10-Q 1 d294033d10q.htm FORM 10-Q Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

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

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2017

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)

(646) 336-1700

(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  ☒

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  ☒    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      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  ☒

The number of shares of our common stock outstanding on February 28, 2017, 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 January 31, 2017 and April 30, 2016      4  
  Condensed Consolidated Statements of Operations for the three and nine months ended January 31, 2017 and 2016      5  
  Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended January 31, 2017 and 2016      6  
  Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2017 and 2016      7  
  Notes to Condensed Consolidated Financial Statements      8  
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations      47  
Item 3.   Quantitative and Qualitative Disclosures about Market Risk      67  
Item 4.   Controls and Procedures      68  
PART II.   OTHER INFORMATION      69  
Item 1.   Legal Proceedings      69  
Item 1A.   Risk Factors      69  
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds      69  
Item 3.   Defaults Upon Senior Securities      69  
Item 4.   Mine Safety Disclosures      69  
Item 5.   Other Information      69  
Item 6.   Exhibits      69  
  Signatures      70  

 

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Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q for the quarter ended January 31, 2017 (this Quarterly Report on Form 10-Q), 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 April 30, 2016, filed with the SEC on June 23, 2016 (our Annual Report on Form 10-K), and those that may be discussed in this Quarterly Report on Form 10-Q 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 on Form 10-Q 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.

Available Information

We announce material information, including press releases, analyst presentations and financial information regarding the Company (as defined below), through a variety of means, including the Company’s website (www.infor.com), the Investors subpage of our website (www.infor.com/company/infor-investors-relations/), our blog (blogs.infor.com), press releases, filings with the SEC, public conference calls and social media, including the Company’s Twitter account (twitter.com/infor) and Facebook page (www.facebook.com/infor), in order to achieve broad, non-exclusionary distribution of information to the public. The Investors subpage is accessible by clicking on the tab labeled “Company” on our website home page. We also use these channels to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore, investors should look to these channels for important and time-critical information. In addition, we make available on the Investors subpage of our website (under the link “Investor News”), free of charge, our annual reports on Form 10-K and quarterly reports on Form 10-Q as soon as practicable after we electronically file such reports with the SEC. We encourage investors, the media and others interested in the Company to review the information we post on these various channels, as such information could be deemed to be material information. The information posted on our website, blog or social media is not incorporated into this Quarterly Report on Form 10-Q.

Additionally, the public may read and copy any of the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. Our electronically filed reports can also be obtained on the SEC’s internet site at http://www.sec.gov.

 

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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)

 

     January 31,     April 30,  
     2017     2016  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 412.0     $ 705.7  

Accounts receivable, net

     401.2       391.9  

Prepaid expenses

     153.8       151.2  

Income tax receivable

     76.6       61.2  

Other current assets

     23.9       22.9  

Deferred tax assets

     41.3       43.1  
  

 

 

   

 

 

 

Total current assets

     1,108.8       1,376.0  

Property and equipment, net

     155.3       125.0  

Intangible assets, net

     809.1       896.6  

Goodwill

     4,466.8       4,398.0  

Deferred tax assets

     65.5       76.1  

Other assets

     93.8       134.3  
  

 

 

   

 

 

 

Total assets

   $ 6,699.3     $ 7,006.0  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

    

Current liabilities:

    

Accounts payable

   $ 74.5     $ 116.8  

Income taxes payable

     41.1       40.7  

Accrued expenses

     403.0       432.7  

Deferred tax liabilities

     1.4       1.3  

Deferred revenue

     990.9       936.7  

Current portion of long-term obligations

     —         56.3  
  

 

 

   

 

 

 

Total current liabilities

     1,510.9       1,584.5  

Long-term debt, net

     5,604.9       5,653.7  

Deferred tax liabilities

     114.1       127.3  

Other long-term liabilities

     200.8       239.4  
  

 

 

   

 

 

 

Total liabilities

     7,430.7       7,604.9  
  

 

 

   

 

 

 

Commitments and contingencies (Note 14)

    

Redeemable noncontrolling interests

     —         140.0  

Stockholders’ deficit:

    

Common stock, $0.01 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at January 31, 2017 and April 30, 2016

     —         —    

Additional paid-in capital

     1,234.5       1,175.7  

Receivable from stockholders

     (36.9     (36.9

Accumulated other comprehensive (loss) income

     (259.0     (193.0

Accumulated deficit

     (1,679.8     (1,694.8
  

 

 

   

 

 

 

Total Infor, Inc. stockholders’ deficit

     (741.2     (749.0

Noncontrolling interests

     9.8       10.1  
  

 

 

   

 

 

 

Total stockholders’ deficit

     (731.4     (738.9
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interests and stockholders’ deficit

   $ 6,699.3     $ 7,006.0  
  

 

 

   

 

 

 

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     Nine Months Ended  
     January 31,     January 31,  
     2017     2016     2017      2016  

Revenues:

         

Software license fees

   $ 81.4     $ 87.3     $ 237.6      $ 255.2  

SaaS subscriptions

     100.1       71.7       290.9        164.7  
  

 

 

   

 

 

   

 

 

    

 

 

 

Software license fees and subscriptions

     181.5       159.0       528.5        419.9  

Product updates and support fees

     347.8       349.2       1,051.0        1,060.1  
  

 

 

   

 

 

   

 

 

    

 

 

 

Software revenues

     529.3       508.2       1,579.5        1,480.0  

Consulting services and other fees

     177.3       163.4       542.8        495.2  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total revenues

     706.6       671.6       2,122.3        1,975.2  
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating expenses:

         

Cost of software license fees (1)

     14.8       16.7       44.2        46.7  

Cost of SaaS subscriptions (1)

     43.3       29.0       123.2        69.8  

Cost of product updates and support fees (1)

     59.3       61.7       180.5        186.5  

Cost of consulting services and other fees (1)

     145.0       141.2       430.4        420.0  

Sales and marketing

     112.4       109.6       349.5        317.5  

Research and development

     111.9       114.5       335.4        313.4  

General and administrative

     54.1       52.8       156.6        143.7  

Amortization of intangible assets and depreciation

     58.0       65.6       172.9        181.0  

Restructuring costs

     7.8       12.2       37.5        20.4  

Acquisition-related and other costs

     (1.2     3.4       6.6        15.0  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total operating expenses

     605.4       606.7       1,836.8        1,714.0  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from operations

     101.2       64.9       285.5        261.2  
  

 

 

   

 

 

   

 

 

    

 

 

 

Other expense, net:

         

Interest expense, net

     79.2       80.5       239.4        231.6  

Other (income) expense, net

     (16.8     35.7       8.4        9.3  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total other expense, net

     62.4       116.2       247.8        240.9  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income (loss) before income tax

     38.8       (51.3     37.7        20.3  

Income tax provision (benefit)

     0.8       (5.7     22.3        11.2  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss)

     38.0       (45.6     15.4        9.1  

Net income (loss) attributable to noncontrolling interests

     0.4       (1.4     0.4        (2.4
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ 37.6     $ (44.2   $ 15.0      $ 11.5  
  

 

 

   

 

 

   

 

 

    

 

 

 

 

(1) Excludes amortization of intangible assets and depreciation, 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     Nine Months Ended  
     January 31,     January 31,  
     2017     2016     2017     2016  

Net income (loss)

   $ 38.0     $ (45.6   $ 15.4     $ 9.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss):

        

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

     (1.8     (11.9     (73.6     (74.3

Change in defined benefit plan funding status, net of tax

     (0.1     1.2       2.4       1.4  

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

     1.7       1.1       4.9       1.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     (0.2     (9.6     (66.3     (71.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     37.8       (55.2     (50.9     (62.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Noncontrolling interests comprehensive income (loss)

     0.2       (1.8     0.1       (2.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Infor, Inc.

   $ 37.6     $ (53.4   $ (51.0   $ (59.3
  

 

 

   

 

 

   

 

 

   

 

 

 

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)

 

     Nine Months Ended  
     January 31,  
     2017     2016  

Cash flows from operating activities:

    

Net income

   $ 15.4     $ 9.1  

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

    

Depreciation and amortization

     172.9       181.0  

Provision for doubtful accounts, billing adjustments and sales allowances

     16.5       14.7  

Deferred income taxes

     (8.0     (13.9

Non-cash loss (gain) on foreign currency

     8.4       9.5  

Non-cash interest

     20.8       19.2  

Equity-based compensation expense

     7.3       18.9  

Other

     (1.5     1.3  

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

    

Prepaid expenses and other assets

     14.7       (41.0

Accounts receivable, net

     (14.0     (16.4

Income tax receivable/payable, net

     (19.5     (18.7

Deferred revenue

     39.7       27.5  

Accounts payable, accrued expenses and other liabilities

     (116.4     30.3  
  

 

 

   

 

 

 

Net cash provided by operating activities

     136.3       221.5  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions, net of cash acquired

     (170.9     (549.6

Purchase of other investments

     (0.1     (25.0

Change in restricted cash

     (0.1     (3.2

Purchases of property, equipment and software

     (60.0     (49.4
  

 

 

   

 

 

 

Net cash used in investing activities

     (231.1     (627.2
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Equity contributions

     144.0       —    

Dividends paid

     (111.5     (35.0

Loans to stockholders

     —         (1.6

Payments on capital lease obligations

     (3.2     (2.4

Proceeds from issuance of debt

     —         495.0  

Payments on long-term debt

     (78.8     (25.6

Deferred financing and early debt redemption fees paid

     (0.8     (16.5

Purchase of noncontrolling interests

     (138.0     —    

Other

     (1.9     (1.2
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (190.2     412.7  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (8.7     (11.8
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (293.7     (4.8

Cash and cash equivalents at the beginning of the period

     705.7       526.7  
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 412.0     $ 521.9  
  

 

 

   

 

 

 

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. 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 many industries, including manufacturing, distribution, healthcare, public sector, automotive, service industries, equipment services, management and rental (ESM&R), consumer products and retail and hospitality industries. 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 software programs that are less specialized and more difficult to run in the cloud, and take more time and cost to tailor to 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. By delivering deep industry functionality coupled with lightweight integration, our customers can take advantage of these mission-critical applications and suites in the cloud, running on Amazon Web Services, a hosting services industry leader. Additionally, Infor offers the GT Nexus, Inc. (GT Nexus) supply chain network platform to connect companies with their suppliers, distributors, and 3PLs in a commerce cloud. We also provide ongoing support and maintenance services for our customers through our subscription-based annual maintenance and support programs. In addition to providing software products, we help our customers implement and use our applications more effectively through our consulting services.

We generate revenue primarily from the sale of perpetual software licenses granting customers use of our software products, providing access to software products through our Software-as-a-Service (SaaS) subscription offerings, providing product updates and support and providing consulting services to our customers.

We serve a large, diverse and specialized global customer base across three geographic regions—the Americas, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC).

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. Our investments in other non-consolidated entities are accounted for using the equity method or cost method depending upon the level of ownership and/or our ability to exercise significant influence over the operating and financial policies of the investee. 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 April 30, 2016, and other amounts presented herein as of April 30, 2016, 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 April 30, 2016, included in our Annual Report on Form 10-K.

