Edgar Filing: SUNGARD DATA SYSTEMS INC

Form 10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2011

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

For the transition period from to

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 incorporation or organization)		(IRS Employer Identification No.)

680 East Swedesford Road, Wayne, Pennsylvania 19087

(Address of principal executive offices, including zip code)

484-582-2000

(Registrants’ telephone number, including area code)

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 x No ¨
SunGard Capital Corp. II		Yes x No ¨
SunGard Data Systems Inc.		Yes x No ¨

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 x No ¨
SunGard Capital Corp. II		Yes x No ¨
SunGard Data Systems Inc.		Yes x No ¨

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 ¨. Accelerated filer ¨. Non-accelerated filer x. Smaller reporting company ¨.

SunGard Capital Corp. II Large accelerated filer ¨. Accelerated filer ¨. Non-accelerated filer x. Smaller reporting company ¨.

SunGard Data Systems Inc. Large accelerated filer ¨. Accelerated filer ¨. Non-accelerated filer x. Smaller reporting company ¨.

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 ¨ No x
SunGard Capital Corp. II		Yes ¨ No x
SunGard Data Systems Inc.		Yes ¨ No x

The number of shares of the registrants’ common stock outstanding as of June 30, 2011:


SunGard Capital Corp.		255,870,461 shares of Class A common stock and 28,429,970 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, 2010 and June 30, 2011 (unaudited)		2

	Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2011 (unaudited)		3

	Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2011 (unaudited)		4

	SunGard Capital Corp. II

	Consolidated Balance Sheets as of December 31, 2010 and June 30, 2011 (unaudited)		5

	Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2011 (unaudited)		6

	Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2011 (unaudited)		7

	SunGard Data Systems Inc.

	Consolidated Balance Sheets as of December 31, 2010 and June 30, 2011 (unaudited)		8

	Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2011 (unaudited)		9

	Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2011 (unaudited)		10

	Notes to Consolidated Financial Statements (unaudited)		11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		39

Item 4T.	Controls and Procedures		39

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		39

Item 1A.	Risk Factors		39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		39

Item 3.	Defaults upon Senior Securities		39

Item 4.	(Removed and Reserved)		39

Item 5.	Other Information		39

Item 6.	Exhibits		40

SIGNATURES			41

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.

Consolidated Balance Sheets

(In millions except share and per-share amounts)

(Unaudited)


	December 31, 2010			June 30, 2011
*Assets*
Current:
Cash and cash equivalents	$	778		$	821
Trade receivables, less allowance for doubtful accounts of $41 and $50		894			863
Earned but unbilled receivables		167			188
Prepaid expenses and other current assets		178			184
Clearing broker assets		230			277
Deferred income taxes		10			10

Total current assets		2,257			2,343

Property and equipment, less accumulated depreciation of $1,135 and $1,255		918			926
Software products, less accumulated amortization of $1,301 and $1,434		809			713
Customer base, less accumulated amortization of $1,158 and $1,280		2,000			1,889
Other intangible assets, less accumulated amortization of $23 and $21		187			170
Trade name, less accumulated amortization of $7 and $10		1,023			1,020
Goodwill		5,774			5,825

Total Assets	$	12,968		$	12,886


*Liabilities and Equity*
Current:
Short-term and current portion of long-term debt	$	9		$	10
Accounts payable		64			47
Accrued compensation and benefits		302			260
Accrued interest expense		103			92
Other accrued expenses		421			366
Clearing broker liabilities		210			250
Deferred revenue		997			999

Total current liabilities		2,106			2,024

Long-term debt		8,046			8,068
Deferred income taxes		1,212			1,197

Total liabilities		11,364			11,289

Commitments and contingencies
Noncontrolling interest in preferred stock of SCCII subject to a put option		54			31
Class L common stock subject to a put option		87			55
Class A common stock subject to a put option		11			7
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 $5,033 million; 50,000,000 shares authorized, 28,670,331 and 28,761,476 shares issued		—			—
Class A common stock, par value $.001 per share; 550,000,000 shares authorized, 258,037,523 and 258,858,048 shares issued		—			—
Capital in excess of par value		2,703			2,746
Treasury stock, 326,329 and 331,506 shares of Class L common stock; and 2,940,981 and 2,987,587 shares of Class A common stock		(34	)		(35	)
Accumulated deficit		(2,970	)		(3,175	)
Accumulated other comprehensive income (loss)		(29	)		51

Total SunGard Capital Corp. stockholders’ equity (deficit)		(330	)		(413	)
Noncontrolling interest in preferred stock of SCCII		1,782			1,917

Total equity		1,452			1,504

Total Liabilities and Equity	$	12,968		$	12,886

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

SunGard Capital Corp.

