10-Q 1 d787450d10q.htm FORM 10-Q Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2014

OR

 

  ¨ 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: 333-183494-06

 

 

 

LOGO

INFOR, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE   01-0924667
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification Number)

641 AVENUE OF THE AMERICAS

NEW YORK, NEW YORK

  10011
(Address of principal executive offices)   (Zip Code)

(678) 319-8000

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Note: The registrant is a voluntary filer and is not subject to the filing requirements. However, the registrant 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.

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 x No ¨

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

 

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The number of shares of our common stock outstanding on September 8, 2014, was 1,000, par value $0.01 per share.

 

 

 


Table of Contents

INFOR, INC.

Form 10-Q

Index

 

PART I.  

FINANCIAL INFORMATION

     4   
Item 1.  

Financial Statements (unaudited)

     4   
 

Condensed Consolidated Balance Sheets at July 31, 2014 and May 31, 2014

     4   
 

Condensed Consolidated Statements of Operations for the three months ended July 31, 2014 and 2013

     5   
 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended July  31, 2014 and 2013

     6   
 

Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 2014 and 2013

     7   
 

Notes to Condensed Consolidated Financial Statements

     8   
Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     35   
Item 3.  

Quantitative and Qualitative Disclosures about Market Risk

     48   
Item 4.  

Controls and Procedures

     49   
PART II.  

OTHER INFORMATION

     49   
Item 1.  

Legal Proceedings

     49   
Item 1A.  

Risk Factors

     49   
Item 2.  

Unregistered Sales of Equity Securities and Use of Proceeds

     49   
Item 3.  

Defaults Upon Senior Securities

     49   
Item 4.  

Mine Safety Disclosures

     50   
Item 5.  

Other Information

     50   
Item 6.  

Exhibits

     50   
 

SIGNATURES

     51   

 

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Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q for the Quarter Ended July 31, 2014, contains forward-looking statements within the meaning of securities laws. The forward-looking statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “forecast,” “project,” “should” and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions, the outcome of pending litigation and the expected impact of recently issued accounting pronouncements. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. The forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those anticipated in the forward-looking statements; including those that are discussed under Risk Factors in documents we have filed with the U.S. Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for our fiscal year ended May 31, 2014, filed with the SEC on July 28, 2014, and those that may be discussed in this Quarterly Report under Part II, Item 1A, Risk Factors.

Given these risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements included in this Quarterly Report. The forward-looking statements included in this Quarterly Report reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, whether as a result of new information, future events or otherwise. Readers should carefully review the risk factors described in our Annual Report on Form 10-K and in other documents that we file from time to time with the SEC including our Quarterly Reports on Form 10-Q.

 

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INFOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts which are actuals)

(unaudited)

 

ASSETS           July 31,
2014
            May 31,
2014
 

Current assets:

           

Cash and cash equivalents

   $           575.8        $           575.3    

Accounts receivable, net

        308.2             404.2    

Prepaid expenses

        106.7             108.1    

Income tax receivable

        27.1             33.7    

Other current assets

        35.2             33.5    

Deferred tax assets

        28.2             27.5    
     

 

 

       

 

 

 

Total current assets

        1,081.2             1,182.3    

Property and equipment, net

        83.3             82.8    

Intangible assets, net

        909.7             950.7    

Goodwill

        4,293.9             4,317.2    

Deferred tax assets

        68.2             88.6    

Other assets

        32.9             31.5    

Deferred financing fees, net

        121.6             125.0    
     

 

 

       

 

 

 

Total assets

   $           6,590.8        $           6,778.1    
     

 

 

       

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

           

Current liabilities:

           

Accounts payable

   $           48.2        $           53.8    

Income taxes payable

        19.6             19.8    

Accrued expenses

        355.5             406.3    

Deferred tax liabilities

        1.3             1.3    

Deferred revenue

        913.6             975.3    

Current portion of long-term obligations

        54.3             31.7    
     

 

 

       

 

 

 

Total current liabilities

        1,392.5             1,488.2    

Long-term debt

        5,294.9             5,339.6    

Deferred tax liabilities

        179.3             192.5    

Other long-term liabilities

        194.6             217.8    
     

 

 

       

 

 

 

Total liabilities

        7,061.3             7,238.1    
     

 

 

       

 

 

 

Commitments and contingencies (Note 14)

           

Stockholders’ deficit:

           

Common stock, $0.01 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at July 31, 2014 and May 31, 2014

                     

Additional paid-in capital

        1,280.3             1,276.3    

Receivable from stockholders

        (35.3)            (35.3)   

Accumulated other comprehensive income

        15.4             48.7    

Accumulated deficit

        (1,730.9)            (1,749.7)   
     

 

 

       

 

 

 

Total stockholders’ deficit

        (470.5)            (460.0)   
     

 

 

       

 

 

 

Total liabilities and stockholders’ deficit

   $           6,590.8        $           6,778.1    
     

 

 

       

 

 

 

The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.

 

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INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)

(unaudited)

 

           Three Months Ended  
           July 31,  
                   2014                            2013          

Revenues:

            (recast)   

Software license fees and subscriptions

  $           192.0       $           157.2    

Product updates and support fees

       373.7            366.4    
    

 

 

      

 

 

 

Software revenues

       565.7            523.6    

Consulting services and other fees

       187.5            187.7    
    

 

 

      

 

 

 

Total revenues

       753.2            711.3    
    

 

 

      

 

 

 

Operating expenses:

         

Cost of software license fees and subscriptions(1)

       33.6            28.2    

Cost of product updates and support fees (1)

       66.8            63.3    

Cost of consulting services and other fees (1)

       146.5            149.1    

Sales and marketing

       127.7            118.8    

Research and development

       102.0            95.4    

General and administrative

       60.4            49.9    

Amortization of intangible assets and depreciation

       65.1            64.2    

Restructuring costs

       7.5            4.1    

Acquisition-related and other costs

       0.7            9.8    
    

 

 

      

 

 

 

Total operating expenses

       610.3            582.8    
    

 

 

      

 

 

 

Income from operations

       142.9            128.5    
    

 

 

      

 

 

 

Other expense, net:

         

Interest expense, net

       88.7            100.2    

Loss on extinguishment of debt

                 0.7    

Other (income) expense, net

       (32.1)           12.6    
    

 

 

      

 

 

 

Total other expense, net

       56.6            113.5    
    

 

 

      

 

 

 

Income before income tax

       86.3            15.0    

Income tax provision

       12.8            3.4    
    

 

 

      

 

 

 

Net income

  $           73.5       $           11.6    
    

 

 

      

 

 

 

 

(1) Excludes depreciation and amortization of intangible assets which are separately stated below.

The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.

 

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INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(unaudited)

 

           Three Months Ended  
           July 31,  
                   2014                            2013          
            (recast)   

Net income

  $           73.5       $           11.6    
    

 

 

      

 

 

 

Other comprehensive income (loss):

         

Unrealized gain (loss) on foreign currency translation, net of tax

       (57.3)           (23.1)   

Defined benefit plan funding status, net of tax

       0.9            1.9    

Unrealized gain (loss) on derivative instruments, net of tax

       (0.5)             
    

 

 

      

 

 

 

Total other comprehensive income (loss)

       (56.9)           (21.2)   
    

 

 

      

 

 

 

Comprehensive income (loss)

  $           16.6       $           (9.6)   
    

 

 

      

 

 

 

 

 

 

The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.

 

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INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

            Three Months Ended  
            July 31,  
                    2014                             2013          

Cash flows from operating activities:

              (recast)   

Net income

   $           73.5        $           11.6    

Adjustments to reconcile net income to net cash provided by operating activities:

           

Depreciation and amortization

        65.1             64.2    

Provision for doubtful accounts, billing adjustments and sales allowances

        5.9             4.5    

Deferred income taxes

        (37.5)            (12.8)   

Non-cash (gain) loss on foreign currency

        (32.0)            12.5    

Non-cash interest

        6.6             7.0    

Non-cash loss on extinguishment of debt

                   0.7    

Equity-based compensation expense

        7.2             4.8    

Other

        0.3             0.6    

Changes in operating assets and liabilities (net of effects of acquisitions):

           

Prepaid expenses and other assets

        (1.1)            (5.3)   

Accounts receivable, net

        (2.8)            11.8    

Income tax receivable/payable

        29.7             15.5    

Deferred revenue

        33.7             58.2    

Accounts payable, accrued expenses and other liabilities

        7.5             (11.4)   
     

 

 

       

 

 

 

Net cash provided by operating activities

        156.1             161.9    
     

 

 

       

 

 

 

Cash flows from investing activities:

           

Acquisitions, net of cash acquired

                   (23.8)   

Change in restricted cash

        0.6             (1.6)   

Purchases of property, equipment and software

        (10.5)            (7.5)   
     

 

 

       

 

 

 

Net cash used in investing activities

        (9.9)            (32.9)   
     

 

 

       

 

 

 

Cash flows from financing activities:

           

Loans to stockholders

        (0.2)              

Payments on capital lease obligations

        (0.7)            (0.5)   

Proceeds from issuance of debt

                   937.7    

Payments on long-term debt

        (8.8)            (918.5)   

Deferred financing fees

                   (11.9)   
     

 

 

       

 

 

 

Net cash (used in) provided by financing activities

        (9.7)            6.8    
     

 

 

       

 

 

 

Effect of exchange rate changes on cash and cash equivalents

        (7.8)            (3.0)   
     

 

 

       

 

 

 

Net increase in cash and cash equivalents

        128.7             132.8    

Cash and cash equivalents at the beginning of the period

        447.1             337.9    
     

 

 

       

 

 

 

Cash and cash equivalents at the end of the period

   $           575.8        $           470.7    
     

 

 

       

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

           

Assets acquired in acquisitions, net of cash acquired

   $                 $           38.6    

Liabilities assumed in acquisitions

   $                 $           14.8    

The accompanying Notes are an integral part of the Condensed Consolidated Financial Statements.

 

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INFOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Nature of Business and Basis of Presentation

Infor, Inc. (Infor) is one of the largest providers of enterprise software and services in the world. We provide industry-specific and other enterprise software products and related services, primarily to large and medium-sized enterprises in the manufacturing, distribution, healthcare, public sector, automotive, service industries, equipment services, management and rental (ESM&R), consumer products and retail and hospitality industries. We serve a large, diverse and sophisticated customer base across three geographic regions: the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC). Our software and services offerings are often “mission critical” for many of our customers as they help automate and integrate critical business processes, which enable our customers to better manage their suppliers, partners, customers and employees, as well as their business operations generally. Our industry-specific approach distinguishes us from larger competing enterprise software vendors, whose primary focus is on less specialized software programs that take more time and cost to tailor to target customers’ specific needs during periods of implementation and upgrade. We believe our products and services provide a lower relative total cost of ownership for customers than the offerings of larger competing vendors.

We specialize in and target specific industries, or verticals, and have industry-specific business units that leverage our industry-oriented products and teams. Augmenting our vertical-specific applications, we have horizontal software applications, including our customer relationship management (CRM), enterprise asset management (EAM), financial applications, human capital management (HCM), and supply chain management (SCM) suites which, in addition to our proprietary light-weight middleware solution ION®, are integrated with our enterprise software applications and sold across different verticals. In addition to providing software products, we provide on-going support and maintenance services for our customers through our subscription-based annual maintenance and support programs. We also help our customers implement and use our applications more effectively through our consulting services.