 

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Noncontrolling Interests

We consolidate our majority-owned subsidiaries and reflect redeemable noncontrolling interests and noncontrolling interests on our Condensed Consolidated Balance Sheets for the portion of those entities that we do not own as mezzanine equity on our Condensed Consolidated Balance Sheets and as a component of consolidated equity separate from the equity attributable to Infor, Inc.’s stockholders, respectively. The redeemable noncontrolling interests’ and noncontrolling interests’ share in our net earnings are included in net income (loss) attributable to noncontrolling interests in our Condensed Consolidated Statements of Operations, and their portion of comprehensive income (loss) is included in comprehensive income (loss) attributable to noncontrolling interests in our Condensed Consolidated Statements of Comprehensive Income (Loss).

Noncontrolling interests with redemption features, such as put options, that are not solely within our control (redeemable noncontrolling interests) are reported as mezzanine equity on our Condensed Consolidated Balance Sheets, between liabilities and equity, at the greater of redemption value or initial carrying value. The redeemable noncontrolling interest that we have reported related to an 18.52% interest in GT Nexus that Infor did not own. In the second quarter of fiscal 2017, we purchased the remaining 18.52% of GT Nexus from the holders of the redeemable noncontrolling interests for $138.0 million, and GT Nexus became a wholly-owned subsidiary of the Company. See Note 3, Acquisitions – Fiscal 2016.

The following table presents a summary of the changes in the redeemable noncontrolling interests for the periods indicated:

 

     Three Months Ended     Nine Months Ended  
     January 31,     January 31,  
(in millions)    2017      2016     2017     2016  

Beginning of period

   $ —        $ 127.8     $ 140.0     $ —    

Increase due to business combination

     —          —         —         125.0  

Net loss attributable to redeemable noncontrolling interests

     —          (1.6     (0.4     (2.7

Accretion/reduction of redeemable noncontrolling interests redemption value, net

     —          7.5       (1.6     11.4  

Redemption of noncontrolling interests

     —          —         (138.0     —    
  

 

 

    

 

 

   

 

 

   

 

 

 

End of period

   $ —        $ 133.7     $ —       $ 133.7  
  

 

 

    

 

 

   

 

 

   

 

 

 

The noncontrolling interest that we report as equity on our Condensed Consolidated Balance Sheets relates to a minority interest held in an international subsidiary acquired in the GT Nexus Acquisition. See Note 3, Acquisitions – Fiscal 2016.

Cost Method Investments

We have investments in other entities where we do not hold a controlling interest. We use the cost method of accounting when our voting interests in such entities are less than 20% and we do not have the ability to exercise significant influence over the entities’ operating and financial policies. Our cost method investments are reported at cost and are included in other assets on our Condensed Consolidated Balance Sheets. Dividend income received, if any, is reported in other (income) expense, net, in our Condensed Consolidated Statements of Operations. Our cost method investments are assessed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. We have not recorded any dividends or other-than-temporary impairment charges related to our cost method investments. The fair values of our cost method investments are not readily available, and there are no quoted market prices for these investments.

In the third quarter of fiscal 2016, we acquired a 16.67% equity interest in LogicBlox-Predictix Holdings, Inc. (Predictix), for $25.0 million pursuant to the Stock Purchase Agreement dated as of January 18, 2016 (the Predictix Stock Purchase Agreement), by and among Infor Enterprise Applications, LP (Infor Enterprise), which is an affiliate of the parent company of Infor, and Predictix and the stockholder parties signatory thereto. We accounted for our investment in Predictix under the cost method in accordance with applicable accounting principles as we did not have significant influence over Predictix. As of April 30, 2016, our investment in Predictix had a carrying value of approximately $25.0 million. On June 27, 2016, we acquired the remaining issued and outstanding capital stock of Predictix and we discontinued the cost method accounting treatment from that date forward. See Note 3, Acquisitions.

 

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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 establish standards for, and requires disclosure of, certain financial information related to reportable operating segments and geographic regions. See Note 16, Segment and Geographic Information.

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, and fair value of derivative financial instruments. 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

Our fiscal year is from May 1 through April 30 and the third quarter of each fiscal year is from November 1 through January 31. Unless otherwise stated, references to the years 2017 and 2016 relate to our fiscal years ended April 30, 2017 and 2016, respectively. References to future years also relate to our fiscal years ending April 30.

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 April 30, 2016, which are included in our Annual Report on Form 10-K. 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 SaaS subscriptions, providing software support and product updates and providing consulting services to our customers. We record software license, product updates and support, and related service revenues in accordance with the guidance provided by ASC 985-605, Software—Revenue Recognition, and we record revenues related to non-software deliverables such as SaaS subscriptions and related service revenue in accordance with guidance provided by ASC 605, Revenue Recognition. Revenue is recorded net of applicable taxes.

Our software license fees revenues are primarily from sales of perpetual software licenses granting customers use of our software products. 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.

Our SaaS subscriptions revenues are primarily from granting customers access to software products through our SaaS subscription offerings. SaaS subscription revenues are recognized over the contract term once the software is made available for use in an environment hosted, supported, and maintained by Infor.

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. 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 revenues related to education, hosting services and Inforum, our customer event.

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, April 30, 2016

   $ 13.5  

Provision

     7.3  

Write-offs and recoveries

     (5.3

Currency translation effect

     (0.4
  

 

 

 

Balance, January 31, 2017

   $ 15.1  
  

 

 

 

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, April 30, 2016

   $ 10.4  

Provision

     9.2  

Write-offs

     (9.4

Currency translation effect

     (0.5
  

 

 

 

Balance, January 31, 2017

   $ 9.7  
  

 

 

 

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 applicable period. Gains or losses resulting from translation of balance sheet accounts are included as a separate component of accumulated other comprehensive income on our Condensed Consolidated Balance Sheets. Gains or losses resulting from foreign currency transactions are included in foreign currency gain or loss as a component of other (income) expense, net, in the accompanying Condensed Consolidated Statements of Operations. Foreign currency gains or losses related to intercompany transactions considered to be long-term investments are included in other comprehensive income (loss) as a net credit or charge.

Transaction gains and losses are recognized in our results of operations based on the difference between the foreign currency exchange rates on the transaction date and on the reporting date. We recognized a net foreign exchange gain of $16.8 million and a net foreign exchange loss of $35.6 million for the three months ended January 31, 2017 and 2016, respectively. In the first nine months of fiscal 2017 and 2016, we recognized a net foreign exchange loss of $8.2 million and $9.5 million, respectively.

 

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Certain foreign currency transaction gains and losses are generated from our intercompany balances that are not considered to be long-term in nature and 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.

Adoption of New Accounting Pronouncements

Not applicable

Recent Accounting Pronouncements — Not Yet Adopted

In May 2014, the FASB issued guidance on 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 was to be effective for annual reporting periods beginning after December 15, 2016 (our fiscal 2018) and early adoption was not permitted. On April 1, 2015, the FASB proposed deferring the effective date by one year to December 15, 2017, for annual reporting periods beginning after that date (our fiscal 2019). The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. 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.

In November 2015, the FASB issued guidance simplifying the balance sheet presentation of deferred taxes. Under this guidance, deferred tax assets and deferred tax liabilities are to be classified as non-current in a classified statement of financial position, amending the guidance requiring companies to separate deferred income tax liabilities and assets into current and non-current amounts. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods (our fiscal 2018), and early adoption is permitted. This guidance may be applied either prospectively to all deferred tax assets and liabilities, or retrospectively to all periods presented. The adoption of this guidance will only impact presentation on our consolidated balance sheets and related disclosures and will not have a material impact on our financial position, results of operations or cash flows. We are currently evaluating the timing of adoption of this guidance and adoption method.

In February 2016, the FASB issued a new leasing standard that will supersede current guidance related to accounting for leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under this guidance, lessees will recognize a right-of-use asset and a lease liability on their consolidated balance sheets for leases with accounting lease terms of more than 12 months. The liability recognized will be the present value of related lease payments, subject to certain adjustments. Leases will continue to be classified as either operating or finance for income statement purposes, which will affect the pattern of expense recognition in the consolidated statements of operations. The standard will be effective for the first interim period within annual periods beginning after December 15, 2018 (our fiscal 2020), with early adoption permitted. The standard is required to be adopted using the modified retrospective approach. We are currently evaluating how this guidance will impact our consolidated financial statements and related disclosures and evaluating the timing of adoption. We expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will have a significant impact on our assets and liabilities. We do not expect that this guidance will have a material impact on our results of operations or cash flows.

In August 2016, the FASB issued new guidance related to the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance will be effective for the first interim period within annual periods beginning after December 15, 2017 (our fiscal 2019), with early adoption permitted. The standard is required to be adopted using a retrospective transition method approach. We are currently evaluating how this guidance will impact the classification/presentation of these items on our consolidated statements of cash flows and related disclosures. This guidance will not have a material impact on our financial position or our results of operations.

 

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In October 2016, the FASB issued new guidance related to accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This guidance amends current GAAP which prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The update requires an entity to recognize the income tax consequences of an intra-entity transfer for assets other than inventory when the transfer occurs. The guidance will be effective for the first interim period within annual periods beginning after December 15, 2017 (our fiscal 2019), with early adoption permitted. The amendments are to be applied on a modified retrospective basis through a cumulative-effect adjustment to the balance sheet as of the beginning of the period of adoption. We are currently evaluating how this guidance will impact our financial position, results of operations and cash flows.

In November 2016, the FASB issued new guidance related to the classifications and presentation of changes in restricted cash in the statement of cash flows. This guidance requires that the statement of cash flows explain the change during the period in total of cash, cash equivalents and restricted cash. Accordingly, amounts generally described as restricted cash are to be combined with unrestricted cash when reconciling the beginning and end of period balances on the statement of cash flows. The guidance will be effective for the first interim period within annual periods beginning after December 15, 2017 (our fiscal 2019), with early adoption permitted. We are currently evaluating how this guidance will impact the classification/presentation of restricted cash on our consolidated statements of cash flows and related disclosures. This guidance will not have a material impact on our financial position or our results of operations.

In January 2017, the FASB issued guidance that clarifies the definition of a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. This guidance is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods (our fiscal 2019). Early adoption is permitted. We are currently evaluating how this guidance will impact our financial position, results of operations and cash flows.

In January 2017, the FASB issued guidance simplifying how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under this guidance, goodwill impairment will be determined based on the comparison of the fair value of a reporting unit to its carrying amount with an impairment charge recorded for the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is to be applied prospectively and is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods (our fiscal 2021). Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Upon adoption, we will adjust our goodwill testing procedures accordingly. We do not expect that this guidance will have a material impact on our financial position, results of operations or cash flows.

As of the date of this Quarterly Report on Form 10-Q, there were no other recent accounting standard updates that we have not yet adopted that we believe would have a material impact on our financial position, results of operations or cash flows.