Consolidated Statements of Operations

(In millions)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2011			2010			2011
Revenue:
Services	$	1,112		$	1,126		$	2,216		$	2,230
License and resale fees		103			109			171			183

Total products and services		1,215			1,235			2,387			2,413
Reimbursed expenses		38			31			66			63

		1,253			1,266			2,453			2,476


Costs and expenses:
Cost of sales and direct operating		581			573			1,173			1,158
Sales, marketing and administration		286			313			557			597
Product development		69			83			141			164
Depreciation and amortization		72			72			146			144
Amortization of acquisition-related intangible assets		120			119			240			244

		1,128			1,160			2,257			2,307

Operating income (loss)		125			106			196			169
Interest income		1			1			1			2
Interest expense and amortization of deferred financing fees		(160	)		(129	)		(319	)		(266	)
Other income (expense)		14			1			14			(1	)

Income (loss) from continuing operations before income taxes		(20	)		(21	)		(108	)		(96	)
Benefit from (provision for) income taxes		(1	)		(52	)		31			—

Income (loss) from continuing operations		(21	)		(73	)		(77	)		(96	)
Income (loss) from discontinued operations, net of tax		—			—			2			—

Net income (loss)		(21	)		(73	)		(75	)		(96	)
Income attributable to the noncontrolling interest (including $(3) million, $(11) million, $3 million and $(10) million in temporary equity)		(49	)		(55	)		(96	)		(109	)

Net income (loss) attributable to SunGard Capital Corp.	$	(70	)	$	(128	)	$	(171	)	$	(205	)

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

SunGard Capital Corp.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2010			2011
*Cash flow from operations:*
Net loss	$	(75	)	$	(96	)
Income (loss) from discontinued operations		2			—

Income (loss) from continuing operations		(77	)		(96	)
Reconciliation of income (loss) from continuing operations to cash flow from operations:
Depreciation and amortization		385			388
Deferred income tax provision (benefit)		(57	)		(30	)
Stock compensation expense		17			15
Amortization of deferred financing costs and debt discount		22			20
Other noncash items		(13	)		3
Accounts receivable and other current assets		131			8
Accounts payable and accrued expenses		(119	)		(125	)
Clearing broker assets and liabilities, net		6			(7	)
Deferred revenue		(61	)		1

Cash flow from continuing operations		234			177
Cash flow from discontinued operations		12			—

Cash flow from operations		246			177


*Investment activities:*
Cash paid for acquired businesses, net of cash acquired		(13	)		(26	)
Cash paid for property and equipment and software		(147	)		(133	)
Other investing activities		8			(1	)

Cash provided by (used in) continuing operations		(152	)		(160	)
Cash provided by (used in) discontinued operations		(1	)		—

Cash provided by (used in) investment activities		(153	)		(160	)

*Financing activities:*
Cash received from issuance of common stock		1			2
Cash received from borrowings, net of fees		29			14
Cash used to repay debt		(35	)		(2	)
Cash used to repurchase treasury stock		(3	)		(1	)
Other financing activities		(1	)		(8	)

Cash provided by (used in) continuing operations		(9	)		5
Cash provided by (used in) discontinued operations		—			—

Cash provided by (used in) financing activities		(9	)		5


Effect of exchange rate changes on cash		(19	)		21


Increase (decrease) in cash and cash equivalents		65			43
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)	$	729		$	821

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

SunGard Capital Corp. II

Consolidated Balance Sheets

(In millions except share and per-share amounts)

(Unaudited)


	December 31, 2010			June 30, 2011
*Assets*
Current:
Cash and cash equivalents	$	778		$	821
Trade receivables, less allowance for doubtful accounts of $41 and $50		894			863
Earned but unbilled receivables		167			188
Prepaid expenses and other current assets		178			184
Clearing broker assets		230			277
Deferred income taxes		10			10

Total current assets		2,257			2,343

Property and equipment, less accumulated depreciation of $1,135 and $1,255		918			926
Software products, less accumulated amortization of $1,301 and $1,434		809			713
Customer base, less accumulated amortization of $1,158 and $1,280		2,000			1,889
Other intangible assets, less accumulated amortization of $23 and $21		187			170
Trade name, less accumulated amortization of $7 and $10		1,023			1,020
Goodwill		5,774			5,825

Total Assets	$	12,968		$	12,886


*Liabilities and Stockholders’ Equity*
Current:
Short-term and current portion of long-term debt	$	9		$	10
Accounts payable		64			47
Accrued compensation and benefits		302			260
Accrued interest expense		103			92
Other accrued expenses		422			366
Clearing broker liabilities		210			250
Deferred revenue		997			999

Total current liabilities		2,107			2,024

Long-term debt		8,046			8,068
Deferred income taxes		1,211			1,197

Total liabilities		11,364			11,289


Commitments and contingencies

Preferred stock subject to a put option		37			24

Stockholders’ equity:
Preferred stock, par value $.001 per share; cumulative 11.5% per annum, compounded quarterly; aggregate liquidation preference of $1,818 million and $1,930 million; 14,999,000 shares authorized, 9,924,392 and 9,955,951 issued		—			—
Common stock, par value $.001 per share; 1,000 shares authorized, 100 shares issued and oustanding		—			—
Capital in excess of par value		3,747			3,769
Treasury stock, 112,987 and 114,779 shares		(14	)		(14	)
Accumulated deficit		(2,137	)		(2,233	)
Accumulated other comprehensive income (loss)		(29	)		51

Total stockholders’ equity		1,567			1,573

Total Liabilities and Stockholders’ Equity	$	12,968		$	12,886

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

SunGard Capital Corp. II

Consolidated Statements of Operations

(In millions)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2011			2010			2011
Revenue:
Services	$	1,112		$	1,126		$	2,216		$	2,230
License and resale fees		103			109			171			183

