UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 333-178959           

Epicor Software Corporation

(Exact name of registrant as specified in its charter)

Delaware	45-1478440
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
804 Las Cimas Parkway Austin, TX	78746
(Address of principal executive offices)	(Zip Code)

(800) 999 - 1809

(Registrant’s telephone number, including area code)

Indicate by check mark whether 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.    Yes  o   No Q As a voluntary filer, not subject to the filing requirements, the registrant 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.

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).    Yes  ¨ No  Q As a voluntary filer, the registrant is not required to submit Interactive Data Files pursuant to Rule 405 of Regulation S-T. The registrant has submitted all Interactive Data Files that would be required under Rule 405 of Regulation S-T for the preceding 12 months.

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.

Large Accelerated Filer	o	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).    Yes  ¨    No  ý

As of August 8, 2014, we had 100 shares of common stock, no par value, outstanding.

EPICOR SOFTWARE CORPORATION

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2014

INDEX

	Page
Note Regarding Forward-Looking Statements	2
PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets as of June 30, 2014 and September 30, 2013	3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended June 30, 2014 and 2013	4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2014 and 2013	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures About Market Risk	59
Item 4. Controls and Procedures	59
PART II — OTHER INFORMATION	60
Item 1. Legal Proceedings	60
Item 1A. Risk Factors	60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 6. Exhibits	61
SIGNATURES	62
Exhibits Index	63

1

NOTE REGARDING FORWARD-LOOKING STATEMENTS

For purposes of this Quarterly Report on Form 10-Q ("Report"), the terms "we", "our", "us", and the "Company" refer to Epicor Software Corporation and its consolidated subsidiaries. This Report contains forward-looking statements that set forth anticipated results based on management’s plans and assumptions. Such forward-looking statements involve substantial risks and uncertainties. These statements often include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “seek”, “will”, “may”, or similar expressions. These statements include, among other things, statements regarding:

• the economy, IT and software spending and our markets and technology, including Software as a Service and cloud offerings;

• our strategy and ability to compete in our markets;

• our results of operations, including the financial performance of acquired companies, products, services and technologies on a combined and stand-alone basis;

• our ability to generate additional revenue from our current customer base;

• the impact of new accounting pronouncements, legal or regulatory requirements;

• our acquisitions, including statements regarding financial performance, products, and strategies;

• our credit agreement and senior note indenture, our ability to comply with the covenants therein, and the terms of any future credit or debt agreements;

• the impact of our parent company's PIK Toggle Notes, and our related dividend payments to our parent company, on our liquidity;

• the life of our assets, including amortization schedules;

• our sources of liquidity, cash flow from operations and borrowings;

• our financing sources and their sufficiency;

• our expected capital expenditures;

• our legal proceedings;

• our forward or other hedging contracts and practices; and

• our tax expense and tax rate.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under "Part I, Item 1A - Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013 as well as elsewhere herein and in our other filings with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by applicable law.

2

PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements

EPICOR SOFTWARE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)	June 30, 2014			September 30, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	104,648		$	82,902
Accounts receivable, net of allowances of $11,666 and $13,725 at June 30, 2014 and September 30, 2013, respectively	116,785			136,640
Inventories, net	3,676			3,951
Deferred tax assets	20,728			21,497
Income tax receivable	10,173			10,941
Prepaid expenses and other current assets	37,804			37,026
Total current assets	293,814			292,957
Property and equipment, net	62,781			64,931
Intangible assets, net	630,654			730,510
Goodwill	1,297,633			1,301,913
Deferred financing costs	25,062			29,514
Other assets	10,009			10,117
Total assets	$	2,319,953		$	2,429,942
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	23,142		$	29,625
Payroll related accruals	47,488			39,704
Deferred revenue	163,038			157,247
Current portion of long-term debt	8,401			22,100
Accrued interest payable	6,707			16,711
Accrued expenses and other current liabilities	50,325			66,243
Total current liabilities	299,101			331,630
Long-term debt, net of unamortized discount of $6,231 and $6,182 at June 30, 2014 and September 30, 2013, respectively	1,286,219			1,290,283
Deferred income tax liabilities	236,853			246,919
Loan from affiliate	1,050			2,206
Other liabilities	40,927			47,095
Total liabilities	1,864,150			1,918,133
Commitments and contingencies (Note 12)
Stockholder’s equity:
Common stock; No par value; 1,000 shares authorized; 100 shares issued and outstanding at June 30, 2014 and September 30, 2013. Net of dividends (Note 4)	610,500			647,000
Additional paid-in capital	18,166			13,081
Accumulated deficit	(155,935		)	(135,427		)
Accumulated other comprehensive loss (Note 13)	(16,928		)	(12,845		)
Total stockholder’s equity	455,803			511,809
Total liabilities and stockholder’s equity	$	2,319,953		$	2,429,942

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

3

EPICOR SOFTWARE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended						Nine Months Ended
(in thousands)	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Revenues:
Software and software related services:
Software license	$	35,541		$	32,463		$	105,233		$	93,849
Software and cloud subscriptions	22,519			20,568			65,139			60,440
Software support	108,532			105,089			322,473			310,089
Total software and software related services	166,592			158,120			492,845			464,378
Professional services	58,751			61,117			174,343			176,511
Hardware and other	20,892			21,977			66,810			67,330
Total revenues	246,235			241,214			733,998			708,219
Operating expenses:
Cost of software and software related services revenues1 (Note 1)	37,485			36,517			110,522			107,586
Cost of professional services revenues1	44,482			46,032			134,412			136,180
Cost of hardware and other revenues1	15,234			17,160			49,850			53,170
Sales and marketing	43,451			41,549			126,891			122,997
Product development	26,092			27,254			80,584			76,928
General and administrative	16,890			18,152			54,275			55,454
Depreciation and amortization	42,750			39,707			125,774			120,243
Acquisition-related costs	2,254			2,018			6,222			5,862
Restructuring costs	1,157			606			2,769			4,099
Total operating expenses	229,795			228,995			691,299			682,519
Operating income	16,440			12,219			42,699			25,700
Interest expense	(21,293		)	(22,935		)	(65,710		)	(69,924		)
Other expense, net	(139		)	(244		)	(386		)	(668		)
Loss before income taxes	(4,992		)	(10,960		)	(23,397		)	(44,892		)
Income tax benefit	(1,672		)	(1,324		)	(2,889		)	(8,889		)
Net loss	$	(3,320	)	$	(9,636	)	$	(20,508	)	$	(36,003	)
Comprehensive income (loss):
Net loss	$	(3,320	)	$	(9,636	)	$	(20,508	)	$	(36,003	)
Other comprehensive income (loss) (Note 13):
Unrealized gain (loss) on cash flow hedges, net of taxes	(27		)	118			(309		)	(69		)
Realized loss on cash flow hedge reclassified into interest expense, net of taxes	455			575			1,498			575
Unrealized gain (loss) on pension plan liabilities	(20		)	(4		)	317			101
Foreign currency translation adjustment	4,550			(2,643		)	(5,589		)	(9,384		)
Total other comprehensive income (loss), net of taxes	4,958			(1,954		)	(4,083		)	(8,777		)
Comprehensive income (loss)	$	1,638		$	(11,590	)	$	(24,591	)	$	(44,780	)

⁽¹⁾  Exclusive of amortization of intangible assets and depreciation of property and equipment, which is shown separately in depreciation and amortization below.

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

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EPICOR SOFTWARE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
(in thousands)	June 30, 2014			June 30, 2013
Operating activities:
Net loss	$	(20,508	)	$	(36,003	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation expense	5,547			4,614
Depreciation and amortization	125,774			120,243
Amortization of deferred financing costs and original issue discount and loss on extinguishment of debt	5,677			5,254
Changes in operating assets and liabilities and other	(16,261		)	(6,835		)
Net cash provided by operating activities	100,229			87,273
Investing activities:
Purchases of property and equipment	(12,101		)	(13,443		)
Capitalized computer software and database costs	(8,956		)	(8,200		)
Acquisition of businesses, net of cash acquired	—			(152,830		)
Sale of short-term investments	—			1,440
Net cash used in investing activities	(21,057		)	(173,033		)
Financing activities:
Proceeds from revolving facilities, net	—			40,000
Payments to affiliate	(1,618		)	—
Payments on long-term debt	(17,714		)	(6,475		)
Payments of dividends	(36,500		)	—
Proceeds from issuance of senior secured term loan	—			3,050
Payments of financing fees	(1,350		)	(1,598		)
Net cash provided by (used in) financing activities	(57,182		)	34,977
Effect of exchange rate changes on cash	(244		)	(2,421		)
Net change in cash and cash equivalents	21,746			(53,204		)
Cash and cash equivalents, beginning of period	82,902			130,676
Cash and cash equivalents, end of period	$	104,648		$	77,472

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

5

EPICOR SOFTWARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION AND ACCOUNTING POLICY INFORMATION

Description of Business

We are a leading global provider of enterprise application software and services focused on small and mid-sized companies and the divisions and subsidiaries of Global 1000 enterprises. We provide industry-specific solutions to the manufacturing, distribution, retail and services sectors. We specialize in and target three application software segments: ERP, Retail Solutions and Retail Distribution, which we also consider our segments for reporting purposes. These segments are determined in accordance with how our management views and evaluates our business based on the criteria as outlined in authoritative accounting guidance regarding segments under accounting principles generally accepted in the United States of America ("GAAP").

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. The accompanying unaudited condensed consolidated balance sheets as of June 30, 2014 and September 30, 2013, the unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended June 30, 2014 and 2013, and the unaudited condensed consolidated statements of cash flows for the nine months ended June 30, 2014 and 2013 represent our financial position, results of operations and cash flows as of and for the periods then ended. In management's opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring items, considered necessary to fairly present our financial position at June 30, 2014 and September 30, 2013, the results of our operations for the three and nine months ended June 30, 2014 and 2013, and our cash flows for the nine months ended June 30, 2014 and 2013, respectively.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013, filed with the Securities and Exchange Commission on December 11, 2013.

Our accompanying unaudited condensed consolidated financial statements have been prepared in conformity with GAAP for interim financial information. The accompanying unaudited condensed consolidated balance sheet as of September 30, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted.