3. Acquisitions

Fiscal 2017

Starmount

On August 2, 2016, we acquired Starmount, Inc. (Starmount) for $62.1 million, net of cash acquired and including contingent consideration of $9.7 million recorded at the time of the purchase (the Starmount Acquisition). Included in the purchase price is $23.4 million of deferred consideration, which reflects the present value of a deferred payment of $25.0 million due on the first anniversary of the closing date of the Starmount Acquisition. The total purchase price may also include up to an additional $10.3 million if certain future performance conditions are met. Based in Austin, Texas, Starmount is a modern store systems provider serving large and mid-market retailers. Starmount is an innovative mobile-first company providing point-of-sale, mobile shopping assistant, and store inventory management products along with a data-rich commerce hub to engage shoppers, streamline operations, and support consistent cross-channel customer interactions. The Starmount Acquisition will enable us to accelerate delivery of our Infor CloudSuite Retail suite of enterprise applications. The operating results related to this acquisition have been included in our Condensed Consolidated Financial Statements from the acquisition date.

We have recorded approximately $15.1 million of identifiable intangible assets and $49.3 million of goodwill related to the Starmount Acquisition. The acquired intangible assets relating to Starmount’s trade name, existing technology and customer relationships are being amortized over their weighted average estimated useful lives of approximately one, seven and nine years, respectively. We have determined that the goodwill arising from the Starmount Acquisition will not be deductible for tax purposes.

 

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Predictix

On June 27, 2016, we acquired the remaining issued and outstanding capital stock in LogicBlox-Predictix Holdings, Inc., for approximately $125.7 million, net of cash acquired (the Predictix Acquisition). This is in addition to the 16.67% equity interest we acquired in the third quarter of fiscal 2016 for $25.0 million. See Note 1, Nature of Business and Basis of Presentation, Cost Method Investments. Based in Atlanta, Georgia, Predictix is a provider of cloud-native, predictive, and machine-learning solutions for retailers. Predictix uses next-generation data science and big data analytics to help solve some of the most complex and challenging problems faced by retailers today. The Predictix Acquisition complements and further expands offerings under Infor CloudSuite Retail, our suite of enterprise applications delivered in the cloud and designed for today’s retailing landscape. The merger consideration was partially funded through a new capital contribution made to Infor’s parent company by its current equity holders, investment funds affiliated with Golden Gate Capital and investment funds affiliated with Summit Partners. See Note 17, Related Party Transactions- Equity Contributions. The operating results related to this acquisition have been included in our Condensed Consolidated Financial Statements from the acquisition date.

We have recorded approximately $37.0 million of identifiable intangible assets and $122.7 million of goodwill related to the Predictix Acquisition. The acquired intangible assets relating to Predictix’ existing technology and customer relationships are being amortized over their weighted average estimated useful lives of approximately five and twelve years, respectively. We have determined that the goodwill arising from the Predictix Acquisition will not be deductible for tax purposes.

Merit

On May 11, 2016, we acquired Merit Globe AS (Merit) for $23.7 million, net of cash acquired and including contingent consideration of $7.5 million recorded at the time of the purchase (the Merit Acquisition). The total purchase price may also include up to an additional $4.5 million if certain future performance conditions are met. Based in Norway, Merit is a consulting firm specializing in Infor M3 products and services with approximately 250 employees and more than 500 customers in 22 countries, with a concentration in Europe. The Merit Acquisition brings decades of experience of Infor M3 consulting services that will expand and enhance Infor’s professional services’ capabilities, particularly in the large and growing European Infor M3 customer base. The operating results related to this acquisition have been included in our Condensed Consolidated Financial Statements from the acquisition date.

We have recorded approximately $9.0 million of identifiable intangible assets and $15.8 million of goodwill related to the Merit Acquisition. The acquired intangible assets relating to Merit’s trade name, existing technology and customer relationships are being amortized over their weighted average estimated useful lives of approximately two, two and eight years, respectively. We have determined that the goodwill arising from the Merit Acquisition will not be deductible for tax purposes.

Our estimates of fair value and resulting allocation of purchase price related to the acquisitions of Starmount, Predictix and Merit are preliminary as of January 31, 2017. We are in the process of finalizing the valuation of certain assets and liabilities, primarily income tax liabilities, and as a result the final allocation of the adjusted purchase prices may differ from the information presented in these unaudited Condensed Consolidated Financial Statements. These acquisitions were not significant for financial reporting purposes, and their related results were not material to our results for the three months and nine months ended January 31, 2017.

Fiscal 2016

On September 18, 2015, we acquired a majority ownership stake of 81.48% in GT Nexus, for $549.9 million, net of cash acquired (the GT Nexus Acquisition). GT Nexus is a cloud-based supply chain management firm based in Oakland, California. GT Nexus is the cloud platform that some of the world’s largest companies, across many sectors, including manufacturing and retail, use to monitor and orchestrate their global supply chains including automation of sourcing, trade finance and logistics operations. The GT Nexus Acquisition complemented and further expanded our global SCM offerings. The results of operations of GT Nexus have been included in our results of operations from the date of the GT Nexus Acquisition.

The total consideration for the GT Nexus Acquisition was funded through the issuance of our 5.75% senior secured notes due 2020 (see Note 11, Debt – Senior Secured Notes), together with cash on hand and equity issued to certain shareholders and management of GT Nexus. The acquired intangible assets relating to GT Nexus’ existing technology, existing customer relationships and tradenames are being amortized over their weighted average estimated useful lives of approximately six, twelve and three years, respectively. The excess of the consideration transferred over the fair values of the net assets acquired and liabilities assumed was recorded as goodwill, which represented operating efficiencies expected to be realized. We determined that the goodwill arising from the GT Nexus Acquisition would not be deductible for tax purposes.

 

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The remaining 18.52% redeemable noncontrolling interest in GT Nexus included two redemption features: call options exercisable by the Company and put options exercisable by the redeemable noncontrolling interest holders. Given that the noncontrolling interests were redeemable at the option of the holders, they were reported in the mezzanine section between liabilities and equity on our Condensed Consolidated Balance Sheets. The redeemable noncontrolling interests were puttable at a redemption price of $150.0 million on the first anniversary of the acquisition date. Therefore, we were accreting the redeemable noncontrolling interests, using the effective interest method, from the acquisition date fair value to the redemption value over a one-year period. Accretion adjustments to the carrying value of the redeemable noncontrolling interests were considered deemed dividends and were recorded against additional paid-in capital.

In the second quarter of fiscal 2017, we exercised our call option pursuant to the Stock Rollover and Equity Purchase Agreement entered into in relation to the GT Nexus Acquisition, which allowed us to purchase the remaining 18.52% of GT Nexus from the holders of the redeemable noncontrolling interests in GT Nexus. We exercised the call option at a call price of $138.0 million. With our purchase of this remaining interest, GT Nexus became a wholly-owned subsidiary of the Company. See Note 1, Nature of Business and basis of Presentation – Noncontrolling Interests, and Note 18, Supplemental Guarantor Financial Information.

Platform Settlement Services, LLC (PSS), a wholly-owned subsidiary of GT Nexus, is a bankruptcy-remote special purpose entity. PSS was established for the purpose of facilitating the settlement of transactions between GT Nexus customers and their supply chain providers. PSS acts as a collection and paying agent, receiving funds from customers and forwarding to appropriate credit parties. PSS is a custodian of the cash received from its customers and has no legal ownership rights to the funds held in such custodial accounts. Therefore, we do not report any cash in transit in the bank accounts of PSS at period end, nor any cash movements during a reporting period, in our Condensed Consolidated Financial Statements. The balance of cash in transit in custodial accounts held by PSS was $24.4 million and $54.2 million at January 31, 2017 and April 30, 2016, respectively.

Contingent Consideration

The agreements related to certain of our acquisitions include contingent consideration provisions. 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.

The purchase consideration related to one of our pre-fiscal 2016 acquisitions included additional contingent cash consideration payable to the sellers if certain performance conditions were met as detailed in the applicable agreement. As of January 31, 2017, we estimated the fair value of the remaining contingent consideration to be $1.7 million, which we anticipate will be paid in the fourth quarter of fiscal 2017.

In addition, the purchase consideration related to the Merit Acquisition and the Starmount Acquisition includes additional contingent cash consideration payable to the sellers if certain future performance conditions are met as detailed in the applicable purchase agreements. The potential undiscounted amount of future payments that we may be required to make related to the contingent consideration is between $0.0 and $32.0 million. As of January 31, 2017, we have recorded a liability for the estimated fair value of these contingent consideration arrangements of approximately $14.0 million.

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, April 30, 2016

   $ 1,259.1      $ 2,844.5      $ 294.4      $ 4,398.0  

Goodwill acquired

     154.0        2.9        33.2        190.1  

Currency translation effect

     (27.1      (85.6      (8.6      (121.3
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, January 31, 2017

   $ 1,386.0      $ 2,761.8      $ 319.0      $ 4,466.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Goodwill acquired during the first nine months of fiscal 2017 totaled $190.1 million and primarily related to the Starmount Acquisition, Predictix Acquisition, and the Merit Acquisition. See Note 3, Acquisitions.

 

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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 indicates 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 2017. We chose to perform a Step 1 goodwill impairment assessment as of September 30, 2016. 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 January 31, 2017. 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 January 31, 2017 and April 30, 2016:

 

     January 31, 2017  
     Fair Value Measurements Using Inputs Considered as         
(in millions)    Level 1      Level 2      Level 3      Fair Value  

Assets

           

Cash equivalents

   $ 10.0      $ —        $ —        $ 10.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 10.0      $ —        $ —        $ 10.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Contingent consideration

   $ —        $ —        $ 15.7      $ 15.7  

Derivative instruments

     —          7.5        —          7.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ 7.5      $ 15.7      $ 23.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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     April 30, 2016  
     Fair Value Measurements Using Inputs Considered as         
(in millions)    Level 1      Level 2      Level 3      Fair Value  

Assets

           

Cash equivalents

   $ 80.0      $ —        $ —        $ 80.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 80.0      $ —        $ —        $ 80.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Contingent consideration

   $ —        $ —        $ 1.7      $ 1.7  

Derivative instruments

     —          15.4        —          15.4  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ 15.4      $ 1.7      $ 17.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash equivalents include funds held in money market instruments, 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 Condensed 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 acquisitions. The estimated fair value of the contingent consideration was based primarily on our estimates of meeting the applicable contingency conditions as per the terms of the applicable agreements. These include estimates of various operating performance measures and our assessment of the probability of meeting such results, with the probability-weighted earn-out then discounted to estimate fair value. The various operating performance measures included in these contingent consideration agreements relate to revenue growth rates, the level of services, license and SaaS revenues, the ratio of EBITDA to total revenue, and the level of EBITDA. As these are unobservable inputs, the contingent consideration liabilities are 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. 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 2017 or fiscal 2016. The following table reconciles the change in our Level 3 assets/liabilities for the periods indicated:

 

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

Balance, April 30, 2016

   $ 1.7  

Contingent consideration

     17.2  

Currency translation effect

     (0.4

Total (gain) loss recorded in earnings

     (2.8
  

 

 

 

Balance, January 31, 2017

   $ 15.7  
  

 

 

 

 

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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 January 31, 2017, 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.

