EX-99.1 2 c98236exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
                         
    Three Months Ended December 31, 2009  
    As Originally              
    Reported     Adjustment     As Adjusted  
Revenue:
                        
Services
   $ 1,274     $ —     $ 1,274  
License and resale fees
     148       —       148  
 
                  
Total products and services
     1,422       —       1,422  
Reimbursed expenses
     45       —       45  
 
                  
 
     1,467       —       1,467  
 
                  
Costs and expenses:
                        
Cost of sales and direct operating
     671       —       671  
Sales, marketing and administration
     320       —       320  
Product development
     77       —       77  
Depreciation and amortization
     76       —       76  
Amortization of acquisition-related intangible assets
     136       —       136  
Goodwill impairment charge and merger costs
     1,129       —       1,129  
 
                  
 
     2,409       —       2,409  
 
                  
Income (loss) from operations
     (942 )     —       (942 )
Interest income
     1       —       1  
Interest expense and amortization of deferred financing fees
     (166 )     —       (166 )
Other income (expense)
     9       —       9  
 
                  
Loss before income taxes
     (1,098 )     —       (1,098 )
Benefit from (provision for) income taxes
     9       52       61  
 
                  
Net loss
   $ (1,089 )   $ 52     $ (1,037 )
 
                  
SunGard Data Systems Inc.
Consolidated Statements of Operations
(in millions)
                         
    Twelve Months Ended December 31, 2009  
    As Originally              
    Reported     Adjustment     As Adjusted  
Revenue:
                        
Services
   $ 4,961     $ —     $ 4,961  
License and resale fees
     384       —       384  
 
                  
Total products and services
     5,345       —       5,345  
Reimbursed expenses
     163       —       163  
 
                  
 
     5,508       —       5,508  
 
                  
Costs and expenses:
                        
Cost of sales and direct operating
     2,709       —       2,709  
Sales, marketing and administration
     1,112       —       1,112  
Product development
     302       —       302  
Depreciation and amortization
     291       —       291  
Amortization of acquisition-related intangible assets
     540       —       540  
Goodwill impairment charge and merger costs
     1,130       —       1,130  
 
                  
 
     6,084       —       6,084  
 
                  
Income (loss) from operations
     (576 )     —       (576 )
Interest income
     7       —       7  
Interest expense and amortization of deferred financing fees
     (637 )     —       (637 )
Other income (expense)
     15       —       15  
 
                  
Loss before income taxes
     (1,191 )     —       (1,191 )
Benefit from (provision for) income taxes
     21       52       73  
 
                  
Net loss
   $ (1,170 )   $ 52     $ (1,118 )
 
                  
See Notes to Consolidated Condensed Financial Information.

 

 

 

SunGard Data Systems Inc.
Consolidated Condensed Balance Sheets
(in millions)
                         
    December 31, 2009  
    As Originally              
    Reported     Adjustment     As Adjusted  
Assets:
                        
Current:
                        
Cash and cash equivalents
   $ 664     $ —     $ 664  
Accounts receivable, net
     1,136       —       1,136  
Clearing broker assets
     332       —       332  
Prepaid expenses and other current assets
     211       —       211  
 
                  
Total current assets
     2,343       —       2,343  
Property and equipment, net
     925       —       925  
Software products, net
     1,020       —       1,020  
Customer base, net
     2,294       —       2,294  
Other assets, net
     1,220       —       1,220  
Goodwill
     6,178       —       6,178  
 
                  
Total Assets
   $ 13,980     $ —     $ 13,980  
 
                  
 
                        
Liabilities and Stockholder’s Equity:
                        
Current:
                        
Short-term and current portion of long-term debt
   $ 64     $ —     $ 64  
Accounts payable and accrued expenses
     950       —       950  
Clearing broker liabilities
     294       —       294  
Deferred revenue
     1,040       —       1,040  
 
                  
Total current liabilities
     2,348       —       2,348  
Long-term debt
     8,251       —       8,251  
Deferred income taxes
     1,366       (52 )     1,314  
 
                  
Total liabilities
     11,965       (52 )     11,913  
Stockholder’s equity
     2,015       52       2,067  
 
                  
Total Liabilities and Stockholder’s Equity
   $ 13,980     $ —     $ 13,980  
 
                  
See Notes to Consolidated Condensed Financial Information.

 

 

 

SunGard Data Systems Inc.
Notes to Consolidated Condensed Financial Information
Note 1. Reconciliation of Net Income (Loss) to EBITDA and Reconciliation of EBITDA to Adjusted EBITDA
EBITDA represents net income (loss) before interest expense, income taxes, depreciation and amortization and goodwill impairment. Adjusted EBITDA is defined as EBITDA further adjusted to give effect to certain items that are required in calculating covenant compliance under our senior and senior subordinated notes as well as under our senior secured credit facilities, which were entered into in August 2005 and our senior notes entered into in September 2008. Adjusted EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described below. EBITDA and Adjusted EBITDA are not recognized terms under generally accepted accounting principles (GAAP). EBITDA and Adjusted EBITDA do not represent net income (loss), as that term is defined under GAAP, and should not be considered as an alternative to net income (loss) as an indicator of our operating performance. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management or discretionary use as such measures do not consider certain cash requirements such as capital expenditures (including capitalized software expense), tax payments and debt service requirements. SunGard considers EBITDA and Adjusted EBITDA to be key indicators of our ability to pay our debt. EBITDA and Adjusted EBITDA as presented herein are not necessarily comparable to similarly titled measures. The following is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the GAAP measure we believe to be most directly comparable to EBITDA and Adjusted EBITDA. Further information regarding this reconciliation is included in our periodic filings with the U.S. Securities and Exchange Commission.
                         