Beginning in fiscal 2014, we elected to change the presentation of the revenues and cost of revenues sections of our unaudited condensed consolidated statements of comprehensive income (loss) to better align our presentation with other companies in our industry and to enhance comparability. Beginning in fiscal 2014, within revenues and cost of revenues, we present software and software related services, professional services and hardware and other. Prior periods have been reclassified to conform to the current period presentation. The change in presentation had no effect on the total amount of revenues or cost of revenues and no change has been made to the Company’s reporting segments.

Use of Estimates

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. While management has based their assumptions and estimates on the facts and circumstances existing at June 30, 2014, actual results could differ from those estimates and affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements. The operating results for the three and nine months ended June 30, 2014 are not necessarily indicative of the results that may be achieved for the fiscal year ending September 30, 2014.

6

Fiscal Year

Our fiscal year is from October 1 through September 30. Unless otherwise stated, references to the years 2012 and 2013 relate to our fiscal years ended September 30, 2012 and 2013, respectively. References to future years also relate to our fiscal years ending September 30 of the applicable year.

Revenue Recognition Policy

Our primary sources of revenue are comprised of: Software and Software Related Services, Professional Services, and Hardware and Other as described below:

Software and Software Related Services:

• Software license revenues - Revenues from the granting of perpetual licenses to customers to use our software and application offerings.

• Software and cloud subscriptions - Revenues from recurring fees earned from granting customers access to a broad range of our software and application offerings on a subscription basis. These offerings consist primarily of software application modules and suites, proprietary catalogs, ecommerce and electronic data interchange, data warehouses and other data management products and all software accessed or managed on-demand over the Internet through a Software as a Service (“SaaS”) model.

• Software support revenues - Revenues earned primarily from providing customers with technical support services, as well as unspecified software upgrades (when and if available) and release updates and patches.

Professional Services:

Consists primarily of revenues generated from implementation contracts to install (software and hardware), configure and deploy our software products. Our professional services revenues also include business and technical consulting, integration services, custom software development and product training and educational services regarding the use of our software products. Additionally, we provide managed services for customers hosted at our data center facilities, partner data centers or physically on-premise at customer facilities.

Hardware and Other:

Consists primarily of revenues generated from the re-sale of servers, Point-of-Sale ("POS") and storage product offerings, hardware maintenance fees and the sale of business products.

Our revenue recognition for software elements is based on Accounting Standards Codification Section 985-605 - Software-Revenue Recognition. Revenue for sales of software licenses is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed or determinable and collection is probable.

For multiple-element software arrangements (software and software related services and professional services), we use the residual method of revenue recognition. Under the residual method, consideration is allocated to undelivered elements based upon vendor specific objective evidence ("VSOE") of the fair value of those elements, with the residual of the arrangement fee allocated to the software license components. We have established VSOE of fair value for each undelivered software element of the sale through independent transactions not sold in connection with a software license. VSOE of fair value of the software support is determined by reference to the price our customers are required to pay for the services when sold-separately. For professional services, VSOE of fair value is based on the hourly or daily rate at which these services were sold without any other product or service offerings.

For multiple-element arrangements that include non-software elements and software not essential to the hardware's functionality, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the non-software elements. In order to allocate revenue based on each deliverables relative selling price, we have established the best estimated selling price for each item using a hierarchy of VSOE, third-party evidence ("TPE"), and estimated selling price ("ESP"). VSOE generally only exists when we sell the deliverable separately and is the price actually charged for that deliverable. TPE of selling price represents the price charged by other vendors of largely

7

interchangeable products in standalone sales to similar customers. ESPs reflect our best estimate of what the selling prices would be if they were sold regularly on a stand-alone basis. We determine ESP for a product or service by considering multiple factors, including, but not limited to, transaction size, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. Then we further allocate the consideration within the software group to the respective elements within that group following the residual method. After the arrangement consideration has been allocated to the elements, we account for each respective element in the arrangement as described above.

Software License Revenues: Amounts allocated to software license revenues that do not require significant customization are recognized at the time of delivery of the software when VSOE of fair value for all undelivered elements exists and all the other revenue recognition criteria have been met. If VSOE of fair value does not exist for all undelivered elements, license revenue is deferred and recognized when delivery or performance of the undelivered element(s) has occurred or when VSOE is established for the undelivered element(s). If support or consulting is the only remaining element for which VSOE of fair value does not exist, then the related license revenue is recognized over the performance period of the service.

Software and Cloud Subscriptions: We recognize revenue for our software and cloud subscriptions ratably over the contract term primarily commencing with the date the services are made available to customers and all other revenue recognition criteria have been satisfied. Most of our software and cloud subscriptions customer base is on monthly terms and accordingly we bill for these services monthly.

Software Support: Support fees are typically paid in advance and are recognized on a straight-line basis over the term of the contract.

Professional Services: Professional services are sold on a fixed fee and time-and-materials basis. Consulting engagements can last anywhere from one day to several months and are based strictly on the customer’s requirements and complexities. Our software, as delivered, can typically be used by the customer. Our professional services are generally not essential to the functionality of the software, as delivered, and do not result in any material changes to the underlying software code.

For services performed on a time-and-materials basis, revenue is recognized when the services are performed. On occasion, we enter into fixed or “not to exceed” fee arrangements. In these types of arrangements, revenue is recognized as services are proportionally performed as measured by hours incurred to date, as compared to total estimated hours to be incurred to complete the work. If, in the services element of the arrangement we perform significant production, modification or customization of our software, we account for the entire arrangement, inclusive of the software license revenue, using contract accounting as the software and services do not meet the criteria for separation. Revenue from training engagements is generally recognized as the services are performed.

Our revenue recognition for non-software elements is based on ASC 605-Revenue Recognition. Revenue for sales of hardware products and other are recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed or determinable and collection is probable.

Hardware and Other: Hardware equipment revenue is recognized based upon the accounting guidance contained in ASC 605. Hardware maintenance contracts are entered into at the customer’s option and are recognized ratably over the contractual term of the arrangements.

For multiple-element arrangements that include non-software elements and software essential to the hardware's functionality, we allocate revenue to all deliverables based on their relative selling prices. In order to allocate revenue based on each deliverables relative selling price, we have established the best estimated selling price for each item using a hierarchy of VSOE, TPE, and ESP. VSOE generally only exists when we sell the deliverable separately and is the price actually charged for that deliverable. TPE of selling price represents the price charged by other vendors of largely interchangeable products in standalone sales to similar customers. ESPs reflect our best estimate of what the selling prices would be if they were sold regularly on a stand-alone basis. We determine ESP for a product or service by considering multiple factors, including, but not limited to, transaction size, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices.

We determine our ESP by considering our overall pricing objectives and market conditions. Significant pricing practices taken into consideration include our discounting practices, desired gross profit margins, the size and volume of our transactions, the customer demographic, the geographic area where services are sold, price lists, our go-to-market strategy, historical standalone sales, any customization included in the contract and contract prices. The determination of ESP is made through

8

consultation with and approval by our management. As our go-to-market strategies evolve, we may modify pricing practices in the future, which could result in changes in relative selling prices, including both VSOE and ESP.

Components of Cost of Software and Software Related Revenues

The components of our cost of software and software related revenues were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Components of cost of software and software related services revenues:
Software license	$	5,242	$	4,909	$	14,560	$	13,753
Software and cloud subscriptions	7,769		6,521		22,527		20,263
Software support	24,474		25,087		73,435		73,570
Total	$	37,485	$	36,517	$	110,522	$	107,586

Accumulated Amortization of Intangible Assets

Accumulated amortization of intangible assets was $420.7 million and $311.8 million as of June 30, 2014 and September 30, 2013, respectively.

Non-Cash Investing Activities on Statement of Cash Flows

During the nine months ended June 30, 2014, we installed $2.4 million of leasehold improvements which were paid directly by the landlord for our facility in Bensalem, Pennsylvania. We have excluded these leasehold improvements from Purchases of Property and Equipment in our unaudited condensed consolidated statement of cash flows as they represent a non-cash investing activity.

Recently Issued Accounting Pronouncements

In May 2014, the FASB and the IASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). This new guidance will supersede existing revenue guidance under GAAP and International Financial Reporting Standards ("IFRS"). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard defines a five step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. We expect that these judgments and estimates will include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Additionally, the new standard will eliminate the requirement to recognize revenue based on VSOE of fair value for multiple element software arrangements. The standard is effective for public entities for annual periods beginning after December 15, 2016, which will be our fiscal year 2018, and for interim periods within those fiscal years. The standard allows for two methods of transition: (i) retrospective with the cumulative effect of initially applying the standard recognized at the date of initial application and providing certain additional disclosures as defined within the standard, or (ii) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within the standard. We are currently evaluating the impact of adopting ASU 2014-09 on our financial statements.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830), Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05), which requires companies to release cumulative translation adjustments into earnings when an entity ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity. The amendments are effective for public companies for fiscal years beginning after December 15, 2013, which will be our fiscal year 2015. The amendments should be applied prospectively to derecognition events occurring after the effective date. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2013-05 on our results of operations.

9

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income (ASU 2013-02), which requires companies to disclose information about reclassifications out of accumulated other comprehensive income and changes in the balance of accumulated other comprehensive income. The disclosures can be presented on the face of the financial statements or in the footnotes. We adopted ASU 2013-02 prospectively in the first quarter of fiscal 2014. We have added a total for other comprehensive income (loss) on the face of our unaudited condensed consolidated statements of comprehensive income (loss). Additionally, we have added a footnote disclosure to roll forward the balances of each component of accumulated other comprehensive loss, separately disclosing the tax effect of all activity. We have also disclosed the effect on net loss of reclassifications out of accumulated other comprehensive loss into net loss. See Note 13 - Accumulated Other Comprehensive Loss.

NOTE 2 — ACQUISITIONS AND RELATED TRANSACTIONS

Acquisition of Solarsoft Business Systems, Inc.

On October 12, 2012, we acquired 100% of the equity of Solarsoft Business Systems, Inc. ("Solarsoft") for $155.0 million in cash plus $6.6 million cash on hand reduced by $2.2 million of agreed-upon liabilities assumed. Additionally, the purchase agreement included a clause to account for estimates that were made at the time of closing. The purchase price allocation for Solarsoft was finalized as of September 30, 2013.