As allowed by applicable FASB guidance, we have elected not to apply the fair value option for financial assets and liabilities to any of our currently eligible financial assets or liabilities. As of January 31, 2017 and April 30, 2016, our material financial assets and liabilities not carried at fair value included our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. These financial instruments are recorded at their carrying values which are deemed to approximate fair value, generally 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, 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 January 31, 2017 and April 30, 2016, the total carrying value of our long-term debt was approximately $5.6 billion and $5.7 billion, respectively, and the estimated fair value of our long-term debt was approximately $5.8 billion and $5.6 billion, respectively.

6. Accounts Receivable, Net

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

 

     January 31,      April 30,  
(in millions)    2017      2016  

Accounts receivable

   $ 362.0      $ 363.0  

Unbilled accounts receivable

     54.3        42.4  

Less: allowance for doubtful accounts

     (15.1      (13.5
  

 

 

    

 

 

 

Accounts receivable, net

   $ 401.2      $ 391.9  
  

 

 

    

 

 

 

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, Net

Our intangible assets, net consist of the following for the periods indicated:

 

     January 31, 2017      April 30, 2016         
(in millions)    Gross
Carrying
Amounts
     Accumulated
Amortization
     Net (1)      Gross
Carrying
Amounts
     Accumulated
Amortization
     Net      Estimated
Useful Lives
(in years)
 

Customer contracts and relationships

   $ 1,994.2      $ 1,347.2      $ 647.0      $ 2,004.0      $ 1,305.2      $ 698.8        2 - 15  

Acquired and developed technology

     1,123.0        967.4        155.6        1,126.7        936.7        190.0        1 - 11  

Tradenames

     137.5        131.0        6.5        138.3        130.5        7.8        1 - 20  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ 3,254.7      $ 2,445.6      $ 809.1      $ 3,269.0      $ 2,372.4      $ 896.6     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

(1) Net intangible assets decreased from April 30, 2016 to January 31, 2017 by approximately $11.2 million due to cumulative foreign currency translation adjustments, reflecting movement in the currencies of the applicable underlying entities.

 

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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      Nine Months Ended  
     January 31,      January 31,  
(in millions)    2017      2016      2017      2016  

Customer contracts and relationships

   $ 26.6      $ 37.7      $ 82.1      $ 104.7  

Acquired and developed technology

     19.2        18.5        57.1        51.0  

Tradenames

     0.7        0.6        2.1        1.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 46.5      $ 56.8      $ 141.3      $ 156.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

The estimated future annual amortization expense related to these intangible assets as of January 31, 2017, was as follows:

 

(in millions)       

Fiscal 2017 (remaining 3 months)

   $ 46.4  

Fiscal 2018

     141.6  

Fiscal 2019

     122.1  

Fiscal 2020

     113.2  

Fiscal 2021

     106.2  

Fiscal 2022

     64.5  

Thereafter

     215.1  
  

 

 

 

Total

   $ 809.1  
  

 

 

 

8. Accrued Expenses

Accrued expenses consisted of the following for the periods indicated:

 

     January 31,      April 30,  
(in millions)    2017      2016  

Compensation and employee benefits

   $ 157.6      $ 165.9  

Taxes other than income

     24.9        26.9  

Royalties and partner commissions

     41.1        55.5  

Litigation

     2.5        1.9  

Professional fees

     12.9        8.5  

Subcontractor expense

     7.8        6.2  

Interest

     52.5        77.8  

Restructuring

     26.4        14.9  

Asset retirement obligations

     0.7        2.3  

Deferred rent

     2.8        2.9  

Deferred acquisition payments

     33.7        1.7  

Other

     40.1        68.2  
  

 

 

    

 

 

 

Accrued expenses

   $ 403.0      $ 432.7  
  

 

 

    

 

 

 

 

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Included above in other accrued expenses as of April 30, 2016, was approximately $17.5 million pertaining to dividends accrued related to our funding of interest on our affiliate company’s debt. These dividends were settled in the first quarter of fiscal 2017. See Note 17, Related Party Transactions – Dividends Paid to Affiliates.

9. Equity-Based Compensation

We account for equity-based payments, including grants of employee stock options, 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 Infor Enterprise. Pursuant to applicable FASB guidance related to equity-based awards, we have reflected equity-based 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 equity-based compensation expense recognized in our Condensed Consolidated Statements of Operations, by category, for the periods indicated:

 

     Three Months Ended      Nine Months Ended  
     January 31,      January 31,  
(in millions)    2017      2016      2017      2016  

Cost of product updates and support fees

   $ 0.1      $ 0.1      $ 0.2      $ 0.2  

Cost of consulting services and other fees

     —          —          0.1        —    

Sales and marketing

     0.3        1.4        1.3        2.1  

Research and development

     0.1        10.8        0.6        11.4  

General and administrative

     0.7        3.4        5.1        5.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1.2      $ 15.7      $ 7.3      $ 18.9  
  

 

 

    

 

 

    

 

 

    

 

 

 

10. Restructuring Charges

We have recorded restructuring charges related to our acquisitions and on occasion 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 include employee severance costs and costs related to the reduction of office space. 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 2017 Restructuring Charges

During the first nine months of fiscal 2017, we incurred restructuring costs of $38.0 million related to employee severance costs primarily for personnel actions taken in our EMEA region affecting all functional areas, and for facility charges related to exiting or consolidation of space in facilities in the Americas region. During the first nine months of fiscal 2017, we made cash payments of approximately $13.9 million related to these actions. We expect to complete the remainder of these actions over the next twelve months.

Fiscal 2017 Acquisition-Related Charges

During the first nine months of fiscal 2017, we incurred restructuring costs of $1.5 million in employee severance costs and for facility charges related to the operations of our current year acquisitions. During the first nine months of fiscal 2017, we made cash payments of $0.7 million related to these actions. We expect to complete these actions during the remainder of fiscal 2017.

 

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Fiscal 2016 Restructuring Charges

During fiscal 2016, we incurred restructuring costs for employee severance costs related to personnel actions across all functions primarily in the Americas and EMEA regions, and for facility charges related to exiting or consolidation of space in facilities primarily in the Americas region. During the first nine months of fiscal 2017, we recorded restructuring cost reversals of $2.3 million and we made cash payments of approximately $8.0 million related to these actions. We expect to complete these actions during the remainder of fiscal 2017.

Fiscal 2016 Acquisition-Related Charges

During fiscal 2016, we incurred acquisition-related restructuring costs primarily related to the operations of GT Nexus that we acquired in the second quarter of fiscal 2016. These restructuring charges included employee severance costs related to redundant positions and facility charges related to exiting or consolidation of space. During the first nine months of fiscal 2017, we recorded adjustments to these restructuring costs of $0.5 million and we made cash payments of $1.8 million related to these actions. We expect to complete these actions during the remainder of fiscal 2017.

Previous Restructuring and Acquisition-Related Charges

Prior to fiscal 2016, we had completed certain restructuring activities as well as a series of acquisition-related restructuring actions. During the first nine months of fiscal 2017, we recorded restructuring cost reversals of $0.2 million and we made net cash payments of $0.6 million related to these actions. 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.

The following table sets forth the reserve activity related to our restructuring plans for the nine-month period ended January 31, 2017. 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), adjustments to the accrual that were reclasses between balance sheet accounts (Other), or adjustments to the accrual that were related to the impact of fluctuations in foreign currency exchange rates (Foreign Currency Effect):

 

                   Adjustment to Costs                            
(in millions)    Balance
April 30,
2016
     Initial
Costs
     Expense     Other     Foreign
Currency
Effect
    Cash
Payments
    Balance
January 31,
2017
     Total Costs
Recognized
to Date
     Total
Expected
Program
Costs
 

Fiscal 2017 restructuring

                      

Severance

   $ —        $ 36.3      $ —       $ —       $ (0.7   $ (13.7   $ 21.9      $ 36.3      $ 36.3  

Facilities and other

     —          1.7        —         0.5       —         (0.2     2.0        2.2        2.2  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2017 restructuring

     —          38.0        —         0.5       (0.7     (13.9     23.9        38.5        38.5  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2017 acquisition-related

                      

Severance

     —          0.7        —         —         —         (0.5     0.2        0.7        0.7  

Facilities and other

     —          0.8        —         —         —         (0.2     0.6        0.7        0.7  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2017 acquisition-related

     —          1.5        —         —         —         (0.7     0.8        1.4        1.4  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2016 restructuring

                      

Severance

     11.1        —          (2.3     (0.8     (0.3     (6.2     1.5        15.9        15.9  

Facilities and other

     4.0        —          —         0.7       —         (1.8     2.9        5.3        5.3  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2016 restructuring

     15.1        —          (2.3     (0.1     (0.3     (8.0     4.4        21.2        21.2  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2016 acquisition-related

                      

Severance

     0.7        —          —         —         —         (0.6     0.1        1.3        1.3  

Facilities and other

     3.1        —          0.5       (0.1     —         (1.2     2.3        4.1        4.1  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2016 acquisition-related

     3.8        —          0.5       (0.1     —         (1.8     2.4        5.4        5.4  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Previous restructuring

                      

Severance

     0.5        —          (0.2     —         —         (0.3     —          22.7        22.7  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total previous restructuring

     0.5        —          (0.2     —         —         (0.3     —          22.7        22.7  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Previous acquisition-related

                      

Severance

     0.1        —          —         —         0.1       —         0.2        40.5        40.5  

Facilities and other

     0.3        —          —         —         —         (0.3     —          4.0        4.0  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total previous acquisition-related

     0.4        —          —         —         0.1       (0.3     0.2        44.5        44.5  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total restructuring

   $ 19.8      $ 39.5      $ (2.0   $ 0.3     $ (0.9   $ (25.0   $ 31.7      $ 133.7      $ 133.7  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

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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      Nine Months Ended  
     January 31,      January 31,  
(in millions)    2017      2016      2017      2016  

License

   $ 1.3      $ 3.5      $ 3.9      $ 5.1  

Maintenance

     0.6        1.2        7.9        2.4  

Consulting

     2.8        1.8        8.6        2.9  

General and administrative and other functions

     3.1        5.7        17.1        10.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total restructuring costs

   $ 7.8      $ 12.2      $ 37.5      $ 20.4  
  

 

 

    

 

 

    

 

 

    

 

 

 

11. Debt

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

 

     January 31, 2017     April 30, 2016  
     Principal     Net      Contractual     Principal     Net     Contractual  
(in millions)    Amount     Amount (1)      Rate     Amount     Amount (1)     Rate  

First lien Term B-3 due June 3, 2020

   $ 451.1     $ 448.1        3.75   $ 461.8     $ 458.1       3.75

First lien Term B-5 due June 3, 2020

     2,387.7       2,326.3        3.75     2,447.5       2,373.2       3.75

First lien Euro Term B due June 3, 2020

     355.8       352.3        4.00     386.2       382.0       4.00

5.75% first lien senior secured notes due August 15, 2020

     500.0       484.2        5.75     500.0       481.1       5.75

6.5% senior notes due May 15, 2022

     1,630.0       1,620.7        6.50     1,630.0       1,619.7       6.50

5.75% senior notes due May 15, 2022

     377.9       373.3        5.75     401.0       395.9       5.75

Deferred financing fees, debt discounts and premiums, net

     (97.6     —            (116.5     —      
  

 

 

   

 

 

      

 

 

   

 

 

   

Total long-term debt

     5,604.9       5,604.9          5,710.0       5,710.0    

Less: current portion

     —         —            (56.3     (56.3  
  

 

 

   

 

 

      

 

 

   

 

 

   

Total long-term debt - non-current

   $ 5,604.9     $ 5,604.9        $ 5,653.7     $ 5,653.7    
  

 

 

   

 

 

      

 

 

   

 

 

   

 

(1) Debt balances net of applicable unamortized debt discounts, premiums and deferred financing fees.