Total products and services		1,215			1,235			2,387			2,413
Reimbursed expenses		38			31			66			63

		1,253			1,266			2,453			2,476


Costs and expenses:
Cost of sales and direct operating		581			573			1,173			1,158
Sales, marketing and administration		286			313			557			597
Product development		69			83			141			164
Depreciation and amortization		72			72			146			144
Amortization of acquisition-related intangible assets		120			119			240			244

		1,128			1,160			2,257			2,307

Operating income (loss)		125			106			196			169
Interest income		1			1			1			2
Interest expense and amortization of deferred financing fees		(160	)		(129	)		(319	)		(266	)
Other income (expense)		14			1			14			(1	)

Income (loss) from continuing operations before income taxes		(20	)		(21	)		(108	)		(96	)
Benefit from (provision for) income taxes		(1	)		(52	)		31			—

Income (loss) from continuing operations		(21	)		(73	)		(77	)		(96	)
Income (loss) from discontinued operations, net of tax		—			—			2			—

Net income (loss)	$	(21	)	$	(73	)	$	(75	)	$	(96	)

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

SunGard Capital Corp. II

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2010			2011
*Cash flow from operations:*
Net income (loss)	$	(75	)	$	(96	)
Income (loss) from discontinued operations		2			—

Income (Loss) from continuing operations		(77	)		(96	)
Reconciliation of income (loss) from continuing operations to cash flow from operations:
Depreciation and amortization		385			388
Deferred income tax provision (benefit)		(57	)		(30	)
Stock compensation expense		17			15
Amortization of deferred financing costs and debt discount		22			20
Other noncash items		(13	)		3
Accounts receivable and other current assets		131			8
Accounts payable and accrued expenses		(119	)		(125	)
Clearing broker assets and liabilities, net		6			(7	)
Deferred revenue		(61	)		1

Cash flow from continuing operations		234			177
Cash flow from discontinued operations		12			—

Cash flow from operations		246			177


*Investment activities:*
Cash paid for acquired businesses, net of cash acquired		(13	)		(26	)
Cash paid for property and equipment and software		(147	)		(133	)
Other investing activities		8			(1	)

Cash provided by (used in) continuing operations		(152	)		(160	)
Cash provided by (used in) discontinued operations		(1	)		—

Cash provided by (used in) investment activities		(153	)		(160	)


*Financing activities:*
Cash received from borrowings, net of fees		29			14
Cash used to repay debt		(35	)		(2	)
Cash used to repurchase treasury stock		(1	)		—
Other financing activities		(2	)		(7	)

Cash provided by (used in) continuing operations		(9	)		5
Cash provided by (used in) discontinued operations		—			—

Cash provided by (used in) financing activities		(9	)		5


Effect of exchange rate changes on cash		(19	)		21


Increase (decrease) in cash and cash equivalents		65			43
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)	$	729		$	821

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

SunGard Data Systems Inc.

Consolidated Balance Sheets

(In millions except share and per-share amounts)

(Unaudited)


	December 31, 2010			June 30, 2011
*Assets*
Current:
Cash and cash equivalents	$	778		$	821
Trade receivables, less allowance for doubtful accounts of $41 and $50		894			863
Earned but unbilled receivables		167			188
Prepaid expenses and other current assets		178			184
Clearing broker assets		230			277
Deferred income taxes		10			10

Total current assets		2,257			2,343

Property and equipment, less accumulated depreciation of $1,135 and $1,255		918			926
Software products, less accumulated amortization of $1,301 and $1,434		809			713
Customer base, less accumulated amortization of $1,158 and $1,280		2,000			1,889
Other intangible assets, less accumulated amortization of $23 and $21		187			170
Trade name, less accumulated amortization of $7 and $10		1,023			1,020
Goodwill		5,774			5,825

Total Assets	$	12,968		$	12,886


*Liabilities and Stockholder’s Equity*
Current:
Short-term and current portion of long-term debt	$	9		$	10
Accounts payable		64			47
Accrued compensation and benefits		302			260
Accrued interest expense		103			92
Other accrued expenses		423			368
Clearing broker liabilities		210			250
Deferred revenue		997			999

Total current liabilities		2,108			2,026

Long-term debt		8,046			8,068
Deferred income taxes		1,207			1,192

Total liabilities		11,361			11,286


Commitments and contingencies

Stockholder’s equity:
Common stock, par value $.01 per share; 100 shares authorized, issued and oustanding		—			—
Capital in excess of par value		3,773			3,782
Accumulated deficit		(2,137	)		(2,233	)
Accumulated other comprehensive income (loss)		(29	)		51

Total stockholder’s equity		1,607			1,600

Total Liabilities and Stockholder’s Equity	$	12,968		$	12,886

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

SunGard Data Systems Inc.