During the three months ended June 30, 2014, based on an agreement reached with the former shareholders of Solarsoft, the expiration of certain sales and use tax statutes of limitation, as well as additional analysis completed during the quarter ended June 30, 2014, we reduced acquired sales and use tax reserves by $2.2 million. Additionally, we received $0.7 million in cash from the former shareholders of Solarsoft in settlement of a dispute regarding sales tax liabilities. As the measurement period for the Solarsoft acquisition was completed as of September 30, 2013, and the adjustments were recorded based on developments which occurred subsequent to the Solarsoft acquisition, we recorded these amounts as a $2.9 million reduction of general and administrative expenses during the three months ended June 30, 2014.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed (in thousands):

Purchase Price:	$	159,424
Fair Value of Assets Acquired and Liabilities Assumed
Tangible assets acquired:
Current assets	$	30,469
Property and equipment, net	1,206
Other non-current assets	3
Total tangible assets acquired	31,678
Identified intangible assets acquired	69,300
Current liabilities assumed	(32,314		)
Long-term liabilities assumed	(19,173		)
Total assets acquired in excess of liabilities assumed	49,491
Goodwill	109,933
Total purchase price	$	159,424

The fair value of assets acquired and liabilities assumed has been determined based upon our estimates of the fair values of assets acquired and liabilities assumed in the acquisition. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. We recorded goodwill because the purchase price exceeded the fair value of net assets acquired, due to Solarsoft's assembled workforce and other intangible assets which do not qualify for separate recognition as well as anticipated synergies to be realized from combining Solarsoft's operations with our own. We have determined that goodwill arising from the Solarsoft acquisition will not be deductible for tax purposes.

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The amounts of revenue attributable to Solarsoft products and the net loss of Solarsoft included in our unaudited condensed consolidated statement of comprehensive income (loss) for the three and nine months ended June 30, 2013 are as follows (in millions).

	Three Months Ended			October 12, 2012 through
	June 30, 2013			June 30, 2013
	(unaudited)			(unaudited)
Revenue	$	18.9		$	57.1
Net loss	$	(0.8	)	$	(8.0	)

As of fiscal 2014, Solarsoft has been integrated into our operations, accordingly we have not presented revenue and net loss attributable to Solarsoft products for the three and nine months ended June 30, 2014.

NOTE 3 — GOODWILL

We account for goodwill, which represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination, in accordance with relevant authoritative accounting principles. The determination of the value of goodwill requires management to make estimates and assumptions that affect our unaudited condensed consolidated financial statements, and this valuation process includes Level 3 fair value measurements.

We perform a goodwill impairment test on each of our reporting units on an annual basis on July 1. Additionally, on a quarterly basis, we review for impairment indicators which could impact the fair value of our reporting units. Conditions which could indicate that the fair value of a reporting unit has declined include the following:

• Macroeconomic conditions such as a deterioration in general economic conditions, limitations on accessing capital and other developments in financial markets;

• Industry and market considerations such as a deterioration in the environment in which the reporting unit operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for a reporting units products or services, or a regulatory or political development; and

• Overall financial performance such as negative or declining cash flows or a decline in revenue or earnings compared with results of current and relevant prior periods.

We did not note any indicators that goodwill was impaired as of June 30, 2014. Should such conditions arise in the future between annual goodwill impairment tests, we will perform an interim goodwill impairment test and record an impairment, which could be material, if we determine the carrying value of a reporting unit's goodwill exceeds its fair value.

NOTE 4 — DEBT

Total debt in the periods presented consisted of the following (in thousands):

	June 30, 2014		September 30, 2013
2011 Credit Agreement term loan due 2018, net of unamortized discount of approximately $6,231 and $6,182, respectively	$	829,620	$	847,368
Senior Notes due 2019	465,000		465,000
Convertible Senior Notes	—		15
Total debt	1,294,620		1,312,383
Current portion	8,401		22,100
Total long-term debt, net of discount	$	1,286,219	$	1,290,283

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2011 Senior Secured Credit Agreement

The 2011 Senior Secured Credit Agreement was initiated on May 16, 2011 and was amended in March 2013, September 2013, January 2014 and May 2014 ("2011 Credit Agreement"). The 2011 Credit Agreement consists of a term loan with an outstanding principal balance of $835.9 million (before $6.2 million unamortized original issue discount) as of June 30, 2014 and a revolving credit facility with a borrowing capacity of $103.0 million. As of June 30, 2014, we had no borrowings outstanding on the revolving credit facility; the interest rate on the term loan was calculated based on an interest rate index plus a margin; and the interest rate index was based, at our option, on a LIBOR rate with a minimum LIBOR floor of 1.0% or a Base Rate as defined in the 2011 Credit Agreement. As of June 30, 2014, the interest rate applicable to the term loans was 4.0%.

On March 7, 2013, we entered into Amendment No. 1 to the 2011 Credit Agreement to, among other things, reduce the interest rate margin applicable to borrowings under the term loan included in the 2011 Credit Agreement. Amendment No. 1 provided for the refinancing of the then outstanding balance of $857.0 million of our existing Term B Loans under the 2011 Credit Agreement with $860.0 million of Term B-1 Loans. The interest rate on the Term B-1 Loans was based, at our option, on a LIBOR rate, plus a margin of 3.25% per annum, with a LIBOR floor of 1.25%, or the Base Rate (as defined in the 2011 Credit Agreement), plus a margin of 2.25% per annum. Additionally, the annual principal payments were reduced from $8.7 million per annum to $8.6 million per annum through fiscal 2017. The Term B-1 Loans were scheduled to mature on the same date as the original maturity date of the Term B Loans.

In addition, Amendment No. 1 provided for, among other things (i) the ability for the Company to incur certain incremental facilities under the 2011 Credit Agreement in the form of senior secured, senior unsecured, senior subordinated, or subordinated notes or term loans and create certain liens securing such indebtedness, (ii) the elimination of “most favored nation” protection with respect to extensions of the maturity of the Term B-1 Loans and (iii) increased capacity for the Company to consummate asset dispositions, make restricted payments and to prepay the Company's existing 8.625% senior unsecured notes due 2019 and other subordinated debt.

We accounted for Amendment No. 1 as a modification of debt because the cash flows under the amended term loan were not substantially different than the cash flows under the original term loan. We incurred $1.6 million of fees in connection with the amended term loan, and we recorded $1.5 million of those fees to deferred financing costs and $0.1 million of the fees to interest expense in accordance with GAAP. As Amendment No. 1 was accounted for as a modification, we are continuing to amortize the existing unamortized deferred financing costs, the existing original issue discount and the new deferred financing costs using the effective interest method.

On September 20, 2013, we entered into Amendment No. 2 to the 2011 Credit Agreement to increase the borrowing capacity under our revolving credit facility from $75.0 million to $88.0 million. Amendment No. 2 did not affect the interest rate applicable to the revolving credit facility, or the maturity date.

We accounted for Amendment No. 2 as a modification of debt because the only change was to increase the borrowing capacity on the revolving credit facility from $75.0 million to $88.0 million. In connection with Amendment No. 2, we recorded new deferred financing costs of less than $0.1 million. We are continuing to amortize the existing unamortized deferred financing costs, the existing original issue discount and the new deferred financing costs using the effective interest method.

On January 17, 2014, we entered into Amendment No. 3 to the 2011 Credit Agreement to, among other things, reduce the interest rate margin and the LIBOR floor applicable to borrowings under the term loan included in the 2011 Credit Agreement. Amendment No. 3 provided for the refinancing of our existing $840.1 million of Term B-1 Loans under the 2011 Credit Agreement with $840.1 million of new Term B-2 Loans. The interest rate on the Term B-2 Loans is based, at our option, on a LIBOR rate, plus a margin of 3.0% per annum, with a LIBOR floor of 1.0% per annum, or the Base Rate (as defined in the 2011 Credit Agreement), plus a margin of 2.0% per annum. Amendment No. 3 increased our required principal payments by $6.3 million for the remainder of fiscal 2014, decreased our annual principal payments from $8.6 million per annum to $8.4 million per annum from fiscal 2015 through fiscal 2017, and decreased our payments during fiscal 2018 from $814.3 million to $808.6 million. The Term B-2 Loans mature on the same date as the original maturity date of the Term B and Term B-1 Loans. Additionally, the Amendment No. 3 removed the restriction on the Company's ability to repurchase its $465.0 million of Senior Notes due 2019.

We incurred $1.3 million of fees in connection with Amendment No. 3. We are amortizing $1.2 million of the fees to interest expense over the remaining term of the 2011 Credit Agreement, and we recorded $0.1 million of the fees directly to interest expense in accordance with GAAP. Additionally, we recorded a $0.5 million loss on extinguishment of debt to write off deferred financing costs and original issue discount allocable to lenders whose balances were transferred to other lenders in

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connection with Amendment No. 3. The loss on extinguishment of debt is included within other expense, net in our unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended June 30, 2014. The remainder of the unamortized deferred financing costs and original issue discount were allocable to lenders whose term loan balances were deemed to be modified. We are continuing to amortize the remaining unamortized deferred financing costs, the existing original issue discount and the new deferred financing costs using the effective interest method.

On May 15, 2014, we entered into Amendment No. 4 to the 2011 Credit Agreement to increase the borrowing capacity under our revolving credit facility from $88.0 million to $103.0 million. Amendment No. 4 did not affect the interest rate applicable to the revolving credit facility, or the maturity date.

We accounted for Amendment No. 4 as a modification of debt because the only change to the 2011 Credit Agreement was to increase the borrowing capacity on the revolving credit facility. In connection with Amendment No. 4, we recorded new deferred financing costs of less than $0.1 million. We are continuing to amortize the existing unamortized deferred financing costs, the existing original issue discount and the new deferred financing costs using the effective interest method.

The 2011 Credit Agreement originated in May 2011 and provided for (i) a seven-year term loan in the amount of $870.0 million, amortized (principal repayment) at a rate of 1% per year beginning September 30, 2011 on a quarterly basis for the first six and three-quarters years, with the balance paid at maturity and (ii) a five-year revolving credit facility (the "revolving credit facility") that permitted revolving loans in an aggregate amount of up to $75.0 million, which increased to $103.0 million as a result of Amendment No. 2 and Amendment No. 4, and which included a letter of credit facility and a swing line facility, and is due and payable in full at maturity in May 2016. In addition, subject to certain terms and conditions, the 2011 Credit Agreement provided for one or more uncommitted incremental term loans and/or revolving credit facilities in an aggregate amount not to exceed $150.0 million plus, among other things, unlimited additional uncommitted incremental term loans and/or revolving credit facilities if we satisfy a certain First Lien Senior Secured Leverage Ratio. Additionally, we paid a 1% original issue discount on the term loan for a total of $8.7 million and a 0.5% original issue discount on the revolving credit facility for $0.4 million. The term loan and revolving credit facility were amended on March 7, 2013, September 20, 2013, January 17, 2014 and May 15, 2014, as noted above. The remaining components of the 2011 Credit Agreement have not been amended.

