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8-K - FORM 8-K - SUNGARD DATA SYSTEMS INCd290262d8k.htm

Exhibit 99.1

SunGard Capital Corp.

SunGard Capital Corp. II

SunGard Data Systems Inc.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

SunGard Higher Education Sale

On August 4, 2011, SunGard Data Systems Inc., a Delaware corporation (“SunGard”), and SunGard Higher Education Inc., a Delaware corporation and formerly a wholly owned subsidiary of SunGard (“HE”), entered into an Asset Purchase Agreement (as amended, the “Asset Purchase Agreement”) with companies affiliated with Hellman & Friedman Capital Partners VI, L.P. Also on August 4, 2011, SunGard, affiliates of SunGard, and HE entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with affiliates of Hellman & Friedman, including Sophia, L.P., a Delaware limited partnership (“Purchaser Parent”) and Datatel Parent Corp., a Delaware corporation (“Datatel”), an existing Hellman & Friedman portfolio company. The Asset Purchase Agreement and the Merger Agreement provided that SunGard would sell SunGard’s Higher Education business segment (excluding SunGard’s K-12 education business) (the “Higher Education Businesses”) to affiliates of Hellman & Friedman for an aggregate purchase price of $1.775 billion, subject to certain adjustments.

On January 19 and January 20, 2012, Purchaser Parent and its subsidiaries acquired HE and the Higher Education Businesses pursuant to the terms and conditions of the Asset Purchase Agreement and the Merger Agreement. As a result of the completion of these transactions, each of HE and Datatel are wholly owned by Purchaser Parent.

SunGard used net cash proceeds (as defined in SunGard’s senior secured credit agreement), which were approximately $1.222 billion after applicable taxes, transaction fees, expenses and other adjustments, to repay a portion of its senior secured credit facility term loans on a pro-rata basis.

Pro Forma Information

The accompanying unaudited pro forma condensed consolidated statements of operations of SCC, SunGard Capital Corp. II (“SCCII”) and SunGard for the years ended December 31, 2008, 2009 and 2010 and for the nine months ended September 30, 2011 are presented as if the sale of the Higher Education Businesses had occurred on January 1, 2008. The accompanying unaudited pro forma condensed consolidated balance sheets of SCC, SCCII and SunGard as of September 30, 2011 are presented as if the sale of the Higher Education Businesses had occurred on September 30, 2011. The unaudited pro forma condensed consolidated financial information contains specific assumptions and adjustments related to the sale of the Higher Education Businesses. The adjustments are based on information presently available and assumptions management believes are reasonable under the circumstances as of the date of this filing. Actual adjustments, however, may differ materially from the information presented.

The unaudited pro forma condensed consolidated financial information is intended for informational purposes only. It is not necessarily indicative of and does not purport to represent what SCC, SCCII or SunGard’s future financial condition or operating results will be after giving effect to the sale and does not reflect actions that may be undertaken by management after the sale.


The following is a brief description of the amounts recorded under each of the column headings in the unaudited pro forma condensed consolidated statements of operations:

Historical SunGard

This column reflects SunGard’s historical audited operating results for the years ended December 31, 2008, 2009 and 2010, and the historical unaudited operating results of continuing operations and financial condition as of and for the nine months ended September 30, 2011 prior to any adjustment for the sale described above. The nine month period ended September 30, 2011 does not include the results of the HE business due to its presentation in discontinued operations in that period.

Disposition

This column reflects the elimination of the historical operating results of SunGard’s Higher Education business for the years ended December 31, 2008, 2009, and 2010 and the historical unaudited financial condition as of September 30, 2011 at the amounts that have been reflected in SunGard’s consolidated financial statements for such periods.

Pro Forma Adjustments

This column reflects the pro forma effect of the use of $1.222 billion of net cash proceeds from the sale of the Higher Education Businesses to repay a portion of outstanding term loans and the related interest savings assuming the repayment occurred at the beginning of 2010.

The unaudited pro forma condensed consolidated financial information set forth below, including notes thereto, should be read in conjunction with “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and the historical consolidated financial statements and notes thereto included in SunGard’s annual report on Form 10-K for the year ended December 31, 2010 and in the SunGard’s quarterly report on Form 10-Q/A for the quarterly period ended September 30, 2011 that have been filed with the Securities and Exchange Commission.


SunGard Capital Corp.