Unless otherwise indicated or the context requires otherwise, hereafter any reference to Infor, we, our, us or the Company refers to Infor, Inc. and its consolidated subsidiaries.

Basis of Presentation

Our Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the SEC. Our Condensed Consolidated Financial Statements include the accounts of Infor, Inc. and our wholly-owned and majority-owned subsidiaries operating in the Americas, EMEA and APAC. All significant intercompany accounts and transactions have been eliminated.

The unaudited Condensed Consolidated Financial Statements and Notes are presented as permitted by FASB requirements for quarterly reports and do not contain all the information and disclosures included in our annual financial statements and related notes as required by GAAP. The Condensed Consolidated Balance Sheet data as of May 31, 2014, and other amounts presented herein as of May 31, 2014, or for the year then ended, were derived from our audited financial statements. The accompanying Condensed Consolidated Financial Statements reflect all adjustments, in the opinion of management, necessary to fairly state our financial position, results of operations and cash flows for the periods presented. These adjustments consist of normal and recurring items. The results of operations for our interim periods are not necessarily indicative of results to be achieved for any future interim period or for our full fiscal year. The accompanying interim Condensed Consolidated Financial Statements should be read in conjunction with our consolidated financial statements and related notes for the fiscal year ended May 31, 2014, included in our Annual Report on Form 10-K, filed with the SEC on July 28, 2014.

Beginning in the first quarter of fiscal 2015, we changed our fiscal year end. As a result of the change in our fiscal year end, the comparable prior year results of operations have been recast to conform to the new fiscal calendar. See, Fiscal Year, below for further information.

Business Segments

We view our operations and manage our business as three reportable segments: License, Maintenance, and Consulting. We determine our reportable operating segments in accordance with the provisions in the FASB guidance on segment reporting, which establishes standards for, and requires disclosure of, certain financial information related to reportable operating segments and geographic regions. See Note 16, Segment and Geographic Information.

 

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Use of Estimates

The preparation of financial statements in accordance with GAAP requires us to make certain estimates, judgments and assumptions. These estimates, judgments and assumptions are based upon information available to us at the time that they are made and are believed to be reliable. These estimates, judgments and assumptions can affect the reported amounts of our assets and liabilities as of the date of the financial statements as well as the reported amounts of our revenues and expenses during the periods presented. On an on-going basis we evaluate our estimates and assumptions, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts and sales returns, fair value of equity-based compensation, fair value of acquired intangible assets and goodwill, fair value of contingent consideration related to our acquisitions, useful lives of intangible assets and property and equipment, income taxes, restructuring obligations, contingencies and litigation, fair value of derivative financial instruments, among others. We believe these estimates and assumptions are reasonable under the circumstances and they form a basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Differences between these estimates, judgments or assumptions and actual results could materially impact our financial statements. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application.

Fiscal Year

We have changed our fiscal year end from May 31 to April 30, effective for our fiscal year 2015. As a result of this change, for fiscal year 2015 we will report an eleven month transition period from June 1, 2014 to April 30, 2015.

Beginning with the first quarter of our fiscal year 2015, we have reported our quarterly results in this Quarterly Report on Form 10-Q based on our new fiscal calendar. Accordingly, we have reported the first quarter of fiscal year 2015 as the three month period ended July 31, 2014, which includes the results of May 2014, the last month of our previously reported fiscal year 2014. Our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Cash Flows and the accompanying Notes to our financial statements are presented based on our new fiscal calendar (as of and for the three months ended July 31, 2014) and our most recent audited financial statements for fiscal 2014 ended May 31, 2014. In addition, all applicable prior period results of operations have been recast based on our new fiscal calendar to facilitate comparability of the current and prior periods.

2. Summary of Significant Accounting Policies

A detailed description of our significant accounting policies can be found in our financial statements for our fiscal year ended May 31, 2014, which are included in the Annual Report on Form 10-K that we filed with the SEC on July 28, 2014. The following Notes should be read in conjunction with such policies and other disclosures contained therein.

Revenue Recognition

We generate revenues primarily by licensing software and Software-as-a-Service (SaaS) subscriptions, providing support and product updates, and providing consulting services to our customers. We record all revenues in accordance with the guidance provided by ASC 985-605, Software—Revenue Recognition, and ASC 605, Revenue Recognition. Revenue is recorded net of applicable taxes.

Our software license fees and subscriptions revenues are primarily from sales of perpetual software licenses granting customers use of our software products and access to software products through our SaaS subscription offerings. Software license fees are recognized when the following criteria are met: 1) there is persuasive evidence of an arrangement, 2) the software product has been delivered, 3) the fees are fixed or determinable, and 4) collectability is reasonably assured. SaaS subscription revenues are recognized over the contract term once the software is made available through our SaaS offerings. SaaS subscription revenues are included in software license fees and subscriptions revenues in our Condensed Consolidated Statements of Operations and were approximately $26.1 million and $14.7 million in the first quarter of fiscal 2015 and 2014, respectively.

Our product updates and support services entitle our customers to receive, for an agreed upon period, unspecified product upgrades (when and if available), release updates, regulatory updates and patches, as well as support services including access to technical information and technical support staff. The term of product updates and support services is typically twelve months. The product updates and support fees are recorded as product updates and support fees revenue in our Condensed Consolidated Statements of Operations and recognized ratably over the term of the agreement.

 

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We also provide software-related services, including systems implementation and integration services, consulting, training, custom modification and application managed services. Consulting services are generally provided under time and materials contracts and revenues are recognized as the services are provided and are recorded as consulting services and other fees revenue in our Condensed Consolidated Statements of Operations. Consulting services and other fees also include education and hosting services.

Allowances for Doubtful Accounts, Cancellations and Billing Adjustments

We have established an allowance for estimated billing adjustments and an allowance for estimated amounts that will not be collected. We record provisions for billing adjustments as a reduction of revenue and provisions for doubtful accounts as a component of general and administrative expense in our Condensed Consolidated Statements of Operations.

The following is a rollforward of our allowance for doubtful accounts:

 

(in millions)      

Balance, May 31, 2014

   $           18.2    

Provision

        1.2    

Write-offs and recoveries

        (1.8)   

Currency translation effect

        (0.1)   
     

 

 

 

Balance, July 31, 2014

   $                                                17.5    
     

 

 

 

Sales Allowances

We do not generally provide a contractual right of return. However, in the course of arriving at practical business solutions to various claims arising from the sale of our products and delivery of our solutions, we have allowed for sales allowances. We record a provision against revenue for estimated sales allowances on license and consulting revenues in the same period the related revenues are recorded or when current information indicates additional allowances are required. The balance of our sales reserve is reflected in deferred revenue on our Condensed Consolidated Balance Sheets.

The following is a rollforward of our sales reserve:

 

(in millions)      

Balance, May 31, 2014

   $           7.9    

Provision

        1.9    

Write-offs

        (0.9)   

Currency translation effect

        (0.1)   
     

 

 

 

Balance, July 31, 2014

   $                                                  8.8    
     

 

 

 

Foreign Currency

The functional currency of our foreign subsidiaries is typically the applicable local currency. The translation from the respective foreign currencies to United States Dollars (U.S. Dollar) is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using a weighted average exchange rate during the period. Gains or losses resulting from such translation are included as a separate component of accumulated other comprehensive income. Gains or losses resulting from foreign currency transactions are included in foreign currency gain or loss except for the effect of exchange rates on long-term intercompany transactions considered to be a long-term investment, which are accumulated and credited or charged to other comprehensive income.

Transaction gains and losses are recognized in our results of operations based on the difference between the foreign exchange rates on the transaction date and on the reporting date. We recognized net foreign exchange gains of $32.0 million and net foreign exchange losses of $12.5 million for the three months ended July 31, 2014 and 2013, respectively. The foreign currency exchange gains and losses are included as a component of other (income) expense, net, in the accompanying Condensed Consolidated Statements of Operations.

Certain foreign currency transaction gains and losses are generated from our intercompany balances that are not considered to be long-term in nature that will be settled between subsidiaries. These intercompany balances are a result of normal transfer pricing transactions among our various operating subsidiaries, as well as certain loans initiated between subsidiaries. We also recognize transaction gains and losses from revaluing our debt denominated in Euros and held by subsidiaries whose functional currency is the U.S. Dollar. See Note 11, Debt.

 

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Adoption of New Accounting Pronouncements

On June 1, 2014, we adopted the FASB guidance on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exist. This guidance requires an entity to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss carryforward, or similar tax loss or tax credit carryforward, rather than as a liability when the uncertain tax position would reduce the net operating loss or other carryforward under the tax law of the applicable jurisdiction and the entity intends to use the deferred tax asset for that purpose. The adoption of this guidance resulted in an $18.1 million reduction of our long term deferred tax assets with a corresponding reduction in our other long term liabilities. The adoption of this guidance did not have a material impact on our results of operations or cash flows.

On June 1, 2014, we adopted the FASB amended guidance on foreign currency matters relating to the releasing of cumulative translation adjustments to net income when an entity ceases to have a controlling financial interest in a subsidiary or business within a foreign entity. According to this guidance, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, or if a controlling financial interest is no longer held. The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.

Recent Accounting Pronouncements — Not Yet Adopted

In May 2014, the FASB issued guidance that clarifies the principles for revenue recognition. This guidance is a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new rules establish a core principle that requires the recognition of revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016 (our fiscal 2018) and early adoption is not permitted. Initial adoption may be accounted for either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initial application recognized at the date of adoption. We are currently evaluating how this guidance will affect our revenue recognition, which transition approach we will use upon adoption and the impact it may have on our financial position, results of operations or cash flows.

3. Acquisitions

Fiscal 2015

We did not complete any acquisitions in the first quarter of fiscal 2015. See Note 19, Subsequent Event.

Fiscal 2014

In the three months ended July 31, 2013, we made one acquisition for a purchase price of $34.6 million, net of cash acquired, to expand our product and service offerings in our targeted verticals, primarily manufacturing and distribution. We have included the results of the acquired company in our Condensed Consolidated Financial Statements from the applicable acquisition date. This acquisition was not significant and their results were not material to our results for the three months ended July 31, 2014, or the comparable period ended July 31, 2013.

In addition, on January 7, 2014, we acquired PeopleAnswers for approximately $200.0 million. PeopleAnswers is a provider of predictive talent analytics whose cloud-based talent science platform is used by companies to optimize hiring, promotion, learning, and compensation processes. The acquisition of PeopleAnswers complemented and further expanded our Infor Human Capital Management (HCM) suite offerings in the high-growth HCM market. The results of PeopleAnswers have been included in our Condensed Consolidated Financial Statements from the acquisition date.

The purchase consideration related to certain of our acquisitions include additional contingent cash consideration payable to the sellers if specific future performance conditions are met as detailed in the applicable purchase agreements. The fair value of these contingent consideration agreements was estimated to be $12.4 million as of May 31, 2014. The change in the estimated fair value of the contingent consideration, during the contingency period through settlement, is recorded in our results of operations in the period of such change and is included in acquisition-related and other costs in our Condensed Consolidated Statements of Operations. We have estimated the fair value of the contingent consideration agreements to be $12.4 million as of July 31, 2014. The potential undiscounted amount of future payments that we may be required to make related to the remaining contingent consideration agreements is between $0.0 and approximately $24.7 million. Subsequent to the end of first quarter of fiscal 2015, on August 25, 2014, we paid $8.5 million under the provisions of certain of the contingent consideration agreements.