The original interest rate under the 2011 Credit Agreement was equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the highest of (1) the corporate base rate of the administrative agent, (2) the fed funds rate plus 0.5 percent per annum and (3) the Eurocurrency rate for an interest period of one month plus 1%, or (b) a Eurocurrency rate for interest periods of one, two, three or six months, and to the extent agreed by the administrative agent nine and twelve months; provided, however that the minimum Eurocurrency rate for any interest period may be no less than 1.25% per annum in the case of the term loans. The initial applicable margin for term loans and borrowings under the revolving credit facility was 2.75% with respect to base rate borrowings and 3.75% with respect to Eurodollar rate borrowings, which in the case of borrowings under the revolving credit facility, may be reduced subject to our attainment of certain First Lien Senior Secured Leverage Ratios.

In addition to paying interest on outstanding principal under the revolving credit facility, we are required to pay a commitment fee to the lenders equal to 0.75% per annum for any available borrowings on the facility. The commitment fee rate may be reduced subject to our attaining certain First Lien Senior Secured Leverage Ratios. We must also pay customary letter of credit fees for issued and outstanding letters of credit.

Substantially all of our assets and those of our domestic subsidiaries are pledged as collateral to secure our obligations under the 2011 Credit Agreement and each of our material wholly-owned domestic subsidiaries guarantees our obligations thereunder. The terms of the 2011 Credit Agreement require compliance with various covenants discussed further below. Amounts repaid under the term loans may not be re-borrowed. Beginning with the fiscal year ended September 30, 2012, the 2011 Credit Agreement requires us to make mandatory prepayments of then outstanding term loans if we generate excess cash flow (as defined in the 2011 Credit Agreement) during a complete fiscal year, subject to reduction upon achievement of certain total leverage ratios. The calculation of excess cash flow per the 2011 Credit Agreement includes net income, adjusted for noncash charges and credits, changes in working capital and other adjustments, less the sum of debt principal repayments, capital expenditures, and other adjustments. The excess cash flow calculation may be reduced based upon our attained ratio of consolidated total debt to consolidated Adjusted EBITDA (consolidated earnings before interest, taxes, depreciation and amortization, further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under the indenture governing the Senior Notes and our 2011 Credit Agreement, all as defined in the 2011 Credit Agreement). Any mandatory prepayments due are reduced dollar-for-dollar by any voluntary prepayments made during the year. We

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generated $27.0 million of excess cash flow during the year ended September 30, 2013, and as a result, we paid a mandatory prepayment of $13.5 million in December 2013.

The 2011 Credit Agreement and the Senior Notes permit us to make dividend payments to our parent companies in certain circumstances. Permitted dividend payments are calculated as the sum of (i) $40.0 million plus (ii) the lesser of (a) cumulative Consolidated Net Income, as defined in the 2011 Credit Agreement and the Indenture for the Senior Notes, and (b) the excess of cumulative excess cash flow over cumulative mandatory prepayments on the term loan. We utilize permitted dividend payments to voluntarily fund interest on debt issued by our indirect parent company, Eagle Midco Inc. ("EGL Midco"). EGL Midco has issued $400 million in principal amount of Senior PIK Toggle Notes (the "Midco Notes"). In December 2013 and June 2014, we made dividend payments of $18.5 million and $18.0 million, respectively, to fund the December 2013 and June 2014 interest payments for the Midco Notes. We intend to continue utilizing permitted dividend payments to voluntarily fund interest on the Midco Notes. See "Parent Company PIK Toggle Notes" below for a description of the Midco Notes.

Senior Notes Due 2019

On May 16, 2011, we issued $465.0 million aggregate principal amount of 8.625% Senior Notes due 2019 (“Senior Notes”). Each of our material wholly-owned domestic subsidiaries, as primary obligors and not merely as sureties, have jointly and severally, irrevocably and unconditionally, guaranteed, on an unsecured senior basis, the performance and full and punctual payment when due, whether at maturity, by acceleration, or otherwise, of all of our obligations under the Senior Notes.

Notwithstanding the foregoing, a senior note guarantee by a wholly-owned subsidiary guarantor will terminate upon:

• a sale or other disposition (including by way of consolidation or merger) of the capital stock of such guarantor or the sale or disposition of all or substantially all the assets of the guarantor (other than to us or one of our restricted subsidiaries) otherwise permitted by the senior note indenture;

• the designation in accordance with the indenture of the guarantor as an unrestricted subsidiary or the occurrence of any event after which the guarantor is no longer a restricted subsidiary as defined in the senior note indenture;

• defeasance or discharge of the Senior Notes;

• to the extent that such guarantor no longer guarantees any other Company indebtedness, such as a release of such guarantor’s guarantee under our 2011 Credit Agreement; or

• upon the achievement of investment grade status by the Senior Notes as described in the senior note indenture; provided that such senior note guarantee shall be reinstated upon the reversion date.

The Senior Notes are our unsecured senior obligations and are effectively subordinated to all of our secured indebtedness (including the 2011 Credit Agreement); and senior in right of payment to all of our existing and future subordinated indebtedness.

Covenant Compliance

The terms of the 2011 Credit Agreement and the indenture governing the Senior Notes restrict certain of our activities, the most significant of which include limitations on the incurrence of additional indebtedness, liens or guarantees, payment or declaration of dividends, sales of assets and transactions with affiliates. The 2011 Credit Agreement also contains certain customary affirmative covenants and events of default.

Under the 2011 Credit Agreement, if at any time we have an outstanding balance under the revolving credit facility, our first lien senior secured leverage, consisting of amounts outstanding under the 2011 Credit Agreement and other secured borrowings less cash and cash equivalents on hand, may not exceed the applicable ratio to our consolidated Adjusted EBITDA (referred to as "Consolidated EBITDA" in the 2011 Credit Agreement) for the preceding 12-month period. At June 30, 2014, the applicable ratio is 3.50 to 1.00, which will decrease to 3.25 to 1.00 on March 31, 2015 and will not decrease thereafter.

At June 30, 2014 we were in compliance with all covenants included in the terms of the 2011 Credit Agreement and the indenture governing the Senior Notes.

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Convertible Senior Notes

In May 2011, we acquired Epicor Software Corporation ("Legacy Epicor") which had $230.0 million aggregate principal amount of 2.375% convertible senior notes due in 2027 (“convertible senior notes”) outstanding. On May 20, 2011, Legacy Epicor announced a tender offer to purchase the convertible senior notes at par plus interest accrued through June 19, 2011. The tender offer expired on June 17, 2011 and 99.99% of the convertible senior notes were tendered. We repaid the remaining outstanding principal amount of $15 thousand in May 2014. As of June 30, 2014, no convertible senior notes remained outstanding.

Future Maturities of Long Term Debt

As of June 30, 2014, maturities of long term debt were $2.1 million for the remainder of fiscal 2014, $8.4 million per year from 2015 through 2017, $808.6 million in 2018 and $465.0 million in 2019.

Parent Company PIK Toggle Notes

In addition to our debt discussed above, EGL Midco has issued the Midco Notes in the principal amount of $400 million. The Midco Notes were issued on June 10, 2013 and mature on June 15, 2018. We and our consolidated subsidiaries have not guaranteed the Midco Notes, and we have not pledged any assets as collateral for the payment of the Midco Notes. The Midco Notes are unsecured.

We are not contractually obligated to service interest or principal payments on the Midco Notes. Additionally, the holders of the Midco Notes have no recourse against us or our assets. Under applicable guidance from the SEC (SAB Topic 5-J), a parent's debt, related interest expense and allocable deferred financing fees are to be included in a subsidiary's financial statements under certain circumstances. We have considered these circumstances and determined that we do not meet any of the applicable criteria related to the Midco Notes and, accordingly, we have not reflected the Midco Notes in our unaudited condensed consolidated financial statements for the quarter ended June 30, 2014 or any period presented.

Interest on the Midco Notes is payable semiannually in arrears on June 15th and December 15th of each year, commencing on December 15, 2013. Subject to conditions in the indenture for the Midco Notes, EGL Midco is required to pay interest on the Midco Notes in cash or through issuing additional notes or increasing the principal amount of the Midco Notes ("PIK Interest"). The interest rate on the Midco Notes is 9.0% per annum for interest paid in cash or 9.75% per annum for PIK Interest. PIK Interest is paid by issuing additional notes having the same terms as the Midco Notes or by increasing the outstanding principal amount of the Midco Notes.

The terms of the Midco Notes require that a calculated portion of the interest be payable in cash ("Minimum Cash Interest"). EGL Midco is and will continue to be dependent upon our cash flows for any interest on the Midco Notes which it pays in cash. Interest on the Midco Notes is required to be paid in cash to the extent that we are permitted to make dividend payments to EGL Midco. The 2011 Credit Agreement and the indenture governing the Senior Notes restrict our ability to pay dividends or make distributions or other payments to EGL Midco to fund payments with respect to the Midco Notes or to repay or repurchase the Midco Notes unless the restricted payment covenants in these agreements are satisfied. However, dividend payments will only be provided to the extent that after funding the interest payment, our domestic cash and cash equivalents plus available borrowings under our revolving credit facility exceed $25.0 million. For the semiannual interest periods ended December 15, 2013 and June 15, 2014, the Minimum Cash Interest payable on the Midco Notes was equal to the full cash interest payments of $18.5 million and $18.0 million, respectively.

The terms of the Midco Notes require EGL Midco and its subsidiaries to comply with certain covenants, including limitations on incurring additional indebtedness, a prohibition of additional limitations on dividend payments, limitations on sales of assets and subsidiary stock, and limitations on making guarantees. Additionally, failure to pay Minimum Cash Interest on the Midco Notes constitutes an event of default for EGL Midco, causing the Midco Notes to become immediately due and payable by Midco. The holders of the Midco Notes, however, have no recourse against us or our assets.