 

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The weighted average contractual interest rate at January 31, 2017 and April 30, 2016 was 4.86% and 4.85%, respectively. The effective interest rate of each of our debt obligations is not materially different from the contractual interest rate.

The following table summarizes our future repayment obligations related to the principal debt balances for all of our borrowings as of January 31, 2017:

 

Fiscal 2017 (remaining 3 months)

   $ —    

Fiscal 2018

     —    

Fiscal 2019

     —    

Fiscal 2020

     4.2  

Fiscal 2021

     3,690.5  

Fiscal 2022

     —    

Thereafter

     2,007.8  
  

 

 

 

Total

   $ 5,702.5  
  

 

 

 

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 which consists of a secured revolving credit facility and a secured term loan facility (the Credit Agreement), which was subsequently amended. See Note 12, Debt, in notes to the consolidated financial statements for the fiscal year ended April 30, 2016, included in our Annual Report on Form 10-K, for a description of each amendment (First Amendment through Sixth Amendment; Seventh and Eighth Amendments described below).

The credit facilities are guaranteed by Infor, Inc. and certain of our wholly-owned domestic subsidiaries (the Guarantors), 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 that 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 $120.0 million. We have made no draws against the Revolver and no amounts are currently outstanding. However, $11.5 million of letters of credit have reduced the amount available under the Revolver to $108.5 million as of January 31, 2017. Pursuant to the Credit Agreement, there is an undrawn line fee of 0.50% and the Revolver matures on April 5, 2019. 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.

On August 15, 2016, we entered into the Seventh Amendment to the Credit Agreement. The Seventh Amendment provided for, among other modifications to the Credit Agreement as set forth therein, a two-year extension of the maturity date for the Revolver under the Credit Agreement to April 5, 2019, as well as a reduction in the aggregate size of the Revolver from $150.0 million to $120.0 million, with commensurate reductions in related sublimits.

 

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Table of Contents

Term Loans

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.

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 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 certain situations.

Refinancing Amendment

Subsequent to quarter end, on February 6, 2017, we entered into the Eighth Amendment to our Credit Agreement, which refinanced all of the outstanding balances of our first lien term loans including our Tranche B-3 Term Loan, our Tranche B-5 Term Loan, and our Euro Tranche B Term Loan, with the proceeds of a new $2,147.1 million term loan (the Tranche B-6 Term Loan) and a new €1,000.0 million term loan (the Euro Tranche B-1 Term Loan). See Note 19, Subsequent Events – Refinancing Amendment.

Senior Notes

Our 6.5% and 5.75% Senior Notes (the Senior Notes) bear interest at the applicable rates per annum, which is payable semi-annually in cash in arrears, on May 15 and November 15 each year. The Senior Notes mature on May 15, 2022. 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 indenture governing the Senior Notes, we are subject to certain customary affirmative and negative covenants.

First Lien Senior Secured Notes

On August 25, 2015, in connection with the GT Nexus Acquisition, we issued $500.0 million in aggregate principal amount of 5.75% first lien senior secured notes (the Senior Secured Notes) at an issue price of 99.00%. The Senior Secured Notes mature on August 15, 2020, and bear interest at the applicable rate per annum that is payable semi-annually in cash in arrears, on February 15 and August 15 each year, beginning on February 15, 2016.

The Senior Secured Notes are first lien senior secured obligations of Infor (US), Inc. and are fully and unconditionally guaranteed on a senior secured basis by Infor, Inc., and certain of our existing and future wholly-owned domestic subsidiaries. Under the indenture governing the Senior Secured Notes, we are subject to certain customary affirmative and negative covenants.

On October 12, 2016, we entered into supplemental indentures to the indentures governing the Senior Notes and the Senior Secured Notes to add Starmount, Inc. as a guarantor of each of such notes.

Unrestricted Subsidiary

We have designated Infor Retail Holdings, Inc. (Infor Retail Holdings), a wholly-owned subsidiary of Infor (US), Inc., as an “Unrestricted Subsidiary” as defined under the provisions of the Credit Agreement and the indentures governing our Senior Notes and Senior Secured Notes. The financial position and results of operations of Infor Retail Holdings are included in our Condensed Consolidated Financial Statements. As required by the Credit Agreement and the indentures governing our Senior Notes and Senior Secured Notes, we are to present information sufficient to ascertain our financial condition and results of operations excluding our Unrestricted Subsidiaries.

 

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Infor Retail Holdings includes the financial position and results of operations of Predictix, which we acquired in the first quarter of fiscal 2017. See Note 3, Acquisitions. As of April 30, 2016, prior to the Predictix Acquisition, the financial position of Infor Retail Holdings only reflected our $25.0 million investment in Predictix, acquired in the third quarter of fiscal 2016, with an offsetting credit in equity. See Note 1, Nature of Business and Basis of Presentation – Cost Method Investments. This investment was included in other assets on our Condensed Consolidated Balance Sheets as of April 30, 2016. On June 27, 2016, we acquired the remaining issued and outstanding capital stock of Predictix.

Infor Retail Holdings’ financial position as of January 31, 2017 and its results of operations for the first nine months of fiscal 2017 were not significant to our consolidated financial position and results of operations as of and for the period ended January 31, 2017. Infor Retail Holdings held assets totaling $156.4 million, primarily intangible assets and goodwill, and liabilities of $7.7 million as of January 31, 2017. For the nine months ended January 31, 2017, Infor Retail Holdings recorded revenues of $12.9 million and a loss from operations of $8.3 million.

Deferred Financing Fees, Debt Discounts and Premiums

As of January 31, 2017 and April 30, 2016, deferred financing fees, net of amortization, related to our Term Loans, Senior Notes, and Secured Senior Notes of $84.9 million and $100.2 million, respectively, were reflected on our Condensed Consolidated Balance Sheets as a direct reduction in the carrying amount of our long-term debt. In addition, we had deferred financing fees, net of amortization, related to the Revolver of $1.3 million and $1.2 million as of January 31, 2017 and April 30, 2016, respectively, which were reflected on our Condensed Consolidated Balance Sheets in other assets. During the second quarter of fiscal 2017, in conjunction with the Seventh Amendment to our Credit Agreement, we capitalized an additional $0.8 million of deferred financing fees related to the Revolver. The new and existing deferred finance fees related to the Revolver are being amortized over approximately two and a half years through the extended maturity date of April 5, 2019. For the three months ended January 31, 2017 and 2016, we amortized $5.3 million and $5.3 million, respectively, in deferred financing fees which are included in interest expense, net in our Condensed Consolidated Statements of Operations. For the first nine months of fiscal 2017 and 2016, we amortized $15.9 million and $14.7 million, respectively, in deferred financing fees.

In addition, we have recorded debt discounts, net of premiums and accumulated amortization, of $12.7 million and $16.3 million as of January 31, 2017 and April 30, 2016, respectively, as a direct reduction of the carrying amount of our long-term debt.

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 not reflected in our Condensed Consolidated Financial Statements for any of the periods presented. These affiliate company borrowings are described below.

Holding Company PIK Notes

On April 8, 2014, Infor Software Parent, LLC (HoldCo), an indirect holding company of Infor, Inc., 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.

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, accrues at a rate of 7.125% per annum. PIK interest on the HoldCo Notes accrues at a rate of 7.875% per annum. As of January 31, 2017 and April 30, 2016, 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. See Note 17, Related Party Transactions – Dividends Paid to Affiliates.

The HoldCo Notes are HoldCo’s general unsecured senior obligations and are not guaranteed by any of HoldCo’s 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 the Senior Notes.

 

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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     Nine Months Ended  
     January 31,     January 31,  
(in millions, except percentages)    2017     2016     2017     2016  

Income tax provision (benefit)

   $ 0.8     $ (5.7   $ 22.3     $ 11.2  

Effective income tax rate

     2.1     11.1     59.2     55.2

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.

The change in our effective tax rate for the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016 was primarily driven by a decrease in the mix of U.S. based earnings, a reduction in tax from the creation of U.S. tax credits, a reduction in the valuation allowances for various foreign deferred tax assets, and a decrease in deferred tax liabilities recorded as a result of a tax law change in the United Kingdom.

The change in our effective tax rate for the first nine months of fiscal 2017 compared to the corresponding period of fiscal 2016 was primarily driven by an increase in the liabilities recorded for unrecognized tax benefits, a reduction in permanent non-deductible costs subject to U.S. tax, a decrease in taxes from the creation of U.S. tax credits, and a reduction in the valuation allowances for various foreign deferred tax assets.

During the upcoming twelve months ending January 31, 2018, we expect a net reduction of approximately $22.4 million of unrecognized tax benefits, primarily due to the expiration of statutes of limitation in various jurisdictions.

Our net deferred tax assets were $106.8 million and $119.2 million as of January 31, 2017 and April 30, 2016, respectively. 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 (loss) 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).

 

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

 

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

Balance, April 30, 2016

   $ (167.4    $ (16.1    $ (9.5    $ (193.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

     (73.6      2.4        4.9        (66.3

Less: other comprehensive income (loss) attributable to noncontrolling interests

     0.3        —          —          0.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss) attributable to Infor, Inc.

     (73.3      2.4        4.9        (66.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, January 31, 2017

   $ (240.7    $ (13.7    $ (4.6    $ (259.0
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Funded status of defined benefit pension plan is presented net of tax benefit of $4.0 million and $4.0 million as of January 31, 2017 and April 30, 2016, respectively.
(2) Derivative instruments unrealized gain (loss) is presented net of tax benefit of $2.9 million and $5.9 million as of January 31, 2017 and April 30, 2016, respectively.