 

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4. Goodwill

The change in the carrying amount of our goodwill by reportable segment for the period indicated was as follows:

 

(in millions)                 License                      Maintenance                    Consulting                         Total          

Balance, May 31, 2014

   $           979.1        $           3,056.5        $           281.6        $           4,317.2    

Currency translation effect

        (4.1)            (17.6)            (1.6)            (23.3)   
     

 

 

       

 

 

       

 

 

       

 

 

 

Balance, July 31, 2014

   $           975.0        $           3,038.9        $           280.0        $           4,293.9    
     

 

 

       

 

 

       

 

 

       

 

 

 

We acquired no goodwill since our last fiscal year end.

In accordance with the FASB guidance related to goodwill and other intangible assets, we are required to assess the carrying amount of our goodwill for potential impairment annually or more frequently if events or a change in circumstances indicate that impairment may have occurred. We conduct our annual impairment test in the second quarter of each fiscal year as of September 30. We believe that our reportable segments are also representative of our reporting units for purposes of our goodwill impairment testing.

We conducted our most recent annual impairment assessment in the second quarter of fiscal 2014. We chose to perform a Step 1 goodwill impairment assessment as of September 30, 2013. This assessment did not indicate any potential impairment for any of our reporting units and no further testing was required. We believe there was no impairment of our goodwill and no indication of potential impairment existed as of July 31, 2014. We have no accumulated impairment charges related to our goodwill.

5. Fair Value

Fair Value Hierarchy

The FASB has established guidance on financial assets and liabilities and nonfinancial assets and liabilities that are recognized at fair value on a recurring basis and guidance for nonfinancial assets and liabilities that are recognized at fair value on a nonrecurring basis. This guidance defines fair value, establishes a framework for measuring fair value and establishes a fair value hierarchy which requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to measure fair value.

The three levels of the fair value hierarchy are as follows:

 

Level 1     —      Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2     —      Inputs other than the quoted prices in active markets that are observable either directly or indirectly including: 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     —      Unobservable inputs that are supported by little or no market data, are significant to the fair values of the assets or liabilities, and require the reporting entity to develop its own assumptions.

We measure certain of our financial assets and liabilities at fair value. The following table summarizes the fair value of our financial assets and liabilities that were accounted for at fair value on a recurring basis, by level within the fair value hierarchy, as of July 31, 2014, and May 31, 2014:

 

          July 31, 2014  
         

 

Fair Value Measurements Using Inputs Considered as

             
(in millions)                  Level 1                             Level 2                             Level 3                         Fair Value       

Assets

               

Cash equivalents

  $          171.3       $                                  -       $                                  -       $          171.3    
   

 

 

     

 

 

     

 

 

     

 

 

 

Total

  $                          171.3       $               $               $                          171.3    
   

 

 

     

 

 

     

 

 

     

 

 

 

Liabilities

               

Contingent consideration

  $               $               $          12.4       $          12.4    

Derivative instruments

               13.7                    13.7    
   

 

 

     

 

 

     

 

 

     

 

 

 

Total

  $               $          13.7       $          12.4       $          26.1    
   

 

 

     

 

 

     

 

 

     

 

 

 

 

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          May 31, 2014  
         

 

Fair Value Measurements Using Inputs Considered as

             
(in millions)                  Level 1                             Level 2                             Level 3                         Fair Value       

Assets

               

Cash equivalents

  $          209.5       $                                  -       $                                  -       $          209.5    
   

 

 

     

 

 

     

 

 

     

 

 

 

Total

  $                          209.5       $               $               $                          209.5    
   

 

 

     

 

 

     

 

 

     

 

 

 

Liabilities

               

Contingent consideration

  $               $               $          12.4       $          12.4    

Derivative instruments

               16.1                    16.1    
   

 

 

     

 

 

     

 

 

     

 

 

 

Total

  $               $          16.1       $          12.4       $          28.5    
   

 

 

     

 

 

     

 

 

     

 

 

 

Cash equivalents include funds held in money market instruments and are reported at their current carrying value which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents on our Consolidated Balance Sheets. Our money market instruments are valued using quoted market prices and are included in Level 1 inputs.

Contingent consideration relates to certain of our fiscal 2013 acquisitions. The estimated fair value of the contingent consideration was based primarily on our estimates of meeting the applicable contingency conditions over the years following the acquisition as per the terms of the applicable purchase agreements. These include estimates of revenue growth rates and our assessment of the probability of meeting such results, with the probability-weighted earn-out then discounted to estimate fair value. As these are unobservable inputs, the contingent consideration is included in Level 3 inputs. The contingent consideration liabilities are included in accrued expenses and other long-term liabilities on our Condensed Consolidated Balance Sheets. In future periods, until settled, we will remeasure the estimated fair value of the contingent consideration and will include any change in the related liability in acquisition-related and other costs in our Condensed Consolidated Statements of Operations. See Note 3, Acquisitions.

Derivative instruments consist of interest rate swaps entered into to hedge our market risk relating to possible adverse changes in interest rates. The fair value of the interest rate swaps is estimated as the net present value of projected cash flows based upon forward interest rates at the balance sheet date. The models used to value the interest rate swaps are based primarily on readily observable market data, such as LIBOR forward rates, for all substantial terms of the interest rate swap contracts and the credit risk of the counterparties. As such, these derivative instruments are included in Level 2 inputs. See Note 15, Derivative Financial Instruments.

We have had no transfers of assets/liabilities into or out of Levels 1, 2 or 3 during fiscal 2015 or fiscal 2014. The following table reconciles the change in our Level 3 liabilities for the first quarter of fiscal 2015:

 

           Fair Value  
                     Measurements Using            
           Significant  
           Unobservable Inputs  
(in millions)          Level 3  

Balance, May 31, 2014

   $          12.4    

Settlements

         

Total gain recorded in earnings

         
    

 

 

 

Balance, July 31, 2014

   $          12.4    
    

 

 

 

 

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In addition to the financial assets and liabilities included in the above table, certain nonfinancial assets and liabilities are to be measured at fair value on a nonrecurring basis in accordance with applicable GAAP. In general, nonfinancial assets including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. As of July 31, 2014, we had not recorded any impairment related to such assets and had no other material nonfinancial assets or liabilities requiring adjustments or write-downs to their current fair value.

We elected not to apply the FASB guidance, as allowed, related to the fair value option for financial assets and liabilities to any of our currently eligible financial assets or liabilities. As of July 31, 2014, our material financial assets and liabilities not carried at fair value include accounts receivable, accounts payable and long-term debt, which are recorded at their current carrying values.

Fair Value of Financial Instruments

As of July 31, 2014, and May 31, 2014, the current carrying amount of our financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are deemed to approximate fair value due to their short periods to maturity.

Fair Value of Long-Term Debt

To estimate fair value of our long-term debt for disclosure purposes on each reporting date, we used recent market transactions and related market quotes of the bid and ask pricing of our long-term debt (Level 2 on the fair value hierarchy). At July 31, 2014, and May 31, 2014, the total carrying value of our long-term debt was approximately $5.3 billion and $5.4 billion, respectively, and the estimated fair value of our long-term debt was approximately $5.6 billion and $5.6 billion, respectively.

6. Accounts Receivable, Net

Accounts receivable, net is comprised of the following for the periods indicated:

 

(in millions)           July 31,
2014
            May 31,
2014
 

Accounts receivable

   $                               272.4        $                               369.4    

Unbilled accounts receivable

        53.3             53.0    

Less: allowance for doubtful accounts

        (17.5)            (18.2)   
     

 

 

       

 

 

 

Accounts receivable, net

   $           308.2        $           404.2    
     

 

 

       

 

 

 

Unbilled accounts receivable represents revenue recognized on contracts for which billings have not yet been presented to customers because the amounts were earned but not contractually billable as of the balance sheet date.

7. Intangible Assets

Our intangible assets subject to amortization were as follows for the periods indicated:

 

            July 31, 2014      May 31, 2014
(in millions)           Gross
Carrying
Amounts
            Accumulated
Amortization
            Net             Gross
Carrying
Amounts
            Accumulated
Amortization
            Net      Estimated
Useful
Lives
(in years)

Customer contracts and relationships

   $           1,831.6        $           1,137.2        $           694.4        $           1,840.2        $           1,118.2        $           722.0        2 - 15

Acquired and developed technology

        1,077.9             867.0             210.9             1,082.4             859.0             223.4        2 - 11

Tradenames

        137.2             132.8             4.4             137.6             132.3             5.3        1 - 20
     

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

    

Total

   $           3,046.7        $           2,137.0        $              909.7        $           3,060.2        $           2,109.5        $              950.7       
     

 

 

       

 

 

       

 

 

       

 

 

       

 

 

       

 

 

    

 

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The following table presents amortization expense recognized in our Condensed Consolidated Statements of Operations, by asset type, for the periods indicated:

 

            Three Months Ended  
            July 31,  
(in millions)                   2014                             2013          
              (recast)   

Customer contracts and relationships

   $           37.2        $           38.4    

Acquired and developed technology

        18.4             17.3    

Tradenames

        1.7             2.3    
     

 

 

       

 

 

 

Total

   $           57.3        $           58.0    
     

 

 

       

 

 

 

The estimated future annual amortization expense related to these intangible assets as of July 31, 2014, was as follows:

 

(in millions)      

Fiscal 2015 (remaining 9 months)

   $           160.7    

Fiscal 2016

        192.7    

Fiscal 2017

        142.6    

Fiscal 2018

        94.8    

Fiscal 2019

        79.7    

Fiscal 2020

        72.1    

Thereafter

        167.1    
     

 

 

 

Total

   $                               909.7    
     

 

 

 

8. Accrued Expenses

Accrued expenses consisted of the following for the periods indicated:

 

            July 31,             May 31,  
(in millions)                       2014                                     2014              

Compensation and employee benefits

   $           151.5        $           170.2    

Taxes other than income

        16.5             26.0    

Royalties and partner commissions

        37.8             47.0    

Litigation

        2.3             2.4    

Professional fees

        9.4             8.1    

Subcontractor expense

        6.2             8.0    

Interest

        57.8             69.1    

Restructuring

        13.2             16.1    

Retirement obligations

        1.3             1.7    

Deferred rent

        17.5             16.9    

Other

        42.0             40.8    
     

 

 

       

 

 

 

Accrued expenses

   $           355.5        $           406.3    
     

 

 

       

 

 

 

Included in other accrued expenses as of July 31, 2014, above is approximately $9.4 million pertaining to a product solution delivered prior to Infor’s acquisition of Lawson in September 2011. We settled a dispute with a legacy Lawson customer and recorded this pre-acquisition contingency expense in general and administrative expense in our Condensed Consolidated Statement of Operations in the first quarter of fiscal 2015.

 

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9. Equity-Based Compensation

We account for equity-based payments, including grants of employee securities awards, restricted stock and other equity-based awards, in accordance with ASC 718, Compensation—Stock Compensation, which requires that equity-based payments (to the extent they are compensatory) be recognized in our results of operations based on their fair values and the estimated number of securities we ultimately expect will vest. We utilize the Option-Pricing Method to estimate the fair value of our equity awards. All equity-based payments are based upon equity issued by a parent company of Infor. Pursuant to applicable FASB guidance related to equity-based awards, we have reflected equity compensation expense related to our parent company’s equity grants within our results of operations with an offset to additional paid-in capital.