On December 15, 2013 and June 15, 2014, we paid dividend payments of $18.5 million and $18.0 million, respectively, to EGL Midco to fund the December 15, 2013 and June 15, 2014 interest payments applicable to the Midco Notes. We recorded the dividend payments as reductions to common stock on our balance sheet. These dividend payments are reflected in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2014.

We intend to fund cash interest payments through cash dividends to EGL Midco. If all interest is paid in cash, our dividend payments to EGL Midco would be approximately $36 million per year from fiscal 2015 through fiscal 2018. To the

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extent we do not fund interest with cash, interest obligations will be satisfied through PIK Interest. We believe that our cash flow from operations, our current working capital, as well as funds available to us on our revolving credit facility will be sufficient to cover our liquidity needs and to fund dividend payments to EGL Midco for the foreseeable future.

NOTE 5 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Interest Rate Caps and Swaps

Our objective in using interest rate caps or swaps is to add stability to interest expense and to manage and reduce the risk inherent in interest rate fluctuations. We may use interest rate caps or swaps as part of our interest rate risk management strategy. Interest rate caps are option-based hedge instruments which do not qualify as cash flow hedges and limit our floating interest rate exposure to a specified cap level. If the floating interest rate exceeds the cap, then the counterparty will pay the incremental interest expense above the cap on the notional amount protected, thereby offsetting that incremental interest expense on our debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counter-party in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. We do not hold or issue interest rate cap or swap agreements for trading purposes. In the event that a counterparty fails to meet the terms of the interest rate cap or swap agreement, our exposure is limited to the interest rate differential. We manage the credit risk of the counterparties by dealing only with institutions that we consider financially sound. We consider the risk of non-performance to be remote.

In August 2011, we entered into a hedging instrument consisting of two components to hedge the floating rate interest applicable to term loan borrowings under the 2011 Credit Agreement or any related refinancing. The first component was an 18-month interest rate cap on an initial notional amount of $534.6 million, based on a cap of 2%, and was settled quarterly on the last business day of each of March, June, September and December, which began September 30, 2011 and ended March 31, 2013. The second component is a 30-month interest rate swap to effectively convert an initial notional amount of $436.2 million of floating rate debt to fixed rate debt at the rate of 2.13% per annum, and is settled on the last business day of each of March, June, September and December, beginning June 30, 2013 and ending September 30, 2015. As of June 30, 2014, the notional amount of the swap was $342.8 million.

In March 2013, we entered into Amendment No. 1 to our 2011 Credit Agreement to reduce the interest rate margin applicable to the term loan contained in the 2011 Credit Agreement. Our interest rate swap was initially planned to hedge the floating interest rate applicable to term loan borrowings under the 2011 Credit Agreement or any related refinancing. As a result, Amendment No. 1 did not impact the effectiveness of our interest rate swap, and we continue to apply cash flow hedge accounting. See Note 4 - Debt for more information on Amendment No. 1 to our 2011 Credit Agreement.

In January 2014, we entered into Amendment No. 3 to our 2011 Credit Agreement to reduce the interest rate applicable to borrowings on our term loan. Amendment No. 3 reduced the LIBOR margin applicable to borrowings on the term loan from 3.25% to 3.0% and reduced the LIBOR floor applicable to borrowings on the term loan from 1.25% to 1.0%. We did not amend the 1.25% LIBOR floor contained in our interest rate swap, and accordingly, we incorporated the change to our hedged interest payments into our analysis and measurement of hedge effectiveness, noting that our interest rate swap remained highly effective as of June 30, 2014. See Note 4 - Debt for more information on Amendment No. 3 to our 2011 Credit Agreement.

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Foreign Currency Contracts Not Designated as Hedges

We have operations in countries around the world and these operations generate revenue and incur expenses in currencies other than the United States Dollar, particularly the Australian Dollar, Canadian Dollar, Euro, British Pound, Mexican Peso, Malaysian Ringgit and Swedish Krona. We use foreign currency forward contracts to manage our market risk exposure associated with foreign currency exchange rate fluctuations for certain (i) inter-company balances denominated in currencies other than an entity’s functional currency and (ii) net asset exposures for entities that transact business in foreign currencies but are U.S. Dollar functional for consolidation purposes. These derivative instruments are not designated and do not qualify as hedging instruments. Accordingly, the gains or losses on these derivative instruments are recognized in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) and are designed generally to offset the gains and losses resulting from translation of inter-company balances recorded from the re-measurement of our non-functional currency balance sheet exposures. During the three and nine months ended June 30, 2014, we recorded net foreign currency losses of $0.4 million and $0.5 million, respectively. During the three and nine months ended June 30, 2013, we recorded net foreign currency losses of $0.3 million and $1.2 million, respectively. Our foreign currency gains and losses include gains and losses on foreign currency forward contracts and re-measurement of foreign currency denominated monetary balances into the functional currency. We have entered into a master netting arrangement whereby we settle our foreign currency forward contracts on a net basis with each counterparty. We record our foreign currency forward contracts on a gross basis, with the fair value of each of our foreign currency forward contracts included on our condensed consolidated balance sheets as either prepaid expenses and other current assets or other accrued expenses depending on whether the fair value of the contract is an asset or a liability, respectively. Cash flows related to our foreign currency forward contracts are included in cash flows from operating activities in our unaudited condensed consolidated statements of cash flows.

Our foreign currency forward contracts are generally short-term in nature, typically maturing within 90 days or less. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in our results of operations for that period. These gains and losses largely offset gains and losses resulting from translation of inter-company balances and recorded from the revaluation of our non-functional currency balance sheet exposures. We expect these contracts to mitigate some foreign currency transaction gains or losses in future periods. The net realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature.

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The following tables summarize the fair value of derivatives in asset and liability positions (in thousands):

	Asset Derivatives (Fair Value)
	Balance Sheet Location	June 30, 2014			September 30, 2013
Foreign currency forward contracts	Prepaid expenses and other current assets	$	165		$	150
	Liability Derivatives (Fair Value)
	Balance Sheet Location	June 30, 2014			September 30, 2013
Interest rate swap	Other liabilities	$	(3,356	)	$	(5,613	)
Foreign currency forward contracts	Accrued expenses and other current liabilities	(226		)	(28		)
Total liability derivatives		$	(3,582	)	$	(5,641	)

The following tables summarize the pre-tax effect of our interest rate swap and cap on our unaudited condensed consolidated statements of comprehensive income (loss) (in thousands):

Interest Rate Cap and Swap Designated as Cash Flow Hedge

	Three Months Ended						Nine Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Gain (loss) recognized in other comprehensive income (loss) on derivative (effective portion)	$	(43	)	$	190		$	(539	)	$	(116	)
Gain recognized in income on derivative (ineffective portion)	—			32			203			23
Loss recognized in income for time value of derivative (excluded from effectiveness assessment)	(5		)	(9		)	(18		)	(26		)
Realized loss reclassified from accumulated other comprehensive loss into interest expense (effective portion)	(737		)	(948		)	(2,594		)	(948		)

Gains and losses recognized in income related to the interest rate swap and cap are included within interest expense.

During the three and nine months ended June 30, 2014, we made interest payments of $0.8 million and $2.7 million for the swap, and in connection with those payments, we reclassified $0.7 million and $2.6 million of losses from accumulated other comprehensive loss into interest expense. The remaining losses reported in accumulated other comprehensive loss will be reclassified into interest expense as hedged interest payments are made each quarter through September 30, 2015. We expect to reclassify approximately $2.7 million of accumulated other comprehensive loss into interest expense over the next twelve months.

The following table summarizes the effect of our foreign currency forward contracts on our unaudited condensed consolidated statements of comprehensive income (loss) (in thousands):

Foreign Currency Forward Contracts Not Designated as Hedges

	Three Months Ended					Nine Months Ended
	June 30, 2014			June 30, 2013		June 30, 2014			June 30, 2013
Included in other expense, net	$	(246	)	$	1,554	$	(907	)	$	717

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NOTE 6 — FAIR VALUE

We measure fair value based on authoritative accounting guidance under GAAP, which defines fair value, establishes a framework for measuring fair value as well as expands on required disclosures regarding fair value measurements.

Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The uses of inputs in the valuation process are categorized into a three-level fair value hierarchy.

• Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.

• Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

Our deferred compensation plan assets and our post-retirement insurance plan assets, which consist of corporate-owned life insurance policies that are valued at their net cash surrender value, and deferred compensation liabilities, which are valued using the reported values of various publicly traded mutual funds, are classified as Level 2 because they are determined based on inputs that are readily available in public markets or can be derived from information available in public markets.

The fair value of our foreign currency contracts and interest rate swaps and caps is determined based on inputs that are readily available in public markets or can be derived from information available in public markets. Therefore, we have categorized them as Level 2.

We record adjustments to fair value to appropriately reflect our nonperformance risk and the respective counter-party’s nonperformance risk in our fair value measurements. As of June 30, 2014, we have assessed the significance of the impact of nonperformance risk on the overall valuation of our derivative positions and have determined that it is not significant to the overall valuation of the derivatives.

The fair value of our deferred compensation plan assets and liabilities, post-retirement insurance plan assets, interest rate swap liabilities and foreign currency forward contracts were as follows, by category of inputs, as of June 30, 2014(in thousands):

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets:
Foreign currency forward contracts (1)	$	—	$	165		$	—	$	165
Deferred compensation plan assets (2)	—		4,581			—		4,581
Post-retirement insurance plan assets (2)	—		762			—		762
Liabilities:
Foreign currency forward contracts (3)	—		(226		)	—		(226		)
Interest rate swap (4)	—		(3,356		)	—		(3,356		)
Deferred compensation plan liabilities (4)	—		(4,592		)	—		(4,592		)
Total	$	—	$	(2,666	)	$	—	$	(2,666	)

(1) Included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheet.

(2) Included in other assets in our unaudited condensed consolidated balance sheet.

(3) Included in accrued expenses and other current liabilities in our unaudited condensed consolidated balance sheet.

(4) Included in other liabilities in our unaudited condensed consolidated balance sheet.

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Other Financial Assets and Liabilities

Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities.

