||||
(in millions) | Company | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets |
||||||||||||||||||||
Current: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 222 | $ | 8 | $ | 546 | $ | | $ | 776 | ||||||||||
Intercompany balances |
(6,227 | ) | 5,381 | 846 | | | ||||||||||||||
Trade receivables, net |
1 | 656 | 317 | | 974 | |||||||||||||||
Prepaid expenses, taxes and other current assets |
1,337 | 93 | 454 | (1,349 | ) | 535 | ||||||||||||||
Total current assets |
(4,667 | ) | 6,138 | 2,163 | (1,349 | ) | 2,285 | |||||||||||||
Property and equipment, net |
1 | 600 | 322 | | 923 | |||||||||||||||
Intangible assets, net |
144 | 3,232 | 537 | | 3,913 | |||||||||||||||
Intercompany balances |
(7 | ) | | 7 | | | ||||||||||||||
Goodwill |
| 4,656 | 1,157 | | 5,813 | |||||||||||||||
Investment in subsidiaries |
14,127 | 2,511 | | (16,638 | ) | | ||||||||||||||
Total Assets |
$ | 9,598 | $ | 17,137 | $ | 4,186 | $ | (17,987 | ) | $ | 12,934 | |||||||||
Liabilities and Stockholders Equity |
||||||||||||||||||||
Current: |
||||||||||||||||||||
Short-term and current portion of long-term debt |
$ | | $ | 2 | $ | 8 | $ | | $ | 10 | ||||||||||
Accounts payable and other current liabilities |
192 | 2,141 | 1,018 | (1,349 | ) | 2,002 | ||||||||||||||
Total current liabilities |
192 | 2,143 | 1,026 | (1,349 | ) | 2,012 | ||||||||||||||
Long-term debt |
7,608 | 2 | 458 | | 8,068 | |||||||||||||||
Intercompany debt |
(200 | ) | 127 | 250 | (177 | ) | | |||||||||||||
Deferred income taxes |
345 | 738 | 118 | | 1,201 | |||||||||||||||
Total liabilities |
7,945 | 3,010 | 1,852 | (1,526 | ) | 11,281 | ||||||||||||||
Total stockholders equity |
1,653 | 14,127 | 2,334 | (16,461 | ) | 1,653 | ||||||||||||||
Total Liabilities and Stockholders Equity |
$ | 9,598 | $ | 17,137 | $ | 4,186 | $ | (17,987 | ) | $ | 12,934 | |||||||||
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 | $ | 359 | $ | (33 | ) | $ | 1,200 | |||||||||
Costs and expenses: |
||||||||||||||||||||
Cost of sales and direct operating |
| 386 | 215 | (33 | ) | 568 | ||||||||||||||
Sales, marketing and administration |
28 | 138 | 105 | | 271 | |||||||||||||||
Product development |
| 45 | 51 | | 96 | |||||||||||||||
Depreciation and amortization |
| 54 | 20 | | 74 | |||||||||||||||
Amortization of acquisition-related intangible assets |
| 101 | 19 | | 120 | |||||||||||||||
28 | 724 | 410 | (33 | ) | 1,129 | |||||||||||||||
Operating income (loss) |
(28 | ) | 150 | (51 | ) | | 71 | |||||||||||||
Net interest income (expense) |
(147 | ) | (56 | ) | 44 | | (159 | ) | ||||||||||||
Other income (expense) |
60 | (3 | ) | | (57 | ) | | |||||||||||||
Income (loss) before income taxes |
(115 | ) | 91 | (7 | ) | (57 | ) | (88 | ) | |||||||||||
Benefit from (provision for) income taxes |
61 | (31 | ) | 2 | | 32 | ||||||||||||||
Income (loss) from continuing operations |
$ | (54 | ) | $ | 60 | $ | (5 | ) | $ | (57 | ) | $ | (56 | ) | ||||||
Income from discontinued operations, net of tax |
| | 2 | | 2 | |||||||||||||||
Net loss |
$ | (54 | ) | $ | 60 | $ | (3 | ) | $ | (57 | ) | $ | (54 | ) | ||||||
20
Supplemental Condensed Consolidating Schedule of Operations | ||||||||||||||||||||
Three Months ended March 31, 2011 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | ||||||||||||||||||
(in millions) | Company | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Total revenue |