The following table presents the total equity compensation expense recognized in our Condensed Consolidated Statements of Operations, by category, for the periods indicated:

 

            Three Months Ended  
            July 31,  
(in millions)                       2014                                     2013              
              (recast)   

Product updates and support fees

   $           0.4        $             

Sales and marketing

        1.8             2.2    

Research and development

        1.5             2.0    

General and administrative

        3.5             0.6    
     

 

 

       

 

 

 

Total

   $           7.2        $           4.8    
     

 

 

       

 

 

 

10. Restructuring Charges

We have recorded restructuring charges related to our acquisitions and in the ordinary course of business to eliminate redundancies, improve our operational efficiency and reduce our operating costs. These cost reduction measures included workforce reductions relating to restructuring our workforce, the exiting of certain leased facilities and the consolidation of space in certain other facilities. In accordance with applicable FASB guidance, our restructuring charges are broken down into acquisition related and other restructuring costs. These restructuring charges represent severance associated with redundant positions and costs related to redundant office locations. No business activities of the companies that we have acquired were discontinued. The workforce reductions were typically from all functional areas of our operations.

Fiscal 2015 Restructuring Charges

We have incurred restructuring costs totaling $3.0 million during the first quarter of fiscal 2015 relating to employee severance costs primarily for personnel in our professional services organization primarily in our EMEA region as well as personnel in our sales organization primarily in our Americas region. We made cash payments of approximately $0.9 million during the first quarter of fiscal 2015 related to these actions. We expect to complete the majority of these restructuring activities in the remainder of fiscal 2015.

Fiscal 2014 Restructuring Charges

During fiscal 2014, we incurred restructuring costs related to employee severance for personnel in product development and general and administrative functions and costs related to certain exited facilities. Since our last fiscal year end of May 31, 2014, we recorded restructuring cost reversals of $1.3 million relating to applicable employees’ severance costs. We made cash payments of approximately $2.9 million during the similar period of fiscal 2015 related to these actions. We completed the majority of these restructuring activities in fiscal 2014.

Previous Restructuring Charges and Acquisition-Related Charges

Prior to fiscal 2014, we had completed a series of acquisitions as well as certain restructuring activities. Since our last fiscal year end of May 31, 2014, we recorded restructuring cost reversals of $0.1 million related to these severance actions and exited facilities. We made net cash payments of $0.6 million related to these previous actions during the similar period of fiscal 2015. The remaining accruals associated with these prior restructuring charges relate primarily to lease obligations associated with the closure of redundant offices acquired in prior business combinations, as well as contractual payment obligations of severed employees. Actions related to these restructuring activities have been completed.

 

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The following table sets forth the reserve activity related to our restructuring plans for the two-month period ended July 31, 2014. The adjustments to costs in the tables below consist of adjustments to the accrual that were accounted for as an adjustment to current period earnings (Expense) or adjustments to the accrual that were related to the impact of fluctuations in foreign currency exchange rates (Foreign Currency Effect):

 

                                  Adjustment to Costs                                               Total  
(in millions)         Balance

 

 May 31, 

 

2014

           Initial 

 

Costs

           Expense            Foreign

 

 Currency 

 

Effect

          Cash

 

 Payments 

          Balance

 

 July 31, 

 

2014

          Total Costs

 

Recognized

 

to Date

          Expected

 

  Program  

 

Costs

 

Fiscal 2015 restructuring

                               

Severance

  $          -      $          3.0      $          -      $          -      $          (0.9)      $          2.1      $          3.0      $          3.0   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total fiscal 2015 restructuring

      -          3.0          -          -          (0.9)          2.1          3.0          3.0   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Fiscal 2014 restructuring

                               

Severance

      12.6          -          (1.3)          (0.1)          (2.8)          8.4          20.6          20.6   

Facilities and other

      0.5          -          -          -          (0.1)          0.4          0.8          0.8   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total fiscal 2014 restructuring

      13.1          -          (1.3)          (0.1)          (2.9)          8.8          21.4          21.4   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Previous restructuring

                               

Severance

      1.7          -          (0.1)          -          (0.5)          1.1          26.6          26.6   

Facilities and other

      0.4          -          -          -          -          0.4          1.4          1.4   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total previous restructuring

      2.1          -          (0.1)          -          (0.5)          1.5          28.0          28.0   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Previous acquisition-related

                               

Severance

      0.7          -          -          -          (0.1)          0.6          48.6          48.6   

Facilities and other

      2.3          -          -          -          -          2.3          19.2          19.2   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total previous acquisition-related

      3.0          -          -          -          (0.1)          2.9          67.8          67.8   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total restructuring

  $              18.2      $              3.0      $              (1.4)      $              (0.1)      $              (4.4)      $              15.3      $            120.2      $            120.2   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

The remaining restructuring reserve accruals related to severance and current facilities costs are included in accrued expenses with the long-term facilities cost reserve included in other long-term liabilities on our Condensed Consolidated Balance Sheets.

The following table summarizes the restructuring charges reflected in our results of operations for the periods indicated for each of our reportable segments including charges related to those functions not allocated to our segments.

 

           Three Months Ended  
           July 31,  
(in millions)                  2014                            2013          
            (recast)   

License

   $          2.7        $          1.2    

Maintenance

       0.5            0.2    

Consulting

       4.8            1.6    

General and administrative and other functions

       (0.5)           1.1    
    

 

 

      

 

 

 

Total restructuring costs

   $          7.5        $          4.1    
    

 

 

      

 

 

 

11. Debt

The following table summarizes our long-term debt balances for the periods indicated:

 

          July 31, 2014           May 31, 2014  
(in millions)             Amount           Effective Rate                 Amount           Effective Rate    

First lien Term B-3 due June 3, 2020

  $          476.2         3.750    $          477.4         3.750 

First lien Term B-5 due June 3, 2020

      2,537.3         3.750        2,543.6         3.750 

First lien Euro Term B due June 3, 2020

      462.4         4.000        472.0         4.000 

9.375% senior notes due April 1, 2019

      1,015.0         9.375        1,015.0         9.375 

10.0% senior notes due April 1, 2019

      334.7         10.000        340.7         10.000 

11.5% senior notes due July 15, 2018

      560.0                 11.500        560.0                 11.500 

Debt discounts

      (36.4)            (37.4)     
   

 

 

       

 

 

   

Total long-term debt

      5,349.2             5,371.3      

Less: current portion

      (54.3)            (31.7)     
   

 

 

       

 

 

   

Total long-term debt - non-current

  $                  5,294.9         $                  5,339.6      
   

 

 

       

 

 

   

 

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The weighted average interest rate at July 31, 2014, and May 31, 2014, was 6.00% and 6.00%, respectively.

The following table summarizes our future repayment obligations on the principal debt balances for all of our borrowings as of July 31, 2014:

 

(in millions)              

Fiscal 2015 (remaining 9 months)

   $           54.1    

Fiscal 2016

        4.1    

Fiscal 2017

        34.5    

Fiscal 2018

        35.0    

Fiscal 2019

        1,944.7    

Fiscal 2020

        35.0    

Thereafter

        3,278.2    
     

 

 

 

Total

   $                                       5,385.6    
     

 

 

 

Credit Facilities

On April 5, 2012, we entered into a secured credit agreement with Infor (US), Inc. as borrower and a syndicate of certain banks and other financial institutions as lenders and which consists of a secured term loan facility and a secured revolving credit facility (the Credit Agreement), which was subsequently amended. See Note 12, Debt, in notes to consolidated financial statements for the fiscal year ended May 31, 2014, included in our Annual Report on Form 10-K, filed with the SEC on July 28, 2014, for a description of each amendment.

The credit facilities are guaranteed by Infor, Inc. and certain of our wholly owned domestic subsidiaries, and are secured by liens on substantially all of the borrower’s assets and the assets of the guarantors. Under the Credit Agreement we are subject to a financial maintenance covenant which is applicable only for the revolving credit facility and then only for those fiscal quarters in which we have significant borrowings under the revolving credit facility outstanding as of the last day of such fiscal quarter. This covenant would require us to maintain a total leverage ratio not to exceed certain levels as of the last day of any such fiscal quarter. We are subject to certain other customary affirmative and negative covenants as well.

Revolver

The secured revolving credit facility (the Revolver) has a maximum availability of $150.0 million. We have made no draws against the Revolver and no amounts are currently outstanding. However, $9.9 million of letters of credit have reduced the amount available under the Revolver to $140.1 million. Pursuant to the Credit Agreement there is an undrawn line fee of 0.50% and the Revolver matures on March 31, 2017. Amounts under the Revolver may be borrowed to finance working capital needs and for general corporate purposes. While we have made no draws against the Revolver, interest on any future Revolver borrowings will be based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, or an alternate base rate, plus a margin of 1.75% per annum.

Term Loans

Under the secured term loan facility, we had the following term loans outstanding as of July 31, 2014.

On January 2, 2014, we entered into a $2,550.0 million term loan (the Tranche B-5 Term Loan). Interest on the Tranche B-5 Term Loan is based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, with a LIBOR floor of 1.0%, or an alternate base rate, plus a margin of 1.75% per annum, with a minimum alternative base rate floor of 2.0%. The Tranche B-5 Term Loan matures on June 3, 2020.

 

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On June 3, 2013, we entered into a $483.0 million term loan (the Tranche B-3 Term Loan). Interest on the Tranche B-3 Term Loan is based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, with an Adjusted LIBOR floor of 1.0%, or an alternate base rate, plus a margin of 1.75% per annum, with a minimum alternative base rate floor of 2.0%. The Tranche B-3 Term Loan matures on June 3, 2020.

On June 3, 2013, we also entered into a €350.0 million term loan (the Euro Tranche B Term Loan). Interest on the Euro Tranche B Term Loan is based on a fluctuating rate of interest determined by reference to an Adjusted LIBOR rate, plus a margin of 3.0% per annum, with an Adjusted LIBOR floor of 1.0%. The Euro Tranche B Term Loan matures on June 3, 2020.

Interest on the term loans borrowed under the secured term loan facility (the Term Loans) is payable quarterly, in arrears. Quarterly principal payment amounts are set for each of the Term Loans with balloon payments at the applicable maturity dates. The Term Loans are subject to mandatory prepayments in the case of certain situations.

Senior Notes

Our senior notes bear interest at the applicable rates per annum which is payable semi-annually in cash in arrears. The senior notes are general unsecured obligations of Infor (US), Inc. and are guaranteed by Infor, Inc. and certain of our wholly owned domestic subsidiaries. Under the indentures governing the senior notes, we are subject to certain customary affirmative and negative covenants.

Deferred Financing Fees

As of July 31, 2014, deferred financing fees, net of amortization, of $121.6 million were reflected on our Condensed Consolidated Balance Sheets in deferred financing fees, net. For the three months ended July 31, 2014 and 2013, we amortized $5.1 million and $6.3 million, respectively, in deferred financing fees which are included in interest expense, net in our Condensed Consolidated Statements of Operations.