As of June 30, 2014, the term loan contained in our 2011 Credit Agreement had a fair value of $840.1 million, which represented approximately 101% of its carrying value before unamortized original issue discount. We determined the fair value of the term loan by reference to interest rates currently available to us for issuance of debt with similar terms and remaining maturities. Accordingly, the fair value of the term loan contained in our 2011 Credit Agreement represents a Level 2 fair value measurement. As of June 30, 2014, the fair value of our Senior Notes was approximately $502.2 million based on a trading price of approximately 108% of par value. The carrying amount is based on interest rates available upon the date of the issuance of the debt and is reported in the unaudited condensed consolidated balance sheets. The fair value of our Senior Notes is determined by reference to their current trading price. The Senior Notes are not actively traded, and as such, the fair value of our Senior Notes represents a Level 2 fair value measurement.

The fair value of foreign currency forward contract assets and liabilities, deferred compensation plan assets and liabilities, post-retirement insurance plan assets, and interest rate swap liabilities were as follows, by category of inputs, as of September 30, 2013 (in thousands):

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets:
Foreign currency forward contracts (1)	$	—	$	150		$	—	$	150
Deferred compensation plan assets (2)	—		3,746			—		3,746
Post-retirement insurance plan assets (2)	—		713			—		713
Liabilities:
Foreign currency forward contracts (3)			(28		)			(28		)
Interest rate swap (4)	—		(5,613		)	—		(5,613		)
Deferred compensation plan liabilities (4)	—		(3,916		)	—		(3,916		)
Total	$	—	$	(4,948	)	$	—	$	(4,948	)

(1) Included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheet.

(2) Included in other assets in our unaudited condensed consolidated balance sheet.

(3) Included in accrued expenses and other current liabilities in our unaudited condensed consolidated balance sheet.

(4) Included in other liabilities in our unaudited condensed consolidated balance sheet.

NOTE 7 — INCOME TAXES

The provision for income taxes includes both domestic and foreign income taxes at the applicable statutory rates adjusted for non-deductible expenses, uncertain tax positions, valuation allowances and other permanent differences. We recorded an income tax benefit of $1.7 million, or 33.5% of pre-tax loss, during the three months ended June 30, 2014 compared to an income tax benefit of $1.3 million, or 12.1% of pre-tax loss, during the three months ended June 30, 2013.

Our income tax rate for the three months ended June 30, 2014 differed from the federal statutory rate primarily due to non-deductible expenses including share-based compensation; foreign earnings that are currently taxed in the US under the Controlled Foreign Corporation Regime set forth in the IRC Section 951 through 960; and lower tax rates in foreign jurisdictions where earnings are deemed permanently reinvested. Our income tax rate for the three months ended June 30, 2013 differed from the federal statutory rate primarily due to non-deductible expenses including share-based compensation; release of deferred tax assets from foreign net operating losses, and foreign earnings that are currently taxed in the US under the Controlled Foreign Corporation Regime set forth in the IRC Section 951 through 960.

We recorded an income tax benefit of $2.9 million, or 12.3% of pre-tax loss, during the nine months ended June 30, 2014 compared to an income tax benefit of $8.9 million, or 19.8% of pre-tax loss, during the nine months ended June 30, 2013.

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Our income tax rate for the nine months ended June 30, 2014 differed from the federal statutory rate primarily due to non-deductible expenses including share-based compensation; foreign earnings that are currently taxed in the US under the Controlled Foreign Corporation Regime set forth in the IRC Section 951 through 960; and lower tax rates in foreign jurisdictions where earnings are deemed permanently reinvested, partially offset by other non-deductible expenses. Our income tax rate for the nine months ended June 30, 2013 differed from the federal statutory rate primarily due to non-deductible expenses including share-based compensation, changes in our reserve for uncertain tax positions, and lower tax rates in foreign jurisdictions. Additionally, the federal research credit expired on December 31, 2011 and was retroactively reinstated effective January 2, 2013.

NOTE 8 — SHARE BASED COMPENSATION

In November 2011, the Board of Directors of Eagle Topco, LP, a limited partnership (“Eagle Topco”), our indirect parent company, approved a Restricted Partnership Unit Plan for purposes of compensation of our employees and certain directors. We grant Series C restricted units ("Series C Units") in Eagle Topco to certain employees and directors as compensation for their services. The employees and directors who receive the Series C Units contribute $0.0032 per unit.

There are three categories of Series C Units which vest based on a combination of service, performance and market

conditions. Annual Units vest ratably over 3 to 4 years based on the holder’s continued employment with the Company. Performance Units vest ratably over 3 to 4 years based upon employee service and attainment of targets for Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”). Exit Units vest based upon attaining thresholds for return on partnership capital. We recognize share based compensation expense using the accelerated expense attribution method, which separately recognizes compensation expense for each vesting tranche over its vesting period.

During the nine months ended June 30, 2014 and 2013, we granted 8.1 million and 2.6 million Series C Units, respectively, to certain employees as compensation for their services. In addition to Series C Units, in November 2011, we issued 0.7 million Series B restricted units ("Series B Units") in Eagle Topco to certain employees and directors. The employees and directors who received the Series B Units contributed $2.8571 per unit. Series B Units may be settled in cash upon call by the Company in certain circumstances. We record changes in the value of Series B Units as compensation expense. During the nine months ended June 30, 2014, we recorded $0.5 million of compensation expense for Series B Units within general and administrative expense, and we paid $1.4 million to settle Series B Units. As of June 30, 2014, $0.3 million Series B Units were outstanding with an aggregate value of $1.0 million.

The following table summarizes our share-based compensation expense and its allocation within our unaudited condensed consolidated statements of comprehensive income (loss) (in thousands):

	Three Months Ended				Nine Months Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Cost of revenues:
Software and software related services	$	20	$	11	$	56	$	82
Professional services	21		79		139		253
Hardware and other	11		6		33		16
Operating expenses:
Sales and marketing	639		449		1,849		1,281
Product development	208		177		562		577
General and administrative	652		698		2,908		2,405
Total share-based compensation expense	$	1,551	$	1,420	$	5,547	$	4,614

NOTE 9 — RESTRUCTURING COSTS

During fiscal 2011, our management approved a restructuring plan as we identified synergies and began to focus our operations to more properly align our cost structure with current business conditions and our projected future revenue streams. During fiscal 2013, our management approved a restructuring plan as we began to integrate Solarsoft into our operations. We do not expect to incur significant additional restructuring charges in connection with the Solarsoft restructuring plan. Any additional costs will be recorded to the restructuring costs line item in our statements of comprehensive income (loss) as they are incurred. During fiscal 2014, our management approved a restructuring plan to more properly align our personnel and facilities costs with our projected future revenue streams at certain locations and business units.     

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Our restructuring liability at June 30, 2014, was approximately $5.8 million and the changes in our restructuring liabilities for the nine months then ended were as follows (in thousands):

	Balance at September 30, 2013											Balance at June 30, 2014
			New Charges			Payments			Adjustments
Facility consolidations	$	7,825	$	(81	)	$	(2,929	)	$	66		$	4,881
Employee severance, benefits and related costs	916		2,850			(2,850		)	(4		)	912
Total	$	8,741	$	2,769		$	(5,779	)	$	62		$	5,793

Our restructuring liability at June 30, 2013, was approximately $8.4 million and the changes in our restructuring liabilities for the nine months then ended were as follows (in thousands):

	Balance at September 30, 2012										Balance at June 30, 2013
			New Charges		Payments			Adjustments
Facility consolidations	$	8,874	$	1,131	$	(1,777	)	$	(472	)	$	7,756
Employee severance, benefits and related costs	941		2,968		(3,225		)	(5		)	679
Total	$	9,815	$	4,099	$	(5,002	)	$	(477	)	$	8,435

All restructuring charges were recorded in “Restructuring costs” in our unaudited condensed consolidated statements of comprehensive income (loss).

NOTE 10 — RELATED PARTY TRANSACTIONS

Our Audit Committee charter specifies that the Audit Committee of our Board of Directors is responsible for reviewing and approving all related party transactions. All related party transactions have been approved in accordance with this charter.

We use various methods to identify potential related party transactions, including an annual “conflict of interest” survey pursuant to which employees that report to our Chief Executive Officer or the Chief Financial Officer, generally, vice presidents and above, identify transactions in which they have an interest as well as certain personal and business relationships. Similarly, directors and officers annually complete a questionnaire in which they also identify transactions that may be required to be disclosed under Item 404(a) of Regulation S-K, as well as certain personal and business relationships. Information regarding a person's affiliations and relationships is tracked internally to aid in the identification of potential related party transactions on a real-time basis as they arise throughout the year. Identified transactions are reviewed by management, including by internal legal counsel, and, as necessary, approved, by management. In addition, pursuant to our code of conduct, employees, directors and officers have an affirmative obligation to disclose any potential conflicts of interest. To the extent any transactions are identified that may be required to be disclosed pursuant to Item 404(a) of Regulation S-K, in our financial statements or otherwise, such transactions would be presented to the Audit Committee for approval. Finally, we have a single stockholder, so any material transactions between the Company and such stockholder would be reviewed by the Audit Committee.

In May 2011, we entered into a Services Agreement with the beneficial owner of all of our capital stock, Apax Partners, L.P. ("Apax"), which provides for an aggregate annual advisory fee of approximately $2 million to be paid in quarterly installments. During the three months ended June 30, 2014 and 2013, we recorded expense related to the advisory fee of approximately $0.5 million and $0.5 million, respectively, in our general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). During the nine months ended June 30, 2014 and 2013, we recorded expense related to the advisory fee of approximately $1.5 million and $1.5 million, respectively, in our general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

During fiscal 2012, we received $2.2 million in loans from an affiliate, Eagle Topco. The loans were related to cash received from our employees and directors in connection with the restricted partnership unit plan. At September 2013, the balance of the loans was $2.2 million. In October 2013, we increased the balance of the loans recorded on our unaudited condensed consolidated balance sheet by $0.5 million to record the change in value of Series B Units in Eagle Topco. As of June 30, 2014, we have repaid $1.6 million of the loans. At June 30, 2014, the balance of the loans was $1.1 million. The

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loans are included in loan from affiliate in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2014 and September 30, 2013.

Parent Company PIK Toggle Notes

In addition to our debt discussed in Note 4 - Debt, our indirect parent company, EGL Midco, has issued the Midco Notes in the principal amount of $400 million. The Midco Notes were issued on June 10, 2013 and mature on June 15, 2018. We and our consolidated subsidiaries have not guaranteed the Midco Notes, and we have not pledged any assets as collateral for the payment of the Midco Notes. The Midco Notes are unsecured.