The components of other comprehensive income (loss), including amounts reclassified out of accumulated other comprehensive income (loss), were as follows for the periods indicated:

 

(in millions)

Three Months Ended

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

January 31, 2017

        

Foreign currency translation adjustment

   $ (1.8    $ —        $ (1.8

Change in funded status of defined benefit plans

     (0.1      —          (0.1

Derivative instruments unrealized loss

     (0.2      —          (0.2

Reclassification adjustments:

        

Amortization of derivative instruments unrealized loss

     3.0        (1.1      1.9  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ 0.9      $ (1.1    $ (0.2
  

 

 

    

 

 

    

 

 

 

January 31, 2016

        

Foreign currency translation adjustment

   $ (11.9    $ —        $ (11.9

Change in funded status of defined benefit plans

     1.2        —          1.2  

Derivative instruments unrealized loss

     (1.2      0.4        (0.8

Reclassification adjustments:

        

Amortization of derivative instruments unrealized loss

     3.0        (1.1      1.9  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ (8.9    $ (0.7    $ (9.6
  

 

 

    

 

 

    

 

 

 

 

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(in millions)

Nine Months Ended

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

January 31, 2017

        

Foreign currency translation adjustment

   $ (73.6    $ —        $ (73.6

Change in funded status of defined benefit plans

     2.4        —          2.4  

Derivative instruments unrealized gain (loss)

     (1.0      0.3        (0.7

Reclassification adjustments:

        

Amortization of derivative instruments unrealized loss

     9.0        (3.4      5.6  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ (63.2    $ (3.1    $ (66.3
  

 

 

    

 

 

    

 

 

 

January 31, 2016

        

Foreign currency translation adjustment

   $ (74.3    $ —        $ (74.3

Change in funded status of defined benefit plans

     1.4        —          1.4  

Derivative instruments unrealized gain (loss)

     (6.1      2.3        (3.8

Reclassification adjustments:

        

Amortization of derivative instruments unrealized loss

     8.9        (3.4      5.5  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ (70.1    $ (1.1    $ (71.2
  

 

 

    

 

 

    

 

 

 

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 $14.4 million for the three-month periods ended January 31, 2017 and 2016, respectively. For the first nine months of fiscal 2017 and 2016, total rent expense for operating leases was $42.8 million and $40.6 million, respectively.

We have also entered into certain capital lease commitments for buildings, company aircraft, computers and operating equipment and automobiles. 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. Our total capital lease obligations were $9.8 million and $5.8 million as of January 31, 2017, and April 30, 2016, respectively.

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 January 31, 2017 and April 30, 2016, we have accrued $2.5 million and $1.9 million, respectively, related to current litigation matters. We expense all legal costs to resolve regulatory, legal, tax or other matters in the period incurred.

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 do not have a history of incurring costs to settle claims or paying awards under these indemnification obligations. Accordingly, we have not recorded any liabilities related to these agreements as of January 31, 2017 and April 30, 2016.

 

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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 designated these instruments as cash flow hedges upon initiation, they have been highly effective since their inception, and we anticipate that they will be highly effective on an on-going basis. These interest rate swaps had an 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    January 31,     April 30,  
(in millions, except percentages)    Amount      Base    

Asset (Liability)

   2017     2016  

Accounting cash flow hedges:

            

Interest rate swap

   $ 425.3        2.4725   Accrued expenses    $ (3.3   $ (5.2
        Other long-term liabilities      —         (1.7

Interest rate swap

     212.6        2.4740   Accrued expenses      (1.7     (2.6
        Other long-term liabilities      —         (0.9

Interest rate swap

     212.6        2.4750   Accrued expenses      (1.7     (2.6
        Other long-term liabilities      —         (0.9

Interest rate swap

     94.5        2.4725   Accrued expenses      (0.8     (1.1
        Other long-term liabilities      —         (0.4
  

 

 

         

 

 

   

 

 

 

Total

   $ 945.0        Total, net asset (liability)    $ (7.5   $ (15.4
  

 

 

         

 

 

   

 

 

 

The following table presents the before-tax 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:

 

            Three Months Ended     Nine Months Ended  
     Statement of      January 31,     January 31,  
(in millions)    Operations Location      2017     2016     2017     2016  

Accounting cash flow hedges:

           

Interest rate swaps

           

Effective portion - gain (loss) recognized in OCI

      $ (0.2   $ (1.2   $ (1.0   $ (6.1
     

 

 

   

 

 

   

 

 

   

 

 

 

(Gain) loss reclassified from AOCI into net income

     Interest expense, net      $ 3.0     $ 3.0     $ 9.0     $ 8.9  
     

 

 

   

 

 

   

 

 

   

 

 

 

We have no other derivative 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 January 31, 2017, approximately $7.5 million 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 12 months. This estimate is based on the 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 eight months.

 

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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 chief operating decision-maker (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 HCM, 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 resulting from products licensed to our customers on a perpetual basis and subscription revenues related to granting customers access to software products through our SaaS subscription offerings. 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.

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 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.

 

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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  

January 31, 2017

        

Revenues

   $ 181.9     $ 348.0     $ 177.4     $ 707.3  

Cost of revenues

     57.1       59.2       145.0       261.3  

Direct sales and other costs

     98.1       —         —         98.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 26.7     $ 288.8     $ 32.4     $ 347.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     14.7     83.0     18.3     49.2

January 31, 2016

        

Revenues

   $ 164.9     $ 349.2     $ 163.5     $ 677.6  

Cost of revenues

     44.7       61.6       141.2       247.5  

Direct sales and other costs

     91.7       —         —         91.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 28.5     $ 287.6     $ 22.3     $ 338.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     17.3     82.4     13.6     49.9

 

(in millions, except percentages)    Reportable Segment  

Nine Months Ended

   License     Maintenance     Consulting     Total  

January 31, 2017

        

Revenues

   $ 530.4     $ 1,051.7     $ 542.9     $ 2,125.0  

Cost of revenues

     164.3       180.3       430.3       774.9  

Direct sales and other costs

     294.0       —         12.6       306.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 72.1     $ 871.4     $ 100.0     $ 1,043.5  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     13.6     82.9     18.4     49.1

January 31, 2016

        

Revenues

   $ 430.1     $ 1,060.6     $ 495.3     $ 1,986.0  

Cost of revenues

     113.4       186.3       420.0       719.7  

Direct sales and other costs

     268.3       —         —         268.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 48.4     $ 874.3     $ 75.3     $ 998.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     11.3     82.4     15.2     50.3

 

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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      Nine Months Ended  
     January 31,      January 31,  
(in millions)    2017      2016      2017      2016  

Reportable segment revenues

   $ 707.3      $ 677.6      $ 2,125.0      $ 1,986.0  

Purchase accounting revenue adjustments (1)

     (0.7      (6.0      (2.7      (10.8
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 706.6      $ 671.6      $ 2,122.3      $ 1,975.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reportable segment sales margin

   $ 347.9      $ 338.4      $ 1,043.5      $ 998.0  

Other unallocated costs and operating expenses (2)

     180.9        195.7        547.6        535.4  

Amortization of intangible assets and depreciation

     58.0        65.6        172.9        181.0  

Restructuring costs

     7.8        12.2        37.5        20.4  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

     101.2        64.9        285.5        261.2  

Total other expense, net

     62.4        116.2        247.8        240.9  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before income tax

   $ 38.8      $ (51.3    $ 37.7      $ 20.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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, equity-based compensation, 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  

January 31, 2017

           

Software license fees

   $ 40.2      $ 32.5      $ 8.7      $ 81.4  

SaaS subscriptions

     81.5        11.8        6.8        100.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software license fees and subscriptions

     121.7        44.3        15.5        181.5  

Product updates and support fees

     228.1        93.3        26.4        347.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     349.8        137.6        41.9        529.3  

Consulting services and other fees

     92.7        71.8        12.8        177.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 442.5      $ 209.4      $ 54.7      $ 706.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

January 31, 2016

           

Software license fees

   $ 51.7      $ 29.5      $ 6.1      $ 87.3  

SaaS subscriptions

     62.9        6.8        2.0        71.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software license fees and subscriptions

     114.6        36.3        8.1        159.0  

Product updates and support fees

     227.1        96.4        25.7        349.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     341.7        132.7        33.8        508.2  

Consulting services and other fees

     86.8        64.3        12.3        163.4  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 428.5      $ 197.0      $ 46.1      $ 671.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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(in millions)    Geographic Region  

Nine Months Ended

   Americas      EMEA      APAC      Total  

January 31, 2017

           

Software license fees

   $ 136.1      $ 79.0      $ 22.5      $ 237.6  

SaaS subscriptions

     229.6        33.3        28.0        290.9  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software license fees and subscriptions

     365.7        112.3        50.5        528.5  

Product updates and support fees

     682.9        287.5        80.6        1,051.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     1,048.6        399.8        131.1        1,579.5  

Consulting services and other fees

     283.9        216.5        42.4        542.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 1,332.5      $ 616.3      $ 173.5      $ 2,122.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

January 31, 2016

           

Software license fees

   $ 155.1      $ 79.9      $ 20.2      $ 255.2  

SaaS subscriptions

     145.0        15.4        4.3        164.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software license fees and subscriptions

     300.1        95.3        24.5        419.9  

Product updates and support fees

     686.7        295.0        78.4        1,060.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     986.8        390.3        102.9        1,480.0  

Consulting services and other fees

     264.5        193.5        37.2        495.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 1,251.3      $ 583.8      $ 140.1      $ 1,975.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

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  

January 31, 2017

   $ 125.2      $ 17.8      $ 12.3      $ 155.3  

April 30, 2016

   $ 92.9      $ 20.4      $ 11.7      $ 125.0  

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

 

     Three Months Ended      Nine Months Ended  
     January 31,      January 31,  
(in millions)    2017      2016      2017      2016  

United States

   $ 402.9      $ 391.4      $ 1,211.2      $ 1,134.9  

All other countries

     303.7        280.2        911.1        840.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 706.6      $ 671.6      $ 2,122.3      $ 1,975.2  
  

 

 

    

 

 

    

 

 

    

 

 

 

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:

 

     January 31,      April 30,  
(in millions)    2017      2016  

United States

   $ 123.1      $ 90.5  

All other countries

     32.2        34.5  
  

 

 

    

 

 

 

Total long-lived tangible assets

   $ 155.3      $ 125.0  
  

 

 

    

 

 

 

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

Sponsor Transactions

Golden Gate Capital and Summit Partners, L.P. (Summit Partners, and together with Golden Gate Capital, the Sponsors) are our largest investors. We have entered into advisory agreements with our 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. We recognize these management fees as a component of general and administrative expenses in our Condensed Consolidated Statement of Operations.

The following table sets forth management fees and expenses rendered under the advisory agreements in connection with acquisitions, debt refinancing and other advisory services for the periods indicated:

 

     Three Months Ended      Nine Months Ended  
     January 31,      January 31,  
(in millions)    2017      2016      2017      2016  

Golden Gate Capital

   $ 1.4      $ 1.5      $ 4.3      $ 4.3  

Summit Partners

     0.6        0.5        1.7        1.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total management fees and expenses

   $ 2.0      $ 2.0      $ 6.0      $ 5.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

At January 31, 2017, approximately $1.1 million of these fees primarily related to Golden Gate Capital remained unpaid.

In the normal course of business, we may sell products and services to companies owned by our Sponsors. Sales to companies owned by Golden Gate Capital and Summit Partners are recognized according to our revenue recognition policy as described in Note 2, Summary of Significant Accounting Policies. Sales to Golden Gate Capital-owned companies were approximately $0.2 million and $1.2 million in the three and nine months ended January 31, 2017, respectively, and $0.2 million and $0.9 million in the comparable periods of fiscal 2016. We had sales of less than $0.1 million to companies owned by Summit Partners in the first nine months of fiscal 2017 and no sales in the corresponding prior period of fiscal 2016.

