United States
Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

þ		Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

o		Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file numbers:

SunGard Capital Corp.		000-53653
SunGard Capital Corp. II		000-53654
SunGard Data Systems Inc.		001-12989

 

SunGard^® Capital Corp.
SunGard^® Capital Corp. II
SunGard^® Data Systems Inc.

(Exact name of registrant as specified in its charter)

Delaware		20-3059890
Delaware		20-3060101
Delaware		51-0267091
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

SunGard Capital Corp.		Yes þ No o
SunGard Capital Corp. II		Yes þ No o
SunGard Data Systems Inc.		Yes o No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

SunGard Capital Corp.		Yes o No o
SunGard Capital Corp. II		Yes o No o
SunGard Data Systems Inc.		Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

SunGard Capital Corp.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

SunGard Capital Corp. II

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

SunGard Data Systems Inc.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

SunGard Capital Corp.		Yes o No þ
SunGard Capital Corp. II		Yes o No þ
SunGard Data Systems Inc.		Yes o No þ

The number of shares of the registrants’ common stock outstanding as of March 31, 2010:

SunGard Capital Corp.		255,447,411 shares of Class A common stock and 28,382,978 shares of Class L common stock
SunGard Capital Corp. II		100 shares of common stock
SunGard Data Systems Inc.		100 shares of common stock

 

 

SunGard Capital Corp.
SunGard Capital Corp. II
SunGard Data Systems Inc.
And Subsidiaries

Index

		Page
Part I. Financial Information
Item 1. Financial Statements:
SunGard Capital Corp.
Consolidated Balance Sheets as of December 31, 2009 and March 31, 2010 (unaudited)			2
Consolidated Statements of Operations for the three months ended March 31, 2009 and 2010 (unaudited)			3
Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2010 (unaudited)			4
SunGard Capital Corp. II
Consolidated Balance Sheets as of December 31, 2009 and March 31, 2010 (unaudited)			5
Consolidated Statements of Operations for the three months ended March 31, 2009 and 2010 (unaudited)			6
Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2010 (unaudited)			7
SunGard Data Systems Inc.
Consolidated Balance Sheets as of December 31, 2009 and March 31, 2010 (unaudited)			8
Consolidated Statements of Operations for the three months ended March 31, 2009 and 2010 (unaudited)			9
Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2010 (unaudited)			10
Notes to Consolidated Financial Statements (unaudited)			11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures about Market Risk			28
Item 4T. Controls and Procedures			28
Part II. Other Information
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3. Defaults upon Senior Securities			29
Item 4. (Removed and Reserved)			29
Item 5. Other Information			29
Item 6. Exhibits			29
Signatures			30
Computation of Ratio of Earnings to Fixed Charges
302 Certification - Chief Executive Officer
302 Certification - Chief Financial Officer
906 Certification - Chief Executive Officer
906 Certification - Chief Financial Officer

Part I. FINANCIAL INFORMATION

Explanatory Note

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

Item 1. Financial Statements

SunGard Capital Corp.

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Capital Corp.

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Capital Corp.

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Capital Corp. II

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Capital Corp. II

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Capital Corp. II

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Data Systems Inc.

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Data Systems Inc.

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

The accompanying notes are an integral part of these consolidated financial statements.

SunGard Data Systems Inc.

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

The accompanying notes are an integral part of these consolidated financial statements.

SUNGARD CAPITAL CORP.
SUNGARD CAPITAL CORP. II
SUNGARD DATA SYSTEMS INC.

1. Basis of Presentation:

SunGard Data Systems Inc. (“SunGard”) was acquired on August 11, 2005 (the “Transaction”) in a leveraged buy-out by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG (collectively, the “Sponsors”).

SunGard is a wholly owned subsidiary of SunGard Holdco LLC, which is wholly owned by SunGard Holding Corp., which is wholly owned by SunGard Capital Corp. II (“SCCII”), which is a subsidiary of SunGard Capital Corp. (“SCC”). All four of these companies were formed for the purpose of facilitating the Transaction and are collectively referred to as the “Holding Companies.” SCC, SCCII and SunGard are separate reporting companies and, together with their direct and indirect subsidiaries, are collectively referred to as the “Company”.

The Company has four reportable segments: Financial Systems (“FS”), Higher Education (“HE”), Public Sector (“PS”) and Availability Services (“AS”). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.