Consolidated Statements of Operations

(In millions)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2011			2010			2011
Revenue:
Services	$	1,112		$	1,126		$	2,216		$	2,230
License and resale fees		103			109			171			183

Total products and services		1,215			1,235			2,387			2,413
Reimbursed expenses		38			31			66			63

		1,253			1,266			2,453			2,476

Costs and expenses:
Cost of sales and direct operating		581			573			1,173			1,158
Sales, marketing and administration		286			313			557			597
Product development		69			83			141			164
Depreciation and amortization		72			72			146			144
Amortization of acquisition-related intangible assets		120			119			240			244

		1,128			1,160			2,257			2,307

Operating income (loss)		125			106			196			169
Interest income		1			1			1			2
Interest expense and amortization of deferred financing fees		(160	)		(129	)		(319	)		(266	)
Other income (expense)		14			1			14			(1	)

Income (loss) from continuing operations before income taxes		(20	)		(21	)		(108	)		(96	)
Benefit from (provision for) income taxes		(1	)		(52	)		31			—

Income (loss) from continuing operations		(21	)		(73	)		(77	)		(96	)
Income (loss) from discontinued operations, net of tax		—			—			2			—

Net income (loss)	$	(21	)	$	(73	)	$	(75	)	$	(96	)

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

SunGard Data Systems Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2010			2011
*Cash flow from operations:*
Net income (loss)	$	(75	)	$	(96	)
Income (loss) from discontinued operations		2			—

Income (loss) from continuing operations		(77	)		(96	)
Reconciliation of income (loss) from continuing operations to cash flow from operations:
Depreciation and amortization		385			388
Deferred income tax provision (benefit)		(58	)		(30	)
Stock compensation expense		17			15
Amortization of deferred financing costs and debt discount		22			20
Other noncash items		(13	)		3
Accounts receivable and other current assets		131			8
Accounts payable and accrued expenses		(117	)		(125	)
Clearing broker assets and liabilities, net		6			(7	)
Deferred revenue		(61	)		1

Cash flow from continuing operations		235			177
Cash flow from discontinued operations		12			—

Cash flow from operations		247			177


*Investment activities:*
Cash paid for acquired businesses, net of cash acquired		(13	)		(26	)
Cash paid for property and equipment and software		(147	)		(133	)
Other investing activities		8			(1	)

Cash provided by (used in) continuing operations		(152	)		(160	)
Cash provided by (used in) discontinued operations		(1	)		—

Cash provided by (used in) investment activities		(153	)		(160	)


*Financing activities:*
Cash received from borrowings, net of fees		29			14
Cash used to repay debt		(35	)		(2	)
Other financing activities		(4	)		(7	)

Cash provided by (used in) continuing operations		(10	)		5
Cash provided by (used in) discontinued operations		—			—

Cash provided by (used in) financing activities		(10	)		5


Effect of exchange rate changes on cash		(19	)		21


Increase (decrease) in cash and cash equivalents		65			43
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)	$	729		$	821

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

SUNGARD CAPITAL CORP.

SUNGARD CAPITAL CORP. II

SUNGARD DATA SYSTEMS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation:

SunGard Data Systems Inc. (“SunGard”) was acquired on August 11, 2005 (the “LBO”) 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 LBO 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”). Effective January 1, 2011, the Company’s K-12 business was transferred from PS to HE. The balances at December 31, 2010 and for the three and six months ended June 30, 2010 have been revised to include this business in HE. 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, 2010. 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, 2011.

In May 2011, the Financial Accounting Standard Board (FASB) revised the fair value measurement and disclosure requirements so that the requirements under GAAP and International Financial Reporting Standards (“IFRS”) are the same. The guidance clarifies the FASB’s intent about the application of existing fair value measurements and requires enhanced disclosures, most significantly related to unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. The guidance is effective prospectively during interim and annual periods beginning after December 15, 2011. The Company does not anticipate that this adoption will have a significant impact on the financial position or results of operations.

In June 2011, the FASB amended guidance relating to the presentation requirements of comprehensive income within an entity’s financial statements. Under the guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement or in two separate but consecutive statements. The amended guidance eliminates the previously available option of presenting the components of other comprehensive income as part of the statement of changes in equity. In addition, an entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The amendment is effective for fiscal years beginning after December 15, 2011 and will be applied retrospectively.

2. Revision:

During the second quarter of 2011, the Company identified a classification error within its consolidated statements of operations. The misclassification resulted in overstating the product development expense line item on the statement of operations. Generally, the offsetting understatement was to cost of sales and direct operating expenses. The error in classification had no impact on total reported expenses for any period and therefore had no impact on operating or net income. The Company assessed the materiality of this item on previously reported periods and concluded the misclassification error was not material and did not warrant restatement of previously issued financial statements. Accordingly, product development expense for the three- and six-month periods ended June 30, 2010 has been revised from $93 million to $69 million and from $189 million to $141 million, respectively, to correct the immaterial misclassification. In future filings, any comparative period presentations will be revised when those periods are presented.

3. Acquisitions and Discontinued Operations:

Acquisitions

The Company seeks to acquire businesses that broaden its existing product lines and service offerings by adding complementary products and service offerings and by expanding its geographic reach. During the six months ended June 30, 2011, the Company completed three acquisitions in its FS segment. Cash paid, net of cash acquired and subject to certain adjustments, was $26 million.