In addition, we have made payments to companies owned by Golden Gate Capital for products and services of $2.4 million and $10.0 million in the third quarter and first nine months of fiscal 2017, respectively, and $1.8 million and $8.7 million in the comparable periods of fiscal 2016. We have made no payments to companies owned by Summit Partners for products and services in the third quarter of fiscal 2017 and $0.2 million in the first nine months of fiscal 2017, and $0.3 million and $0.5 million in the third quarter and first nine months of fiscal 2016, respectively.

In the second quarter of fiscal 2017, we entered into a SaaS subscription agreement with Golden Gate Capital (the SaaS Agreement) under which Golden Gate Capital agreed to a three-year subscription to our CloudSuite Financials and Procurement software including related implementation services, both at our customary rates. The SaaS Agreement and related services total approximately $0.9 million, including SaaS subscription revenue of $0.2 million per year which will be recognized ratably over each of the three years under the agreement, and $0.3 million in consulting services which are to be recognized as the services are provided.

 

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In connection with the issuance of our Senior Secured Notes in the second quarter of fiscal 2016, we capitalized as deferred financing fees $2.5 million in fees paid to Angel Island Capital Services, LLC, an affiliate of Golden Gate Capital and we expensed buyer transaction fees of approximately $4.8 million payable to Golden Gate Capital and $1.9 million payable to Summit Partners in connection with the GT Nexus Acquisition. These transaction fees were included in acquisition-related and other costs in our Condensed Consolidated Statement of Operations for fiscal 2016. The deferred financing fees were included in other long-term liabilities on our Condensed Consolidated Balance Sheets as of April 30, 2016. In addition, in connection with the Predictix Acquisition we expensed buyer transaction fees of approximately $1.1 million payable to Golden Gate Capital and $0.4 million payable to Summit Partners in the first quarter of fiscal 2017. The buyer transaction fees related to the GT Nexus Acquisition and the Predictix Acquisition were paid to Golden Gate Capital and Summit in the first quarter of fiscal 2017.

Equity Contributions

In the first quarter of fiscal 2017, we completed the Predictix Acquisition. See Note 3, Acquisitions – Predictix. In conjunction with the Predictix Acquisition, our Sponsors made new capital contributions to Infor Enterprise, an affiliate of the parent company of Infor, of $133.0 million, of which $77.0 million was contributed as equity to Infor, Inc. Investment funds affiliated with Golden Gate Capital and investment funds affiliated with Summit Partners contributed approximately $95.2 million and $37.8 million, respectively. The proceeds from the new equity contribution were used to fund the Predictix Acquisition purchase consideration.

Dividends Paid to Affiliates

In the first nine months of fiscal 2017, we paid dividends to HoldCo totaling $111.5 million including the following:

In the first quarter of fiscal 2017, we paid dividends to HoldCo totaling $94.0 million. The dividend related to the funding of HoldCo’s quarterly interest on the HoldCo Notes due November 1, 2016 as well as funding of future interest payments related to the HoldCo Notes and future amounts due under our Tax Allocation Agreement. HoldCo then contributed equity of $67.0 million to Infor, Inc.

In the first quarter of fiscal 2017, we also paid dividends to HoldCo totaling $17.5 million related to the funding of quarterly interest on our affiliate’s debt. In April 2016, HoldCo elected to pay quarterly interest due related to the HoldCo Notes of approximately $26.7 million in cash (i) with $0.1 million cash on-hand, (ii) with amounts we funded through dividend distributions from Infor to HoldCo of $17.5 million, which were accrued as of April 30, 2016, and (iii) through certain payments made under the Tax Allocation Agreement, totaling $9.1 million. The dividends and amounts due under the Tax Allocation Agreement were paid on May 2, 2016.

In the first nine months of fiscal 2016, we paid dividends to HoldCo totaling $35.0 million, related to the funding of quarterly interest on our affiliate’s debt, including the following:

In April 2015, HoldCo elected to pay quarterly interest due related to the HoldCo Notes of approximately $26.7 million in cash (i) with $1.2 million cash on-hand, (ii) with amounts we funded through dividend distributions from Infor to HoldCo of $17.0 million, which were accrued as of April 30, 2015, and (iii) through certain payments made under the Tax Allocation Agreement, totaling $8.5 million. The dividends and amounts due under the Tax Allocation Agreement were paid on May 1, 2015.

In October 2015, HoldCo elected to pay the semi-annual interest due related to the HoldCo Notes of approximately $27.3 million in cash (i) with $0.3 million cash on-hand, (ii) with amounts we funded through dividend distributions from Infor to HoldCo of $18.0 million, which were accrued as of October 31, 2015, and (iii) through payments made under the Tax Allocation Agreement of $9.0 million. The dividends and amounts due under the Tax Allocation Agreement were paid on November 2, 2015.

In future periods, we may from time-to-time service additional interest payments related to the HoldCo Notes through further dividend distributions.

Due to/from Affiliates

Infor, through certain of our subsidiaries, had net receivables from our affiliates, primarily HoldCo, of $36.9 million as of January 31, 2017 and April 30, 2016. These receivables arose primarily due to our payment of deferred financing fees and interest related to certain acquired debt of HoldCo and are included in receivable from stockholders in the equity section on our Condensed Consolidated Balance Sheets.

 

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We have entered into a Tax Allocation Agreement with GGC Software Parent, Inc., and HoldCo (the Tax Allocation Agreement). Infor 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 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 made under the Tax Allocation Agreement have been recorded against affiliate payable, which is included in accounts payable on our Condensed Consolidated Balance Sheets. In the first nine months of fiscal 2017 and 2016, we made payments of $9.1 million and $17.6 million, respectively, under the Tax Allocation Agreement, which were recorded against affiliate payable. We had $15.4 million and $9.1 million payable under the Tax Allocation Agreement as of January 31, 2017 and April 30, 2016, respectively.

18. Supplemental Guarantor Financial Information

The Senior Notes and Senior Secured 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 Senior Notes and Senior Secured 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 January 31, 2017 and April 30, 2016, our Condensed Consolidating Statements of Operations, our Condensed Consolidating Statements of Comprehensive Income (Loss) for our fiscal quarters and nine-month periods ended January 31, 2017 and 2016, and our Condensed Consolidating Statements of Cash Flows for the nine months ended January 31, 2017 and 2016.

The Infor (US), Inc. (Subsidiary Issuer) column excludes Infor (US), Inc.’s Unrestricted Subsidiary, Infor Retail Holdings, which is included in the Non-Guarantor Subsidiaries column. See Note 11, Debt – Unrestricted Subsidiary.

In the second quarter of fiscal 2017, we purchased the remaining 18.52% of GT Nexus from the holders of the redeemable noncontrolling interests and GT Nexus became a wholly-owned subsidiary of the Company. See Note 3, Acquisitions – Fiscal 2016. As a result, we included the wholly-owned domestic subsidiaries of GT Nexus in the Guarantor Subsidiaries column retrospectively for all periods then presented. In addition, in the third quarter of fiscal 2017, we merged the wholly-owned domestic subsidiaries of GT Nexus into Infor (US), Inc. and accordingly, they are included in the subsidiary Issuer column retrospectively for all periods currently presented below.

During the third quarter of fiscal 2017, we identified and corrected an error in the manner in which we presented receipts of dividends received by Infor, Inc. (Parent) from Infor (US), Inc. (Issuer) and dividends further paid out of Infor, Inc. (Parent) to its parent company. Previously, such amounts were presented on a net basis as there was a net zero impact to our financing cash flows. However, in the current quarter, we have presented such amounts on a gross basis, and presentation in the prior period’s Condensed Consolidating Statement of Cash Flows below has been revised to be consistent with the current period presentation. We have assessed the materiality of these revisions and concluded that they were not material to any of our previously issued financial statements.

 

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Table of Contents

Condensed Consolidating Balance Sheets

 

     January 31, 2017  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
     Non-Guarantor
Subsidiaries
     Eliminations     Total
Consolidated
 

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ —       $ 80.2     $ —        $ 331.8      $ —       $ 412.0  

Accounts receivable, net

     —         197.4       9.8        194.0        —         401.2  

Prepaid expenses

     —         91.6       24.2        38.0        —         153.8  

Income tax receivable

     —         65.5       0.3        10.9        (0.1     76.6  

Other current assets

     —         7.9       0.1        15.9        —         23.9  

Affiliate receivable

     —         71.4       165.5        41.7        (278.6     —    

Deferred tax assets

     —         21.6       5.1        14.7        (0.1     41.3  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     —         535.6       205.0        647.0        (278.8     1,108.8  

Property and equipment, net

     —         114.6       8.5        32.2        —         155.3  

Intangible assets, net

     —         657.2       1.1        150.8        —         809.1  

Goodwill

     —         2,796.7       62.5        1,607.6        —         4,466.8  

Deferred tax assets

     0.2       —         8.4        65.4        (8.5     65.5  

Other assets

     —         25.3       8.2        60.3        —         93.8  

Affiliate receivable

     —         226.7       0.1        79.2        (306.0     —    

Investment in subsidiaries

     —         1,914.1       —          —          (1,914.1     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 0.2     $ 6,270.2     $ 293.8      $ 2,642.5      $ (2,507.4   $ 6,699.3  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

              

Current liabilities:

              

Accounts payable

   $ —       $ 53.4     $ 0.1      $ 21.0      $ —       $ 74.5  

Income taxes payable

     —         —         —          41.2        (0.1     41.1  

Accrued expenses

     —         198.6       32.0        172.4        —         403.0  

Deferred tax liabilities

     0.1       —         —          1.4        (0.1     1.4  

Deferred revenue

     —         600.0       21.3        369.6        —         990.9  

Affiliate payable

     29.4       204.6       5.3        39.3        (278.6     —    

Current portion of long-term obligations

     —         —         —          —          —         —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     29.5       1,056.6       58.7        644.9        (278.8     1,510.9  

Long-term debt

     —         5,604.9       —          —          —         5,604.9  

Deferred tax liabilities

     —         115.7       —          6.9        (8.5     114.1  

Affiliate payable

     58.1       78.9       0.4        168.6        (306.0     —    

Other long-term liabilities

     —         67.9       8.2        124.7        —         200.8  

Losses in excess of investment in subsidiaries

     653.8       —         —          —          (653.8     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     741.4       6,924.0       67.3        945.1        (1,247.1     7,430.7  

Redeemable noncontrolling interests

     —         —         —          —          —         —    

Total Infor, Inc. stockholders’ equity (deficit)

     (741.2     (653.8     226.5        1,687.6        (1,260.3     (741.2

Noncontrolling interests

     —         —         —          9.8        —         9.8  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (741.2     (653.8     226.5        1,697.4        (1,260.3     (731.4
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit)

   $ 0.2     $ 6,270.2     $ 293.8      $ 2,642.5      $ (2,507.4   $ 6,699.3  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

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Table of Contents
     April 30, 2016  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
     Non-Guarantor
Subsidiaries
     Eliminations     Total
Consolidated
 

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ —       $ 163.7     $ —        $ 542.0      $ —       $ 705.7  