In December 2013 and June 2014, we paid dividends of $18.5 million and $18.0 million, respectively, to EGL Midco to fund EGL Midco's December 2013 and June 2014 interest payments on the Midco Notes.

We intend to continue funding cash interest payments on the Midco Notes through cash dividends to EGL Midco. If all interest is paid in cash, our dividend payments to EGL Midco would be approximately $36 million per year from fiscal 2015 through fiscal 2018. See Note 4 - Debt for further information regarding the Midco Notes.    

NOTE 11 — SEGMENT REPORTING

We are a leading global provider of enterprise application software and services focused on small and mid-sized companies and the divisions and subsidiaries of Global 1000 enterprises. We specialize in and target three application software segments: ERP, Retail Solutions and Retail Distribution, which we consider our segments for reporting purposes. These segments are determined in accordance with how our management views and evaluates our business and based on the criteria as outlined in authoritative accounting guidance regarding segments under GAAP. We believe these segments accurately reflect the manner in which our management views and evaluates the business.

Because these segments reflect the manner in which our management views our business, they necessarily involve judgments that our management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified to reflect technologies and applications that are newly created, change over time, or evolve based on business conditions, each of which may result in reassessing specific segments and the elements included within each of those segments. Future events, including changes in our senior management, may affect the manner in which we present segments in the future.

Description of the businesses served by our reportable segments:

• ERP segment - The ERP segment provides (1) distribution solutions designed to meet the expanding requirement to support a demand driven supply network by increasing focus on the customer and providing a more seamless order-to-shipment cycle for a wide range of vertical markets including electrical supply, plumbing, medical supply, heating and air conditioning, tile, industrial machinery and equipment, industrial supplies, building supplies, fluid power, janitorial and sanitation, medical, value-added fulfillment, food and beverage, redistribution and general distribution; (2) manufacturing solutions designed for discrete, process and mixed-mode manufacturers with batch, lean and “to-order” manufacturing in a range of verticals including industrial machinery, instrumentation and controls, food and beverage, medical devices, printing, packaging, automotive, aerospace and defense, energy and high tech; and (3) financial management and professional services solutions designed to provide the project accounting, time and expense management, and financial analysis and reporting necessary to support the complex requirements of serviced-based companies in the consulting, banking, financial services, not-for-profit and software sectors.

• Retail Solutions segment - The Retail Solutions segment supports (1) large, distributed retail environments that require a comprehensive multichannel retail solution including POS store operations, cross-channel order management, customer relationship management ("CRM"), loyalty management, merchandising, planning and assortment planning, business intelligence and audit and operations management capabilities and (2) small- to mid-sized retailers with our Epicor Software as a Service for retail which provides a preconfigured, full suite retail solution, including the infrastructure for the host and store hardware, ongoing solution updates, monitoring, maintenance and support, as a subscription service. Our Retail Solutions segment caters to the general merchandise, specialty retail, apparel and footwear, sporting goods and department store verticals.

• Retail Distribution segment - The Retail Distribution segment supports small to mid-sized, independent or affiliated retailers that require integrated POS or ERP offerings. Our Retail Distribution segment primarily supports independent

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hardware retailers, lumber and home centers, lawn and garden centers, farm and agriculture retailers, retail pharmacies, sporting goods, and other specialty hardlines retailers, as well as customers involved in the manufacture, distribution, sale and installation of new and remanufactured parts used in the maintenance and repair of automobiles and light trucks primarily in North America as well as the United Kingdom and Ireland, including several retail chains in North America.

Segment Revenue and Contribution Margin

The results of the reportable segments are derived directly from our management reporting system. The results are based on our method of internal reporting using segment contribution margin as a measure of operating performance and are not necessarily in conformity with GAAP. Our management measures the performance of each segment based on several metrics, including contribution margin as defined below, which is not a financial measure calculated in accordance with GAAP. Asset data is not reviewed by our management at the segment level and therefore is not included.

Segment contribution margin includes all segment revenues less the related cost of sales, direct marketing, sales, and product development expenses as well as certain general and administrative expenses, including bad debt expenses and direct legal costs. A significant portion of each segment’s expenses arises from shared services and centrally managed infrastructure support costs that we allocate to the segments to determine segment contribution margin. These expenses primarily include information technology services, facilities, and telecommunications costs.

Certain operating expenses are not allocated to segments because they are separately managed at the corporate level. These unallocated costs include marketing costs (other than direct marketing), general and administrative costs such as human resources, finance and accounting, share-based compensation expense, depreciation and amortization of intangible assets, acquisition-related costs, restructuring costs, interest expense, and other income (expense).

There are significant judgments that our management makes with respect to the direct and indirect allocation of costs that may affect the calculation of contribution margin. While our management believes these and other related judgments are reasonable and appropriate, others could assess such matters in ways different than our management.

The exclusion of costs not considered directly allocable to individual business segments results in contribution margin not taking into account substantial costs of doing business. We use contribution margin, in part, to evaluate the performance of, and allocate resources to, each of the segments. While our management may consider contribution margin to be an important measure of comparative operating performance, this measure should be considered in addition to, but not as a substitute for, net income (loss), cash flow and other measures of financial performance prepared in accordance with GAAP that are otherwise presented in our financial statements. In addition, our calculation of contribution margin may be different from the calculation used by other companies and, therefore, comparability may be affected.

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Reportable segment revenue by category is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
ERP revenues:
Software and software related services:
Software license	$	27,118	$	23,669	$	78,561	$	68,314
Software and cloud subscriptions	5,555		4,997		16,224		13,436
Software support	78,834		75,059		232,882		221,742
Total software and software related services	111,507		103,725		327,667		303,492
Professional services	40,198		41,355		119,543		119,266
Hardware and other	4,053		4,293		12,908		14,379
Total ERP revenues	155,758		149,373		460,118		437,137
Retail Solutions revenues:
Software and software related services:
Software license	3,283		3,831		9,149		10,415
Software and cloud subscriptions	2,389		1,984		6,611		5,726
Software support	10,361		10,575		31,431		30,719
Total software and software related services	16,033		16,390		47,191		46,860
Professional services	11,311		13,022		33,150		37,213
Hardware and other	5,627		7,495		17,390		22,044
Total Retail Solutions revenues	32,971		36,907		97,731		106,117
Retail Distribution revenues:
Software and software related services:
Software license	5,140		4,963		17,523		15,120
Software and cloud subscriptions	14,575		13,587		42,304		41,278
Software support	19,337		19,455		58,160		57,628
Total software and software related services	39,052		38,005		117,987		114,026
Professional services	7,242		6,740		21,650		20,032
Hardware and other	11,212		10,189		36,512		30,907
Total Retail Distribution revenues	57,506		54,934		176,149		164,965
Total revenues:
Software and software related services:
Software license	35,541		32,463		105,233		93,849
Software and cloud subscriptions	22,519		20,568		65,139		60,440
Software support	108,532		105,089		322,473		310,089
Total software and software related services	166,592		158,120		492,845		464,378
Professional services	58,751		61,117		174,343		176,511
Hardware and other	20,892		21,977		66,810		67,330
Total revenues	$	246,235	$	241,214	$	733,998	$	708,219

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Reportable segment contribution margin is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
ERP	$	51,568	$	45,315	$	152,521	$	134,076
Retail Solutions	9,782		11,884		26,693		32,230
Retail Distribution	19,975		17,388		59,130		50,564
Total segment contribution margin	$	81,325	$	74,587	$	238,344	$	216,870

The reconciliation of total segment contribution margin to our loss before income taxes is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Total segment contribution margin	$	81,325		$	74,587		$	238,344		$	216,870
Corporate and unallocated costs	(17,173		)	(18,617		)	(55,333		)	(56,352		)
Share-based compensation expense	(1,551		)	(1,420		)	(5,547		)	(4,614		)
Depreciation and amortization	(42,750		)	(39,707		)	(125,774		)	(120,243		)
Acquisition-related costs	(2,254		)	(2,018		)	(6,222		)	(5,862		)
Restructuring costs	(1,157		)	(606		)	(2,769		)	(4,099		)
Interest expense	(21,293		)	(22,935		)	(65,710		)	(69,924		)
Other expense, net	(139		)	(244		)	(386		)	(668		)
Loss before income taxes	$	(4,992	)	$	(10,960	)	$	(23,397	)	$	(44,892	)

NOTE 12 — COMMITMENTS AND CONTINGENCIES

We are currently involved in various claims and legal proceedings. Our significant legal matters are discussed below. Each quarter we review the status of each significant matter and assess our potential financial exposure. For legal and other contingencies, we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. If the potential loss is material and considered reasonably possible of occurring, we disclose such matters in the footnotes to the financial statements. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time the accruals are made. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Such revisions in the estimates of the potential liabilities could have a material impact on our results of operations and financial position.

State Court Shareholder Litigation

In connection with the announcement of the proposed acquisition of Epicor Software Corporation ("Legacy Epicor") by funds advised by Apax in April 2011, four putative stockholder class action suits were filed in the Superior Court of California, Orange County, and two such suits were filed in Delaware Chancery Court. The actions filed in California were entitled Kline v. Epicor Software Corp. et al., (filed Apr. 6, 2011); Tola v. Epicor Software Corp. et al., (filed Apr. 8, 2011); Watt v. Epicor Software Corp. et al., (filed Apr. 11, 2011), and Frazer v. Epicor Software et al., (filed Apr. 15, 2011). The actions filed in Delaware were entitled Field Family Trust Co. v. Epicor Software Corp. et al., (filed Apr. 12, 2011) and Hull v. Klaus et al., (filed Apr. 22, 2011). Amended complaints were filed in the Tola and Field Family Trust actions on April 13, 2011 and April 14, 2011, respectively. Plaintiff Kline dismissed his lawsuit on April 18, 2011 and shortly thereafter filed an action in federal district court. Kline then dismissed his federal lawsuit on July 22, 2011. The state court suits alleged that the Legacy Epicor directors breached their fiduciary duties of loyalty and due care, among others, by seeking to complete the sale of Legacy Epicor to funds advised by Apax through an allegedly unfair process and for an unfair price and by omitting material information from the Solicitation/Recommendation Statement on Schedule 14D-9 that Legacy Epicor filed on April 11, 2011 with the SEC. The complaints also alleged that Legacy Epicor, Apax Partners, L.P. and Element Merger Sub, Inc. aided and abetted the directors in the alleged breach of fiduciary duties. The plaintiffs sought certification as a class and relief that included, among other things, an order enjoining the tender offer and merger, rescission of the merger, and payment of

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plaintiff's attorneys' fees and costs. On April 25, 2011, plaintiff Hull filed a motion in Delaware Chancery Court for a preliminary injunction seeking to enjoin the parties from taking any action to consummate the transaction. On April 28, 2011, plaintiff Hull withdrew this motion. On December 30, 2011, Hull dismissed his Delaware suit.