$ | | $ | 845 | $ | 366 | $ | (1 | ) | $ | 1,210 | |||||||||
Costs and expenses: |
||||||||||||||||||||
Cost of sales and direct operating |
| 358 | 202 | (1 | ) | 559 | ||||||||||||||
Sales, marketing and administration |
26 | 146 | 111 | | 283 | |||||||||||||||
Product development |
| 29 | 79 | | 108 | |||||||||||||||
Depreciation and amortization |
| 50 | 22 | | 72 | |||||||||||||||
Amortization of acquisition-related
intangible assets |
| 97 | 28 | | 125 | |||||||||||||||
26 | 680 | 442 | (1 | ) | 1,147 | |||||||||||||||
Operating income (loss) |
(26 | ) | 165 | (76 | ) | | 63 | |||||||||||||
Net interest income (expense) |
(87 | ) | (35 | ) | (14 | ) | | (136 | ) | |||||||||||
Other income (expense) |
49 | (62 | ) | | 11 | (2 | ) | |||||||||||||
Income (loss) before income taxes |
(64 | ) | 68 | (90 | ) | 11 | (75 | ) | ||||||||||||
Benefit from (provision for) income taxes |
41 | (17 | ) | 28 | | 52 | ||||||||||||||
Net income (loss) |
$ | (23 | ) | $ | 51 | $ | (62 | ) | $ | 11 | $ | (23 | ) | |||||||
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 | ) | ||||||
Income from discontinued operations |
| | 2 | | 2 | |||||||||||||||
Income (loss) from continuing operations |
(54 | ) | 60 | (5 | ) | (57 | ) | (56 | ) | |||||||||||
Non cash adjustments |
(40 | ) | 130 | 39 | 57 | 186 | ||||||||||||||
Changes in operating assets and liabilities |
(75 | ) | 8 | 4 | | (63 | ) | |||||||||||||
Cash flow provided by (used in) continuing operations |
(169 | ) | 198 | 38 | | 67 | ||||||||||||||
Cash flow provided by discontinued operations |
| | 13 | | 13 | |||||||||||||||
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) continuing operations |
152 | (203 | ) | (30 | ) | | (81 | ) | ||||||||||||
Cash provided by (used in) discontinued operations |
| | | | | |||||||||||||||
Cash provided by (used in) investment activities |
152 | (203 | ) | (30 | ) | | (81 | ) | ||||||||||||
Financing activities: |
||||||||||||||||||||
Net repayments of long-term debt |
(11 | ) | (2 | ) | (6 | ) | | (19 | ) | |||||||||||
Other financing activities |
| | | | | |||||||||||||||
Cash provided by (used in) continuing operations |
(11 | ) | (2 | ) | (6 | ) | | (19 | ) | |||||||||||
Cash provided by (used in) discontinued operations |
| | | | | |||||||||||||||
Cash provided by (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 | |||||||||
21
Supplemental Condensed Consolidating Schedule of Cash Flows | ||||||||||||||||||||
Three months ended March 31, 2011 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | ||||||||||||||||||
(in millions) | Company | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flow from operations: |
||||||||||||||||||||
Net income (loss) |
$ | (23 | ) | $ | 51 | $ | (62 | ) | $ | 11 | $ | (23 | ) | |||||||
Non cash adjustments |
(38 | ) | 198 | 49 | (11 | ) | 198 | |||||||||||||
Changes in operating assets and liabilities |
73 | (160 | ) | (35 | ) | | (122 | ) | ||||||||||||
Cash flow provided by (used in) operations |
12 | 89 | (48 | ) | | 53 | ||||||||||||||
Investment activities: |
||||||||||||||||||||
Intercompany transactions |
39 | (33 | ) | (6 | ) | | | |||||||||||||
Cash paid for businesses acquired by the Company,
net of cash acquired |
| (6 | ) | (13 | ) | | (19 | ) | ||||||||||||
Cash paid for property and equipment and software |
(1 | ) | (43 | ) | (20 | ) | | (64 | ) | |||||||||||
Other investing activities |