Accounts receivable, net

     —         208.0       9.2        174.7        —         391.9  

Prepaid expenses

     —         85.4       23.7        42.1        —         151.2  

Income tax receivable

     —         50.1       0.2        10.9        —         61.2  

Other current assets

     —         3.5       0.5        18.9        —         22.9  

Affiliate receivable

     —         102.7       144.6        52.2        (299.5     —    

Deferred tax assets

     —         23.1       5.1        15.0        (0.1     43.1  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     —         636.5       183.3        855.8        (299.6     1,376.0  

Property and equipment, net

     —         81.3       9.2        34.5        —         125.0  

Intangible assets, net

     —         746.3       2.2        148.1        —         896.6  

Goodwill

     —         2,745.7       62.5        1,589.8        —         4,398.0  

Deferred tax assets

     0.2       —         11.2        76.1        (11.4     76.1  

Other assets

     —         33.6       15.0        85.7        —         134.3  

Affiliate receivable

     —         643.9       0.1        70.0        (714.0     —    

Investment in subsidiaries

     —         1,658.3       —          —          (1,658.3     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 0.2     $ 6,545.6     $ 283.5      $ 2,860.0      $ (2,683.3   $ 7,006.0  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

              

Current liabilities:

              

Accounts payable

   $ —       $ 88.0     $ —        $ 28.8      $ —       $ 116.8  

Income taxes payable

     —         0.5       —          40.2        —         40.7  

Accrued expenses

     —         228.1       37.5        167.1        —         432.7  

Deferred tax liabilities

     0.1       —         —          1.3        (0.1     1.3  

Deferred revenue

     —         571.5       16.5        348.7        —         936.7  

Affiliate payable

     29.5       185.5       3.0        81.5        (299.5     —    

Current portion of long-term obligations

     —         56.3       —          —          —         56.3  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     29.6       1,129.9       57.0        667.6        (299.6     1,584.5  

Long-term debt

     —         5,653.7       —          —          —         5,653.7  

Deferred tax liabilities

     —         120.8       —          17.9        (11.4     127.3  

Affiliate payable

     58.1       69.7       0.4        585.8        (714.0     —    

Other long-term liabilities

     —         93.0       17.2        129.2        —         239.4  

Losses in excess of investment in subsidiaries

     661.5       —         —          —          (661.5     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     749.2       7,067.1       74.6        1,400.5        (1,686.5     7,604.9  

Redeemable noncontrolling interests

     —         140.0       —          —          —         140.0  

Total Infor, Inc. stockholders’ equity (deficit)

     (749.0     (661.5     208.9        1,449.4        (996.8     (749.0

Noncontrolling interests

     —         —         —          10.1        —         10.1  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (749.0     (661.5     208.9        1,459.5        (996.8     (738.9
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interests and stockholders’ equity (deficit)

   $ 0.2     $ 6,545.6     $ 283.5      $ 2,860.0      $ (2,683.3   $ 7,006.0  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

38


Table of Contents

Condensed Consolidating Statements of Operations

 

     Three Months Ended January 31, 2017  
     Infor, Inc.     Infor (US), Inc.     Guarantor     Non-Guarantor           Total  
(in millions)    (Parent)     (Subsidiary Issuer)     Subsidiaries     Subsidiaries     Eliminations     Consolidated  

Revenues:

            

Software license fees

   $ —       $ 37.0     $ 0.6     $ 43.8     $ —       $ 81.4  

SaaS subscriptions

     —         79.3       1.1       19.7       —         100.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         116.3       1.7       63.5       —         181.5  

Product updates and support fees

     —         208.1       7.8       131.9       —         347.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         324.4       9.5       195.4       —         529.3  

Consulting services and other fees

     —         79.7       4.0       93.6       —         177.3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         404.1       13.5       289.0       —         706.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         8.5       0.7       5.6       —         14.8  

Cost of SaaS subscriptions

     —         34.4       1.1       7.1       0.7       43.3  

Cost of product updates and support fees

     —         31.3       0.8       26.3       0.9       59.3  

Cost of consulting services and other fees

     —         61.6       3.8       77.6       2.0       145.0  

Sales and marketing

     —         61.3       7.5       42.4       1.2       112.4  

Research and development

     —         62.3       1.5       45.0       3.1       111.9  

General and administrative

     —         6.6       35.4       20.0       (7.9     54.1  

Amortization of intangible assets and depreciation

     —         43.0       1.8       13.2       —         58.0  

Restructuring costs

     —         3.5       0.9       3.4       —         7.8  

Acquisition-related and other costs

     —         1.1       (0.1     (2.2     —         (1.2

Affiliate (income) expense, net

     —         62.3       (44.6     (17.7     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         375.9       8.8       220.7       —         605.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     —         28.2       4.7       68.3       —         101.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

            

Interest expense, net

     —         79.1       —         0.1       —         79.2  

Affiliate interest (income) expense, net

     —         (2.1     —         2.1       —         —    

Other (income) expense, net

     —         (7.7     —         (9.1     —         (16.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     —         69.3       —         (6.9     —         62.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     —         (41.1     4.7       75.2       —         38.8  

Income tax provision (benefit)

     —         (10.2     2.9       8.1       —         0.8  

Equity in (earnings) loss of subsidiaries

     (38.0     (68.9     —         —         106.9       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     38.0       38.0       1.8       67.1       (106.9     38.0  

Net income (loss) attributable to noncontrolling interests

     —         —         —         0.4       —         0.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ 38.0     $ 38.0     $ 1.8     $ 66.7     $ (106.9   $ 37.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

39


Table of Contents
     Three Months Ended January 31, 2016  
     Infor, Inc.     Infor (US), Inc.     Guarantor     Non-Guarantor           Total  
(in millions)    (Parent)     (Subsidiary Issuer)     Subsidiaries     Subsidiaries     Eliminations     Consolidated  

Revenues:

            

Software license fees

   $ —       $ 46.1     $ 1.6     $ 39.6     $ —       $ 87.3  

SaaS subscriptions

     —         64.0       0.3       7.4       —         71.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         110.1       1.9       47.0       —         159.0  

Product updates and support fees

     —         207.8       7.9       133.5       —         349.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         317.9       9.8       180.5       —         508.2  

Consulting services and other fees

     —         76.3       3.8       83.3       —         163.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         394.2       13.6       263.8       —         671.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         10.2       0.9       5.6       —         16.7  

Cost of SaaS subscriptions

     —         23.0       0.9       4.4       0.7       29.0  

Cost of product updates and support fees

     —         31.3       0.6       28.6       1.2       61.7  

Cost of consulting services and other fees

     —         60.8       3.4       75.1       1.9       141.2  

Sales and marketing

     —         60.3       5.7       42.0       1.6       109.6  

Research and development

     —         68.8       1.6       40.9       3.2       114.5  

General and administrative

     —         10.7       33.0       17.7       (8.6     52.8  

Amortization of intangible assets and depreciation

     —         45.6       2.7       17.3       —         65.6  

Restructuring costs

     —         7.7       0.2       4.3       —         12.2  

Acquisition-related and other costs

     —         3.6       (0.3     0.1       —         3.4  

Affiliate (income) expense, net

     —         53.4       (39.7     (13.7     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         375.4       9.0       222.3       —         606.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     —         18.8       4.6       41.5       —         64.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

            

Interest expense, net

     —         80.6       —         (0.1     —         80.5  

Affiliate interest (income) expense, net

     —         (8.1     —         8.1       —         —    

Other (income) expense, net

     —         (5.2     —         40.9       —         35.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     —         67.3       —         48.9       —         116.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     —         (48.5     4.6       (7.4     —         (51.3

Income tax provision (benefit)

     —         (17.0     0.9       10.4       —         (5.7

Equity in (earnings) loss of subsidiaries

     45.6       14.1       —         —         (59.7     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (45.6     (45.6     3.7       (17.8     59.7       (45.6

Net income (loss) attributable to noncontrolling interests

     —         (1.6     —         0.2       —         (1.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ (45.6   $ (44.0   $ 3.7     $ (18.0   $ 59.7     $ (44.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

40


Table of Contents
     Nine Months Ended January 31, 2017  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues:

            

Software license fees

   $ —       $ 124.6     $ 2.7     $ 110.3     $ —       $ 237.6  

SaaS subscriptions

     —         247.0       2.3       41.6       —         290.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         371.6       5.0       151.9       —         528.5  

Product updates and support fees

     —         621.7       23.9       405.4       —         1,051.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         993.3       28.9       557.3       —         1,579.5  

Consulting services and other fees

     —         245.0       13.6       284.2       —         542.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         1,238.3       42.5       841.5       —         2,122.3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         26.2       2.1       15.8       0.1       44.2  

Cost of SaaS subscriptions

     —         96.9       3.5       21.0       1.8       123.2  

Cost of product updates and support fees

     —         91.4       2.6       83.4       3.1       180.5  

Cost of consulting services and other fees

     —         179.6       10.9       233.8       6.1       430.4  

Sales and marketing

     —         197.3       21.5       126.7       4.0       349.5  

Research and development

     —         185.7       4.9       135.1       9.7       335.4  

General and administrative

     —         18.5       104.0       58.9       (24.8     156.6  

Amortization of intangible assets and depreciation

     —         126.1       5.6       41.2       —         172.9  

Restructuring costs

     —         5.9       0.9       30.7       —         37.5  

Acquisition-related and other costs

     —         6.1       1.7       (1.2     —         6.6  

Affiliate (income) expense, net

     —         165.3       (130.6     (34.7     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         1,099.0       27.1       710.7       —         1,836.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     —         139.3       15.4       130.8       —         285.5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

            

Interest expense, net

     —         239.3       —         0.1       —         239.4  

Affiliate interest (income) expense, net

     —         (15.5     —         15.5       —         —    

Other (income) expense, net

     —         (32.2     —         40.6       —         8.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     —         191.6       —         56.2       —         247.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     —         (52.3     15.4       74.6       —         37.7  

Income tax provision (benefit)

     —         (10.8     2.9       30.2       —         22.3  

Equity in loss (earnings) of subsidiaries

     (15.4     (56.9     —         —         72.3       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     15.4       15.4       12.5       44.4       (72.3     15.4  

Net income (loss) attributable to noncontrolling interests

     —         (0.4     —         0.8       —         0.4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ 15.4     $ 15.8     $ 12.5     $ 43.6     $ (72.3   $ 15.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

41


Table of Contents
     Nine Months Ended January 31, 2016  
     Infor, Inc.     Infor (US), Inc.     Guarantor     Non-Guarantor           Total  
(in millions)    (Parent)     (Subsidiary Issuer)     Subsidiaries     Subsidiaries     Eliminations     Consolidated  

Revenues:

            

Software license fees

   $ —       $ 136.9     $ 5.5     $ 112.8     $ —       $ 255.2  

SaaS subscriptions

     —         144.7       0.7       19.3       —         164.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         281.6       6.2       132.1       —         419.9  

Product updates and support fees

     —         626.5       23.7       409.9       —         1,060.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         908.1       29.9       542.0       —         1,480.0  

Consulting services and other fees

     —         230.6       10.7       253.9       —         495.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         1,138.7       40.6       795.9       —         1,975.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         27.0       2.8       16.8       0.1       46.7