In conjunction with the amendments to our Credit Agreement, we evaluated each refinancing transaction in accordance with ASC 470-50-40, Debt—Modifications and Extinguishments—Derecognition, to determine if the refinancing of the applicable term loans were modifications or extinguishments of the original term loans. Each lender involved in the applicable amendments’ refinance was analyzed to determine if their participation in the refinancing should be accounted for as a modification or an extinguishment. As a result of our assessment, the participation of certain lenders was determined to be modifications and applicable amounts of the unamortized deferred financing fees continue to be capitalized and amortized over the term of the refinanced debt. In fiscal 2014 we capitalized $12.1 million of fees paid to creditors as deferred financing fees related to the modifications. These fees also include costs associated with lenders participating in the financing for the first time. These amounts have been reflected as cash flows from financing activities on our Condensed Consolidated Statements of Cash Flows. For the remaining lenders, a discounted cash flow analysis was performed to determine if their participation had substantially changed. The lenders who chose not to participate in the applicable amendments’ refinance, and those lenders whose participation substantially changed, were determined to be extinguishments. As a result, in fiscal 2014, $5.2 million of the unamortized balance of the applicable deferred financing fees and debt discounts were expensed and recorded in our results of operations as a component of loss on extinguishment of debt in our Condensed Consolidated Statements of Operations, including $0.7 million in the three months ended July 31, 2013. In addition, in fiscal 2014 we expensed $20.9 million in third-party costs incurred related to the modifications, which were included in acquisition-related and other costs in our Condensed Consolidated Statements of Operations, including $10.6 million in the three months ended July 31, 2013. No comparable amounts were capitalized or expensed in the first three months of fiscal 2015 as we did not undertake any refinancing activities in the quarter.

Affiliate Company Borrowings

In addition to the debt held by Infor and its subsidiaries discussed above, certain affiliates of the Company have other borrowings which are described below.

Holding Company PIK Notes

On April 8, 2014, Infor Software Parent, LLC (HoldCo), an indirect holding company of Infor, and its direct subsidiary Infor Software Parent, Inc., issued $750.0 million in aggregate principal amount of 7.125%/7.875% Senior Contingent Cash Pay Notes (the HoldCo Notes) with net proceeds, after expenses, of approximately $737.8 million. The HoldCo Notes mature on May 1, 2021, and bear interest at the applicable rates per annum that is payable semi-annually in arrears, on May 1 and November 1 each year, beginning on November 1, 2014.

 

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Interest is payable entirely in cash, unless certain conditions are satisfied, in which case interest on the HoldCo Notes may be paid by increasing the principal amount of the HoldCo Notes or by issuing new notes (PIK interest), or through a combination of cash and PIK interest. Interest on the notes, if paid in cash, will accrue at a rate of 7.125% per annum. PIK interest on the notes will accrue at a rate of 7.875% per annum. As of July 31, 2014, and May 31, 2014, the total balance outstanding related to the HoldCo Notes was $750.0 million. We may from time-to-time service interest payments related to the HoldCo Notes. Any payment of interest that we may pay will be funded primarily through dividend distributions from Infor to HoldCo.

The HoldCo Notes are HoldCo’s general unsecured senior obligations and are guaranteed only by HoldCo’s direct subsidiary, Infor Lux Bond Company (Lux Bond Co), and are not guaranteed by any of HoldCo’s other subsidiaries including Infor. The HoldCo Notes rank equally in right of payment with any future unsecured indebtedness of HoldCo, will be effectively subordinated to any future secured indebtedness of HoldCo to the extent of the value of the collateral securing such indebtedness, and will be structurally subordinated to all of the existing and future indebtedness and other liabilities of HoldCo’s subsidiaries, including Infor’s borrowings under its senior secured credit facilities and Infor’s existing notes.

Proceeds from the sale of the HoldCo Notes were used to repay the outstanding balance of the Lux PIK Term Loan of $166.8 million, to make a $565.5 distribution to HoldCo equityholders, to pay a call premium and accrued interest related to the Lux PIK Term Loan, and to pay related transaction fees and expenses.

Parent Company PIK Term Loan

Lux Bond Co, our direct parent company, had debt in respect of a term loan (the Lux PIK Term Loan) under the Holdco PIK Term Loan Agreement, dated March 2, 2007, and amended pursuant to the First Amendment thereto, dated as of April 5, 2012.

The Lux PIK Term Loan bore interest at a fixed rate of 13.375% per year and accrued quarterly. Accrued but unpaid interest was added to the principal balance. At the election of Lux Bond Co, interest for a quarter may have been paid in cash and the fixed rate reduced by 50 basis points per annum for that quarter. In the second and third quarters of fiscal 2014, Lux Bond Co elected to pay the quarterly interest in cash and we funded the applicable Lux PIK Term Loan interest payments. See Note 17, Related Party Transactions – Due to/from Affiliate. On April 8, 2014, the outstanding balance of the Lux PIK Term Loan, including accrued interest, was repaid with the proceeds of the HoldCo Notes discussed above and no amounts were outstanding as of July 31, 2014, or May 31, 2014.

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 Infor does not meet any of the applicable criteria related to the HoldCo Notes or the Lux PIK Term Loan. Accordingly, we have not reflected the HoldCo Notes or the Lux PIK Term Loan in our condensed consolidated financial statements for any of the periods presented.

12. Income Taxes

Income taxes have been provided in accordance with ASC 740, Income Taxes. The effective tax rate for the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. Our effective tax rate may fluctuate as a result of changes in the forecasted annual income level and geographical mix of our operating earnings as well as a result of acquisitions, changes in liabilities recorded for unrecognized tax benefits, changes in the valuation allowances for deferred tax assets, tax settlements with U.S. and foreign tax authorities, and the impact from changes in enacted tax laws.

Our income tax provision and overall effective tax rates were as follows for the periods indicated:

 

           Three Months Ended  
           July 31,  
(in millions, except percentages)                  2014                            2013          
            (recast)   

Income tax provision

  $           12.8       $           3.4    

Effective income tax rate

       14.8         22.7 

Our provision for income taxes differs from the tax computed at the U.S. federal statutory rate primarily due to certain earnings considered as indefinitely reinvested in foreign operations, states taxes, and foreign earnings taxed at lower income tax rates than in the U.S.

 

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The change in our effective tax rate for the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014 was primarily driven by an increase in foreign earnings subject to lower tax rates, an increase in the amount of unrecognized tax benefits, an increase in foreign earnings subject to U.S. taxes, and a reduction in the amount of foreign entity restructuring tax expense.

During the upcoming twelve months ending July 31, 2015, we expect a net reduction of approximately $24.1 million of unrecognized tax benefits, primarily due to the expiration of statutes of limitation in the various jurisdictions.

Our net deferred tax assets were $96.4 million and $116.1 million as of July 31, 2014 and May 31, 2014. We believe it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

13. Comprehensive Income (Loss)

Comprehensive income (loss) is the change in equity of a business enterprise from non-stockholder transactions impacting stockholders’ deficit that are not included in the statement of operations and are reported as a separate component of stockholders’ deficit. Other comprehensive income (loss) includes the change in foreign currency translation adjustments, changes in defined benefit plan obligations, and unrealized gain (loss) on derivative instruments.

We report accumulated other comprehensive income as a separate line item in the stockholders’ deficit section of our Condensed Consolidated Balance Sheets. We report the components of comprehensive income (loss) on our Condensed Consolidated Statements of Comprehensive Income (Loss).

Total accumulated other comprehensive income (loss) and its components were as follows for the periods indicated:

 

(in millions)       Foreign
Currency
Translation
  Adjustment  
        Funded Status
of Defined
Benefit Pension
Plan (1)
        Derivative
Instruments
Unrealized
 Gain (Loss) (2) 
        Accumulated
Other
Comprehensive
Income
 

Balance, May 31, 2014

  $     66.0       $     (7.4)      $     (9.9)      $     48.7    

Other comprehensive income (loss)

      (34.9)          0.1           1.5           (33.3)   
   

 

 

     

 

 

     

 

 

     

 

 

 

Balance, July 31, 2014

  $     31.1       $     (7.3)      $     (8.4)      $     15.4    
   

 

 

     

 

 

     

 

 

     

 

 

 

 

 

(1) Funded status of defined benefit pension plan is presented net of tax benefit of $2.5 million and $2.5 million as of July 31, 2014 and May 31, 2014, respectively.
(2) Derivative instruments unrealized gain (loss) is presented net of tax benefit of $5.3 million and $6.2 million as of July 31, 2014 and May 31, 2014, respectively.

The components of other comprehensive income (loss) were as follows for the periods indicated. There were no amounts reclassified out of accumulated other comprehensive income in any of the periods presented.

 

(in millions)

Three Months Ended

          Before-Tax             Income Tax
 (Expense) Benefit 
             Net-of-Tax       

July 31, 2014

           

Foreign currency translation adjustment

  $     (57.3)      $          $     (57.3)   

Change in funded status of defined benefit plans

      1.0           (0.1)          0.9    

Derivative instruments unrealized gain (loss)

      (0.8)          0.3           (0.5)   
   

 

 

     

 

 

     

 

 

 

Other comprehensive income (loss)

  $     (57.1)      $     0.2       $     (56.9)   
   

 

 

     

 

 

     

 

 

 

July 31, 2013 (recast)

           

Foreign currency translation adjustment

  $     (23.1)      $          $     (23.1)   

Change in funded status of defined benefit plans

      2.4           (0.5)          1.9    
   

 

 

     

 

 

     

 

 

 

Other comprehensive income (loss)

  $     (20.7)      $     (0.5)      $     (21.2)   
   

 

 

     

 

 

     

 

 

 

 

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14. Commitments and Contingencies

Leases

We have entered into cancelable and non-cancelable operating leases, primarily related to rental of office space, certain office equipment and automobiles. Total rent expense for operating leases was $13.9 million and $13.3 million for the three-month periods ended July 31, 2014 and July 31, 2013, respectively.

We have also entered into certain capital lease commitments for buildings, automobiles, computers and operating equipment. Aggregate property acquired through capital leases and the associated depreciation of these assets is included in property and equipment, net on our Condensed Consolidated Balance Sheets. The current portion of capital lease obligations is included in accrued expenses, and the long-term portion of capital lease obligations is included in other long-term liabilities on our Condensed Consolidated Balance Sheets.

Litigation

From time to time, we are subject to litigation in the normal course of business. We accrue for litigation exposure when a loss is probable and estimable. As of July 31, 2014, and May 31, 2014, we have accrued $2.3 million and $2.4 million, respectively, related to current litigation matters. We expense all legal costs to resolve regulatory, legal, tax or other matters in the period incurred.

Patent Infringement Lawsuit by ePlus

On May 19, 2009, ePlus sued Infor (US), Inc. (then known as Lawson Software, Inc. (Lawson)), alleging infringement of three separate United States patents. On January 27, 2011, a jury found that Lawson’s S3 Procurement System, when used in combination with certain complementary Supply Chain Management products we offer that specifically included the Requisition Self Service (RSS) module, infringed two of the ePlus patents. No damages were awarded to ePlus. Following the jury verdict, Lawson developed a design-around product, Requisition Center (RQC), which was intended to be a non-infringing replacement product. On May 23, 2011, the Court entered an injunction prohibiting Lawson from licensing, servicing, or supporting in the United States our S3 Procurement System, when used in certain software configurations that included RSS.

Lawson appealed the adverse judgment to the United States Court of Appeals for the Federal Circuit; ePlus filed a cross-appeal as to damages. On November 21, 2012, the Federal Circuit ruled, affirming the jury’s verdict of liability on one method claim (applicable to two of Lawson’s accused configurations) and reversing all other liability findings. The Federal Circuit also affirmed the trial court’s rulings against ePlus on damages. The Federal Circuit directed the District Court on remand to consider what changes are required to the injunction in light of the liability rulings in Lawson’s favor.

In September 2011, before the Federal Circuit’s decision, ePlus had initiated contempt proceedings alleging that Lawson was not compliant with the injunction for, inter alia, releasing RQC which ePlus claims is not more than colorably different from certain of the products found to infringe and also infringes its patents. The District Court conducted an evidentiary hearing in the contempt proceeding in April 2013. On June 11, 2013, the District Court modified the injunction by deleting from its scope a certain software configuration, but ordered that the injunction shall remain in effect in all other respects. The District Court issued a separate order denying Lawson’s motion to dissolve or modify the injunction. Lawson appealed the District Court’s denial of the motion to modify, and order of modification, to the Federal Circuit.