| 1 | | | 1 | |||||||||||||||
Cash provided by (used in) investment activities |
38 | (81 | ) | (39 | ) | | (82 | ) | ||||||||||||
Financing activities: |
||||||||||||||||||||
Net repayments of long-term debt |
(5 | ) | | 18 | | 13 | ||||||||||||||
Other financing activities |
(2 | ) | | | | (2 | ) | |||||||||||||
Cash provided by (used in) financing activities |
(7 | ) | | 18 | | 11 | ||||||||||||||
Effect of exchange rate changes on cash |
| | 16 | | 16 | |||||||||||||||
Increase (decrease) in cash and cash equivalents |
43 | 8 | (53 | ) | | (2 | ) | |||||||||||||
Beginning cash and cash equivalents |
179 | | 599 | | 778 | |||||||||||||||
Ending cash and cash equivalents |
$ | 222 | $ | 8 | $ | 546 | $ | | $ | 776 | ||||||||||
22
23
Three Months Ended | Three Months Ended | Percent Increase | ||||||||||||||||||
March 31, | March 31, | (Decrease) | ||||||||||||||||||
(in millions) | 2010 | 2011 | 2011 vs. 2010 | |||||||||||||||||
percent of | percent of | |||||||||||||||||||
revenue | revenue | |||||||||||||||||||
Revenue |
||||||||||||||||||||
Financial systems (FS) |
$ | 660 | 55 | % | $ | 672 | 56 | % | 2 | % | ||||||||||
Higher education (HE) |
136 | 11 | % | 140 | 12 | % | 3 | % | ||||||||||||
Public sector (PS) |
35 | 3 | % | 34 | 3 | % | (3) | % | ||||||||||||
Software & processing solutions |
831 | 69 | % | 846 | 70 | % | 2 | % | ||||||||||||
Availability services (AS) |
369 | 31 | % | 364 | 30 | % | (1) | % | ||||||||||||
$ | 1,200 | 100 | % | $ | 1,210 | 100 | % | 1 | % | |||||||||||
Costs and Expenses |
||||||||||||||||||||
Cost of sales and direct
operating |
$ | 568 | 47 | % | $ | 559 | 46 | % | (2) | % | ||||||||||
Sales, marketing and
administration |
271 | 23 | % | 283 | 23 | % | 4 | % | ||||||||||||
Product development |
96 | 8 | % | 108 | 9 | % | 13 | % | ||||||||||||
Depreciation and amortization |
74 | 6 | % | 72 | 6 | % | (3) | % | ||||||||||||
Amortization of acquisition-
related intangible assets |
120 | 10 | % | 125 | 10 | % | 4 | % | ||||||||||||
$ | 1,129 | 94 | % | $ | 1,147 | 95 | % | 2 | % | |||||||||||
Operating Income (Loss) |
||||||||||||||||||||
Financial systems (1) |
$ | 114 | 17 | % | $ | 115 | 17 | % | 1 | % | ||||||||||
Higher education (1) |
34 | 25 | % | 27 | 19 | % | (21) | % | ||||||||||||
Public sector (1) |
8 | 23 | % | 10 | 29 | % | 25 | % | ||||||||||||
Software & processing
solutions (1) |
156 | 19 | % | 152 | 18 | % | (3) | % | ||||||||||||
Availability services (1) |
70 | 19 | % | 73 | 20 | % | 4 | % | ||||||||||||
Corporate administration |
(17 | ) | (1) | % | (19 | ) | (2) | % | 12 | % | ||||||||||
Amortization of acquisition-
related intangible assets |
(120 | ) | (10) | % | (125 | ) | (10) | % | 4 | % | ||||||||||
Stock compensation expense |
(8 | ) | (1) | % | (6 | ) | | % | (25) | % | ||||||||||
Other costs (2) |
(10 | ) | (1) | % | (12 | ) | (1) | % | 20 | % | ||||||||||
$ | 71 | 6 | % | $ | 63 | 5 | % | (11) | % | |||||||||||
(1) | Percent of revenue is calculated as a percent of revenue from FS, HE, PS, Software and Processing Solutions, and AS, respectively. | |
(2) | Other costs include certain purchase accounting adjustments, management fees paid to the Sponsors and certain other costs, partially offset in each year by capitalized software development costs. |
24
Three Months Ended | Three Months Ended | Percent Increase | ||||||||||||||||||
March 31, | March 31, | (Decrease) | ||||||||||||||||||