Discontinued Operations

In December 2010, the Company sold its PS UK business. The results for the discontinued operations for the three-and six-months ended June 30, 2010 were as follows (in millions):


	Three Months Ended			Six Months Ended
	June 30, 2010			June 30, 2010
Revenue	$	45		$	94

Operating income		1			4

Income before income taxes		1			4
Provision for income taxes		(1	)		(2	)

Income from discontinued operations	$	—		$	2

4. Goodwill:

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


	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		6			—			—		—			6			—			—			—			—			6
Tax benefits realized from the exercise of stock options related to the LBO and other		(2	)		(1	)		—		(2	)		(5	)		—			—			—			—			(5	)
Effect of foreign currency translation		42			—			—		8			50			—			—			—			—			50

Balance at June 30, 2011	$	3,496		$	1,047		$	436	$	2,209		$	7,188		$	(32	)	$	(205	)	$	(1,126	)	$	(1,363	)	$	5,825

Effective January 1, 2011, the Company’s K-12 business was transferred from PS to HE. The balances at December 31, 2010 have been revised to include this business in HE.

5. Clearing Broker Assets and Liabilities:

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


	December 31, 2010		June 30, 2011
Segregated customer cash and treasury bills	$	57	$	65
Collateral for securities borrowed		154		190
Receivables from customers and other		19		22

Clearing broker assets	$	230	$	277


Payables to customers	$	19	$	14
Collateral for securities loaned		137		173
Payable to brokers and dealers		54		63

Clearing broker liabilities	$	210	$	250

Segregated customer cash and treasury bills are held by the Company on behalf of customers. 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.

6. Debt and Derivatives:

On January 31, 2011, SunGard entered into the First Refinancing Amendment to its Amended and Restated Senior Secured Credit Agreement, dated as of June 9, 2009 (“Credit Agreement”) to, among other things, (a) eliminate the LIBOR and base rate floors and (b) reduce the Eurocurrency rate spread from 3.75% to 3.50% and the base rate spread from 2.75% to 2.50% with no impact on maturity.

On March 11, 2011, SunGard entered into the Second Refinancing and Incremental Amendment to its Credit Agreement to, among other things, obtain new revolving credit commitments in an aggregate amount equal to $300 million that will terminate on May 11, 2013, thereby increasing the Company’s revolving credit commitments by $50 million, to $880 million, all of which now have been extended to (or expire on) May 11, 2013.

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:


Inception	Maturity	Notional Amount (in millions)		Interest rate paid			Interest rate received (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	%

The fair values of interest rate swaps designated as cash flow hedging instruments, included in other accrued expenses on the consolidated balance sheets, are $38 million and $24 million as of December 31, 2010 and June 30, 2011, 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 and six months ended June 30, 2010 and 2011 (in millions):


	Classification	Three Months Ended June 30,						Six Months Ended June 30,
		Three Months Ended June 30,						Six Months Ended June 30,
		2010			2011			2010			2011
Gain (loss) recognized in Accumulated Other Comprehensive Income (OCI)	OCI	$	(17	)	$	(9	)	$	(37	)	$	(10	)
Loss reclassified from accumulated OCI into income	Interest expense and amortization of deferred financing fees		20			7			42			20

The Company has no ineffectiveness related to its swap agreements.

The Company expects to reclassify in the next twelve months approximately $21 million from OCI into earnings related to the Company’s interest rate swaps based on the borrowing rates at June 30, 2011.

7. Fair Value Measurements:

The following table summarizes assets and liabilities measured at fair value on a recurring basis at June 30, 2011 (in millions):


	Fair Value Measures Using						Total
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents - money market funds	$	282	$	—	$	—	$	282


Liabilities
Interest rate swap agreements and other	$	—	$	24	$	—	$	24

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


	Fair Value Measures Using						Total
	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

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. 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, 2010 and June 30, 2011 (in millions):


	December 31, 2010				June 30, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Floating rate debt	$	4,707	$	4,644	$	4,725	$	4,689
Fixed rate debt		3,348		3,432		3,353		3,429

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

8. 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 June 30,						Six Months Ended June 30,
	2010			2011			2010			2011
Net loss	$	(21	)	$	(73	)	$	(75	)	$	(96	)
Foreign currency translation gains (losses)		(78	)		18			(139	)		75
Unrealized gains (losses) on derivative instruments		1			(3	)		3			5

Comprehensive income (loss)	$	(98	)	$	(58	)	$	(211	)	$	(16	)

9. Equity:

A rollforward of SCC’s equity for 2011 follows (in millions):


	SunGard Capital Corp. stockholders												Noncontrolling interest
	Class L - temporary equity			Class A - temporary equity			Permanent equity			Total			Temporary equity			Permanent equity		Total
Balance at December 31, 2010	$	87		$	11		$	(330	)	$	(232	)	$	54		$	1,782	$	1,836
Net income (loss)		—			—			(205	)		(205	)		(10	)		119		109
Foreign currency translation		—			—			75			75			—			—		—
Net unrealized gain on derivative instruments		—			—			5			5			—			—		—

Comprehensive income (loss)		—			—			(125	)		(125	)		(10	)		119		109
Stock compensation expense		—			—			15			15			—			—		—
Termination of put options due to employee terminations and other		(36	)		(4	)		41			1			(16	)		16		—
Issuance of common and preferred stock		(1	)		—			3			2			—			—		—
Purchase of treasury stock		—			—			(1	)		(1	)		—			—		—
Transfer intrinsic value of vested restricted stock units		5			—			(8	)		(3	)		3			—		3
Other		—			—			(8	)		(8	)		—			—		—