Pro Forma Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

 

     September 30, 2011  
     Historical
SunGard
    Disposition     Pro Forma
Adjustments
    Pro Forma  

Assets

        

Current:

        

Cash and cash equivalents

   $ 746      $ 1,771  (1)    $ (1,222 (3)    $ 1,295   

Trade receivables, net

     689        —          —          689   

Earned but unbilled receivables

     154        —          —          154   

Prepaid expenses and other current assets

     163        —          —          163   

Clearing broker assets

     220        —          —          220   

Deferred income taxes

     2        18  (5)      —          20   

Assets held for sale

     1,321        (1,321     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     3,295        468        (1,222     2,541   

Property and equipment, net

     877        —          —          877   

Software products, net

     586        —          —          586   

Customer base, net

     1,639        —          —          1,639   

Other intangible assets, net

     156        —          (16 )(3)      140   

Trade name, net

     1,020        —          —          1,020   

Goodwill

     4,853        —          —          4,853   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 12,426      $ 468      $ (1,238   $ 11,656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity

        

Current:

        

Short-term and current portion of long-term debt

   $ 11      $ —        $ —        $ 11   

Accounts payable

     40        —          —          40   

Accrued compensation and benefits

     293        —          —          293   

Accrued interest expense

     103        —          —          103   

Accrued income taxes

     20        473  (5)      —          493   

Other accrued expenses

     327        26  (2)      —          353   

Clearing broker liabilities

     178        —          —          178   

Deferred revenue

     817        —          —          817   

Deferred income taxes

     127        (115 )(5)      —          12   

Current liabilities of discontinued operations

     254        (254     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     2,170        130        —          2,300   

Long-term debt

     7,840        —          (1,222 (3)      6,618   

Deferred income taxes

     1,040        25  (5)      —          1,065   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     11,050        155        (1,222     9,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingencies

        

Noncontrolling interest in preferred stock of SCCII subject to a put option

     31        —          —          31   

Class L common stock subject to a put option

     54        —          —          54   

Class A common stock subject to a put option

     7        —          —          7   

Stockholders’ equity:

        

Class L common stock

     —          —          —          —     

Class A common stock

     —          —          —          —     

Capital in excess of par value

     2,753        —          —          2,753   

Treasury stock

     (36     —          —          (36

Accumulated deficit

     (3,379     313        (16     (3,082

Accumulated other comprehensive income (loss)

     (28     —          —          (28
  

 

 

   

 

 

   

 

 

   

 

 

 

Total SunGard Capital Corp. stockholders’ equity (deficit)

     (690     313        (16     (393

Noncontrolling interest in preferred stock of SCCII

     1,974        —          —          1,974   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     1,284        313        (16     1,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

   $ 12,426      $ 468      $ (1,238   $ 11,656   
  

 

 

   

 

 

   

 

 

   

 

 

 


SunGard Capital Corp. II

Pro Forma Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

 

     September 30, 2011  
     Historical
SunGard
    Disposition     Pro Forma
Adjustments
    Pro Forma  

Assets

        

Current:

        

Cash and cash equivalents

   $ 746      $ 1,771  (1)    $ (1,222 )(3)    $ 1,295   

Trade receivables, net

     689        —          —          689   

Earned but unbilled receivables

     154        —          —          154   

Prepaid expenses and other current assets

     163        —          —          163   

Clearing broker assets

     220        —          —          220   

Deferred income taxes

     2        18  (5)      —          20   

Assets held for sale

     1,321        (1,321     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     3,295        468        (1,222     2,541   

Property and equipment, net

     877        —          —          877   

Software products, net

     586        —          —          586   

Customer base, net

     1,639        —          —          1,639   

Other intangible assets, net

     156        —          (16 )(3)     140   

Trade name, net

     1,020        —          —          1,020   

Goodwill

     4,853        —          —          4,853   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 12,426      $ 468      $ (1,238   $ 11,656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

        

Current:

        

Short-term and current portion of long-term debt

   $ 11      $ —        $ —        $ 11   

Accounts payable

     40        —          —          40   

Accrued compensation and benefits

     293        —          —          293   

Accrued interest expense

     103        —          —          103   

Accrued income taxes

     21        473  (5)      —          494   

Other accrued expenses

     326        26  (2)     —          352   

Clearing broker liabilities

     178        —          —          178   

Deferred revenue

     817        —          —          817   

Deferred income taxes

     127        (115 )(5)      —          12   

Liabilities related to assets held for sale

     254        (254     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     2,170        130        —          2,300   

Long-term debt

     7,840        —          (1,222 )(3)      6,618   

Deferred income taxes

     1,040        25  (5)      —          1,065   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     11,050        155        (1,222     9,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingencies

        

Preferred stock subject to a put option

     24        —          —          24   

Stockholders’ equity:

        

Preferred stock

     —          —            —     

Common stock

     —          —            —     

Capital in excess of par value

     3,775        —          —          3,775   

Treasury stock

     (15     —          —          (15

Accumulated deficit

     (2,380     313        (16     (2,083

Accumulated other comprehensive income (loss)

     (28     —            (28
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     1,352        313        (16     1,649   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 12,426      $ 468      $ (1,238   $ 11,656   
  

 

 

   

 

 

   

 

 

   

 

 

 


SunGard Data Systems Inc.