(in millions) | 2010 | 2011 | 2011 vs. 2010 | |||||||||||||||||
percent of | percent of | |||||||||||||||||||
revenue | revenue | |||||||||||||||||||
Financial Systems |
||||||||||||||||||||
Services |
$ | 593 | 49 | % | $ | 592 | 49 | % | | % | ||||||||||
License and resale fees |
45 | 4 | % | 54 | 4 | % | 20 | % | ||||||||||||
Total products and services |
638 | 53 | % | 646 | 53 | % | 1 | % | ||||||||||||
Reimbursed expenses |
22 | 2 | % | 26 | 2 | % | 18 | % | ||||||||||||
$ | 660 | 55 | % | $ | 672 | 56 | % | 2 | % | |||||||||||
Higher Education |
||||||||||||||||||||
Services |
$ | 116 | 10 | % | $ | 122 | 10 | % | 5 | % | ||||||||||
License and resale fees |
18 | 2 | % | 16 | 1 | % | (11) | % | ||||||||||||
Total products and services |
134 | 11 | % | 138 | 11 | % | 3 | % | ||||||||||||
Reimbursed expenses |
2 | | % | 2 | | % | | % | ||||||||||||
$ | 136 | 11 | % | $ | 140 | 12 | % | 3 | % | |||||||||||
Public Sector |
||||||||||||||||||||
Services |
$ | 30 | 3 | % | $ | 29 | 2 | % | (3) | % | ||||||||||
License and resale fees |
4 | | % | 4 | | % | | % | ||||||||||||
Total products and services |
34 | 3 | % | 33 | 3 | % | (3) | % | ||||||||||||
Reimbursed expenses |
1 | | % | 1 | | % | | % | ||||||||||||
$ | 35 | 3 | % | $ | 34 | 3 | % | (3) | % | |||||||||||
Software & Processing
Solutions |
||||||||||||||||||||
Services |
$ | 739 | 62 | % | $ | 743 | 61 | % | 1 | % | ||||||||||
License and resale fees |
67 | 6 | % | 74 | 6 | % | 10 | % | ||||||||||||
Total products and services |
806 | 67 | % | 817 | 68 | % | 1 | % | ||||||||||||
Reimbursed expenses |
25 | 2 | % | 29 | 2 | % | 16 | % | ||||||||||||
$ | 831 | 69 | % | $ | 846 | 70 | % | 2 | % | |||||||||||
Availability Services |
||||||||||||||||||||
Services |
$ | 365 | 30 | % | $ | 361 | 30 | % | (1) | % | ||||||||||
License and resale fees |
1 | | % | | | % | (100) | % | ||||||||||||
Total products and services |
366 | 31 | % | 361 | 30 | % | (1) | % | ||||||||||||
Reimbursed expenses |
3 | | % | 3 | | % | | % | ||||||||||||
$ | 369 | 31 | % | $ | 364 | 30 | % | (1) | % | |||||||||||
Total Revenue |
||||||||||||||||||||
Services |
$ | 1,104 | 92 | % | $ | 1,104 | 91 | % | | % | ||||||||||
License and resale fees |
68 | 6 | % | 74 | 6 | % | 9 | % | ||||||||||||
Total products and services |
1,172 | 98 | % | 1,178 | 97 | % | 1 | % | ||||||||||||
Reimbursed expenses |
28 | 2 | % | 32 | 3 | % | 14 | % | ||||||||||||
$ | 1,200 | 100 | % | $ | 1,210 | 100 | % | 1 | % | |||||||||||
25
Three Months Ended March 31, | ||||||||||||
2010 | 2011 | % change | ||||||||||
(In millions) | ||||||||||||
Revenue |
||||||||||||
Total |
$ | 1,200 | $ | 1,210 | 1 | % | ||||||
Less Broker/Dealer business |
53 | 31 | ||||||||||
Total excluding Broker/Dealer business |
$ | 1,147 | $ | 1,179 | 3 | % | ||||||
Financial Systems |
$ | 660 | $ | 672 | 2 | % | ||||||
Less Broker/Dealer business |
53 | 31 | ||||||||||
Financial Systems excluding
Broker/Dealer business |
$ | 607 | $ | 641 | 6 | % | ||||||
Operating Income (Loss) |
||||||||||||
Total |
$ | 71 | $ | 63 | (11) | % | ||||||
Less Broker/Dealer business |
(6 | ) (1) | (4) | (1) | ||||||||
Total excluding Broker/Dealer business |
$ | 77 | $ | 67 | (13) | % | ||||||
Financial Systems |
$ | 114 | $ | 115 | 1 | % | ||||||
Less Broker/Dealer business |
(5 | ) (1) | (2) | (1) | ||||||||
Financial Systems excluding
Broker/Dealer business |