The accompanying interim consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. Interim financial reporting does not include all of the information and footnotes required by GAAP for annual financial statements. The interim financial information is unaudited, but, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments necessary to provide a fair statement of results for the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

The presentation of certain prior year amounts has been revised to conform to the current year presentation.

Recent Accounting Pronouncements

The Financial Accounting Standard Board issued new revenue recognition guidance for arrangements with multiple deliverables. The new guidance, whose scope excludes software revenue recognition, modifies the fair value requirements for revenue recognition by providing “best estimate of selling price” in addition to vendor specific objective evidence, or “VSOE”, and vendor objective evidence, now referred to as third-party evidence, or “TPE”, for determining the selling price of a deliverable. Since the Company will be able to use an estimate of the selling price for the deliverables in an arrangement, all deliverables will be separate units of accounting, provided (a) a delivered item has value to the customer on a standalone basis, and (b) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the control of the Company. As a result of the requirement to use the best estimate of the selling price when VSOE or TPE of the selling price cannot be determined, the residual method is no longer permitted. The new guidance is effective for fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact of this revenue guidance, but does not expect the guidance to have a material impact on the consolidated financial statements.

2. Goodwill:

The following table summarizes changes in goodwill by segment (in millions):

		Cost																				Accumulated Impairment
		FS				HE				PS				AS				Subtotal				PS				AS				Subtotal				Total
Balance at December 31, 2009		$	3,457			$	950			$	814			$	2,211			$	7,432			$	(128	)		$	(1,126	)		$	(1,254	)		$	6,178
2010 acquisitions			2				—				—				1				3				—				—				—				3
Adjustments related to the Transaction and prior year acquisitions			—				—				—				(1	)			(1	)			—				—				—				(1	)
Effect of foreign currency translation			(31	)			—				(9	)			(10	)			(50	)			—				—				—				(50	)
Balance at March 31, 2010		$	3,428			$	950			$	805			$	2,201			$	7,384			$	(128	)		$	(1,126	)		$	(1,254	)		$	6,130

3. Clearing Broker Assets and Liabilities:

Clearing broker assets and liabilities are comprised of the following (in millions):

		December 31,				March 31,
		2009				2010
Segregated customer cash and treasury bills		$	153			$	39
Securities owned			40				86
Securities borrowed			116				130
Receivables from customers and other			23				20
Clearing broker assets		$	332			$	275
Payables to customers		$	163			$	63
Securities loaned			95				102
Customer securities sold short, not yet purchased			9				14
Payable to brokers and dealers			27				59
Clearing broker liabilities		$	294			$	238

Segregated customer cash and treasury bills are held by the Company on behalf of customers. Clearing broker securities consist of trading and investment securities at fair market values, which are based on quoted market rates. Securities borrowed and loaned are collateralized financing transactions which are cash deposits made to or received from other broker/dealers. Receivables from and payables to customers represent amounts due or payable on cash and margin transactions.

4.

Derivatives:

The Company uses interest rate swap agreements to manage the amount of its floating rate debt in order to reduce its exposure to variable rate interest payments associated with the senior secured credit facilities. Each of these swap agreements is designated as a cash flow hedge. SunGard pays a stream of fixed interest payments for the term of the swap, and in turn, receives variable interest payments based on LIBOR. The net receipt or payment from the interest rate swap agreements is included in interest expense. The Company does not enter into interest rate swaps for speculative or trading purposes. A summary of the Company’s interest rate swaps follows:

						Notional								Interest rate
						Amount				Interest rate				received
Inception		Maturity				(in millions)				paid				(LIBOR)
February 2006		February 2011				$	800				5.00	%		3-Month
January 2008		February 2011				$	750				3.17	%		3-Month
January/February 2009		February 2012				$	1,200				1.78	%		1-Month
January/February 2010		May 2013				$	500				1.99	%		3-Month
Total / Weighted Average interest rate						$	3,250				2.93	%

The fair values of interest rate swaps designated as cash flow hedging instruments, included in other accrued expenses on the consolidated balance sheets, are $70 million and $69 million as of December 31, 2009 and March 31, 2010, respectively.

The table below summarizes the impact of the effective portion of interest rate swaps on the balance sheets and statements of operations for the three months ended March 31, 2009 and 2010 (in millions):

		Three months ended March 31,
		2009				2010			Classification
Gain (loss) recognized in Accumulated Other Comprehensive Loss (OCI)		$	(4	)		$	2			OCI
Gain (loss) reclassified from accumulated OCI into income			(15	)			(22	)		Interest expense and amortization of deferred financing fees

The Company has no ineffectiveness related to its swap agreements.