On August 16, 2013, the District Court issued an Opinion and Order finding Lawson in contempt of its May 23, 2011 injunction, awarding damages to ePlus in the amount of $18,167,950 (plus post-judgment interest at an annual rate of 0.12%), denying ePlus’ request for enhanced damages and attorney’s fees, and imposing a coercive remedy in the daily amount of $62,362 payable to the Court, unless and until Lawson establishes that it is in compliance with the Court’s injunction order by September 20, 2013. Lawson appealed the District Court’s rulings on contempt to the Federal Circuit.

As previously noted, on direct appeal, the Federal Circuit held two of the five infringed claims to be invalid. Subsequently, on April 3, 2014, the Patent and Trademark office (PTO) cancelled the remaining three claims, including the single claim that is the basis for the modified injunction. The Board of Patent Appeals and Interferences (BPAI) had invalidated those patent claims, and ePlus appealed that administrative determination to the Federal Circuit. On November 8, 2013 the Federal Circuit issued a judgment affirming the BPAI. The Federal Circuit issued its mandate to the PTO on February 5, 2014 and the PTO subsequently cancelled the patent claims.

On July 25, 2014, the Federal Circuit ruled in Lawson’s favor on the appeals from the injunction and contempt orders. The Federal Circuit vacated the District Court’s injunction and contempt orders in their entirety (including all damage awards) and remanded the case back to the District Court “with instructions to dismiss.”

 

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On August 25, 2014, ePlus petitioned the Federal Circuit for a panel rehearing, and/or rehearing en banc. If denied, ePlus could thereafter seek a writ of certiorari from the United States Supreme Court. The case is therefore not yet finally terminated. Lawson, however, reasonably expects that the ultimate outcome of the case will be as the Federal Circuit ruled on July 25, 2014. Even if ePlus obtained a rehearing, and even if it were to prevail, neither of which Lawson anticipates, the appeal would need to be remanded to the Panel for further consideration because Lawson advanced additional, independent grounds to reverse the district court’s injunction and contempt rulings that the Panel did not reach in in its July ruling.

Other Proceedings

We are subject to various other legal proceedings and the risk of litigation by employees, customers, patent owners, suppliers, stockholders or others through private actions, class actions, administrative proceedings or other litigation. While the outcome of these claims cannot be predicted with certainty, we are of the opinion that, based on information presently available, the resolution of any such legal matters existing as of July 31, 2014, will not have a material adverse effect on our financial position, results of operations or cash flows.

Guarantees

We typically grant our customers a warranty that guarantees that our product will substantially conform to Infor’s current specifications for 90 days from the delivery date. We also indemnify our customers from third-party claims of intellectual property infringement relating to the use of our products. Infor’s standard software license agreements contain liability clauses that are limited in amount. We account for these clauses under ASC 460, Guarantees. We have not previously incurred costs to settle claims or paid awards under these indemnification obligations. Accordingly, we have not recorded any liabilities related to these agreements as of July 31, 2014, and May 31, 2014.

15. Derivative Financial Instruments

We have entered into certain interest rate swaps with notional amounts totaling $945.0 million to limit our exposure to floating interest rate risk related to a significant portion of the outstanding balance of our Term Loans. See Note 11, Debt. We entered into these interest rate swaps to mitigate our exposure to the variability of the three-month LIBOR for our floating rate debt. We have designated these instruments as cash flow hedges upon initiation and we anticipate that these hedges will be highly effective at their inception and on an on-going basis. These interest rate swaps have a forward effective date of March 31, 2015, with a 30-month term expiring September 29, 2017, and have a 1.25% floor.

The following table presents the fair values of the derivative financial instruments included on our Condensed Consolidated Balance Sheets at the dates indicated:

 

                     Balance Sheet       Fair Value at  
        Notional      Derivative     Classification             July 31,                     May 31,        
(in millions, except percentages)       Amount      Base    

Asset (Liability)

      2014         2014  

Accounting cash flow hedges:

                

Interest rate swap

  $     425.3          2.4725    Accrued expenses   $     (1.3)      $       
         Other long-term liabilities       (4.8)          (7.3)   

Interest rate swap

      212.6          2.4740    Accrued expenses       (0.6)            
         Other long-term liabilities       (2.5)          (3.6)   

Interest rate swap

      212.6          2.4750    Accrued expenses       (0.6)            
         Other long-term liabilities       (2.5)          (3.6)   

Interest rate swap

      94.5          2.4725    Accrued expenses       (0.3)            
         Other long-term liabilities       (1.1)          (1.6)   
   

 

 

          

 

 

     

 

 

 

Total

  $     945.0          Total, net asset (liability)   $     (13.7)      $     (16.1)   
   

 

 

          

 

 

     

 

 

 

The following table presents the impact of the derivative financial instruments on our other comprehensive income (OCI), accumulated other comprehensive income (AOCI), and our statement of operations for the periods indicated:

 

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              Three Months Ended  
     Statement of        July 31,  
(in millions)   

  Operations Location  

           2014                  2013      

Accounting cash flow hedges:

               (recast)   

Interest rate swaps

            

Effective portion - gain (loss) recognized in OCI

     $      (0.8)      $        
       

 

 

      

 

 

 

Gain (loss) reclassified from AOCI into net income

   Interest expense, net   $           $        
       

 

 

      

 

 

 

We have no other derivatives instruments designated as accounting hedges and no derivatives that are not designated as hedging instruments. The amounts reflected in the above tables do not include any adjustments to reflect the impact of deferred income taxes. For all periods presented, there were no gains or losses recognized in income related to hedge ineffectiveness.

As of July 31, 2014, none of the amounts included in accumulated other comprehensive income (loss) related to our derivative instruments is expected to be reclassified into earnings during the next twelve months. This estimate is based on the forward effective date of our interest rate swaps and the timing of the occurrence of the hedged forecasted transactions. The maximum term over which we are hedging our exposure to the variability of future cash flows (for all forecasted transactions) is approximately four years.

16. Segment and Geographic Information

We are a global provider of enterprise business applications software and services focused primarily on medium and large enterprises. We provide industry-specific and other enterprise software products and related services to companies in the manufacturing, distribution, healthcare, public sector, automotive, service industries, ESM&R, consumer products & retail and hospitality industries. We serve customers in the Americas, EMEA and APAC geographic regions.

Segment Information

We view our operations and manage our business as three reportable segments: License, Maintenance, and Consulting. See Note 1, Nature of Business and Basis of Presentation – Business Segments. It is around these three key sets of business activities that we have organized our business and established budgets, forecasts and strategic objectives, including go-to-market strategies. Within our organization, multiple sets of information are available reflecting various views of our operations including vertical, geographic, product, and/or functional information. However, the financial information provided to and used by our CODM to assist in making operational decisions, allocating resources and assessing performance reflects revenues, cost of revenues and sales margin for these three segments.

LicenseOur License segment develops, markets and distributes enterprise software including the following types of software: enterprise human capital management, financial management, business intelligence, asset management, enterprise performance management, supply chain management, service management, manufacturing operations, business project management and property management for hospitality companies. License revenues include license fees which primarily consist of fees resulting from products licensed to customers on a perpetual basis. Product license fees result from a customer’s licensing of a given software product for the first time or with a customer’s licensing of additional users for previously licensed products. License revenues also include revenues related to our SaaS offerings.

Maintenance Our Maintenance segment provides software updates and product support including when-and-if-available upgrades, release updates, regulatory updates and patches, access to our knowledge base and technical support team, technical advice and application management. Generally, these services are provided under annual contracts. Infor’s maintenance agreements are comprehensive customer support programs which entitle customers to various levels of support to meet their specific needs. Infor’s maintenance and customer support offerings are delivered through our global support organization operating from our support centers around the world. Maintenance revenues include product updates and support fees revenues which represent the ratable recognition of fees to enroll and renew licensed products in our maintenance programs. These fees are typically charged annually and are based on the license fees initially paid by the customer. These revenues can fluctuate based on the number and timing of new license contracts, renewal rates and price increases.

ConsultingOur Consulting segment provides software implementation, customization, integration, training and other consulting services related to Infor’s software products. Services in this segment are generally provided under time and materials contracts, and in certain situations, under fixed-fee or maximum-fee contracts. Infor’s consulting offerings range from initial

 

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assessment and planning of a project to the actual implementation and post-implementation of a project, including optimizing a customer’s use of our software, as well as training and learning tools designed to help customers become proficient in using Infor’s software quickly and effectively. Consulting services and other revenue include consulting services and other fees revenues from services provided to customers who have licensed Infor’s products.

The measure we use to assess our reportable segments’ operating performance is sales margin. Reportable segment sales margin includes segment revenues net of direct controllable costs. Segment revenues include adjustments to increase revenues that would have been recognized if we had not adjusted certain deferred revenue balances related to acquisitions to their fair values at the time of the acquisition as required by GAAP. Segment costs represent those costs of resources dedicated to each segment, direct sales costs, and allocation of certain operating expenses. Segment costs exclude any allocation of depreciation and amortization related to our acquired intangible assets or restructuring costs.

We do not have any intercompany revenue recorded between reportable segments. The accounting policies for our reportable segments are the same as those used in our consolidated financial statements. We do not assess or report assets or capital expenditures by reportable segment. For disclosure of goodwill by reportable segment see Note 4, Goodwill.

The following table presents financial information for our reportable segments for the periods indicated:

 

(in millions, except percentages)           Reportable Segment  

Three Months Ended

                License                   Maintenance                 Consulting                     Total        

July 31, 2014

                 

Revenues

   

$

    192.6       $          373.8       $          187.7       $          754.1    

Cost of revenues

        32.2           66.4           146.5           245.1    

Direct sales costs

        107.1                             107.1    
     

 

 

     

 

 

     

 

 

     

 

 

 

Sales margin

   

$

    53.3       $          307.4       $          41.2       $          401.9    
     

 

 

     

 

 

     

 

 

     

 

 

 

Sales margin %

        27.7%           82.2%           21.9%           53.3%    

July 31, 2013 (recast)

                 

Revenues

   

$

    159.6       $          366.8       $          188.4       $          714.8    

Cost of revenues

        26.0           63.3           149.5           238.8    

Direct sales costs

        99.0                             99.0    
     

 

 

     

 

 

     

 

 

     

 

 

 

Sales margin

   

$

    34.6       $          303.5       $          38.9       $          377.0    
     

 

 

     

 

 

     

 

 

     

 

 

 

Sales margin %

        21.7%           82.7%           20.6%           52.7%    

The following table presents a reconciliation of our reportable segment revenues, net of the reversal of purchase accounting revenue adjustments, and our reportable segment sales margin to total consolidated revenues and consolidated income (loss) before income tax for the periods indicated:

 

                Three Months Ended          
        July 31,  
(in millions)       2014         2013  
          (recast)   

Reportable segment revenues

  $     754.1       $     714.8    

Purchase accounting revenue adjustments (1)

      (0.9)          (3.5)   
   

 

 

     

 

 

 

Total revenues

  $     753.2       $     711.3    
   

 

 

     

 

 

 

Reportable segment sales margin

  $     401.9       $     377.0    

Other unallocated costs and operating expenses (2)

      186.4           180.2    

Amortization of intangible assets and depreciation

      65.1           64.2    

Restructuring costs

      7.5           4.1    
   

 

 

     

 

 

 

Income from operations

      142.9           128.5    

Total other expense, net

      56.6           113.5    
   

 

 

     

 

 

 

Income before income tax

  $     86.3       $     15.0    
   

 

 

     

 

 

 

 

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(1) Adjustments to decrease reportable segment revenue for revenue that we would have recognized had we not adjusted acquired deferred revenue as required by GAAP.
(2) Other unallocated costs and operating expenses include certain sales and marketing expenses, research and development, general and administrative, acquisition-related and other costs, as well as adjustments for deferred costs recognized related to acquired deferred revenue.