Balance at June 30, 2011	$	55		$	7		$	(413	)	$	(351	)	$	31		$	1,917	$	1,948

A rollforward of SCC’s equity for 2010 follows (in millions):


	SunGard Capital Corp. stockholders											Noncontrolling interest
	Class L - temporary equity			Class A - temporary equity		Permanent equity			Total			Temporary equity			Permanent equity			Total
Balance at December 31, 2009	$	88		$	11	$	321		$	420		$	51		$	1,593		$	1,644
Net income (loss)		—			—		(171	)		(171	)		3			93			96
Foreign currency translation		—			—		(139	)		(139	)		—			—			—
Net unrealized gain on derivative instruments		—			—		3			3			—			—			—

Comprehensive income (loss)		—			—		(307	)		(307	)		3			93			96
Stock compensation expense		—			—		17			17			—			—			—
Termination of put options due to employee terminations and other		(2	)		—		—			(2	)		(1	)		1			—
Purchase of treasury stock		—			—		(1	)		(1	)		—			(1	)		(1	)
Transfer intrinsic value of vested restricted stock units		4			—		(6	)		(2	)		2			—			2

Balance at June 30, 2010	$	90		$	11	$	24		$	125		$	55		$	1,686		$	1,741

In the case of termination of employment resulting from disability or death, an employee or his/her estate may exercise a put option which would require the Company to repurchase vested shares at the current fair market value. These common or preferred shares must be classified as temporary equity (between liabilities and equity) on the balance sheet of SCC and SCCII. At vesting or exercise, grant-date intrinsic value or exercise value, respectively, is reclassified to temporary equity. On termination of employment, the value included in temporary equity is reclassified to permanent equity.

10. Segment Information:

The Company has four reportable segments: FS, HE and PS, which together form the Company’s Software & Processing Solutions business, and AS. The Company evaluates the performance of its segments based on operating results before interest, income taxes, amortization of acquisition-related intangible assets, stock compensation and certain other costs. Effective January 1, 2011, the Company’s K-12 business was transferred from PS to HE. The results for 2010 have been revised to include this business in HE. The operating results apply to each of SCC, SCCII and SunGard unless otherwise noted. The operating results for each segment follow (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2011			2010			2011
Revenue:
Financial systems	$	702		$	714		$	1,362		$	1,386
Higher education		150			150			286			290
Public sector		36			36			71			70

Software & processing solutions		888			900			1,719			1,746
Availability services		365			366			734			730

	$	1,253		$	1,266		$	2,453		$	2,476

Depreciation and amortization:
Financial systems	$	21		$	21		$	40		$	42
Higher education		3			3			7			7
Public sector		1			2			2			3

Software & processing solutions		25			26			49			52
Availability services		47			46			97			92

	$	72		$	72		$	146		$	144

Income (loss) from operations:
Financial systems	$	147		$	139		$	261		$	254
Higher education		37			44			71			71
Public sector		10			10			18			20

Software & processing solutions		194			193			350			345
Availability services		84			81			154			154
Corporate and other items ⁽¹⁾		(141	)		(158	)		(286	)		(308	)
Other costs		(12	)		(10	)		(22	)		(22	)

	$	125		$	106		$	196		$	169

Cash paid for property and equipment and software:
Financial systems	$	21		$	21		$	41		$	44
Higher education		2			2			4			5
Public sector		2			1			4			2

Software & processing solutions		25			24			49			51
Availability services		46			45			97			80
Corporate administration		—			—			1			2

	$	71		$	69		$	147		$	133

(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 $119 million for the three months ended June 30, 2010 and 2011, respectively, and $240 million and $244 million for the six months ended June 30, 2010 and 2011, respectively.

Amortization of acquisition-related intangible assets by segment follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2011		2010		2011
Amortization of acquisition-related intangible assets:
Financial systems	$	64	$	63	$	128	$	132	⁽¹⁾
Higher education		10		10		20		20
Public sector		3		3		7		6

Software & processing solutions		77		76		155		158
Availability services		43		43		85		86

	$	120	$	119	$	240	$	244

(1)	Amortization of acquisition-related intangible assets in 2011 includes impairment charges related to customer base and software, respectively, for a subsidiary in the FS segment of approximately $3 million and $4 million.

The FS Segment is organized to align with customer-facing business areas. FS revenue by these business areas follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2011		2010		2011
Capital Markets	$	167	$	186	$	319	$	361
Global Trading		184		148		346		299
Asset Management		86		96		171		185
Wealth Management		95		87		187		178
Banking		48		57		91		104
Corporate Liquidity		42		50		87		91
Insurance		44		42		82		81
Global Services & Distribution		29		39		63		71
Other		7		9		16		16

Total Financial Systems	$	702	$	714	$	1,362	$	1,386

11. Related Party Transactions:

In accordance with the Management Agreement between the Company and affiliates of the Sponsors, the Company recorded $3 million and $2 million of management fees in sales, marketing and administration expenses during each of the three months ended June 30, 2010 and 2011, respectively. The Company recorded $7 million and $6 million of management fees in sales, marketing and administration expenses during each of the six months ended June 30, 2010 and 2011, respectively. At December 31, 2010 and June 30, 2011, $6 million and $5 million, respectively, was included in other accrued expenses.