Pro Forma Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

 

     September 30, 2011  
     Historical
SunGard
    Disposition     Pro Forma
Adjustments
    Pro Forma  

Assets

        

Current:

        

Cash and cash equivalents

   $ 746      $ 1,771  (1)    $ (1,222 )(3)    $ 1,295   

Trade receivables, net

     689        —          —          689   

Earned but unbilled receivables

     154        —          —          154   

Prepaid expenses and other current assets

     163        —          —          163   

Clearing broker assets

     220        —          —          220   

Deferred income taxes

     2        18  (5)      —          20   

Assets held for sale

     1,321        (1,321     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     3,295        468        (1,222     2,541   

Property and equipment, net

     877        —          —          877   

Software products, net

     586        —          —          586   

Customer base, net

     1,639        —          —          1,639   

Other intangible assets, net

     156        —          (16 )(3)      140   

Trade name, net

     1,020        —          —          1,020   

Goodwill

     4,853        —          —          4,853   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 12,426      $ 468      $ (1,238   $ 11,656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholder’s Equity

        

Current:

        

Short-term and current portion of long-term debt

   $ 11      $ —        $ —        $ 11   

Accounts payable

     40        —          —          40   

Accrued compensation and benefits

     293        —          —          293   

Accrued interest expense

     103        —          —          103   

Accrued income taxes

     23        473  (5)      —          496   

Other accrued expenses

     326        26  (2)      —          352   

Clearing broker liabilities

     178        —          —          178   

Deferred revenue

     817        —          —          817   

Deferred income taxes

     127        (115 )(5)      —          12   

Liabilities related to assets held for sale

     254        (254     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     2,172        130        —          2,302   

Long-term debt

     7,840        —          (1,222 )(3)      6,618   

Deferred income taxes

     1,035        25  (5)      —          1,060   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     11,047        155        (1,222     9,980   
  

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingencies

        

Stockholder’s equity:

        

Common stock

     —          —          —          —     

Capital in excess of par value

     3,787        —          —          3,787   

Accumulated deficit

     (2,380     313        (16     (2,083

Accumulated other comprehensive income (loss)

     (28     —          —          (28
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholder’s equity

     1,379        313        (16     1,676   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholder’s Equity

   $ 12,426      $ 468      $ (1,238   $ 11,656   
  

 

 

   

 

 

   

 

 

   

 

 

 


SunGard Capital Corp.

SunGard Capital Corp. II

SunGard Data Systems Inc.

Pro Forma Condensed Consolidated Statement of Operations

(In millions)

(Unaudited)

 

     Nine Months Ended September 30, 2011  
     Historical
SunGard
    Pro Forma
Adjustments
    Pro Forma  

Revenue:

      

Services

   $ 3,060      $ —        $ 3,060   

License and resale fees

     192        —          192   
  

 

 

   

 

 

   

 

 

 

Total products and services

     3,252        —          3,252   

Reimbursed expenses

     77        —          77   
  

 

 

   

 

 

   

 

 

 
     3,329        —          3,329   
  

 

 

   

 

 

   

 

 

 

Costs and expenses:

      

Cost of sales and direct operating

     1,544        —          1,544   

Sales, marketing and administration

     832        —          832   

Product development

     228        —          228   

Depreciation and amortization

     204        —          204   

Amortization of acquisition-related intangible assets

     334        —          334   
  

 

 

   

 

 

   

 

 

 
     3,142        —          3,142   
  

 

 

   

 

 

   

 

 

 

Operating income (loss)

     187        —          187   

Interest income

     3        —          3   

Interest expense and amortization of deferred financing fees

     (396     35 (4)      (361

Other income (expense)

     (2     —          (2
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (208     35        (173

Benefit from (provision for) income taxes

     58        (13     45   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ (150   $ 22      $ (128
  

 

 

   

 

 

   

 

 

 


SunGard Capital Corp.

SunGard Capital Corp. II

SunGard Data Systems Inc.

Pro Forma Condensed Consolidated Statement of Operations

(In millions)

(Unaudited)

 

 

     Year Ended December 31, 2010  
     Historical
SunGard
    Disposition     Pro Forma
Adjustments
    Pro Forma  

Revenue:

        

Services

   $ 4,485      $ (410   $ —        $ 4,075   

License and resale fees

     380        (86     —          294   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total products and services

     4,865        (496     —          4,369   

Reimbursed expenses

     127        (7     —          120   
  

 

 

   

 

 

   

 

 

   

 

 

 
     4,992        (503     —          4,489   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

        

Cost of sales and direct operating

     2,201        (243     —          1,958   

Sales, marketing and administration

     1,141        (101     —          1,040   

Product development

     370        (18     —          352   

Depreciation and amortization

     291        (13     —          278   

Amortization of acquisition-related intangible assets

     484        (33     —          451   

Goodwill impairment charges

     237        (32     —          205   
  

 

 

   

 

 

   

 

 

   

 

 

 
     4,724        (440     —          4,284   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     268        (63     —          205   

Interest income

     2        —          —          2   

Interest expense and amortization of deferred financing fees

     (638     —          50  (4)      (588

Loss on extinguishment of debt

     (58     —          —          (58

Other income (expense)

     7          —          7   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (419     (63     50        (432

Benefit from (provision for) income taxes

     29        39        (19     49   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ (390   $ (24   $ 31      $ (383
  

 

 

   

 

 

   

 

 

   

 

 

 


SunGard Capital Corp.