The Company expects to reclassify in the next twelve months approximately $79 million from OCI into earnings related to the Company’s interest rate swaps based on the borrowing rates at March 31, 2010.

5. Fair Value Measurements:

The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2010 (in millions):

		Fair Value Measures Using
		Level 1				Level 2				Level 3				Total
Assets
Cash and cash equivalents — money market funds		$	156			$	—			$	—			$	156
Clearing broker assets — treasury bills			35				—				—				35
Clearing broker assets — securities owned			86				—				—				86
		$	277			$	—			$	—			$	277
Liabilities
Clearing broker liabilities — customer securities sold short, not yet purchased		$	14			$	—			$	—			$	14
Interest rate swap agreements and other			—				67				—				67
		$	14			$	67			$	—			$	81

The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2009 (in millions):

		Fair Value Measures Using
		Level 1				Level 2				Level 3				Total
Assets
Cash and cash equivalents — money market funds		$	168			$	—			$	—			$	168
Clearing broker assets — U.S. treasury bills			151				—				—				151
Clearing broker assets — securities owned			40				—				—				40
		$	359			$	—			$	—			$	359
Liabilities
Clearing broker liabilities — customer securities sold short, not yet purchased		$	9			$	—			$	—			$	9
Interest rate swap agreements			—				70				—				70
		$	9			$	70			$	—			$	79

A Level 1 fair value measure is based upon quoted prices in active markets for identical assets or liabilities. A Level 2 fair value measure is based upon quoted prices for similar assets and liabilities in active markets or inputs that are observable. A Level 3 fair value measure is based upon inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

Cash and cash equivalents – money market funds and Clearing broker assets – U.S. treasury bills are recognized and measured at fair value in the Company’s financial statements. Clearing broker assets and liabilities – securities owned and customer securities sold short, not yet purchased are recorded at closing exchange-quoted prices. Fair values of the interest rate swap agreements are calculated using a discounted cash flow model using observable applicable market swap rates and assumptions and are compared to market valuations obtained from brokers.

The following table presents the carrying amount and estimated fair value of the Company’s debt, including current portion and excluding the interest rate swaps, as of December 31, 2009 and March 31, 2010 (in millions):

		December 31, 2009								March 31, 2010
		Carrying				Fair				Carrying				Fair
		Value				Value				Value				Value
Floating rate debt		$	4,967			$	4,815			$	4,937			$	4,879
Fixed rate debt			3,348				3,507				3,343				3,476

The fair value of the Company’s floating rate and fixed rate long-term debt is primarily based on market rates.

6. Comprehensive Income (Loss):

Comprehensive income (loss) consists of net income (loss) adjusted for other increases and decreases affecting stockholder’s equity that are excluded from the determination of net income (loss). The calculation of comprehensive income (loss) follows (in millions):

		Three Months Ended
		March 31,
		2009				2010
Net loss		$	(34	)		$	(54	)
Foreign currency translation losses			(87	)			(61	)
Unrealized gains (losses) on derivative instruments			(4	)			2
Comprehensive income (loss)		$	(125	)		$	(113	)

7. Equity:

A rollforward of SCC’s temporary and permanent equity for 2010 follows:

		SunGard Capital Corp. stockholders																Noncontrolling interest
		Class L -				Class A -
		temporary				temporary				Permanent								Temporary				Permanent
		equity				equity				equity				Subtotal				equity				equity				Subtotal				Total
Balance at December 31, 2009		$	88			$	11			$	321			$	420			$	51			$	1,593			$	1,644			$	2,064
Net income (loss)			—				—				(101	)			(101	)			6				41				47				(54	)
Foreign currency translation			—				—				(61	)			(61	)			—				—				—				(61	)
Net unrealized gain on derivative instruments			—				—				2				2				—				—				—				2
Comprehensive income (loss)			—				—				(160	)			(160	)			6				41				47				(113	)
Stock compensation expense			—				—				8				8				—				—				—				8
Transfer intrinsic value of vested restricted stock units			2				—				(4	)			(2	)			1				—				1				(1	)
Balance at March 31, 2010		$	90			$	11			$	165			$	266			$	58			$	1,634			$	1,692			$	1,958