    Three Months Ended December 31, 2009  
    As Originally              
(in millions)   Reported     Adjustment     As Adjusted  
Net loss
   $ (1,089 )   $ 52     $ (1,037 )
Interest expense, net
     165       —       165  
Income tax (benefit) expense
     (9 )     (52 )     (61 )
Depreciation and amortization
     212       —       212  
Goodwill impairment charge
     1,126       —       1,126  
 
                  
EBITDA
     405       —       405  
 
                        
Purchase accounting adjustments
     4       —       4  
Non-cash charges
     11       —       11  
Restructuring and other charges
     21       —       21  
 
                  
Adjusted EBITDA — senior secured credit facilities
     441               441  
 
                        
Loss on sale of receivables
     —       —       —  
 
                  
Adjusted EBITDA — senior notes due 2013 and 2015 and senior subordinated notes due 2015
   $ 441     $ —     $ 441  
 
                  
                         
    Twelve Months Ended December 31, 2009  
    As Originally              
(in millions)   Reported     Adjustment     As Adjusted  
Net loss
   $ (1,170 )   $ 52     $ (1,118 )
Interest expense, net
     630       —       630  
Income tax expense (benefit)
     (21 )     (52 )     (73 )
Depreciation and amortization
     831       —       831  
Goodwill impairment charge
     1,126       —       1,126  
 
                  
EBITDA
     1,396       —       1,396  
 
                        
Purchase accounting adjustments
     17       —       17  
Non-cash charges
     36       —       36  
Restructuring and other charges
     42       —       42  
Pro forma expense savings related to acquisitions
     3       —       3  
Other
     5       —       5  
 
                  
Adjusted EBITDA — senior secured credit facilities
     1,499               1,499  
 
                        
Loss on sale of receivables
     —       —       —  
 
                  
Adjusted EBITDA — senior notes due 2013 and 2015 and senior subordinated notes due 2015
   $ 1,499     $ —     $ 1,499  
 
                  

 

 

 

SunGard Data Systems Inc.
Notes to Consolidated Condensed Financial Information
Note 2. Reconciliation of Income from Operations to Adjusted Income from Operations
Adjusted income from operations represents income from operations adjusted for goodwill impairment charges, amortization of acquisition-related intangible assets, merger costs, purchase accounting adjustments for deferred revenue, stock-based compensation expense and management fee expense. Adjusted income from operations is not a recognized term under generally accepted accounting principles (GAAP). Adjusted income from operations does not represent income from operations, as that term is defined under GAAP, and should not be considered as an alternative to income from operations as an indicator of our operating performance. We have included information concerning adjusted income from operations because we use such information when evaluating income from operations to better evaluate the underlying performance of the Company. Adjusted income from operations as presented herein is not necessarily comparable to similarly titled measures. The following is a reconciliation between adjusted income from operations and income from operations, the GAAP measure we believe to be most directly comparable to adjusted income from operations.
                         
    Three Months Ended December 31, 2009  
    As Originally              
(in millions)   Reported     Adjustment     As Adjusted  
Income (loss) from operations
   $ (942 )   $ —     $ (942 )
 
                        
Amortization of acquisition-related intangible assets
     136       —       136  
Goodwill impairment charge
     1,126       —       1,126  
Merger costs
     3       —       3  
Purchase accounting adjustments
     4       —       4  
Stock-based compensation and other costs
     15       —       15  
 
                  
Adjusted income from operations
   $ 342     $ —     $ 342  
 
                  
                         
    Twelve Months Ended December 31, 2009  
    As Originally              
(in millions)   Reported     Adjustment     As Adjusted  
Income (loss) from operations
   $ (576 )   $ —     $ (576 )
 
                        
Amortization of acquisition-related intangible assets
     540       —       540  
Goodwill impairment charge
     1,126       —       1,126  
Merger costs
     4       —       4  
Purchase accounting adjustments
     17       —       17  
Stock-based compensation and other costs
     48       —       48  
 
                  
Adjusted income from operations
   $ 1,159     $ —     $ 1,159  
 
                  

 

 

 

SunGard Data Systems Inc.
Notes to Consolidated Condensed Financial Information
Note 3. Impact of Broker/Dealer on Organic Revenue Growth
The Company defines organic revenue as revenue from businesses owned for at least one year and excluding revenue from businesses sold in the previous twelve months further adjusted to remove the impact of changes in currency exchange rates. When assessing its financial results, the Company focuses on organic revenue because reported revenue is affected by the timing and magnitude of acquisitions, dispositions and currency. Beginning in 2007, the Company began to experience significant revenue growth in one of our trading systems businesses, a broker/dealer business with inherently lower margins than the rest of the financial systems business, and whose revenue is a function of market volatility and customer mix. Reported revenue and organic revenue growth with and without the broker/dealer business for the total Company and Financial Systems for 2008 and 2009 follows:
                         
    Twelve Months Ended December 31, 2009  
    As Originally              
    Reported     Adjustment     As Adjusted  
Revenue growth as reported:
                        
Total SunGard
     -2 %     —       -2 %
Financial Systems
     — %     —       — %
 
                        
Organic revenue growth:
                        
Total SunGard
     -3 %     —       -3 %
Financial Systems
     -5 %     —       -5 %
 
                        
Organic revenue growth without broker/dealer business:
                        
Total SunGard
     -3 %     —       -3 %
Financial Systems
     -6 %     —       -6 %