SunGard Capital Corp. II

SunGard Data Systems Inc.

Pro Forma Condensed Consolidated Statement of Operations

(In millions)

(Unaudited)

 

 

 

     Year Ended December 31, 2009  
     Historical
SunGard
    Disposition     Pro Forma  

Revenue:

      

Services

   $ 4,844      $ (439   $ 4,405   

License and resale fees

     324        (79     245   
  

 

 

   

 

 

   

 

 

 

Total products and services

     5,168        (518     4,650   

Reimbursed expenses

     164        (7     157   
  

 

 

   

 

 

   

 

 

 
     5,332        (525     4,807   
  

 

 

   

 

 

   

 

 

 

Costs and expenses:

      

Cost of sales and direct operating

     2,534        (263     2,271   

Sales, marketing and administration

     1,088        (96     992   

Product development

     348        (16     332   

Depreciation and amortization

     288        (13     275   

Amortization of acquisition-related intangible assets

     529        (33     496   

Goodwill impairment charges

     1,126        —          1,126   
  

 

 

   

 

 

   

 

 

 
     5,913        (421     5,492   
  

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (581     (104     (685

Interest income

     7        —          7   

Interest expense and amortization of deferred financing fees

     (637     —          (637

Other income (expense)

     15        —          15   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (1,196     (104     (1,300

Benefit from (provision for) income taxes

     74        41        115   
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ (1,122   $ (63   $ (1,185
  

 

 

   

 

 

   

 

 

 


SunGard Capital Corp.

SunGard Capital Corp. II

SunGard Data Systems Inc.

Pro Forma Condensed Consolidated Statement of Operations

(In millions)

(Unaudited)

 

 

     Year Ended December 31, 2008  
     Historical
SunGard
    Disposition     Pro Forma  

Revenue:

      

Services

   $ 4,898      $ (453   $ 4,445   

License and resale fees

     359        (77     282   
  

 

 

   

 

 

   

 

 

 

Total products and services

     5,257        (530     4,727   

Reimbursed expenses

     144        (10     134   
  

 

 

   

 

 

   

 

 

 
     5,401        (540     4,861   
  

 

 

   

 

 

   

 

 

 

Costs and expenses:

      

Cost of sales and direct operating

     2,601        (276     2,325   

Sales, marketing and administration

     1,113        (101     1,012   

Product development

     309        (23     286   

Depreciation and amortization

     274        (10     264   

Amortization of acquisition-related intangible assets

     472        (34     438   
  

 

 

   

 

 

   

 

 

 
     4,769        (444     4,325   
  

 

 

   

 

 

   

 

 

 

Operating income (loss)

     632        (96     536   

Interest income

     17        —          17   

Interest expense and amortization of deferred financing fees

     (597     —          (597

Other income (expense)

     (93     —          (93
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (41     (96     (137

Benefit from (provision for) income taxes

     (51     43        (8
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ (92   $ (53   $ (145
  

 

 

   

 

 

   

 

 

 

SunGard Capital Corp.

SunGard Capital Corp. II

SunGard Data Systems Inc.

Notes to unaudited Pro Forma Condensed Consolidated Financial Information

 

1 Gross proceeds of $1.775 billion less purchase price adjustments of approximately $4 million.

 

2 Represents estimated transaction fees and expenses to be paid in connection with the sale of the Higher Education Businesses.

 

3 Net cash proceeds (as defined in SunGard’s senior secured credit agreement), which were approximately $1.222 billion after applicable taxes, transaction fees, expenses and other adjustments, to repay a portion of SunGard’s senior secured credit facility term loans on a pro-rata basis and the write-off of the pro-rata portion of deferred financing costs associated with the term loans.

 

4 Interest related to the $1.222 billion term loan repayment was computed using the actual weighted average historical interest rates of the term loans and the pro-rata portion of amortization of deferred financing costs included in interest expense for the periods presented.

 

5 Represents adjustments to tax balances to reflect: the reversal of existing deferred tax assets and liabilities associated with the outside tax basis differences in the Higher Education Business, the reversal of existing deferred tax assets for foreign tax credits that can be utilized to offset the expected current taxes to be paid on the transaction, and the estimated current taxes (net of foreign tax credits) on the transaction.