12. Supplemental Cash Flow Information:

Supplemental cash flow information for the six months ended June 30, 2010 and 2011 follows (in millions):


	Six Months Ended June 30,
*Supplemental information:*	2010			2011
Acquired businesses:
Property and equipment	$	2		$	1
Software products		3			11
Customer base		10			12
Goodwill		2			6
Other tangible and intangible assets		3			—
Deferred income taxes		(2	)		(5	)
Purchase price obligations and debt assumed		(1	)		—
Net current liabilities assumed		(4	)		1

Cash paid for acquired businesses, net of cash acquired of $2 and $4, respectively	$	13		$	26

13. Subsequent Event:

As disclosed in a Form 8-K filed on August 5, 2011, the Company announced that SCC, SunGard, Datatel Parent Corp. (“Datatel”) and certain of their respective affiliates had entered into an Agreement and Plan of Merger dated as of August 4, 2011, and that SunGard, SunGard Higher Education Inc. and certain affiliates of Datatel had entered into an Asset Purchase Agreement dated as of August 4, 2011 (together, the “Transaction Agreements”) to sell SunGard’s HE business (excluding the K-12 Education business). The transactions are subject to customary closing conditions and could close as early as late in the fourth quarter of 2011 or as late as August 2, 2012. SunGard intends to use the transaction proceeds of $1.775 billion, less applicable taxes and fees, to repay a portion of its existing indebtedness.

14. Supplemental Guarantor Condensed Consolidating Financial Statements:

SunGard’s senior unsecured notes are jointly and severally, fully and unconditionally guaranteed on a senior unsecured basis and the senior subordinated notes are jointly and severally, fully and unconditionally guaranteed on an unsecured senior subordinated basis, in each case, subject to certain exceptions, by substantially all wholly owned, domestic subsidiaries of SunGard (collectively, the “Guarantors”). Each of the Guarantors is 100% owned, directly or indirectly, by SunGard. None of the other subsidiaries of SunGard, either direct or indirect, nor any of the Holding Companies guarantee the senior notes and senior subordinated notes (“Non-Guarantors”). The Guarantors and SunGard Holdco LLC also unconditionally guarantee the senior secured credit facilities.

The following tables present the financial position, results of operations and cash flows of SunGard (referred to as “Parent Company” for purposes of this note only), the Guarantor subsidiaries, the Non-Guarantor subsidiaries and Eliminations as of December 31, 2010 and June 30, 2011, and for the three and six month periods ended June 30, 2010 and 2011 to arrive at the information for SunGard on a consolidated basis. SCC and SCCII are neither parties nor guarantors to the debt issued as described in the notes to consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2010.


(in millions)	Supplemental Condensed Consolidating Balance Sheet December 31, 2010
	Parent Company			Guarantor Subsidiaries		Non-Guarantor 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 Stockholder’s 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 stockholder’s equity		1,607			14,012		2,337		(16,349	)		1,607

Total Liabilities and Stockholder’s Equity	$	9,568		$	18,491	$	4,082	$	(19,173	)	$	12,968


(in millions)	Supplemental Condensed Consolidating Balance Sheet June 30, 2011
	Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current:
Cash and cash equivalents	$	224		$	4	$	593	$	—		$	821
Intercompany balances		(6,313	)		5,482		831		—			—
Trade receivables, net		1			720		330		—			1,051
Prepaid expenses, taxes and other current assets		1,310			89		436		(1,364	)		471

Total current assets		(4,778	)		6,295		2,190		(1,364	)		2,343
Property and equipment, net		—			607		319		—			926
Intangible assets, net		139			3,130		523		—			3,792
Intercompany balances		(8	)		1		7		—			—
Goodwill		—			4,652		1,173		—			5,825
Investment in subsidiaries		14,177			2,510		—		(16,687	)		—

Total Assets	$	9,530		$	17,195	$	4,212	$	(18,051	)	$	12,886


Liabilities and Stockholder’s Equity
Current:
Short-term and current portion of long-term debt	$	—		$	2	$	8	$	—		$	10
Accounts payable and other current liabilities		179			2,223		978		(1,364	)		2,016

Total current liabilities		179			2,225		986		(1,364	)		2,026
Long-term debt		7,609			3		456		—			8,068
Intercompany debt		(198	)		63		253		(118	)		—
Deferred income taxes		340			727		125		—			1,192

Total liabilities		7,930			3,018		1,820		(1,482	)		11,286

Total stockholder’s equity		1,600			14,177		2,392		(16,569	)		1,600

Total Liabilities and Stockholder’s Equity	$	9,530		$	17,195	$	4,212	$	(18,051	)	$	12,886


(in millions)	Supplemental Condensed Consolidating Schedule of Operations Three Months Ended June 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Total revenue	$	—		$	908		$	388		$	(43	)	$	1,253


Costs and expenses:
Cost of sales and direct operating		—			392			232			(43	)		581
Sales, marketing and administration		22			155			109			—			286
Product development		—			5			64			—			69
Depreciation and amortization		—			51			21			—			72
Amortization of acquisition-related intangible assets		1			101			18			—			120

		23			704			444			(43	)		1,128

Operating income (loss)		(23	)		204			(56	)		—			125
Net interest income (expense)		(148	)		(67	)		56			—			(159	)
Other income (expense)		92			11			14			(103	)		14