Geographic Information

The following table presents our revenues summarized by geographic region, based on the location at which each sale originates, for the periods indicated:

 

(in millions)        Geographic Region  

Three Months Ended

            Americas                     EMEA                     APAC                     Total        

July 31, 2014

                   

Software license fees and subscriptions

  $      116.6       $      55.7       $      19.7       $      192.0    

Product updates and support fees

       228.0            115.5            30.2            373.7    
    

 

 

      

 

 

      

 

 

      

 

 

 

Software revenues

       344.6            171.2            49.9            565.7    

Consulting services and other fees

       88.4            82.1            17.0            187.5    
    

 

 

      

 

 

      

 

 

      

 

 

 

Total revenues

  $      433.0       $      253.3       $      66.9       $      753.2    
    

 

 

      

 

 

      

 

 

      

 

 

 

July 31, 2013 (recast)

                   

Software license fees and subscriptions

  $      96.5       $      45.8       $      14.9       $      157.2    

Product updates and support fees

       226.3            110.0            30.1            366.4    
    

 

 

      

 

 

      

 

 

      

 

 

 

Software revenues

       322.8            155.8            45.0            523.6    

Consulting services and other fees

       86.0            81.9            19.8            187.7    
    

 

 

      

 

 

      

 

 

      

 

 

 

Total revenues

  $      408.8       $      237.7       $      64.8       $      711.3    
    

 

 

      

 

 

      

 

 

      

 

 

 

The following table presents our long-lived tangible assets, consisting of property and equipment net of accumulated depreciation, summarized by geographic region:

 

     Geographic Region  
(in millions)                  Americas                      EMEA                            APAC                              Total          

July 31, 2014

   $ 49.5        $ 26.5        $ 7.3        $ 83.3    

May 31, 2014

   $ 50.6        $ 26.5        $ 5.7        $ 82.8    

The following table sets forth our revenues by country for the periods indicated:

 

             Three Months Ended      
         July 31,  
(in millions)        2014          2013  
            (recast)   

United States

  $      384.5       $      357.0    

All other countries

       368.7            354.3    
    

 

 

      

 

 

 

Total revenues

  $      753.2       $      711.3    
    

 

 

      

 

 

 

Revenues attributable to the United States, our country of domicile, and foreign countries are based on the country in which the sales originate.

 

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The following table sets forth long-lived tangible assets by country at the dates indicated:

 

                   July 31,                                May 31,              
(in millions)        2014          2014  

United States

 

$

     47.8      $      49.4   

Germany

       8.3           8.6   

All other countries

       27.2           24.8   
    

 

 

      

 

 

 

Total long-lived tangible assets

  $      83.3      $      82.8   
    

 

 

      

 

 

 

Only those countries in which revenues or long-lived assets exceed 10% of our consolidated revenues or long-lived assets are reflected in the above tables. In those fiscal periods when a country’s revenues or long-lived tangible assets are less than 10% of the consolidated totals, applicable amounts are included in “all other countries.”

17. Related Party Transactions

We have entered into advisory agreements with both Golden Gate Capital and Summit Partners, L.P. (Summit Partners, and together with Golden Gate Capital, the Sponsors) pursuant to which we have retained them to provide advisory services relating to financing and strategic business planning, acquisitions and investments, analysis and oversight, executive recruiting and certain other services. The Sponsors are our largest investors.

Golden Gate Capital

During the three months ended July 31, 2014 and 2013, we recognized as a component of general and administrative expenses in our Condensed Consolidated Statement of Operations $1.5 million and $1.2 million, respectively, for Golden Gate Capital management fees and expenses rendered in connection with acquisitions, debt refinancing and other advisory services. At July 31, 2014, $1.1 million of these fees remained unpaid.

In the normal course of business, we may sell or purchase products and services to companies owned by Golden Gate Capital. Sales to Golden Gate Capital-owned companies were approximately $0.3 million and $0.9 million in the first three months of fiscal 2015 and 2014, respectively. These revenues were recognized according to our revenue recognition policy as described in Note 2, Summary of Significant Accounting Policies. In addition, we have made an insignificant amount of payments to companies owned by Golden Gate Capital in the first three months of fiscal 2015 and 2014, respectively.

Summit Partners

During the three months ended July 31, 2014 and 2013, we recognized as a component of general and administrative expenses in our Condensed Consolidated Statement of Operations $0.5 million and $0.5 million, respectively, for Summit Partners management fees and expenses rendered in connection with acquisitions, debt refinancing and other advisory services, all of which were paid at July 31, 2014. We had no sales to companies owned by Summit Partners in the first three months of fiscal 2015 or the corresponding prior period. We have made an insignificant amount of payments to companies owned by Summit Partners in the first three months of fiscal 2015 and in the corresponding prior period.

Due to/from Affiliates

Infor, through certain of our subsidiaries, had net receivables from our affiliates, HoldCo and Lux Bond Co, of $35.3 million and $35.3 million as of July 31, 2014, and May 31, 2014, respectively. These receivables arose primarily due to our payment of deferred financing fees and interest related to Lux Bond Co’s debt and are included in receivable from stockholders in the equity section on our Condensed Consolidated Balance Sheets. In the first quarter of fiscal 2015, we did not fund any quarterly interest payments related to the HoldCo Notes as the first interest payment is not due until November 2014. In the first three months of fiscal 2014, Lux Bond Co did not elect to pay first quarter interest related to the then outstanding Lux PIK Term Loan in cash and we did not fund the quarterly interest. In future periods we may from time-to-time service interest payments related to the HoldCo Notes. Any payment of interest that we may pay will be funded primarily through dividend distributions from Infor to HoldCo or potentially though intercompany loans to HoldCo. In the first three months of fiscal 2015, we paid certain expenses of our affiliates related to the HoldCo Notes of approximately $0.2 million which is reflected in the balance of receivable from stockholders above.

In addition, Infor has entered into a Tax Allocation Agreement with GGC Software Parent, Inc., an affiliate of Lux Bond Co. The Company is included in the GGC Software Parent, Inc. consolidated federal income tax return and the Tax Allocation Agreement sets forth the obligation of Infor and our domestic subsidiaries with regard to preparing and filing tax returns and allocating tax payments under the consolidated reporting rules of the Internal Revenue Code and similar state and local tax laws governing

 

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combined or consolidated filings. The Tax Allocation Agreement provides that each domestic subsidiary that is a member of the consolidated, unitary or combined tax group will pay its share of the taxes of the group. Payments of amounts recorded under the terms of the Tax Allocation Agreement are generally recorded as a decrease in our affiliate receivable. In the three months ended July 31, 2014 and 2013, we recorded payments of $5.0 million and $1.4 million, respectively, related to the Tax Allocation Agreement as reductions to our affiliate receivable. In addition, we had $3.4 million and $3.2 million payable under the Tax Allocation Agreement as of July 31, 2014, and May 31, 2014, respectively, which is included in accounts payable on our Condensed Consolidated Balance Sheets.

18. Supplemental Guarantor Financial Information

The 9.375%, 10.0% and 11.5% senior notes issued by Infor (US), Inc. are fully and unconditionally guaranteed, except for certain customary automatic release provisions, jointly and severally, by Infor, Inc., its parent company, and substantially all of its existing and future wholly-owned domestic subsidiaries (collectively the Guarantor Subsidiaries). See Note 11, Debt. Its other subsidiaries (collectively, the Non-Guarantor Subsidiaries) are not guarantors of our borrowings. The indentures governing the notes limit, among other things, the ability of Infor, Inc. and the Guarantor Subsidiaries to incur additional indebtedness; declare or pay dividends; redeem stock or make other distributions to stockholders; make investments; create liens or use assets as security in other transactions; merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets; enter into transactions with affiliates; and sell or transfer certain assets.

The following tables set forth requisite financial information of Infor, Inc., Infor (US), Inc., the Guarantor Subsidiaries and Non-Guarantor Subsidiaries including our Condensed Consolidating Balance Sheets as of July 31, 2014, and May 31, 2014, our Condensed Consolidating Statements of Operations and our Condensed Consolidating Statements of Comprehensive Income (Loss) for our fiscal quarter ended July 31, 2014 and 2013, and our Condensed Consolidating Statements of Cash Flows for the three months ended July 31, 2014 and 2013.

 

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Condensed Consolidating Balance Sheets

 

        July 31, 2014  
            Infor, Inc.             Infor (US), Inc.         Guarantor          Non-Guarantor                    Total  
(in millions)       (Parent)          (Subsidiary Issuer)              Subsidiaries             Subsidiaries             Eliminations                 Consolidated      

ASSETS

                       

Current assets:

                       

Cash and cash equivalents

  $     -      $     180.0      $     -      $     395.8      $     -      $     575.8   

Accounts receivable, net

      -          118.3          6.9          183.0          -          308.2   

Prepaid expenses

      -          51.1          15.8          39.8          -          106.7   

Income tax receivable

      -          11.4          0.2          15.5          -          27.1   

Other current assets

      -          22.6          0.3          12.3          -          35.2   

Affiliate receivable

      -          476.6          481.6          22.9          (981.1)          -   

Deferred tax assets

      -          11.0          4.2          13.1          (0.1)          28.2   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total current assets

      -          871.0          509.0          682.4          (981.2)          1,081.2   

Property and equipment, net

      -          32.9          14.9          35.5          -          83.3   

Intangible assets, net

      -          603.9          8.7          297.1          -          909.7   

Goodwill

      -          2,378.8          62.5          1,852.6          -          4,293.9   

Deferred tax assets

      0.2          -          5.9          68.6          (6.5)          68.2   

Other assets

      -          5.8          6.3          20.8          -          32.9   

Deferred financing fees, net

      -          121.6          -          -          -          121.6   

Affiliate receivable

      -          873.4          1.3          150.9          (1,025.6)          -   

Investment in subsidiaries

      -          1,666.6          -          -          (1,666.6)          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total assets

  $     0.2      $                 6,554.0      $             608.6      $               3,107.9      $               (3,679.9)      $               6,590.8   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

                       

Current liabilities:

                       

Accounts payable

  $     -      $     27.7      $     0.1      $     20.4      $     -      $     48.2   

Income taxes payable

      -          -          -          19.6          -          19.6   

Accrued expenses

      -          158.4          29.0          168.1          -          355.5   

Deferred tax liabilities

      0.1          -          -          1.3          (0.1)          1.3   

Deferred revenue

      -          542.8          21.7          349.1          -          913.6   

Affiliate payable

      29.4          503.1          396.0          52.6          (981.1)          -   

Current portion of long-term obligations

      -          54.3          -          -          -          54.3   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total current liabilities

      29.5          1,286.3          446.8          611.1          (981.2)          1,392.5   