$ | 119 | $ | 117 | (2) | % | ||||||
(1) | The operating income related to the Broker/Dealer excluded from Total and FS differ because we evaluate performance of our segments based on operating results before amortization of acquisition-related intangible assets, stock compensation and certain other costs. |
26
27
28
29
Last Twelve | ||||||||||||
Months | ||||||||||||
Three Months Ended March 31, | March 31, | |||||||||||
2010 | 2011 | 2011 | ||||||||||
Income (loss) from continuing operations |
$ | (56 | ) | $ | (23 | ) | $ | (357 | ) | |||
Interest expense, net |
159 | 136 | 613 | |||||||||
Benefit from income taxes |
(32 | ) | (52 | ) | (49 | ) | ||||||
Depreciation and amortization |
194 | 197 | 778 | |||||||||
Goodwill impairment charge |
| | 237 | |||||||||
EBITDA |
265 | 258 | 1,222 | |||||||||
Purchase accounting adjustments (a) |
4 | 3 | 12 | |||||||||
Non-cash charges (b) |
8 | 6 | 36 | |||||||||
Restructuring and other charges (c) |
9 | 8 | 49 | |||||||||
Acquired EBITDA, net of disposed EBITDA (d) |
3 | | 6 | |||||||||
Pro forma expense savings related to acquisitions (e) |
1 | | 1 | |||||||||
Loss on extinguishment of debt and other (f) |
5 | 7 | 71 | |||||||||
Adjusted EBITDA senior secured credit facilities,
senior notes due 2015, 2018 and 2020 and
senior subordinated notes due 2015 |
$ | 295 | $ | 282 | $ | 1,397 | ||||||
30
Covenant | Actual | |||||||
Requirements | Ratios | |||||||
Senior secured credit facilities (1) |
||||||||
Minimum Adjusted EBITDA to consolidated interest expense ratio |
1.80x | 2.50x | ||||||
Maximum total debt to Adjusted EBITDA |
6.25x | 5.04x | ||||||
Senior notes due 2015, 2018 and 2020 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 | 2.66x |
(1) | The senior secured credit facilities require us to maintain an Adjusted EBITDA to consolidated interest expense ratio starting at a minimum of 1.80x for the four-quarter period ended December 31, 2010 and increasing over time to 1.95x by the end of 2011 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 SunGards receivables facility. Beginning with the four-quarter period ending December 31, 2010, 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) | SunGards 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, 2011, we had $4.40 billion outstanding under the term loan facilities and available commitments of $850 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 2015, 2018 and 2020 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. |
31
32
Number | Document | |||
10.1 | Second Refinancing and Incremental Amendment, dated as of March 11, 2011 to the Amended and Restated Credit Agreement, dated as of June 9, 2009. |
|||
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. |
33
SUNGARD CAPITAL CORP. | ||||||
SUNGARD CAPITAL CORP. II | ||||||
Dated: May 5, 2011
|
By: | /s/ Robert F. Woods
|
||||
Executive Vice President and Chief Financial Officer | ||||||
(Principal Financial Officer) |
SUNGARD DATA SYSTEMS INC. | ||||||
Dated: May 5, 2011
|
By: | /s/ Robert F. Woods
|
||||
Senior Vice President-Finance and Chief Financial Officer | ||||||
(Principal Financial Officer) |
34
Exhibit No. | Document | |||
10.1 | Second Refinancing and Incremental Amendment, dated as of March 11, 2011 to the Amended and Restated Credit Agreement, dated as of June 9, 2009. |
|||
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. |
35