Income (loss) from continuing operations before income taxes		(79	)		148			14			(103	)		(20	)
Benefit from (provision for) income taxes		58			(56	)		(3	)		—			(1	)

Income (loss) from continuing operations		(21	)		92			11			(103	)		(21	)
Income from discontinued operations, net of tax		—			—			—			—			—

Net income (loss)	$	(21	)	$	92		$	11		$	(103	)	$	(21	)


(in millions)	Supplemental Condensed Consolidating Schedule of Operations Three Months Ended June 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Total revenue	$	—		$	866		$	399		$	1		$	1,266


Costs and expenses:
Cost of sales and direct operating		—			344			228			1			573
Sales, marketing and administration		39			157			117			—			313
Product development		—			24			59			—			83
Depreciation and amortization		—			49			23			—			72
Amortization of acquisition-related intangible assets		—			98			21			—			119

		39			672			448			1			1,160

Operating income (loss)		(39	)		194			(49	)		—			106
Net interest income (expense)		(118	)		(77	)		67			—			(128	)
Other income (expense)		29			12			—			(40	)		1

Income (loss) before income taxes		(128	)		129			18			(40	)		(21	)
Benefit from (provision for) income taxes		55			(101	)		(6	)		—			(52	)

Net income (loss)	$	(73	)	$	28		$	12		$	(40	)	$	(73	)


(in millions)	Supplemental Condensed Consolidating Schedule of Operations Six Months Ended June 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Total revenue	$	—		$	1,782		$	747		$	(76	)	$	2,453


Costs and expenses:
Cost of sales and direct operating		—			783			466			(76	)		1,173
Sales, marketing and administration		50			293			214			—			557
Product development		—			45			96			—			141
Depreciation and amortization		—			105			41			—			146
Amortization of acquisition-related intangible assets		1			202			37			—			240

		51			1,428			854			(76	)		2,257

Operating income (loss)		(51	)		354			(107	)		—			196
Net interest income (expense)		(295	)		(123	)		100			—			(318	)
Other income (expense)		152			8			14			(160	)		14

Income (loss) from continuing operations before income taxes		(194	)		239			7			(160	)		(108	)
Benefit from (provision for) income taxes		119			(87	)		(1	)		—			31

Income (loss) from continuing operations		(75	)		152			6			(160	)		(77	)
Income from discontinued operations, net of tax		—			—			2			—			2

Net income (loss)	$	(75	)	$	152		$	8		$	(160	)	$	(75	)


(in millions)	Supplemental Condensed Consolidating Schedule of Operations Six Months Ended June 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Total revenue	$	—		$	1,711		$	765		$	—		$	2,476


Costs and expenses:
Cost of sales and direct operating		—			708			450			—			1,158
Sales, marketing and administration		65			302			230			—			597
Product development		—			48			116			—			164
Depreciation and amortization		—			99			45			—			144
Amortization of acquisition-related intangible assets		—			195			49			—			244

		65			1,352			890			—			2,307

Operating income (loss)		(65	)		359			(125	)		—			169
Net interest income (expense)		(205	)		(112	)		53			—			(264	)
Other income (expense)		78			(50	)		—			(29	)		(1	)

Income (loss) before income taxes		(192	)		197			(72	)		(29	)		(96	)
Benefit from (provision for) income taxes		96			(118	)		22			—			—

Net income (loss)	$	(96	)	$	79		$	(50	)	$	(29	)	$	(96	)


(in millions)	Supplemental Condensed Consolidating Schedule of Cash Flows Six Months ended June 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flow from operations:
Net income (loss)	$	(75	)	$	152		$	8		$	(160	)	$	(75	)
Income (loss) from discontinued operations		—			—			2			—			2

Income (loss) from continuing operations		(75	)		152			6			(160	)		(77	)
Non cash adjustments		(110	)		244			59			160			353
Changes in operating assets and liabilities		(95	)		92			(38	)		—			(41	)

Cash flow provided by (used in) continuing operations		(280	)		488			27			—			235
Cash flow provided by (used in) discontinued operations		—			—			12			—			12

Cash flow provided by (used in) operations		(280	)		488			39			—			247


Investment activities:
Intercompany transactions		407			(381	)		(26	)		—			—
Cash paid for acquired businesses, net of cash acquired		—			—			(13	)		—			(13	)
Cash paid for property and equipment and software		—			(113	)		(34	)		—			(147	)
Other investing activities		—			10			(2	)		—			8

Cash provided by (used in) continuing operations		407			(484	)		(75	)		—			(152	)
Cash provided by (used in) discontinued operations		—			—			(1	)					(1	)

Cash provided by (used in) investment activities		407			(484	)		(76	)		—			(153	)


Financing activities:
Net repayments of long-term debt		(23	)		(2	)		19			—			(6	)
Other financing activities		(4	)		—			—			—			(4	)

Cash provided by (used in) continuing operations		(27	)		(2	)		19			—			(10	)
Cash provided by (used in) discontinued operations		—			—			—			—			—

Cash provided by (used in) financing activities		(27	)		(2	)		19			—			(10	)


Effect of exchange rate changes on cash		—			—			(19	)		—

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