Long-term debt

      -          5,294.9          -          -          -          5,294.9   

Deferred tax liabilities

      -          149.0          -          36.8          (6.5)          179.3   

Affiliate payable

      58.6          151.8          0.3          814.9          (1,025.6)          -   

Other long-term liabilities

      -          54.6          8.2          131.8          -          194.6   

Losses in excess of investment in subsidiaries

      382.6          -          -          -          (382.6)          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total liabilities

      470.7          6,936.6          455.3          1,594.6          (2,395.9)          7,061.3   

Total stockholders’ equity (deficit)

                (470.5)          (382.6)          153.3          1,513.3          (1,284.0)          (470.5)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total liabilities and stockholders’ deficit

  $     0.2      $     6,554.0      $     608.6      $     3,107.9      $     (3,679.9)      $     6,590.8   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

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        May 31, 2014  
            Infor, Inc.             Infor (US), Inc.         Guarantor          Non-Guarantor                    Total  
(in millions)       (Parent)          (Subsidiary Issuer)              Subsidiaries             Subsidiaries             Eliminations                 Consolidated      

ASSETS

                       

Current assets:

                       

Cash and cash equivalents

  $     -      $     227.4      $     -      $     347.9      $     -      $     575.3   

Accounts receivable, net

      -          165.3          10.9          228.0          -          404.2   

Prepaid expenses

      -          50.5          14.9          42.7          -          108.1   

Income tax receivable

      -          17.8          0.2          15.7          -          33.7   

Other current assets

      -          18.5          0.2          14.8          -          33.5   

Affiliate receivable

      -          431.0          439.2          35.7          (905.9)          -   

Deferred tax assets

      -          9.9          4.2          13.5          (0.1)          27.5   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total current assets

      -          920.4          469.6          698.3          (906.0)          1,182.3   

Property and equipment, net

      -          34.0          15.4          33.4          -          82.8   

Intangible assets, net

      -          627.1          9.3          314.3          -          950.7   

Goodwill

      -          2,378.8          62.5          1,875.9          -          4,317.2   

Deferred tax assets

      0.4          -          6.2          88.4          (6.4)          88.6   

Other assets

      -          5.9          4.4          21.2          -          31.5   

Deferred financing fees, net

      -          125.0          -          -          -          125.0   

Affiliate receivable

      -          873.7          1.3          150.2          (1,025.2)          -   

Investment in subsidiaries

      -          1,669.0          -          -          (1,669.0)          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total assets

  $     0.4      $     6,633.9      $     568.7      $     3,181.7      $     (3,606.6)      $     6,778.1   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

                       

Current liabilities:

                       

Accounts payable

  $     -      $     26.4      $     0.1      $     27.3      $     -      $     53.8   

Income taxes payable

      -          -          -          19.8          -          19.8   

Accrued expenses

      -          185.1          33.8          187.4          -          406.3   

Deferred tax liabilities

      0.1          -          -          1.3          (0.1)          1.3   

Deferred revenue

      -          579.4          17.9          378.0          -          975.3   

Affiliate payable

      29.5          469.9          361.0          45.5          (905.9)          -   

Current portion of long-term obligations

      -          31.7          -          -          -          31.7   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total current liabilities

      29.6          1,292.5          412.8          659.3          (906.0)          1,488.2   

Long-term debt

      -          5,339.6          -          -          -          5,339.6   

Deferred tax liabilities

      -          160.4          (0.1)          38.6          (6.4)          192.5   

Affiliate payable

      58.6          151.1          0.4          815.1          (1,025.2)          -   

Other long-term liabilities

      -          62.5          5.5          149.8          -          217.8   

Losses in excess of investment in subsidiaries

      372.2          -          -          -          (372.2)          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total liabilities

      460.4          7,006.1          418.6          1,662.8          (2,309.8)          7,238.1   

Total stockholders’ equity (deficit)

      (460.0)          (372.2)          150.1          1,518.9          (1,296.8)          (460.0)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total liabilities and stockholders’ deficit

  $     0.4      $     6,633.9      $     568.7      $     3,181.7      $     (3,606.6)      $     6,778.1   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

30


Table of Contents

Condensed Consolidating Statements of Operations

 

        Three Months Ended July 31, 2014  
(in millions)        Infor, Inc. 

 

(Parent)

        Infor (US), Inc.

 

(Subsidiary Issuer)

        Guarantor

 

  Subsidiaries  

         Non-Guarantor 

 

Subsidiaries

        Eliminations         Total

 

Consolidated

 

Revenues:

                       

Software license fees and subscriptions

  $     -      $     105.7      $     6.2      $     80.1      $     -      $     192.0   

Product updates and support fees

      -          205.5          7.6          160.6          -          373.7   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Software revenues

      -          311.2          13.8          240.7          -          565.7   

Consulting services and other fees

      -          72.7          3.4          111.4          -          187.5   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total revenues

      -          383.9          17.2          352.1          -          753.2   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Operating expenses:

                       

Cost of software license fees and subscriptions

      -          20.5          1.9          11.0          0.2          33.6   

Cost of product updates and support fees

      -          31.3          0.7          33.6          1.2          66.8   

Cost of consulting services and other fees

      -          53.6          4.7          86.3          1.9          146.5   

Sales and marketing

      -          59.5          7.4          59.4          1.4          127.7   

Research and development

      -          52.7          2.3          44.2          2.8          102.0   

General and administrative

      -          12.1          32.5          23.3          (7.5)          60.4   

Amortization of intangible assets and depreciation

      -          37.8          3.3          24.0          -          65.1   

Restructuring costs

      -          1.2          0.2          6.1          -          7.5   

Acquisition-related and other costs

      -          0.1          -          0.6          -          0.7   

Affiliate (income) expense, net

      -          68.3          (47.8)          (20.5)          -          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total operating expenses

      -          337.1          5.2          268.0          -          610.3   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Income from operations

      -          46.8          12.0          84.1          -          142.9   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Other expense, net:

                       

Interest expense, net

      -          89.0          0.1          (0.4)          -          88.7   

Affiliate interest (income) expense, net

      -          (11.4)          -          11.4          -          -   

Loss on extinguishment of debt

      -          -          -          -          -          -   

Other (income) expense, net

      -          (12.7)          -          (19.4)          -          (32.1)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total other expense, net

      -          64.9          0.1          (8.4)          -          56.6   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Income (loss) before income tax

      -          (18.1)          11.9          92.5          -          86.3   

Income tax provision (benefit)

      -          (4.4)          4.3          12.9          -          12.8   

Equity in (earnings) loss of subsidiaries

      (73.5)          (87.2)          -          -          160.7          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net income (loss)

  $     73.5      $     73.5      $     7.6      $     79.6      $     (160.7)      $     73.5   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

31


Table of Contents
        Three Months Ended July 31, 2013 (recast)  
(in millions)        Infor, Inc. 

 

(Parent)

        Infor (US), Inc.

 

(Subsidiary Issuer)

        Guarantor

 

  Subsidiaries  

         Non-Guarantor 

 

Subsidiaries

        Eliminations         Total

 

Consolidated

 

Revenues:

                       

Software license fees and subscriptions

  $     -      $     85.9      $     2.9      $     68.4      $     -      $     157.2   

Product updates and support fees

      -          204.0          7.3          155.1          -          366.4   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Software revenues

      -          289.9          10.2          223.5          -          523.6   

Consulting services and other fees

      -          71.3          2.8          113.6          -          187.7   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total revenues

      -          361.2          13.0          337.1          -          711.3   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Operating expenses:

                       

Cost of software license fees and subscriptions

      -          15.4          2.7          10.0          0.1          28.2   

Cost of product updates and support fees

      -         31.0          0.8           30.3           1.2           63.3   

Cost of consulting services and other fees

      -          56.5          2.3          88.1          2.2          149.1   

Sales and marketing

      -          56.5          9.4          51.5          1.4          118.8   

Research and development

      -          50.2          2.0          40.7          2.5          95.4   

General and administrative

      -          4.3          30.2          22.8          (7.4)          49.9   

Amortization of intangible assets and depreciation

      -          36.7          3.2          24.3          -          64.2   

Restructuring costs

      -          1.1          0.2          2.8          -          4.1   

Acquisition-related and other costs

      -          10.8          0.4          (1.4)          -          9.8   

Affiliate (income) expense, net

      -          32.4          (38.7)          6.3          -          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total operating expenses

      -          294.9          12.5          275.4          -          582.8   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Income (loss) from operations

      -          66.3          0.5          61.7          -          128.5   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Other expense, net:

                       

Interest expense, net

      -          100.1          -          0.1          -          100.2   

Affiliate interest (income) expense, net

      -          (16.8)          (0.1)          16.9          -          -   

Loss on extinguishment of debt

      -          0.7          -          -          -          0.7   

Other (income) expense, net

      -          2.8          (0.2)          10.0          -          12.6   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total other expense, net

      -          86.8          (0.3)          27.0          -          113.5   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Income (loss) before income tax

      -          (20.5)          0.8          34.7          -          15.0   

Income tax provision (benefit)

      -          (5.1)          1.5          7.0          -          3.4   

Equity in (earnings) loss of subsidiaries

      (11.6)          (27.0)          -          -          38.6          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net income (loss)

  $     11.6      $     11.6      $     (0.7)      $     27.7      $     (38.6)      $     11.6   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

Condensed Consolidating Statements of Comprehensive Income (Loss)

 

  

        Three Months Ended July 31, 2014  
(in millions)        Infor, Inc. 

 

(Parent)

        Infor (US), Inc.

 

(Subsidiary Issuer)

        Guarantor

 

  Subsidiaries  

         Non-Guarantor 

 

Subsidiaries

        Eliminations         Total

 

Consolidated

 

Net income (loss)

  $     73.5      $     73.5      $     7.6      $     79.6      $     (160.7)      $     73.5   

Other comprehensive income (loss):

                       

Unrealized gain (loss) on foreign currency translation, net of tax

      -          -          -          (57.3)          -          (57.3)   

Defined benefit plan funding status, net of tax

      -          0.1          -          0.8          -          0.9   

Unrealized gain (loss) on derivative instruments, net of tax

      -          (0.5)          -          -          -          (0.5)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total other comprehensive income (loss)

      -          (0.4)          -          (56.5)          -          (56.9)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Comprehensive income (loss)

  $     73.5      $     73.1      $     7.6      $     23.1      $     (160.7)      $     16.6   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
        Three Months Ended July 31, 2013 (recast)  
(in millions)        Infor, Inc. 

 

(Parent)

        Infor (US), Inc.

 

(Subsidiary Issuer)

        Guarantor

 

  Subsidiaries  

         Non-Guarantor 

 

Subsidiaries

        Eliminations         Total

 

Consolidated

 

Net income (loss)

  $     11.6      $     11.6      $     (0.7)      $     27.7      $     (38.6)      $     11.6   

Other comprehensive income (loss):

                       

Unrealized gain (loss) on foreign currency translation, net of tax

      -          -          -          (23.1)          -          (23.1)   

Defined benefit plan funding status, net of tax

      -          0.2          -          1.7          -          1.9   

Unrealized gain (loss) on derivative instruments, net of tax

      -          -          -          -          -          -   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total other comprehensive income (loss)

      -          0.2          -          (21.4)          -          (21.2)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Comprehensive income (loss)

  $     11.6      $     11.8      $     (0.7)      $     6.3      $     (38.6)      $     (9.6)   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

32


Table of Contents

 

Condensed Consolidating Statements of Cash Flows

 

 

        Three Months Ended July 31, 2014  
(in millions)        Infor, Inc. 

 

(Parent)

        Infor (US), Inc.

 

(Subsidiary Issuer)