On May 2, 2011, after engaging in discovery, plaintiffs advised that they did not intend to seek injunctive relief in connection with the merger, but would instead file an amended complaint seeking damages in California Superior Court following the consummation of the tender offer. On May 11, 2011, the Superior Court for the County of Orange entered an Order consolidating the Tola, Watt, and Frazer cases pursuant to a joint stipulation of the parties. Plaintiffs filed a Second Amended Complaint on September 1, 2011, which made essentially the same claims as the original complaints. Plaintiffs Kline and Field Family Trust have both joined in the amended complaint. We filed a demurrer (motion to dismiss) to this amended complaint on September 29, 2011. The demurrers were heard on December 12, 2011, and the Court overruled them. The Defendants answered the Complaint on December 22, 2011. On June 22, 2012, the court granted plaintiff's motion for class certification and dismissed Mr. Hackworth as a defendant.

After the parties had completed fact discovery and begun expert discovery, plaintiffs sought leave to amend their complaint to add two new defendants, the Company's former chief financial officer and the Company's former financial advisor, Moelis & Company. On February 22, 2013, the Court granted plaintiffs leave, and plaintiffs' Third Amended Complaint was filed. On April 5, 2013, pursuant to a stipulation between the parties, the Court dismissed Legacy Epicor from this action with prejudice. On April 29, 2013, the Court overruled demurrers by the new defendants to the Third Amended Complaint.

Although we believed this lawsuit was without merit and have vigorously defended against the claims, the parties engaged in a mediation on October 21, 2013. Following the mediation, the parties reached an agreement in principle to settle the action, subject to the approval of the Court. On May 23, 2014, the Court preliminarily approved the proposed settlement and ordered the creation of a settlement fund of $18 million from the various defendants and their insurers. The Court also scheduled a final settlement hearing for October 24, 2014. During the three months ended June 30, 2014, we paid $7.7 million to settle our portion of the litigation. As of June 30, 2014, we do not believe we will pay any additional amounts for the litigation, and as such, we have no remaining liability recorded for the litigation as of June 30, 2014.

NOTE 13 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents a summary of activity in accumulated other comprehensive loss for the three months ended June 30, 2014 (in thousands):

	Foreign currency translation adjustments			Unrealized loss on cash flow hedge, net of tax			Net unrealized loss on post-retirement benefit plans			Total
Balance at March 31, 2014	$	(18,881	)	$	(2,490	)	$	(515	)	$	(21,886	)
Unrealized loss on cash flow hedge, before tax	—			(43		)	—			(43		)
Tax benefit of unrealized loss on cash flow hedge	—			16			—			16
Realized loss on cash flow hedge reclassified into interest expense, before tax	—			737			—			737
Tax benefit of loss on cash flow hedge reclassified into income tax expense (benefit)	—			(282		)	—			(282		)
Unrealized loss on pension plan liabilities (1)	—			—			(20		)	(20		)
Change in foreign currency translation adjustments (1)	4,550			—			—			4,550
Total other comprehensive income (loss)	4,550			428			(20		)	4,958
Balance at June 30, 2014	$	(14,331	)	$	(2,062	)	$	(535	)	$	(16,928	)

(1) During the three months ended June 30, 2014, there was no tax effect of the unrealized loss on pension plan liabilities because there is a full valuation allowance on the related deferred tax asset. We have asserted that earnings of our international subsidiaries have been indefinitely reinvested, and as such, no tax effect has been recorded for our foreign currency translation adjustment.

27

The following table presents a summary of activity in accumulated other comprehensive loss for the nine months ended June 30, 2014 (in thousands):

	Foreign currency translation adjustments			Unrealized loss on cash flow hedge, net of tax			Net unrealized loss on post-retirement benefit plans			Total
Balance at September 30, 2013	$	(8,742	)	$	(3,251	)	$	(852	)	$	(12,845	)
Unrealized loss on cash flow hedge, before tax	—			(539		)	—			(539		)
Tax benefit of unrealized loss on cash flow hedge	—			230			—			230
Realized loss on cash flow hedge reclassified into interest expense, before tax	—			2,594			—			2,594
Tax benefit of loss on cash flow hedge reclassified into income tax expense (benefit)	—			(1,096		)	—			(1,096		)
Unrealized gain on pension plan liabilities (1)	—			—			317			317
Change in foreign currency translation adjustments (1)	(5,589		)	—			—			(5,589		)
Total other comprehensive income (loss)	(5,589		)	1,189			317			(4,083		)
Balance at June 30, 2014	$	(14,331	)	$	(2,062	)	$	(535	)	$	(16,928	)

(1) During the nine months ended June 30, 2014, there was no tax effect of the unrealized gain on pension plan liabilities because there is a full valuation allowance on the related deferred tax asset. We have asserted that earnings of our international subsidiaries have been indefinitely reinvested, and as such, no tax effect has been recorded for our foreign currency translation adjustment.

During the three and nine months ended June 30, 2014, we reclassified realized losses on our cash flow hedge into interest expense upon paying our quarterly swap payments, resulting in increased interest expense of $0.7 million and $2.6 million, respectively, for the three and nine months ended June 30, 2014. During the three and nine months ended June 30, 2014, we also reclassified the realized tax benefit of the swap payments into income tax expense (benefit), which decreased our income tax expense by $0.3 million and $1.1 million, for the three and nine months ended June 30, 2014.

NOTE 14 — DEPARTURE OF CHIEF EXECUTIVE OFFICER

On October 4, 2013, we announced the departure of our former Chief Executive Officer Pervez Qureshi. In the quarter ended December 2013, we recorded an expense of $2.0 million representing 3.0 times Mr. Qureshi's annual base salary in effect at the time of departure plus four days of prorated fiscal 2014 target bonus and 18 months of employee benefits. We recorded this payment within general and administrative expenses in the quarter ended December 31, 2013. In addition, we paid a cash payment of $1.2 million to Mr. Qureshi in settlement of Mr. Qureshi's Series B Units in EGL Topco. See Note 8 - Share Based Compensation for more information regarding Series B Units in EGL Topco.

On October 4, 2013, we appointed Joseph L. Cowan as our President and Chief Executive Officer. Additionally, on November 4, 2013, Mr. Cowan was appointed by the Board as a Director of the Company. Mr. Cowan's employment agreement was filed as Exhibit 10.12 to our Form 10-K for the fiscal year ended September 30, 2013, filed with the Securities and Exchange Commission on December 11, 2013.

NOTE 15 — GUARANTOR CONSOLIDATION

The 2011 Credit Agreement and the Senior Notes are guaranteed by our existing, material 100% owned domestic subsidiaries (collectively, the “Guarantors”). Our other subsidiaries (collectively, the “Non-Guarantors”) are not guarantors of the 2011 Credit Agreement and the Senior Notes. The following tables set forth financial information of the Guarantors and Non-Guarantors for the unaudited condensed consolidating balance sheets as of June 30, 2014 and September 30, 2013, the unaudited condensed consolidating statements of comprehensive income (loss) for the three and nine months ended June 30, 2014 and 2013, and the unaudited condensed consolidating statements of cash flows for the nine months ended June 30, 2014 and 2013.

The information is presented using the equity method of accounting along with elimination entries necessary to reconcile to the condensed consolidated financial statements.

Epicor Software Corporation

Condensed Consolidating Balance Sheet

(Unaudited)

	As of June 30, 2014
	Guarantor
(in thousands)	Principal Operations		Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS:
Current assets:
Cash and cash equivalents	$	35,532	$	3,856	$	65,260		$	—		$	104,648
Accounts receivable, net	63,487		4,278		49,020			—			116,785
Inventories, net	2,691		507		478			—			3,676
Deferred tax assets	17,942		861		1,925			—			20,728
Income tax receivable	10,748		—		(575		)	—			10,173
Prepaid expenses and other current assets	12,049		927		24,828			—			37,804
Total current assets	142,449		10,429		140,936			—			293,814
Property and equipment, net	37,922		1,305		23,554			—			62,781
Intangible assets, net	525,206		1,336		104,112			—			630,654
Goodwill	785,974		74,291		437,368			—			1,297,633
Deferred financing costs	25,062		—		—			—			25,062
Other assets	650,763		217,352		(65,097		)	(793,009		)	10,009
Total assets	$	2,167,376	$	304,713	$	640,873		$	(793,009	)	$	2,319,953
LIABILITIES AND STOCKHOLDER’S EQUITY:
Current liabilities:
Accounts payable	$	16,927	$	817	$	5,398		$	—		$	23,142
Payroll related accruals	30,454		730		16,304			—			47,488
Deferred revenue	96,144		2,812		64,082			—			163,038
Current portion of long-term debt	8,401		—		—			—			8,401
Accrued interest payable	6,684		—		23			—			6,707
Accrued expenses and other current liabilities	23,057		4,337		22,931			—			50,325
Total current liabilities	181,667		8,696		108,738			—			299,101
Long-term debt, net of unamortized discount	1,286,219		—		—			—			1,286,219
Deferred income tax liabilities	207,487		201		29,165			—			236,853
Loan from affiliate	1,050		—		—			—			1,050
Other liabilities	35,150		106		5,671			—			40,927
Total liabilities	1,711,573		9,003		143,574			—			1,864,150
Total stockholder’s equity	455,803		295,710		497,299			(793,009		)	455,803
Total liabilities and stockholder’s equity	$	2,167,376	$	304,713	$	640,873		$	(793,009	)	$	2,319,953

29

Epicor Software Corporation

Condensed Consolidating Balance Sheet

	As of September 30, 2013
	Guarantor
(in thousands)	Principal Operations		Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS:
Current assets:
Cash and cash equivalents	$	15,693	$	3,040	$	64,169	$	—	$	82,902
Accounts receivable, net	66,253		6,144		64,243